Lloyds TSB Bank Plc v Edward Symmons & Partners, Court of Appeal - Technology and Construction Court, March 12, 2003, [2003] EWHC 346 (TCC)

Resolution Date:March 12, 2003
Issuing Organization:Technology and Construction Court
Actores:Lloyds TSB Bank Plc v Edward Symmons & Partners

Case No: HT-02-315

Neutral Citation No. [2003] EWHC 346 (TCC)




St. Dunstan's House,

133-137, Fetter Lane,

London, EC4A 1HD

Date: 12 March 2003

B e f o r e :


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Stephen Lennard (instructed by Eversheds for the Claimant)

Timothy Harry (instructed by Williams Holden Cooklin Gibbons for the Defendants)

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H.H. Judge Richard Seymour Q. C. :


  1. The Claimant, a well-known bank, was, in 1998, called Lloyds Bank Plc. It is convenient to refer to the Claimant in this judgment as ``Lloyds'' no matter what the precise form of its name at the time of which I am speaking.

  2. The Defendants, Messrs. Edward Symmons & Partners (``Symmons''), practise, and did in 1998, as a firm of surveyors and valuers of real property.

  3. Mr. Stephen Skinner was an Associate with Symmons based at its Southampton office in 1998. He is now a partner in the firm. Mr. Colin Jennings was, in 1998, and remains, a partner in Symmons based at the London office of the firm.

  4. The freehold owner of the property known as and situate at The Sanderson Centre, 15 Lees Lane, Gosport, Hampshire (``the Property'') in the summer of 1998 was a company called Salcrom Properties Ltd. (``Salcrom''). At that time Salcrom was also the freehold owner of the property known as and situate at 37-39 Southgate Street, Winchester, Hampshire (``the Winchester Property'').

  5. Salcrom was a customer of Lloyds and from about 1990 Lloyds had advanced funds to Salcrom. From the evidence of Mr. Brian Johnson, a Senior Manager in Lloyds's Debt Management Group, in his witness statement made for the purposes of this action and dated 12 September 2002, which was not challenged and which I accept, by 1998 the security held by Lloyds for the repayment of the sums lent to Salcrom comprised (i) an unlimited debenture; (ii) a legal charge over the freehold interest in the Property; (iii) a legal charge over the freehold interest in the Winchester Property, and (iv) charges over five life assurance policies written in respect of the lives of two of the shareholders in Salcrom, Mr. Peter George Farquhar Dibben and Mr. Russell Abrahams. The wife of Mr. Dibben was Mrs. Sylvia Elizabeth Dibben. It appears that in 1998 she and her husband were the directors of Salcrom, although Mr. Abrahams had previously been a director. The General Manager of Salcrom, who was also the Company Secretary in 1998, was Mr. Andrew Charles Smith. Mr. Smith was not a director of, or a shareholder in, Salcrom.

  6. Towards the end of 1998, as I shall relate, Mr. Dibben, Mr. Abrahams and Mr. Smith all became involved as participants in a company called Systemsolid Ltd. (``Systemsolid'').

  7. By about July 1998 Lloyds had become concerned as to the adequacy of the security which it held for the loan outstanding from Salcrom. It decided to commission a valuation of the Property and a valuation of the Winchester Property from Symmons.

  8. This action is concerned with the valuation of the Property undertaken in September 1998 by Symmons for Lloyds.

    The nature of the claim

  9. Rather unusually, what is complained of on behalf of Lloyds in this action is not the customary grievance that a valuer has overvalued a security, but that Symmons, by Mr. Skinner, undervalued it. I shall come shortly to the matters of the retainer of Symmons and its performance of that retainer, but what was set out in the Particulars of Claim as the alleged breach of the retainer and what allegedly followed from the alleged breach was this:-


  10. In breach of contract and its duty of care to the Bank, Edward Symmons failed to prepare and compile the Reports with reasonable skill and care and were negligent in that they valued the Sanderson Centre in the sum of £525,000 on an open market basis whereas its true value was £1,100,000.


  11. In reliance on the Reports, the Bank sold the benefit of its security by transferring it's [sic] charge in the Sanderson Centre to a buyer for the sum of £525,000 on 17 December 1998 with completion taking place on 18 December 1998.


  12. As a result of Edward Symmons' breach of contract and negligence the Bank has suffered loss and damage in that, had Edward Symmons provided an accurate marketing report and/or true valuation of the Sanderson Centre, it would have sold the property or its security for the true value of £1,100,000. The Bank's claim is for the difference in the actual valuation and the true valuation i.e. £575,000.''

  13. Again rather unusually, the purchaser to which Lloyds sold the benefit of its security over the Property was Systemsolid, that is to say in effect another corporate manifestation of the persons behind Salcrom. I shall return to the possible significance of that circumstance later in this judgment.

  14. In the Defence served on behalf of Symmons the following response to the allegations set out in paragraphs 11,12 and 13 of the Particulars of Claim was made:-

    ``12. It is admitted that Edward Symmons valued the Sanderson Centre in the sum of £525,000 on open market basis, but it is denied, as alleged in Paragraph 11 of the Particulars of Claim, that it failed to prepare and compile the Reports with reasonable skill and care, or negligently, or that the true value of the Sanderson Centre was £1,100,000. In the absence of any particularisation of the respects in which it is said that Edward Symmons failed to act with reasonable skill and care and/or were negligent, Edward Symmons is presently unable further to particularise its denial of negligence.

  15. No admission is made as to the reliance alleged in paragraph 12 of the Particulars of Claim. Subject to formal proof that the Sanderson Centre was sold for the sum there alleged, and on the dates there alleged, the remainder of paragraph 12 of the Particulars of Claim is admitted.

  16. As regards paragraph 13 of the Particulars of Claim, Edward Symmons repeats its denial that it has acted in breach of contract and/or alternatively has been negligent, and accordingly it is denied that the Bank has suffered any loss and damage. Given that it is Edward Symmons' case that its valuation was prepared with reasonable skill and care, it follows that Edward Symmons denies that the Bank would have sold, or would have been able to sell, the property or its security for a sum of £1,100,000. The Bank's claim in the third sentence of paragraph 13 of the Particulars of Claim is noted: for the reasons already pleaded, it is denied. ''

  17. In the light of the pleas in paragraph 14 of the Defence, one of the issues in this action is whether Lloyds would in any event have been able to sell the Property or the benefit of its security for the sum of £1,100,000 or any sum in excess of that at which the benefit of the security was sold.

  18. Pursuant to an order which I made on 13 January 2003 there were served on 20 January 2003 what were described as ``Further Particulars of the Critical Repects in which it is alleged the Defendant failed properly to value the Sanderson Centre''. In those particulars it was explained that the primary and overarching allegation against Symmons was that:-

    ``its valuer, Stephen Skinner, in concluding that the open market value of the property was £525,000 reached an opinion which no reasonably competent valuer exercising reasonable care and skill could have reached...''

    In other words, the primary allegation was that the valuation was so low that that in itself was evidence of negligence. By inference Lloyds's case was that no reasonably competent valuer could have valued the Property in September 1998 at less than what was asserted to have been its true value at that time, namely £1,100,000. The particulars to which I have referred did, however, proceed to set out the stages by which it was alleged that Mr. Skinner reached his allegedly incompetent conclusion. His particular failings were alleged to be these:-

    ``3. Failing to assess competently the net lettable areas of the property:

    3.1 He appeared to calculate value by reference to gross rather than net areas.

    3.2 He ignored, overlooked or discounted vacant accommodation

    3.2.1 on the ground floor amounting to 3,821 sq ft

    3.2.2 on the first floor amounting to 4,740 sq ft of already divided accommodation

    3.2.3 on the first floor amounting to 6,700 sq ft of partially divided space within B40

    3.3 He accordingly ignored or left out of account potentially income of £56,640.

    4 Overallowance for costs of services:

    4.1 He allowed for figure of £240,000 to be deducted for cost of services.

    4.2 A competent valuer would have allowed some £130 - £135,000.

    5 Failing to allow for a greater recovery of service charge costs:

    5.1 He made no allowance for recovery of the deficit in the cost of providing services

    5.2 A competent valuer would have allowed for recovery of the shortfall over a period of 2 years.

    6 Ignoring or discounting the level of rents already achieved in assessing potential for rents on the first and second floors:

    6.1 He assessed the potential rent for the first and second floors between £0.50 and £2.00 per sq ft

    6.2 He calculated the potential rent for the first floor at £1.00 per sq ft

    6.3 He ignored or discounted the fact that the average rent then being paid for the first floor was £3.31 plus £0.40 service charge

    6.4 A competent valuer would have concluded that the average rent for the first floor would have been no less than £3.00 per sq ft plus £1.00 per sq ft service charge

    6.5 He calculated the potential rent for the second floor at £0.50 per sq ft

    6.6 He ignored or discounted the fact that the average rent formerly being paid for the second floor by Hampshire Prints was £1.22 plus...

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