Lloyds Bank Plc v. Pearce [1999] EWHC Ch 217 (7th July, 1999)

Lloyds Bank Plc v. Pearce [1999] EWHC Ch 217 (7th July, 1999)

Crosse & Crosse breached their contractual and tortious duties to the Bank by failing to report restrictive covenants that materially affected the value and marketability of the security property. The Bank relied on the defective report and would not have proceeded with the advance had it been properly advised. The claim is not statute-barred as the Bank did not have actual or constructive knowledge of the damage until July 1995. The Bank is entitled to recover its whole loss arising from the advance. The claim against Burd Pearce fails as their retainer was limited, the Bank did not rely on their report, and no loss was caused by any breach.

Citation
[1999] EWHC Ch 217
Parties
Claimant: Lloyds Bank Plc; First Defendant: Burd Pearce (a firm); Second Defendant: Crosse & Crosse
Jurisdiction
England and Wales
Procedural Posture
Professional Negligence Claim / Judgment After Trial
Outcome
Claim against Crosse & Crosse succeeds; claim against Burd Pearce fails.
Legal Topics
Solicitors' Duties, Negligent Misstatement, Limitation of Actions, Damages for Professional Negligence, Restrictive Covenants, Mortgage Security
Professional Negligence Banking Law Property Law Solicitors' Duties Negligent Misstatement Limitation of Actions Damages for Professional Negligence Restrictive Covenants +1 more

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Parties

Lloyds Bank Plc

Claimant

Burd Pearce (a firm)

First Defendant

Crosse & Crosse

Second Defendant

Procedural Posture

Professional Negligence Claim / Judgment After Trial

Legal Issues

  1. 1 Whether Crosse & Crosse breached their duty to the Bank by failing to report restrictive covenants affecting the security property
  2. 2 Whether Burd Pearce owed or breached a duty to the Bank in the 1992 transaction
  3. 3 Whether the Bank's claim against Crosse & Crosse is statute-barred by limitation

Ratio Decidendi

Crosse & Crosse breached their contractual and tortious duties to the Bank by failing to report restrictive covenants that materially affected the value and marketability of the security property. The Bank relied on the defective report and would not have proceeded with the advance had it been properly advised. The claim is not statute-barred as the Bank did not have actual or constructive knowledge of the damage until July 1995. The Bank is entitled to recover its whole loss arising from the advance. The claim against Burd Pearce fails as their retainer was limited, the Bank did not rely on their report, and no loss was caused by any breach.

Court Disposition

Claim against Crosse & Crosse succeeds; claim against Burd Pearce fails.

Orders

  • Crosse & Crosse to pay damages to Lloyds Bank Plc as pleaded in paragraph 8.1 and appendix 1 to the re-amended statement of claim.
  • Claim against Burd Pearce dismissed.