Rehman & Anor v Jones Lang Lasalle Ltd

On an appeal from a decision refusing summary judgment, the court may determine a short point of law where the evidence is sufficient, but must assess the pleaded case on the evidence actually before it. For limitation under section 14A of the Limitation Act 1980, knowledge concerns the material facts of damage and its attribution to the alleged negligence, not knowledge of a legal cause of action. A claimant may have actual or constructive knowledge when a commercial investment loses its essential income stream and professional advice should reasonably be obtained. A valuer’s report prepared for a lender will ordinarily not give rise to a duty of care to a commercial purchaser who should obtain independent advice. An express disclaimer may negative any such duty, particularly in a commercial valuation of expensive property.

The Defendant appealed against District Judge Giles’s refusal of its applications for summary judgment and, alternatively, to strike out the Claimants’ negligence claim under CPR 3.4(2). The Claimants alleged that negligent valuations of an industrial property caused them loss when the tenant became insolvent, including liabilities under personal guarantees and loss of their investment.

The appeal concerned limitation, duty of care, disclaimer, and whether the claimed losses were reflective losses. The First Report was prepared before Greenhammer Investments Ltd was incorporated and its intended client was disputed. The Second Report was commissioned by the Bank and addressed to it. The central questions were whether the claim had a real prospect of success and whether there was any compelling reason for trial.

1. Limitation. The appeal was allowed on limitation. Under section 14A of the Limitation Act 1980, the relevant knowledge was knowledge of the material facts about the damage and that the damage was attributable to the alleged negligence. It was not knowledge that the facts gave rise to a cause of action. When Alpine entered liquidation, the Claimants lost the £600,000 rental stream on which the £7 million valuation depended. The evidence showed that the property’s value had thereby fallen to a level close to the purchase price and that the Claimants were exposed under their guarantees. They should reasonably have obtained advice about re-letting and capital value. The claim was therefore statute-barred.
2. Appeal approach. The appeal was a review of the District Judge’s decision, not a rehearing, but the challenged conclusions involved errors of law and fact rather than an exercise of discretion. The Claimants could not rely merely on the assertion that factual issues might emerge at trial without providing evidence capable of raising such issues.
3. Duty of care. The First Report raised a properly arguable issue whether the Claimants, or the First Claimant, were the intended client or an unidentified principal. That issue depended on evidence about the instructions and could not be summarily disposed of. In relation to the Second Report, Scullion v Bank of Scotland established the ordinary position that a valuer instructed by a lender in a commercial transaction may assume that the purchaser will obtain independent advice. Nevertheless, an unusual factual matrix might support a duty where the valuer reasonably expected the purchaser not merely to see but to rely on the report. The appeal failed on this ground.
4. Disclaimer. The disclaimer was relevant only if the Claimants were third parties. In relation to the Second Report, the Defendant was entitled to rely on it to negative any duty of care. The commercial nature of the transaction and the value of the property required something most unusual to displace that conclusion. Summary judgment or strike-out was therefore appropriate insofar as the claim concerned the Second Report.
5. Reflective loss. The damages claim could not be struck out as plainly reflective. The principle depended on the company having a corresponding cause of action. Greenhammer did not exist when the First Report was prepared, and the disclaimer arguments might prevent it suing in respect of either Report. The Claimants therefore had an arguable case that their losses fell within the situation where the company had no cause of action. The appeal failed on this ground.
6. The parties were invited to agree the form of order, failing which the order would be considered when judgment was handed down.

• High Court (Queen’s Bench Division): allowed the Defendant’s appeal from the order of District Judge Giles dated 11 December 2012 refusing summary judgment and strike-out. Permission to appeal had been granted by His Honour Judge Gosnell on 21 January 2013.