B2/2001/1537
Neutral Citation Number: [2002] EWCA Civ 216
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CROYDON COUNTY COURT
(HIS HONOUR JUDGE ELLIS)
		                          	 Royal Courts of Justice
                                         The Strand
                                         London

								 Tuesday  5  February 2002
B e f o r e:

LORD  JUSTICE  LAWS

and

LORD  JUSTICE  DYSON

- - - - - - - - - - - - -
B E T W E E N:
JAMES & CHARLES DODD (A Firm)
Respondents/Claimants

- v -

KEVIN JAMES O'CALLAGHAN
Appellant/Defendant
- - - - - - - -

(Computer Aided Transcription by
Smith Bernal, 190 Fleet Street, London EC4A 2HD
Telephone 020 7421 4040
Official Shorthand Writers to the Court)
- - - - - - - -

THE APPLICANT appeared in person

MR J SMITH (instructed by Messrs Cripps Harries Hall, Kent TN1) appeared on behalf of THE RESPONDENTS
- - - - - - - -
J U D G M E N T
Tuesday 5 February 2002
1.	LORD JUSTICE LAWS: This is an application for permission to appeal against a judgment of His Honour Judge Ellis given in the Croydon County Court on 14 January 2001. The proceedings consisted of a claim by the respondents against the applicant for the balance due under a mortgage taken out by him in 1989 in respect of Flat D, 143 Coombe Road, Croydon. The respondents are assignees of the mortgage. The judge gave judgment in the respondents' favour for £56,037.22. 
2.	The applicant's case is that there is new documentary evidence which, had it been available at trial, would have led the learned judge to find that the building society mortgagee did not discharge its duty to take reasonable steps to obtain a proper price for the premises. The application for permission to appeal came before Rix LJ at a without notice hearing on 26 October 2001. He adjourned it for a fresh hearing on notice. That has been listed before us today. The applicant has appeared and addressed us with great courtesy in person. Mr Smith is here as counsel for the prospective respondents. 
3.	Rix LJ succinctly described the facts and the issue at trial thus: 
“2. In 1989 Mr O'Callaghan obtained a mortgage from the Abbey National Building Society for £58,000 in respect of flat D, a top floor flat in the roof of a house at 153 Coombe Road, Croydon. Unfortunately, Mr O'Callaghan could not keep up the mortgage payments and he surrendered the keys in November 1992. In March 1993 the flat was marketed by the Abbey National and in May 1993 an offer of £30,000 was agreed and the sale proceeded thereafter. The net proceeds amounted to about £28,000, leaving a sum of £35,000 due on balance. 
3. The Abbey National then brought a claim against Mr O'Callaghan's solicitors for negligence in the conduct of that mortgage loan. That claim was compromised by the solicitors paying the Abbey National £39,000 and they took an assignment of the mortgage. Those solicitors, Dodd & Co, then brought this claim against Mr O'Callaghan as assignees of the mortgage. 
4. It would appear that the monies paid by the solicitors to the Abbey National in compromise of the Abbey National's claim against them did not go to reduce or discharge the mortgage debt. Therefore Dodd & Co simply stepped into the shoes of the Abbey National for the amount outstanding under the mortgage. 
5. The essential issue at the trial before Judge Ellis was whether flat D had been sold at an undervalue, and whether the Abbey National had been in breach of their duty to take reasonable steps to obtain a proper price. The evidence was that, at the time of the repossession, the flat was valued by two different valuers at £28,000 or £29,000. It was put on the market at £34,000. The price had subsequently been dropped to £31,000 and, after one offer had fallen through, a sale was completed (as I have mentioned) in the sum of £30,000. 
6. A joint expert, Mr Veness, gave evidence at the trial [in fact, his reports were read]. His evidence was that at the relevant time the value of the flat was 'in the region of £35,000', but he also said that he would be prepared to review his opinion in the light of Mr O'Callaghan's assertion that he had managed to sell the flat on the floor below, flat C at the same house, about a year later, in 1994, for £46,000. Mr Veness made a supplementary report saying that if that were indeed the case, he would be willing to revise his valuation IN RESPECT of June 1993 upwards. 
7. At trial, Mr O'Callaghan sought to prove that the sale price of £30,000 was too low. First, he asserted that flat C, the flat below, had indeed been sold in July 1994 for £46,000. The judge did not accept that evidence as he said that there was no 'hard evidence' for the sale of that price. 
8. Secondly, Mr O'Callaghan relied on evidence that he had marketed flat D in October 1991 at some £55,000, and that he had received an offer close to the asking price at about that time. Although the marketing of flat D at that time had long been in issue, Mr O'Callaghan had said nothing in his witness statement, prior to his evidence in court, that the marketing of that flat had produced any offer.” 
4.	The evidence sought now to be relied on by the applicant falls into two categories. They relate respectively to the two contentions summarised by Rix LJ at paragraph 7 and 8. The judge below dealt with the two issues in this way: 
“26. However one also has to take account of the fact that the price of £54,950 [for flat D] was an asking price, and as everybody knows sometimes asking prices are unrealistic. The Defendant said in evidence that he received an offer in 1991 which was close to the price that was being asked, but that is the first time he has made mention of receiving such an offer. I find it surprising that if that is correct he did not mention it in his witness statement. The witness statement in the bundle was filed and served in support of an application by the Defendant to set aside a default judgment, and one would therefore expect such a statement to contain evidence that was important on the issue of valuation. Had there been an offer it seems to me that surely would have been mentioned in that statement -- and it was not. 
27. The Defendant has also said that the flat below Flat D, that is Flat C at 153 Coombe Road, was sold in July 1994 for £46,000. Again there is no mention of that fact in his witness statement. He said he told Mr Veness about it, and Mr Veness went so far as to say that if satisfactory evidence could be produced that this was in fact correct then it would cause Mr Veness to alter his opinion. However the Defendant has not been able to produce any hard evidence to support his contention that the flat below was sold for £46,000 in July 1994, and I do not accept his evidence on that point in the circumstances.” 
5.	The evidence sought to be relied on in relation to the alleged offer to buy Flat D for £54,000 consists of two letters passing between the applicant and the Abbey National in January 1992. On their face they indicate that the applicant was advising the Abbey National that he had received an offer for Flat D in the sum of £54,000. 
6.	As regards the sale of Flat C the proposed new evidence is as follows: 
(1) estate agent's particulars advertising Flat C for £46,000; 
(2) a letter from Mr Simon Maurice stating that he purchased Flat C for £45,500 in 1994; and 
(3) a copy mortgage offer dated 11 April 1994 addressed to Mr Maurice and referring to the potential purchase of Flat C for £45,500. 
7.	This court's power to receive new evidence is now regulated by Civil Procedure Rules 52.11: 
“.... 
(2) Unless it orders otherwise, the appeal court will not receive -- 
.... 
(b) evidence which was not before the lower court. 
....” 
8.	It is clear from recent authority (Hertfordshire Investments Ltd v Bubb and another [2000] 1 WLR 2318, 2325H, and Mostyn Neil Hamilton v Mohamed Al Fayed (CA 21.12.00, paras 10-13) that the three tests or criteria established in the well-known case of Ladd v Marshall [1954] 1 WLR 1489 remain of high importance. They are: 
(1) Could the evidence have been obtained for the trial with reasonable diligence? 
(2) The evidence, if given, must have had an important influence on the result, though it need not be decisive. 
(3) The evidence is such as is presumably to be believed. 
9.	I turn to the offer letters concerning Flat D. These letters have at all times so far as I am aware been in the applicant's possession. He could have produced them for the trial. It is to be noted that he told Rix LJ, as recorded in paragraph 9 of the Lord Justice's judgment, that he found them on the very day of the trial when he returned home. In his skeleton argument before us he said that he told the lower court on the day of trial that he had left them at home. He was expecting the case to last two days and so assumed he would have the opportunity to produce them on day 2, but the case finished on day 1. That point is indeed referred to by the applicant at page 3D-E of the transcript when he was cross-examined by the judge. The letters were seemingly in his possession. 
10.	However, Abbey National's file copy of the letter of 13 January 1992, which is one of the two, refers to an offer of £44,000, whereas the copy produced to this court by the applicant refers to an offer of £54,000. Somehow the number has been changed. I am not satisfied of the authenticity of the copy letter produced by the applicant, nor of the veracity of what he says about these letters in the skeleton argument. Having regard to the first and third limbs of Ladd v Marshall, I would refuse to admit this evidence. 
11.	I turn to the proposed evidence concerning Flat C. In my judgment this too could have been obtained with reasonable diligence. I note this exchange in the applicant's cross-examination at trial: 
“Q.Can you tell me -- do you still own the entire Victorian property? 
A. Again -- 
Q.Can you just answer that question -- do you or do you not? 
A. I own the freehold interest in the property. 
Q.Yes, so you will know who your leaseholders are? 
A. Yes. 
Q.And you will know when they come to sell their leasehold interest to somebody else?A. That's correct. 
Q.So you will know, if you are telling the truth, that in July of 1994 -- seven years ago -- Flat C was sold for £46,000? 
A.Yes, I mean it was sold by Mr Caine to Mr Morris. 
Q. Yes. 
A.And over the last week I have been trying to locate Mr Morris so he could actually provide a statement to your good selves and the court to verify the actual sums involved. 
Q.Because if this were really true, from April of 2000 you have had a year to try to collect this crucial information but you have not done so? 
A.I didn't realise at the time how crucial it would be.” 
Moreover, on 17 May 2001 the applicant had written to Mr Veness, the expert, in these terms: 
“The flat [Flat C] was put on the market during the late summer of 1993 for £46,000. I eventually dealt with the problems within the lease and contracts were exchanged. Completion was on 4th July 1994 to a Mr S Maurice who purchased the flat at this date. Mr Maurice owned the flat until 1999. The new owner is a Mr Philips.” 
12.	The applicant tells us that he employed a private inquiry agent to find Mr Maurice. That may well be so, but it sees to me that on his own account of matters given in evidence and in the letter to Mr Veness, if he had the essential information relating to Mr Maurice's purchase many, many months (even years) before the trial of this matter, he could with reasonable diligence have obtained “hard evidence” about this sale. 
13.	While on the face of it that is enough to conclude this application in the respondent's favour, it seems to me right that I should consider whether either or both of these pieces of evidence might have had a significant effect on the result of the case. As Rix LJ noted, in a supplemental report of 11 June 2001 Mr Veness had said: 
“3.02 If when preparing my previous report had I been aware that 153c Coombe Road had sold for in the region of £46,000 approximately one year after the valuation date, this would have influenced my opinion of value as at that time. It is my opinion that the market for this type of flat in the Croydon area was fairly static and I would not have expected any significant increase in value between 1993 and 1994.” 
14.	However, in my judgment one has to look at the effect of the undisputed facts concerning the circumstances in which Flat D actually came to be sold for £30,000. Upon this aspect of the case evidence was given by an employee of the Abbey National, Mr Stacey. This is how Judge Ellis dealt with it: 
“12. Mr Stacey was working as the area controller in the property sales and claims department of Abbey National at the time we are concerned with in 1993. Abbey National had instigated the possession proceedings in October 1992. Possession was granted at a hearing in January 1993, and eviction was due to take place on 3 February 1993 -- but before eviction could take place the Defendant handed has keys to the Abbey National and voluntarily surrendered possession of the property. 
13. Mr Stacey's evidence is that a firm of local estate agents and an independent local surveyor were instructed to carry out a valuation of the property. The estate agents were Cornerstone. They valued the property at £28,000 and recommended an asking price of £32,000. The surveyor, Stuart Edwards Surveyors, valued the property at £29,000 and recommended an asking price of £33,950. Mr Stacey referred to the supporting documents which demonstrate these facts. 
14. Both the agents and the surveyors noted factors in their respective reports which in their belief would adversely affect the prospects of sale, in particular this was down to the reduced ceiling height due to sloping ceilings, the fact that there were skylight windows instead of conventional windows, and the fact that the property fronted on to a fairly busy main road. 
.... 
16. Returning to Mr Stacey's evidence, he initially instructed Cornerstone on 22 February 1993 to market the property at the asking price of £33,950. He sent to Cornerstone a reminder requiring them to be mindful of the statutory obligation to achieve the best price reasonably obtainable. He said that the Defendant was informed of the decision to market the property at that price by a letter dated 24 February 1993, and his evidence was that he explained in that letter to the Defendant that it might be necessary to accept a lower offer in order to achieve the sale. He said that he did not receive any communication from the Defendant suggesting that he thought the price was too low. The property was placed on the market on 4 March 1993. 
17. Mr Stacey's evidence is that after approximately one month on the market little interest had been shown in the property. It had been advertised in the local press on one occasion and there had been seven viewings. According to the report from the agents, most potential purchasers had indeed commented on the unusual layout of the property, and it was recommended that the price should be dropped to £30,950. That recommendation was in due course accepted by Abbey National and Abbey National's instructions were confirmed in Mr Stacey's letter of 19 April 1993. Mr Stacey said that he so notified the Defendant on the same date. 
18. Following that price reduction an offer was received for £30,000 but that offer was later withdrawn. Then on 5 May Mr Stacey was informed that there had been a second offer of £30,000 from a Miss Kathi, and that offer was accepted on 10 May 1993. That was some two months after the property had been on the market. That sale was duly completed. 
.... 
20. It seems to me that the evidence from Mr Stacey is cogent evidence that the property was sold at a proper price. Appropriate advice was taken from the agents and from a surveyor. The initial asking price was significantly higher than the price that the Abbey National had been advised that they might obtain. They waited some time whilst prospective purchasers viewed the property. The evidence is that there was not an unseemly rush to sell. They listened further to advice, and in due course reduced the asking price. They then received one offer at the asking price of £30,000 which was later withdrawn, and then finally managed to sell it at that price. That is in my judgment compelling evidence that that was the market price of the flat at that time, and was a proper price for the flat.” 
15.	It seems to me incontestable that the new evidence, certainly that relating to Flat C, is simply incapable of assailing this conclusion arrived at by the learned judge. The course of events leading to the sale for £30,000 to my mind establishes, and must have established in the mind of any reasonable judge, that the Abbey National indeed took reasonable steps to obtain a proper price. 
16.	Before us this morning the applicant has put in some written submissions. One of the matters there emphasised is an assertion by him that certain statements which appear in the first report of Mr Veness are untrue: 
“Item 6.04At item 3a of Questionnaire [for properties in possession] completed by Mr Neville I note that he was asked whether there had been any recent sales of similar properties in the locality to which he has responded -- NO. 
6.05Similar to item 7 of the Inspection Report [of a property in possession] completed by Mr Read [a representative of Stuart Edwards, the surveyors] -- he has been asked to give details of similar properties in the area to which he has responded NOT KNOWN. 
6.06From the perusal of these documents it is unclear as to how the valuers had arrived at their opinion. In my experience, I would have expected them to have considered sales or prospective sales of similar properties in the locality.” 
17.	The applicant says that the answers recorded in the questionnaire and inspection report, and referred to by Mr Veness at paragraph 6.04 and 6.05, were untrue. He seeks to submit that there was a “cosy relationship” between Cornerstone and Stuart Edwards. The implicit suggestion no doubt is that the valuations which between them they arrived at were in some way collusive and too low. But he accepts that none of this was suggested to the judge below. It is entirely hopeless to seek to run such a case now. We have looked carefully at the whole of his written submissions. There is nothing in them that is capable of shifting the firm conclusions at which I have arrived, namely: 
(1) the evidence sought to be put in could, with reasonable diligence, have been obtained below; and 
(2) in any event, credible or not, it would have had no significant effect upon the result of the case. 
18.	For my part I would dismiss this application. 
19.	LORD JUSTICE DYSON: I agree. 
ORDER: Application dismissed with costs against the applicant summarily assessed in the sum of £5,027.25.