This is the most up to date authority in the area of lender professional negligence. The case examined whether a non-fraudulent Defendant could recover a contribution towards their liability from a fraudulent co-Defendant and confirmed the basis upon which losses in deceit cases are to be quantified.

The underlying facts of the case

In 2005, the Claimant (“Nationwide”) made two advances of £10.5 million and £1 million to a property developer (“Goldgrade”) on the security of commercial property, valued fraudulently by DHL’s employee at between £10.5 million and £16 million. The property’s true value was between £1.3 million and £1.5 million.

Nationwide brought proceedings against the First Defendant valuers, (“DHL”) for fraudulent misrepresentation (deceit). It relied upon fraudulent valuations when advancing monies to Goldgrade and, as a result, lost a great deal. The Claimant also brought proceedings against the Second Defendant solicitors (“Cobbetts”) for breaching their duties to their lender client by failing to identify and inform the lender of the underlying fraud. Cobbetts claimed a contribution from DHL. Nationwide obtained summary judgment against DHL in deceit and accepted an offer of settlement from Cobbetts in the sum of £5,585,001 plus costs of £555,000.

The questions in this element of the case were: (i) how should Nationwide’s claim against DHL be quantified; (ii) what was the quantum of Cobbett’s contribution claim against DHL; and (iii) could Cobbetts recover a contribution from DHL in respect of the costs settlement agreed with Nationwide.

Calculating the value of the Buildings Society’s claim against DHL

As the claim was in fraud, DHL were unable to use the defence of contributory negligence. The Court stated that Nationwide was able to recover losses which flowed from its reliance on DHL’s valuation of the property. The losses suffered need not have been foreseeable, provided they were caused by the fraudulent statement. This meant that Nationwide was able to recover, amongst other things, the advance; lost interest which would have been earned had other loans been made; costs of management and staff time; additional funding costs and the loss of opportunity to make other loans. These sums, less the current value of the property, brought the total recoverable to more than £21 million.
Calculating Cobbetts’ contribution claim against DHL

Nationwide accepted a settlement of £5,585,001 from Cobbetts. The question then arose as to how much of this settlement figure Cobbetts could claim from DHL. The Court looked at whether the starting figure for calculating the amount of the contribution should be the total claim value of £21 million, or the accepted settlement sum of approximately £5.5 million. Another question that arose was whether Cobbetts could use the defence of contributory negligence, even though DHL were not able to do so.

The claim against the Defendants was based on two principles: a claim in deceit against DHL and a claim in negligence against Cobbetts. The sums recoverable under these claims differ. A claim in deceit allows for recovery of all direct losses. A claim in negligence only allows for recovery of all those losses that are reasonably foreseeable.

The Civil Liability (Contribution) Act 1978 governs those instances when contributions are being sought between litigating parties. Section 1(1) states that, in order for the Act to apply, the parties must be liable “in respect of the same damage”. The Court found here that “the same damage” was to that element of Nationwide’s loss for which both parties were responsible. They were both liable in negligence, not deceit. The starting figure when determining the total of Cobbetts’ contribution claim against DHL was therefore the value of the negligence claim, £13.2 million.

The defences which can be relied upon by defendants to claims for deceit and negligence also differ. In a claim of deceit, the defendant cannot rely on contributory negligence, whereas they can in a claim in negligence. The Court decided that it would be unjust if Cobbetts were not able to rely on this defence.

Cobbetts were entitled to rely upon the defence of contributory negligence. The Court deducted 50% of the full value of the negligence claim, leaving £6.6 million. The Court then apportioned the loss, holding the valuer 80% liable and the solicitors 20% liable to Nationwide.

Cobbetts were, as a result, able to recover the settlement sum of £5,585,001 from DHL in their contribution claim, less 20% of £6.6 million. This meant that £4.26 million was recoverable from DHL by Cobbetts.

Cobbetts’ claim for a contribution from DHL in respect of costs

The Court held that it was appropriate to adopt the same percentage split of responsibility between the co-defendants when determining costs.


This case is useful as it shows how the Courts are currently dealing with some key facets of a lender professional negligence claim. It gave guidance in dividing responsibility between co-defendants.  It also endorsed some of the well known principles in professional negligence litigation.

For further information please contact Georgina Squire or Helen Thurkettle