Judge(s) sitting 3 Concurrence Cairns LJ | Decision by Cross LJ End date February 25, 1971 | |
 | ||
Decided 25 February 1971 (1971-02-25) Citation(s) [1971] EWCA Civ 9, [1971] Ch 949 Transcript(s) Salmon LJ, Cross LJ, Cairns LJ Ruling court Court of Appeal of England and Wales Similar Vernon v Bethell, Medforth v Blake, Barclays Bank plc v O'Brien | ||
Cuckmere Brick Co v Mutual Finance [1971] EWCA Civ 9 is an English land law case, concerning mortgages.
Contents
Facts
In 1961, Cuckmere Brick Co had received planning permission to build 100 flats on a site near Maidstone, and received mortgage financing from Mutual Finance. By 1964, due to cash flow problems arising from other developments in which Cuckmere was involved, planning permission was subsequently received (with Mutual's approval) to build 35 houses, which would have incurred lower construction costs. Construction had still not commenced by 1966, and Mutual exercised power of sale under the mortgage, putting the land up for auction, and advertising that the property had planning permission for the houses, but not the flats. Cuckmere advised Mutual of the oversight, and the latter told the auctioneer to mention it. They got £44,000 at the auction, and Cuckmere argued that it should have been closer to £75,000 had the planning permission been mentioned properly in the advertisements.
Cuckmere sued, asking for an account to be taken on the basis that the defendants should be debited with the price which they could and should have obtained for the site. Mutual counter-claimed for the balance of all moneys due under the mortgage with interest after crediting the plaintiffs with the proceeds of the sale. Plowman J found for the plaintiffs on the claim and counterclaim, considering that £65,000 was the price that could and should have been obtained for it but for the defendants' default or failure to take reasonable precautions in relation to the sale.
Both parties appealed to the Court of Appeal.
Judgment
The appeal was allowed in part. Although generally agreeing on the state of the law, by 2-1 the case was returned for an inquiry as to damages, on the basis that the price at which the land could probably have been sold was still at large.
Salmon LJ held that Mutual Finance had breached its duty of care to Cuckmere. The duty is not to get the best or proper price, whatever that means, but ‘the true market value.’
Cross LJ discussed that Mutual Finance was also responsible for the conduct of its agent, the auctioneer: