Mortgage: Sale by mortgageeSs 2, 8 and 36 of Limitation Act 1980 - mortgagor alleging negligent sales at undervalue - sales effected more than six years before commencement of action - mortgagor relying on 12-year period applicable to action on a specialty - trial judge upholding limitation defence - mortgagor contending on appeal that important authority not brought to attention of court below - whether duty to obtain proper price based on implied term of mortgage deed - appeal dismissedRaja v Lloyds TSB Bank plc:Court of Appeal: Judge LJ,Mance LJ, Sir Andrew Morritt V-C:24 January 2001Between July 1989 and October 1991, the defendant bank, exercising its power of sale as the claimant's mortgagee, sold three properties for a total price of 386,500.In October 1997 the claimant commenced proceedings, alleging that the bank had failed to take reasonable care to obtain a proper price for the properties, thereby causing a loss to the claimant of 133,500.

In answer to the bank's contention that his claim was statute-barred, the claimant argued that the relevant limitation period was the 12-year period laid down by s.8(2) of the Limitation Act 1980 for an action 'upon a speciality'.

The trial judge dismissed the claim, holding that the duty alleged to have been broken had not arisen out of the mortgage deed but from rules of equity.

The period which the bank could rely upon was, accordingly, the six-year period provided for by s.2 of the 1980 Act, which was to be applied by analogy pursuant to s.36 of the Act.

The claimant appealed, contending that the view taken by the trial judge was in conflict with the view expressed by Lord Justice Slade in Bishop v Bonham [1988] 1 WLR 742 (not cited before the trial judge) that the relevant duty was derived from a term to be implied into the mortgage deed.Held: The appeal was dismissed.

1.

Upon a proper reading, the observations of Lord Justice Slade did not depart from the principles stated in the leading case of Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949, in which it was explained that equity saw the relationship of mortgagor and mortgagee as one capable of creating a duty of care, and had done so long before the development of the modern common law of negligence.

To the extent that those observations (which were in any event obiter) might be read otherwise, they were plainly inconsistent with more recent authorities: see Downsview Nominees Ltd v First City Corporation Ltd [1993] 3 All ER 626, Yorkshire Bank plc v Hall [1999] 1 All ER 879 and Medforth v Blake [1999] 3 All ER 97.

2.

Further, to base the duty upon an implied contractual term would, contrary to what was held in Parker Tweedale v Dunbar Bank plc [1991] Ch 12, preclude a duty being owed to an interested third party, take for example a guarantor of the mortgage debt.Aditya Kumar Sen (instructed by CM Atif & Co, London) appeared for the claimant; Richard Handyside (instructed by CMS Cameron McKenna, Bristol) appeared for the defendant.