Lenders' contributory negligence - a blunted blade?
Notwithstanding the growing impact of limitation defences, many UK lenders' portfolios remain exposed.
The value of outstanding claims – mostly against surveyors and solicitors – runs to hundreds of £millions and may increase, depending on the future direction of interest rates.
In this context, the deduction of 60% for the lenders' own reckless conduct in the case of Paratus was, until recently, both a significant deterrent for claimant lenders and a welcome relief for beleaguered professionals and their insurers. Two recent TCC cases, decided in December 2012, further developed this emerging line of case law with deductions of 0%, 0% and 50% only. The experienced Judge concerned took a quite different approach to lender conduct and the evidence before him than the Judge in the Paratus case. The result is continuing uncertainty over the level of discount applicable on particular facts, which is unhelpful for practitioners. This note comments on the recent decisions and suggests what weight should be accorded to them in current disputes and in negotiations in which the degree of the lender's fault is in issue.
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