Case No: A3 2001 2367
NEUTRAL CITATION NO. [2002] EWCA Civ 667
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION (Mr Justice Hart)
Royal Courts of Justice
Strand, 
London, WC2A 2LL

Thursday 23 May 2002
Before :

 THE VICE-CHANCELLOR
LORD JUSTICE JONATHAN PARKER
and 
LORD JUSTICE LONGMORE

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Between :
	SARA FROST	Claimant/
Respondent	
	- and -		

James Finlay Bank Ltd	
Defendant/
Appellant	
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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040,  Fax No:  020 7831 8838
Official Shorthand Writers to the Court)
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Mr James Dingemans QC (instructed by Messrs Freeman Solicitors) for the Claimant/Respondent
Mr Michael McParland (instructed by Messrs Collyer-Bristow Solicitors) for the Defendant/Appellant

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Judgment
As Approved by the Court

Crown Copyright ©

Lord Justice Jonathan Parker : 

INTRODUCTION
1.	This is an appeal by James Finlay Bank Ltd (“the Bank”) against an order made by Hart J on 3 October 2001 following the trial of an action brought against the Bank by Mrs Sara Cameron (then Mrs Frost).  
2.	In the action, Mrs Cameron claims damages against the Bank for negligence in connection with a loan of £250,000 made to her by the Bank in August 1991 to enable her to refurbish her house at 7 Ingleby Drive, Mount Park Road, Harrow-on-the-Hill (“the Property”) with a view to selling it.    In the course of the refurbishment the builders reported cracking in the structure of the Property, and the Property was later found to have suffered from subsidence.   
3.	Mrs Cameron’s claim arises out of what happened concerning the insurance of the Property.    In essence, Mrs Cameron alleges: 
1.that the Bank advised or required her to change the insurers of the Property; 
2. that that advice or requirement gave rise to a duty of care on the part of the  Bank;
3. that when it gave that advice or imposed that requirement, the Bank had in its hands a surveyors’ report (of which she had no knowledge) which referred to cracking in the structure of the Property;
4. that the Bank breached its duty of care in (among other things) failing to disclose the report to her before she acted on its advice or in compliance with its requirement to change insurers;
5. that had she known of the contents of the report she would not have so acted;   
6. that by reason of the change of insurers the settlement of the insurance claim in respect of the subsidence took substantially longer than it would have done had she remained with her original insurers; and
7. that the resulting delay caused her economic loss for which the Bank is liable. 
4.	Mrs Cameron’s claim succeeded before the judge.   By his order, the judge directed an inquiry as to damages and an account of the sum due from Mrs Frost to the Bank.   He also directed that further proceedings on the inquiry and the account be stayed pending an appeal by the Bank.   
5.	The Bank applied to the judge for permission to appeal on six grounds.  The judge granted permission to appeal in respect of two of those grounds, but refused permission in respect of the remaining four grounds.   Subsequently, the Bank applied to the Court of Appeal for permission to appeal additionally on three of the four grounds on which the judge had refused permission.   For her part, Mrs Frost applied to the Court of Appeal for permission to cross-appeal.   On 30 January 2002 Robert Walker LJ directed that both these applications be adjourned to be heard with the appeal for which the judge had granted permission.
THE FACTS
6.	In 1976, Mrs Cameron’s husband, Mr Gerald Cameron, a successful businessman, died aged 57.   There was one child of the marriage, a son Harvey, who was about 6 years old when his father died.   Mrs Cameron was left reasonably well-provided for, and she and Harvey continued living in the Property, which had been the matrimonial home.   In 1978 Mrs Cameron married a Mr Stanley Frost.   Thereafter, they lived together in the Property with Harvey (whom Mr Frost subsequently adopted).    The Property was transferred into their joint names, and charged to Eagle Star by way of first charge as security for a loan of some £50,000.   
7.	As the judge records in paragraph 2 of his judgment, it would appear that Mrs Cameron’s financial assets were, over the course of time, dissipated by Mr Frost.   In 1984 Mr Frost was convicted of fraud and sentenced to four years in prison.   In the same year, he was made bankrupt.   He was released from prison in 1986.   By this stage, the family were in straitened financial circumstances, and in receipt of State benefit.    Mr Frost’s trustee in bankruptcy claimed an interest in the Property, but in 1989 his claim was bought off for some £100,000 with funds provided by a relative of Mrs Cameron and the Property was transferred into her sole name.   At about this time, she granted a second charge over the Property in favour of Lloyds Bank plc, as security for a loan of some £60,000.
8.	In early 1989, Mrs Cameron decided to sell the Property.   She accordingly approached a number of local estate agents.   They advised her that in order to realise the full potential of the Property, which was by then in a somewhat run-down state, she should refurbish it before placing it on the market for sale.     She accepted this advice.    She was then faced with the problem of financing the refurbishment.   Mr Frost discussed this with a Mr Philip Wilson, a property dealer friend of his, who suggested that Mrs Cameron approach the Bank.   Mrs Cameron was agreeable to this, and in due course Mr Wilson introduced Mrs Cameron to Mr James Strachan, a director of the Bank.   
9.	At that stage Mrs Cameron was considering transferring the Property into the joint names of herself and Harvey, but in the event she did not do so and the Property has remained in her sole name.
10.	The initial meeting between Mrs Cameron and Mr Strachan took place on 29 June 1989.   Mr Wilson was also present.   The primary issue at the trial was as to what transpired at this meeting (which I will call “the June 1989 meeting”), and I will accordingly return to it later in this judgment.
11.	Following the June 1989 meeting, the Bank requested a valuation of the Property for loan purposes from Scrase Hewlett Partnership, surveyors and valuers.    In a letter to Mr Strachan dated 19 July 1989, Mr Cozens of Scrase Hewlett Partnership reported that in “tip top condition” the Property might be worth something approaching £1M.   However, in its current state he valued it for loan purposes at £550,000 and for fire insurance purposes at £500,000.   Mr Cozens’ letter (to which I will refer hereafter as “the 1989 valuation”) contained a general description of the nature and current condition of the Property, in the course of which Mr Cozens said this:
 “No structural survey has been carried out, but from our general limited inspection it could be seen that the property is in basically sound condition.   
.....   
There is evidence of some minor movement to one side of the house with cracking to the brickwork around the window opening.  It is possible that some localised stabilisation may be required, but we have no reason to anticipate significant problems.”
12.	The Bank did not supply Mrs Cameron with a copy of the 1989 valuation, but in a letter dated 3 August 1989 it informed her that it had received a “satisfactory report”.   The evidence was that the Bank would have supplied her with a copy of the 1989 valuation had she, or her solicitor Mr Carlson, asked for one. 
13.	By a facility letter dated 26 July 1989 addressed to Mrs Cameron and Harvey, the Bank offered a loan facility of £250,000.   The term of the loan was to be two years and it was to be secured by a first charge on the Property.    £200,000 of the loan was to be applied in paying off the existing charges on the Property and in carrying out the proposed refurbishment (which was expected to cost some £70,000 to £80,000); the remaining £50,000 was to be retained by the Bank to cover interest, which was to be rolled up during the period of the loan.   
14.	The facility letter contained a number of standard conditions.   Condition Precedent 2.2 in the facility letter (I shall refer to it hereafter simply as “condition 2.2”) provided (so far as material):
 “The Lender shall require to be satisfied with the insurance cover of the Borrower and will utilise the services of its Insurance Services Division in this connection....”
15.	The reference to the Bank’s “Insurance Services Division” is a reference to James Finlay Financial Services Ltd (“JFFS”), a subsidiary company of the Bank which was at that time owned as to 75 per cent by the Bank and as to the remaining 25 per cent by independent shareholders (in 1991 it became a wholly-owned subsidiary of the Bank).   JFFS in turn had a subsidiary company called James Finlay (Insurance Brokers) Ltd, which carried on business under the same name as JFFS.   
16.	On 1 August 1989 Mrs Cameron accepted the Bank’s offer by signing a copy of the facility letter.    (By that stage she had decided not to transfer the Property into the joint names of herself and Harvey.)
17.	On 3 August 1989 Mr McInroy, a manager in the Bank’s lending department responsible to Mr Strachan, wrote to the Bank’s solicitors, Saunders Bearman Anselm, instructing them to act in the matter, and enclosing a copy of the facility letter.  In his letter, Mr McInroy stated that the Bank would itself be dealing with a number of aspects of the facility letter, including condition 2.2.
18.	At about the same time, Mr McInroy referred the question of the insurance cover on the Property to Mr Macdonald (a director of JFFS), sending Mr Macdonald a copy of an “Advance Proposal Form” containing details of the proposed loan and of the security to be taken for it (i.e. a first charge on the Property).    This was in accordance with what had by then become the general practice of the Bank in referring questions of insurance cover to JFFS.
19.	The Property was at that time insured in Mrs Cameron’s name with Eagle Star at a reinstatement value of £340,000. 
20.	On receipt of the Advance Proposal Form, Mr Macdonald contacted either Mrs Cameron or her solicitor Mr Carlson. 
21.	On 10 August 1989 Mr Macdonald wrote to Carlson & Co, Mrs Cameron’s solicitors.   This letter has assumed central importance in the case, and I therefore set it out in full.  It reads as follows:
“Property Insurance – Mrs Sara [Cameron]
We refer to our recent discussion in connection with the proposed mortgage arrangements on the property at 7 Ingleby Drive, Mount Park Road, Harrow-on-the-Hill.   As discussed, it is Mrs [Cameron’s] wish that we arrange the insurance cover on the building at 7 Ingleby Drive, and in this connection, we attach a proposal form for completion and return as soon as possible.
Our surveyors have indicated a suggested sum insured on a re-instatement basis of £500,000 and on this figure, Ecclesiastical Insurance offer alternative premiums as below, depending on the levels of excess.   Assuming Mrs [Cameron] wishes to take advantage of the premium reduction, we would suggest the premium indicated of £800 provides the most attractive proposition, subject to a £100 excess on claims other than fire, aircraft and explosion, and we await your instructions on this point.”
22.	In the event, for reasons which are not material, completion of the loan transaction was delayed.   Eventually, on 5 January 1990, Saunders Bearman Anselm wrote to Mr McInroy saying (so far as material):
 “....   We have now heard from the solicitors acting for and on behalf of Mrs [Cameron] that they wish to proceed with the completion of the above-mentioned mortgage advance as quickly as possible.   
....   [I]n relation to the insurance of this property they are currently insured with their present mortgagees and in our previous correspondence with yourselves you have confirmed that you will be dealing with the insurance of this property.   I would be grateful if you could please confirm the insurance arrangements to me.....   
I look forward to receiving the insurance details from you...”
23.	By letter dated 12 January 1990 a Mr Wilkinson, on behalf of the Bank, replied as follows (so far as material):
 “As regards the insurance of the property, we would ask you to contact Messrs Carlson & Company who hold a proposal form for completion by Mrs [Cameron] which has not yet been returned to ourselves.
We look forward to hearing from you further in this regard.”
24.	On 16 January 1990 Saunders Bearman Anselm wrote to the Bank referring to the Bank’s letter dated 12 January 1990 and saying (so far as material):
 “We have of course since spoken and we should be obliged if you could please forward to us as soon as possible a Proposal Form for completion by Mrs [Cameron].  The solicitors acting for and on behalf of Mrs [Cameron] have confirmed that they have contacted their client in relation to the Proposal Form but it would assist them if we could arrange for a further form to be sent to us so that they may if necessary attend upon Mrs [Cameron] personally and make sure that the matter is dealt with.
Mrs [Cameron’s] solicitors have confirmed that they wish to complete the mortgage advance very quickly.”
25.	On 22 January 1990 Mrs Cameron signed a proposal form for submission to Ecclesiastical Insurance (“EIG”), seeking cover for the Property at a reinstatement value of £500,000.    Mrs Cameron’s evidence was that Mr Carlson had brought the form to her for her to sign already completed save only for her signature; and that when she asked him whether he was doing the right thing, he replied: “One reputable insurer is as good as another.”   For some unexplained reason, the completed form was not at that stage forwarded to the Bank.
26.	On 25 January 1990 Mrs Cameron signed a new facility letter.   Save that the new facility letter was addressed to her alone, it was in the same terms as the earlier one.   On the same day, Mrs Cameron drew down the entirety of the loan of £200,000 (less the Bank’s fee of £2,500).    Next day, 26 January 1990, Mrs Cameron executed a first charge over the Property in favour of the Bank.
27.	By some mistake or oversight within the Bank, the loan transaction had been completed notwithstanding that the Bank had not as yet satisfied itself about the insurance arrangements; in other words, notwithstanding that condition 2.2 had not been satisfied.   At completion, the Property was still insured with Eagle Star for £340,000: £160,000 less than the reinstatement value recommended by Scrase Hewlett Partnership.
28.	On 9 February 1990 Saunders Bearman Anselm faxed Mr McInroy saying that they had just heard from Carlson & Co, who had confirmed that they had written to Mrs Cameron about the EIG proposal form and that they had:
 “.... indicated to her the urgency of this situation and that the form must be returned to [the Bank] without further delay.”
29.	Mr McInroy did not know whether there was any insurance cover currently in place, and if so at what value, and he was naturally extremely concerned that appropriate cover should be put in place immediately.   A note in his handwriting on a copy of the fax from Saunders Bearman Anselm and dated the same day (9 February 1990) indicates that he telephoned Mrs Cameron, that she was not available, and that he left a message for her to call back.    The hand-written note continues:
 “3.00 ASM [Mr McInroy] instructed JFFS (MM) [Mr Macdonald] to get cover of £500,000 with immediate effect.   Documentation to follow.
On Ecclesiastical Ins.”
30.	Asked in cross-examination about this hand-written note, Mr McInroy said:
 “So what I think happened here was, I said to call back ....   and I’m assuming that someone did call me back at 3 o’clock ...   So at 3 o’clock, immediately after that call, I then instructed insurance to be taken out, because I can only assume that I got the impression that there was now no insurance, because even though the proposal form may have been completed and is in somebody’s hands somewhere in London – either one of the solicitors – it hasn’t been acted on.”
31.	On receipt of Mr McInroy’s instructions, Mr Macdonald immediately contacted EIG and arranged temporary cover for the Property at a value of £500,000.
32.	On the same day, the existing cover with Eagle Star was cancelled.   The evidence does not reveal who effected the cancellation.
33.	On 15 February 1990 Saunders Bearman Anselm wrote to Mr McInroy enclosing the signed and completed EIG proposal form.   This letter appears to have crossed with a letter from Mr McInroy dated 16 February 1990 in which he said:
 “With regard to the insurance position, we confirm that the property .... is insured through our insurance services division at £500,000.   However, we have not received the relevant proposal form despite the fact that Mr Frost confirms this was handed to Messrs Carlson & Co some ten days ago.   We shall advise you when this matter has been resolved.”
34.	On 21 February 1990 Mr McInroy wrote again to Saunders Bearman Anselm confirming that he had received the EIG proposal form and that temporary cover of £500,000 had already been arranged.
35.	Mr McInroy must have forwarded the proposal form to Mr Macdonald, for on 22 February 1990 Mr Macdonald sent it on to EIG.   In his covering letter he asked EIG to note the Bank’s interest on the policy.   He also referred to Mr Frost’s conviction for fraud, saying that the circumstances of the conviction had been disclosed to the Bank and that the Bank had satisfied itself that there was no cause for concern.   EIG replied on 1 March 1990 accepting the proposal, subject to carrying out a “brief survey”.   This was done, and on 9 March 1990 a cover note was issued.
36.	In April 1991, builders carrying out the refurbishment work at the Property discovered structural damage, including cracking.    The refurbishment work thereupon ceased.
37.	In May 1991 EIG was notified of a claim under the EIG policy and duly instructed loss adjusters.   In August 1991 Mrs Cameron instructed consulting engineers, who recommended an investigation into the soil conditions.   On 16 August 1991 the consulting engineers produced a preliminary report.
38.	The judge takes up the story in paragraphs 6 to 8 of his judgment, as follows:
 “6. In the meantime Mrs [Cameron] had applied for and obtained a further advance of £50,000 from the bank principally in order to cover interest accruing on the original advance in excess of the original facility.  By January 1992 her total indebtedness to the bank amounted to some £288,285.00.
7. For the next six and half years Mrs [Cameron] continued to live at the property, with [Mr Frost] and Harvey, while that debt increased.  For a variety of reasons it did not prove possible either to put in hand a programme of repair to the structural defects or to sell the property.  In early 1994 the bank formally claimed repayment of the monies then due under its legal charge (then claimed to be £372,248.57) and on 26 April 1994 appointed a Mr A J Miles, a chartered surveyor, to act as a Law of Property Act receiver and manager of the property.  On 28 June 1995 the bank began possession proceedings against Mrs [Cameron], obtaining an order for possession on 17 November 1995.  On 8 March1996 Carnwath J ordered that the possession order be suspended for one year.  This was to enable the necessary remedial works to be executed and the property sold and the bank’s debt (then being claimed as approaching £500,000) repaid from the proceeds.  In the meantime Mrs [Cameron] had started (by a writ issued on 7 February 1996 and served on 4 June 1996) an action against EIG claiming damages for their failure timeously to accept her claim under her insurance policy and to authorise the necessary remedial works.  EIG eventually (in March 1997) agreed to execute the remedial works and Mrs [Cameron’s] action against EIG was later (on 13 October 1998) compromised on terms that EIG would complete the remedial works, and pay her £140,000.00 damages and all her costs.  By this time, however, it was too late to be able to resist any further the possession order.  Extensions of the suspension granted by Carnwath J were obtained until June 1998 but an application for further suspension was refused by Master Bowman on 23 October 1998.  [Mrs Cameron and Mr Frost] were by then no longer in physical occupation of the property, having moved out to permit the remedial works to be completed.  The bank thereafter took steps to market and sell the property, eventually achieving a sale in September 1999 for £695,000.00.  By that time Mrs [Cameron’s] debt to the bank had risen (depending on the way in which interest is calculated) to either some £800,000.00 or some £882,000.00 even after crediting the £140,000.00 received from EIG.  As at the 1 April 2001 Mrs [Cameron’s] debt to the bank stood at either £172,731.05 or £285,829.02.
8. In raw and round terms, therefore, the price which Mrs [Cameron] has paid for borrowing £200,000.00 from the bank in 1990 is that she has lost the equity she then had in the property and still owes the bank at least £172,731.00.  Her life, ever since the discovery of the cracks in April 1991, has been a miserable, desperate and ultimately unsuccessful attempt to stave off complete financial disaster and the utter extinction of her former way of life.  She has had to sell off the treasured relics of her first marriage, the Rolls, the jewellery, and the dresses.  She now lives, in very reduced circumstances, with her son.  She is still paying, by instalments, utilities bills in respect of the property.”
THE INTERLOCUTORY STAGES OF THE ACTION
39.	On 19 May 1997 the Bank applied to have the action struck out under Order 18 rule 19 of the Rules of the Supreme Court as disclosing no cause of action and as being frivolous, vexatious and an abuse of the process of the court.   Master Dyson made the order sought, and on 7 April 1998 His Honour Judge Mellor QC (sitting as a Deputy High Court Judge) dismissed Mrs Cameron’s appeal.   Mrs Cameron sought leave to appeal from the Court of Appeal, and on 17 September 1998, following an oral hearing, the Court of Appeal granted leave.   It did so on the basis that part of the advice which Mr Strachan arguably gave Mrs Cameron concerned the change of insurers.
40.	On 8 July 1999 the Court of Appeal (Nourse, Mantell and Mance LJJ) allowed Mrs Cameron’s appeal.    Nourse LJ, who gave the leading judgment (with which the other two members of the court agreed), described Mrs Cameron’s case as follows (at p.9A of the transcript):
 “.... the claimant’s claim against the defendant is in negligence.   She alleges that on the special facts of this case, which take it outside the normal banker/customer relationship, in particular because of her request for advice from Mr Strachan, his acceptance of that request and her reliance on it, the defendant assumed a duty to advise her in relation to the project with reasonable skill and care.”
41.	Nourse LJ went on to say that he was unable to hold that Mrs Cameron had no prospect of succeeding in establishing the duty of care alleged, and that the essential question on the appeal was whether she had a real prospect of establishing a breach or breaches of such a duty of care.  He continued (at p.10B of the transcript):
 “Two such breaches are alleged: first, that Mr Strachan wrongly failed to inform the claimant of the valuer’s reference [in the 1989 valuation] to evidence of some minor movement to one side of the house and the possibility “that some localised stabilisation may be required”; second, that Mr Strachan wrongly required or advised the claimant to change insurers.” 
42.	Nourse LJ concluded that Mrs Cameron had no real prospect of establishing the first of the two alleged breaches, given the terms of the 1989 valuation, and that had been the only alleged breach he would have dismissed the appeal.   However, he concluded that it was “well arguable” that the 1989 valuation had “enhanced significance” in relation to the second alleged breach.    At p.13A of the transcript Nourse LJ said this:
“In the end I find myself unable to say that the claimant has no real prospect of establishing that Mr Strachan ought to have recognised the significance of the crucial paragraph in the [1989 valuation] to the change of insurer and yet required or advised the claimant to make the change.”
MRS CAMERON’S CASE AT THE COMMENCEMENT OF THE TRIAL
43.	By the time the trial began, Mrs Cameron had twice amended her Statement of Claim.   However, paragraph 4 of her Re-Amended Statement of Claim, in which she pleads the June 1989 meeting, remained in its original form.    It reads as follows (so far as material):
 “In about June or July 1989 the Plaintiff met Mr Strachan in central London and at the property.   The Plaintiff asked for Mr Strachan’s advice as to whether he thought the loan and the refurbishment was a good idea.   Mr Strachan told the Plaintiff that the property was a delightful house (or words to that effect) and that the Plaintiff should certainly refurbish it before selling it and that the Plaintiff could rely on what Mr Strachan [said].   Mr Strachan said that the Plaintiff need not worry about paying interest on the loan and that the Defendant would be repaid its loan and interest from the sale proceeds.   Mr Strachan convinced the Plaintiff to put aside her fears of taking a big loan, telling the Plaintiff that he was used to advising people on investment and that this was a good investment.”
44.	Paragraph 7 of the Re-Amended Statement of Claim was re-amended in February 2000 (that is to say after the decision of the Court of Appeal allowing Mrs Cameron’s appeal against the order striking out the action).   As re-amended, it reads as follows (the re-amendments are in italics):
 “The insurance position of the property was discussed by the Plaintiff and James Strachan at the meeting in central London particularised in paragraph 4 above when James Strachan told the Plaintiff that she should go to his brokers [JFFS], that she could rely on them and they would advise her as to the best insurance company because the Defendant required new insurers.   James Strachan told the Plaintiff to go to his brokers, [JFFS].   He stated that the Plaintiff could rely on them and they would advise her as to the best insurance company  because the Defendant required new insurers.   In so doing the Defendant persuaded the Plaintiff to obtain new insurers.”
45.	Two additional subparagraphs were also added by re-amendment, immediately following paragraph 7 and numbered respectively 7A and 7B.   Paragraph 7A pleads that JFFS advised Mrs Cameron to insure with EIG, her acceptance of that advice, and the EIG policy.   Paragraph 7B reads as follows (so far as material):
 “The Defendant knew that the Plaintiff was acting in accordance with his advice to obtain new insurers in accordance with the recommendations of [JFFS] before the change of insurers was effected and before the loan was taken out because: the Defendant had recommended the Plaintiff to use [JFFS] to effect a change of insurers; ....”
46.	Paragraph 15 of the Re-Amended Statement of Claim, which remained in its original form, pleads a duty of care owed by the Bank.   It reads as follows:
 “In the premises, by reason of the matters particularised above including the Plaintiff’s request for advice from James Strachan, the advice given by James Strachan and the Plaintiff’s reliance on it, the Defendant owed the Plaintiff a duty of care to advise the Plaintiff with care and skill.   Further or alternatively the Defendant owed the Plaintiff a contractual duty to act with reasonable skill as her banker and adviser.   Both duties were continuing duties.”
47.	Paragraph 16 of the Re-Amended Statement of Claim pleads that the Bank breached its duty of care.   The particulars pleaded under that paragraph had, by the time the trial commenced, been substantially re-amended.    As they stood at the commencement of the trial, the particulars read as follows (I omit passages which had been deleted by amendment):
“ ......
(b) failing to advise the Plaintiff of the contents of the report [i.e. the 1989 valuation] ....  before the Plaintiff accepted the loan and acted in January 1990 on advice given by the Defendant at the meeting in central London in June or July 1989 particularised in paragraph 4 above to follow the recommendations of [JFFS] on a change of insurers;
(c) failing to advise the Plaintiff to obtain a structural survey .... [there then follows an amendment in the same terms as the amendment to paragraph (b) above];
(d) failing to advise the Plaintiff to report the cracking and the potential requirement for underpinning to her then insurers [Eagle Star] .... [there then follows an amendment in the same terms as the amendment to paragraph (b) above];
(e) failing to advise the Plaintiff not to increase her borrowings until the question about the requirement for underpinning of the property had been resolved with her then insurers, in August 1989, before 25 January 1990, before the date on which monies were advanced to the Plaintiff, before the dates on which further advances were made in the form of accruing interest payments or at any other time;
(f) advising the Plaintiff at the meeting in central London in June or July 1989 to contact [JFFS] to rely on their advice as to the best insurance company because the Defendant required new insurers.   ....   The Plaintiff will rely on the Defendant’s admission, in paragraph 4 of the second affidavit of James Strachan sworn on 16 November 1995 in the possession proceedings, to the effect that it would have been ‘entirely wrong and contrary to the bank’s policy and practice’ to have sought to persuade the Plaintiff to change insurance companies.   The Defendant failed to inform the Plaintiff of the contents of the [1989 valuation] at any time before the Plaintiff changed insurers.”
48.	In paragraph 17 of the Re-Amended Statement of Claim Mrs Cameron pleads loss and damage caused by the Bank’s alleged negligence.  Under the particulars of loss and damage Mrs Cameron pleads that had she been advised of the contents of the 1989 valuation (a) she would not have taken the loan; (b) she would have reported the matter to Eagle Star; (c) repair works would have been carried out; and (d) she would have been able to sell the Property.
49.	Thus Mrs Cameron’s (re-amended) case at the commencement of the trial was that a duty of care arose on the part of the Bank by reason of Mr Strachan having, at the June 1989 meeting, advised or required her to change insurers.   There was no pleading of any subsequent advice or requirement as having given rise to a duty of care.
THE TRIAL
50.	The trial of the action was directed be heard together with the trial of Mrs Cameron’s and the Bank’s individual actions against Scrase Hewlett Partnership, both claiming damages for negligence in relation to the 1989 valuation.   The combined hearing occupied seven court days.    The actions against Scrase Hewlett Partnership are of no relevance to this appeal, and I accordingly say no more about them.   
51.	In Mrs Cameron’s action against the Bank, the judge heard oral evidence from (among others) Mrs Cameron, Mr Wilson, Mr Strachan, Mr McInroy and Mr Macdonald.   Mr Frost was not called to give evidence, although he was present in court throughout the hearing.   The judge placed no reliance on Mr Wilson’s evidence, and no issue arises as to that on this appeal.
52.	The documentary evidence before the court was deficient in two important respects, in that the files of the respective solicitors, Saunders Bearman Anselm and Carlson & Co, were not available.   We were told by Mr McParland (appearing for the Bank, as he did before the judge) that the files of Saunders Bearman Anselm were destroyed in a flood some time after the events in issue.   As to Carlson & Co’s files, it appears that when disclosure was first requested Carlson & Co refused to disclose them, asserting a lien on them for unpaid costs.    Subsequent requests were, it appears, met with the response that the files were no longer available.
53.	In the course of opening Mrs Cameron’s case to the judge, Mr Dingemans (who also appears for Mrs Cameron on this appeal, but now as Mr Dingemans QC) said this (at Day 1 p.6 at lines 40-46):
“My Lord, my submission in relation to duty of care will, I hope, be simple and soundly based on authority, and it is this: if a bank, for its own commercial purposes, decides to promote its own insurance broking arm and requires a change of insurers, or advises a change of insurers, then it must do so with reasonable care and skill.”
54.	The factual basis for the existence of a duty of care contended for by Mrs Cameron was that which she had pleaded, namely that at the June 1989 meeting Mr Strachan had advised or required her to change insurers.   Mr Dingemans described this as “obviously a crucial issue”, and it headed the list of issues in his opening written submissions.   In paragraph 8 of his written submissions Mr Dingemans said this:
 “It is submitted that the evidence given by Mr Strachan [i.e. in his witness statements] on this issue is not credible.”
55.	In the event – and this is a crucial feature of the case – Mrs Cameron in her oral evidence did not assert that at the June 1989 meeting Mr Strachan had either required or advised her to change insurers.    As the judge said in paragraph 16 of his judgment:
 “The factual issue here on which the pleadings turn is whether at this meeting the question of insurance was raised and, if so, whether Mr Strachan either advised or required her to change her insurers.   [Mrs Cameron’s] version of the conversation in this respect has varied.    The high watermark of her case is represented by her witness statement in these proceedings, where she said:
 ‘Jimmy [that is, Mr Strachan] said he would like me to change my insurance company.   I was advised by the bank via Jimmy, to go to ‘his’ brokers, [JFFS].   Jimmy told me I could rely on them and they would advise me as to the best insurance company, because the bank required new insurers.   I was persuaded to obtain new insurers and, of course, I followed the advice given to me.’
In her oral evidence under cross-examination she put it rather differently.   She no longer asserted that she had been required to change insurers.   It had simply been suggested to her that she might like to use the services of the bank’s brokers, and that she ‘got the feeling that it would be part of the loan’.”   (Emphasis supplied.)
56.	For his part, Mr Strachan maintained his denial that he had at any time either advised or required Mrs Cameron to change her insurers: a denial which the judge accepted, as will appear when I turn to his judgment on the contested issues.   
57.	In the light of subsequent developments it is material to note that, in the course of his cross-examination of Mr Strachan  (Day 3 p.33 lines 15-22), Mr Dingemans put to Mr Strachan, referring to the events of 9 February 1990, that it was “entirely wrong for Mr McInroy to have insisted on a change of insurance or pre-empted or caused a change of insurance”.   Not surprisingly, perhaps, Mr McParland objected to this line of cross-examination on the basis that up to that point it had been Mrs Cameron’s case that the advice or requirement that she change insurers had emanated from Mr Strachan at the June 1989 meeting, and that it not previously been alleged that it was Mr McInroy who had imposed such a requirement on 9 February 1990.   However, the judge allowed Mr Dingemans to put the question, and Mr Strachan replied that he did not have sufficient knowledge to answer it.   He continued (Day 3, p.33 lines 50-52):
 “If Mrs Frost has spoken to Mr McInroy, I don’t know whether a change was requested or what.”
58.	In his closing oral submissions, Mr McParland referred to what he saw as Mr Dingemans’ attempt to put forward a new case that it was Mr McInroy who had required a change of insurers.   At Day 5 p.7 line 39 Mr McParland said this (referring to his written closing submissions):
 “At 13 we highlight really one of the central factual issues in this case.   Did the bank require or advise the claimant to change insurers?   Did Mr Strachan of the bank make this requirement or unilaterally invite the claimant to change her insurers at the meeting in central London in June 1989?   The reason I have distinguished between the two is because the latter is the basis of the pleaded case against the bank.  All the advice or requirement took place at that first meeting.   Mrs Cameron has emphasised in her evidence that there [were] no other discussions about insurance.   The reason I .... objected [in the course of] Mr Strachan’s evidence to the questions being put about what I submitted at the time was a new case which seemed to be emerging from the evidence in that, well, even if there were not really discussions, what the bank was doing in February 1990 was imposing insurance on Mrs Cameron.   ....   We say that is not the pleaded case.”
59.	In his written closing submissions, which were produced overnight, Mr Dingemans submitted that the evidence established that at the June 1989 meeting Mr Strachan had required Mrs Cameron to change insurers.     This was in accordance with Mrs Cameron’s pleaded case.   However, Mr Dingemans went on (in paragraph 18 of his written submissions) to suggest an alternative case that the requirement to change insurers had been imposed by Mr McInroy on 9 February 1990.   In his oral closing submissions Mr Dingemans followed the same course.   Thus, he submitted (at Day 7 p.27 line 7) that on 9 February 1990 Mr McInroy either:
“.... told Mrs Cameron to complete and return the proposal form or, effectively, he .... took that decision for her.”

60.	He went on (at ibid. line 29) to refer to the Bank as:
“.... effectively putting themselves into the situation of requiring in practice the return of the proposal form ....”

61.	Later, in relation to the events of 9 February 1990, Mr Dingemans said this (at Day 7 p.29 line 5):
“My Lord, I should say before leaving this point that my learned friend has raised a pleading point in relation to the way I put my case.   In my submission, my Lord, on the pleading I am entitled to rely on the meeting, whether or not anything was said, the letter in August 1989, and what happened in January and February 1990.   If I am wrong in that respect, my Lord, then I will respectfully ask to expand the matter [i.e. amend the pleadings].”

62.	When Mr Dingemans was approaching the conclusion of his closing oral submissions on the facts, the following exchange took place between Mr Dingemans and the judge (Day 7 p.3o line 56):
“MR JUSTICE HART:   I suppose what is not pleaded but which is a possible finding of fact is that all that Mr Strachan did in July 1989 was to say:  “Go to the brokers if you want advice about insurance”, or something like that, but without suggesting that she change insurers or anything of that sort.   But then the change of insurers in fact happens as a result of a certain amount of Heath Robinsonism in February.

MR DINGEMANS:   Yes, my Lord.   That is the alternative way I would put my case, as you will have seen from my submissions.   Either primarily accept Mrs Cameron as a witness of truth on these matters, she has been consistent, or, if not, then in fact the gist of what she says is proved by the documents.   My Lord, in my submission the latter possibility is adequately pleaded.   That is my submission on that.   Obviously it is not in final format because at this stage I did not have any of the documents.

MR JUSTICE HART:   Just going back to the pleadings for a moment, I am trying to clear my mind about how far your proposition goes.   Assume for a moment that [JFFS] had nothing to do with the bank and assume also that the bank had no interest at all in the question of insurance but was told at one point in the transaction by the borrower:  “I am proposing to take out a new insurance”, and the bank, the lender, has by that date or subsequently obtained something in the nature of Scrase Hewlett’s report.   Does the lending bank in those circumstances .... owe any duty to the borrower as opposed to a duty to itself?

MR DINGEMANS:    To the extent that the bank is not the person requiring or advising the change of insurers, then it becomes very difficult and almost impossible to spell out the relevant duties of care because effectively ....

MR JUSTICE HART:   The duty of care is in that requirement?

MR DINGEMANS: Absolutely, in the requirement....”

63.	Mr Dingemans then went on to make submissions on the authorities.
64.	Thus, as I understand the position, Mrs Cameron’s case as to the alleged requirement by the Bank that she change insurers (as put in Mr Dingemans’ closing submissions) was as follows: (a) that the requirement had been imposed by Mr Strachan at the June 1989 meeting (this was in accordance with the case as originally pleaded); (b) alternatively, that the requirement was imposed in the course of the correspondence between the Bank and Mrs Cameron or her solicitors in January and February 1990; and (c) further or alternatively, that the requirement was imposed by Mr McInroy on 9 February 1990.   Neither (b) nor (c) had been pleaded.
65.	When Mr Dingemans had concluded his closing submissions, the judge invited Mr McParland to address him on the further authorities which he had cited, and Mr McParland duly did so.    The judge then invited Mr McParland and Mr Dingemans to address him on what he referred to as “the pleading point”.   

66.	Mr McParland submitted that Mrs Cameron’s alternative case that the requirement to change insurers had been imposed at some time after the June 1989 meeting had not been pleaded, but that in any event it was not made out on the evidence.   Mr Dingemans responded by asking for permission to re-re-amend the Statement of Claim.   He suggested that the amendment might take the form of adding the words “or through the bank’s requirements in correspondence and/or on the telephone in January and February 1990” to the end of subparagraphs (b), (c) and (d) of paragraph 16 of the pleading (i.e. adding the words in question to the particulars of breaches of the alleged duty of care).   
67.	Three things can be said straightaway about Mr Dingemans’ suggested amendment.  First, any such amendment ought to have been made to the pleading of a duty of care in paragraph 15 of the pleading, rather than to the allegations of breaches of that duty.   Secondly, adding the suggested words to the particulars of breaches of duty in paragraphs (b), (c) and (d) of paragraph 16 of the pleading did not make grammatical sense.   Thirdly, the suggested amendment did not condescend to particulars as to when, how, or by whom the alleged requirement was said to have been imposed.
68.	Despite the manifest deficiencies in the suggested amendment, however, the judge asked Mr McParland (at Day 7 p.92 line 15):
“What would be the nature of your objection to amending the pleading in that way?”

69.	Mr McParland responded to the effect that the goal posts had been moved so many times that there was hardly any grass left on the pitch.
70.	In response, Mr Dingemans accepted that the case sought to be raised by the suggested amendment did not appear in Mrs Cameron’s witness statement or in her oral evidence, but he submitted (Day 7 p.92 line 48) that:
“.... it comes from possible findings which are open to your Lordship on the documentation, and indeed with the help that Mr McInroy has given in relation to his deciphering of notes in relation to the telephone call [a reference to his hand-written note dated 9 February 1990 referred to earlier]”.
71.	The transcript continues (at ibid. line 53):
“MR DINGEMANS:   In my submission, it does not fundamentally alter the nature of the claimant’s case, which is that she was wrongly advised to change insurers, and given that these are possible findings, it would, in my submission, be appropriate to ....

MR JUSTICE HART:   I will deal with that pleading point in the course of delivering my judgment, which I will reserve.   I am grateful to counsel for their assistance.”

72.	And that concluded the hearing.
THE JUDGMENT
73.	After setting out the undisputed factual background and indicating the general nature of Mrs Cameron’s claim against the Bank, the judge turned to the factual question: “Did the bank advise or require Mrs [Cameron] to change her insurers?”   I quoted earlier a passage from paragraph 16 of his judgment, in which he referred to Mrs Cameron’s oral evidence about the meeting on 29 June 1989.   In paragraph 18 of his judgment, the judge said this:
“So far as the formal position is concerned there is no doubt that it was not a term or condition of the proposed lending either that the insurers should be changed or that the services of JFFS should be employed.  What the facility letter required was that:
"The lender shall require to be satisfied with the insurance cover of the Borrower and will utilise the services of its Insurance Services Division in this connection...."
This was, by 1989, standard practice within the bank.  The reference to “its Insurance Services Division” was a reference to JFFS.  The impression I received was that prior to the arrival of Mr Ingleby as managing director of the bank, the banking and insurance activities of the two parts of the Group business had been carried on in comparative isolation from each other.  His policy had been to introduce practices designed to make the two parts of the business more aware of each other.  Whatever the purposes implicit in such a policy, I am quite satisfied that Mr Strachan himself had a conscious and conscientious objection to making particular insurance arrangements a condition of a loan.  The bank required to be satisfied as to the insurance, but it was otherwise entirely a matter for the customer as to with whom the insurance was effected.  Others in the bank testified to Mr Strachan’s known line on this matter.”

74.	The judge went on to trace the progress of the transaction and of the subsequent change of insurers, as rehearsed earlier in this judgment.   At paragraph 24 of his judgment, the judge returned to the question of what was said about insurance at the initial meeting with Mr Strachan on 29 June 1989.   He considered that it was more likely than not that the question of insurance was raised at the meeting.   However, the judge went on:
“Given Mr Strachan’s distaste for cross-selling, I am sure that he neither encouraged or advised her to change, or to consider changing, her insurers.  It is conceivable that she herself raised a question about insurance since she was at the time in arrears with her premium under the Eagle Star insurance.  If she did it is equally conceivable that Mr Strachan would have told her to have a word with Malcolm Macdonald when he made contact, and would have reassured her that he would be able to look after the question of insurance for her.  The only finding of fact which I make is that Mr Strachan told her that the bank would have to be satisfied as to the insurance position and that she would in due course be hearing from the bank’s brokers in the person of Mr Macdonald on the subject.

75.	In paragraphs 25 and 26 of his judgment, the judge said this:
“25. What happened, thereafter, was that Mrs [Cameron] was offered the opportunity by JFFS of making a proposal to EIG for insurance and, under the guidance of her own solicitor, appears to have decided in principle to make such a proposal.  There was nothing inherently irrational in such a decision.  At the level of cover required Mr Macdonald’s belief was that the EIG premiums would be lower than Eagle Star’s (although he did not in fact investigate this).  The bank, in the course of processing the transaction, simply assumed that the proposal was going to be made.  It never asked JFFS to advise it on the adequacy of the existing Eagle Star policy.  The correspondence between the bank’s  solicitors and Mr Carlson in January and February 1990 (the contents of which have to be inferred from the letters between the bank and its solicitors) must have read (to the recipient) as if, by that stage, the bank was insisting that it was a term of the facility that the proposal to EIG be completed by Mrs [Cameron].  Neither Mrs [Cameron] nor Mr Carlson had any reason to quarrel with that requirement.  As Mr Carlson observed, one reputable insurer was as good as another.
26. My conclusion is that, although the bank did not advise her to change insurers, its actions led her reasonably to believe that she was required to do so as a condition of the facility.  The route by which I have arrived at this conclusion raises a pleading point.  The “requirement” relied on by Mrs [Cameron] in the pleadings is alleged to have been the requirement imposed by Mr Strachan at the initial meeting.  On this point I have found against her.  Mr Dingemans submitted that this alternative route was open to him on the pleadings.  I doubt that.  In the course of his closing submissions he formulated an amendment which he sought permission, if necessary, to make to the particulars given under paragraph 16 of the re-amended Statement of Claim.  That pleads negligence by the bank in:
"failing to advise the plaintiff of the contents of the [19 July] report before the plaintiff accepted the loan and acted in January 1990 on advice given by the defendant at the meeting in central London in June or July 1989 particularised in paragraph 4 above to follow the recommendations of James Finlay Financial Services Limited on a change of insurers."
The amendment sought is to add the words “or through the defendant’s requirements in correspondence and/or on the telephone in January 1990” and to make a corresponding addition to each of the succeeding sub-paragraphs where appropriate.  This was opposed by Mr McParland on the ground that the case had not been foreshadowed in Mrs [Cameron’s] witness statement, that earlier notice of it might have enabled access to Mr Carlson’s files to have been achieved, that (had it been pleaded) further information or interrogatories would have been sought, that this was a case where the goalposts had already been moved too often in the past, and that his whole case had been prepared on the basis that the relevant advice or requirement had been that of Mr Strachan at the initial meeting.  While finding Mr McParland’s exasperation at this late amendment entirely forgivable, I was not persuaded by his objections.  With the exception of Mr Carlson’s files, all of the evidence relevant to the point has emerged as a result of the preparation of the case on the original pleadings.  They necessarily involve an inquiry as to the precise chain of events which led Mrs [Cameron] to change her insurers.  I do not think that a more timeous pleading of the point would have altered the way in which the case has in fact been prepared for trial.  I would accordingly allow the amendment.”
76.	The judge then turned to the question: “Did the Bank owe Mrs Cameron a duty of care in advising or requiring her to change insurers?”    This question only arose, of course, on the footing that the Bank had in fact either advised or required Mrs Cameron to do so, and at that stage in his judgment the judge had made no finding to that effect.
77.	Addressing this question, the judge, after referring to a number of authorities, concluded that although in general a banker owes no duty of care to his customer, a duty of care will arise where the banker assumes an advisory role in relation to the customer.  The judge continued, in paragraphs 30 and 31 of his judgment:
“30 On the findings of fact I have made the bank did not “advise” Mrs [Cameron] to change insurers.  Insofar as anyone advised her in relation to the change of insurers it was Mr Macdonald of JFFS and her solicitor Mr Carlson.  A question does arise as to the extent to which the bank assumed responsibility for the “advice” given by Mr Macdonald.  I will return to this question.  It is necessary first to examine the question whether there was any relevant assumption of responsibility by the bank implicit in its having “required” Mrs [Cameron] to change insurers.  In his closing submissions, Mr Dingemans put the matter in the following way:
"The authorities relied on by the Bank are an accurate statement of law in relation to lending - but do not, and have never, extended to the situation where there is an advice or requirement.  The relevant authorities are summarised in Verity (pages 17-18).  However, although it is not part of the ordinary business of a bank to advise on financial transactions, if they choose to do so the Bank will owe duties.  Similarly it is not part of the ordinary business of a bank to operate as an insurance broker (requiring or advising on change of insurers) but if they choose to do so the Bank will owe duties to do so with reasonable care and skill."

31.The problem with that formulation, as it seems to me, lies in its conflation of “requirement” and “advice”.  If a bank is truly advising its customer to change insurers, one can readily see that it may owe a duty of care to the customer to bring to the customer’s attention any fact known to the bank relevant to the prudence of the proposed change.  If, however, the bank simply makes it a term of the proposed facility that the insurers are changed, I am unable to see why this should place on the bank an obligation to consider on the customer’s behalf whether that is a prudent course for the customer to take, any more than it is its duty to consider the wisdom of any other of the terms of the facility from the customer’s point of view.”  
78.	Then, after citing a passage from the judgment of Ralph Gibson LJ in Williams & Glyn’s Bank v. Barnes [1981] Com LR 205, the judge continued, in paragraphs 32 and 33:
“32. So here, the mere fact that the bank knew or ought to have known of a fact which (I assume for this purpose) made it unwise for Mrs [Cameron] to accept the terms of the facility does not necessarily involve the bank in the assumption of any responsibility for the consequences if all that it was doing was making the change of insurers a condition of the facility.  The position would, however, be different if, in relation to its contractual requirement that the insurers be changed, the bank agreed to act or even insisted on acting as the customer’s broker in effecting the new insurance.  In those circumstances the bank would owe the customer all the duties ordinarily owed by an insurance broker to his client; and in the discharge of those duties I see no reason why the bank should be entitled to erect a Chinese wall between information in its possession qua potential lender and information coming to it as broker.  The customer would reasonably assume that all relevant information would be available to the bank in its role as broker.
33. Did the bank in any relevant sense act as Mrs [Cameron’s] insurance broker?  In formal terms the answer is negative.  The broker of the new insurance was JFIB trading as JFFS.  The facility letter, however, described JFIB as “its [i.e. the bank’s] Insurance Division”.  Mr Macdonald agreed in cross-examination that the point of the policy of involving JFFS in the insurance aspects of the proposed transaction was:
"to offer individual clients of the bank, whether they were corporate or personal, the full facilities of the organisation.  The facility which I was offering was an insurance broking service."
When Mrs [Cameron] (or Mr Carlson) was contacted by Mr Macdonald in August 1989 and invited to use JFFS’s services as broker, she was in my judgment entitled to assume that the services being offered were services being provided by the bank, and that all appropriate care and skill would be employed in their discharge.  Accordingly, I conclude that the bank did assume the responsibility of a broker in the particular circumstances which developed.”

79.	Thus, the judge found that a duty of care arose by reason of the Bank having “assume[d] the responsibility of a broker” when either Mrs Cameron or Mr Carlson “was contacted by Mr Macdonald in August 1989 and invited to use JFFS’s services as broker”.   Not only was this a case which had never been pleaded – not even by the last-minute re-re-amendment -  but the only evidence which could be relied on in support of it (so far as I can see) is the letter from Mr Macdonald dated 10 August 1989 quoted earlier in this judgment.    I shall have to return to this.
80.	The judge then turned to the question whether the Bank had breached its duty of care.  He approached that question on the following basis, as set out in paragraph 34 of his judgment:
 “On the approach I have taken the question is whether it was a breach of an insurance broker’s duty of care and skill to accept instructions from Mrs [Cameron] to obtain new insurance for her from EIG with the knowledge that there was existing cracking in the property as reported to the bank in the 1989 report.  There is, I should emphasise, no question of JFFS having itself been negligent in this respect.  Mr Macdonald was never privy to the 19 July report, that being so far as he was concerned, confidential to the bank.  The question I have to determine is what his attitude should have been had he in fact been aware of the report.

81.	In the result, the judge concluded that the Bank had breached its duty of care in failing (in effect) to ensure that the 1989 valuation was brought to Mrs Cameron’s notice before she changed insurers.   
82.	On that basis, the judge turned to the question of damage.   Based upon a detailed analysis of the history of the project, the judge concluded (in paragraph 59 of his judgment) that but for the change of insurers the repairs would have been completed some 20 months earlier than the date when they were in fact completed.
83.	The judge then turned to other issues (including an allegation of contributory negligence made by the Bank).   It is unnecessary to refer to these other issues, save to say that the allegation of contributory negligence failed.
THE ORDER
84.	As noted earlier, by his order dated 3 October 2001 the judge directed an inquiry as to damages and an account of the sum due from Mrs Cameron to the Bank.   As to costs, he directed that the Bank pay Mrs Cameron 40 per cent of her costs, to be the subject of detailed assessment if not agreed.  He also granted the Bank limited permission to appeal (as to which, see below), and stayed proceedings on the inquiry and account pending the appeal.
THE GROUNDS OF APPEAL
85.	The Bank applied to the judge for permission to appeal on six grounds, viz:
1.	that the amendment for which application had been made at the conclusion of the hearing ought not to have been allowed;
2.	that the judge was wrong to conclude that the Bank owed a duty of care to Mrs Cameron;
3.	the judge was wrong to find that the duty of care (if it existed) had been breached; 
4.	that the judge was wrong to find that Mrs Cameron had suffered a loss other than that which she had pleaded in her Schedule of Loss;
5.	that the judge was wrong to conclude that the breach of duty had caused Mrs Cameron any material loss; and 
6.	that (assuming that a duty of care existed) the judge was wrong to conclude that there was no contributory negligence on the part of Mrs Cameron.
86.	The judge granted permission to appeal on the first two grounds but refused permission in relation to the remainder.    The Bank has now applied to this court for permission to appeal additionally on grounds 3, 4 and 5 above (it does not seek permission to appeal on ground 6 (contributory negligence)), and, pursuant to the order of Robert Walker LJ, that application is now before us.
87.	For her part, Mrs Cameron, by a Respondent’s Notice, seeks to cross-appeal on the issue of damages.
THE ARGUMENTS ON THE APPEAL 
88.	We invited argument in the first instance on the two grounds of appeal for which the judge had granted permission, and on ground 3 (breach of duty) on the assumption that permission to appeal on that ground had also been granted.    In the event, the argument on those grounds of appeal took up most of the two days allocated for the hearing, and it was not possible to continue into the following day since two members of the court were due to sit in a different constitution.    Accordingly at the conclusion of the argument we reserved our judgments, on the footing that directions for the hearing of any further issues could await our decision on the issues on which we had heard argument.
89.	Mr McParland submitted firstly that the judge ought not to have allowed the last-minute amendment.   He submitted that it was fundamentally unfair to the Bank to do so, given that there had been no warning of the amendment, nor had the amendment been at any stage reduced to writing.   He took us in detail through the history of the litigation, emphasising (as pointed out earlier) that Mrs Cameron’s alternative case that the requirement on which she relied had been imposed at some time subsequent to the June 1989 meeting had never been pleaded, and submitting that in any event there was no evidence to support it.    He further submitted that, having allowed the amendment in the course of his reserved judgment, the judge ought to have allowed him an opportunity to consider the Bank's position in the light of it and (if so advised) apply for a further hearing to make submissions and call any further evidence it might wish to call.     At the very least the judge should, he submitted, have invited written submissions as to the consequences of his having allowed the amendment.   He submitted that had the Bank anticipated a case being advanced by Mrs Cameron to the effect that the relevant requirement was imposed at some point in time after the initial meeting it would have made a greater effort to obtain disclosure of Carlson & Co’s files and might even have summonsed Mr Carlson to give oral evidence.    He submitted that in the circumstances the Bank had suffered prejudice which could not be properly compensated in costs.
90.	Turning to the judge’s conclusion that a duty of care existed, Mr McParland pointed out that the judge appeared to have found that a duty of care arose in at least two ways: firstly by reason of the Bank having, in August 1989, “assume[d] the responsibility of an insurance broker” (see paragraph 33 of the judgment); and secondly by reason of the fact that, although it had not in fact required Mrs Cameron to change insurers, Mrs Cameron reasonably believed that it had (see paragraphs 25 and 26 of the judgment).    He submitted that neither of those findings justified the conclusion that the Bank owed a duty of care towards Mrs Cameron.   As to the first, he submitted that such a case had never been pleaded (not even by the last-minute amendment); that the only evidence on which it could be based was the letter from Mr Macdonald to Mr Carlson dated 10 August 1989 (quoted earlier); and that that letter did not begin to establish it.   As to the second, he submitted that, whatever Mrs Cameron’s state of mind may have been, absent any advice or requirement on the part of the Bank no duty of care could have arisen.   
91.	On the issue of breach of duty, Mr McParland submitted that given that the judge had found no advice or requirement on the part of the Bank to change insurers there was no basis for concluding that the Bank failed in its duty of care in not providing Mrs Cameron with a copy of the 1989 valuation.
92.	Mr Dingemans submitted that the judge was acting within his discretion in allowing the amendment.   He referred us to a passage in the judge’s separate judgment on the issue of costs, delivered on 3 October 2001, in which the judge described the amendment as following “the same general tenor of what the claimant’s case had been throughout”.   Mr Dingemans adopted that observation of the judge.   He submitted that the Bank had every opportunity of meeting Mrs Cameron’s case, and that the amendment was based upon the Bank’s own documents, in the form of the correspondence passing between the parties after the June 1989 meeting, and on Mr McInroy’s own witness statement.   He submitted that very real injustice would have been done had the amendment not been allowed.   He submitted that there could have been no possible basis for directing a further hearing, once the amendment had been allowed, since all the available evidence had been before the court, and that the amendment did no more than raise formally an issue of law arising on that evidence.   He submitted that the judge was right in saying that a more timeous pleading would not have altered the way in which the case had been prepared for trial.
93.	On the issue as to the existence of a duty of care, Mr Dingemans submitted that on a true reading of the judgment the judge had found that the Bank had imposed a requirement that Mrs Cameron change insurers, and that, on the authorities, that sufficed to create a duty of care.   He then took us once again on what had by now become a familiar journey through the factual history, submitting that it was to be inferred from the correspondence in August 1989 and in January and February 1990 that the Bank had imposed such a requirement, and repeating his alternative submission that Mr McInroy had imposed such a requirement on 9 February 1990.   In the further alternative, Mr Dingemans submitted that Mr McInroy’s actions in January and February 1990, and in particular his action in taking out temporary cover with EIG, amounted to an assumption by the Bank of the role of insurance broker, with a concomitant duty of care.
94.	As to breach of duty, Mr Dingemans submitted that it was clear on the evidence (and, in particular, on Mr Macdonald’s own admission in cross-examination) that to change insurers at a time when surveyors had reported the existence of cracking in the structure of the Property was, to say the least, a foolish thing to do; and accordingly that the Bank was negligent in failing to apprise her of the contents of the 1989 valuation.
CONCLUSIONS

The existence of a duty of care

95.	I turn first to the judge’s conclusion (in paragraph 33 of his judgment) that in August 1989 the Bank assumed the responsibility of an insurance broker, and in so doing assumed the duty of care which an insurance broker owes to his client.    As I have already pointed out, this was not a case which had ever been pleaded by Mrs Cameron; and not surprisingly, in my judgment, for there was no evidence to support it.    In paragraph 24 of his judgment the judge found that at the June 1989 meeting Mrs Cameron was neither advised nor required to change insurers.   Thus, the only evidence on which such a case could be based is Mr Macdonald’s letter dated 10 August 1989, but that letter (quoted in full in paragraph 21 above) does not seem to me to begin to establish that the Bank had at that stage done anything which could conceivably be construed as amounting to an assumption of the role of an insurance broker.   It must be remembered, after all,  that Mr Macdonald was not an officer of the Bank, and that in paragraph 34 of his judgment the judge expressly acquitted him of having acted negligently in any respect.
96.	I turn next to the effect of subsequent events, and to the judge’s conclusions in paragraphs 25 and 26 of his judgment.
97.	In the first place, Mr Dingemans did not seek to contend that Mrs Cameron’s mistaken belief could in itself give rise to a duty of care by the Bank.   Such a contention would in any event have been contrary to principle and authority.   Accordingly, the judge’s finding that Mrs Cameron held a mistaken belief that she was required to change insurers takes matters no further.
98.	Secondly, as I read his judgment the judge plainly did not make a finding that there was a requirement that Mrs Cameron change insurers: had he intended to make such a finding it would have been unnecessary for him to find that the Bank’s actions “led her reasonably to believe” that there was such a requirement.   Mr Dingemans’ submission that he did make such a finding seems to me to border on the fanciful.
99.	So, since there is no finding of fact made by the judge which supports the existence of a duty of care, on what factual basis might it be said  that a duty of care arose?    
100.	As to that, Mr Dingemans points to the events of January and February 1990, and in particular to Mr McInroy’s act on 9 February 1990 in effecting cover with EIG, as amounting to an assumption by the Bank of the role of insurance broker.   This was not a case which he advanced before the judge; nor, for that matter, was it pleaded.    In particular, it is not a case which is covered by the last-minute amendment (whatever precisely that amendment may mean).    Had it been pleaded, could it have succeeded?   In my judgment, plainly not.    In pressing for the return of the signed and completed proposal form, and in taking out temporary cover with EIG, Mr McInroy was not assuming the role of insurance broker on behalf of the Bank: he was merely directing his efforts to ensuring that the cover which he understood that Mrs Cameron wished to take out with EIG was in fact taken out.   In my judgment, no duty of care could be said to have arisen by virtue of his actions in this respect.
101.	Accordingly, in my judgment there was no duty of care on the part of the Bank in relation to the change of insurers.
The last-minute amendment
102.	It follows from the conclusions which I have already expressed that as matters turned out the last-minute amendment did not affect the outcome of the trial, since in the result it was not supported by the judge’s findings.   Hence, it may not strictly be necessary to say anything about it.
103.	Nevertheless, I do wish to make some brief observations about the judge’s decision to allow the amendment in the form which it took and at the stage in the trial when he allowed it.
104.	In the first place, if there is to be a substantial, as opposed to a merely formal, amendment to a pleading in the course of a trial (and, a fortiori if it is to be made at the conclusion of the trial), it seems to me that in the interests of fairness it is an absolute requirement (a) that the meaning of the amendment should be clear, and (b) that it should raise with sufficient particularity the new case which is sought to be pleaded.   The amendment in the instant case met neither of those requirements.   Mr Dingemans’ valiant attempts to make grammatical sense out of it were wholly unsuccessful; and whatever interpretation one might put upon it, it can at least be said with certainty that it was framed in the most general terms.  The instant case demonstrates, in my judgment, the good sense of requiring a proposed amendment to be reduced to writing before the court adjudicates on the application to make it, so that the court and the opposing party (and for that matter, as the instant case demonstrates, the party seeking to make it) have a proper opportunity to establish its meaning and to assess its significance.    
105.	In the second place, I consider that it was unfair of the judge to allow the amendment, given that (however inadequately) it raised a new case and that it was made at the conclusion of the trial.   In my judgment Mr McParland’s objection to it was well taken.
RESULT
106.	The appeal succeeds, in my judgment, on the ground that on the evidence no duty of care was assumed by the Bank towards Mrs Cameron in relation to the change of insurers.   It is therefore unnecessary for me to address the issue of breach of duty.
107.	I would accordingly allow the appeal and set aside the judge’s order.   It follows that no directions are required as to the hearing of the remaining issues before us, since such issues do not arise.
Lord Justice Longmore:
108.	I agree with Jonathan Parker LJ that the appeal should be allowed for the reasons which he gives.  In the absence of any finding that the Bank did require or advise Mrs Cameron to change insurers, the case (as pleaded) ought to have failed.
109.	A more promising way in which, as the evidence emerged, Mrs Cameron’s case might have been put would have been to allege that in February 1990 Mr McInroy arranged for Mrs Cameron’s home to be insured by the Ecclesiastical Insurance Group Plc and that, since he was an employee of the bank, the bank thereby acted as her insurance broker and thus assumed the duties of skill and care owed by an insurance broker to his client.  It could then have been said that the bank should have considered (but failed to consider) whether it was in Mrs Cameron’s interest to change insurers or to remain with her current insurers at what may well have been a higher premium.
110.	No such case was pleaded for the very understandable reason that Mrs Cameron’s case had always been that she was given positive advice to change insurers in the summer of 1989.  I doubt if it was ever the intention to plead such a case by the amendment, which was sought in the closing moments of the trial and leave for which was granted in the judgment, since the amendment did not on its true construction amount to the pleading of such a case.  If the judge had thought that it was intended by the amendment to make such a major new case at such a late stage, I do not consider he would have granted leave to amend without giving the Bank an opportunity to deal with that new case.
111.	Any such case might have been met by the Bank in a number of possible ways by saying, for example, that Mrs Cameron had by February 1990 in any event decided to do as Mr Macdonald of JFFS had suggested in August 1989 or that an arrangement of the kind indicated could not, in law, give rise to a duty of care.
112.	In these circumstances it cannot be right to speculate on the possible success or otherwise of any such unpleaded (and, as I believe, unargued) case for the claimant.
The Vice-Chancellor :
113.	The circumstances in which this appeal arises have been fully described by Jonathan Parker LJ.  I gratefully adopt his account.  No one reading it can feel anything other than sympathy for Mrs Cameron.  But the question before us is whether James Finlay Bank Ltd (“the Bank”) is liable to compensate Mrs Cameron for all or any of the damage which she has sustained. Sympathy has no part to play in ascertaining the answer to that question.
114.	The Bank can be under no liability to Mrs Cameron unless it owed her some duty and broke it in consequence of which she sustained some damage.  I propose to consider the issues of duty and breach first, even though the issues arising from the late amendment may logically come first.
115.	In paragraphs 15 to 26 of his judgment Hart J considered whether the Bank advised or required Mrs Cameron to change her insurers.  He found (paragraph 18) that it was not a term or condition of the proposed lending either that the insurers should be changed or that the services of the Bank’s subsidiary company James Finlay Financial Services Ltd (“JFFS”) should be employed by Mrs Cameron.  He observed that though the Bank required to be satisfied as to the insurance, as stipulated in paragraph 2.2 of the facility letter, it was otherwise entirely a matter for the customer to determine with whom the insurance was effected.
116.	The judge then considered (paragraphs 20-23) the practice of the Bank and the events subsequent to the meeting between Mrs Cameron and Mr Strachan on 25th June 1989.   In paragraph 24 of his judgment Hart J reverted to that meeting.  He accepted that the question of insurance was  raised.  He rejected the contention of Mrs Cameron that Mr Strachan encouraged or advised her to change or consider changing her insurers.   He concluded:
“The only finding of fact which I make is that Mr Strachan told her that the bank would have to be satisfied as to the insurance position and that she would in due course be hearing from the bank’s brokers in the person of Mr Macdonald on the subject.”
117.	In paragraphs 25 and 26 Hart J considered the effect of the subsequent events.  His conclusion (paragraph 26) was that:
 “..although the bank did not advise her to change insurers, its actions led her reasonably to believe that she was required to do so as a condition of the facility.”
At that stage the judge diverted his attention to what he described as the pleading point to which I shall revert in due course.
118.	The next section of the judgment, as the heading shows, is directed to the question whether the Bank owed Mrs Cameron a duty of care in advising or requiring her to change insurers.   The initial problem, as the judge recognised in paragraph 30 of his judgment, is that on his findings of fact the Bank did not advise Mrs Cameron to change insurers; in so far as she received any advice on that issue it came from Mr Macdonald of JFFS or her own solicitor Mr Carlson.  The judge considered that a question arose as to the extent to which the bank assumed responsibility for the “advice” given by Mr Macdonald.
119.	The judge considered that if the Bank had, in any relevant sense, acted as Mrs Frost’s insurance broker then it would owe to Mrs Cameron all the usual duties of care and skill.    In paragraph 33 he acknowledged that the Bank did not do so in any formal sense but continued:
 “When Mrs Frost (or Mr Carlson) was contacted by Mr Macdonald in August 1989 and invited to use JFFS’s services as broker, she was in my judgment entitled to assume that the services being offered were services being provided by the bank, and that all appropriate care and skill would be employed in their discharge.  Accordingly, I conclude that the bank did assume the responsibility of a broker in the particular circumstances which developed.”
120.	I am unable to agree with this conclusion.   The judge’s findings as to what was said at the meeting between Mrs Cameron and Mr Strachan on 25th June 1989 are inconsistent with any acceptance of responsibility.  So much was accepted by counsel for Mrs Cameron in his closing speech (Day 4 page 468).  Mr Macdonald was not an officer of the Bank.    No statement (including the letter of 10th August 1989) or action of Mr Macdonald, without more, could constitute acceptance of responsibility by or on behalf of the Bank.
121.	The conclusion of the judge as to the effect of the subsequent events is that expressed in paragraph 26 of his judgment, which, so far as relevant to this issue, I have already quoted. That conclusion does not touch the question whether the Bank assumed the responsibility of an insurance broker.  Nor, as a free-standing conclusion, does it assist the case for Mrs Cameron. If a condition of the loan facility to change insurers does not give rise to a duty of care, as the judge recognised in paragraph 31 of his judgment, then conduct leading Mrs Cameron to the reasonable but erroneous belief that such a condition had been imposed cannot do so either.  This was not disputed by counsel for Mrs Cameron.
122.	Accordingly none of the judge’s conclusions supports the existence of a duty of care owed by the Bank to Mrs Cameron.  In this court counsel for Mrs Cameron sought to spell out a duty of care in a manner which does not seem to have attracted the attention of the judge.  He contended that the Bank, in the form of Mr McInroy the relevant manager, in January and February 1990 imposed and carried out on behalf of Mrs Cameron a requirement that she change her insurer from Eagle Star to Ecclesiastical Insurance Group plc.   He submits that the Bank thereby tendered and performed the skilled services of an insurance broker and undertook the corresponding duties.
123.	This submission is based on the passage in the speech of Lord Browne-Wilkinson in White v Jones [1995] AC 207,274 where he said:
 “Let me now seek to bring together these various strands so far as is necessary for the purposes of this case;  I am not purporting to give any comprehensive statement of this aspect of the law.  The law of England does not impose any general duty of care to avoid negligent misstatements or to avoid causing pure economic loss even if economic damage to the plaintiff was foreseeable.  However, such a duty of care will arise if there is a special relationship between the parties.  Although the categories of cases in which such special relationship can be held to exist are not closed, as yet only two categories have been identified, viz. (1) where there is a fiduciary relationship and (2) where the defendant has voluntarily answered a question or tenders skilled advice or services in circumstances where he knows or ought to know that an identified plaintiff will rely on his answers or advice.  In both these categories the special relationship is created by the defendant voluntarily assuming to act in the matter by involving himself in the plaintiff's affairs or by choosing to speak.  If he does so assume to act or speak he is said to have assumed responsibility for carrying through the matter he has entered upon.  In the words of Lord Reid in Hedley Byrne [1964] A.C. 465, 486 he has "accepted a relationship .... which requires him to exercise such care as the circumstances require," i.e. although the extent of the duty will vary from category to category, some duty of care arises from the special relationship.”
124.	In my view this way of putting Mrs Cameron’s case attracts at least two objections. First, the imposition of a requirement as alleged is the converse of tendering advice or rendering services such as Lord Browne-Wilkinson considered to be necessary. Second, the submission is, in my view, contrary to findings the judge did make.  
125.	The requirement, if any, was imposed by the Bank for its own protection as lender.  That was the only interest in the property it had.  It was not involving itself in the affairs of Mrs Cameron in any capacity except that of secured lender. The judge’s summary of the events relied on by counsel for Mrs Cameron is inconsistent with any other conclusion.   With regard to those events he said (paragraph 25) :
 “What happened, thereafter [the meeting on 25th June 1989], was that Mrs Frost was offered the opportunity by JFFS of making a proposal to EIG for insurance and, under the guidance of her own solicitor, appears to have decided in principle to make such a proposal.  There was nothing inherently irrational in such a decision.  At the level of cover required Mr Macdonald’s belief was that the EIG premiums would be lower than Eagle Star’s (although he did not in fact investigate this).  The bank, in the course of processing the transaction, simply assumed that the proposal was going to be made.  It never asked JFFS to advise it on the adequacy of the existing Eagle Star policy.  The correspondence between the bank’s  solicitors and Mr Carlson in January and February 1990 (the contents of which have to be inferred from the letters between the bank and its solicitors) must have read (to the recipient) as if, by that stage, the bank was insisting that it was a term of the facility that the proposal to EIG be completed by Mrs Frost.  Neither Mrs Frost nor Mr Carlson had any reason to quarrel with that requirement.  As Mr Carlson observed, one reputable insurer was as good as another.”
 
126.	As a variant on his primary submission counsel for Mrs Cameron also submitted that the Bank, in the form of Mr McInroy, effected the change of insurers on behalf of Mrs Cameron, thereby acted as her insurance broker and in consequence subjected itself to all the duties of care and skill owed by such a broker. I do not accept that submission either.  The evidence shows that Mr McInroy was unaware of the existing insurance with Eagle Star.  He feared that the security for the loan was not insured at all. Having checked that Mrs Cameron had completed or would complete the proposal form for submission by JFFS to Ecclesiastical Insurance Group plc he made the administrative arrangements necessary for cover to be provided forthwith “by instructing Mr Macdonald accordingly”.
127.	The fact that the arrangement of insurance cover is a function of an insurance broker does not lead to the conclusion that because the Bank made the administrative arrangements by instructing the broker it thereby undertook all the duties of an insurance broker.   Those functions and duties were and remained with JFFS.   And this is the root of Mrs Cameron’s problem.  As her counsel frankly admitted she might have sued JFFS who did act as her brokers.   But her claim would fail because no one at that company saw the report of Scrase Hewlitt before the change of insurer took place in February 1990.    The report remained with the Bank.  But, as a lending bank, it owed no duty of care to Mrs Cameron;  hence the attempt to clothe the bank with the functions and duties of an insurance broker.   The attempt is understandable but, in my view, it fails.
128.	For all these reasons I conclude that the Bank did not owe Mrs Cameron any duty of care on any of the grounds relied on in this court.    Accordingly I would allow this appeal.
129.	 There was considerable argument before us concerning the exercise of the judge’s discretion to allow Mrs Cameron to re-re-amend her statement of claim at the time and in the circumstances he did.  Counsel for the Bank makes two complaints.  First, he submits that the judge should not have given leave to amend at all.    Second, he contends that if the judge was entitled to give leave to amend then he should have allowed counsel for the Bank an opportunity to consider the position of the Bank before giving judgment on the basis of the amendment.
130.	The pleading point, as understood by the judge, was whether it was open to Mrs Cameron to rely on events after the meeting in June 1989 to support her contention that the Bank had required her to change insurers. This was an alternative to her primary contention that such a requirement had been imposed by Mr Strachan at the meeting.   Hart J concluded that the point was not open to counsel for Mrs Cameron on her existing pleadings and entertained an application for permission to amend after all the evidence and the closing speeches had been concluded.  He was not supplied with a draft of the amendment proposed.  His conclusion expressed in paragraph 26 of his judgment was that:
“With the exception of Mr Carlson’s files, all of the evidence relevant to the point has emerged as a result of the preparation of the case on the original pleadings.  They necessarily involve an inquiry as to the precise chain of events which led Mrs Frost to change her insurers.  I do not think that a more timeous pleading of the point would have altered the way in which the case has in fact been prepared for trial.  I would accordingly allow the amendment.”

131.	The amendment added to the particulars of breach of duty contained in paragraph 16 of the re-amended statement of claim not, as it should have done, to the allegation of duty in paragraph 15.  Further it was most unclear what it meant. Omitting the passages previously deleted and confining the quotation to the material parts of sub-paragraph b) the re-re-amendment reads as follows:
“failing to advise the plaintiff of the contents of the [Scrase Hewlitt] report before the plaintiff accepted the loan and acted in January 1990 on advice given by the defendant at the meeting [on 25th June 1989] to follow the recommendations of [JFFS] on a change of insurers or through the defendant’s requirements in correspondence and/or on the telephone in January and February 1990.”

Counsel for Mrs Cameron had great difficulty, when asked by us to identify the alternative to the added words, in  pointing to the place at which to insert the word “either”.   None of his alternative suggestions made grammatical sense. 
132.	Though the judge allowed the amendment and made his findings on the case as reformulated without giving counsel for the Bank any opportunity of considering his position his conclusion was not that in support of which the amendment had been sought.  He decided in paragraph 26 not that the Bank had required Mrs Cameron to change her insurers but that by its actions it had led her to think that she was required to do so as a condition of the facility.
133.	I am bound to say that I think that the course the judge took was open to objection on a number of grounds.  The errors arose from the judge’s commendable wish to avoid the expense and inconvenience to the parties which would have attended any adjournment of the hearing until the next sittings.   In view of my conclusion on the absence of any duty of care it is unnecessary to deal at length with errors in the judge’s approach for which counsel for the Bank contended but I should note some of them.
134.	First, the absence of any draft of the proposed amendment meant that counsel for the Bank did not have the time for consideration of what was proposed he should have had.   Understandably he did not ask for an adjournment.  But the result of the informal nature of the application was that neither counsel for the Bank nor the judge appreciated that the proposed amendment did not make sense or achieve what counsel for Mrs Cameron sought to do.   In the result there was no injustice to the Bank because the form of amendment did not support the alternative case for Mrs Cameron and the judge did not uphold such a case.   The good sense in the normal practice of requiring a draft of and clarity in an amendment proposed at so late a stage is clear from the facts of this case.
135.	If the amendment had supported such alternative case then I would have accepted the submission for the Bank that the judge erred in principle in allowing it.  It is unnecessary for me to go through the course of the proceedings in detail.  Suffice it to say that I accept the submission that it raised a new case too late, without any adequate explanation and to the prejudice of the Bank.  Prejudice to the Bank lay not only in the fact that the correspondence between Mr Carlson and Mrs Cameron and the Bank’s solicitors was no longer available but also in the circumstance that the oral evidence was unrelated to any allegation that the requirement was imposed in January and February 1990. Had the intended allegation been made earlier it appears to me that the Bank’s evidence would have had a different focus. I consider that the judge, who referred to the absence of Mr Carlson’s files underestimated the potential prejudice to the Bank.
136.	Similarly if the amendment had supported the alternative case for Mrs Cameron then the judge should, at some stage, have allowed counsel for the Bank to consider his client’s position in the light of the judge’s decision on the application. He did not do so. In the light of the amendment actually made and of his decision no harm was done, but it might have been.
137.	In the event the judge’s treatment of the application to re-re-amend does not provide any reason for allowing  the appeal.  As I have already indicated I too would allow the appeal on the ground that the Bank did not owe Mrs Cameron any duty of care.  Accordingly the outstanding issues on breach and loss do not arise.

Order:
1.	The Appellant’s appeal is allowed
2.	The said judgment of the Honourable Mr Justice Hart (in so far as it relates to the Respondent’s action against the Appellant) and paragraphs 1, 3, 4, 5 and 7 of the Order of 3rd October 2001 be set aside.
3.	Judgment be entered for the Appellant upon the Respondent’s action herein.
4.	Judgment for the Appellant upon its Counterclaim and the order for the taking of an Account of the sums due to the Appellant from the Respondent made in paragraph 2 of the order of 3rd October 2001, do stand as before.  The stay on further proceedings for the Account in paragraph 4 of the Order of 3rd October 2001 having been lifted in paragraph 2 above, the matter is referred back to the Master for directions to be given for the taking of the Account.
5.	By reason of the Success of the Appellant’s appeal herein:
(i)	The Respondent’s application for permission to cross-appeal is dismissed.
(ii)	The Appellant’s application for permission to raise additional grounds of appeal was not heard, and no determination was made thereon.
6.	The Respondent do pay the Appellant’s costs of the appeal pursuant to Section 11(1) of the Access to Justice 1999 and regulations 9(1) and (2)(b) of the Community Service (Costs) Regulations 2000 (“the Costs Regulations”).  Pursuant to regulation 9 (5) of the Costs Regulations, the amount (if any) to be paid by the respondent and/or any application by the Appellant for a costs order against the Legal Services Commission in respect of such costs, shall be determined in accordance with regulation 10 of the Cost Regulations upon proper application to a Costs Judge.
7.	The Respondent do pay the Appellant’s costs of the action, including reserved costs, pursuant to Section 11(1) of the Access of Justice 1999 and Regulations 9(1) and (3) of the Costs Regulations.  Pursuant to regulation 9(3) (a) of the Costs Regulations, the amount of such costs are limited to all and any sums awarded to and/or claimed by the Respondent pursuant to costs orders made in her favour during the course of the action herein, including the costs order made by the Court of Appeal in July 1999. The Appellant is entitled to set-off any sums due to it pursuant to this order against any sums claimed by the Respondent and / or the Legal Services Commission as aforesaid.
8.	The Respondent’s costs of the appeal be subject to detailed Legal Service Commission assessment pursuant to the provisions of the Access to Justice Act 1999.
(Order does not form part of the approved judgment)