A group of investors have brought a £27m professional negligence claim against a firm of property valuers following the collapse of a major development project.
A judge at a preliminary hearing said they have a good chance of success but a full trial was necessary to assess the full extent of the loss and to what extent the valuers were to blame.
The case involved a company that wanted to acquire five sites to develop into regional fire control centres. A property firm was engaged to provide expert valuations of the sites. They estimated that they were worth £170m. The investors put in £27m on that basis. Most of the remaining money was provided by the bank.
There was a collapse in commercial property values in 2008 and the development of the centres was cancelled in 2010. The development company defaulted on its debts and entered administration owing £123m.
The value of the sites was significantly less than the figures originally put forward.
The investors brought a claim alleging that the valuations had been over-stated. The valuers argued that the investors’ losses fell outside the scope of their duty and asked the judge to dismiss the claim.
The judge held that the investors had real prospects of establishing that their loss was attributable, at least in part, to the alleged inadequacies of the valuers. However, a full trial was needed to assess the maximum amount of the loss that fell within the valuers’ duty of care.
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