Claimant in Part 20 proceedings seeking contribution from defendant valuer – Court finding valuer liable for 25% of damages – Valuer appealing against finding of liability – Construction of statement in prospectus – Appeal allowed
In Part 20 proceedings, Neill Clark (NC) claimed a contribution from Healey & Baker (HB), a firm of surveyors and valuers, in respect of NC’s admitted liability to the claimants, a majority of investors in an enterprise zone property unit trust (EZPUT). NC claimed on the basis that statements attributable to HB in the EZPUT prospectus were misleading. NC’s right to contribution depended upon whether HB owed a duty of care to the investors and, if so, whether it was in breach of it.
The judge decided that HB’s stated expectation, as recorded on p8, para 4 of the prospectus, that the property would be substantially let at a rent of £6.50 per sq ft within two years from completion, meant that HB expected that it would be so let to institutional tenants for terms of 25 years. The judge went on to find that the statement involved negligence on the part of HB and that it was liable for 25% of the damages payable to the investors. HB appealed against the finding of liability. The question was one of construction of the words in para 4 of the prospectus relating to the two-year fixed guarantee – “a period within which the property advisors expect the property to be substantially let”.
Held: The appeal was allowed.
The question was: what would relatively sophisticated investors, intending to make a long-term investment, have understood by those words, when read in context? Investors would have understood such words to mean that HB expected the property to be substantially let at a rent of £6.50 per sq ft within two years from completion, to tenants who were not necessarily institutional tenants, for terms that were not necessarily of 25 years. Such a view was supported when the words were read in the context of what was contemplated in paras 2 and 4, for example; namely, that there might be shortfalls in rental actually received from non- institutional tenants paying rents of less than £6.50 per sq ft. It could not be said that the investors would have understood the words in the sense adopted by the judge. The judgment in the Part 20 proceedings was, therefore, set aside and the Part 20 proceedings dismissed.
Robert Moxon Browne QC and Roger Stewart (instructed by Kennedys) appeared for the appellant; Michael Brindle QC and Thomas Keith (instructed by Berrymans Lace Mawer) appeared for the respondent.
Sarah Addenbrooke, barrister
