Lambert Smith Hampton (LSH) is facing a “substantial damages” claim from a division of York-based property group Helmsley over an allegedly negligent property valuation.
The Court of Appeal has allowed Helmsley’s commercial lending division Helmsley Acceptances to pursue a claim on behalf of a syndicate of investors in respect of a valuation of land in
In February 2007, LSH informed Helmsley that the market value of the land was £2.5m.
Helmsley claims that, in reliance on that valuation, it advanced £1.25m, on behalf of the syndicate, to the company that was purchasing the land.
Helmsley subsequently repossessed the land and, in July 2008, sold it for just £275,000.
Helmsley sued for compensation on its own and the syndicate’s behalf. However, LSH argued that if any loss had occurred by virtue of the alleged negligence, it was the fault of the syndicate rather than Helmsley and, accordingly, Helmsley was not entitled to bring the proceedings.
It also argued that the land had not been overvalued and that the terms of its retainer meant that it owed no duty of care to the investors.
In August 2009, a judge in
Appealing to the Court of Appeal, Mark Cannon QC argued that the decision would mean that even if LSH had been negligent, the losses suffered by the investors as a result would “disappear into a black hole”.
In contrast, he said, if the claim on behalf of the investors went ahead with “the blameworthiness (or otherwise) of the defendant can be assessed, the effect of its conduct in financial terms can be calculated and finality can be had by Helmsley receiving and distributing any damages awarded with the minimum of fuss and expense”.
Allowing the appeal, Longmore LJ ruled that the claim was arguable and must go to trial.
