A high-end property developer has failed in his bid to countersue the Swiss private bank that provided him with a mortgage that he defaulted on.
Developer Kim Shokrollah-Babaee had been seeking to sue EFG Private Bank for around £5m, alleging negligence and breaches of the FCA Mortgage Conduct of Business rules.
Meanwhile, EFG has been chasing Babaee though the London insolvency and companies courts for a similar amount, plus interest, over unpaid loans used to finance a property investment.
Babaee hit the headlines in 2019 following a high-profile divorce case in which he was ordered to pay his ex-wife maintenance of £10,000 a month.
He is now chief executive of prime residential developers K10 Group and has appeared on TV shows such as Channel 4’s Britain’s Most Expensive Houses.
The property at the centre of the case is the Vicarage on Stamford Brook Road, Chiswick, W6 – his family home. According to court papers, Babaee was first introduced to EFG in 2007 via a financial adviser when seeking £5m to refinance three properties, including the Vicarage.
From 2012, according to a court ruling handed down today, Babaee took out a number of loans with EFG which he said were to finance a “career changing move” into residential property, but the bank said was to refinance existing debt. Throughout the period, the bank carried out various valuations of the Vicarage.
Babaee alleged that he invested £3.5m in loans from EFG in “speculative property development”, and that “he would not have done this had it not been for the [bank’s] alleged breaches of duty”. He also alleged that he was influenced by inaccurate valuations of the property obtained by the bank from external surveyors.
Babaee filed the claim in June this year, just before a scheduled bankruptcy hearing brought by the bank. This caused the bankruptcy hearing to be adjourned.
The bank applied for the case to be struck out and, in a ruling handed down today, Mr Justice Miles agreed. He ruled that the bank didn’t breach a statutory duty of care and didn’t breach the FCA’s Mortgage Conduct of Business rules.
He said it was “entirely reasonable” for the bank to “take account” of “an apparently reliable valuation from an appropriate chartered surveyor”.
He added: “The claims are struck out and dismissed.”
According to an article in The Times, Babaee has put the Vicarage on the market for around £7m.
Shokrollah-Babaee v EFG Private Bank Ltd
Business and Property Courts [Mr Justice Miles] 19 December 2023
