Securitisation firm White Tower has no “title to sue” in its claim that Colliers negligently overvalued five major London office blocks by a total of almost £177m, lawyers representing the surveyors have told the High Court.
Colliers also maintains that, even if White Tower is allowed to bring its claim, the valuation of the five properties in October 2006 as part of a portfolio was not negligent. Colliers says that it was retained to prepare a valuation of the portfolio; and that White Tower must establish that its portfolio valuation fell “outside the bracket” applicable to that valuation. It argues that liability is not established just because any one individual property valuation fell outside the bracket.
Denying that White Tower has “title to sue”, Colliers argues that, even if other parties may have maintainable claims (subject to proof of negligence, causation and loss), White Tower does not.
Click on the interactive map below to see the values. Click or hover over the circles to see further details. All values in £m.
Lawyers representing White Tower, however, say that these “unattractive” arguments are a “smokescreen” through which Colliers seeks to avoid liability, and that it is “clear beyond peradventure that if correct market values had been provided… substantial losses would have been avoided”.
In opening arguments before the court, the firm of surveyors says that it cannot seriously be argued that White Tower retained Colliers, or was in any sense in contractual relations with Colliers, adding that White Tower did not even exist at the time of the valuation.
While White Tower says it is entitled to damages either by virtue of a direct duty of care or as an assignee of Société Générale’s right of action, Colliers says that the securitisation, in relation to which the valuation was carried out, was structured in a way that means that White Tower is not a viable claimant. Colliers argues that in a commercial case of this kind, the court should give effect to the structures which the parties had put in place.
This latter point, it says, distinguishes the case from that of Titan Europe 2006-3 plc v Colliers International UK plc (in liquidation) [2015] EWCA Civ 1083; [2016] EGLR 6, in which a title to sue argument was dismissed.
White Tower is seeking substantial damages for alleged professional negligence on the part of Colliers in carrying out valuations of the five in October 2006. It says that Colliers overvalued the properties by a total of almost £177m.
The valuations were carried out on the instructions of Société Générale as part of a refinancing and securitisation transaction relating to a portfolio of nine office blocks. The transaction involved Société Générale, as originator, making a secured loan of £1.45bn and the White Tower, as issuer, acquiring the senior tranche of that loan of £1.15bn by raising funds through the issue of commercial mortgage backed floating rate loan notes, ranked in various classes ranging from A to E, which were admitted to the Irish Stock Exchange.
Colliers’ overall valuation of the portfolio was in the sum of £1,832,050,000, but White Tower says its true market value was £1,655,100,000.
The properties were sold during the course of 2010 and 2011 following a revaluation of the office blocks in June 2009, which indicated that the five properties in question were worth very substantially less than Colliers had valued them at in 2006. The sale proceeds were sufficient to enable White Tower to repay the Class A to Class D noteholders in full and partially repay the Class E noteholders. However, the Class E noteholders remained substantially out of pocket and White Tower says it is liable to them for more than £19m.
It claims that Colliers was negligent in overvaluing each of the five office blocks to such a degree that it fell below the standard of care to be expected of reasonably competent valuers.
| The properties | Colliers’ valuation | What White Tower says they were worth |
|---|---|---|
| Alban Gate, 125 London Wall, London EC2 | £410m | £366.4m |
| 60 Victoria Embankment, London EC4 | £350m | £298.5m |
| Sampson House, 64 Hopton Street, London SE1 | £212.5m | £172.5m |
| Millennium Bridge House, 1 High Timber Street, London EC4 | £134.25m | £107.4m |
| New Court, 48 Carey Street, London WC2 | £86m | £71m |
| Total | £1,655,100,000 | £1,832,050,000 |
| Alleged overvaluation | £176,950,000 |
