Negligence disputes have emerged against three national firms so far this month, all arising out of allegedly fraudulent property deals involving Dunlop Haywards — a surveying unit of property services firm Erinaceous. Nationwide launched negligence claims against Eversheds and Browne Jacobson for £20m and around £3m respectively, while Cheshire Building Society is suing Cobbetts for £10m.
Top partners believe the claims could be the first of many against advisers. Lovells real estate partner Nicholas Cheffings (pictured) said his firm had been advising clients on their rights against various parties in a number of these situations recently.
He commented: “This sort of claim was very common in the early 1990s, when the bottom fell out of an overheated property market. Lenders found themselves having lent far too much on some hugely overvalued properties. They looked to their surveyors and lawyers to recoup some of their losses.”
Cheffings added: “It was inevitable that the unprecedented flood of money pouring into property in the last two or three years would result in a similar spate of claims sooner or later. Sadly, these high-profile claims may just be the first of many to hit the headlines.”
Clifford Chance real estate partner John Pickston said: “With the credit crunch it means some deals may not go ahead, increasing the likelihood that the level of profitability expected will not be achieved. Clients will want to establish whether this is a failure on the part of the advisers. Clients are likely to want to mitigate effects of any downturn or softening in the market.”
Meanwhile Browne Jacobson is also facing an additional negligence claim by Robinson Healthcare. The claim, worth around £500,000, states that the firm failed to provide protection against potential tax liabilities resulting from the differences between the value of a property as shown in accounts and the actual value of it.
The firm said the claim will be strenuously defended.
