In November 2015, the Court of Appeal overturned in Titan
Europe 2006-3 plc v Colliers International UK plc (In.
liquidation)  EWCA Civ 1083 the High Court # 39; s finding that.
Colliers was negligent (see our RealRealty Bulletin, Spring.
The case concerned Colliers # 39; evaluation in December 2005 of a.
huge (242,195 m) business building (the.
Building) in Nuremberg, Germany, occupied by Quelle.
at the time, Germany # 39; s biggest mail-order company, which.
inhabited the Home on a 15-year lease, expiring in 2016.
Colliers valued the Property at EUR 135 million. In reliance on the.
assessment, Credit Suisse made a loan of EUR 110 million to.
Quelle # 39; s landlord, Valbonne. In 2006, the loan was securitised.
with various other loans and was bought by Titan, a recently.
included special purpose vehicle, which released around EUR 1.
billion of floating-rate loan notes to investors. Quelle and.
Valbonne subsequently became insolvent and Valbonne defaulted on.
the loan in around 2009. The Building was ultimately resold for.
just EUR 22.5 million.
Titan pursued a claim against Colliers, in which it declared that.
the true value of the Building in December 2005 had been just EUR.
76.6 million. Titan sought damages comparable to the SAAMCo.
cap (ie the difference between the reported value and the.
declared true value of the home, which is the maximum for which.
a valuer offering information of this sort can be held liable) of.
EUR 58.8 million.
At firstIn the beginning circumstances, Blair J. discovered liability to have been.
established, on the basis that the true value of the Property had.
been only EUR 103 million and the bracket of reasonable evaluations.
had actually been 15 % either side of this, such that the evaluation of EUR.
135 million fell outside the bracket. The judge # 39; s finding regarding.
true value was a rather unexpected reasoning on the evidence,.
which showed that, among other things, in the same year as.
Colliers # 39; evaluation, and in a rising market, there had actually been two.
other valuations and one sale of the Property all at levels above.
the leading end of the judge # 39; s bracket. The judge likewise declined.
Colliers # 39; argument that, as a non-recourse provider of the loan.
notes to financiers, Titan had, in any event, suffered no loss.
Damages of EUR 32 million were granted to Titan.
Colliers subsequently appealed on two primary premises: (1).
that the true value of the Home had actually been significantly higher.
than EUR 103 million; and (2) that Titan did not have title to sue.
and, even if it did, had itself suffered no loss in any event.
Finding of breach of responsibility overturned.
On ground (1), the Court of Appeal substituted a true value of.
EUR 118.3 million and, as a result, discovered that Colliers # 39;.
assessment fell within a 15 % margin of error and had actually not been.
negligent. Attributing certain significance to the reality that, just.
6 months prior to Colliers # 39; valuation, the Property had actually been.
sold for EUR 127.1 million, Longmore LJ held that it was.
impossible that the true value in December 2005.
could have been as low as EUR 103 million which the judge at.
first circumstances had actually incorrectly continued without regard to proof of.
an actual sale, which Phillips J (in Banque Bruxelles Lambert v.
Eagle Star Insurance coverage (1995)) had called the most cogent.
proof of any home # 39; s market price. Referring also.
to 3 other celebrations in between September 2003 and March 2005 on.
which the Property had actually been valued by others at between EUR 114.7.
million and EUR 134.5 million, Longmore LJ even more kept in mind that a.
value of EUR 103 million would be perilously near to.
the figure of EUR 100 million which the trial judge had himself.
said was the outright minimum that would have carried any.
credibility in the market. He discovered that the evidence.
supplied by the earlier sale and evaluations justified a yield of.
7.4 %, lower than the trial judge # 39; s figure of 8.5 %. He included.
that, although the Court of Appeal had reached its conclusion.
without taking into consideration the rising market that had actually been current.
in 2005, this would have been yet another element in Colliers # 39;.
The securitisation problem.
The securitisation issue was rendered redundant by the.
exoneration of Colliers on liability premises. Revealing obiter.
views on ground (2), nevertheless, the court commented that, because Titan.
had actually retained legal and advantageous ownership of both the loans and.
the loan notes, it would have maintained the right to sue Colliers.
for significant damages. The court was also not prepared to dismiss.
the claim on the basis that the noteholders, not Titan, had.
suffered the loss. Taking a novel technique, which did not occur out.
of either side # 39; s submissions, the court drew an analogy with.
the relationship in between a company and its shareholders, commenting.
that the realitythat the investors in the loan notes had actually been the.
ultimate losers did not suggest that Titan itself might not have.
sustained a loss. Rather, if (contrary to the court # 39; s finding.
on the evaluation) Colliers had negligently misestimated the Building,.
Titan would have suffered a loss as soonas quickly as it acquired the loans.
and securities (consisting of the Home) from Credit Suisse.
It is certainly positive that an appellate court felt able to.
reverse the trial judge # 39; s views on appraisal and adopted an.
strategy more precise than just splitting the.
distinction in between the retrospective calculations of opposing.
professionals. Similarly welcome is the court # 39; s acknowledgment that the.
pre-crash rising market is a relevant aspect that should be taken.
into account. Together, these findings suggest (at least.
implicitly) that the Court of Appeal is keen to take full account.
of the truth of the sustained boom in the pre-2008 European.
building market and to avoid hindsight to the biggestthe best degree.
Less favorable, on the other hand, is the court # 39; s obiter.
commentsdiscuss the concern of whether a company of mortgage-backed.
securities had standing to pursue a claim against a valuer retained.
by an original lender. As was submitted by Colliers, this exposes.
valuers instructed in the context of securitisations to the threat of.
liability to both financiers and the issuer of securities. The Court.
of Appeal # 39; s analysis of this essential problem was remarkably.
Nevertheless, every securitisation will be factually distinct and.
valuers will be selected on different terms and will accept.
different obligations in relation to each deal. It is.
clear from both the Court of Appeal and first instance judgments.
that, in identifying the scope of a valuer # 39; s duty and in.
choosing which of a number of entities may have suffered a.
recoverable loss, there continues to be no substitute for a close analysis.
of both the particular legal documents and the structure of.
the individual finance deal in question. A provider.
claimant # 39; s entitlement to take legal action against valuers in situations comparable.
to those in Titan v Colliers may well, for that reason, be a.
matter of conflict in future litigation and must always be.
evaluated carefully by reference to the particular truths in issue.
In a news release published on the exact same day as the Court of.
Appeal judgment, Titan # 39; s solicitors stated that they are.
thinking about an application for approval to attract the Supreme.
Court. It will be intriguing to see whether the matter earnings.
Court Of Appeal Finds For Defendant Valuers In Titan V Colliers
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