RPC wins landmark property valuation case at the Court of Appeal
RPC, the City-headquartered law firm, has won an important case at the Court of Appeal, successfully overturning a decision that had incorrectly ruled that its client’s property valuation was negligent.
RPC was acting for Colliers International, the global commercial property consultancy which had valued a German property that subsequently became the underlying asset for commercial mortgage backed securities (CMBS).
The case is significant as it confirms that an issuer of securitisation can sue a valuer of the securitised assets if they negligently overvalue that asset. The ruling confirms that investors in the securitisation (eg institutional investors) are not entitled to sue the valuer.
The Court of Appeal decision overturns the High Court decision that had found that Colliers International had negligently overvalued a German commercial property. Colliers International had valued the property in Germany at €135m while the original High Court decision had put the value on the property at €103m.
RPC says that the Court of Appeal ruled in favour of Colliers International because the lower court's assessment of true value did not reflect prices and yields achieved in previous sales of the property and other recent valuations of the property.
Helene Lee, Senior Associate at RPC, comments: "We are pleased to have achieved an excellent result for Colliers International. It is a vindication of our client’s valuation team."
"It shows that where a court judgment produces a valuation that is not properly explained and doesn’t meet the standards of the property valuation profession, then valuers should not be afraid to appeal that decision."
RPC adds that the Court of Appeal decision also provides clarity over whether a securitisation vehicle can sue, which could have a wide-reaching impact in the banking and valuation markets.
RPC says that this is the first case in which the courts have considered whether a securitisation vehicle (as opposed to the Noteholders, who invest in the securities) have a right to sue a valuer.
The Court of Appeal ruled that the securitisation vehicle does have a right to sue. The claimant, Titan, was a securitisation vehicle set up by the original lender, Credit Suisse.
Alexandra Anderson, the RPC Partner leading the team for Colliers, adds: "This decision will be welcomed by valuers as it means they are less likely to be faced by a wide range of claimants from different financial institutions."