In a landmark decision in Titan Europe 2006-3 plc –v- Colliers International UK PLC (“Titan”), the High Court has held that a valuer was liable in relation to its negligent valuation of a property that was collateral for a securitised loan. The Court held that in the case of a complex structured financial transaction of this kind, the circumstances in which legal claims could be brought depended on the contractual terms.
This case appears to be the first brought against a valuer in the context of a securitised loan. It was held that a special purpose vehicle (“SPV”) which is incorporated to issue notes or bonds that fund the purchase by the SPV of mortgage loans could in the event of a negligent valuation bring a successful claim. This will be of considerable interest to other issuers in the market. The SPV submitted that it had suffered a loss the moment it purchased a tranche of the loan. The court accepted that the SPV had suffered loss as a result of its reliance on the over-valuation because it had acquired a loan that was worth less than the amount paid.