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Securitisation issuer awarded damages for valuer’s professional negligence

09 February 2015

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.

Comment

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.

Stephen Cannell