Eversheds.jpg” alt=”Eversheds sued by Nationwide Building Society” />Eversheds is being sued by Nationwide Building Society for more than £20m after the financial lender found itself the victim of a mortgage fraud.
Nationwide alleges that Eversheds did not give sound advice when the building society was considering whether or not to lend Saleem Arshid and his company SA Estates & Properties £14.25m for a building in Carmathen, Wales.
Eversheds was paid £15,000 plus VAT, according to the claim form made public last week, to investigate the title of the property.
Surveyors Dunlop Haywards, now part of the Erinanceous group, completed a valuation report that supported the view that the Carmathen property was worth between £15m and £19m.
However, in the claim form Nationwide said it was worth less than £1m.
This, Nationwide claims, was something that Eversheds should have been aware of as a result of the property having been purchased by a company called ACE1 for £1m.
The law firm did inform Nationwide of the purchase, but neglected to mention the size of the consideration.
On this point the writ, which was served by Mayer Brown, states: “… the fact that Carmarthen had been purchased eight days earlier for a nineteenth of the purported purchase price and valuation on the current transaction was strongly indicative of mortgage fraud.”
Nationwide feels that Eversheds should have realised that mortgage fraud was a possibility.
The building society said it is not alleging that the law firm had acted fraudulently in any way, although it felt that Eversheds had breached its contractual and common law duties.
Nationwide previously settled on confidential terms with the surveyors involved in the case.
A spokesman for Eversheds said: “In the ruling on the Nationwide v Dunlop Haywards case, Mr Justice Simon quite clearly determined that an employee of Dunlop Haywards, Mr McGarry, acted deceitfully in the preparation of valuation reports on which Nationwide relied. Like Nationwide, Eversheds, who acted for them, was subject to the fraud perpetrated by others.
“Following this ruling, to protect their position, Nationwide has issued and recently served proceedings against Eversheds. While this is ongoing we are unable to comment further.”