TWO law firms are to defend a negligence claim running into millions of pounds after allegedly failing to warn their clients a property they were buying was “seriously overvalued”.
Jeffrey Green Russell and Lovell White Durrant both say they will contest their liability vigorously at the High Court trial scheduled for Monday next week.
Rentaminster, a property company now in receivership, and the Scandinavian bank SBG Holdings, claim the firms acted negligently over the drawing up of certificates of title to a property Rentaminster bought for u2.5 million in 1989 with the help of the bank.
The allegations focus on the drawing up of a certificate of title to the property, Longbridge Manor, owned by vendors Sales Booster International (SBI).
Jeffrey Green Russell was acting for Rentaminster and Lovell White Durrant for the bank, the writ says.
It is alleged a co-defendant, valuers Peter Bromwich & Co, had seriously overvalued the property by exaggerating the effect of planning consent attached to it.
And the writ claims Jeffrey Green Russell, which drew up the certificate of title, should have alerted Rentaminster to the problems over planning consent which had led directly to the overvaluing of the property.
The writ goes on to claim Lovells also acted negligently in its advice to the bank by claiming it could rely on the certificate as proof of the property's value. It also alleges the firm failed to ensure the certificate was drawn up properly.
The firm acting for the plaintiffs, Reid Minty, believes it is the first case of its kind where certificates of title have been the centre of High Court litigation.
“Certificates of title are a common City device – the question is over the responsibilities firms have in drawing them up,” says partner Stephen Moss.