White Tower and Colliers International, the opposing parties in the White Tower valuation negligence case, have announced they have agreed to dismiss the case, on the sixteenth day of the trial.
The surprise announcement was made in court this morning, the day after the start of Colliers’ closing submissions.
The issuer of the £1.15 billion White Tower 2006-1CMBS had alleged that in October 2006 Colliers International had negligently overvalued five central London office buildings out of a nine-strong portfolio which were collateral for the securitisation. The negligence, White Tower claimed, had led to a near £39 million loss.
The case was due to conclude tomorrow after going into a fourth week of hearing evidence, including from expert witnesses William Newsom of Savills, appearing for White Tower, and John Bareham of DTZ, appearing for the Colliers side.
The parties agreed a dismissal with no costs payable.
Colliers’ head of valuation, Russell Francis, said White Tower “has discontinued its claim and no money has been paid by Colliers or its insurers to White Tower.”
In a statement Colliers said: “There were doubts about White Tower’s ability to meet an adverse costs order and in those circumstances, Colliers agreed not to pursue an order in respect of its costs.”
In the statement, Francis said: “The valuation of £1.8 billion.. was well supported by evidence at the time, not only of comparable transactions, but also offers made for the portfolio from highly respected active investors in the market.
“We also pursued the argument that White Tower was never our client and therefore had no case against us. We had to spent a considerable amount of time and effort in defending ourselves against a totally unmeritorious claim. We felt our arguments were so strong and White Tower’s were so weak that we were not prepared to pay any amount of money to the claimant.
“The claimant’s eventual decision to discontinue vindicated our decision.”
White Tower had claimed in court that Colliers used indicative values for the properties to inform its eventual valuation without a thorough process being followed and that there was little documentation of the work done.
It had also argued that Colliers did have a duty of care to the SPV White Tower as well as to the bank, Societe Generale, which commissioned the original valuation when it lent property tycoon Simon Halabi £1.45bn to buy the portfolio.
Paul Rivlin, a director of White Tower, said: “The case has been discontinued because the valuation issues were insufficiently clear to us to have confidence that we could overcome the burden on us as claimant to prove a recompensable loss. We were confident in the position we established demonstrating that Colliers had a duty to White Tower.
“The poor quality of the valuation process at the time was admitted by the defence as was a degree of overvaluation. But the burden on the claimant is high and the cost risk is substantial.”