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The Court of Appeal give judgment in multimillion pound property unit trust claim

Date: 08/11/2012

The Court of Appeal handed down judgment today in respect of a two-pronged appeal by Drivers Jonas from the decision of Mr Justice Eder (([2011] EWHC 2336 (Comm)). Drivers Jonas were defendants to an action by a trustee of an Enterprise Zone Unit Trust (and its sponsor) arising out of the Trust’s purchase of a Factory Outlet Centre for £62.85 million in April 2001. The trustee and sponsor successfully alleged at first instance that Drivers Jonas’ valuation of the FOC was negligent (and that they never should have taken the project on in the first place) and were awarded damages on a diminution in value basis.

Whilst no challenge was made to any of the findings on breach of duty, on appeal Drivers Jonas challenged the judge’s findings as to the “true value” of the property at the date of breach, on the basis that the expert evidence before the Court was inadequate for this purpose. This appeal failed, the Court of Appeal finding that the judge had been entitled to find that the true value of the FOC was £44.8 million (Lloyd LJ dissenting).

Drivers Jonas also challenged the judge’s finding that no credit had to be given in respect of damages for tax relief achieved in the investment by the individual investors (who were not parties to the action). The Court of Appeal rejected their primary argument, that credit had to be given for the entirety of the tax relief, but allowed their secondary argument on this point finding that credit had to be given for only the tax relief attributable to the amount of the overvaluation.  

The Appellant valuers were represented by Roger Stewart QC and Sian Mirchandani. The Respondent trustee and sponsor were represented by Sue Carr QC, Graham Chapman and Lucy Colter.

Capita Alternative Fund Services (Guernsey) Ltd v Drivers Jonas (A Firm) [2012] EWCA Civ 1417