Law firms face £6m negligence claim from property investors


Investments: Hotels and student digs were not built

Two law firms have been facing multiple claims worth nearly £6m from disgruntled investors who lost money on hotels and student accommodation that were never built.

Northampton-based Scott Fowler and Yorkshire firm Wilsons were facing four separate claims involving multiple claimants, totalling 166 against Scott Fowler and 56 against Wilsons.

The information about the case came out in a ruling on costs budgets from Chief Master Marsh in the Chancery Division, handed down last week following a hearing in May. He said some of the cases have settled in the time since the hearing, but did not specify how many.

The claimants, many of who are resident abroad, agreed to purchase as an investment a long-leasehold interest in units of hotel and/or student accommodation which were to have been built at seven locations across England.

They had to pay substantial deposits ranging from 30% to 50% upon exchange of contracts. The developments were not built and the developers became insolvent.

The deposits should have been protected against default by the developer by deposit protection bonds taken out with Northern & Western Insurance Company Ltd (NWIC). However, NWIC did not pay out under any of the bonds and entered insolvent liquidation.

It is alleged that Wilsons and Scott Fowler, which acted for the claimants, were in breach of their duties and liable for the claimants’ losses. The claims have an aggregate value of about £5.7m.

The four claims are not subject to a group litigation order but are being case managed in a similar manner, with 22 lead cases being tried.

Master Marsh said there was another group of claimants out there, but their application to be case managed with these four was rejected. He did not name the defendant/s.

He added that one additional claim was brought against Hull firm Graham & Rosen, “but that claim is no longer pursued following settlement terms having been agreed”.




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