Exclusive: Bank accuses consultant of failings over an abandoned tower project in Manchester
Bank of Ireland is suing Faithful+Gould for £9.9m over the consultant’s alleged failings on an abandoned tower project in Manchester.
Bank of Ireland appointed Faithful+Gould (F+G) as a quantity surveyor on the £25.6m 24-storey Sarah Tower by Issa Developments on Lena Street in 2005, but work halted in 2008 after contractor BS Construction fell into administration.
Bashar Issa, the owner of Issa Developments – who also controlled BS Construction – was declared bankrupt a year later.
Bank of Ireland arranged to provide the majority of funding for the development and approved a £15m loan facility for Issa Developments, it claims partly on the basis of information obtained from F+G.
According to a claim filed with the High Court in London, Bank of Ireland alleges F+G failed to effectively appraise risks and the capabilities and financial strength of contractors, and to effectively monitor progress.
The £9.9m claim relates to £3.1m of drawdowns by Issa on the Bank of Ireland loan facility, further damages and accrued interest. F+G says it gave Bank of Ireland sufficient warning about the risks before and during the process.
In its claim, Bank of Ireland alleges four of the contractors appointed had liabilities in excess of assets - making them technically insolvent. It claims none of the firms had the experience or capabilities to take on a job of Sarah Tower’s scale.
It also criticises F+G for not making it aware there was no formal contract between Issa and contractor BS Construction and that many construction materials ordered for the project had not been delivered from overseas.
F+G says Bank of Ireland’s losses were caused by its “own acts and/or negligence” and the bank “generally failed to heed various warnings and advice given to it by the defendant in relation to the risk associated with financing the development.”
Work was abandoned shortly after steel frame erection began on site. The site was subsequently bought by Property Alliance Group and a 12-storey Premier Inn has been built on it.
A Faithful+Gould spokesperson said: “We strongly refute the allegations made against us and will vigorously defend Faithful+Gould’s strong reputation. We believe we acted correctly at all times in this matter and are content for it to be dealt with by the court.”
Bank of Ireland declined to comment.