Firm pays out to settle a £9.9m High Court dispute over alleged failings on an abandoned tower project in Manchester

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Faithful+Gould has paid out £3.35m to the Bank of Ireland to settle a £9.9m High Court dispute over the consultant’s alleged failings on an abandoned tower project in Manchester.

The Bank of Ireland sued Faithful+Gould (F+G) in 2012, claiming the firm failed in its duties as the bank’s quantity surveyor on Issa Developments’ £25.6m 24-storey Sarah Tower.

Work halted on the 24-storey tower in 2008 after contractor BS Construction fell into administration. Bashar Issa - the owner of Issa Developments and BS Construction - was declared bankrupt a year later.

The Bank of Ireland - which provided the majority of funding for the development and approved a £15m loan facility for Issa Developments - claimed that F+G failed to effectively appraise project risks and the capabilities and financial strength of contractors, and did not effectively monitor progress.

In its defence F+G said it gave the Bank of Ireland sufficient warning of the risks before and during the process.

Details of the £3.35m settlement, paid by F+G to the bank in January, emerged this month in a High Court judgment on a subsequent Part 20 claim by F+G against property agent CBRE in an attempt to recover some of its losses on the job.

Mr Justice Edwards-Stewart ruled F+G had “failed to prove” CBRE’s actions caused any of the bank’s losses, but found that CBRE had made “gross errors” in its preparation of a development appraisal for the bank for Sarah Tower.

The judge ruled CBRE over-valued the gross development value and site valuation of the Sarah Tower project by 20% and 39% respectively.

In the event of a successful F+G appeal against the Part 20 liability ruling, CBRE should pay F+G £1.73m to cover 55% of its settlement costs to the bank, the judge ruled.

The judge said “it reflects the facts that F+G had a liability to the bank”, but said the bank was also “guilty of a substantial degree of contributory negligence”, adding “I have no hesitation in saying that the bank acted incompetently”.

He ruled F+G’s £3.35m settlement “was a little below its true liability”, which he calculated as £3.6m.

Work was abandoned on Sarah Tower 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 spokesperson for F+G said: “We are disappointed with the outcome of the case but do not have the legal grounds to appeal the court’s decision.

“We are pleased to see this issue reach a conclusion.”

A CBRE spokesperson said: “We have always maintained that the claim by [F+G] was misguided and are pleased that the court has also reached this conclusion.”

The Bank of Ireland declined to comment.