Two law firms are facing multiple claims of negligence after investors lost millions on student accommodation and hotels which were never built. Northampton-based Scott Fowler face 166 claims and Yorkshire-based firm Wilsons 56 claims from disgruntled investors.
The buyers, many of whom were overseas investors, had put down large deposits of between 30% – 50% on long leasehold properties. These included hotels at Wembley & Woolwich, and student accommodation at Birmingham, Bradford, Liverpool and Leicester.
The developers of the schemes became insolvent and the properties were never built. The investors’ deposits were insured under a deposit protection bond issued by Northern & Western Insurance Company (NWIC). NWIC also failed and was placed into insolvent liquidation, leaving the investors facing the loss of their deposits.
The investors have started actions against Wilsons and Scott Fowler, claiming the law firms were in breach of their duties and liable for the losses.
“These claims demonstrate the risks that firms face if it is alleged that they have repeatedly made the same mistake when they are acting for many clients,” said James Burgoyne, Director – Claims & Technical, Brunel Professions. “Relatively small individual claims can turn into huge losses when multiplied many times over. Regular attention to the adequacy of the insurance limit of indemnity is important, rather than simply following the SRA minimum £2m or £3m requirements.”
Brunel Professions is a leading provider of PII insurance broking to the legal profession. To find out more call Mark Sommariva on 0203 475 3275.