FCA authorised · FRN 7249520117 325 0027Quote & buy →
Titan Europe 2006-3 plc v Colliers International UK plc [2015] EWCA Civ 1083 took the permissible margin of error into the commercial arena. The valuer had valued a large mixed-use commercial property in Germany (warehousing, offices and retail space, let to a single major tenant) at €135 million in December 2005. The property was unusual and specialised, and the market was difficult. The claim arose out of a securitised loan where the valuation had underpinned the lending.
The courts accepted that a valuation of an exceptional and specialised commercial property attracts a wider permissible bracket than a standard property, reflecting the genuine difficulty of valuing such an asset; the trial judge set the bracket at 15% and there was no appeal against that figure. At first instance the valuer was held negligent, but the Court of Appeal reversed that finding: on the Court of Appeal's assessment of the property's true value, the €135 million figure fell within the 15% bracket, so the valuation was not negligent. The case is therefore best known for confirming how the margin of error operates for complex commercial property, and for the valuer succeeding despite a large apparent shortfall against the eventual sale price.
The case also addressed who could bring the claim in a securitisation, with the court accepting that the issuer that held the loan had title to sue. For a valuer, the practical point is that the eventual claimant in a structured finance transaction may be several steps removed from the party originally instructed.
Titan shows the margin of error operating at scale. Apex explains how limit adequacy and defence costs work for higher-value instructions on its surveyors' PI guide, and the parallel issues for cost and project consultants on the quantity surveyors' PI guide. For commercial valuation, the size of the potential loss makes limit selection a considered decision rather than a default.
The scale of the sums at stake in Titan, tens of millions of pounds, is the practical headline for any firm doing commercial valuation. A single instruction can generate an exposure many times the size of a typical residential claim, which makes the choice of limit a considered decision rather than a default. A firm valuing large or specialised assets should think about the largest realistic loss a single instruction could produce, not the average.
Aggregation is the other feature to understand. Where several valuations share an underlying cause, or where one transaction generates multiple related claims, the way the policy aggregates them determines how the limit and excess apply. In a securitisation the eventual claimant may be an issuer or assignee rather than the original client, which affects who gives notice and how the claim is defended. For commercial valuation practices, matching the limit and the aggregation wording to the true scale of the work is central to placing cover that would actually respond to a Titan-sized event.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.
