Issa lender sues QS for £9.9m
Loans on the failed Sarah Tower development in Manchester by Bashar Issa are at the centre of a High Court claim by Bank of Ireland against consultant Faithful+Gould.
Bank of Ireland is suing F+G for £9.9m, alleging the loan was based on information supplied by the consultant which the bank says failed to effectively appraise risks, capabilities, financial strength of contractors, and to effectively monitor progress.
F+G was appointed as a quantity surveyor on the £25.6m 24-storey Sarah Tower by Issa Developments in 2005. Work stopped in 2008 after contractor BS Construction, also controlled by Issa, fell into administration. Issa was declared bankrupt in 2009.
Bank of Ireland provided most of the funding for the development and approved a £15m loan facility for Issa Developments.
The £9.9m claim at the High Court in London relates to £3.1m drawn down by Issa on the Bank of Ireland loan facility, as well as further damages and accrued interest.
F+G said it gave Bank of Ireland sufficient warning about the risks before and during the process. In its claim, Bank of Ireland said four of the contractors appointed had liabilities in excess of assets, putting them in an insolvent position. It claims none of the firms had the experience or capabilities to take on a job of Sarah Tower's scale.
The bank alleged F+G did not point out there was not a formal contract between Issa and contractor BS Construction.
F+G responded that 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."
The site was later acquired by Property Alliance Group and a 12-storey Premier Inn was built.
A spokesman for Faithful+Gould 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.
