£12.7m mortgage fraud case settled out of court

Thursday 28th June 2012

A huge mortgage fraud case that had been keenly awaited in the legal world has been settled out of court at the last minute.

Neither Barclays nor Savills would comment on the matter, which The Lawyer magazine had tipped to be one of this year’s top 20 court cases.

Barclays had launched the case in an attempt to recoup £12.7m, and was seeking the damages from mortgage brokers Savills Private Finance and chartered surveyors Stocker & Roberts Partnership.

It alleged cases of mortgage fraud between September 2006 and April 2007.

It had also launched a professional negligence claim against Montague Lambert and the firm of solicitors formerly known as Saracens LLP.

Barclays claimed that Stocker & Roberts prepared valuation reports that were ‘persistently and grossly overvalued, consistent with a fraud’.

It also claimed that, in four of the actions, Savills introduced the borrowers to Barclays and commissioned reports from Stocker & Roberts, and that in two of those, the professional acting for Savills received payments of £10,000 and £70,000 into his personal bank account shortly afterwards.

In one of the mortgage transactions, involving two properties in London, Barclays had claimed that a property was valued at £19.5m when it was worth £10.6m.

According to Savills, their man was dismissed in November 2007.

All the parties had denied all the allegations, and a trial had been expected to start this month and to last five weeks, but Michael Douglas QC said that Barclays had reached individual arrangements with each of the defendants and that an all-encompassing agreement had been made between all parties to ensure ‘absolute finality’ on the case.

At the beginning of this year, The Lawyer magazine said: “The case is typical of several major mortgage fraud claims, which litigators say have been circling the City for some time without confirmed instructions.

“Professional negligence lawyers will be observing the case closely, as it provides an opportunity for the country’s leading professional negligence silks to go head-to-head.”

In May last year, Savills sold Savills Private Finance to the brokerage’s senior management team, but continues to hold a 19.99% stake in the business, now renamed SPF Private Clients.

A spokeswoman for Barclays said: “The parties have settled the claims. The terms of the settlement are confidential.”

A spokeswoman for Savills declined to comment.

It is not known whether police or any regulatory bodies are investigating the events surrounding the case.