This case examines the limits of surveyor liability in construction cases, as well as underlining how decisive expert evidence can be.
Background
The focus of this claim was on the role of an Independent Fund Monitoring Surveyor (‘IMS‘), in providing their opinion as regards a development in Liverpool. The developer of the project was Signature Living Residential Limited (‘Signature‘), who were going to convert and refurbish an existing building, known as Ralli House, into over 120 residential flats and associated communal areas.
An IMS is appointed to protect the interests of parties who have a financial stake in a building project, for example lenders or investors. The IMS checks the progress of the project for them, normally approving the drawdowns of funds as the project progresses. They are most commonly RICS (Royal Institution of Chartered Surveyors) accredited professionals with extensive experience in building surveying and construction project management.
You cannot escape the responsibility of tomorrow by evading it today.” Abraham Lincoln
Here, the lender, Eiger Funding (PCC) Limited (the ‘Claimant‘), had relied on the advice of Ridge and Partners LLP (the ‘Defendant), who were appointed to act as the IMS for the Claimant. The IMS was to assess the feasibility of the Ralli House project, and, in particular, the financial viability of the borrower’s projected cost and time to complete. In reliance on their advice, the Claimant advanced a £12.9 million loan to refinance an existing loan and to fund the completion of the project.
Just over 17 months into the loan, Signature went into administration, resulting in losses of approximately £10.8 million for the Claimants.
The Claim
The Claimants brought a claim of professional negligence against the Defendants, when it was subsequently found that the report they had relied on was inadequate in several key respects. The Claimants argued that they had advanced the loan in reliance on the information provided in that report.
The criticisms of the report included underestimating the construction costs, not having any independent assessment of the completion costs and failing to identify the conflict of interests which existed between the parties.
Conflict of interest
There was a conflict of interest as the Defendant had previously acted for Signature on this project, so was in effect reviewing their own earlier work. The Court found that this conflict was not handled properly in accordance with RICS guidelines which mandates that the conflicted firm must seek written ‘informed consent’ from the relevant parties before proceeding, which the Defendant did not obtain.
“No transaction” claims
The Claimant argued that it would not have entered into the loan at all had proper advice been given by the Defendant, known as a “no transaction” claim. This was accepted by the Court who agreed that on the facts, the surveyor’s advice clearly formed part of the lender’s decision-making process and was a condition precedent to lending. This demonstrates that the work undertaken by an IMS can be subject to a “no transaction” claim, where their advice is key to the lender’s decision making.
Outcome
The Court agreed that the IMS had relied too heavily on numbers they had been supplied with by Signature and had failed to carry out sufficient scrutiny of those figures. It was emphasised that an IMS must exercise genuine independent professional judgement in the execution of their role. They must investigate all the information provided, reaching their own conclusions and not merely relying on the figures provided by a borrower or developer.
Quality is everyone’s responsibility.” W. Edwards Deming
Limits on recovery
Even though the Claimant successfully established breach, causation and reliance in this case, the Claimant did not recover its full losses. The Claimants were only awarded £2.5 million, a much lower figure than they had hoped to recover.
The Court applied the framework established in Manchester Building Society v Grant Thornton UK LLP [2021] UKSC 20 (18 June 2021) and focused on the specific risk that the surveyor had been engaged to address. It was clear that in following the Manchester Building Society case, the risk assessed was specifically that regarding the construction costs and cost to complete. The overall failures of the project, and the losses flowing from that, were deemed to fall outside the IMS’s scope of duty. This confirms that the IMS is responsible only for the consequences of its construction cost advice being incorrect, not for all the consequential costs of the loan failing.
Conclusion
This decision marks part of the ongoing trend of a more conservative approach to recovery in professional negligence claims, as well as reiterating what an IMS is responsible for and, importantly, what they are not.
Even in a “no transaction” case, the damages recoverable will be limited to the losses falling within the scope of the duty undertaken by the IMS. Damages were restricted to the losses for which the IMS was actually responsible and will not extend to a lender’s overall losses suffered on an unsuccessful project.
It was noted that the quality of the expert evidence was decisive in this case, with the judge accepting in full the evidence from the Claimant’s expert witness, David Griffiths of Expert Evidence International, and agreeing that it was reasonable for the Claimants to have relied on the evidence given by the IMS in their report, again underlining the value that an experienced expert can bring to a case.
Link: Eiger Funding (PCC) Limited v Ridge and Partners LLP [2026] EWHC 609 (TCC) (16 March 2026)
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