“Investors cannot demand repayment of sums due and owing under the Loan Notes until all amounts outstanding under the Senior Facility, the Bridging Facility, the Mezzanine Facility the Advisers’ Agreements and amounts owing to unsecured creditors are fully discharged to the satisfaction of [BoS] and [ERIML] respectively. “No income will be distributed to Unitholders and no interest arising will be paid to Loan Noteholders until such time as the obligations within the Intercreditor Agreement are discharged. “Unitholders and Loan Noteholders are required to accede to the terms of the Intercreditor Agreement so that they are bound by it.”
“Put shortly, it is not disputed that the valuer’s scope of duty is limited to the loss occasioned by a decrease in the security available to the claimant, and no valuer negligence in the present case caused any such decrease in security available to the Claimants, because there is no security available to the Claimants after the Bank of Scotland has been satisfied, nor would there ever have been.”
“Rules which make the wrongdoer liable for all the consequences of his wrongful conduct are exceptional and need to be justified by some special policy. Normally the law limits liability to those consequences that are attributable to that which made the act wrongful. In the case of liability in negligence for providing inaccurate information, this would mean liability for the consequences of the information being inaccurate.”
“But in order to establish a cause of action in negligence he must show that his loss is attributable to the overvaluation, that is, that he is worse off than he would have been if it had been correct.”
“However, for the reasons spelled out by my noble and learned friend, Lord Hoffmann, in the substantive judgments in this case [1997] A.C. 191, a defendant valuer is not liable for all the consequences which flow from the lender entering into the transaction. He is not even liable for all the foreseeable consequences. He is not liable for consequences, which would have arisen even if the advice had been correct. He is not liable for these because they are the consequences of risks the lender would have taken upon himself if the valuation advice had been sound. As such they are not within the scope of the duty owed to the lender by the valuer.” “For what, then, is the valuer liable? The valuer is liable for the adverse consequences, flowing from entering into the transaction, which are attributable to the deficiency in the valuation.”
“It is necessary to recapitulate what this House has laid down in relation to the assessment of damages in cases of the present kind. Two calculations are required. The first is a calculation of the loss incurred by the lender as a result of having entered into the transaction. This is an exercise in causation. The main component in the calculation is the difference between the amount of the loan and the amount realised by enforcing the security.” “The second calculation has nothing to do with questions of causation: see the Nykredit case, at p. 1638, per Lord Hoffmann. It is designed to ascertain the maximum amount of loss capable of falling within the valuer's duty of care. The resulting figure is the difference between the negligent valuation and the true value of the property at the date of valuation. The recoverable damages are limited to the lesser of the amounts produced by the two calculations.” “It is to be observed that neither amount is an element or component of the other. Either may be the greater, for they are the results of completely different calculations. In mathematical terms, they bear the same relationship to each other as a-b does to cd . The figure produced by the second calculation is simply the amount of the overvaluation. It is not the loss or any part of it, and cannot be equated with the amount of the loss sustained by the lender in consequence of the overvaluation. The two are the same only in a case where the lender has advanced 100 per cent. of valuation.”
“A result of this reasoning is that the damages which, in the present case, the plaintiffs can recover are confined to that part of the plaintiffs' basic loss caused by the defendants' negligence which can be equated in money terms to the amount of the defendants' overvaluation.”
“Thus in the case of valuers, and their like, that is to say, those who undertake to provide specific information, the SAAMCo principle gave rise to a subrule, that valuers are not generally liable … for all the foreseeable consequences of their negligence, but only for the consequences of the valuation being wrong. It follows that the damages will usually, though not always, be limited to the difference between their valuation and the correct value; …”
“The second inquiry, although this is not always openly acknowledged by the courts, involves a value judgment ("ought to be held liable"). Written large, the second inquiry concerns the extent of the loss for which the defendant ought fairly or reasonably or justly to be held liable (the epithets are interchangeable). … the inquiry is whether the plaintiff's harm or loss should be within the scope of the defendant's liability, given the reasons why the law has recognised the cause of action in question. The law has to set a limit to the causally connected losses for which a defendant is to be held responsible. In the ordinary language of lawyers, losses outside the limit may bear one of several labels. They may be described as too remote because the wrongful conduct was not a substantial or proximate cause, or because the loss was the product of an intervening cause. The defendant's responsibility may be excluded because the plaintiff failed to mitigate his loss. Familiar principles, such as foreseeability, assist in promoting some consistency of general approach. These are guidelines, some more helpful than others, but they are never more than this.”
“We understand that the loan notes subscribed for will be non-qualifying corporate bonds (“non-QCBs”) and it is assumed for the purposes of this Opinion that their value at the date of subscription is equal to their subscription price. “As the loan notes are non-QCBs any profits or loses in relation the redemption of the loan notes will be taxed as capital gains for UK resident individual note holders. It is not anticipated that any capital profits will be realised on the redemption of such loan notes since … it is assumed for the purposes of this Opinion that the subscription prices equals market value and there is no prospect of a premium on redemption. In the event that the loan notes are redeemed for less than full value a capital loss should be available to UK resident and domiciled note holders based on the actual loss incurred on the loan note (i.e. the difference between subscription value and redemption value, ignoring interest).”
“Investors should seek their own advice on the taxation consequences of an investment in the Trust, especially those investors who are not resident for tax purposes in the United Kingdom or Jersey as they may be subject to tax in their respective jurisdiction. None of Evans Randall the Trustee the General Partner or any of their advisors can take responsibility in this regard.”
“The Opinion is only provided for [ERIML] and the Trust. The Opinion cannot and should not be relied on by any third party who should seek their own independent tax advice as appropriate.”