Eiger Funding (PCC) Limited v Ridge And Partners LLP
| Judge | Adrian Williamson KC (sitting as a Deputy High Court Judge) |
| Judgment | 16 March 2026 |
| Jurisdiction | England & Wales |
| Claimant | Eiger Funding (PCC) Limited |
| Defendant | Ridge And Partners LLP |
Summary
A development lender sued its independent monitoring surveyor for professional negligence after a substantial development loan went wrong. The lender said it relied on the surveyor's report when it agreed to lend, and that the surveyor had a conflict of interest and had failed to advise that the building contract sum was too low.
The surveyor denied breach and disputed that the lender would have acted differently, and argued that the loss could not be proved. The lender ran a no transaction case: it said it would have withdrawn from the lending altogether had the surveyor advised it properly.
Adrian Williamson KC found the surveyor in breach and awarded the lender 2.5 million pounds. The loan asset was worth less than the lender had been led to believe from the outset, and that shortfall was the recoverable loss.
Background and facts
Eiger Funding, a lender, agreed in November 2018 to lend 12.9 million pounds to a developer, Signature Living, to fund the completion of the conversion of a building at 60 Old Hall Street in Liverpool into about 122 flats and commercial space. The loan was secured by a first charge over the property.
Ridge and Partners acted as the independent monitoring surveyor. Its role was to advise the lender on the development, including the cost to complete and the adequacy of the building contract. Eiger relied on a report Ridge provided on 9 November 2018 when it decided to lend.
The loan did not prosper and the lender suffered a substantial loss. Eiger sued Ridge, alleging that it should never have acted both as the developer's quantity surveyor and as the lender's independent monitoring surveyor, and that it had failed to advise that the contract sum for the works was inadequate.
The issue
The court had to decide whether the surveyor was in breach of its duty to the lender, whether the lender would have withdrawn from the loan had it been advised properly, and what loss, if any, the breach had caused.
The decision
Adrian Williamson KC found the surveyor in breach. Acting as both the developer's quantity surveyor and the lender's independent monitoring surveyor put it in a position of conflict, and its report failed to advise the lender that the contract sum, and so the cost to complete, was understated. The report gave a cost to complete of about 2.9 million pounds when the true position was worse.
On causation, the court accepted the lender's no transaction case: it would have withdrawn from the lending if it had been advised properly. The loss followed from the fact that the security was worth less than the lender had been led to believe:
"the asset represented by the Loan Agreement was less valuable and damaged to that extent as soon as it was entered into."Adrian Williamson KC, paragraph 138
In measuring the loss the judge applied the scope of duty principles in Manchester Building Society v Grant Thornton UK LLP [2022] AC 783, so that the recoverable loss was confined to the consequences of the surveyor's advice being wrong. He measured that shortfall, after allowing for the understated cost to complete, at 2.5 million pounds, and awarded that sum:
"For these reasons, I have concluded that Eiger are entitled to damages in the sum of £2.5m."Adrian Williamson KC, paragraph 139
Practical implications
An independent monitoring surveyor owes a real duty to the lender that appoints it, and a lender can recover its loss when that duty is broken. The surveyor's report is the document the lender relies on to decide whether and on what terms to lend, and a report that understates the cost to complete or the adequacy of the building contract exposes the surveyor to a claim if the loan goes wrong.
The dual role is a trap. A firm should not act both as the developer's quantity surveyor and as the lender's monitoring surveyor on the same project. The two roles pull in opposite directions, and the professional guidance for monitoring surveyors treats the combination as a conflict. A firm asked to take on both should decline one, and a lender should check that its monitoring surveyor is independent of the developer.
Advising on the adequacy of the contract sum is part of the job. The monitoring surveyor is not a passive reporter of figures the developer supplies. It must tell the lender if the contract sum is too low to complete the works, because an underpriced contract is a warning that the development may stall and the security may fall short. A surveyor that passes on optimistic numbers without that warning risks a finding of negligence.
The loss can crystallise at the outset. On a no transaction case, where the lender would not have lent at all if advised properly, the court can measure the loss as the extent to which the security was worth less than represented when the loan was made, rather than waiting to trace every unfolding loss. A lender should plead the no transaction case where it can, and gather the evidence to show it would have walked away.
Practice points
- An independent monitoring surveyor owes a duty to the appointing lender; a report that understates the cost to complete or the adequacy of the building contract can found a negligence claim if the loan fails.
- A firm should not act as both the developer's quantity surveyor and the lender's monitoring surveyor on the same project; the combination is a conflict of interest.
- The monitoring surveyor must advise the lender if the contract sum is too low to complete the works rather than simply relaying the developer's figures.
- On a no transaction case, the loss can be measured as the extent to which the security was worth less than represented at the date of the loan, and the scope of duty principles confine recovery to the consequences of the advice being wrong; plead the no transaction case and evidence that the lender would have withdrawn.