Gateley facing law suit over failed apartment scheme

DEVELOPER Empirical Property Group is considering a £250m professional negligence action against Birmingham law firm Gateley.

The case is linked to the failure of the Trafford Press apartment scheme on Chester Road. Manchester, which was being developed by Empirical subsidiary FreshStart Living.

The firm claims Gateley made mistakes in sales contracts that led to deals falling through. This in turn caused funding problems and eventually the scheme stalled. Empirical argues this had a significant impact on its other developments around the country.

FreshStart vehicle FSL Properties Trafford Press failed in September and administrator Leonard Curtis has instructed law firm TLT to pursue a £6m claim reflecting loss of profits and associated costs. It has not yet reached court but in February TLT sent a letter of claim which gives Gateley three months to respond.

Meanwhile, Empirical’s chief executive Charlie Cunningham said forensic accountants are looking into the potential for a much larger claim of between £150m-£250m “in relation to the same group of transactions, the failure of the project and the resulting impact on the group”.

Trafford Press was a high profile FreshStart scheme which involved converting the former buildings of the Veno drug company and the Trafford Press.

In 2011 the plan was for around 116 apartments across old and new buildings. Some renovation work has taken place on the original buildings and there were tenants, until Leonard Curtis moved them out on safety grounds.

In a statement Cunningham said: “FSL Properties Trafford Press Ltd (in administration) has commenced legal proceedings for professional negligence in relation to the purchase and sales of the Trafford Press development. I understand that the amount claimed in relation to loss of profit and associated costs is in excess of £6m.

“Empirical Property Group Ltd, the parent company of FSL Properties Trafford Press Ltd, is also to issue proceedings against Gateley in relation to the same group of transactions, the failure of the project and the resulting impact on the group.

“This claim is significantly more substantial and, whilst forensic accountants are still completing their work, it is expected to be between £150m-£250m. Counsel’s opinion has been taken and our advice is that liability on both claims will be almost impossible to dispute and that damages will be substantial.”

In a statement, a spokesman for Gateley said: “Court proceedings have not begun and Gateley cannot comment on the likelihood of any claim that may take place against it.”