Property valuers LandMark White are being sued for a "gross overvaluation" of a Sydney office building by the financial services group, Suncorp.
Suncorp alleges LandMark was negligent when it provided Record Investments, the Allco company, with a $115 million valuation for the 13-storey office building at 149 Castlereagh Street in Sydney's CBD.
Allco had purchased the property for $35 million in 2007, then received a $90 million mortgage facility from Suncorp to renovate the building based on a $115 million valuation.
However Suncorp's claim before the Federal Court suggests the renovated building was only worth $65.6 million with Landmark alleged to be negligent partly because it relied on a 100% occupancy as soon as the renovations finished.
"A reasonably competent valuer would not have assumed that the property would be more than one-third leased on practical completion," Suncorp said in its statement of claim which was reported by Fairfax Media.
LandMark also failed to take into account poor pedestrian traffic flow and access, poor natural light and an excess of columns in the building, and the lack of vehicular access "with the result that all goods, including waste removal, would have to be carried in and out of the building at the street frontage".
Suncorp claims it was left $40.2 million out of pocket after Allco collapsed and is seeking compensation and damages.
The building was in the news in late 2011 when the Allco asset was re-listed after a sale failed to get across the line. It finally sold last year at $40.6 million to Blackstone at a reported 46% discount to the face value of the debt from Suncorp.