*Developers' to sue banks for property market collapse

An industry body representing over 1000 small-scale developers is planning to bring a landmark legal case against bank bosses, regulators and policymakers for their role in the recent property market crash.

The Irish Property Council (IPC) announced the plan at a meeting in Dublin last week and is soliciting would-be plaintiffs by placing adverts in national newspapers in the Irish Republic. The aim of the advertising is to both increase awareness and to raise €250,000 from members to fund legal costs.

"We already have five or six cases we know of that could work…people who are in dire straights because of the amount they were allowed to borrow," said IPC director Seamas Savage. "We're hoping the ads will prompt more people to come forward."

The IPC believe that banks, regulators and policy makers have a "case to answer" in relation to sharing the responsibility for the property collapse.

IPC-retained legal advisors, Ferry Solicitors, will argue that "reckless" lending by banks and a "lack or regulation and incompetence" by the state contributed to the current plight of those who borrowed money to fund property ventures.

The death of personal responsibility

Although a lax regulatory environment undoubtably contributed to the financial crisis that caused the collapse in property prices and transaction volumes; any judgement in favour of the IPC would surely be a dangerous precedent.

Where should we draw the line? Will someone who lost their job as a result of the credit crunch be able to claim compensation from their country’s regulators and banks?

Global edge have three bank managers and I hate all of them; but were they to blame for the financial losses we suffered in 2009? Indirectly perhaps, but the truth is I should have anticipated problems better and laid-off staff more quickly.

Due to long planning lags, developers are always one of the hardest hit in economic downturns. The only way around the problem is better anticipation, agility and innovation. It comes with the territory. If there turns out to be limited demand for developments that were built on flawed assumptions, the best course of action is to accept responsibility and move on.

Looking backwards solves nothing. The only people who win from a course of action like this are lawyers.

Source: Global edge

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