Eiger Funding v Ridge – professional negligence, cost advice and where consultants go wrong
The Technology and Construction Court has handed down judgment in Eiger Funding (PCC) Ltd v Ridge and Partners LLP [2026] EWHC 609 (TCC), a decision which will be of particular interest to quantity surveyors, project monitors and construction consultants advising lenders and developers. At its core, the case is not simply about a failed development in Liverpool. It is about the scope of a consultant’s duty when asked to advise on cost, risk and viability, and the consequences of getting that wrong.
Background and commercial context
The claimant, Eiger Funding, advanced a loan of approximately £12.9 million to fund the completion of a residential conversion project at 60 Old Hall Street in Liverpool. The lending decision was driven by a relatively straightforward commercial model: a short-term bridging facility, supported by a projected gross development value of just over £20 million, and underpinned by the assumption that the remaining works could be completed for around £3 million.
Ridge and Partners were engaged as independent monitoring surveyor. They provided what became known as “Report 16”, issued on 9 November 2018, shortly before the loan was approved. That report was intended to provide assurance on construction costs, programme and risk – in other words, the very matters a lender relies on when assessing whether a development is viable.
The project did not proceed as anticipated. Progress stalled, costs increased, the developer entered administration in April 2020, and Eiger ultimately suffered substantial losses. The claim against Ridge was framed as professional negligence, advancing what is often referred to as a “no transaction” case i.e. had proper advice been given, the loan would not have been made.
What went wrong – the consultant’s role under scrutiny
The court’s findings on breach are highly instructive for construction professionals. The starting point was that Ridge did owe a duty to Eiger, notwithstanding the absence of a formally executed appointment. The court had little difficulty concluding that, viewed objectively, services had been requested and provided for reward, and that a duty arose both in contract and in tort. For consultants, this reinforces a familiar but important point: a lack of formal paperwork will not prevent the imposition of legal obligations where advisory services are in fact provided.
Turning to the substance of the advice, the court found that Report 16 was “confusing and unsatisfactory”. That is a deliberately understated judicial criticism. In reality, the report failed in a number of fundamental respects which go to the heart of construction consultancy practice.
First, the report adopted a revised construction cost of approximately £7.6 million without any proper explanation of how that figure had been derived from the original £10.2 million contract sum. There was no coherent analysis, no benchmarking, and no clear reasoning process. In effect, the consultant endorsed a figure provided by the developer without interrogating its reliability.
Secondly, the “cost to complete” figures were inconsistent and unsupported. Different figures were presented – £3.06 million, £2.93 million and £2.77 million – with no meaningful explanation of the differences between them. The court considered that these were not independent assessments at all, but arithmetic exercises based on developer-supplied data.
Thirdly, there was a failure to engage with obvious warning signs. The cost information provided by the developer was high-level, rounded and lacking in detail. A reasonably competent consultant would either have undertaken a granular cost analysis or, in the absence of sufficient information, warned that the figures were unreliable and that there was a significant risk of cost overruns.
The expert evidence was clear on this point. Whether adopting a detailed measurement approach or a benchmarking exercise using BCIS data, a competent professional would have identified that the proposed costs were materially low and that the true cost of completion could be significantly higher.
Risk allocation and the importance of clear advice
A further aspect of the judgment of particular relevance to construction consultants concerns the treatment of the contractual relationship within the project. The underlying building contract was, on its face, a fixed price lump sum arrangement. However, the report suggested that the revised cost of £7.6 million was “agreed” between the developer and contractor, both of which were entities within the same corporate group. The court found that this required explanation. A fixed price contract provides cost certainty; a target or informal “agreed” cost between related entities does not.
For consultants, this highlights an often overlooked aspect of advisory duties. It is not sufficient to record that a figure has been “agreed”. Where the contractual structure undermines the reliability of that agreement, that risk must be clearly explained. The failure to do so in this case meant that the lender was not properly advised of the true risk profile of the project.
Conflict of interest – marking your own homework
The court also found that Ridge was in a position of conflict. It had previously prepared cost appraisals for the developer which underpinned the original contract sum. In advising the lender, it was effectively reviewing and relying on its own earlier work.
Under the relevant RICS guidance, such a situation requires informed consent. That was not obtained. More importantly, the conflict had practical consequences. The consultant failed to highlight that the original £10.2 million figure was based on 2015 pricing and had not been adjusted to reflect market increases of approximately 20% by 2018.
The lesson is straightforward. Conflicts are not merely procedural issues to be documented and waived. They can directly affect the quality and independence of advice. Where a consultant is “marking its own homework”, the need for transparency and critical analysis becomes even more acute.
Causation and reliance – did the advice matter?
Ridge argued that the report was not in fact relied upon by Eiger, pointing to the absence of any reference to it in board papers. The court rejected that argument. On the evidence, including witness testimony and the commercial context, the report formed part of the decision-making process. Of particular importance was the structure of the loan agreement, which required an acceptable report from an independent monitoring surveyor as a condition precedent to funding. This made the report a critical component of the transaction, even if not expressly referenced in every document. For consultants, this reinforces that advisory reports prepared in the context of funding arrangements will almost inevitably be relied upon, whether or not that reliance is formally documented.
Scope of duty and loss – a SAAMCO analysis
The court applied the principles from South Australia Asset Management Corp v York Montague Ltd and subsequent authorities, focusing on the scope of the duty undertaken by Ridge. Ridge’s role was not to advise on the overall commercial merits of the transaction. It was to provide information and advice on construction costs and associated risks. Accordingly, it was liable only for losses flowing from the inaccuracy of that information.
The key question was therefore what risk Ridge was supposed to guard against. The court answered that clearly. The duty was to protect the lender from entering into a transaction based on unrealistically low construction costs and an inaccurate assessment of the cost to complete. The case was treated as a “distressed asset” scenario, drawing on principles from Nykredit Mortgage Bank Plc v Edward Erdman Group Ltd (No 2). The loss arose at the point the loan was entered into, because the asset acquired was worth less than assumed due to the undisclosed cost risk.
What is particularly striking in this case is the scale of the loss compared to the damages actually awarded. The court awarded only £2.5 million in damages, whilst Eiger’s unrecovered loss was in the region of £10.8 million. The reason lies in the application of the scope of duty principles from South Australia Asset Management Corp v York Montague Ltd. Ridge was not considered responsible for the overall failure of the development, the developer’s insolvency, or the wider commercial outcome of the project. Its duty was limited to advising on construction costs and the associated risk. As a result, the recoverable loss was confined to the financial impact of that specific risk, namely the extent to which the cost to complete had been understated. The £2.5 million figure therefore represents the court’s assessment of that “risk gap”, not the total loss suffered on the transaction.
How CCC can help
This case highlights how early assumptions around cost and delivery can later become central to disputes. When those assumptions do not hold, the issues tend to emerge as delay, disruption and loss and expense, with the key question being how that risk is allocated under the contract. We assist in analysing the contractual provisions and project records to establish that position, and in preparing or defending the resulting claims through adjudication and other dispute resolution processes.
