Solicitors negligently advised on property purchase by failing to explain the results of a Plansearch report obtained in respect of significant property purchase and deciding the results were not adverse.

16 / 05 / 2017

Wedlake Bell LLP, on behalf of Orientfield Holdings Limited, took on a claim in 2012 against Bird & Bird LLP for damages as a result of breach of contract and negligence.

The claim originated from the abandoned acquisition of a property in St John’s Wood, London, by Orientfield Holdings Limited, in respect of which Bird & Bird LLP had acted. The acquisition was abandoned following exchange of contracts when plans to develop a 100 pupil school into an 8 storey academy were discovered and Orientfield Holdings subsequently lost its deposit.

Orientfield was successful at trial in 2015 with the Judge finding that Bird & Bird were under an obligation to summarise the effect of a Plansearch report obtained during the conveyancing process, which revealed the existence of the development pre-completion. Orientfield was awarded £1.8M in damages, plus the costs of the claim.

Bird & Bird made an application for permission to appeal, listing 10 grounds in respect of which they felt the judge had erred. Permission was granted by Dame Janet Smith in the Court of Appeal in respect of grounds 1 to 3 of the 10 requested grounds.

Bird & Bird renewed its application for permission to appeal in respect of the refused 7 grounds (4 to 10). This was listed for hearing on 23 November 2016. Conversely, Orientfield felt the initial grant of permission in respect of grounds 1 to 3 had resulted from a misunderstanding by the judge and as such took the unusual step of making an application for an order that this limited permission be overturned.

At an interim hearing both sides were unsuccessful in their applications. The Defendant was not granted permission in respect of grounds 4 to 10, however permission remained in respect of grounds 1 to 3.

The full appeal hearing took place on 17 January 2017 at the Court of Appeal in London, which ruled that whilst the judgment could have explained in greater detail what information could have been provided to the purchaser, the judge has considered what an appropriate summary was in the original judgment. As such, there was no basis to interfere with the original ruling that the solicitors should have summarised the effect of the Plansearch report and given the client the opportunity to decide what to do next in respect of the acquisition. In this instance the client would have instructed them to make further investigations and would not have exchanged contracts. The appeal was dismissed and the Claimant awarded its costs of the appeal.

To discuss the issues raised in this article please contact: Tammy Evans at tevans@wedlakebell.com