Solicitor negligent for failing to warn client of planned development

In the recent case of Orientfield Holdings Ltd v Bird & Bird LLP [2015] the High Court has held that a solicitor has acted negligently for failing to warn his client about plans to build two schools in the same street as the client’s new property. The client was purchasing a £25 million property in North West London, specifically number 56 on the street, with the planned school buildings to be nearby at number 80.

After making enquiries from the sellers, the buyer’s solicitors obtained a Plansearch Plus report which disclosed the plans to build the schools. The solicitor did not mention the matter to the client in their report on the title.

The claimant subsequently found out the plans following exchange of contracts and tried to rescind the contract. Somewhat inevitably he ended up in litigation with the sellers. The matter was settled with the claimant and seller splitting the £2.575 million deposit. The claimant then sued their solicitors for the balance.

The High Court held that where a solicitor has information that may affect a client’s decision-making process, he has a duty to inform the client of that information. The court ruled the claimant was entitled to hold the opinion that the school’s development would have a detrimental impact on the property’s value. A reasonable assumption given the nearby schools are aiming to hold a combination of 1400 children; likely to cause some disturbance to the area.

The judge rejected the defendant’s arguments that:

  • The claimant had failed to mitigate the loss by failing to complete the purchase.
  • The claimant had failed to mitigate by not mediating the dispute.

This case should be taken as a huge warning to all practising solicitors and conveyancers to make sure that all information which has been discovered is passed on to clients before exchange. The case also illustrates the importance of making comprehensive enquiries, investigating searches and then preparing a thorough report for the client.

The case can be contrasted to the recent ruling in Kandola v Mirza Solicitors LLP [2015] where solicitors were found not liable for failing to carrying out a search which would have revealed a bankruptcy petition, but had previously warned the client that the transaction was risky.

Do you agree with the judge’s decision in Orientfield Holdings Ltd v Bird & Bird LLP and the sort of precedent the decision could set?

Let us know in the comments section below.

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