Bird & Bird liable for £2 million

Leading solicitors Bird & Bird has just been found liable in the High Court for a £2 million breach of duty after failing to advise their client of a planning application close to a £25 million property. Given the huge liability exposure, Paul Addison from DevAssist asks: “How much more do you need to convince you to take more care with planning searches?”.

A recent High Court ruling has firmly drawn a line in the sand on the debate over whether or not conveyancers need to review planning search information more rigorously.

The well-known top 50 firm, Bird & Bird, acted for Hong Kong businesswoman Rebecca Chow on a seven bedroom property at 56 Avenue Road, London NW8. A £2.75 million deposit had been paid through a British Virgin Islands vehicle, Orientfield Holdings.

On discovering that a new academy school, housing 1400 pupils and reaching some six stories in height, had received full planning permission for development close to the property, Orientfield withdrew from the purchase. Matters were settled with the vendor, but Orientfield pursued Bird & Bird for half of the deposit, plus costs.

Clear absence of detailed advice

It was argued that Bird & Bird had a clear duty of care to advise Mrs Chow on the contents of the Plansearch report that was obtained, which highlighted the presence of the planning application.

Wedlake Bell LLP, acting for Orientfield, argued that Bird & Bird should have stressed the potentially negative impact of the property’s intended use ahead of the purchase, and that not doing so represented a breach of duty.

His Honour Judge Mark Pelling QC said: “It was a breach of duty to say, as was said, that the information provided did not reveal anything that adversely affects the property.” He added: “It is for the client to judge the impact of the material, not the solicitor.”

Given that Ms Chow had intended to spend £29 million on purchase and refurbishment, she was entitled to take the view that the construction of the school was an adverse factor that mitigated against proceeding and one which “altered the risk profile” of the purchase.

Understand the risk, assessed by experts

The critical part here is the understanding of how the risk changed. How can the client make the judgement without a full analysis being made available to them? Case law now proves that they can’t and that you will fall foul of your duty of care requirements if you do not supply it.

With rising property values, the stakes are increasingly high – not only on the investment capital at risk, but just simply around making decisions in the context of an ever changing and fast moving development landscape.

STL are pleased to offer its clients DevAssess to combat exactly this kind of scenario. The report critically analyses land use zoning and existing and dormant planning applications. This makes sure clients get crystal clear advice that can be relied upon. Thus avoiding the trap that Bird & Bird fell into.

Potentially millions of pounds of damages can be avoided by ordering a more detailed interpretation on planning searches, safeguarding your client’s funds and mitigating your firm’s negligence risk. Rely on professional, detailed searches from STL to provide the guidance that will help your client decide.

Next steps

For more information on DevAssess or any of the other interpreted planning and development risk reports from DevAssist, call us on 0800 318611 or email [email protected].

Register here for our FREE Webinar “How to avoid being sued for £2 million”, 6th October 2015 at 11.00am.

This article was submitted to be published by STL Group Limited as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.

Today's Conveyancer