INTERNATIONAL FIRM HAS WINGS CLIPPED IN HIGH COURT PROFESSIONAL NEGLIGENCE PROCEEDINGS

International law firm Bird & Bird may have had their feathers ruffled by the High Court’s apparent decision to order payment of £1.8 million to their former client Orientfield Holdings Ltd in professional negligence proceedings. The recent unreported High Court case may serve as a reminder that conveyancing solicitors should carefully consider information arising from pre-contract searches and ensure that they disclose all information which might be of importance to the client prior to exchange of contracts.

It is understood Orientfield Holdings Ltd, an off-shore investment company, instructed Bird & Bird to act in the purchase of a £25m luxury property in North West London, now purportedly owned by Elisabeth Murdoch, daughter of Australian media tycoon Rupert Murdoch.

At the pre-contract stage Bird & Bird supposedly commissioned a Plansearch Plus report which revealed that a nearby school site had been granted redevelopment planning permission. It is understood that it was alleged in the proceedings that the firm did not raise this with their client in the report on title or at any stage prior to exchange of contracts, informing them instead that the information that the seller provided pre-contract did not reveal anything “nearby” adversely affecting the property. Orientfield then allegedly rescinded the contract for sale upon discovery of the proposed nearby redevelopment, forfeiting the £2,575,000 deposit to the sellers. A settlement was purportedly reached with the sellers in respect of the deposit with the investment company issuing proceedings against Bird & Bird to recover the balance of the deposit plus interest; their costs in the settled proceedings and fees incurred in relation to proposed refurbishment works plus solicitors’ fees paid to the firm from the exchange of contracts.

Judgment has apparently recently been given in favour of the Claimant, although the judgment has yet to be released by the Chancery Division. It is understood that the judge held that the solicitors were under a duty to bring the redevelopment planning permission to their client’s attention and that they had breached this duty by failing to do so and by stating that the information contained in the Plansearch Plus report did not reveal anything that adversely affected the property.