A Court of Appeal judgment on causation may be significant for those involved in real estate transactions and interested in Planning.
A London law firm has lost its challenge to a decision that it had acted negligently in relation to the purchase of a £26m London property.
In 2015 the High Court ruled that Bird & Bird was negligent when it did not inform overseas property developer Orientfield Holdings Limited of the results of a search report which detailed several planning applications within 300m of the property, and a nearby proposed major development.
Issue
After exchange and shortly before completion the purchaser of 56 Avenue Road, a £26m London residential property, wanted to back out on discovering a number of planning applications within 300m of the property and a proposed major development nearby.
The purchaser refused to complete and the vendor commenced proceedings seeking forfeiture of the deposit, a claim which was compromised on a 50/50 basis.
The purchaser then sought to recover the lost deposit and costs from its conveyancing solicitors, Bird & Bird for what was claimed to be their negligence and breach of contract for failing to give the purchaser details of the planning applications and proposed development.
Judgment was given in favour of the purchaser in the High Court.
Bird & Bird’s appeal was dismissed by the Court of Appeal in a judgment on 9 May 2017 which upheld the High Court’s decision that Bird & Bird was liable and ordered to pay the purchaser the compromised sum paid to the vendors and the costs of the vendors’ claim.
Facts
The key facts were that;
- the purchaser had not visited the property
- in the Property Information Form the vendors answered;
- No to the question – ‘Have any notices or correspondence been received or sent e.g. from or to a neighbour council or government department, or any negotiations or discussions taken place which affect the property or property nearby? If yes, please give details.’
- ‘Please make your own inquiries’ to the question – ‘Is the seller aware of any proposals to develop property or land nearby or of any proposals to make alterations to buildings nearby? If yes, please give details.’
- in the light of these answers Bird & Bird completed a 52 page Plansearch report which;
- provided brief details of a significant number of planning applications within 300 metres of the property
- included a ‘Summary’ page which indicated the total number of applications in various categories, distinguishing between ‘large’ (developments with an estimated value over £100,000), ‘small’ and ‘minor’ applications
- included a map indicating the location of applications in respect of which permission had been granted within 250 metres of the property.
- included one large application and a further small application relating to 80 Avenue Road which were not highlighted by the Plansearch report (see property location plan below)
- Bird & Bird provided a Report on Title which made no mention of the Plansearch Report or the development
- in relation to the pre-contract enquiries the Report on Title stated;
‘The information provided by the sellers in their replies to our pre-contact inquiries did not reveal anything that adversely affects the property.’
Property location
Legal point
In the Court of Appeal it was acknowledged ‘there was some force in Bird & Bird’s submissions that the High Court judgment should have worked through the issue of causation more methodically and explicitly, and set out what information should have been provided to the purchaser, what the purchaser would have done, and what would then have happened.
Nevertheless the Court of Appeal concluded that the High Court Judge had sufficiently considered what an appropriate summary of the Plansearch report would have revealed and the conclusion cannot be faulted adding in the judgment;
‘Orientfield Holdings would have known about the development before exchange, and the conclusion that [it] would have withdrawn from the purchase at that time is unassailable’
Comment
As cases are fact-specific care should be taken when attempting to rely on this authority.
Interestingly after conclusion of the vendor’s claim against Orientfield Holdings Limited, the property was sold three years later for £37.8 million, over £11 million more than agreed between the vendors and Orientfield Holdings Limited, a fact which appears to be difficult to reconcile with the High Court and Court of Appeal judgments in this case.