International law firm Bird & Bird has paid £1.8 m in damages after it failed to tell a client that a large school was to be built near the house it was buying.

Orientfield appointed Bird & Bird to handle the purchase of a nine bedroom house in St John’s Wood for £25 million.  When the property sellers failed to fully complete pre-contract enquiries, they directed Bird & Bird to a planning report for the property.  This revealed plans to extend a small local school into a six-floor academy for 1,500 pupils.  Bird & Bird failed to pass this information on and told its client that there were no matters adverse to the property in its Report on Title.

Orientfield only found out about the school plans after it had exchanged contracts.  It pulled out of the purchase and was faced with a claim from the sellers to forfeit its £2.5 million deposit.  The case was settled with the deposit being split between Orientfield and the seller.

Orientfield then started an action against Brid & Bird to recover the balance of the deposit and costs it had incurred in planning refurbishments of the property.  Bird & Bird argued that it was under no duty to advise on the content of the planning report in its defence.  It also said that Orientfield should have mitigated its loss by completing the purchase and reselling it at a later date.

The judge, Honour Judge Mark Pelling QC, disagreed and awarded £1.8 m in damages plus costs against Bird & Bird. “Clients rightly expect and should have professional advisors who act diligently to protect their interests. It has been a hard fought claim, and it is excellent that all of Orientfield’s loss has been recovered, including its legal costs,” said Wedlake Bell partner, David Golten, who acted for Orientfield.

“This case was about a fairly basic conveyancing error,” said James Burgoyne, Director- Claims & Technical Brunel Professional Risks.  “What makes it stand out was the cost of the property and sums of money involved.  All law firms handling property transactions can learn from this case.  They need to ensure that they have tried and tested peer review procedures in place so that errors of this nature cannot occur.”

The case has been reported by Mortgage Finance Gazette, Legal Business and law firm Davies & Partners.