London law firm Mishcon de Reya is being sued for more than £48m by a property development company that alleges the firm gave negligent legal advice.
Aurium Real Estate London Ultra Prime, a property company set up to develop an area around the Bayswater Road, near Hyde Park, central London, alleges that advice given by the firm directly led to Aurium losing over £48m of the £53m it had invested in the project.
According to court document, Aurium planned to buy the site, secure vacant possession and obtain planning permission before selling it on. The company hired development and design form Fenton Whelan to project manage, and Fenton Whelan hired Mishcon as lawyers.
The development hit a hitch when a tenant of one of the ground floor and basement properties refused to agree terms. According to court documents, Mishcon advised that developers could demolish the building from the top down, and build around the ground floor and basement without breaking the terms of the tenant’s lease.
Lawyers for Aurium say that in 2017 Aurium agreed to sell the project to a Hong Kong developer for a profit of £48m. However, the tenant of the building issued legal proceedings against Aurium alleging the “build around” plan breached its lease, and the Hong Kong developer withdrew the bid.
Aurium was then forced to extend its finance and ultimately had to assign its interest in the project to an investor.
Aurium argues that its loss was due to advice give by Mishcon. The law firm denies this. It is arguing that the advice it gave was not “wrong”, it was not the reason why Aurium lost out on the deal, it gave no advice to Aurium, and Aurium is acting with the benefit of hindsight.
They are countersuing for unpaid legal fees.
The case is being heard in business and property division of the High Court, and is scheduled to last for three weeks.
