London law firm Mishcon de Reya has defended itself against a multi-million-pound negligence claim brought by a developer over a scheme near Hyde Park.
Aurium Real Estate London Ultra Prime, a company set up to develop an area around Bayswater Road, W2, sued the law firm, claiming that its advice led directly to Aurium losing more than £48m of the £53m it had invested in the project.
Aurium was seeking to recover the £48m plus interest.
At a three-week trial in March, lawyers for the company claimed that Aurium planned to buy the site, secure vacant possession and obtain planning permission before selling it on. The company hired development and design firm Fenton Whelan to project manage, and Fenton Whelan hired Mishcon to provide legal advice.
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 the developer 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.
Aurium argued that this was negligent advice that ultimately led to a potential buyer pulling out of the deal, causing it a loss.
Mischon denied negligence from the start and counter-sued Atrium for around £300,000 in unpaid legal fees.
In a ruling handed down this week, trial judge Jonathan Richards backed Mishcon and ordered Aurium to pay the unpaid legal fees.
The judge said the loss claimed was “outside the scope” of Mishcon’s duty. Aurium was not the counterpart to the contract to provide legal advice, so Mischon owed it no contractual duties, he ruled.
In addition, the judge found that the firm had acted reasonably and responded properly to what it had been asked to advise on.
“Having been asked for high-level and preliminary advice, [Mishcon] were not obliged to anticipate what build-around scheme might ultimately emerge,” the judge said in his ruling.
“In my judgment, even if, contrary to my conclusion…, Mishcon de Reya owed duties to Aurium in connection with the advice, it did not negligently breach any duties so owed.
“Aurium’s claim is dismissed. Judgment is given for [Mischon] on its counterclaim.”
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