A Poole housing development is at the centre of a £200,000 legal battle heading for the High Court.
Developers Merlion Holdings, Merlion Construction, and Merlion Group claim solicitor Welburn & Co acted in breach of duty and failed to warn it had not investigated restrictive covenants on property at Downland Place in Canford Heath, Poole.
The companies instructed the law firm to act for them in August 1997 over plans to buy and redevelop the property, and say they informed it about restrictive covenants in favour of Poole council.
Merlion had planned to build 36 extra houses on the land within six weeks of a purchase and development agreement.
However, after spending substantial sums, Merlion discovered the solicitor had not sought copies of the conveyance or a deed, it is alleged.
The property is subject to development restrictions which mean that no development can be carried out at the property, except in the footprint of the existing building.
Merlion negotiated with Poole council for the release of the covenants, and this was agreed in March 2001.
The deal left Merlion having to release four of the plots intended for development to East Dorset Housing Association for just £100,000, instead of the market value of £320,000.
It also had to pay the council £34,000, the High Court writ alleges.
Merlion claims the legal firm misrepresented that it had requested copies of the 1967 conveyance and a 1970 deed when it had not, and failed to make enquiries about the development restrictions.
It also alleges it failed to warn that it would be unsafe to proceed or spend more money on the project until enquiries had been completed, and exchanged the agreement without advising they had not investigated the restrictive covenants and deed.
Merlion is seeking damages of £195,978 for wasted expenditure and fees, damages for loss of the profit making opportunity, and interest.
EGi News 10/09/02
