A developer is suing Britain’s sixth biggest law firm, Dibb Lupton Alsop, for more than £600,000 over a property finance deal that went wrong.
A high court writ claims the firm’s Birmingham office advised both sides in negotiations over a funding deal, but drew up a contract that favoured the funders and did not reflect what developer Chapel and London Estates intended.
Chapel and its four private backers say Dibb Lupton never warned them what the paperwork really meant, and as a result they were left out of pocket to the tune of over £597,000.
In 1994, the writ alleges, Chapel entered negotiations with a private financier, Eric Grove, to fund the acquisition and development of property at 57-61 Chapel Street and 24-30 London Street, Southport.
Chapel had regularly used Dibb Lupton as its lawyers and instructed John Booth, a partner in the firm, to handle the conveyancing. In the meantime, however, Groves instructed Richard Ollis, also a partner in Dibb Lupton’s Birmingham office, to advise him on the finance arrangements.
Chapel and its four guarantors signed a loan agreement in August 1994. The development was not profitable, and Chapel sold it on at a loss to a company controlled by Grove and his family, which later made a significant profit on it.
Chapel claims that if the lawyers had drawn up the agreement properly, it would have been liable to pay Grove £1m. But, under the terms of agreement as drawn up by Dibb Lupton, Grove claimed a further £1.25m from Chapel and £1m plus interest from the guarantors.
The writ says Dibb Lupton should have known that Chapel and the guarantors would have relied on the law firm to draw up the paperwork “in a way which fairly and accurately reflected the terms” they had agreed. In fact, Chapel claims, Dibb Lupton took instructions on how to draw up the contract only from Grove.
Chapel says the law firm breached its duty by failing to explain what the contract meant “in clear and unambiguous terms”, and without warning them to take independent advice from another firm of solicitors.
Chris Rawstron, managing partner of Dibb Lupton’s Birmingham office, said: “The claim will be vigorously defended.”
EGi News 13/10/99
