Orientfield Holdings Ltd v Bird & Bird LLP

A solicitor is generally required to investigate only matters expressly or impliedly within the client’s instructions. However, information actually acquired which may be material must be communicated to the client. The solicitor must not unilaterally decide that potentially relevant information is immaterial, particularly where its significance has not been investigated.

The client is entitled to make the resulting commercial judgment. Causation requires proof of what the client would have done with proper advice. Mitigation does not ordinarily require completion of a transaction which the client reasonably regards as commercially unattractive, nor does it require litigation conduct to be judged with undue hindsight.

Orientfield Holdings Ltd claimed damages from its solicitors, Bird & Bird LLP, arising from the proposed purchase of a high-value residential property. Bird & Bird obtained a planning search identifying large non-residential planning permissions nearby but failed to disclose or explain the report before exchange of contracts.

The claimant alleged that this caused it to exchange contracts, later rescind when the proposed school development was discovered, lose part of its deposit and incur litigation and related costs. The defendant denied breach, disputed causation, alleged failure to mitigate, and pleaded contributory negligence. The issues were whether there had been a breach of duty, whether it caused the claimed losses, and whether the losses should be reduced.

1. Claim succeeded. The defendant was liable for breach of duty, subject to the agreed sums and interest being addressed in submissions.
2. A solicitor is not generally obliged to undertake investigations not expressly or impliedly requested. However, where the solicitor acquires information which may be important to the client, it must be brought to the client’s attention. The threshold for communication is intentionally low. The solicitor is not ordinarily responsible for deciding the business merits of the transaction.
3. Having obtained the Plansearch report, the defendant should have summarised its effect, identified the possibility of further investigation with the local planning authority, and invited instructions. The solicitor was not in a position reasonably to conclude that the report disclosed nothing adverse without inspecting or researching the identified permissions.
4. Causation required the court to determine what a non-negligent solicitor would have reported and what the claimant would then have done. The claimant established that it would have withdrawn or required further enquiries before exchange. Its commercial decision could properly take account of the development’s effect on risk, future saleability and the refurbishment project, even without valuation evidence showing an immediate diminution below the agreed price.
5. The mitigation defence failed. The claimant was not required to spend more than £22 million completing a transaction it reasonably regarded as no longer commercially attractive. Applying British Westinghouse Electric and Manufacturing Company Limited v Underground Electric Railways Company [1912] AC 673 and Banco de Portugal v Waterlow & Sons Limited [1932] AC 452, mitigation did not require conduct that a reasonable and prudent person would not ordinarily undertake, and the claimant’s response was not to be judged harshly with hindsight.
6. The claimant’s conduct in defending and counterclaiming in the Plant proceedings was an appropriate loss-reducing step. Its approach to mediation, viewed in the context of the late and narrow opportunity, the absence of a settlement offer, the parties’ positions and the proximity of trial, did not amount to a failure to mitigate.
7. The contributory-negligence plea also failed. There was no sufficient evidence that a valuation would have revealed the development or that the claimant ought reasonably to have anticipated that it would do so.