By Sheila Mckeinzie-
The trial of a £65m legal claim against a London firm began in the High Court yesterday. Mishcon de Reya’s negligent advice is said to have caused the collapse of a multi-million pound property development deal, the High Court heard yesterday as the trial of a £65m claim against the London firm began.
Aurium Real Estate London Ultra Prime Limited is accusing Mishcon of failing to provide reliable professional advise to its tenant who was refusing to surrender a lease of premises on the proposed site of a ‘high-end property development’ overlooking Hyde Park in central London. Mishcon is counterclaiming for just over £300,000 in unpaid legal fees plus interest.
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The company is suing Mishcon for £48m at an interest rate of 8% given the collapse of the deal, raising the worth of the claim to £65.8m.
Aurium Real Estate London which has offices in London and Singapore, and through its association with Karas LLP in Hong Kong, claim to counsel clients around the world with vision, dedication and passion. The firm says it fights for freedoms, settle disputes, protect assets and grow businesses. We fiercely guard our clients’ interests and appreciate the privilege of sitting alongside them as a trusted advisor.
In professional negligence claims, individuals or organizations who purport to have a special skill, and who offer that skill to others that rely on it, can be found liable in the event the skill or advice turns out to be in error.
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Aurium Real Estate London had a special purpose vehicle in 2014 to buy properties on the site of the now £500m Park Modern development, and secured £80m in financing to complete the site assembly, secure possession, and obtain planning permission with a view to selling the project on.
The legal suit alleges that Mishcon gave negligent advice in relation to a ‘hold out tenant’, Berkeley Credit & Guarantee Limited (BCG), which refused to give up possession of its lease of premises on the site.
Mishcon is said to have advised in January 2016 on a so-called ‘build around strategy’, by which Aurium would demolish the structure of the building ‘from the top down’ while BCG remained in occupation before rebuilding around the premises, would not breach BCG’s lease.
The High Court presided over by judge Jonathan Richards, heard that Mischon’s negligent advice directly caused the losses incurred by the claimant.
Rupert Reed QC, acting on behalf Arrium Real Estates London, told the court that his client agreed to sell its interest in the project to a Hong Kong-listed developer for £158m in 2017 before the buyer pulled out after BCG issued proceedings for a declaration that the build around strategy would be a breach of its lease.
Reed argued that ‘the negligent advice given by Mishcon in 2016 was directly causative of the losses Aurium suffered’, adding that Aurium ‘would never have embarked on the build around strategy … if Mishcon had correctly advised that the build around strategy carried a serious litigation risk’.
Mishcon disputes the claim and insists that its advice ‘did not identify or describe any “build around” scheme’ , insisting that it ‘cannot be said to have been the cause of the loss of a real and substantial chance of recovering the money invested in the project’.
Ian Croxford QC, for Mishcon, described Aurium’s claim as ‘a product of hindsight’, saying in his skeleton argument that the firm’s advice ‘generally described the rights of the tenant under BCG’s lease and the obligations of the landlord’.
He added: ‘The advice was obviously on its face an abstract exercise and general in its nature and could not conceivably be taken as a green light to a build around scheme free of any conceivable challenge as if such a challenge could be dismissed out of hand.’
Croxford argued that Aurium failed to obtain vacant possession of two other properties, which he said was another ‘fundamental’ problem with the claim.
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