We set out below the facts of a case that we found interesting, as discovered via Practical Law.
The facts are:
The High Court has held that a local authority (LA) was liable to a buyer (B) for an incorrect reply in a local authority search result which B relied upon when purchasing a property. The LA failed to disclose that it had been investigating whether part of the property was in fact highway maintainable at public expense. When it was found that part of the property was in fact highway maintainable at public expense the buyer suffered a loss in the value of the property. The LA were liable in tort as local authorities have a duty of care to keep the list of streets which are highways maintainable at the public expense correct and up to date. The LA was also liable for negligent misstatement.
Our comments: We have been instructed on a number of transactions where the search results have played an absolutely crucial role in the due diligence process prior to the acquisition of a site for property development. What this case highlights is that it was only through the court process that the Local Authority were taken to task. Yes the result benefited the buyer, yes, the buyer was awarded damages. But what about the time spent in litigating? How would that impact upon the “bottom line”? We always advise our clients to undertake site visits at regular intervals and update search results if an acquisition takes longer to conclude than first anticipated. Hopefully such scenarios can therefore be avoided in the future. What this case does highlight is that not even a local authority search result is fail proof. Question everything dear reader!