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Local searches: if the council gets the replies wrong

View profile for Mark Kendrick
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Property buyers, particular if intending to develop, will often rely on the results of a Local Search, an essential component of the due diligence process on acquisition. In particular planning history and constraints and highways aspects are important. The Local Search is relied on as to the information it provides completely as unlike replies to enquiries or disclosures by a seller it is not caveated or limited by knowledge.

What happens when the information provides by a Local Search, relied on by the buyer, turns out to be wrong? The recent decision in Chesterton Commercial (Oxon) Ltd v Oxfordshire County Council [2015] gives useful guidance. Here a developer buyer bought land in a registered title that included land in front of the buildings, which was used for parking by the occupiers of them. The Local Search indicated that this land was not part of a public highway, but it turned out that it actually was, and was adopted as such. Given that the buyer intended to develop and sell with the benefit of this parking facility, which was a very valuable feature at this location, there was a clear and substantial loss to the buyer’s profit as a result. The claim against the Council succeeded, even though as the Council claimed, they were not told by the buyer, when making the search, that it intended to redevelop the land.

It is long established that a Local Authority can be liable to members of the public in tort. Here that was held to be a duty to keep a list of streets and their extent as adopted to be maintained at public expense, correct and up to date, and by extension to provide a correct Local Search result based on that. It was held that Oxfordshire County Council was liable for negligent misstatement and that it was foreseeable that if the search result was wrong, the buyer could purchase at a price higher than it would have if an accurate result was given, which on these facts would have reflected that the parking spaces would not be available to include on sales on completion of the development.

It was held to be irrelevant that the buyer did not tell the Council that it intended to develop and re-sell, as in this particular case damages were claimed only on the basis of diminution in value on the basis of the existing use. Thus the judgment did not need to address the possibility of lost development profits.  This is fine as far as it goes, but we are left with a conundrum. There is no real way to, on a Local Search application (and in practice solicitors have no means of doing so when these are made electronically using search agents as is now universal practice), make it explicit that the search applicant is buying land for development. Anyway would it make any difference to the accuracy of the replies if it did?

This guide is for general information and interest only and should not be relied upon as providing specific legal advice.  If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.