Risk management

Losing the plotVictor acted for Massif Ltd, a company specialising in the acquisition and development of large plots of land for light industrial use.Following three successful schemes, Massif's director, Yves, instructed Victor on an exciting new project.

The money raised from the previous schemes would be channelled into the purchase and development of a new site in a fantastic location with first-class transport links.

The projected profits were substantial, and Victor was assured of an attractive fee.The land in question was already subject to outline planning permission.

Victor wrote to Yves, explaining the workings of the planning system and setting out the risks involved in buying land when only outline permission had been granted.Yves wrote back saying that he understood but that it was essential for commercial reasons that the deal should be tied up as quickly as possible.

In the last paragraph Yves instructed Victor to proceed to exchange of contracts.After completion, Yves instructed Victor to apply for full planning permission.

Victor did so and discovered that, under the terms of the outline permission, Yves could only develop the land if visibility splays were provided at the main entrance to the site.

This would mean encroaching on adjoining land, which was owned by a neighbour.

Victor wrote to the neighbour asking for his authority, but the neighbour refused.Now, for the first time, Victor advised Yves on the terms of the outline planning permission.

He explained that without the visibility splays, he would be in breach of planning if he developed the land in the manner envisaged.

Any development would be liable to enforcement proceedings.Victor now realised how careless he had been.

He should have read the terms of the planning permission at the outset.

If he had done so, he would have advised Yves and Massif that the development potential was conditional on providing the splays, and that this depended on obtaining the right to carry out works on his neighbour's land.Victor still hasn't heard from Yves about whether Massif will seek to recover its losses from his firm.

But, under the Solicitors' Indemnity Insurance Rules 2000, solicitors are obliged to notify not just claims, but also circumstances that might give rise to a claim.Aware that he had made a potentially costly mistake, he sent a report form to his insurers.

Then he prepared a memo to all conveyancing staff on the need to read the terms of all planning permissions with care.l For information on claims prevention, contact Richard Gerrard at St Paul International, tel: 020 7645 6800.