Oliver Morris, a solicitor in our Commercial Property team, takes a look at the recent case of BDW Trading Ltd v Integral Geotechnique (Wales) Ltd  EWHC 1915 (TCC), which discussed when a report commissioned by a seller can be relied on by a buyer.
Bridgend County Borough Council owned a site that had been used as a residential educational centre from the mid-1930s and intended to sell this land for residential development. Prior to going to market, the council instructed Integral Geotechnique (Wales) Ltd to provide a geotechnical report of the site. The council made it clear to Integral that it was fundamental that the report should be capable of being relied upon by any prospective purchaser.
Integral prepared the report, which identified building material containing asbestos in some of the buildings on the site, but failed to mention the risk that where buildings had been demolished there could be asbestos in the ground.
The report stated that it could not be disclosed to a purchaser without Integral’s consent, but that it could be assigned to a potential purchaser. The report was disclosed to the eventual purchaser, BDW Trading Limited, but in error it was not assigned to them.
After completion of the purchase, BDW found materials containing asbestos in the ground.
BDW argued that if the report had disclosed the presence of asbestos in the ground, they would have attempted to reduce their offer for the property. This claim of negligence against Integral, however, was unsuccessful.
The court held that no negligence was established. It also held that the report had not actually been assigned to BDW. The report specifically stated that it did not confer any rights on third parties, and that it should not be passed to other parties without Integral’s consent. Reliance upon the report could only be placed once an assignment had taken place, and here, none had. Without said assignment, Integral had no liability to BDW.
This case highlights the need for buyers of land to consider whether they will be able to rely on a report provided by a seller. Alternatively, buyers should consider whether it is simpler and more cost-effective to commission their own report at the outset.
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