Mishcon de Reya has fought off a £65m negligence claim over the collapse of a multi-million pound property development deal, with the High Court today also ruling in favour of the London firm on its counterclaim for just over £300,000 in unpaid fees.

Aurium Real Estate London Ultra Prime Limited alleged Mishcon failed to advise it properly on its approach towards a tenant who was refusing to surrender a lease on the proposed site of a ‘high-end property development’ overlooking Hyde Park in central London.

The company incorporated Bayswater Road (Holdings) Limited (BRHL) in 2014 to buy properties on the site of what is now the £500m Park Modern development and secured financing to complete site assembly, secure possession and obtain planning permission with a view to selling the project on.

Aurium claimed Mishcon gave negligent advice in relation to a ‘hold out tenant’, Berkeley Credit & Guarantee Limited (BCG), which refused to give up possession.

Mishcon was said to have advised in January 2016 that 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.

Aurium’s barrister Rupert Reed QC told the court in March that Aurium agreed to sell its interest in the project to a Hong Kong-listed developer for £158m in 2017, before the sale collapsed after BCG issued proceedings for a declaration that the build around strategy would be a breach of its lease.

The company sued Mishcon for £48m plus interest – which the court heard that, a rate of 8% since the deal collapsed, valued the claim at £65.8m.

But Judge Jonathan Richards today dismissed the claim, ruling that Mishcon ‘owed contractual duties to BRHL, but not to Aurium’ and that the loss claimed ‘fell outside the scope of [Mishcon’s] duty, even if that duty had been owed to Aurium’.

The judge held that ‘even if … [Mishcon] owed duties to Aurium in connection with the advice, it did not negligently breach any duties so owed’. He also found that Mishcon was not asked ‘to advise on even a general proposal for a build around scheme that involved a demolition’, saying: ‘Having been asked for high-level and preliminary advice, [Mishcon] were not obliged to try to anticipate what build around scheme might ultimately emerge.’

A spokesperson for Mishcon said: ‘From the outset it was our belief that this claim was without merit. The judgment supports this position and the matter is concluded.’