Auction sale — Premises described in particulars with photograph — Wine bar let under tenancy — Wine bar closed and tenant not paying rent — Whether misdescription — Whether misrepresentation — Whether appellant purchaser entitled to rescind — Appeal allowed
By a contract of sale dated September 22 1988 the appellant agreed to purchase the freehold of 414/6 Coldharbour Lane, Brixton, London SW9, for £141,000 following a successful bid at auction. The appellant was then informed that the tenant of the premises had failed to pay three quarters’ rent and the wine bar, cocktail lounge business was closed following the withdrawal of the justices’ licence. The appellant failed to complete. The respondent brought proceedings for specific performance, alternatively damages and the appellant counterclaimed that by reason of the description of the premises in the auction particulars with a photograph showing the business as “Wine bar by day; cocktail lounge by night”, there was a misrepresentation because the business was no longer being used lawfully. Mr Julian Jeffs QC, sitting as a deputy judge of the Chancery Division, gave judgment for the respondent and dismissed the counterclaim.
Held The appeal was allowed.
The test is whether reading the auction particulars as a whole in its context gives a false impression. The appellant was induced to believe that there was a going concern — a wine bar — bringing in a regular income of rent; the wine bar was in operation and the tenant was trading and had a licence. The premises were not as described and accordingly the appellant was entitled to rescind the contract and to claim damages.
Laurence v Lexcourt Holdings Ltd [1978] 1 WLR 1128 considered.
Norman Primost (instructed by Philip Ross & Co) appeared for the appellant; and Joanne Moss (instructed by Kaufman Kramer Shebson) appeared for the respondent.
