Property — Sale agreement – Claimant agreeing to sell land – Defendant purchaser retaining part of purchase price in accordance with terms of agreement – Defendant refusing to pay balance on discovery of contamination – Defendant alleging fraudulent misrepresentation by claimant – Claimant commencing proceedings to recover balance of purchase price – Whether defendant establishing actionable misrepresentation – Claim allowed
The claimant sold a 40-acre site, in May 2004, to the defendant. It leased the site back until 30 August 2005 in order to carry out certain demolition works. The purchase price was £12.25m, part of which was retained by the defendant pursuant to the terms of the sale agreement. Although most of the money was subsequently paid, the sum of £150,506 remained outstanding and the claimant commenced proceedings to recover.
The defendant argued that it had entered into the sale agreement in reliance upon a written representation made by the claimant’s director as to the extent of the contamination at the property. It maintained that that representation had been made fraudulently and that, following its purchase of the property, it discovered that more than 14,000 tonnes of soil in the central area had been contaminated by a waste product that contained high concentrations of cyanide.
The central issue turned largely upon the proper interpretation of the contract documents, including the letter containing the representation by the claimant’s director.
Held: The claim was allowed.
There had been no actionable misrepresentation, fraudulent or otherwise, or deceit and the sale agreement contained no relevant collateral warranty or term that would allow a claim against the claimant or its director.
When considering issues concerning the factual matrix, one would expect to find the meaning of the words and the intention of the draftsmen in the words themselves. If they provided a clear solution, one should hesitate before concluding that the draftsmen had used words whose meaning did not suit the objective. The court should not forget that certain matters of fact were within the peculiar knowledge of one side or the other and that; even where a piece of information was known by or available to each party, commercial considerations might mean that it was regarded in different ways by each side: R (on the application of Westminster City Council) v National Asylum Support Service [2002] UKHL 38; [2002] 1 WLR 2956, Static Control Components (Europe) Ltd v Egan [2004] EWCA Civ 392; [2004] 2 Lloyd’s Rep 429, Chartbrook Ltd v Persimmon Homes Ltd [2007] EWHC 409 (Ch); [2007] 1 All Er (Comm) 1083 and Martin v David Wilson Homes Ltd [2004] EWCA Civ 1027; [2004] 3 EGLR 77; [2004] 39 EG 134 considered
On the evidence in the present case, each party had known that: (i) the property was heavily contaminated; (ii) there was widespread chemical contamination across the site; and (iii) extensive remediation works would be required. The precise details of those remediation works were the responsibility of the defendant, as purchaser of the property. In any event, the precise scope of the remediation works and the eventual cost was out of the parties’ hands since it was dictated, in large part, by what the local authority were prepared to accept and what they would insist upon once the defendant decided to develop the property as a residential site.
Accordingly, the claimant was entitled, in principle, to the balance of the purchase price plus interest, with a deduction of an amount that it had separately agreed to pay towards the cost of the remediation works.
Andrew Nicol (instructed by DLA Piper LLP, of Leeds) appeared for the claimant; Simon Lofthouse QC and Lucie Briggs (instructed by Howard Kennedy) appeared for the defendant.
Eileen O’Grady, barrister
