Sale of land – Misrepresentation – Claimants purchasing holiday park – Claimants alleging that purchase induced by misrepresentations contained in vendor’s answers to standard pre-contract enquiries – Whether purchase induced by deceit or negligent misstatement by first and second respondents as vendor’s solicitors – Whether induced by deceit on part of third defendant as managing director of vendor – Claims dismissed
In February 2008, the claimant couple contracted to purchase a holiday park in Padstow, Cornwall, for £1,350,000. The park comprised around 160 fixed chalets let to individual chalet owners on long leases; a touring park for visiting caravans and tents; an area under development to house new lodges; an amenity centre; and a two-bedroom site manager’s flat. The vendor was a company owned by the chalet owners. The first defendant owned one of the chalets and was a member of the second defendant firm, which was the vendor’s conveyancing solicitor on the sale. The third defendant was the managing director of the vendor.
The first claimant was an experienced property dealer who contemplated that he would be able to complete the development of the new lodges and would also be able to carry out any necessary work to the existing developed areas and charge the cost to the chalet owners under the service charge provisions of their leases.
Prior to completion of the sale, the claimants’ solicitor made the usual standard pre-sale enquiries on a British Property Federation standard form, the Commercial Property Standard Enquiries CPSE.1 (version 2.6) (the CPSEs). That form contained an explanation and disclaimer stating that relied to the enquiries would be “given by the Seller and addressed to the Buyer” and that the replies were “given without liability on the part of the Seller’s solicitors”. The third defendant provided the first defendant with the information to complete the vendor’s answers to those enquiries; the first defendant then contacted the third defendant for additional information to fill in certain blanks before passing the answers on to the claimants’ solicitor.
The claimants brought a claim for damages against the defendants, alleging that they had been induced to conclude the sale agreement by misrepresentations made in the answers to the CPSEs with regard to: (i) the physical condition of the park (the park representations); and (ii) how many chalet owners had not paid their service charges for 2008 (the service charge representations).
In relation to the park representations, the claimants alleged deceit on the part of the third defendant and deceit and/or negligent misstatement on the part of the first and second defendants. They also alleged negligent misstatement by the first and second defendants in relation to the service charge representations’ they argued that those representations had induced them to agree the final completion balance and settle up on completion and that they had suffered loss as a result.
Held: The claims were dismissed.
(1) The CPSEs were by nature enquiries of the vendor in respect of a proposed commercial property transaction. Accordingly, the answers provided in response to those enquiries, to the extent they constituted representations calculated to induce the claimants to contract to purchase the park, were representations made by the vendor and not by the defendants. While their content had been provided by the third defendant, and they had been communicated to the claimants’ solicitor by the second defendant, acting in the person of the first defendant, they were representations by the vendor only.
That was fatal to the negligence claim against the first and second defendants in relation to the park representations. The situation did not fall outside the normal rule that a vendor’s solicitor owed no duty of care to the purchaser in respect of the vendor’s pre-contractual representations: Gran Gelato v Richcliff (Group) Ltd [1992] Ch 560 applied. Even without the disclaimer in the opening section of the CPSEs, which confirmed or reinforced the normal position, the claim would still fall within the normal rule. The CPSE was a standard form which a commercial property vendor’s solicitor would expect to be asked to complete. Nonetheless, it was by nature a form submitted by the purchaser for completion by the vendor without liability on the part of the vendor’s solicitor, who would inevitably return the form in due course. To step outside the normal rule would require some indication that personal responsibility was being undertaken notwithstanding that, at the purchaser’s instigation and express request, the process was one in which the vendor’s solicitor was to have no liability. The first respondent had not stepped outside or beyond his role as the vendor’s solicitor with regard to the answers to the pre-contract enquiries and had not undertaken any measure of personal responsibility for the accuracy of the answers notwithstanding that he was an interested and involved chalet owner.
(2) The CPSE disclaimer would not protect against liability for deceit if such liability was otherwise established. On the evidence, the third defendant had provided answers to the pre-contract enquiries without any belief in the truth of those answers and he would therefore have been liable for deceit in relation to the park representations had those representations induced the claimants to enter into the contract. However, the evidence did not establish that the park representations had had that effect.
On the evidence, the freeholder’s service charge entitlement was the only consideration operating on the first claimant’s mind in deciding to buy, so far as concerned the physical condition of the park and the degree to which work would be needed after acquisition. While he might not have had a clear or full idea, when concluding the agreement, that he would need to undertake all the work which he did in fact undertake after purchase, that was not because he was misled by anything said by or on behalf of the vendor about the condition of the park or the need for work to be done to it. The first claimant had visited the park several times before purchasing and, while had had observed that it was rather tired and run-down, he was happy to trust his own, experienced judgment as to its condition. His only concern was whether such work as might prove to be necessary could be charged to the chalet owners’ account. In relation to the condition of the park, the first claimant had not been influenced at all by the CPSE answers. While there was a rebuttable presumption of inducement where a contract had been concluded following misrepresentations by or on behalf of one party calculated to induce the other party to enter into the contract, the presumption was comfortably rebutted on the facts of the instant case.
In the case of the first and second defendants, the claim in deceit also failed on the ground that the first defendant did not know, prior to the sale, of the matters of fact that rendered the CPSE answers untrue.
(3) Nor would the claim in negligence have succeeded against the first and second defendants even if that claim had overcome the CPSE disclaimer and the rule in Gran Gelato and if the court had found for the claimants on the issue of inducement. In respect of the CPSEs, the first defendant had simply carried out a normal, careful, job of going through the form, having received, as often happened, an incomplete initial set of answers from the third defendant as managing director of his client, the vendor, checking them for obvious error and taking instructions so as to provide answers where the third defendant had left blanks. There could be no finding of negligence against the first defendant in the circumstances.
(4) For similar reasons, the first and second defendants were not liable in relation to the service charge representations. When it came to the completion meeting, the relevant information in respect of the service charge was provided by the third defendant directly and the claimants decided to take the risk of inaccuracy to get the completion finalised. In the absence of any representation by the first defendant, the third defendant would still would have provided the same list in relation to service charge payments and the completion balance would have been calculated in the same way according to that list. The first defendant’s representations were not a factor in what happened on completion. Moreover, in those circumstances, no relevant duty of care was owed by the first or second defendants since the first defendant had made, and put his and the firm’s name to, only the representation that the figures he had provided to the claimants’ solicitor were as supplied to him by the third defendant. He had not undertaken any more substantial responsibility for the accuracy of the information that he passed and his failure independently to scrutinise, challenge or second-guess the third defendant’s information could not be said to have been careless.
Jonathan Seitler QC and Emily McKechnie (instructed by Enigma Solicitors, of Plymouth) appeared for the claimants; Francis Bacon (instructed by Caytons Law) appeared for the first and second defendants; the third defendant appeared in person.
Sally Dobson, barrister
Click here to read a transcript of Francis and another v Knapper and others
