A seller must give truthful answers to replies to pre-contract enquires (or alternatively refuse to answer them altogether or direct the buyer to make enquiries of third parties). If the reply given is false or misleading, the seller may be liable for misrepresentation. This case considers the correct method of assessing the damages due.
In Alison Quilter v Hodson Developments Ltd [2016] EWCA Civ 1125 the seller failed to reveal, in replies to enquiries, that there had been on-going problems with the communal heating system for some years. The Court of Appeal accepted, based mostly on the oral evidence of neighbours, that there had been such problems, and that tenants of the development had threatened to withhold service charge payments as a result. It held the seller guilty of misrepresentation by omission.
The interesting point of the case was the calculation of the damages. It was accepted that the value of the flat would have been £15,000 lower if the true position had been explained at the time of purchase. So the damages awarded were £15,000. However, Ms Quilter had, in the meantime, managed to sell the flat at full price (disclosing the boiler problems and ongoing dispute) which meant a profit of £35,000 on her original purchase. The original sellers argued that this meant there was no loss flowing from their misrepresentation and no damages should be payable.
In Bacciottini v Gotelee and Goldsmith [2016] EWCA Civ 170 an analagous situation had arisen. The buyer bought a property with planning consent without knowing that that consent imposed a restriction on the permitted use. They sued their solicitor for negligence for not disclosing the restriction, but by the time of the trial the restriction had been lifted permanently in return for a payment of £250. The Court limited the damages to £250, not the wider drop in market value of the property with and without the restriction at the date of original purchase.
In Quilter the court did not follow Bacciottini. It said that Ms Quilter had (as a result of the misrepresentation) acquired a flat that was really worth £15,000 less. Her choice to sell that flat was not triggered by the unreliable boiler and associated points, she had disclosed the history to her buyer in full, and she was entitled to the full benefit of the property market upturn (the £35,000) in addition to the normal measure of damages for the undisclosed defect.
Sue Highmore is a property law consultant
