Purchase of land — No rights of connection to sewerage system — Purchaser claiming that land purchased in reliance on representation that land had drainage — Agents’ particulars referred to — Claim for damages — High Court holding that innocent misrepresentation proved — Purchaser entitled to damages for loss incurred — Judgment for purchaser
In 1988 the defendants decided that a small plot of land in Thurloxton, between Taunton and Bridgewater was surplus to requirements and instructed agents to dispose of it. To maximise its value the agents sought and obtained outline planning permission for two dwelling-houses. The plaintiff was looking for investment opportunities. He purchased the land for £87,500 as a joint venture with a builder, P.
An issue arose concerning the drainage of foul water from the site. In response to the question: “Does the property have drainage, water, electricity? Which of them are connected to the mains?” the defendants replied: “Please see the agent’s particulars of sale”. The plan annexed to the draft contract showed the drain going into a main sewer. In fact there was no main drain and the defendants were unable to grant any drainage rights to a main drain. The plaintiff claimed that it had entered into the contract and conveyance in reliance upon/by reason of the vendors’ representation and that the representation was not true and was made negligently. Further, the defendants were allegedly in breach of contract by failing to convey the right, which they purported to grant.
Held Judgment for the plaintiff.
1. On the evidence, the plaintiff entered into the contract for the purchase of the plot in reliance upon the misrepresentations as to drainage made by the defendants’ agents. The plaintiff’s assertion that the misrepresentations were made negligently had not been pursued, but the court was not satisfied that on the evidence the relationship of vendor and purchaser gave rise to the requisite duty of care.
2. The conveyance of the land did not purport to grant a right to connect to the main drain. The defendants were not in breach of contract.
3. It was accepted by the defendants that the proper measure of damages recoverable for innocent misrepresentation under section 2(1) of the Misrepresentation Act 1967 was the measure for fraudulent misrepresentation rather than for negligence at common law; the plaintiff was entitled to recover all losses suffered by him flowing from the misrepresentations, whether foreseeable or not, provided they were not too remote: see Royscot Trust v Rogerson [1991] 2 QB 297.
4. The issue was the degree to which the delay in construction and disposal of the houses on the land was fairly attributable to fault on the part of the defendants. On the evidence such delay was from the point at which building work would have begun in November 1989 until the time it commenced in June 1990. Accordingly, the plaintiff lost use of his capital for a period of six months as a result of the defendant’s misrepresentations.
5. There was no evidence that a better price would have been obtained for the first house had it been disposed of six months earlier. There was a direct comparison as regards the second house with the price obtained nine months earlier for the first. On the premises that the decline in value over that period was linear, it fell by about £2,666 or 3% in the six months preceding the second sale. The loss was suffered equally by the plaintiff and P.
Tor Alloway (instructed by Fladgate Fielder) appeared for the plaintiff; Simon Redmayne (instructed by Radcliffes) appeared for the defendants.
