Greenglade Estates Ltd v Chana and another

Sale of land – Warranty of authority – Second defendant holding auction sale – Claimant agreeing after auction to purchase unsold lot comprising seven flats – First defendant owner of flats denying having authorised sale – Claim for specific performance failing – Second defendant conceding claim for breach of warranty of authority – Quantum of damages – Appropriate date of valuation – Judgment accordingly The second defendant was a large firm of chartered surveyors and auctioneers. At one of its auctions in September 2009, one of the lots comprised seven subtenanted flats in a large detached house. The first defendant was the registered leasehold proprietor of the flats. The lot failed to reach its reserve price of £670,000 and, immediately after the auction, a representative of the claimant approached the auctioneer with a view to purchasing it by private treaty. A sale was agreed at £670,000 and a memorandum of sale was completed, signed by the claimant and by the second defendant as agent for the vendor. The claimant paid a deposit of 10% to the second defendant. The contractual completion date for the sale was 30 days after the contract date.The first defendant later denied having authorised any sale of the property. The sale did not complete on the due date and the first defendant did not respond to a notice to complete served by the claimant. The claimant brought proceedings against the first defendant for specific performance. By his defence, the first defendant alleged that he had not been a party to the sale agreement and that it had in fact been made by a third party using his identity to obtain moneys by fraud. In view of that defence, the claimant joined the second defendant to the proceedings, claiming damages against it for breach of warranty of authority.In the light of the first defendant’s evidence at trial, the parties agreed that the specific performance claim should be dismissed and that judgment should be entered against the second defendant on the breach of warranty claim. An issue remained as to the quantum of damages. The parties accepted that the proper award was the value of the property, less the agreed price, and that the valuation date should be postponed for so long as the claimant had reasonably continued to seek completion of the sale. However, they differed as to the proper valuation date on the application of that approach. Held: Judgment was given accordingly.Damages for breach of warranty of authority should put the claimant in the same position as if the warranty had been accurate and the sale had been authorised by the owner of the property. Accordingly, the appropriate measure was the value of the property, less the agreed price. Although the logical date for valuation was the agreed completion date, damages could be assessed at a later date where it was just to do and there was authority for the proposition that the valuation date might be postponed for so long as the claimant had reasonably continued to seek completion of the sale: Suleman v Shahsavari [1988] 1 WLR 1181; [1989] 1 EGLR 203; [1989] 09 EG 69 applied. Since the parties agreed on the postponement approach, the court applied it in the instant case notwithstanding concerns about the appropriateness of doing so.The mere fact that completion was unlikely to be achieved did not make it unreasonable to pursue it. In the instant case, although it had become apparent that the claim against the first defendant was unlikely to succeed, it had not been certain to fail, and the second defendants had not been willing to concede the point and accept liability. In such circumstances, it had been reasonable for the claimant to continue to pursue its alternative claims against both defendants and, accordingly, it would be just to value the property as at the date of the trial.Per curiam: Where damages were awarded for breach of warranty of authority, logic suggested that the relevant date for valuation should be the agreed completion date. The claim for breach of warranty involved a hypothetical assumption that the owner of the property had authorised the sale; on that assumption, the claimant would have received the property on the contractual completion date, in the absence of evidence that the owner would have resisted or delayed completion for some other reason. No assistance could be derived from the lapse of time during which completion had in fact been resisted, since the sale had not in fact been authorised. An approach that postponed the valuation date for so long as the claimant had reasonably pursued completion of the sale was problematic since it conflated the hypothetical with the actual situation, whereas it was the difference between those two scenarios that represented the measure of the claimant’s loss. Mark Warwick (instructed by Kaye Tesler & Co) appeared for the claimant; Thomas Bell (instructed by CMS Cameron McKenna LLP, of Bristol) appeared for the second defendant. Sally Dobson, barrister