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Lloyd and another v Browning and another

Sale of land – Misrepresentation – Exclusion clause – Unfair Contract Terms Act 1977 Contract for sale of land containing special condition to effect that buyer not induced to enter into contract by contract by any statement made by the seller except written enquiries raised by buyer’s conveyancers or in correspondence between parties’ conveyancers – Respondent sellers held to have induced appellant buyers to enter into contract by oral misrepresentation regarding planning permission – Whether special condition excluding liability of sellers – Whether condition ineffective as an exclusion clause not meeting requirements of section 11 of 1977 Act – Appeal dismissed
 
In early 2009, the appellants, respectively a husband and wife and the latter’s parents, were looking for a property where they could all live together but in two separate residential units. They became interested in a property comprising certain land and farm outbuildings in  Cowden, Kent, which the respondents were selling with planning permission for conversion to three residential units. The sales particulars referred to the original plans for that development, which incorporated an extension to the outbuildings which the appellants regarded as an important feature. In fact, the local planning authority (LPA) had considered the extension element to be contrary to local planning policies and had granted planning permission by reference to amended plans that excluded the extension.


Discussions between the parties proceeded on the basis of the unamended plans. The more limited nature of the actual planning permission did not come to light either in pre-contract enquiries between the parties’ solicitors or in the dealings between the LPA and a planning consultant that the appellants had engaged. Although the planning consultant examined the LPA’s files, the amended plans had not been placed in it; however, the consultant did note that the LPA’s planning committee report mentioned no extension.


Contracts were subsequently exchanged on a contract incorporating the standard conditions of sale (fourth edition); there was also a special condition, commonly used in the Eastbourne Law Society area, which stated: “in making this contract no statement made by the seller or his agent has induced him to enter except written statements, if any, made by the seller’s conveyancers in replies to enquiries raised by the buyer’s conveyancers or in correspondence between the parties’ conveyancers.”


After completion, the appellants learned the true position concerning the planning permission and brought a claim for damages against the respondents, relying on section 2(1) of the Misrepresentation Act 1967. The judge found that the claimants had been induced to enter into the contract by the defendants’ oral misrepresentation regarding the plans and that the difference between the value of the property with and without the extension was £55,000. However, he concluded that the claim failed by reason of the exclusion clause.


The appellants appealed. They contended that the judge should have found the special condition to be an exclusion clause that did not meet the requirements of section 11 of the Unfair Contract Terms Act 1977 as to fairness and reasonableness.


Held: The appeal was dismissed.
The relevant issue, for the purposes of the 1977 Act, was not whether the exclusion clause was in general a fair and reasonable clause but whether it was a fair and reasonable clause as contained in the particular contract. Clauses such as the special condition in the instant case were designed to achieve certainty; they were meant to forestall disputes as to whether things were or were not said prior to exchange of contracts and trial on contested issues of fact on such matters. That was a reasonable position for each party to take and a reasonable aim for them to wish to achieve. Such a condition was not in itself intrinsically objectionable. There were further matters indicating that the condition was a fair and reasonable one to be introduced into the particular contract. First, each side had legal advisers and the appellants had also instructed architects and planning consultants. Second, the contract was one for the sale of land, which gave it a status of “formality” given that contracts relating to dispositions of land were designed by law to require that all the agreed terms were set out in one contractual document signed by each party. Third, the condition was not a “take it or leave it” condition; it was a special condition agreed by the parties’ lawyers in circumstances where the parties had equal and corresponding negotiating positions. It also had the general imprimatur of the Eastbourne law Society and was in common use, which was a further factor indicating reasonableness. Fourth, the condition expressly permitted the appellants to rely on written statements made by the respondents’ solicitor in replying to pre-contract enquiries or otherwise in correspondence. Thus, if the appellants sought to rely on what had been said to them orally, the means for giving legal effect to that were readily available by an appropriate pre-contract enquiry or solicitor’s letter, which would reveal what the respondents were prepared formally to commit themselves to.


It made no difference to the outcome that the respondents knew the importance of the extended building to the appellants. If the matter was of such importance, that was all the more reason for the appellants to secure written confirmation in the manner discussed above before any contracts were exchanged. The planning consultant’s investigation of the LPA file, which did not indicate any approved extension and did not attach any plans, indicated on its face that there was at least a potential problem or gap. Those potential uncertainties reinforced the desirability of the appellants making more detailed enquiries of the LPA, or instructing their solicitor of the point identified by the planning consultant so that written confirmation on the matter could be sought from the respondents’ solicitor before the appellants committed themselves to any contract. Those matters tended to confirm the reasonableness of the condition. Overall, the particular condition, in the particular contract, was fair and reasonable.


Roger Smithers (instructed by Hewetts Solicitors, of Reading) appeared for the appellants; Michael Bowmer (instructed by Mayo Wynne Baxter LLP, of Forest Row) appeared for the defendants.


Sally Dobson, barrister

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