Vendor and purchaser — Action by purchaser of a house for rescission, repayment of deposit with interest, damages and other relief — Plaintiff purchased at an auction a house described as vacant, the sale particulars of which listed the accommodation available on each floor, but did not indicate that the house contained a blocked-off room to which the house gave no access — This room was in fact leased to a neighbouring property which had access to it through a door cut in the wall and used it as a store room — The sale particulars did not include this room in the accommodation listed but neither did they mention that such a room existed and was excluded from the sale — Judge described the room as a ‘flying freehold jutting into a house’ — The plaintiff had noticed on an inspection some puzzling features, such as an unexplained window but did not discover the true position until after the auction — He had assumed that his purchase included every part of the house — Plaintiff refused to complete and commenced proceedings — Defendants contended that the sale had not included the room, submitted that a prudent purchaser comparing the listed accommodation with the physical features would have pursued inquiries, and they counterclaimed for specific performance or damages, forfeiture of the deposit and other relief — Held that a reasonable person who had read the particulars and
The plaintiff
in this action was Muhammed Golan Mustafa, the purchaser, and the defendant
vendors were the Baptist Union Corporation Ltd. The house in question was at 2
Downs Road, Lower Clapton, London E5.
P S A Rossdale
(instructed by Alexander Johnson) appeared on behalf of the plaintiff; N Patten
(instructed by Ellis & Fairbairn) represented the defendants.
Giving
judgment, WARNER J said: Mr Mustafa, the plaintiff in this case, is a married
man with six children, the last of whom was born on May 6 1981. At an auction
sale held on April 28 1981 at Caxton Hall, Westminster, he became the purchaser
of a house known as 2 Downs Road, Lower Clapton, London E5. The vendors were
the defendants, the Baptist Union Corporation Ltd. The price was £35,000 and
the plaintiff paid a deposit of £3,500 to the auctioneers, Athawes, Son &
Co, as agents for the defendants.
No 2 Downs
Road is one of a typical terrace of Victorian houses, about 100 years old,
situate on the south side of that road. It is the end house in the terrace.
Immediately adjoining it on the west side is a disused chapel, which has been
leased by the defendants since at least 1975 to an organisation called the
Psychiatric Rehabilitation Association (and which I will refer to as ‘the PRA’)
for the purposes of a rehabilitation centre run by them.
The house
itself is in two parts: the original part, which has four storeys
(semi-basement, ground floor, first floor and second floor) and an extension at
the rear, which has three storeys. The whole, with the exception of the
blocked-off room that I shall mention in a moment, was at the time of the
auction, and indeed still is, arranged as two self-contained maisonettes. The
upper maisonette, the entrance to which is the front door on the ground floor
of the house, comprises the rooms on the first and second floors of the
original part of the house and a bathroom and we on the top storey of the rear
extension. The lower maisonette, the entrance to which is the door leading from
the area into the semi-basement, comprises the rooms in the semi-basement and
on the ground floor of the original part, together with the lowest storey of
the rear extension, in which there is a bathroom and we. The middle storey of
the rear extension does not form part of either maisonette and is inaccessible
from either, or from the garden at the back. It must at one time have been
accessible from the ground floor of the house, but that access is now blocked
off by a solid partition. There is also a door to it from the garden, but that
door is, as it were, halfway up the outside wall. There must at one time have
been steps up to that door, but there are none there now. The blocked-off room
also has a window overlooking the garden.
That room is
let to the PRA under a lease granted to them by the defendants on May 10 1977
for a term which expires on March 24 1985, but which, it appears, will be
renewable under Part II of the Landlord and Tenant Act 1954. There is access to
the blocked-off room from the other premises let by the defendant to the PRA
because a door has been cut in the wall between them. The room is used by the
PRA as a storeroom.
In March 1981
the plaintiff saw an advertisement in a local newspaper announcing the auction
sale. He was at the time looking for a house large enough for himself and his
family. He telephoned the auctioneers and they sent him a copy of the auction
catalogue. The catalogue listed 53 lots for sale, among them some described as
‘vacant houses’ and some described as ‘part-vacant houses’. No 2 Downs Road was
listed among the ‘vacant houses’. It was Lot 40 and, in view of the issues that
arise in this case, I must describe the particulars given of it in the
catalogue in some detail.
There was in
the top left-hand corner of the first page on which those particulars appeared
a photograph of the front of the house. To the right of that were the words ‘By
Order of the Baptist Union’, underneath them in capitals ‘Vacant Possession’
and ‘Lot 40’, then underneath that, in larger capitals ‘Freehold House’, then
in small letters ‘known as’, in large capitals again ‘2 Downs Road’, then in
smaller capitals ‘Lower Clapton E5’, then in small letters ‘Situated off
Rectory Road close to Cricketfield Road and Hackney Downs, the property is
arranged as:’. Beneath the photograph and those words, across the page, in large
capitals, were the words ‘Two Self-contained Maisonettes’ and then in small
letters the words ‘as follows:.’ Below
that there was a list, in various kinds of lettering, but none of it in large
capitals, of the accommodation available on each floor in each maisonette, with
the measurements of each room, except that the measurements were not given of
the bathrooms, of the wcs, or of the kitchen in the lower maisonette. There
followed in small letters the statement: ‘There is a garden at the rear’. Then
on the next page there were in small letters the words ‘offered with’ and, in
large capitals across the page, ‘Entire Vacant Possession’. Below that, in
small letters, details were given about the rates, and the names and addresses
were given of a firm (Craig, Hall & Rutley) in conjunction with which
Athawes, Son & Co were offering Lot 40 and of the vendor’s solicitors.
Nowhere in the
particulars was there any mention of the blocked-off room or of the lease of it
to the PRA. Nor was there any mention of them in the conditions of sale. Yet
Craig, Hall & Rutley, from whom Athawes, Son & Co had received their
instructions, had told them about that room and that it was to be excluded from
the sale. Craig, Hall & Rutley had also referred to that fact in a letter that
they wrote to the secretary of the defendants on March 25 1981. I heard
evidence from Mr D A Rugg, the partner in Athawes, Son & Co who drew up the
particulars. He told me that he felt that it was unnecessary to mention the
blocked-off room in them — unnecessary, so he put it, to go further than
describe correctly what was being sold.
Having seen
the auction particulars, the plaintiff thought that the house was of a size and
type that would suit his family if reconverted into a single house. He inspected
it twice before the auction, having on each occasion collected the keys from
Athawes, Son & Co’s offices. On neither occasion did he take the auction
catalogue with him.
On the first
occasion he was alone. It was late afternoon. There was no light in the house
and he had no torch. He inspected all the rooms that he could see, and was
satisfied. He was not aware of the blocked-off room. Later, however, he began
to wonder whether he had seen all the rooms and became confused in his own mind
about the layout of the rooms. So he decided to see the house again.
On the second
occasion it was daylight and he was accompanied by a friend, a Mr Raman, who is
a builder. They inspected all the accessible rooms and went out into the
garden. From there they saw that the rear extension had three storeys and they
realised that they had not had access from inside the house to the middle
storey. They saw the door and the window to the blocked-off room. They assumed
that there had been steps up to that door, but that someone had removed them,
perhaps because, in the plaintiff’s words, they were ‘broken’. The plaintiff
decided that, if he bought the house, he would either put steps up to that door
or cut a door in the partition that I have mentioned, which, Mr Raman advised him,
would be feasible. It never occurred to the plaintiff that the blocked-off room
was not included in the sale, or that it might be in someone else’s occupation.
The
plaintiff’s impression that the steps might have been removed because they were
‘broken’, in other words, unsafe — in putting that gloss on the plaintiff’s
evidence I have in mind that he gave it in English, which is not his native
tongue — was consistent with the general condition of the house, which was
described to me by Mr Cheke, a surveyor called on behalf of the plaintiff. Mr
Cheke said that there was rising damp, penetrating damp, possibly caused by
defective gutters and drainpipes, some cracks in the walls and some woodworm.
Mr Defries, a surveyor called on behalf of the defendants, described the
general condition of the house as ‘fair’, a word which in his vocabulary means
not as good as average.
The plaintiff
returned to the house about three weeks after the auction, again with Mr Raman.
They decided that this time they must see inside the blocked-off room and they
went next door, to the premises of the PRA, with a view to trying to borrow a
ladder. A young man opened the door to them. He asked them why they wanted a
ladder. On being told the reason, he told them that the blocked-off room was
used by the PRA as part of their premises. The plaintiff, not surprisingly,
then communicated with his solicitor.
The solicitors
for the plaintiff and for the defendants had, in the meantime, been carrying
out the normal conveyancing procedures in ignorance of the fact that the
defendants had intended the blocked-off room to be excluded from the sale, in
ignorance, indeed, I think, of the fact that the blocked-off room existed.
Their discovery of those facts and of the existence of the lease to the PRA was
followed by copious correspondence between them, in which, to put it shortly,
the plaintiff’s solicitor called upon the defendants to terminate the
lease to the PRA so as to be able to give to the plaintiff vacant possession of
the whole house and the defendants’ solicitor contended that the blocked-off
room was not included in the sale.
On October 29
1981 the defendants’ solicitor served notice to complete within 21 days. The
plaintiff was not, however, prepared to complete unless he was given possession
of the whole house, including the blocked-off room. He told me his reasons for
that and I found them readily understandable. Shortly stated they were that he
was looking, for himself and his family, for an entire house with which they
could do anything they wanted, not a house in the middle of which there would
be a room belonging to strangers over whom he had no control. That, as he saw
it, could give rise to all sorts of trouble. He told me that, had he been given
to understand that the blocked-off room was not included in the sale, he would
not even have gone to the auction.
Mr Cheke told
me in some detail of the difficulties that a flying freehold jutting into a
house of this kind could cause. It would substantially reduce the price
obtainable on any resale. In the meantime it would hamper, and render more
expensive, such works as the installation of central heating, the renewal of
the plumbing, electrical rewiring, and any desired structural alterations to
the rear extension. In particular, Mr Cheke mentioned that all the plumbing in
the house was in the rear extension; that it had old-fashioned lead pipes which
would sooner or later need to be replaced with copper pipes in accordance with
modern practice; and that indeed a building society lending money for the
purchase of the house might well require such replacement. Mr Cheke also told me
of the difficulties to which the protrusion of such a flying freehold could
give rise over maintenance — such as the repointing of brickwork, which was
needed to prevent the penetration of damp, and over external repainting. I
found the evidence of Mr Cheke impressive. It was not really contradicted by Mr
Defries. Indeed in some respects Mr Defries confirmed it. For good measure, Mr
Rossdale, who appears for the plaintiff, pointed out that, as a matter of law,
the existence of the lease of the blocked-off room entitled the PRA to an
easement of support, carrying with it the right for them to enter 2 Downs Road
to effect any necessary repairs.
There were
thus ample practical reasons why the plaintiff should decline to complete on
the footing envisaged by the defendants’ solicitor and, on November 20 1981,
the writ in this action was issued. By that writ the plaintiff claimed, among
other things, rescission of the contract made at the auction on April 28 1981.
Before I turn to the issues raised in the action, I must round off my narrative
of the facts by mentioning one further incident.
On December 1
1981 the house was put up for auction again. The auctioneers were again
Athawes, Son & Co, but this time the particulars included a note, inserted
at the instance of the defendants’ solicitor, in these ter M:
The sale does
not include a room at the rear of the first floor which has no access from the
property and forms part of the adjoining premises.
The reference
there to the first floor should, I think, have been to the ground floor. At all
events, the highest bid for the property on that occasion was £30,000 and it
was withdrawn. Mr Rugg told me that he did not know what effect the note had
had, but that he thought the market had gone done in the meantime. It seems to
me clear, however, from Mr Cheke’s evidence, and indeed as a matter of common
sense, that the note must have had some depreciatory effect.
By his
reamended statement of claim the plaintiff claims rescission of the contract,
repayment of the deposit with interest, damages, and a declaration that he is
entitled to a lien on the property for all sums awarded to him in the action.
The defendants counterclaim for specific performance, further or in the
alternative damages, forfeiture of the deposit and ancillary relief.
In support of
the plaintiff’s claim Mr Rossdale advanced a number of contentions, the first
of which was that, on the true interpretation of the contract, the blocked-off
room was included in the property agreed to be sold. Clearly, and there is no
dispute about this, if that contention is right, the plaintiff is entitled to
succeed.
In support of
that contention Mr Rossdale cited Grigsby v Melville [1974] 1 WLR
80. Mr Patten, who appears for the defendants, submitted, however, that that
case was distinguishable because it related to the interpretation of a
conveyance, not of a contract. In the case of a conveyance containing a parcels
clause defining, whether by reference to a plan or not, the boundaries of the
land conveyed, it was appropriate, Mr Patten submitted, to apply the rule of
law that, in the absence of express words to the contrary, the conveyance
carried all that was above and beneath the piece of ground thus defined. In the
case of a contract such as the present, however, it would be inappropriate, he
said, to apply any such rule of law. The property comprised in the sale was
defined by the auction particulars, which contained no parcels clause, and
were, by their nature, addressed to laymen. They should accordingly be interpreted
in accordance with what they would, on a fair reading, mean to an ordinary
reasonable person.
As to that, I
agree with Mr Patten, and I add this. Special Condition 11 relating to Lot 40
in the auction catalogue in this case was as follows:
The Purchaser
shall be deemed to acknowledge that he has not entered into this contract in
reliance on any of the said statements and that he has satisfied himself as to
the correctness of each of the said statements by inspection or otherwise and
that no warranty or representation has been made by the Vendor or the said
agents in relation to or in connection with the property.
The
particulars should accordingly, in my view, be interpreted in accordance with
what they would mean to an ordinary reasonable person who had inspected the
property and who knew, as indeed the plaintiff knew, what was visible on such
an inspection.
Mr Patten’s
argument rested essentially on the circumstances that the particulars of Lot 40
listed the accommodation available in each of the maisonettes, giving the
measurements of the main rooms, and that, if one compared that list with what
could be seen at 2 Downs Road, one would realise that the blocked-off room was
not among those listed. A prudent purchaser, he said, confronted with that, and
with the fact that the blocked-off room was inaccessible, would have made
inquiries.
I find the
suggestion that a prudent purchaser would have made inquiries difficult to
accept. As Mr Rossdale pointed out, the particulars and conditions of sale in
an auction catalogue are put out on a ‘take it or leave it’ basis. In this very
case there was, among the general conditions in the auction catalogue (No 13,
para 4) a provision that:
The Vendors
do not make or give and neither the Auctioneers nor any person in the employment
of the Auctioneers has any authority to make or give any representation or
warranty in relation to any of the properties.
Suppose that a
prospective bidder at the auction had made inquiries of the auctioneers. (He
could hardly have been expected to make inquiries of anyone else.) It is
possible, perhaps probable, that, in the present case, he would have been told
that the blocked-off room was excluded from the sale. It is conceivable, on the
other hand, that he would have spoken to a clerk who did not know the facts.
One can only speculate as to the answer he would then have got. Whatever answer
he got, however, it could not alter or affect the terms of the written contract
that he would enter into if the property was knocked down to him at the auction.
So the inquiry would be, from his point of view, futile.
Be that as it
may, I have come to the conclusion that a reasonable person who had seen the
particulars of Lot 40 in the auction catalogue and had inspected 2 Downs Road
would not think that the blocked-off room was excluded from the sale.
Whatever the
situation may have been in centuries gone by, flying freeholds are uncommon
today, except in places such as New Square, Lincoln’s Inn, where, I believe,
the difficulties to which they give rise are overcome by special Acts of
Parliament. So an ordinary reasonable person, looking at the printed
particulars of Lot 40, would not be on his guard for the possible existence of
a flying freehold within it. He would see, first, the photograph of the front of
the house. From that he would derive the impression that everything behind that
front was comprised in the sale. He would gather, from what was printed in
large capitals in the particulars, that what was offered for sale was the
freehold of the house with vacant possession of the entirety of it. He would
also gather, of course, that the property had been divided into two
maisonettes. He might or might not, according to the sort of prospective
purchaser he was, rely on the auctioneers’ list of the rooms in each
maisonette. On inspection, he would become aware of the existence of the
blocked-off room. If, having become aware of its existence, he closely
re-examined the list of accommodation in the particulars, he might realise that
the blocked-off room was not included in that list. There is, however, no
compelling reason why he should do that, and, if he did it, he would
probably put the discrepancy down to an oversight on the part of the
auctioneers. He would of course ask himself why the blocked-off room was
inaccessible. The most obvious answer to that question would be that the
maisonettes had been let separately and that the freeholder had kept possession
of the blocked-off room for some purpose of his own. That would be no reason
why the blocked-off room should be excluded from the sale of the freehold. Only
a most imaginative prospective purchaser would think of the possibility that
the blocked-off room had been let to the people next door.
I accordingly
conclude that, on the true interpretation of the contract, the blocked-off room
was included in the property agreed to be sold. I need not, therefore, consider
Mr Rossdale’s alternative contentions or deal with Mr Patten’s very interesting
arguments in answer to them.
