Sale of land — Restrictive covenants — Alleged misrepresentation as to common form of leases — Alternative allegation of backdating of leases — Leases contained restrictive covenants — Ransom effect of covenants — Claim for damages succeeded on one ground
The plaintiffs are a firm of solicitors of which the relevant member is Mr Sidney Grabiner. In 1982 he acted for Alton House (Holdings) Ltd in its purchase for £700,000 of Cavendish House, St John’s Wood, London, from Calflane Ltd. The defendant is also a solicitor; he was in partnership with Bennett & Partners between 1969 and 1988 and acted for Calflane in that transaction; he was also a director of Calflane and effectively ran it.
Cavendish House was a block of flats, with garages and garage spaces, all let on long leases; the attraction to the purchasers was that part of the site was suitable for development as a petrol filling station. On January 18 1982, in connection with a contract race, the defendant sent a letter to plaintiffs, with prints of the form of lease used in the sale of the flats and garages, stating that “the leases of all flats, garages and garage spaces which had been let had … been granted in the same or substantially the same form with no material variations between them”. The plaintiffs alleged that that representation was false because five leases of garage spaces dated January 7 1982 contained manuscript insertions restricting the use of the development site as a petrol filling station; those leases were granted to Calflane Managements Ltd, of which the defendant’s wife was a director, and put that company in a position to control the development site completely and to ransom its value. It was further alleged that the defendant had witnessed the sealing of those leases and therefore knew of the terms of the restrictive covenants and had made the representation fraudulently. It was alternatively alleged that either the five leases and counterparts were executed after the exchange of contracts with Alton and back-dated or, alternatively, the restrictive covenant was written into the leases and counterparts after they had been duly executed and contracts exchanged between Alton and Calflane. The plaintiffs sought damages for the ransom sum of £60,000 paid to release the restrictive covenants and fees of solicitors Alton were obliged to instruct when the covenants were discovered.
Held The claim succeeded under one of the heads of claim.
1. On the evidence Mr Grabiner relied on the representation that the five leases were in the same form as the print received with the letter of January 18 1982. However, the crucial words of the letter cannot be read as carrying the representation alleged either expressly or impliedly. The claim for damages failed under this head of claim.
2. The evidence showed that prior to January 7 1982 Mr Gold must have been aware of the possible use of the site for a petrol filling station and that he, himself, sought to avoid the abandonment of a planning permission for that purpose. The evidence showed that the leases were backdated to extract a ransom from Alton.
Alan Steinfeld QC and Julienne Walker (instructed by Reynolds Porter Chamberlain) appeared for the plaintiffs; Donald Rattee QC and Andrew Simmonds (instructed by Lovell White Durrant) appeared for the defendant.
