Sale of land – Misrepresentation – Damages – Claimant purchaser seeking damages from defendant vendor for alleged misrepresentations prior to purchase of property – Whether claimant establishing reliance on false representations resulting in loss – Whether defendant having reasonable grounds for believing representations true – Claim allowed
In 2016, the claimant wished to buy an investment property, with a minimum of two bedrooms. She purchased apartment 1 at 15 Hamilton Street, Pontcanna, Cardiff, a leasehold property which had recently been renovated by the defendant. The property was originally one house but the defendant had turned it into two apartments, one at the front and one at the rear.
The plans accompanying the planning permission for the development showed a room on the second floor extending across the whole floor into the eaves at the front and into a dormer window at the rear, described as a bedroom, with an en suite bathroom to the rear.
The plans that accompanied the lease (and later the draft sale and purchase agreement provided to the claimant), showed the second floor divided into two rooms, both described as bedrooms. It was common ground that, following the division of the second floor into two rooms, the only light source to the front room was a Velux window. The other bedroom benefitted from the dormer window.
The claimant brought a claim for damages under section 1 of the Misrepresentation Act 1967 for alleged misrepresentations by or on behalf of the defendant prior to her purchase. The claimant alleged that the property was marketed and sold with the benefit of two bedrooms on the second floor, and with the benefit of a Velux rooflight window in the front bedroom. In fact, there was no planning consent for the Velux window, which had to be removed, leaving the front room without any source of natural light or ventilation. As such it was unsuitable for use as a bedroom.
Held: The claim was allowed.
(1) Under section 1 of the 1967 Act, it was for the claimant to establish that: an actionable representation or representations was or were made to her; one or more of those representations was untrue; she relied on it or them in entering the contract to purchase the property; and as a result, she suffered loss. Whether an actionable representation was made was to be judged objectively, according to the impact that whatever was said might be expected to have on a reasonable representee in the position and with the known characteristics of the claimant: MCI WorldCom International Inc v Primus Telecommunications INC [2004] EWCA Civ 957 considered.
In the present case, the fact that the front room on the second floor was referred to as a bedroom in the plans supplied to the claimant would reasonably lead a person in the position of the claimant to believe that the room was at least capable of lawfully being used as a bedroom. Both the plans accompanying the planning permission and those annexed to the lease were important, but for different purposes. The planning permission plans were of most importance in defining what was in fact permitted. However, in determining what was represented between the defendant and the claimant, it was the lease plans alone that were important as they were provided to the claimant as part of the communications designed to enable her to decide whether to purchase the property.
(2) There was an express statement in the Law Society Property Information Form, that the seller was not aware of any breaches of planning permission conditions, or of work that did not have all necessary consents. Such an express statement was capable, where the facts were not equally known to the representor and representee, of carrying with it a further implied statement by the person making it, that there were reasonable grounds for that belief. It was enough for that principle to apply that one party was better equipped with information than the other. The statement by a vendor that he was not aware of defects in title implied that he had taken reasonable steps to ascertain whether any existed: Smith v Land and House Property Corporation (1884) 28 Ch D 7, Brown v Raphael [1958] 1 Ch 636 and William Sindall Plc v Cambridgeshire County Council [1994] 1 WLR 1016 considered.
In the present case, the defendant had access to superior information as it originally purchased the property and carried out the development, engaged agents to assist in ensuring that requisite consents had been obtained, and knew what features already existed on the property prior to the development. The conveyancing process operated on the basis that the purchaser was entitled to ask questions of the vendor, rather than having to make its own enquiries from scratch and to rely on a vendor who had the greater knowledge about what had been done, with what permissions, to the property having made its own reasonable enquiries before answering those questions. The information form contained a clear warning to the vendor of the importance of providing accurate answers. In the circumstances, the defendant did not have reasonable grounds for believing that there was no work that lacked a requisite consent.
(3) In claims under section 1 of the 1967 Act, the claimant was to be put in the position they would have been in had the misrepresentation not been made. On the claimant’s evidence that had the representations not been made she would not have proceeded with the purchase of the property, damages were to be assessed in the first instance as the difference between the amount she paid for the property and its value at the time without the benefit of the Velux window. On the evidence, some loss was caused to the claimant by reason of the misrepresentations made to her. Accordingly, the defendant was liable under section 2(1) of the 1967 Act unless it could establish that it had reasonable grounds for believing that the representations made were true.
As the defendant did not have reasonable grounds for believing that the work carried out had been done with all requisite consents, it followed that it did not have reasonable grounds to believe that the front room on the second floor was capable of being used as a bedroom. It was no defence that the claimant could, through her own enquiries, have discovered the true position: Laurence v Lexcourt Holdings Ltd [1978] 1 WLR 1128 considered.
In all the circumstances, the defendant was liable to compensate the claimant for the misrepresentations made and the claimant was entitled to damages totalling £34,142.92.
Catherine Collins (instructed by Lewis Lewis & Co Ltd) appeared for the claimant. The defendant appeared by its representative.
Eileen O’Grady, barrister
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