(1) Jeffrey Herrmann (2) Mina Gerowin Herrmann v Withers LLP
| Jurisdiction | England & Wales |
| Judge | Mr Justice Newey |
| Judgment Date | 30 May 2012 |
| Neutral Citation | [2012] EWHC 1492 (Ch) |
| Docket Number | Case No: HC10C03969 |
| Court | Chancery Division |
| Date | 30 May 2012 |
[2012] EWHC 1492 (Ch)
Mr Justice Newey
Case No: HC10C03969
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Rolls Building, Royal Courts of Justice,
7 Rolls Buildings, London, EC4A 1NL
Mr Jonathan Seitler QC and Mr Benjamin Faulkner (Instructed by Jones Day) for the Claimants
Mr Michael Pooles QC and Mr Paul Mitchell (Instructed by Reynolds Porter Chamberlain LLP) for the Defendants
Hearing dates: 6–10 and 22 February 2012
Further written submissions: 24 and 28 February 2012
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
In 2008 the claimants, Mr Jeffrey Herrmann and his wife Mrs Mina Gerowin Herrmann, bought a house at 37 Ovington Square in the Knightsbridge area of London. They instructed the defendants, Withers LLP, to act for them on the transaction and were advised that the property had the benefit of a statutory right to use the garden in Ovington Square ("the Garden"). In the event, that advice proved to be erroneous: in 2010 Sir William Blackburne held that the relevant statute, the Kensington Improvement Act 1851 ("the 1851 Act"), does not apply to 37 Ovington Square. In these proceedings, the Herrmanns allege that Withers were negligent and so are liable to pay them damages.
Narrative
Mr and Mrs Herrmann, who are American, have both enjoyed successful careers. Mr Herrmann practised as a trial lawyer in New York City until he retired at the end of 2007. Mrs Herrmann also qualified as an attorney, but she practised as such only briefly before going to Harvard Business School and then into investment banking. She joined Paulson & Co in 2004 and was seconded to Paulson Europe LLP, of which she is a partner, with effect from January 2008. Paulson Europe LLP is an investment management firm.
The work visas issued to Mr and Mrs Herrmann were for five years. However, the Herrmanns told me, and I accept, that they envisaged that they might in the event remain in the United Kingdom for longer than five years. They will probably go back to their house in New York eventually, but there is no definite date by which they will do so.
Mrs Herrmann's secondment began on 4 January 2008, and her husband joined her in London later that month. They lived in rented accommodation initially, but they were soon looking for a house to buy. By the middle of March, they had decided that they wanted to purchase a property at 47 Cheyne Walk. With this in mind, they approached Withers (whom they had instructed the previous month to advise them on other matters) about the possibility of their acting for them on the purchase. On 13 March, the Herrmanns met Mrs Penelope Williams, a partner in Withers' private client department, and Miss Emma Copestake, who at the time was a senior lawyer in the firm's real estate team.
Following this meeting, the Herrmanns made an offer for 47 Cheyne Walk. This was accepted, subject to contract, but the Herrmanns were quickly "gazumped". The draft contract was withdrawn on 18 March 2008.
37 Ovington Square first features in the documents on 7 March 2008, when Mrs Herrmann informed her husband in an email that a viewing had tentatively been arranged for the next day. She also said:
"There is a garden, they're checking on dogs on leads".
On 18 March, the Herrmanns exchanged emails about the possibility of seeing 37 Ovington Square the following day, but on 19 March Mrs Herrmann told Miss Copestake that the "second favourite house" of herself and her husband was 21 Phillimore Gardens. By 26 March, Mrs Herrmann was nonetheless expressing enthusiasm for 37 Ovington Square. Mr Herrmann said that he was bothered by the "absence of a large green space nearby or even a little strip of grass like those along the Embankment" and "the unpleasant view from the front windows … and the unsightly apartment building in the square", but both he and his wife very much liked the interior, Mrs Herrmann calling it "wonderful and magical". Two days later, Mrs Herrmann wrote to Miss Copestake in an email:
"We are looking at houses and there is one I've fallen in love with".
The house in question was 37 Ovington Square.
It was at this stage, as it seems to me, that Miss Copestake first learned of the Herrmanns' interest in 37 Ovington Square. A passage in Mrs Herrmann's witness statement could be read as suggesting that she had already spoken to Miss Copestake about 37 Ovington Square, but, if that is Mrs Herrmann's recollection (and I am not sure it is), I think she is mistaken.
37 Ovington Square was described during the trial as being in the "neck" of Ovington Square. It lies on a short stretch of road (containing no more than five houses on each side) which connects a rectangular area containing a fenced garden to the north-west with Walton Street to the south- east. While it is possible to see the fenced garden from a bay window at 37 Ovington Square, the property does not front onto the Garden. Nor does it have a private garden of its own. It does, however, have the benefit of a small outside terrace at ground floor level. Its virtues also include, I gather, an excellent entertaining space, enhanced in particular by a room known as the "Grand Salon".
37 Ovington Square was owned by the trustees of a family trust and occupied by a member of the family, a Mrs Norma Heyman. The property was marketed on the vendors' behalf by Knight Frank. The sales particulars Knight Frank prepared for the property included reference to "Access to communal garden".
On 2 April Mrs Herrmann gave Miss Copestake "advance notice" by email that she and her husband were about to start bidding on 37 Ovington Square. By an email of Friday 4 April, Mrs Herrmann informed Miss Copestake that a purchase price of £6.8 million had been agreed. After the weekend, Turner Debenhams, the solicitors acting for the vendors, wrote to Withers enclosing a draft contract and other documentation. They noted in their letter that "the intention is exchange Contracts within 5 working days, with completion to take place on or before 2 nd June".
The time-frames for exchange and completion were discussed in the email correspondence. On 10 April Miss Copestake noted that the exclusivity period would technically expire on 15 April, but Mrs Herrmann suggested in her reply that Friday 18 April would be acceptable to the vendors. On 14 April Mrs Herrmann proposed planning for 18 April "if we get the paperwork committing from the Bank by Wednesday or Thursday" but said that Monday 21 April was also feasible.
On 9 April 2008 Turner Debenhams sent Withers, among other things, a "Property information form" completed by Mrs Heyman on behalf of the vendors. This included the question (number 8.1), "Are there any formal or informal arrangements which the seller has over any neighbouring property?" Mrs Heyman answered in the affirmative and went on to say:
"Access to square gardens, this supplied as courtesy by garden committee".
No answer was given to question 10, "Has the seller ever incurred any expenses for the use of the property or any of its amenities?"
On 10 April 2008 Miss Copestake sent Turner Debenhams additional enquiries before contract. These included matters arising out of questions 8.1 and 10 in the "Property information form". With regard to question 8.1, the additional enquiries included this:
"Question 8.1:
13.5.1. the reply states that access to the Square Gardens are at the 'courtesy of the garden committee'. Neither the Transfer nor the Lease provides for a right to use the gardens. Who or what is the garden committee; what authority does it have; how is it able to grant rights to use the gardens?;
13.5.2. please confirm that any pass or key will be handed over on completion; and
13.5.3. please provide contact details of the garden committee and explain how access is arranged".
The additional enquiries also asked for a reply to question 10.
Miss Copestake referred to the additional enquiries in an email she sent to Mr and Mrs Herrmann on 10 April. She said:
"I have reviewed the pre-contract papers and received the results of most of my searches. I am pleased to report that there is nothing of major concern revealed. As is usual, I am today raising some additional due diligence enquiries following the review of the papers".
On 15 April 2008 Turner Debenhams sent Withers replies to their additional enquiries before contract. In response to enquiries 13.5.1 to 13.5.3, they said:
"All houses that overlook the Square pay a fee to access the garden. The Seller is trying to find further information".
With regard to whether expenses had been incurred for the use of the property or any of its amenities (question 10 in the "Property information form"), Turner Debenhams replied:
"No, subject to any payments that may have been made for the use of the Square Gardens".
The letter with which the replies to the additional enquiries were sent stated:
"Our Client is looking for any further paperwork or correspondence that may be at the property and which would supplement the replies already given".
On 17 April 2008 Turner Debenhams forwarded to Withers copies of a variety of documents that Mrs Heyman had by then provided. These included a copy of a council tax bill for 37 Ovington Square.
On the same day, Withers sought further information from Turner Debenhams in relation to some of the additional enquiries. One of the requests related to enquiry 13.5.1. It said:
"We note that a fee is paid to access the garden, but we are searching for a legal right to be able to use the garden. Please clarify the position".
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