Alison Quilter v Hodson Developments Ltd
| Jurisdiction | England & Wales |
| Judge | The Right Honourable Lord Justice Longmore,The Right Honourable Lord Justice Kitchin,The Right Honourable Lord Justice Floyd |
| Judgment Date | 17 November 2016 |
| Neutral Citation | [2016] EWCA Civ 1125 |
| Date | 17 November 2016 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B2/2015/0639 |
[2016] EWCA Civ 1125
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
HIS HONOUR JUDGE SAGGERSON
Royal Courts of Justice
Strand, London, WC2A 2LL
The Right Honourable Lord Justice Longmore
The Right Honourable Lord Justice Kitchin
and
The Right Honourable Lord Justice Floyd
Case No: B2/2015/0639
Mr Paul Letman (instructed by Magrath LLP) for the Appellant
Mr Pepin Aslett (instructed by Lester Aldridge LLP) for the Respondent
Hearing dates: 3 rd November 2016
Judgment of the court handed down by Lord Justice Floyd:
Introduction
Alison Quilter exchanged contracts to purchase an apartment in a development at Chobham Lakes in Surrey, managed by the developers, Hodson Developments Limited ("Hodson"), on 5 th January 2012. Completion occurred on 19 th January 2012. The purchase price was £240,000. The claimant sold the property for £275,000 two years later.
The development comprised 54 dwellings. It was a gated community with communally managed grounds. All the dwellings were serviced by the same communal central heating and hot water system, which was a biomass system.
Prior to the exchange of contracts Hodson, as vendor, was sent a standard form of pre-contract enquiries. Enquiry number 55 was:-
"Is the seller aware of any past or current dispute which relates in any way to the property, its use, or any other matter connected with the property and, in particular, regarding boundaries, easements, covenants or any planning matters? If so please give details."
Enquiry number 56 was:-
"Is the seller aware of any circumstances which may lead to such dispute. If so, please give details."
In response, Hodson was alleged to have omitted a number of important matters, because it impliedly represented, by omissions, that it was not aware of certain disputes which affected the value of the property.
Ms Quilter said that there had been four misrepresentations prior to contract. These were that Hodson had impliedly represented that it did not know about the following disputes:-
i) a dispute in relation to the refusal, on the part of Hodson, to establish an independent management company for the development;
ii) a dispute relating to excessive levels of service charges being imposed on occupiers of the individual units;
iii) disputes regarding the working of the biomass boiler; and
iv) disputes that existed as to inadequate provision of heating and hot water, inextricably linked to the malfunction of the biomass boiler.
With respect to the first two alleged misrepresentations, the judge found as a fact that there had been no such disputes and there is no appeal as to that.
The judge considered the third and fourth alleged misrepresentations together. He noted at paragraph 46 of the judgment that "it is in this regard that it seems to me quite clear that the real substance of the claimant's case lies".
The judgment
HHJ Saggerson, sitting in the Central London County Court, found that there were ongoing problems with the boiler and that there was a dispute with Hodson in relation to this which ought to have been disclosed. Hodson was therefore making a misrepresentation by implying that it was not aware of these matters. The principal matters on which the judge relied in reaching his conclusion were:-
i) oral evidence from Ms Quilter who said she had experienced boiler problems herself and also recounted conversations with neighbours who had prior experience of the issue. The judge described the nature of the evidence relating to the neighbours as hearsay of "a gossipy nature";
ii) two other residents, Mr Courtney Warboys and Mr Geraint Herbert also gave oral evidence. The judge noted at para 51 that they said in their witness statements that "from the winter of 2010 onwards if not before, the heating and hot water system would fail regularly for various reasons";
iii) the judge then found at para 52 that there were "repeated, if intermittent" failures in the biomass system which were persistent over the winter of 2010/11 and resurfaced over the winter of 2011/2012;
iv) at para 54 the judge noted that the evidence in Ms Quilter's favour "is not always supported by documents" and that there were few specific records or minutes in the residents' committee meetings about the biomass failure;
v) at para 56 the judge said that there were "dogged, difficult and repeated problems" with the boiler and that the residents took it for granted that it was on the agenda and so did not always raise it at committee meetings for that reason. He preferred the evidence of the residents to the evidence of Mr Thomas Hodson and Mr Alan Hodson, who were the responsible individuals at Hodson;
vi) at para 58 the judge relied on a report by MCA Consulting Engineers Ltd from February 2010 which identified ways in which the system had been put together differently from the design. The judge recorded that this report was "withdrawn" by the consultants but the judge did not think that this impacted on its accuracy;
vii) he also relied on a report by the National House Building Council ("NHBC") compiled at the beginning of 2014 at a time when the management company (now under the control of the residents) sought to enforce the NHBC guarantee given at the time of construction and purchase of the apartments; and
viii) the judge then concluded (para 66) that "the parties, the residents and the development company, were working closely together to try and salvage something out of this heating and hot water system problem". There was accordingly a dispute which should have been revealed in answer to Enquiry 55.
The judge then went on to consider damages. He relied on McGregor on Damages (19 th ed. 2014) at paragraph 47–054 to 47–057. He applied what is described there as the normal measure, which is the difference between the actual value of what was acquired and the price which was paid. Taking into account expert evidence the judge concluded that the purchase price of £240,000 constituted the market value of the apartment as it was represented to be. Having regard to the defects, the judge held that the property should have cost £225,000. He therefore gave judgment in Ms Quilter's favour of £15,000.
The judge then considered whether the subsequent sale of the property by Ms Quilter altered the position as to damages. He concluded that the claimant was entitled to take advantage of the market value increase. He noted that the profit she had made would have been £15,000 greater if she had paid the appropriate price for the apartment initially.
When it came to the question of costs, Hodson submitted that Ms Quilter should to be awarded only a third of her costs, on an issue based approach. However, the judge thought that was too crude an analysis and that she should be awarded 70%.
Although Longmore LJ refused permission on the papers McFarlane LJ, after hearing Mr Letman, granted permission at an oral hearing.
Grounds of appeal
There are 6 grounds of appeal which are:-
i) the judge erred in law and reached a conclusion which no reasonable tribunal could have reached by holding that there was a dispute between residents and Hodson Developments about the performance of the biomass system, when the documentary evidence (such as minutes of meetings and performance records) showed that there was no dispute and Mr Herbert's evidence confirmed the absence of any such dispute;
ii) the judge relied on "gossipy" hearsay evidence and mistook the other witness evidence in determining that the biomass system was a "catastrophe" again without referring to the performance records of the system;
iii) the judge wrongly took into account the MCA and NHBC reports relating to the biomass system. One of those reports was withdrawn and the other was prepared 16 months after Hodson handed over the running of the development;
iv) the judge erred in law in deciding that the claimant had suffered a capital loss on the purchase of the property by wrongly assessing loss at the date of the transaction when he ought to have taken into account the profit on the subsequent sale;
v) the judge acted irrationally in accepting the claimant's expert's evidence of the property's diminution in value when this was premised on the biomass system only working intermittently and being out of action the majority of the time; and
vi) the judge made a costs award which was outside the bounds of his discretion when discounting the claimant's costs by only 30% because she succeeded on only one of the misrepresentations alleged and recovered less than a third of her claim.
We take the grounds of appeal in turn.
Ground 1: was there a dispute?
Submissions
Hodson submitted the claimant could give no first hand evidence of any dispute in the period prior to her entry into the apartment. Mr Warboys noted that in a meeting on 2 nd December 2010 agreement was reached between the parties to work collaboratively on the heating issue. Although he became impatient at the lack of progress on key issues about the middle of 2011, his only email at that stage did not refer to the biomass.
In Mr Herbert's statement there was no evidence that there was any matter regarding the working of the biomass that was actually put to Hodson and disputed. Mr Herbert's own correspondence only refers to there being a dispute for the first time in February 2012.
Neither the minutes of meetings with resident's representatives nor the service record for the boilers indicated any ground for thinking that there was any dispute.
Ms Quilter submitted that the judge carefully considered the issues and was entitled to reach his conclusions; he had relied on oral evidence and the factors mentioned in paragraph 9 above. Although...
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