Strover v Harrington

JurisdictionEngland & Wales
Date1988
Year1988
CourtChancery Division
[CHANCERY DIVISION] STROVER AND ANOTHER v. HARRINGTON AND OTHERS [1986 S. No. 6950] 1987 Nov. 24, 25, 26, 30; Dec. 1, 2 Sir Nicolas Browne-Wilkinson V.-C.

Vendor and Purchaser - Misrepresentation - Reliance on statement - Inaccurate particulars of sale - Mis-statement corrected by letter to purchasers' solicitors - Failure of solicitors to inform purchasers of correction - Whether knowledge of solicitors to be imputed to purchasers - Completion in reliance on misrepresentation - Whether purchasers entitled to damages - Misrepresentation Act 1967 (c. 7), s. 2(1)F1

The vendors, having decided to sell their house, instructed estate agents to prepare sale particulars for the property. Those particulars stated that the house had main drainage whereas it shared a cesspool with an adjoining house on whose land it was situated. The purchasers agreed, subject to contract, to purchase the house from the vendors at a price of £215,000. The agents then wrote to the purchasers' solicitors stating that the particulars were incorrect inasmuch as the The purchasers' solicitors failed to inform their clients of the correction having been made. The purchasers engaged surveyors to carry out a survey of the property for them. The surveyor, conducting the survey, was told by one of the vendors that the house had main drainage and in reliance on that statement, reported that the property was “drained to the main sewer by a drain line through the adjacent property.” In reply to pre-contract inquiries the vendors' solicitors also stated that the property had main drainage. Neither of those two later misrepresentations were corrected and, in reliance on all three misrepresentations, the purchasers exchanged contracts and completion took place on 21 May 1986. On discovering the true position, the purchasers issued a writ against the vendors and their own surveyors on 21 November. They placed the house on the market and, on selling it, made a profit of £37,000.

On the purchasers' claim for damages against the vendors for misrepresentation and against the surveyors in negligence:—

Held, dismissing the action, (1) that, in the absence of evidence as to the practice of skilful surveyors, there was no basis on which the surveyors could be held to have been negligent (post, pp. 581C–D, 582C–D).

(2) That to recover damages under section 2(1) of the Misrepresentation Act 1967, the purchasers had to show that the damage was caused by their reliance on a mis-statement of which they had no knowledge that it was false; that on the facts the purchasers would not have entered into the contract if they had known of the letter correcting the statement in the sale particulars but, since it was normal conveyancing practice that communications between vendors and purchasers in matters relating to the transaction were between their solicitors and by implication the solicitors had actual authority to receive on their clients' behalf all relevant information, the purchasers, contrary to the facts, were to be treated as having knowledge of the correction of the mis-statement; and that, therefore, the purchasers' claim under section 2(1) of the Act of 1967 failed since any loss to them was caused not by the misrepresentations but by their solicitors' failure to communicate the correction of the first mis-statement (post, pp. 583H, 586D–G, 587C588A).

Blackley v. National Mutual Life Association of Australasia Ltd. [1972] N.Z.L.R. 1038 applied.

(3) That, on the evidence, even if the vendors might otherwise have been liable for damages for misrepresentation, the purchasers had failed to prove that any damage had been suffered (post, pp. 589H590A).

The following cases are referred to in the judgment:

Ayrey v. British Legal and United Provident Assurance Co. Ltd. [1918] 1 K.B. 136

Bawden v. London, Edinburgh and Glasgow Assurance Co. [1892] 2 Q.B. 534, C.A.

Blackley v. National Mutual Life Association of Australasia Ltd. [1972] N.Z.L.R. 1038

Markappa Inc. v. N.W. Spratt & Son Ltd. [1985] 1 Lloyd's Rep. 534, CA

Newsholme Brothers v. Road Transport and General Insurance Co. Ltd. [1929] 2 K.B. 356, C.A.

Thake v. Maurice [1986] Q.B. 644; [1986] 2 W.L.R. 337; [1986] 1 All E.R. 497, C.A.

Wells v. Smith [1914] 3 K.B. 722

The following additional cases were cited in argument:

Anglo-Cyprian Trade Agencies Ltd. v. Paphos Wine Industries Ltd. [1951] 1 All E.R. 873

Ford v. White & Co. [1964] 1 W.L.R. 885; [1964] 2 All E.R. 755, C.A.

Hayward v. Pullinger & Partners Ltd. [1950] 1 All E.R. 581

Howard Marine and Dredging Co. Ltd. v. A. Ogden & Sons (Excavations) Ltd. [1978] Q.B. 574; [1978] 2 W.L.R. 515; [1978] 2 All E.R. 1134, C.A.

Laurence v. Lexcourt Holdings Ltd. [1978] 1 W.L.R. 1128; [1978] 2 All E.R. 810

Oropesa, The [1943] P. 32; [1943] 1 All E.R. 211, C.A.

Perry v. Sidney Phillips & Son [1982] 1 W.L.R. 1297; [1982] 3 All E.R. 705, C.A.

Redgrave v. Hurd (1881) 20 Ch.D. 1, C.A.

Salvesen (Chr.) & Co. v. Rederi Aktiebolaget Nordstjernan [1905] A.C. 302, H.L.(Sc.)

Saunders v. Edwards [1987] 1 W.L.R. 1116; [1987] 2 All E.R. 651, C.A.

ACTION

By a writ and statement of claim, dated 21 November 1987, the plaintiffs, Richard Guy Strover and his wife Collette Mary Strover, claimed against the first and second defendants, Michael Edmund Harrington and his wife Andrea Harrington, and against the third defendant, Cobbs Property Services Ltd., surveyors, that by a contract in writing dated 23 April 1986 between the plaintiffs and the first and second defendants, the plaintiffs had agreed to purchase, and those defendants to sell, a freehold property known as Greenbank, Ashurst Road, Ashurst, Tunbridge Wells, Kent, registered under title No. K133400 together with the adjoining freehold land registered under title No. K537507, for the price of £215,000. The sale had been completed on 21 May 1986. The plaintiffs alleged that it was an implied term of their engagement of the third defendant that the third defendant would use professional skill and care and notify the plaintiffs of all matters relating to the property which might influence the plaintiffs' decision whether or not to purchase the property or the price they would be willing to pay for it; that the third defendant owed the plaintiffs a duty of care at common law, but that on 4 March 1986 the third defendant's report, prepared by Mr. N. N. R. Butler, stated that “The property is drained to the main sewer via lines through the adjacent property.” Further, it was alleged that on or about 2 April 1986, the plaintiffs' solicitors made a pre-contract inquiry as to the drainage enjoyed by the property and received the answer “The property has mains drainage” and that a reference was made to easements relating thereto “granted and reserved.” It was further alleged that the plaintiffs, in completing the purchase, relied on those statements, which were false, since the property did not benefit from main drainage but instead the foul drains ran to an inspection chamber in the rear yard of the adjoining property through a second inspection chamber in that yard, thereafter through a pipe mounted on the wall of the cellar to that house, and thereafter ran to a cesspool in an adjoining field and that the capacity of the cesspool was insufficient for both the properties or either of the properties alone. An answer to a further pre-contract inquiry had stated that the vendors “did not know whether there were any defects in the services, but had not met with any difficulty over user,” and that those statements were false since there had been blockage and leaking of the pipes, and overflowing of the cesspool prior to the date of inquiry. It was alleged that in the circumstances the third defendant was in breach of contract and/or had acted negligently, (i) in making the categorical statement that there was mains drainage (ii) in failing to mention or indicate that the plaintiffs should make further inquiries as to the existence of such outlet for the drainage, and (iii) in failing to investigate the drainage sufficiently, or to observe and report of the condition of the cesspool.

The plaintiffs further alleged that the statements or representations made in answer to pre-contract inquiries were made negligently by the first and second defendants since they knew or ought to have known of the true state of the drainage system and its adequacy and that the plaintiffs had suffered loss and damage in that it was impossible to connect the drainage to the main sewer and that the cost of repairing the existing system or of installing a new septic tank individual to the property would be £8,000; further that the plaintiffs had suffered loss due to the difference in value between the property with either mains drainage or an individual septic tank system and its value with a defective shared cesspool and they claimed damages and interest thereon pursuant to section 35A of the Supreme Court Act 1981.

The defendants denied negligence and the first and second defendants, in their amended defence relied, inter alia, on condition 17 of the National Conditions of Sale, 20th ed. (1981), to which the contract was subject, and on section 3 of the Misrepresentation Act 1967. It was denied that the plaintiffs, in completing the purchase, relied on the answers to pre-contract inquiries, and it was contended that the plaintiffs were aware at all material times that the property did not have the benefit of mains drainage. In particular it was alleged that in a telephone conversation on 18 February 1986, confirmed by a letter of that date, the defendants' agents, Messrs. Parris & Quirk, had informed the plaintiffs' solicitors, Messrs. Farrer & Co., that the sale particulars, a copy of which had been supplied to the plaintiffs and/or their solicitors, were “incorrect, inasmuch as … the property was not connected to mains drainage but is served by septic tank”; that the receipt of that letter had been acknowledged in the plaintiffs' solicitors' reply...

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