William Sindall Plc v Cambridgeshire County Council
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE RUSSELL,LORD JUSTICE HOFFMANN,LORD JUSTICE EVANS |
| Judgment Date | 21 May 1993 |
| Judgment citation (vLex) | [1993] EWCA Civ J0521-1 |
| Date | 21 May 1993 |
| Court | Court of Appeal (Civil Division) |
[1993] EWCA Civ J0521-1
(His Honour Judge Roger Cooke)
Before: Lord Justice Russell Lord Justice Evans and Lord Justice Hoffmann
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE MAYOR's AND CITY OF LONDON COURT
MR. T. ETHERTON QC and MR. S. KOVATS (instructed by Sharpe Pritchard) appeared on behalf of the Appellant.
MR. J. SHER QC and MR. R. HARRISON (instructed by Miller & Co.) appeared on behalf of the Respondent.
( )
I shall invite Lord Justice Hoffmann to give the first judgment.
This appeal arises out of a completed sale of building land which was subsequently discovered to be subject to an easement of drainage. Judge Roger Cooke, sitting in the Mayor's and City of London Court, held that the purchaser was entitled to rescind the sale. Against that decision the vendor appeals. It says that either the purchaser has no remedy or else that it should be confined to an award of damages. We allow the appeal, reverse the finding that the purchaser was entitled to rescind and dismiss the action.
1. The sale
In 1988, at the height of the property boom, Cambridgeshire County Council ("Cambridgeshire") decided to raise some capital by selling part of the playing fields of Netherhall School in Cherry Hinton Road, Cambridge. It registered a deemed outline planning consent for residential development subject to the approval of details by the local planning authority, which was Cambridge City Council ("the City"). It then offered the land for sale by tender.
Cambridgeshire had acquired most of the land more than 30 years earlier from the principal of a local building company which is now called William Sindall plc ("Sindall"). The tender offer produced bids from a number of developers, but Sindall fought like a tiger for the right to buy the site. It applied for judicial review, claiming that under the practice followed since the Crichel Down case it had a legitimate expectation that it would be given the first opportunity to buy it back. The result was that on 7th December, 1988, Cambridgeshire agreed to sell the land to Sindall for #5,082,500, which was the highest offer it had received from anyone else. The contract was completed on 28th March, 1989.
Over the next two years the victory turned into a disaster. The City planners were obstructive about the approval of reserved matters. It took 18 months and an appeal to the Secretary of State to obtain detailed consent for 60 houses and 30 flats. By this time the property market had collapsed. In October, 1990, the site was worth less than half of what had been paid. Sindall had borrowed the whole of the purchase price at a high rate of interest. The chairman was against investing more money to complete the development. Quicker returns could be obtained by finishing other houses already under construction. He would have preferred to sell at the best price obtainable, but buyers for large building sites had become thin upon the ground.
Before Sindall had decided anything about the future of the site, the prospect of deliverance appeared from a wholly unexpected quarter. On 30th October, 1990, it was discovered that, unknown to any of the individuals who had been concerned in the sale, there was buried in the land a nine inch foul sewer. It crossed the site diagonally from one corner to the other, draining a block of flats called Greystoke Court, which adjoined the eastern boundary of the site on Cherry Hinton Road, to a public sewer under a road called Gunhild Way to the south-west. A sewer needs a six meter wide maintenance strip to be left vacant above it. That is why sewers are usually laid under roads. Such a strip would have cut a swathe through Sindall's approved housing lay-out. Unless the sewer could be re-routed, the detailed planning consent obtained with so much effort would be impossible to implement. Sindall would have to go back to the Cambridge planners with a different scheme. In Sindall's view, there was no way in which the sewer could be re-routed. It was neither legally possible nor technically feasible. On 20th December, 1990, Sindall's solicitors therefore wrote rescinding the contract on the ground of various misrepresentations and common fundamental mistake. On 11th February, 1991, it issued a writ claiming a declaration that the contract had been rescinded and claiming repayment of the #5,082, 500 price with interest.
2. Was it a serious problem?
Much of the argument of Mr. Sher QC, who appeared for Sindall, involved variations on the theme that the discovery of the sewer was such a devastating blow to the proposed development that it would be most unjust to construe the contract as excluding a remedy or to exercise a discretion against rescission. I shall therefore start by considering whether in practice the sewer would have presented a serious problem.
Sindall devoted a great deal of energy, both before and at the trial in trying to prove that the sewer was public within the meaning of the Public Health Act 1936 and the Water Act 1973. This would have meant that the sewer was now vested in the privatised Anglian Water Services Ltd ("Anglian"). It maintained this stance, despite the fact that the City, Cambridgeshire and Anglian were unanimously of the opinion that the sewer was a private easement for the benefit of Greystoke Court. Such an attitude might seem quixotic if one did not realise that Sindall thought its commercial interest lay in there being no solution to the problem. The judge found that the sewer was private and against that finding there is no appeal.
The sewer could therefore be diverted to suit Sindall's development if this was technically feasible and the City was willing to consent. The evidence showed that in principle the City was willing to accept any alternative method of draining Greystoke Court provided that it worked and did not cost the City any money. Most of the evidence at the trial was about whether one could within a reasonable time have devised a workable scheme which did not make it necessary to redesign Sindall's approved lay-out.
The question had to be answered hypothetically because Sindall at the time resolutely refused to discuss alternative schemes of any kind. The reason for its refusal is perfectly understandable. If a solution was possible, it might be able to recover the additional costs as damages but would in the end be left with a site for which it paid over #5 million and was piling up interest charges at #2,000 a day but which was worth less than #2 million. If no solution was possible, it stood a better chance of being able to rescind the contract and get its money back. The chairman Mr. Mott was perfectly frank. In response to a point-blank question in cross-examination he said that he had no interest in a technical solution to the problem.
The person with whom Sindall would have discussed the technicalities if the market had gone up instead of down was Mr. Facer, the City's engineer in charge of sewers. One of the reserved matters in the planning consent was that Sindall had to submit a drainage scheme for its development for building regulation approval. It would also have wanted to enter into an agreement with the City under Section 18 of the Public Health Act 1936, under which the City agreed to adopt the completed sewers as public. In both cases, this would have meant satisfying Mr. Facer that the sewers had a sufficient fall to be able to drain properly, or, if this was not possible in flat and low-lying Cambridge, that a pumping station would be installed.
As soon as the sewer was discovered, Mr. Facer invited Sindall to discuss what could be done. His view was that the most practical solution was to link Greystoke Court with the new sewers for Sindall's scheme. Cambridgeshire, in a response on 24th January 1991 to Sindall's rescission letter of 20th December 1990, also said that the sewer could be diverted and invited discussions. Sindall did not accept either of those invitations. Eventually Cambridgeshire decided to prove that the sewer could be diverted even without Sindall's cooperation. It constructed an underground pumping station on the land of Greystoke Court and a new sewer to a manhole in another street. The new work was entirely off the site and by the time of the trial the offending sewer had been abandoned. The total cost to Cambridgeshire was about #54,000.
At the trial, Sindall's case remained that there were no solutions. Even the diversion which had actually been constructed was for various reasons inadequate and anyway had taken too long, but the judge rejected Sindall's technical criticisms. He found that it would have been feasible to join Greystoke Court to Sindall's new sewers in the way Mr. Facer had first contemplated. Furthermore, the fall would have been sufficient to allow the system to drain without having to be pumped.
Mr. Sher has criticised these findings. He says that until the commencement of the trial, Cambridgeshire seemed content to rely upon the diversion it had actually constructed as its evidence that the problem was soluble. The alternative of diversion into the Sindall sewer had merely been mentioned as a possibility, but was neither particularised in the pleadings or supported by expert evidence of feasibility. Only in the course of the evidence of Sindall's drainage expert, Mr. Balfour, did Cambridgeshire's expert, Mr. Clasby, produce a supplementary report containing the technical calculations for a diversion into the Sindall sewer.
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