Building plot – Agreement for sale – Misrepresentation – Claimant purchasing land auction situated between two properties – Issue arising as to location of boundary – Neighbouring property owners seeking to establish correct position of boundary –Claimant claiming rescission of contract for sale for misrepresentation – Whether claimant entitled to rescind contract – Whether damages constituting appropriate remedy in lieu of rescission – Claim allowed
In October 2007, the defendants sold a building plot at auction to the claimant company. The defendants had been granted planning permission to build a small house on the plot in April 2007. The plot lay between two properties numbered 25 and 27. The defendants owned number 27 and DP owned number 25. The claimant began to clear the site and removed part of a hedge which lay between the two properties. DP immediately claimed title to all or part of the hedge and the claimant stopped work on clearing the site.
DP sued the claimant in the county court claiming title to the land occupied by the hedge and further land to the west. The claimant brought proceedings in the High Court against the defendants claiming rescission of the contract for sale of the plot for misrepresentation and damages. The boundary between numbers 25 and 27 had been created by a conveyance in 1926. Since the proceedings overlapped in that they both raised issues as to the position of the legal boundary between numbers 25 and 27, they were heard together.
The High Court action also raised issues as to the true construction of the transfer and the agreement of sale in respect to boundaries; and whether the claimant was entitled to rescind the contract on the basis that it had been induced to enter into the agreement of sale by misrepresentations in relation to the western and eastern boundaries of the plot, the drain and the description of the land as a building plot together with the references to planning permission and a planning application.
Held: The claim was allowed.
(1) On its true construction, the legal boundary at all times remained governed by the terms of the 1926 conveyance. The hedge had long pre-dated the 1926 conveyance. The line on the Ordnance Survey map which was referred to in that conveyance was a line which marked the middle line of the hedge. Since the conveyance conveyed land by reference to the Ordnance Survey map, the middle line of the hedge became the legal boundary created by that conveyance: Fisher v Winch [1939] 1 KB 666 and Alan Wibberley Building Ltd v Insley [1999] 2 EGLR 89; [1999] 24 EG 160 considered.
(2) On the true construction of the agreement for sale, the western boundary of the plot was the line of the fence. As to the eastern boundary, there was clear misrepresentation in the auction particulars that the defendants had title to all of the box hedge and that the purchaser would acquire it. Although the particulars stated that they were without responsibility on the part of the vendor, that statement was not relied on by the defendants and it did not prevent the reference to the box hedge having the character of a representation.
Neither the existence of the easement drainage nor of a drainage pipe on the plot had been disclosed by the defendants to the claimant. Moreover, the various statements made in the auction particulars amounted to a misrepresentation that the planning permission of April 2007 was reasonably capable of being implemented. On the balance of probabilities, the house permitted by the planning permission was not reasonably capable of being built on the land transferred: Goodhart v Hyett (1883) 25 Ch D 182; Abingdon Corporation v James [1940] Ch 287; and Rickmansworth Water Co v JW Ward & Sons Ltd [1990] EGCS 91 considered.
(3) The effect of standard condition 3.1.1 of the Standard Conditions of Sale (Fourth Edition) was that the sale was free from encumbrances and free from an easement of drainage. By standard condition 7.1.3, the claimant was only entitled to rescission if the error or omission complained of resulted from fraud or recklessness or where the claimant would be obliged, to its prejudice, to accept property differing substantially, in quantity, quality or tenure, from what the error or omission had led him to expect. In the present case, the misrepresentations about the defendants’ title along the eastern boundary and the existence of a drainage easement had resulted in the property transferred differing substantially in terms of quantity and quality from that which the claimant had been led to expect. On the evidence, the claimant had relied upon those representations and the defendants had failed to establish that the claimant had affirmed the contract and thereby lost its right to rescind for misrepresentation.
(4) The court was not persuaded that it would be equitable to exercise its jurisdiction under section 2(2) of the Misrepresentation Act 1967 to deny the remedy of rescission and leave the claimant to claim damages against the defendants. The remedy of rescission was the ordinary remedy for misrepresentation. The misrepresentations in the present case were significant and the defendants had put forward no particular reason why the court should not permit it. Further, it had not been suggested that there was any equitable bar based on the passage of time before the claimant raised the issue of rescission which would justify the court in refusing the remedy of rescission. Accordingly, the claimant was entitled to rescind the agreement for sale by retransferring the land to the defendants and the defendants repaying the purchase price to the claimant together with interest: William Sindall plc v Cambridge City Council [1993] EGCS 105; [1994] 1 WLR 1016 applied.
Malcolm Warner (instructed by Henriques Griffiths, of Bristol) appeared for the claimant company; Jamal Demachkie (instructed by TLT Solicitors, of Bristol) appeared for the defendants in the High Court action; Jajinder Sahonte (instructed by Wards, of Bristol) appeared for the claimants (DP) in the county court action.
