Lewin v Barratt Homes Ltd

Property Misdescriptions Act 1991 — False and misleading statements — Pictures and show house — Houses as built differed materially from pictures and show house — Whether statements in form of pictures and show house mere promises as to the future or statements of existing fact The respondent was a developer and builder of private houses. Informations were laid against the developer by the appellant trading standards officer that it had misled two prospective purchasers of houses that it was to build, and which were being offered for sale prior to construction, with regard to their external design. Each purchaser was shown a picture of a Maidstone-type house and a show house of the same type; both were materially different from the houses to be built and as built. The two purchasers felt that they had been misled, but they reluctantly proceeded to completion. In fact, the developer was aware in January 1997 that it could not build the Maidstone house-type in the external form shown to the two purchasers later that year because of planning permission difficulties; it had added a sticker to the pictures indicating that the details had been changed. There were four charges against the developer in respect of each purchaser under section 1(1) of the Property Misdescriptions Act 1991; within these charges were allegations that false and misleading statements were made by way of a suggested viewing of the show house, and by means of a picture of the Maidstone-type house. The magistrates dismissed the charges on the ground that, although false or misleading statements had been made, they were promises as to the future and not statements of existing fact. The trading standards officer appealed by way of case stated. Held: The appeal was allowed and the case remitted to the magistrates with a direction to convict on the counts of making misleading statements. The magistrates were right in determining that statements under section 1(1) of the 1991 Act must be as to existing facts. The statements were not mere promises for the future. The statements contained, by implication, a statement of a present fact: a representation that the developer, in its dealings with the purchasers, was intending and able to build Maidstone houses to the designs that it was showing to prospective customers. The magistrates were therefore wrong in determining that the statements made to the purchasers, namely the showing of the pictures and the show house, were mere promises as to the future and not also statements of existing fact. There was no inadequacy in the informations, and the respondent could be convicted on this basis. The following cases are referred to in this report. Beckett v Cohen [1972] 1 WLR 1593; [1973] 1 All ER 120; (1972) 71 LGR 46 R v Sunair Holidays Ltd [1973] 1 WLR 1105; [1973] 2 All ER 1233 Soden v Cray [1862] 7 LT 324 This was an appeal by way of case stated from determinations of the Towcester justices dismissing eight informations laid against the respondent, Barratt Homes Ltd, by the appellant trading standards officer, Bryan Roy Lewin. Karl Scholz (instructed by the solicitor to Northamptonshire County Council) appeared for the appellant; Timothy Jones (instructed by Gateley Wareing, of Birmingham) represented the respondent. Giving the first judgment, SIMON BROWN LJ said: Bryan Roy Lewin, a trading standards officer for Northamptonshire County Council, appeals by way of case stated from the adjudication of the Towcester justices, sitting at Corby on 7 June 1999, dismissing eight informations brought against the respondent, Barratt Homes Ltd, under section 1(1) of the Property Misdescriptions Act 1991. Section 1(1) of that Act provides: Where a false or misleading statement about a prescribed matter is made in the course of… a property development business… the person by whom the business is carried on shall be guilty of an offence under this section. Section 1(5)(d) provides that: a prescribed matter is any matter relating to land which is specified in an order made by the Secretary of State. The prescribed matter relevant for present purposes is that specified in para 7 of the Schedule to the Property Misdescriptions (Specified Matters) Order 1992: ‘physical or structural characteristics…’. The respondent, as the justices found, is a well known property developer and builder of private houses. Essentially, what was alleged against it was that it had misled two prospective purchasers of houses that it was to build, and which were being offered for sale prior to construction, with regard to their external design. The house type in question was known as the Maidstone, and each purchaser was shown a picture of it and also a Maidstone show house, both of which were materially different from the houses to be built and as built. The two prospective purchasers, a Mr Stephen Day and a Mr Steven Huntingdon, although ultimately feeling that they had been misled, in the event reluctantly proceeded to completion, being fearful that they would otherwise forfeit their deposits. Four of the charges related to Mr Day; four to Mr Huntingdon. Within each pair of four charges are two alleged false statements and two alleged misleading statements. Within each of those pairs, one charge alleged that the statement was made by way of a suggested viewing of the show house, and the other charge alleged a statement made by means of a picture of the Maidstone house. For illustrative purposes, I will set out just the first information, from p1 of the case stated: On a day in May 1997 at Bromley Mews, Brackley, Northamptonshire, in the course of a property development business, by means of a suggestion that Stephen Day, a prospective purchaser of a ‘Maidstone’ house, view your show house in Far Cotton, Northampton, you made a misleading statement, as to a prescribed matter, namely that the front aspect of the ‘Maidstone’ house to be built at 29 Castle Mount, Brackley, would have physical or structural characteristics including gable roof over one window, rendering to the top floor 78 wall, a large top floor window above the porch, and a central concrete lintel in the ground floor window, when this was not the case. Contrary to Section 1(1) of the Property Misdescriptions Act 1991. The further provisions of section 1 of the 1991 Act relevant to the consideration of these charges are as follows: (5) For the purposes of this section — (a) ‘false’ means false to a material degree, (b) a statement is misleading if (though not false) what a reasonable person may be expected to infer from it, or from any omission from it, is false, (c) a statement may be made by pictures or any other method of signifying meaning as well as by words… Let me now set out those of the magistrates’ findings of fact that related to Mr Day’s dealing with the respondent: 2. On 4 May 1997, Mr Stephen Day visited the respondent’s Bromley Mews site office which was adjacent to the respondent’s Castle Mount site in Brackley. 3. The respondent’s site negotiator, Mrs Sally Parker, showed MrDay a large framed picture of a detached ‘Maidstone’ house, which was on the wall of the site office, and a further picture of the same house on an A4 sized sheet. Houses of this ‘Maidstone’ design were to be built on the respondent’s Castle Mount site and were being offered for sale prior to their construction. Beneath the picture there appeared in writing an ‘IMPORTANT NOTICE’ that pointed out that the visual depictions could not be relied upon as an accurate description. On the exterior of the glass beneath the bottom of the picture there was a small sticker which stated in bold capital letters ‘DETAILS OF THIS PROPERTY HAVE BEEN AMENDED. PLEASE REFER TO SITE NEGOTIATOR FOR DETAILS’. On the office wall there was a framed A4 document headed ‘IMPORTANT NOTICE’, that warned that there might be a difference between the accommodation depicted in Barratt’s literature and that on offer in particular developments. 4. Mrs Parker suggested to Mr Day that he view a detached ‘Maidstone’ show house in Far Cotton, Northampton. 5. Mr Day travelled to Northampton and viewed the detached ‘Maidstone’ show house. 6. Mr Day did not recall anything being brought to his attention, either verbally or in writing, which would indicate that the ‘Maidstone’ property to be built for him at Castle Mount, Brackley would in any way be different from the display pictures or the ‘Maidstone’ show house in Northampton. He visited the property fortnightly while it was being built. On 25November 1997 he completed a pre-completion inspection form specifying various matters relating to the interior of the house, but did not complain of any external feature. 7. In November 1997 Mr Day visited the completed house which he had contracted to purchase and noticed that it differed from the pictures and the show house. The house differed from the ‘Maidstone’ shown in the pictures and from the show house in that it had no gable roof over one window, no rendering to the top floor wall, no large window above the porch and no central concrete lintel in the ground floor window. 8. Mr Day believed that he would lose the deposit of 10% of his purchase price, which he had paid on exchange of contracts, if he did not complete. He therefore carried on with his purchase. Similar facts were found relative to Mr Huntingdon. He, too, visited the site office and was shown the framed picture, in his case on 20 July 1997, and he, too, went to view the show house. He particularly liked the large downstairs window with the central lintel, the gabled roof and the white rendering to the front of the house; three of the four features that were mentioned in the information. He ‘fell in love with it’ (ie the design shown to him) and, having agreed to purchase one of the houses, he immediately paid a £100 reservation fee. He, like Mr Day, believed that the Maidstone house that he had agreed to buy would be the same as he had been shown. He, too, felt obliged to continue with his purchase. The other important fact found by the magistrates was that the respondent’s reason for changing the external appearance of the Maidstone-type house was that, in January 1997, the planning authority had required it to make these alterations to the design. Before the magistrates, the respondent argued a number of different defences. Those that failed were: first, that, considering the documents, namely the picture, the notices and the sticker, as a whole, there was no misdescription; second, that the invitation to prospective purchasers to visit the show house carried with it no representation that the house they were considering buying would be identical (indeed, it was submitted, architect’s drawings shown to purchasers indicated the contrary); third, that the respondent had satisfied the due diligence defence in section 2 of the 1991 Act; and fourth, that the informations were duplicitous. I need not explain the basis of this final contention, and observe only that it was of a highly technical and unmeritorious character. The argument that succeeded was: that the statements made as to the external appearance of the ‘Maidstone’ houses, which had yet to be built, were promises to the future and not statements of existing fact. The respondent relied upon Beckett v Cohen [1972] 1 WLR 1593 and R v Sunair Holidays [1973] 2 All ER 1233 in support of this submission. The magistrates expressed their conclusions in these terms: A. False or misleading statements had been made about a prescribed matter — ie the physical or structural characteristics of ‘Maidstone’ houses being built and they had not been effectively disclaimed by any contrary statement made. B. A statutory defence under section 2 of the Act had not been made out. C. The statements were promises to the future and not statements of existing fact, and accordingly dismissed all the charges. D. The informations were not duplicitous. The only paragraphs of present significance are A and C. The two questions then posed for the determination of this court are: (a) Were we right in determining that statements within the meaning of section 1(1) of the Property Misdescriptions Act 1991 must be as to existing fact?; and (b) Were we right in determining that the statements made to Messrs Day and Huntingdon were mere promises to the future and not also statements of existing fact? The answer to question (a) cannot be doubted. Plainly, the magistrates were right in deciding that a statement cannot offend against section 1(1) of the 1991 Act unless it is a statement of existing fact. The position is no different to that arising under section 14(1) of the Trade Descriptions Act 1968, the section considered by this court in the two cases relied upon by the respondent below, Beckett v Cohen [1972] 1 WLR 1593 and R v Sunair Holidays Ltd [1973] 2 All ER 1233 I need refer only to the well known passage from MacKenna J’s judgment in the latter at p1236F: So much for the facts. We come now to the construction of s 14. The section deals with ‘statements’ of which it can be said that they were, at the time when they were made, ‘false’. That may be the case with a statement of fact, whether past or present. A statement that a fact exists now, or that it existed in the past, is either true or false at the time when the statement is made. But that is not the case with a promise or a prediction about the future. A prediction may come true or it may not. A promise to do something in the future may be kept or it may be broken. But neither the prediction nor the promise can be said to have been true or false at the time when it was made. We conclude that s 14 does not deal with forecasts or promises as such. We put in the qualifying words ‘as such’ for this reason. A promise or forecast may contain by implication a statement of present fact. The person who makes the promise may be implying that his present intention is to keep it or that he has at present the power to perform it. The person who makes the forecast may be implying that he now believes that his prediction will come true or that he has the means of bringing it to pass. Such implied statements of present intention, means or belief, when they are made, may well be within s 14 and therefore punishable if they were false and were made knowingly or recklessly. But if they are punishable, the offence is not the breaking of a promise or the failure to make a prediction come true. It is the making of a false statement of an existing fact, somebody’s present state of mind or present means. I repeat the words ‘neither [a] prediction nor [a] promise can be said to have been true or false at the time when it was made’. They underlie the difficulty I have in reconciling the magistrates’ conclusions A and C. In A, the magistrates conclude that false or misleading statements were made here, yet in C they conclude that the statements amounted merely to promises. How can that be, given that a promise cannot be false? 79 With that thought in mind, I address question (b): were these statements indeed mere promises for the future, or did they not by implication contain a statement of present fact, a representation that the respondent, in its dealings with Mr Day and MrHuntingdon respectively in May and July 1997, was intending and able to build Maidstone houses to the designs that it was showing prospective customers? If such a statement was implicit, then plainly it was false. Ever since January 1997, the respondent had known perfectly well that it could no longer build to the design shown, and that, presumably, is why it had a sticker below the picture of a Maidstone house, stating: ‘Details of this property have been amended. Please refer to site negotiator for details.’ To my mind, it seems quite obvious that by showing prospective purchasers pictures of a Maidstone design and the show house itself, the respondent was stating that that was how it proposed to build the houses. That, in other words, was its present intention and, so far as it knew, nothing stood in the way of it. The answer to question (b) would therefore be ‘no’. The magistrates were wrong about this. The respondent, however, argues on this appeal — and this, frankly, appears to be the only real point left in the case — that the appellant was simply not entitled to secure a conviction on that basis. The burden of MrTimothy Jones’ argument before this court has been that the informations as laid charged only a statement as to how the houses would be built, and allege nothing as to the respondent’s present intention or ability to build them in that way. To my mind, that argument is not merely unmeritorious but quite unreal. True it is that the respondent alerted the appellant on the second day of the hearing to its intention to argue the Beckett v Cohen point, and true it is, too, that the appellant never sought to amend the informations (as perhaps he might have done) to allege in terms that the statement carried with it the implication to which I have already referred. But it seems to me perfectly clear that the magistrates were not regarding themselves as precluded by what I may call ‘a pleading point’ from arriving at the correct conclusion on the issue now before us in question (b). Nor was the respondent, to my mind, disadvantaged in the way it was putting its case. On the contrary, its factual defence was that, bearing in mind the disclaimer notices and architect’s drawings, the purchasers should have realised that they were not going to get the precise design shown to them. Nor, in my judgment, is there the least doubt that any inadequacy in the form of these informations was covered by section 123 of the Magistrates’ Courts Act 1980. This provides: (1) No objection shall be allowed to any information or complaint… for any defect in it in substance or in form, or for any variance between it and the evidence adduced on behalf of the prosecutor or complainant at the hearing of the information or complaint. Subsection (2) enables a defendant who is misled by any such variance to apply for an adjournment, but Mr Jones has been quite unable to suggest to us any purpose that an adjournment of the hearing could have served. Of course, as the footnotes to section 123 in Halsbury’s Statutes point out: This section does not enable a person to be convicted of an offence different from that charged. There is, however, no question here of the offence, as I see it, being different to that charged. On any showing, it is an offence under section 1(1) of the 1991 Act. The position is wholly unlike that in Soden v Cray [1862] 7 LT 324 (the one case of those referred to in the Halsbury footnote that was shown to us), where the justices convicted a defendant under a quite different statute to that under which he had been charged. In short, there is in my judgment nothing in the form of these informations that stands in the way of justice or prevents our answering question (b) in the way already indicated. I would accordingly allow this appeal. Agreeing, NEWMAN J said: I agree, and only wish to add something as to the way in which the case proceeded below. In this court, in appeals from magistrates by way of case stated, it is regularly necessary to consider whether an alleged failure on the part of the prosecution in the conduct of the trial below should justify the acquittal of a defendant on a criminal charge. The prosecution, of course, have the burden of proof. The defence are entitled to leave the prosecution to prove their case and are under no obligation to draw attention and give notice (for example, in the course of the evidence) to the absence of evidence on an essential ingredient of the offence. That said, in my judgment, there are areas concerning the conduct of a case where the defence, by remaining silent or by not taking a particular course, can be taken to have let points go by default. Oversights on the part of the prosecution do occur, for example, sometimes in drink cases there is a failure to prove the self-calibration of an alcho-test machine; sometimes in speeding cases there is a failure to prove in the course of evidence by a police officer that the machine is an approved machine. In some instances, in my judgment, justice will not be done if acquittals are secured by virtue of pure oversights. In such cases, often the evidence is available at court. In my judgment, in this case it was obvious that the central issue for determination by the magistrates was whether the respondent had made a statement as to present or past fact. The magistrates were having to survey a rather more complex area of law than they would generally be accustomed to consider and, in the general context of such a hearing, it is in the interests of justice that they should receive as much help as possible. By way of example, as my lord has indicated, on the part of the respondent the sole question for consideration in this court has been that which appears in the skeleton argument in this form: The informations laid against the respondent did not allege either an express or an implied false or misleading statement as to existing or past fact. If right, that submission was an end to the proceedings as they were constituted and laid in the magistrates’ court. Had the point been taken at the outset of proceedings before the magistrates — and, in my judgment, it was a threshold question, no evidence being required — it could have been considered. It was an argument bearing upon what appeared on the face of the informations. The appellant would have had an opportunity to seek leave to amend. The magistrates could have considered the application and ruled. As my lord has said, the nature of the amendment, had it been applied for, was obviously one well within the rules. In this court, Mr Jones accepts that, subject only to any need that he might have had for an adjournment, which he does not indicate on any information presently available would have been necessary, the amendment would have been permissible. In my judgment, this demonstrates that had there been such an application, the magistrates would have benefited enormously from the clarification that that argument would have provided to them as to the issues in the case. The state of affairs that my lord has referred to, the inconsistency in the questions that they have posed, and a confusion borne out by a form of letter that we have received suggesting an amendment to the questions would have been avoided. The magistrates, in their suggested amendment to the questions to be answered by this court, wrote as follows: (a) Were we right in determining that statements within the meaning of section 1(1) of the Property Misdescriptions Act 1991 must be as to existing fact? (b) Were we right in determining that the statements made to Messrs Day and Huntingdon were mere promises to the future? (c) Should we have considered whether the statements made to Messrs Day and Huntingdon contained within them assertions as to existing fact? As I have indicated, in my judgment, it was central to the magistrates to properly consider whether or not the statements that were made contained within them statements as to existing facts, but question (c) in the letter suggests they did not realise that they were required to do so. It would seem that the magistrates — through what I would firmly state was no fault of their own — may not have appreciated the complexities of the argument. 80 The events highlight the necessity for ensuring that in cases such as this, and particularly in magistrates’ courts where, increasingly, the bench have to deal with matters of some complexity, all points are taken as clearly as possible and at the appropriate time. That will serve not only to assist the magistrates but will also serve in the wider interests of justice in securing that appeals do not have to be pursued in cases where, as my lord has held, there was really no answer to the matter. For those reasons, I agree that this appeal must be allowed. Appeal allowed.