McCullaugh v Lane Fox & Partners Ltd

Estate agent negligently misstating to plaintiff purchaser extent of property — Purchaser exchanging within two days without survey — Whether vendor’s agent owing duty of care to purchaser for negligent misstatement — Court finding duty of care — Plaintiff not suffering loss through misrepresentation — Plaintiff’s claim dismissedThe plaintiff purchased residential property at 61 Hartingon Road, Chiswick, and claimed that he was induced to enter into the contract by the defendants’ estate agents’ negligent misrepresentation that the house stood in gardens of 0.91 acre, whereas in reality the area of the entire plot, including the space occupied by the house, was only 0.48 acre. The plaintiff claimed that he would never have paid £875,000 for the property if he had known the truth and that it was not worth more than £550,000. He claimed £325,000 damages. The plaintiff had seen the house on a Saturday morning when he was shown around by a member of the defendant’s firm, S, and stated that he would pull the house down and build a new one together with a tennis court. The property was then under existing offer, but the plaintiff was prepared to increase the asking price and telephoned S that evening to say that he wished to buy. He revisited the property the next day and telephoned S on Sunday evening to say that he would exchange contracts on the following day, ie on Monday, which he duly did. No survey was conducted. The sale particulars referred to gardens of “nearly one acre”. Both the plaintiff and his wife recalled that S had specifically told them on the first visit that the gardens were 0.91 of an acre. The judge accepted their evidence, although the figure stated might have been 0.92 acre. Held The plaintiff’s claim was dismissed. 1. The issue raised was of fundamental importance to estate agents on which there appeared to be only on previous decision of the English courts, viz whether the vendor’s agent owed a duty of care to a purchaser of property for negligent misstatement upon which the purchaser relied in entering into the purchase contract: see Computastaff Ltd v Ingledew Brown Bennision & Garrett (1983) 268 EG 906. 2. There had been very substantial developments in the law of negligent misstatement since that case, and the court would consider afresh the existence of a duty of care on a vendor’s estate agent. 3. It must have been plain to S that the plaintiff was prepared to exchange contracts without a survey and indeed there was no time for a survey so that there was a continuing representation on which the plaintiff relied when entering into the contract. 4. The ingredient of proximity and that of the imposition of the duty being just and reasonable rested primarily on the purpose for which the representation was made; the fact that it was made in a professional capacity to a particular potential purchaser in relation to a particular transaction, and to the knowledge of the representer it was highly probable that it would be relied upon by the representee in entering into that transaction without making his own investigation. 5. The plaintiff’s determination to exchange contracts without a survey, unusual though it was, rendered it it no way unfair to impose on the defendants, who were fully aware of that course, a duty of care for the accuracy of what they had said about the area of the property. 6. Breach of the duty of care could only give rise to damages if the plaintiff suffered loss through reliance on the misrepresentation. However, the price paid for the property was no more than its true value so the plaintiff failed to prove that the defendant’s breach of duty caused him loss. His claim was dismissed. Philip Havers (instructed by Mishcon de Reya) appeared for the plaintiff; Richard Lynagh (instructed by Cameron Markby Hewitt) appeared for the defendant.