Museprime Properties Ltd v Adhill Properties Ltd

Sale by auction — Particulars of sale — Particulars of rent review notices — Statement that tenants had not agreed rents — Rents still negotiable — Statement untrue — Rent in rent review notices deemed reviewed rent owing to failure of tenants to serve counternotices — Claim by purchaser for rescission and return of deposit allowedAt an auction, conducted by John Barnett of Harman Healy & Co on June 9 1988, the plaintiffs agreed to purchase three properties at 940, 942 and 944, High Road, London N12, for £49,000; they paid a deposit of £4,900. They alleged that they relied on the auction particulars, which stated in relation to rent review notices: “Notices have been served. The tenants have offered £3,500 pa for number 940, £3,100 pa for number 942 and £3,300 for number 944 all of which have been rejected by the freeholders”. It was also alleged that the auctioneer told the plaintiffs on the day of the auction that no rents were fixed and it would be possible to negotiate market rents. The statements made on behalf of the defendant vendors by the auction particulars were alleged to be untrue in relation to nos 942 and 944. Although the rent review notices had been served, no counternotices had been given by the tenants and accordingly, by the terms of the relevant rent review clauses, the rents in the rent review notices were deemed to be the rents for the ensuing rent review periods: those rents were not negotiable. The defendant vendors purported to rescind the contract and forfeited the deposit. They contended that by a special condition of sale any statements made in the particulars of auction were made without any responsibility and that the auctioneers did not have authority to make any representation or warranty. The plaintiffs claimed the recovery of the deposit and damages. Held The claim was allowed. 1. The auctioneer had the defendants’ ostensible authority to make the statement he did from the rostrum. The general conditions of sale did not exclude liability for them: Overbrooke Estates Ltd v Glencombe Properties Ltd [1974] 1 WLR 1335. 2. The rent review notices were clear and validly implemented the reviews; there were no counternotices in writing from the tenants and accordingly the landlord would not have been able to negotiate higher rents; see Nunes v Davies Laing & Dick Ltd [1986] 1 EGLR 106. 3. The representations were therefore untrue and did include the plaintiffs to make the contract. They were therefore entitled to rescind and to recover the deposit and abortive conveyancing costs. Peter Ralls (instructed by Lewis Lane & Co) appeared for the plaintiffs; and Norman Primost (instructed by Kaufman Kramer Shebson) appeared for the defendants.