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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Dart v Ely & Anor [2000] EWCA Civ 259 (13 October 2000) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2000/259.html Cite as: [2000] EWCA Civ 259 |
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Case No B2/1999/1116
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL) DIVISION
FROM THE SOUTHAMPTON COUNTY COURT
MRS JUSTICE SMITH:
1. This is an appeal from the decision of Mr Recorder Mather sitting at
Southampton County Court in June 1999, when he dismissed the claimant's action
for damages for misrepresentation in relation to a contract for the sale of a
parcel of land at Gurnard Marsh near Cowes on the Isle of Wight. The
defendants, the vendors of the land, conceded during the course of the trial
that at the time of the enquiries before contract, they had negligently failed
to inform the claimant that they were aware of a dispute over the possible
existence of a public right of way over the land, in respect of which the Local
Authority intended to seek a modification order to show the same on the
definitive map under section 53 of the Wildlife and Countryside Act 1981. In
November 1991, the claimant purchased the land in ignorance of this dispute and
the Local Authority's intention. He alleged that had he known the true
position he would not have bought the land. He claimed the difference between
the price he paid and the true value of the land. The Recorder held that the
misrepresentation had not induced him to enter into the contract and dismissed
the claim. The appellant now seeks to persuade this court that the Recorder's
decision was perverse. The respondents submit that the decision was rational
and his conclusion was open to him on the evidence. The Recorder also held that
even if he had found in the claimant's favour he would not have awarded damages
as the claimant had failed to prove any loss.
2. The property comprised about an acre of land just behind the foreshore at
Gurnard Marsh. To the north it has a sea frontage of about 350 feet. The
southern boundary runs along Marsh Road. At the east and west there are
boundaries with other properties facing the foreshore. Over the last 30 or 40
years the mean high water mark which delineates the seaward boundary has moved
outwards due to land filling carried out to counter erosion. As a result, the
plot of land is now larger than it was in the 1960s and the old maps of the
area are now inaccurate.
3. For some years before 1988, a Mr Topham owned the land ran a shop and beach
café upon it. There was also a dinghy park with slipway access to the
sea. The buildings were in poor condition. In 1988, he sold the property
for about £60,000 to the defendants. The first defendant Mr Ely is an
estate agent in the Southampton area. Mr Crocker, who is also an estate agent,
controls the second defendant, a property company. The defendants obtained
outline planning permission for redevelopment of the site and put it on the
market at £97,500. In 1991 they applied for detailed planning consent for
a leisure development with a shop, tea room, barbecue area, water sports
centre, a bungalow and car parking facilities. In about July or August 1991,
the claimant, who was a builder and small property developer, saw the land and
found it attractive. He met a Mr Shorten, who acted as caretaker for the
defendants. Mr Shorten gave him the particulars of sale including details of
the outline planning permission. After discussions to which I will in due
course return, on 12th August 1991 he agreed to buy the property for
£86,000. On 1st October 1991, he signed a contract
conditional upon the grant of detailed planning permission for the new
development. Permission was granted and the sale was completed on
8th November 1991.
4. The claimant said (and it seems to have been accepted) that on inspecting
the site, he noticed that there were signs saying that the property was
private. He noticed a footpath over the grass leading to the foreshore near to
the western boundary. In the western boundary fence he saw a gateway which had
been blocked off with wire and a sign saying `Private property no right of
way'. Whether or not he became aware at that stage that there was another
footpath crossing the land is not clear. In fact there were two. I use the
word footpath without implying anything as to its legal status as a right of
way. The longer of the two ran roughly parallel to the foreshore. The second
ran at right angles to the first and connected with Marsh Road.
5. There was some dispute at the trial as to exactly what conversations took
place during the pre-contract period. It is common ground that the claimant
and Mr Crocker spoke about the property and the application for detailed
planning permission and that the claimant showed great enthusiasm for the
project. The claimant also said that in various telephone conversations Mr
Crocker told him a great deal about the neighbouring properties and
arrangements which had been made in respect of them over the years. He said
that Mr Crocker explained to him that Mr Topham had allowed the public to come
onto his land to come to the shop and café but had never allowed a
public right of way. He assured him that that remained the position. There
was no public right of way. It is not clear whether that part of the
claimant's evidence was accepted. Mr Crocker had said agreed that there were
two or three telephone conversations. He said the two men had also met face to
face, with which the claimant disagreed. In any event, there is no doubt that
Mr Crocker's opinion was that there was no right of way. Mr Shorten's
evidence, which was admitted as two short statements under the Civil Evidence
Act, as he had died before the trial, was somewhat ambiguous but he appears to
have said that he had told the claimant that Mr Topham had permitted the public
to walk on the land in order to visit his shop and café. He knew that
there was no recognised right of way but he was aware that local people thought
there should be. He did not say that he told the claimant of that.
6. On 26th September, the defendants replied to the claimant's
solicitor's enquiries before contract. They stated that they were not aware of
any past or current disputes regarding boundaries, easements, covenants or
other matters relating to the property or its use. They also said that neither
they nor to their knowledge their predecessors in title had received any
notices relating to the property or to matters likely to affect its use or
enjoyment. In fact they were aware that the Gurnard Parish Council had applied
for a modification order under section 53 of the Wild Life and Countryside Act
1981 as they contended that both footpaths across the land were public rights
of way and should be designated as such. In June 1990 they had received a
letter from the County Council Rights of Way Officer informing them of the
application and of the steps which were to be taken. But they did not disclose
that information to the claimant. Searches conducted by the claimant's
solicitor revealed no suggestion of any right of way. By that time, a surveyor
instructed by the claimant's Bank had valued the property in its present state
at £68,500. The claimant said in evidence that on receipt of the report
he tried to negotiate a price reduction with Mr Crocker. Mr Crocker denied that
he had done so. The contract was signed on 1st October, conditional
upon the grant of detailed planning consent.
7. At about this time, the claimant was in contact with Mr Gray, the architect
instructed by the defendants to obtain detailed planning consent. As a result,
he had become aware that the Planning Department of the Council had raised the
question of public access to the land. Either in late September or early
October he saw a letter written by Mr Gray to the Planning Officer on
17th September in which Mr Gray said that there was no right of way
over the land and although his clients would wish to attract the public to the
new facilities, they ´would not wish to encourage a permanent footway at
any point across the land and would certainly not be offering to provide rights
of way or permanent access across their site to the sea frontage'. Detailed
planning consent was granted on 9th October free of any condition
relating to public access. The claimant went ahead and completed the purchase
on 8th November.
8. Unbeknown to the claimant, at that time the Isle of Wight were taking active
steps to obtain a modification order by which the two footpaths across the
claimant's land would be declared to be public rights of way. In 1980, in
response to pressure from residents of Gurnard, the County Council had resolved
to include the long track across the land as a public footpath on a new
definitive map of the area. They were of the view that public user had
established a right of way. However, they took no action and in 1986 Gurnard
Parish Council applied for an order modifying the definitive map of the area by
the addition of both public footpaths across the land. No progress was made but
by 1989, the Rights of Way Officer of the County Council, Mr Slade, had been
instructed to proceed with the application. He suggested to Mr Crocker that
Addishire might dedicate a path across the land but Mr Crocker refused. He
voiced his concern that members of the public walked through the site and
sometimes unblocked his barriers. In October 1989, Mr Crocker wrote to Mr
Slade, noting that the Council wished to establish a right of way over the land
and had been trying to negotiate with the previous owners. He made it plain
that he disputed the existence of any public right of way. In June 1990, Mr
Slade wrote to Addishire Ltd informing it that the Council had applied for a
Modification Order. He was preparing a report and would invite the company to
comment on it in due course.
9. The claimant remained unaware of the outstanding application until
29th January 1992 when he saw a small notice in the local newspaper.
By that time he had demolished the old buildings and had begun work on the
first stage of the new development. He said that he was very concerned when he
read the notice and went to see Mr Slade that day. He was shown the
application with a plan attached. He discovered that the line of the shorter
of the two proposed rights of way ran right through the building he was in the
course of constructing. The longer one ran in front of his new building
through an area which he intended to use as a base for water sports. He said
he was devastated. Mr Slade's contemporaneous note of the meeting confirms
that that is what he said at the time. It also confirms the claimant's
recollection that he suggested to Mr Slade that the public footpath might be
diverted so as to run along his southern boundary adjacent to Marsh Road. Mr
Slade thought that would not be acceptable. He told the Recorder that he
could not remember his conversation with the claimant and was dependent on his
attendance note. His note concluded as follows:
´There will be conflict between the proposed development and public access
to the site which will sooner or later force the Council into resolving it. It
may be necessary to make a modification order and a diversion order
simultaneously in order to avoid future conflict. However, feelings are very
strong in Gurnard about the importance of the this path and I can see there
will be strong objection to such action'.
The claimant said there had been no discussion between him and Mr Slade about
the simultaneous making of two orders. Mr Slade agreed that he could not
remember discussing that with the claimant. He also said that it was
possible to obtain a modification order and a diversion order simultaneously
within about 3 to 4 months, provided there were no objections taken.
10. The claimant said in evidence that soon after he had found out about the
application, Mr Crocker came to see him unexpectedly and brought him some
papers and photographs which he said might help in opposing the modification
order. Mr Crocker agreed that he visited the claimant but said the claimant
had telephoned him to ask for his help. This dispute of fact seems to have
been regarded as of some importance.
11. The claimant said in evidence that he regarded the proposal for a
Modification Order as a very serious matter. He said that if he had known of
it before he had entered into the contract he would not have gone ahead with
the purchase. He said he would have taken advice from his solicitor. As it
was, finding himself in this difficult situation, he consulted his solicitor
about the defendants' non-disclosure and resolved to do what he could to
prevent the Modification Order being made. It is unnecessary for the purposes
of this judgement to describe events in detail but it is fair to say he fought
long and hard against it. In April 1992, he received a copy of the papers to
be put before the County Council's Rights of Way Sub-Committee for approval.
The claimant then realised that the plan attached (which was based on a 1966
Ordnance Survey map) was inaccurate due to the accretion by landfill which had
occurred since the 1960s. The line on the plan depicting the longer of the two
footpaths was drawn further from the sea than the footpath which members of the
public were now claiming they had used for many years. The claimant told the
Recorder that at some time after this discovery he began to feel optimistic
about his chances of defeating the application. He wrote to object to the
proposal on the grounds that the plan was inaccurate and pointed out that,
although the public may have walked across the land for many years, they had
not taken the same route over all that time. On 29th April 1992,
the Sub-Committee approved the application in respect of the longer footpath.
The Order was made in August 1992. The claimant lodged his objection with the
aid of advice from his solicitor. The Council then delayed seeking the
Secretary of State's confirmation of the Order and entered into prolonged
negotiations with the claimant, who by this time had applied for a further
planning permission. The issues were not resolved and the Council decided to
proceed with the Modification Order. In August 1994, there was a public
inquiry as the result of which the Modification Order was confirmed. In 1995,
the claimant applied for a diversion order of the public footpath to the
seaward edge of his land and that was done with effect from May 1996.
12. A letter before action was sent to the defendants in August 1994 but these
proceedings were not begun until 1996. The claimant had the benefit of a legal
aid certificate until shortly before the hearing when it was revoked for
material non-disclosure of means. The claimant accepted in evidence that his
statement of capital was inaccurate in that he had failed to disclose a capital
asset worth about £4,000. Also he had stated his net income on the form
instead of the gross. He denied that there had been any intention to deceive
and said that he had wished to challenge the decision to revoke but could not
afford to do so.
13. The allegations of negligent misstatement were denied throughout the three
day hearing until conceded by counsel during his closing submissions. The
defendants' argument was by then directed towards persuading the court that the
claimant had not relied on the misrepresentation but would have bought the
property for the same sum even if he had known about the Council's application
for a modification order. It was argued that the claimant had become so
enamoured with the idea of this development that he had allowed his heart to
rule his head. The Recorder who held that the claimant had not relied upon the
misrepresentation and had not thereby been induced to enter into the contract.
He would have bought at the same price even had he known the true position.
He gave three main reasons for this conclusion and it is these reasons and the
factual bases underlying them which are attacked in this appeal. Stated
briefly, the reasons were, first, that the Recorder found it significant that
the claimant had not tried to renegotiate the purchase price when he received
the bank's valuation at £68,500. It appears that he accepted that the
claimant's admitted enthusiasm had affected his judgement. Second he thought
that as a result of the enquiries he would have made, the claimant would have
been confident of defeating the application for the modification order. Third,
he rejected the claimant's statement that had he known the truth he would not
have bought. He did so because he had doubts about the claimant's
´credibility'.
14. It is necessary to examine each of these reasons in some detail. Before
embarking on that exercise I remind myself of the well-established principle
which governs the approach of this court to questions of fact determined by a
judge of first instance. Mr Wilson for the respondents put this principle at
the forefront of his argument. This Court is always reluctant to interfere
with findings of fact where they depend upon the resolution of conflicts of
evidence by the judge who has seen the witnesses' demeanour and is in the best
position to assess their truthfulness. Great weight is to be given to the
Judge's view. Only if this court is satisfied that he has erred will it
interfere.
15. I turn to the Recorder's first reason. He was impressed by the fact that
the claimant did not seek to renegotiate the purchase price down from the
agreed £86,000 when he saw the Bank's valuation of only £68,500. The
Recorder was plainly entitled to reject the claimant's evidence that he had in
fact tried to do so. When it had been put to him that he had allowed his heart
to rule his head the claimant had sought to explain that, although he was
enthusiastic about the project, he had not lost his head over it. The Bank's
surveyor had also given an estimate of the valuation of the property when
developed. He said that as a developer he well knew what the development would
cost and in his judgement the venture would be profitable even if he paid
£86,000 for the land. He said he was making a business judgement and he
thought it was a sound one. The Recorder has not commented upon that part of
the claimant's evidence. I must assume that he rejected the explanation but do
not know why he did so. In my experience it is commonly believed that
valuations for lending purposes tend to err on the side of caution, so I would
not have thought a willingness to pay a little more than the estimated value
was any sign of imprudence. I can well understand that willingness to pay
substantially more than the estimated value, as is the case here, might well
be evidence of imprudence. But if there is an explanation for that
willingness, as there is here, it does not seem to me right to draw an
inference of imprudence without first rejecting the explanation. I myself
find the claimant's explanation wholly reasonable. He was at the time in his
forties with 20 years' experience of the building industry and property
development and he believed that he could keep development costs low, doing
much of his own work. There does not appear to have been any attack on his
competence as a builder or businessman. He thought the project would be
profitable and so far as I am aware there was no evidence that it has not been.
I myself would feel able to attach very little weight to claimant's willingness
to pay £17,500 more than the valuation figure.
16. The second factor behind the Recorder's reasoning was that he concluded
from the claimant's own evidence that he would not have been unduly worried
about the application for the modification order. At paragraph 32 of the
judgement, he said:
´His own assessment of the risk of a footpath being confirmed would have
been that it was slight because if he had learnt of the proposal earlier, he
would have gone to see Mr Slade and been reassured by the possibility that a
public footpath could be modified and diverted at the same time possibly within
3 to 4 months. He would have had doubts about the likely success of the
application for the reasons set out above in paragraphs 24.'
Paragraph 23 of the judgement dealt with the interview between the claimant
and Mr Slade on 29th January 1992, when the claimant had told Mr
Slade that he was devastated to learn about the application. They had
discussed the possibility of diverting the right of way round by Marsh Road and
Mr Slade had said he did not think that would be acceptable. However, there
was no evidence that they had discussed the simultaneous making of orders to
modify and divert the footpath, let alone the time it might take. At paragraph
24 the Recorder said:
´There is no reason from the evidence for me to think that had the
plaintiff and this conversation with Mr Slade 3 months earlier i.e. prior to
his exchange of the contract with the Defendants, neither (sic) Mr Slade's nor
(sic) the plaintiff's views would have been any different. The plaintiff told
me that following his conversation with Mr Slade he did have a good look at the
application and considered the history of it. He formed the view that "I didn't
feel there was a good prospect of a footpath being confirmed". Whilst I must
not use the benefit of hindsight, I believe that to be relevant because I think
the results of his researches, and therefore his view of about the likelihood
of the modification order being made would have been the same had he carried
them out prior to the exchange of contracts. He was asked what he would have
done had he found out prior to the exchange and he said that he would have
referred the matter to his solicitor to find out `what it was all about'.
There is another passage of the judgement which is relevant to this issue.
Within paragraph 25, the Recorder said:
`It is important to note that Mr Slade, in the statement forming part of his
evidence, is of the view that had the plaintiff not objected to the proposal
for the modification order subsequently and there were (sic) no objections to a
diversion order, then the whole matter could have been resolved within 3 to 4
months. Had objections been raised to the diversion order only, then the issue
would have to be referred to the Department of Environment but the Isle of
Wight Council would have supported a proposed diversion order and the matter
could have been resolved within 12 months. In fact, that is a very grave
underestimate in the light of what actually happened, but that is not something
which should be taken into account. If asked about the likely progress of these
applications, there is no doubt that is what Mr Slade would have said to the
Plaintiff in 1991 prior to exchange of contracts.'
17. The appellant submitted to us that the Recorder has misinterpreted the
evidence in reaching the conclusion that he would have been deterred from
purchasing when he learned about the application for the modification order.
First, he had never said that he felt optimistic about defeating the
application for a modification order as the result of his conversation with Mr
Slade on 29th January. Quite the contrary, he had been very worried
and upset as Mr Slade had said that his proposal that the path might be
diverted round by Marsh Road would be unacceptable. It was later, when he was
given the documents which were to go before the Rights of Way Sub-Committee
that he realised that the plan was wrong and did not tally with the evidence of
user on which the application relied. It was then that he began to feel he
might defeat it. He drew our attention to the relevant passage of the
evidence. Unfortunately the proceedings were not recorded on tape and we have
only a transcript of the Recorder's notebook. The sentence on which the
Recorder has relied says: ´Did not feel good prospect for the footpath
being confirmed as applied for, when order made and I researched and found
statement route different from plan'. That supports the appellant's submission
that he was saying that he felt optimistic when he did research after the order
had been made. He was saying that he felt optimistic that it would not be
confirmed by the Secretary of State. Mr Wilson had to accept that it appeared
that the Recorder had erred in this regard but he submitted that the conclusion
was valid nonetheless. Had the claimant learned of the application before
exchange of contracts he would have made the enquiries which he in fact made at
a much later stage. He would have realised that the plan relied on was out of
date and inaccurate and that the statements in relation to public user did not
describe the path shown on the plan relied on. He would have formed the
optimistic view at that stage and would have been prepared to go on with the
purchase. I cannot accept that submission. The documents which gave rise to
the claimant's optimism were not shown to him in January 1992 and there is no
reason to suppose that they would have been shown to him in the previous
October. Indeed, there is some reason to think that they did not then exist.
Mr Slade had written to Mr Crocker in 1990 promising a copy of his report when
it was ready. The claimant as the new owner received that report in April 1992
and it was then that he realised that the map was out of date. In my judgement,
the Recorder's conclusion that the claimant would have formed an optimistic
view before exchange of contracts is ill founded.
18. The appellant also submitted that the Recorder had erred in concluding that
he would have been reassured by the conversation he would have had with Mr
Slade, had he gone to see him in October 1991. This conclusion is based on the
proposition that the claimant would have asked and accepted Mr Slade's advice
about a number of matters which they did not in fact discuss in the January.
It is said that he would have taken Mr Slade's advice about the making of
simultaneous orders to modify and divert the footpath. He would have accepted
Mr Slade's view that if there were no objections the whole thing would only
take 3 to 4 months and that even if there had been an objection to the
diversion order it would have taken only 12 months to resolve. The difficulty
with this is that the claimant did not apparently say in evidence that he would
have taken the advice of Mr Slade. One can see from the note of evidence that
he said that if he had found out about the application before exchange he would
have consulted his solicitor. In any event, the envisaged conversation with Mr
Slade bears no relation to what would have been said. If the claimant was
devastated by the idea of public right of way going through his business
premises, there would be no question of him consenting to it. I have come to
the conclusion that the Recorder's view that the claimant would have been
reassured by his conversation with Mr Slade cannot be sustained.
19. I turn to the Recorder's third reason for his conclusion. He rejected the
claimant's evidence that had he found the proposal he would either have backed
out altogether or would have insisted that the contract was conditional upon
the application being defeated. He rejected this evidence because he doubted
the claimant's credibility for four reasons. First, he did not accept the
claimant's evidence that Mr Crocker had turned up spontaneously to offer
assistance in early 1992. He preferred Mr Crocker's account on that point. Of
course the Recorder was entitled to make that finding but in my view it is not
the kind of issue which would usually cast serious doubt upon the honesty of a
witness. These witnesses were giving evidence about events which had taken
place over seven years before. It is hardly surprising that their
recollections might be different and the point does not seem to have been of
great importance.
20. Second, the Recorder doubted the claimant's credibility because, when he
first found out about the right of way application he did not consult his
solicitor about that but only about the vendors' non-disclosure. His
explanation for that was that he needed advice on that issue straight away. On
the issue of the footpath he thought it was better to wait until he found out
whether the application would proceed. When the order was made, he consulted a
solicitor about lodging his objection. The third reason is related to the
second. The recorder thought it significant that there was substantial delay
in the commencement of these proceedings. The letter before action was not
written until 1994 and the action not begun until 1996. The claimant had then
had the benefit of a legal aid certificate, which, the Recorder observed gave
him a relatively risk free opportunity to litigate. The defendants invited
the Recorder to conclude that the claimant had never really thought that he had
any ground for complaint against the defendants and that he had just taken
proceedings in the hope of a windfall. The claimant's explanation was that so
far as he was concerned there was no point in taking action until he knew that
the modification order was confirmed. That did not happen until August
1994.
21. The final point related to the revocation of the Claimant's legal aid
certificate. The Recorder observed that revocation is not a matter dealt with
lightly by the Legal Aid Board. However, he was rightly conscious of the fact
that that he had not heard evidence about the issues and was not in a position
to form any view as to whether the claimant had attempted to deceive the Board.
He said ´I do not therefore give the fact of revocation great weight, but
such weight as it does carry must be adverse to the plaintiff'. I have much
sympathy with the Recorder's position here. He had been told something which
was potentially very damaging to the claimant's credibility. However, as this
was a matter of credit, not related to any issue in the action, the claimant's
answers should have been accepted. He had denied any attempt to deceive. In
my judgement, the Recorder should have tried to put the matter from his mind,
difficult thought that might be.
22.With the exception of the fourth point, which ought to have been excluded
from consideration, the Recorder was entitled to take account of these matters
in reaching his decision to reject the claimant's final assertion that he would
not have proceeded with the purchase if he had found out about the right of way
application before exchange of contracts. However, there are two reasons why I
do not think it right to allow that finding of fact to dictate the outcome of
the case. The first is that the Recorder's view of the claimant's credibility
must have been affected by the factual conclusions which he gave as his first
two reasons for rejecting the claim. That he believed the claimant was
determined to have the property even though he had to pay more than it was
worth must have affected his view of the truthfulness of the claimant's final
assertion. So must his conclusion that the claimant would not have been unduly
worried on learning of the right of way application. I have held that those two
conclusions were not well founded in the evidence. The effect is to undermine
the third conclusion.
23.For the reasons I have given, I have come to the clear conclusion that this
decision cannot stand. The parties were invited to address us as to the course
they would wish us to follow in the event that we were to set aside the
Recorder's decision. Both parties recognised that the value of the claim was
such as to render a re-hearing undesirable. Both parties invited us to reach
our decision both on liability and, if appropriate on quantum. If the court
were to set aside the Recorder's decision, find for the claimant and proceed to
assess damages, Mr Wilson submitted that there should be a discount from the
damages because the defendants had given up the chance to fight the case again.
For my part I do not think that can be right. The parties have both accepted
unconditionally that this court should determine all issues because the cost of
a rehearing could not be justified.
24.I would not in any event have been in favour of sending the case back for
rehearing as I regard the proper outcome of the case as clear on the available
evidence. I would hold that the claimant has established on the balance of
probabilities that he would not have proceeded with the purchase if he had
known of the Council's intention to seek a modification order. I consider
first what would have happened if the defendants had simply failed to answer
the two important enquiries before contract. If they had failed or refused to
answer, I think the claimant would have backed out on the basis that there was
something wrong with the property and he did not know what. He might have been
able to find out the truth, having been put on enquiry, but then his position
would have been the same as if the enquiries had been answered frankly at the
proper time. If he had known the truth, I consider that it is possible that he
might have proceeded to purchase at a reduced price but I think it probable
that he would have backed out altogether. My reasons are as follows. The
claimant is a builder and property developer of 20 years' experience. On the
evidence I would not conclude that he had lost his heart to this project
because he was enthusiastic and was prepared to pay more than the Bank's
valuation. I find entirely reasonable his explanation of why he was prepared
to pay more. He saw it as a profitable venture when developed. I would accept
as true the claimant's evidence that when he found out about the right of way
application he was very upset. I am confident of that conclusion because Mr
Slade recorded the claimant's `devastation' at the time. I infer from that
that the claimant would have treated the news very seriously if he had found it
out before exchange of contracts. He would not have been distressed as he was
later because he would not then have been committed to the purchase. But he
would have been very concerned, as in my judgement any reasonable developer
would have been, as he would have found that the line of one proposed footpath
ran through the site of a proposed building and the other ran through the area
intended for water sports. The claimant said he would have consulted his
solicitor. I would accept that evidence. He was in touch with his solicitor
at the time and it would be the most natural thing to do. I would expect the
solicitor to advise him of the procedures to be gone through if the proposal
were to be defeated or accommodated, which would be expected to be give rise to
delay and expense. I do not think Mr Slade would have been able to give a
reliable estimate of when the modification order would probably be made or when
the matter might be finally determined by the Secretary of State, if any
objection were lodged. As the claimant would not willingly have accepted a
right of way on his land, even at the seaward side , he would have realised
that, if he bought, he might well be letting himself in for a long and
expensive battle. I would reject the suggestion that he would have felt
optimistic about defeating the application. He would not have discovered that
the map was out of date until some time in 1992. In any event, if he had been
in receipt of professional advice when he made that discovery, he might well
have been less optimistic. I am prepared to assume that I would have rejected
the claimant's evidence of the circumstances of his meeting with Mr Crocker in
early 1992 but I do not think that would affect my view of his credibility.
Nor would I give weight to the other factors which the Recorder took into
account in that regard. I would not have thought that the claimant had
persuaded himself that he would not have proceeded in 1991 if he had known the
truth. His attitude in early 1992 was consistent with his claim that he would
not have done so. For those reasons, I would propose that judgement should be
entered for the claimant with damages to be assessed on the basis that, but for
the misrepresentation, the claimant would not have entered into the transaction
at all.
Quantum of damage.
25. The Recorder considered the question of the damages he would have awarded
had the claimant proved that he had relied on the misrepresentation. However,
in the event, he felt unable to make the assessment as he found the material
before him to be inadequate. He correctly identified the question to be
answered in a case of misrepresentation where the conclusion of the court is
that the claimant would not have entered into the transaction. The measure of
damage for negligent misrepresentation is the same as for fraud, that is the
difference between the price paid by the actual buyer and the price a
hypothetical buyer would have been prepared to pay on the open market with
knowledge of the defect or problem which had been concealed from the actual
buyer: see Cemp Properties (UK) Ltd V Dentsply Research and Development
Corporation [1991]2 EGLR 197, which was cited to the Recorder and more
recently Smith New Court Securities Ltd v Scrimgeour Vickers (Asset
Management) Ltd [1997] AC 254. Here, as the Recorder correctly
observed, the knowledge which the hypothetical buyer was to have was the
knowledge that there was a proposal to declare public rights of way across the
land but there was no certainty that that proposal would be pursued to a
successful conclusion. So, (at any rate in the absence of evidence of a change
in value between the date of purchase and any later date) the correct measure
of damage would be the difference between the £86,000 paid by the claimant
and the price a hypothetical buyer would have been prepared to pay in October
1991 in the light of the known risk that a right of way might be established.
26. The Recorder heard the evidence of two experts, one for each party. He
rejected the defendants' expert's opinion out of hand and there is no
suggestion that he was wrong to do so. He accepted as reasonable the figures
advanced by Mr Dant, the claimant's expert, but was unable to apply them
directly as Mr Dant had not provided the right information. Mr Dant had
estimated the market value of the land free of any problem over rights of way
£80,000, that is £6,000 less than the claimant had paid. He also
estimated that a hypothetical buyer would have been prepared to pay
£65,000 for the land with a right of way established through it, but
taking into account the likelihood of a diversion order moving the path to the
seaward edge of the land, where it would cause the owner little trouble. He
considered that the value of the land once the path was diverted was virtually
the same as with no right of way over it at all. The major element in the
£15,000 difference between the £80,000 and the £65,000 was to
reflect the trouble and delay to be expected, which the Recorder called the
`put-off factor'. Mr Dant had assessed the put off factor on the basis that
the right of way had been or would be established. He had not taken into
account the uncertainty as to whether it would be. There was only a risk of
it.
27. The Recorder recognised that the market value for the property known to be
carrying the risk of a right of way would be higher than £65,000 but he
felt unable to embark on the exercise of estimating that risk himself. He
declined to make an assessment, saying simply that the claimant had failed to
prove his loss. That did not matter greatly as the claimant had failed to
establish reliance. Had the claimant succeeded below, it would in my judgement
have been necessary for the Recorder to do his best to assess damages, after
hearing the submissions of the parties as to the likelihood of the modification
order being made and confirmed. In this court, the parties accepted that
if the decision on reliance were to be reversed, it would be necessary for us
to do our best on the available material to assess the degree of risk of the
right of way being established and to arrive at a figure for the market value
in October 1991. I must now undertake that task.
28. It is necessary for me to put from my mind the knowledge that footpath was
in the event declared a right of way and was confirmed after a public enquiry.
What did the prospects look like in October 1991? A potential buyer would have
been able to discuss the prospects with Mr Slade and to discover the general
nature of the evidence of user he was in the course of collecting. Mr Slade
would no doubt have explained the reasons why progress had been so slow. He had
inherited a heavy backlog of work when he had been appointed to his position.
But in my judgement Mr Slade would have conveyed to an enquirer the seriousness
of the Council's intention, the strong feelings among local residents and an
indication that the evidence he had collected tended to show user of a foot
path over a very long period. In my judgement, the assessment would have been
made that there was something like a 66% chance that the application would
succeed. It would follow that the true ´put-off factor' was of
the order of £10,000. Thus the hypothetical buyer would have been
prepared to pay £70,000 that is £10,000 less than the market value
without problems. But the claimant is entitled to recover the difference
between what he actually paid and what the hypothetical buyer would have paid.
That difference is £16,000 and in my judgement that is the sum which the
defendants should now pay to the claimant. I would give judgement accordingly.