Case No: TLC 72/00
Neutral Citation Number: [2006] EWHC 3746 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Friday, 20 October 2006

BEFORE:

HIS HONOUR JUDGE PELLING QC
Sitting as a Judge of the High Court
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BETWEEN:

DOE & ANR
Claimants
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SKEGG & ANR
Defendant
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Wordwave International, a Merrill Communications Company
PO Box 1336, Kingston-Upon-Thames, Surrey KT1 1QT
Tel No: 020 8974 7300  Fax No: 020 8974 7301
Email Address: tape@merrillcorp.com
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Mr E Ashfield (instructed by Messrs Lawrence Hamblin) appeared on behalf of the Claimant

Mr A Jackson (instructed by Messrs Foys) appeared on behalf of the Defendant

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Judgment

JUDGE PELLING:   
1.	This is the trial of a claim for damages said to have been suffered by the claimants when they were induced to purchase 69 Harrow Lane, Maidenhead in Berkshire (“the property”) from the defendants by what are alleged to be misrepresentations.  The trial took place on 19 October and I heard oral evidence from Mr Doe and Mr Skegg.  Mrs Doe’s statement was admitted without challenge and Mrs Skegg was unable to give evidence due to ill health.  I refused to admit what purported to be a statement from Mrs Jan Marie Jenson on the ground that, though tendered under cover of a Civil Evidence Act notice, the statement was not signed and had not been approved by her, and thus it seemed to me it was not, in truth, a witness statement at all.  I left open the possibility of an application to adduce as hearsay evidence a statement from the claimant’s solicitors verifying the statement and setting out what Mrs Jenson had told him, but in the event, no application was made to adduce evidence of this sort.
2.	The other preliminary point that arises concerns damages.  The claimant seeks not merely compensatory damages, but also exemplary or aggravated damages.  By an order made on 18 January 2006, Master Teverson directed that the trial before me should be of liability and “… the issue as to type and nature of any damages and of any loss and damages and damage recoverable, excluding any issues as to quantum”.  This was construed by the parties as requiring me to determine whether, in principle, the claimant was entitled to recover exemplary or aggravated damages, and also I think whether damages should be assessed by reference to the value of the property at the date of trial as contended for by the defendant or at date of completion of the impugned acquisition as is contended for by the claimants.
3.	It seems to me to be very difficult and potentially unfair to adopt the course directed by the Master.  In the circumstances it has been agreed that the quantum exercise should be reserved to me and that I should resolve only the liability issues by this judgment.  Therefore, it follows that it is unnecessary for me to comment in detail on the issues concerning exemplary or aggravated damages at this stage.
4.	Mr Skegg, the first defendant, is a retired quantity surveyor.  He is 77 years old and he and his wife purchased the property in June 1964.  They have three children, a son who lives in London, a daughter who lives in Maidenhead and another daughter who lives very near to where the defendants now live in South Yorkshire.  The property is situated to the south of Harrow Lane.  On the north side and to the north west of the property is a detached property, no.70a Harrow Lane, owned by Mr and Mrs Robinson since the summer of 2001 and occupied by them and their adopted son, Andrew.
5.	Unhappy differences and difficulties arose between the defendants and Andrew which are set out in paragraphs 5 to 8 of Mr Skegg’s witness statement and paragraphs 7 to 9 of Mrs Skegg’s witness statement, together with some handwritten notes prepared, as I understand it, by Mr Skegg which appear at pages 68 to 60 in the trial bundle.  It is not necessary that I set out the detail of the complaints made concerning Andrew, other than they involve two unpleasant confrontations in the street and a number of trespasses by Andrew onto the driveway of the property, apparently for the purposes of activating some security lighting installed at the property.
6.	None of Mr and Mrs Robinson or Andrew have given evidence before me, so it is inappropriate that I say much more about the conduct, other than that it is alleged that Andrew is a young adult with learning difficulties, something which has been speculated about but not proved before me.
7.	According to Mr Skegg, the course of conduct ended some time in early March 2001.  By then he had taken advice, so he said, and in consequence had drafted the letter which, in the event, was dated 17 June 2001 and sent to Mr Robinson on or about that date.  This letter is of significance because the claimants say that Mr Skegg’s contention that Andrew’s conduct had ceased in March is wholly inconsistent with the terms of the letter and should be disbelieved.  It is submitted that, if I so conclude, then Mr Skegg’s credibility on all other issues is severely damaged.  The letter written by Mr Skegg was as follows.  Dated, as I have said, 17 June, addressed to Mr Robinson, it says as follows: 
“Dear Mr Robinson

I very much regret having to write to you about the behaviour of Andrew.  For the past six months he has walked into our drive at around 11pm onwards and deliberately activated the security light as many as four or five times a time.  He also deposits his cigarette ends in our driveway and generally makes a nuisance of himself. 

I have taken legal advice about the situation and am informed that under the European Law of Human Rights he is trespassing and causing harassment to us.  We have a number of witnesses to support our statement.  I would request you therefore to speak to him and inform him that my patience is running out and if he does not cease this annoyance, I will instruct my solicitor to take out a curtailment order against him and, if necessary, a court order.

I hope this will now be an end to this unsavoury affair, which has been going on for far too long.

Yours sincerely 
GJ Skegg.”  [Quote unchecked]

8.	It will be at once apparent that this letter is wholly inconsistent with Andrew having ceased his alleged antisocial behaviour in March or any time before the date of the letter, 17 June 2001.  The first paragraph is written by reference to events which by implication are continuing, having started six months prior.  That coincides almost to the day with the start date of the handwritten notes that appear in the bundle to which I have already referred.  Secondly, it requests Mr Robinson to intercede with Andrew and threatens legal proceedings “if he does not cease this annoyance”.  The final sentence that I have just quoted is consistent only with a continuing course of conduct being complained about.
9.	Whilst it is true that the handwritten notes do not refer to any incidents after 27 February 2001, I am not persuaded that this demonstrates the truth of what Mr Skegg says concerning the letter.  Although now hard of hearing, Mr Skegg is an experienced retired professional person, and as such it is inconceivable, in my judgment, that he would have written the letter dated 17 June if the conduct complained of was not ongoing at the time it was sent.  
10.	If, as he asserts, the conduct had ceased at the end of February, then what would have been the point in asking Mr Robinson to intercede with Andrew or thereafter in threatening legal proceedings?  Aside from anything else, it must have been apparent to Mr Skegg that the letter would be seen as highly provocative if the conduct complained of had in fact come to an end.
11.	I have no hesitation, therefore, in rejecting Mr Skegg’s explanation concerning the letter.  In my view, it was written when it was written because of ongoing difficulties with Andrew, current at the date when the letter was sent.  In the event, Mrs Robinson responded on 2 July 2001.
12.	Mr Skegg told me that he and his wife decided to sell the property and move to be nearer their daughter in Yorkshire some time in mid July 2001.  He told me that they had been considering moving before then, but on a visit to his daughter in Yorkshire, he and his wife saw a property near to their daughter and decided to buy it because they liked it very much.  He also told me that he and his wife wished to release capital by selling their property in the south.  
13.	Whilst it is tempting, having concluded that a witness has been untruthful in one respect, to conclude that his or her remaining evidence is of no value, that is or can be unduly simplistic and, in my judgment, would be so here in relation to the issue I have just considered.  Having seen Mr Skegg give evidence and his demeanour while doing so, I accept that the defendants’ motivation in selling was to release capital and to be nearer their daughter in Yorkshire, who they regarded as the more supportive of the two.
14.	I do not accept the suggestion that the move was motivated by the difficulties with Andrew.  As will shortly be apparent, those difficulties did create a problem in relation to the sale of the property.
15.	By 29 August 2001, Mr Skegg’s sale and purchase was ready to proceed through the formal stages.  Mr Skegg retained Wilmot & Co to act.  By a letter of that date, Mrs Vera Greaves of Wilmots wrote to Mr Skegg, thanking him for his instructions, and in relation to the sale saying as follows:
“I enclose a house sale questionnaire, house purchase questionnaire, seller’s property information form and fixtures, fittings and contents list which I would be grateful if you would complete and return to me as soon as possible.

With regard to your sale, I would ask you to note that your replies to the seller’s property information form and fixtures, fittings and contents list will form part of the contract between you and the buyer and you must therefore give accurate replies.

I would particularly draw your attention to the warning on the front page of the seller’s property information form.”  [Quote unchecked]

	The letter concluded as follows:

“I am enclosing the information on the conveyancing procedure which I trust you will find informative and which you may wish to refer to throughout the transaction.  I hope all is clear, but if there are any aspects of this transaction you would like to discuss at this stage, please get in touch.”  [Quote unchecked]
	
16.	Amongst the documents sent to Mr Skegg for completion by him and his wife, was the seller’s property information form (“PIF”).  In its standard form the PIF consisted of a front sheet setting out notes to sellers.  The notes include in bold the following:
“Please complete this form carefully.  It will be sent to the buyer’s solicitor and may be seen by the buyer.  If you are unsure how to answer any of the questions, ask your solicitor before doing so.”  [Quote unchecked]
	
17.	There then followed a series of bullet points for the guidance of the recipient of the form.  The fourth bullet point read as follows:
“It is very important that your answers are correct, because the buyer will rely on them in deciding whether to go ahead.  Incorrect information given to the buyer through your solicitor or mentioned to the buyer in conversation between you, may mean that the buyer can claim compensation from you or even refuse to complete the purchase.”  [Quote unchecked]

18.	There is an issue as to whether the front sheet was ever sent to Mr Skegg.  In his oral evidence he said simply he was not sure and could not remember.  On the balance of probabilities, I conclude that it was sent to the claimant.  I say this because it is referred to in the body of the letter from the solicitors to which I have already referred, and the other documents there referred to were received and there is no logical reason why the front page of the most important document in the bundle would be omitted, particularly given that it was expressly referred to in the body of the letter.  I have no doubt that if the document was missing, Mr Skegg would have asked his solicitors for a copy, particularly given the invitation to do so contained in the final paragraph of the letter, and particularly also given the concern that he professed to have concerning the completion of some of the questions.
19.	The PIF asked the following questions at parts 2 and 3 to which Mr and Mrs Skegg gave the following answers, warranted by their signatures at the end of the form:
“2.  Disputes.

2.1  Do you know of any disputes about this or any neighbouring property?  No.

2.2 Have you received any complaints about anything you have or have not done as owners?  No.

2.3  Have you made any such complaints to any neighbour about what the neighbour has or has not done?  No.

3.  Notices

3.1  Have you either sent or received any letters or notices which affect your property or the neighbouring property in any way, for example, from and to neighbours, the council or a government department?  No.

3.2  Have you had any negotiations or discussions with any neighbour or any local or other authority which affect the property in any way?  No.”  [Quote unchecked]

20.	It is these answers which are alleged to constitute the actionable misrepresentations which form the basis of this claim.  Before turning to the issues that arise, I must complete, albeit briefly, the history, none of which is seriously disputed.
21.	The claimants completed the purchase of the property on 19 November 2001.  Shortly thereafter, they started experiencing problems with Andrew.  It is not necessary that I set them out in detail in this judgment.  The evidence, which I accept, is at paragraphs 10 to 13 and 18 to 22, 24, 28 and 30 of Mr Doe’s statement and paragraphs 9 to 17 and 19 to 34 of Mrs Doe’s statement.  I accept that evidence as I say, and indeed it was not challenged.  I now turn to the present proceedings.  
22.	There are a number of issues that were live between the parties at the start of the trial which, in the event have not been pursued at its conclusion.  In the result, the issues that I have to resolve are (a) what, as a matter of true construction, do the questions in the PIF to which I have referred require; (b) were the answers given by the defendants false; (c) were they made by them without any reasonable belief in their truth.  If they were then the claimants are entitled to damages pursuant to section 2(1) of the Misrepresentation Act 1967; and (d) if the answers were false, were they given by the defendant either (i) knowing them to be untrue or (ii) without belief in their truth, or (iii) reckless as to whether they were true or false.  There is no serious dispute that the claimants were induced to enter into the purchase of the property by the truth and accuracy of the answers.  Indeed, this was accepted by Mr Skegg in the course of his evidence.
23.	If I conclude that in relation to the issues identified at (d) above that any of those grounds are made out, then the claimants would be entitled to succeed in a claim for fraudulent misrepresentation.
24.	I turn first to the questions.  It is common ground, I think, and if it is not it should be, that the claimants need only to succeed in establishing that one question is false and made either without reasonable belief in its truth or fraudulently to be entitled to succeed in the claim.  Question 2.1 asked:
“Do you know of any disputes about this or a neighbouring property?”  

	It is accepted on behalf of the claimant that the words “or a neighbouring” are irrelevant to this dispute and can be ignored.  It is submitted that whatever else the word “dispute” includes, it includes a situation in which one party has been driven to demand that conduct stop or litigation will be commenced. 

25.	For the defendants it was submitted that there was a clear distinction to be drawn between a complaint and a dispute.  Before there could be a dispute, it was submitted that there would have to be an assertion of a right, in this context by the person accused of trespass, rather than mere antisocial behaviour by someone with behavioural problems.  The claimant submitted that this was an unduly restrictive interpretation of the word used and that whatever else “dispute” covered, it certainly covered a pattern of objectionable behaviour by an individual which was confronted with a threat to issue legal proceedings unless the person concerned desist.  That is what was contained in the letter of 17 June 2001.
26.	In relation to this issue, I agree with the claimants.  It is not necessary or desirable that I attempt a comprehensive definition of what is meant by “dispute” in this context.  I have little doubt that a dispute existed by no later than 17 June 2001 concerning Andrew’s behaviour which had resulted in the threat of litigation.
27.	However, was the dispute “… about this … property”?  Again, in my view, the claimant must be correct in submitting that a dispute concerning trespass by Andrew falls within this definition.  The word “about” in this context means no more or no less than “concerning” and there can be no doubt that trespass comes within this meaning.  Equally, there can be no doubt that Mr Skegg was aware of the meaning of trespass and that was what Andrew was doing, because that is precisely what he said that he was doing in the letter of 17 June.  That being so, the answer given of “no” to question 2.1 was, in my view, false.  Whilst I can well see that question 2.1 is capable of covering a number of different disputes, from boundary disputes, building disputes, disputes concerning disputed rights of way and disputes concerning other easements and the like, I do not think it can be limited to that and I conclude that the Skeggs could not reasonably have believed that the conduct of Andrew and their complaints concerning it did not fall within the scope of this question.  Indeed, it was not disputed that if I concluded that “disputes” and “about the property” issues were to be resolved in favour of the claimants and I concluded that Andrew’s conduct was ongoing as at 17 June, that this conclusion necessarily followed.  I will return to the allegations of fraud at the end of the judgment.
28.	It is now common ground that question 2.2 and 3.2 are not relevant to this dispute, 2.2 because it concerns complaints made and 3.2 because it concerns negotiations and discussion when what we are concerned with is the effect of the letter of 17 June.  
29.	I turn therefore to question 2.3.  This asks whether the vendor has made any “such” complaints to any neighbour about what the neighbour has done or not done.  It is common ground that the effect of the word “such” is to create a reference back to the phrase “as owners” in question 2.2 and to “neighbouring property” in 2.1, so that the question is to be read as being “have you made any complaints to any neighbour about what the neighbour has done or not done as owners of any neighbouring property”.
30.	Understood in this way it is submitted on behalf of the defendants that the 17 June letter does not fall within this category because the complaint is about Andrew and he is not, or at any rate there is no evidence that he is, an owner or part owner of the property he lives in with his parents.  In answer to this the claimants submit that plainly Mr Robinson is a neighbour and the nature of the complaint is of a request to control the activities of someone living at the Robinsons’ property.  On this issue I am bound to say I prefer the defendants’ case to that of the claimant.  In my view it is arguable that to be a neighbour you have to own land that is contiguous to that owned by the person who is alleged to be your neighbour.  But whether that is right or wrong, the letter of 17 June is not a complaint about the conduct of the Robinsons, rather it is a request that they intercede with their son.  The threat of legal action is not against the Robinsons but against their son.  Thus, in my view, the claim by reference to this question fails. 
31.	Finally, I turn to question 3.1.  Reduced to its essentials in the context of this case, the question is, “Have you … sent … any letters … which affect your property in any way?”  It is submitted on behalf of the claimant that this manifestly applied to 17 June letter.  I do not think on any view the 17 June letter can said to affect the Robinsons’ property.  It was submitted on behalf of the defendant that the letter does not “affect” the property because it was concerned with human relationships not property issues.
32.	On behalf of the claimants, it is submitted that the word “affect” when combined with the words “in any way”, are words of wide import and are certainly sufficient to include letters threatening legal proceedings in respect of repeated trespasses onto the property.  I agree with this submission and accordingly I conclude that both the answers given, “No”, were on that account false and that from an objective standpoint the defendant could not have had reasonable belief in the correctness of that answer.
33.	It is now necessary that I consider the issue of fraud.  As is well known under section 2(1) of the Misrepresentation Act 1967, damages are always recoverable for a negligent misrepresentation as though the representation had been made fraudulently.  Why the claimant would wish to persist with this allegation is not entirely clear, but it may be because it is thought more likely that a claim to exemplary damages will succeed where there has been a finding of fraud, although, as I have mentioned in the course of the hearing, the test for whether or not exemplary damages is to be awarded is wholly different to the test for fraud.  As is also well known, a claim to damages under section 2(1) of the 1967 Act will succeed unless the representor, here the defendant, has proved they had reasonable grounds to believe and did believe, up to the time the relevant contract was made, that the facts represented were true.  I have so far held that the claim to damages succeeds under section 2(1) of the Misrepresentation Act because the defendants have not proved a reasonable belief.  It is now necessary to consider the issue that arises in a fraud claim, namely whether the defendants know that what was being said was untrue or believed it to be false, or were reckless as to whether it was true or false. 
34.	Inevitably this is the most difficult part of what would otherwise be a straightforward dispute.  Mr Skegg told me in evidence that he and his wife considered carefully the answers that had been given.  He says in his witness statement at paragraph 13:
“When I completed the seller’s property information form it did cross my mind whether or not I ought to mention the fact that I had occasion to write to Mr Robinson.  However, on further reflection I decided that, having regard to the wording of the property information form, this particular issue was not relevant.  The problems that we had had with Andrew Robinson were about his behaviour.  I did not consider that they related to the property and I did not consider that there was any dispute “about this or any neighbouring property”.  There was no complaint about matters done or not done by Andrew Robinson as owners.  There has not been any negotiation or discussion affecting the property.  There was no issue whatsoever about the ownership of the land, the position of boundaries or anything materially affecting the property.”  [Quote unchecked]
	 
35.	It was submitted that I should disbelieve the defendant on this point, that what was said was obvious hindsight and after the event rationalisation and that Mr Skegg was not a witness of truth as is apparent from his evidence concerning 17 June letter to which I have already referred, and if he was genuinely concerned about the true meaning and effect of the questions, he could and should have taken legal advice and whether he did or not is hidden from view by a claim to professional privilege.
36.	I remind myself that where as in a claim under section 2(1) of the 1967 Act it is for the defendant to prove reasonable belief, in a claim for fraud it is for the claimant to prove fraud, notoriously one of the most difficult things to prove in civil proceedings.  Nonetheless, it is also the case that in most fraud cases, a conclusion reached by the court that fraudulent conduct has taken place, will be based upon inference rather than by direct evidence.
37.	Here, first, I am entirely satisfied that Mr Skegg knew full well the likely effect of disclosing Andrew’s conduct to a potential purchaser.  There could be no other explanation for why he gave such careful consideration to whether to disclose the issue or not.  I also remind myself that in the course of cross-examination, the explanation that he gave for not disclosing the situation was “because I had not seen him for months”, a state of affairs which I had disbelieved Mr Skegg on.
38.	Again, in answer to a question to the effect that an honest thing to do would have been to disclose the problem, his answer was “no, because I regard it as an incident in my life that had finished”.  Again, as I have already said, something which was not true because, as the letter of 17 June made clear, the problems with Andrew were ongoing.
39.	Other answers given by Mr Skegg in relation to these issues were not convincing.  So for example, when asked in relation to question 2.1, “Did you really reflect when you filled in the form?”  The answer was not a resounding, “Yes, see paragraph 13 of the witness statement”, but rather “I must have done.”  It is also worthy of note that, notwithstanding the delivery of a detailed letter of claim which refers to the various questions on which reliance is placed here, no detailed answer was ever sent.  In the end I have concluded that Mr Skegg knew that he ought to disclose the existence of the dispute concerning Andrew’s behaviour, but did not do so because he thought it would destroy or severely affect adversely his chances of selling the property or selling it at the price that he was looking for and thereby prevent him from moving to be nearer his daughter and to release capital, which were both the given reasons for wishing to move.
40.	Further, I conclude that he knew that the answers he gave were not truthful on that account, and therefore with regret, but without hesitation, I conclude that the representations I have found were made were made fraudulently.  In the event the claim succeeds as far as liability is concerned.
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