England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
His Honour Judge Dight
CHY08460

		Royal Courts of Justice Strand, London, WC2A 2LL
		29/07/2011

Lord Justice Etherton :

Introduction

1. This is an appeal from the order of His Honour Judge Dight in the Central London County Court dated 21 October 2010 by which he ordered that, as a result of the appellants' innocent misrepresentations, a contract for sale dated 13 December 2007 ("the contract") by the appellants to the respondent of land on the north side of Windsor Road, Wraysbury TW19 5DE ("the Property") was rescinded; the appellants must repay to the respondent the deposit, together with statutory interest; and he dismissed the appellants' counterclaim for specific performance of the contract or damages for the failure to complete it.
2. The issue turns on whether the Judge was right to conclude that Condition 7.1.3 of the Standard Conditions of Sale (4th ed) ("the Standard Conditions"), which were incorporated into the contract, was of no effect on the facts of the case because it failed to satisfy the requirement of reasonableness in section 3 of the Misrepresentation Act 1967 ("the 1967 Act"), as described in section 11(1) of the Unfair Contract Terms Act 1977 ("UCTA").

Condition 7 of the Standard Conditions

3. Condition 7 of the Standard Conditions is as follows, so far as relevant:

"7. REMEDIES

7.1 Errors and omissions

7.1.1 If any plan or statement in the contract, or in the negotiations leading to it, is or was misleading or inaccurate due to an error or omission, the remedies available are as follows.

7.1.2 When there is a material difference between the description or value of the property, or any of the chattels included in the contract, as represented and as it is, the buyer is entitled to damages.

7.1.3 An error or omission only entitles the buyer to rescind the contract:

(a) where it results from fraud or recklessness, or

(b) where he would be obliged, to his prejudice, to accept property differing substantially (in quantity, quality or tenure) from what the error or omission had led him to expect."

The statutory provisions

4. Section 3 of the 1967 Act provides as follows:

"3 Avoidance of provision excluding liability for misrepresentation

If a contract contains a term which would exclude or restrict –

a) any liability to which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was made; or

b) any remedy available to another party to the contract by reason of such a misrepresentation,

that term shall be of no effect except in so far as it satisfies the requirement of reasonableness as stated in section 11(1) of the Unfair Contract Terms Act 1977; and it is for those claiming that the term satisfies that requirement to show that it does."

5. Section 11(1) of UCTA provides as follows, so far as relevant:

"11 The "reasonableness" test

(1) In relation to a contract term, the requirement of reasonableness for the purposes of … section 3 of the Misrepresentation Act 1967 … is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made."

The facts

6. The appellants are the registered owners of the Property. For many years the Property was used for a garage business conducted by the first and third appellants (father and son) under the name Concorde Garage. The transaction started when Lavender Homes Limited ("Lavender"), which was involved in the acquisition and development of residential sites, identified the Property as a possible development site. The respondent was introduced into the transaction to front it for Lavender, and for which it was to be paid a fee. Lavender intended to make an application to the local planning authority to develop the Property into flats.
7. A local General Practitioner, Dr Watts, was interested in developing the Property as a medical centre and purchasing it for that purpose.
8. An oral agreement was reached with the appellants for the sale of the Property to the respondent for £850,000, with completion delayed for 6 months so that Lavender could obtain planning permission and the appellants could wind down the garage business. The appellants, the respondent and Lavender all separately instructed their own solicitors.
9. On 5 November 2007 the respondent's solicitors asked the appellants' solicitors to obtain the appellants' replies to Commercial Property Standard Enquiries ("the Standard Enquiries"). The following was stated in Paragraph F of the introduction to the Standard Enquiries:

"The seller confirms that pending exchange of contract or where there is no prior contract pending completion of a transaction, it will notify the buyer on becoming aware of anything which may cause any reply that it has given to these or any such supplemental enquiries to be incorrect."

10. The relevant Standard Enquiries for the purpose of these proceedings were those in 12.11 and 12.13. They were preceded by Standard Enquiry 12.1 as follows:

"Please supply a copy of any planning permission, proof of reserved matters, building regulations approval, building regulations completion certificate, listed building consent and conservation area consent which relates to the property and of any consent to the display of advertisements at or from the property (each a consent)"

11. Standard Enquiry 12.11 was as follows:

"Please provide details of any application for a consent order certificate which: (a) has been made but not yet decided; (b) has been refused or withdrawn; or (c) is the subject of an outstanding appeal."

12. Standard Enquiry 12.13 was as follows:

"Please supply a copy of any letter or notice under planning legislation which has been given or received in relation to the property."

13. On 19 November 2007 the appellants' solicitors sent replies to the Standard Enquiries. In relation to Standard Enquiry 12.11 the response was "There are none". In relation to Standard Enquiry 12.13 the response was "None given or received".
14. Two days later, on 21 November 2007, a planning consultant for Dr Watts came to the Property and handed the first appellant an envelope containing notice of a planning application by Dr Watts for the erection on the Property of a health centre and four flats. The first appellant telephoned his solicitor, Mr Solomon, to inform him. Mr Solomon did not ask him for a copy of the planning notice and told the first appellant not to worry about it. The Judge found that the first appellant appreciated that the planning application was something that might matter to a purchaser. It is common ground that, in failing to correct the answers to Standard Enquiry 12.11 and 12.13 in the light of Dr Watts' planning application, the appellants made misrepresentations.
15. Contracts were exchanged on 13 December 2007 for the sale of the Property to the respondent for £850,000, with a deposit of £85,000 being paid. Completion was fixed for 1 June 2008. The contract incorporated the Standard Conditions. Condition 7 of the Special Conditions set out various agreed variations to the Standard Conditions. Condition 12 of the Special Conditions was as follows, so far as relevant:

"12. It is hereby agreed and declared that this Agreement includes the entire terms of the agreement for sale and purchase of the Property and that no warranty or statement whether oral or implied made by or on behalf of the Seller shall be capable of being treated as forming part of the said terms or as an inducement by the Seller to the Buyer to enter into this Agreement or as a warranty in relation to the subject matter thereof or be grounds upon which the Buyer shall base any claim against the Seller save that this clause shall not apply to written replies given by the Seller's Solicitors to the Buyer's Solicitors written pre-contract enquiries and written information contained in Commercial Property Standard Enquiries Forms … supplied by the Seller's Solicitors to the Buyer's Solicitors."

16. The first appellant, having been told by Dr Watts that he was going to pursue his planning application notwithstanding that the Property had been sold, telephoned Mr Solomon on 8 January 2008. The Judge found that in that conversation the first appellant expressed both his concern about Dr Watts' planning application and his fears that it might, in some way, affect the sale even though contracts had already been exchanged.
17. At Mr Solomon's request the first appellant sent him a copy of the notice of the planning application. Mr Solomon forwarded it to the respondent's solicitors. Mr Short, a director of Lavender, became aware of the notice at the same time. The evidence given on behalf of the respondent was that, when its director, Mr Hyde, became aware of the planning application, he formed the view it was very bad from the respondent's perspective because, if the local community wanted a health centre and obtained planning permission for it, that would be the most likely use which would be permitted for the Property. Mr Short was also very concerned about the application. Mr Williams, a planning consultant, advised Mr Short (and gave evidence for the respondent at the trial) that Dr Watts' planning application was going to create real difficulties for the respondent or Lavender in obtaining planning permission for a wholly residential development.
18. The appellants' solicitors engaged in correspondence with Dr Watts, in which they sought to persuade him to withdraw his planning application, and offered to pay his reasonable costs in preparing and making the application and his architects' and planning consultants' fees. Mr Solomon also spoke to Dr Watts on 23 April 2008, expressing the concerns of the first appellant. Dr Watts was not, however, willing to withdraw the application.
19. On 14 May 2008 the respondent gave notice that it elected to rescind the contract.
20. On 2 June 2008 the appellant served a notice to complete.
21. The respondent commenced these proceedings on 12 June 2008 for rescission of the contract and repayment of the deposit. The appellants served a defence and counterclaim dated 1 August 2008, in which they asserted that the claim had been brought because of a dramatic fall in the property market since the date of the contract. They relied on Standard Condition 7.1.3, and counterclaimed for specific performance of the contract or, alternatively, damages for breach of contract.
22. On 6 August 2008 the planning committee of the local planning authority accepted Dr Watts' planning application subject to a number of conditions.
23. Following a three day trial in October 2010, the Judge gave judgment in favour of the respondent, ordering rescission of the contract and return of the deposit and dismissing the counterclaim.

The judgment

24. In a lengthy and detailed judgment the Judge concluded that the respondent relied upon the accuracy of the replies to Standard Enquiries 12.11 and 12.13 in deciding to enter into the contract, and that the respondent would not have entered into the contract if it had known about Dr Watts' planning application.
25. The Judge considered, accordingly, that, subject to Standard Condition 7.1.3, the respondent was entitled to rescind the contract. He concluded that Standard Condition 7.1.3 was not fair and reasonable in the circumstances of the case and was therefore of no effect by virtue of section 3 of the 1967 Act and section 11 of UCTA.
26. In reaching that conclusion the Judge referred to the judgments in Walker v Boyle [1982] 1 WLR 495 (Dillon J), Goff v Gauthier [1991] 62 P&CR 388 (Deputy High Court Judge Mr J. Gilliland QC) and FoodCo Uk LLP v Henry Boot Developments Limited [2010] EWHC 358 (Ch) (Lewison J).
27. The Judge's reasoning on the points is at paragraphs [124] to [128] of his judgment. He said the following at [124] to [126]:

[124] It seems to me that the key is, as Mr Johns [counsel for the Claimants] suggests, that these replies were made in writing in the knowledge that the replies were intended to be relied upon. The nature of the information which was not revealed was, as I have already held, highly material so far as the Claimants were concerned and went to the wisdom and merits of their proposed development of the property.

[125] The Defendants, I find, must have known about the importance of the planning position to the purchasers and that is reflected not only in the evidence that Mr Cleaver gave but more particularly in the evidence given by his solicitor, in the attendance notes recording Mr Cleaver's concerns and in the correspondence with Dr Watts in which there was an attempt to buy off Dr Watts' concerns.

[126] Significantly also, in my judgement, is the fact that there was a continuing obligation to correct enquiries if they were known to be incorrect. The information came to Mr Cleaver two days after the replies were given to the enquiries at a time when the advice of Mr Solomon and the terms of the enquiries must have been fresh in Mr Cleaver's mind."

28. The Judge then said ([127]) that, for the reasons given by Mr Johns, Standard Condition 7.1.3 was not in all the circumstances of the case fair and reasonable. That was a reference to seven points made by Mr Johns which the Judge set out at [123] of the judgment, as follows:

"1) he says that the Defendants made a representation which had become false and that they knew about it as did their solicitors. He therefore challenges whether or not the misrepresentation as at the exchange of contract was wholly innocent;

2) in distinction to Gotham v Couteau and the FoodCo case the answer was made as part of the formal enquiry process in writing which the authorities treat, he submits, as a key factor;

3) there was a specific provision, to be found in paragraph F of the introduction to the enquiries before contract, that if the replies to the enquiries were untrue, they would be corrected. He points out that the Defendants did precisely what they confirmed they would not do by not correcting the reply which had become untrue.

4) the contract expressly contemplated reliance on the pre-contract enquiries, in which respect Mr Johns relied on clause 12 of the contract, and says this is reflected in the advice which Mr Solomon gave Mr Cleaver in the letter advising Mr Cleaver as to how to approach the answers to the enquiries that were raised;

5) the Defendants knew of the importance of the replies generally and of this one in particular;

6) the Defendants knew that Dr Watts' application would matter to a purchaser. He refers again to Mr Cleaver's evidence to the effect that he knew that it would matter;

7) there was not really a separate negotiation of the standard conditions and in particular this exclusion provision. They were, save in one respect, standard variations which solicitors tend to adopt as their "pet", my word not his, variations."

29. Finally, on this aspect, the Judge said:

"128. The fact that both parties were represented by solicitors does not seem to me to outweigh that [viz. that Special Condition 7.1.3 was not fair and reasonable]. It is apparent that the clause was not separately negotiated but it is difficult to envisage how it might have been separately negotiated to cater for what actually took place in this case."

The appeal

30. The central submission of the appellants is that the Judge was wrong to conclude that, for the purposes of section 3 of the 1967 Act and section 11 of UCTA, Standard Condition 7.1.3 was not fair and reasonable in all the circumstances. They say that, in reaching his conclusion, the Judge failed to give any or sufficient weight to various important matters and wrongly took account of certain matters which he should not have done.
31. The role of an appeal court on the issue whether a provision satisfies the requirements of reasonableness for the purposes of section 11 of UCTA is a limited one. The position was described by Lord Bridge in George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 AC 803 as follows, at page 815G:

"It may, therefore, be appropriate to consider how an original decision as to what is "fair and reasonable" made in the application of any of these provisions should be approached by an appellate court. It would not be accurate to describe such a decision as an exercise of discretion. But a decision under any of the provisions referred to will have this in common with the exercise of a discretion, that, in having regard to the various matters to which … section 11 of the Act of 1977 direct[s] attention, the court must entertain a whole range of considerations, put them on the scales on one side or the other and decide at the end of the day on which side the balance comes down. There will sometimes be room for a legitimate difference of judicial opinion as to what the answer should be, where it will be impossible to say that one view is demonstrably wrong and the other demonstrably right. It must follow, in my view, that, when asked to review such a decision on appeal, the appellate court should treat the original decision with the utmost respect and refrain from interference with it unless satisfied that it proceeded on some erroneous principle or was plainly and obviously wrong."

32. On the same point Potter LJ, with whom Mantell LJ agreed, said as follows in Overseas Medical Supplies Ltd v Orient Transport Services Ltd [1999] 2 Lloyd's LR 273 (as to whether a contractual limitation of liability provision satisfied the test of reasonableness in UCTA section 11) at page 276:

"9. First, so far as this Court is concerned, while the hearing of this appeal is in the form of a re-hearing and the Court is entitled to reach its own view of the evidence, its approach is constrained by a natural reluctance to disturb a first instance decision as to what is reasonable in all the circumstances of a particular case, bearing in mind that views on reasonableness may properly differ and that, in any matter where the decision depends not merely on argument but also on the effect of oral evidence, the first instance Judge has the advantage of hearing such evidence at first hand."

33. Mr Tom Leech QC, for the appellants, made a number of powerful points in support of the appeal. He emphasised that the appellants, the respondent and Lavender were all separately represented by solicitors and that the Special Conditions contained no less than 10 agreed variations to the Standard Conditions. He observed that the Standard Conditions carry the endorsement of the Law Society, and that what is now Standard Condition 7 has a long history. Its predecessor provisions have been amended from time to time in response to judicial criticism.
34. Mr Leech submitted that Standard Condition 7.1.3 does no more than give effect to the existing law as to when rescission is available. In that connection he cited Tindal CJ in Flight v Booth [1834] 1 Bing. (N.C) 370 at 376-377 as to which misstatements or misdescriptions in particulars of sale justify rescission of the contract and which of them can only be the subject of compensation. Mr Leech rightly pointed out that neither fraud nor recklessness has been alleged in the present case. Nor has the respondent claimed that the description of the Property, or specifically its quantity, tenure or quality, was materially different from what was contracted to be sold or that its value was affected by the misrepresentations. What was available to be sold and was contracted to be sold was a commercial garage for £850,000. The respondent has made no claim for damages whether on the ground of misrepresentation or misdescription or otherwise.
35. The appellants contend that the Judge was wrong in failing to place weight or sufficient weight on each and all of those features. They specifically criticise the Judge for discounting the importance of the fact that all parties were represented by solicitors and that various of the Standard Conditions, other than Condition 7, were varied by agreement ([128]); for apparently forming the view that the appellants had behaved badly (in Mr Leech's words, "close to a finding of fraud") in failing to disclose Dr Watts' application before the contract, when they knew of it; and for relying on attendance notes, discussions and correspondence after the date of the contract as evidence that the appellants were aware that Dr Watts' application would be of relevance to any purchaser and to the respondent in particular.
36. I do not agree with all those points made on behalf of the appellants, but many of them are highly persuasive. I do not consider, for example, that it assists the resolution of the present case to cite Tindal CJ in Flight v Booth since it is common ground that the failure to correct the responses to Standard Enquiries 12.11 and 12.13 prior to the contract gave rise to innocent misrepresentations which, but for Special Condition 7.1.3, would have entitled the respondent to rescind the contract.
37. Further, I do not consider that the Judge can fairly be criticised for his finding of fact that, at the date of the contract, the appellants were aware that Dr Watts' planning application would be of relevance and possible concern to any purchaser of the Property, including the respondent. Nor do I accept that the Judge made any finding that the appellants had behaved in a morally reprehensible manner.
38. On the other hand, there is nothing self-evidently offensive, in terms of reasonableness and fairness, in a contractual term which restricts a purchaser's right to rescind the contract in the event of the vendor's misrepresentation to cases of fraud or recklessness or where the property differs substantially in quantity, quality or tenure from what the purchaser had been led to expect, and to confine the purchaser to damages in all other cases. That is a perfectly rational and commercially justifiable apportionment of risk in the interests of certainty and the avoidance of litigation. While each case turns on its own particular facts, the argument in favour of upholding such a provision as a matter of the commercial autonomy of the contracting parties is particularly strong where, as here, (1) the term has a long history, (2) it is a well established feature of property transactions, (3) it is endorsed by the leading professional body for qualified conveyancers, (4) both sides are represented by solicitors, and (5) the parties (through their solicitors) have negotiated variations of other provisions in the standard form.
39. The question remains, however, whether, on the facts of this particular case, it can be said that the Judge, in the words of Lord Bridge in George Mitchell, proceeded on the basis of some error of principle or was plainly and obviously wrong.
40. In his spirited defence of the Judge's judgment, Mr Johns made various submissions which I do not accept. He relied upon Walker v Boyle for the proposition that it is unreasonable to exclude the right to rescind in a case where the vendor has made an innocent misrepresentation about the property, when the true facts were within his own knowledge. In that case the vendor of a house innocently misrepresented that he was not aware of any boundary dispute. Dillon J held that the purchaser was entitled to rescind the contract notwithstanding that the contract incorporated Condition 17(1) of the National Conditions of Sale (19^th ed). Dillon J said at pages 506G-508A:

"It seems to me that the equitable barrier to specific performance extends not merely to matters of title where the vendor has failed to disclose defects known to him in his own title, but also to misrepresentation where the vendor has, albeit innocently, misdescribed the property or made some other misrepresentation about the property, when the true facts were within his own knowledge. A trifling misrepresentation where the truth would have had no effect on the purchaser and the purchaser would have nonetheless entered into the contract, rests in a different category because there the contract has not been induced by the misrepresentation, but here, as I find, the purchaser would reasonably have refused to contract unless the boundary dispute, if disclosed to him, had first been resolved. Therefore, it seems to me that on equitable principles and consistently with the authorities I have mentioned, and consistently also with the fairly recent decision of Walton J in Faruqi v English Real Estates Ltd [1979] 1 WLR 963, the vendor, Mrs Boyle, is not entitled in equity to rely on condition 17 in the circumstances of this case."

41. So far as concerns the application of section 3 of the 1967 Act, Dillon J said at page 507D-E quite shortly:

"If condition 17 has any validity or relevance in the circumstances of this case, it is a term which would exclude liabilities to which Mrs Boyle would be subject by reason of misrepresentation, and so section 3 is applicable. The requirement of reasonableness in section 11 of the Unfair Contract Terms Act 1977 is that the term shall have been a fair and reasonable one to be included, having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made. I do not regard condition 17 as satisfying that requirement in the circumstance of this case. Another way of putting it is that Mrs Boyle has not shown that it does satisfy that requirement."

42. Dillon J rejected the argument of counsel for the vendor that, as there were solicitors acting for both parties, it would be a very strong thing to say that any term of the contract which resulted was not a fair and reasonable one in the circumstances. He said that argument would have great force, no doubt, if the solicitors had specifically directed their minds to the problem and had evolved the clause under attack; but, in fact, neither solicitor directed his mind to Condition 17, and both had given evidence that they had never come across a case where any question under Condition 17 had arisen. Dillon J said that he did not think a solicitor was called upon to go through the small print of somewhat lengthy standard conditions of sale with a purchaser to draw the purchaser's attention to every problem which on a careful reading of the conditions might in some circumstances or other conceivably arise. Dillon J also rejected the submission of counsel for the vendor that the court should be very slow to hold that a common form clause like Condition 17 was not fair and reasonable. He said that there were common form clauses which had been evolved by negotiation between trade associations, associations of merchants or associations of growers or trade unions or other such bodies to protect the rights of their members, which could be regarded as representing what consensus in the trade regards as fair and reasonable. However, the National Conditions of Sale were not the product of negotiation between such bodies, and it was plain from the reported cases that Condition 17 had come down through the ages despite very drastic limitations imposed on it by the courts. He said that he did not think that it could be said that its precarious survival entitled it to the automatic accolade of fairness and reasonableness for the purposes of UCTA section 11.
43. It is not at all clear that Dillon J was intending to suggest that a contractual provision excluding the right to rescind for an innocent misrepresentation is always unreasonable or unfair if the vendor was aware of the true facts. If he did intend to say that, I do not agree. Nor do I agree with him if he intended to suggest that it is irrelevant to reasonableness under section 11 of UCTA that the provision has the endorsement of the Law Society and is in common use and that all parties were represented by solicitors. Furthermore, I would not agree, if Dillon J intended to say it, that it can never be the duty of a purchaser's solicitor to draw the purchaser's attention to the consequences of the limitation of relief in a provision such as Standard Condition 7.1.3. It depends on the facts. Critically, as is obvious, Condition 17(1) of the National Conditions of Sale (19^th ed) was far more draconian in its limitation of the right to rescind than Standard Condition 7.1. Walker v Boyle is obviously distinguishable from the present case on that central point.
44. Mr Johns referred to the judgment of Mr J Gilliland QC, sitting as a deputy High Court Judge, in Goff –v- Gauthier for, among other things, the proposition that the fact that the misrepresentation in a property sale transaction is made through solicitors negates or undermines the reasonableness or fairness of any provision excluding liability. It is not necessary to recite all the facts of the case. The issue in the case was whether an "entire contract" provision in the sale agreement, which provided that the purchaser did not enter into the agreement in reliance on any warranty or representation other than the vendor's solicitors' written replies to enquiries raised by the purchaser's solicitors, was fair and reasonable within section 11 of UCTA. The Deputy Judge held on the facts of the case that it was not. The provision under consideration in that case is plainly quite different from Standard Condition 7.I.3. It is sufficient to say that I do not accept that the case is authority for any such general proposition about the negative effect of the involvement of solicitors for the purposes of the test in section 11 of UCTA. Nor do I agree with any such general proposition. As I have said, the fact that all parties are represented by solicitors is a factor which is capable of supporting the fairness and reasonableness of a standard provision such as Standard Condition 7.1.3, particularly where it is clear that variations to the Standard Conditions have been negotiated and agreed.
45. Mr Johns then referred to Lewison J's judgment in FoodCo Uk LLP v Henry Boot Developments Limited [2010] EWHC 358 (Ch). Again, that case is of very limited assistance because its facts were so different from those of the present case. So far as relevant to the issues on this appeal, what was in issue in FoodCo was an "entire agreement" provision similar (but not identical) to that in Goff v Gauthier. Lewison J held that the provision satisfied the test of reasonableness in section 11 of UCTA, and that the claimants were only entitled to advance their claim based on fraudulent misrepresentation. That claim failed.
46. Lewison J gave the following reasons (at [177]), so far as relevant, for holding that the clause in issue satisfied the test of reasonableness within section 11 of UCTA:

"(i) The aspiration of certainty is a reasonable one for the parties to adopt. In most cases it will have the effect of avoiding a twelve day trial such as this one.

(ii) There was no substantial imbalance of bargaining power between the parties. Each of the tenants was a commercial and substantial concern ...

(iii) Each of the tenants was advised by solicitors …

(iv) The term itself was open to negotiation …

(v) Perhaps most importantly, the clause expressly permitted reliance on any reply given by the Henry Boot's solicitors to the tenant's solicitors. If, therefore, something of importance had been stated in the course of negotiations upon which the intending tenant wished to rely, its solicitors had only to ask Henry Boot's solicitors for an answer to a question. That would have revealed whether Henry Boot was prepared to formalise the statement so that the tenant could rely on it or whether the tenant would have to undertake its own due diligence."

47. Save for the fifth point, the relevance of which turned on the facts of that case, all the other matters mentioned by Lewison J are matters which could be, and are, invoked by the appellants in support of the validity of Standard Condition 7.1.3.
48. Finally, Mr Johns referred to Morgan v Pooley [2010] EWHC 2447. Again, that case seems to me to be of no assistance in resolving this appeal. In the first place, Mr Justice Edwards-Stuart found on the facts that there had been no misrepresentation. He went on to consider, in the event that the case went further, whether provisions in the Special Conditions in that case precluded reliance on any misrepresentation by the vendors. Those provisions were materially different from Standard Condition 7.1.3. The Judge said that he would hold that the relevant clause satisfied the test of reasonableness for the purposes of section 3 of the 1967 Act. He distinguished Walker v Boyle on the ground that that case turned on its facts, and that ([117]) there was a material difference between "a provision tucked away in one clause of the National Conditions of Sale" and what he was concerned with, namely "a term that is very clearly set out in a set of special conditions that are communicated to the purchaser well before the contract is signed." That case is, therefore, distinguishable on numerous grounds from the present.
49. For all those reasons, I do not consider that any of the cases relied upon by Mr Johns materially advances the respondent's opposition to the appeal; and, indeed, the reasoning of Lewison J in FoodCo could be said in important respects to support the appellants.
50. There remains the question, however, whether it can be said that the Judge, in the words of Lord Bridge in George Mitchell, proceeded on some erroneous principle or was plainly wrong. For the reasons I have given earlier ([38]) it would require some exceptional feature or combination of features to enable a court to conclude that Special Condition 7.1.3 failed to satisfy the test of reasonableness in section 3 of the 1967 Act and section 11 of UCTA. Each case turns on its particular facts, and the onus is on the person relying on the exclusion provision to establish that it was fair and reasonable. In the present case, the Judge, after a three day trial, weighed up all the facts and concluded that, due to a combination of features, the appellants had failed to satisfy him that Special Condition 7.1.3 was fair and reasonable. Although I am far from certain that I would have reached the same conclusion, I cannot say that the Judge proceeded on an erroneous principle or was plainly wrong.
51. The present case has some special features. In particular, it was known to all parties at the date of the contract that an important aspect of the value and commercial attractiveness of the Property lay in its development potential. That potential was inevitably speculative, but the Judge found, and was entitled to find on the facts, that the appellants were aware that a planning application for a change of use to something different from the respondent's intended use would be a material consideration for a purchaser and, in particular, for the respondent. The Judge explained clearly why such a planning application would have, and did in the present case have, a significant negative impact on the respondent such that, had the respondent known of the application, it would not have exchanged contracts for the purchase.
52. The planning application did not affect the "quantity, quality or tenure" of the Property, and, since no planning consent had been granted at the date of the contract, it seems unlikely, and indeed the respondent did not allege, that there was a material difference between the description or value of the Property as it was represented to be and as it actually was. Nevertheless, from the perspective of the respondent, the planning risk was crucial and Dr Watts' application changed the risk landscape. At the date of the contract the appellants knew of that planning application and that it would be material to the intentions of the respondent. The appellants had that knowledge, and failed to disclose the fact that the application had been made, at the very time that they were entering into a contract which would remove the right of the respondent to what would otherwise be its right to rescind for misrepresentation. Moreover they were doing so notwithstanding their express promise, in Paragraph F of the introduction to the Standard Enquiries, that they would notify the respondent on becoming aware of anything which might cause any reply they had given to be incorrect, and notwithstanding their agreement that the appellants' solicitors written replies to the written pre-contract enquiries would be excluded from the "entire agreement" provisions of Condition 12 of the Special Conditions. Whatever my own view of the significance of those features for the purposes of section 11 of UCTA, the Judge was entitled to regard that combination of circumstances as taking the case out of the general run and to hold that the appellants had failed to discharge the onus on them of satisfying the court that Special Condition 7.1.3 was fair and reasonable in the present case.

Conclusion

53. For those reasons, I would dismiss this appeal.

Lord Justice Longmore

54. I agree. This case is a good example of the width of the interference with freedom of contract generated by section 11 of the Unfair Contract Terms Act 1977. My initial reaction was that a term restricting rescission (in non-fraudulent cases) to instances where the property differed substantially in quantity, quality or tenure from what it had been represented to be was, in general, a reasonable clause. The Law Society (with, of course, no axe to grind on behalf of either vendors or purchasers) had promulgated the clause, taking into account judicial criticism of its predecessors.
55. But the question is not whether the clause is, in general, a reasonable clause. The question is whether it was a reasonable clause in the contract made between this vendor and this purchaser at the time when the contract was made. On the particular facts of this case both parties were aware of and wished (if possible) to exploit the development potential of the property. The planning position (and any change to it between the answer to enquiries and completion) was of obvious materiality. Yet the mere existence of an application for planning permission can hardly be said to make the property different in quantity, quality or tenure from what it had been represented to be.
56. It is therefore difficult to criticise a judge who hears all the evidence and concludes that, in the particular circumstances of this particular case, the vendor had not satisfied him that clause 7.1.3 was a reasonable clause to have included in the contract at the time when it was made. I am certainly not satisfied that Judge Dight "proceeded on some erroneous principle or was plainly and obviously wrong" and in the light of George Mitchell v Finney [1983] 2 AC 803, 815 G I too would dismiss this appeal.

Lord Justice Laws

57. I agree.