England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand London WC2A 2LL
		4 November 2013

1. LORD JUSTICE DAVIS:

Introduction

2. After a trial before HHJ Coltart sitting in the Tunbridge Wells County Court, the judge, by his ex tempore judgment given on 1 February 2013, found that the defendants had made oral misrepresentations by reference to certain plans in the context of a planning permission applicable to a property which the claimants wished to acquire from the defendants.
3. The judge found that such misrepresentations induced the claimants to enter into a contract to buy that land. The contract was dated 7 August 2009 and completion took place on 17 August 2009. The judge held, however, that by reason of what may be called an exclusion clause contained in the contract, the claim had to be dismissed. He found that such exclusion clause was fair and reasonable. He refused permission to appeal from his decision, as did Lewison LJ on the papers. But permission to appeal was granted by Gloster LJ after an oral hearing.
4. The issue raised on this appeal is whether the judge was justified in his view that the exclusion clause was fair and reasonable. The claimant appellants say that he was not. The defendant respondents say that he was. The respondents further, and if necessary, rely by way of respondents' notice on certain other matters to support the judges' overall decision to dismiss this claim.
5. Having considered the arguments, both written and oral, I have come to the clear view for myself that the judge was indeed justified in his conclusion and that therefore this appeal is to be dismissed.

Facts

6. The background facts were extensively set out in the evidence, both written and oral, before the trial judge. The judge did not in his judgment formally summarise the evidence or his findings as to that background but in effect identified the background facts by reference to the skeleton arguments of counsel. I will accordingly myself summarise those background facts, albeit I will do so relatively briefly.
7. The defendants, Mr and Mrs Browning, are farmers. They owned, and lived, in Basing Farm in Cowden and had done so since 1986. It appears that latterly they had had problems with diseases ravaging their herd of goats; and they decided to relocate, albeit not far away. For this purpose, they also decided to place certain outbuildings and land on the market, this being in early 2005. They appreciated that the prospects of a successful sale would be enhanced with appropriate planning permission being obtained to convert the farm buildings.
8. To this end, plans were professionally prepared to convert an existing disused barn, including changing its then L-shape into, in effect, a U-shape, essentially doing so by adding an east wing extension. The proposed building was to be divided into three units, each with three bedrooms. The drawings were prepared to this end accordingly.
9. It transpired, however, that adding such an extension was contrary to the council's local planning policies. This was identified to the defendants and their advisers. Accordingly, the drawings were amended and in due course, planning permission was then granted on 13 January 2006 by Sevenoaks District Council for the development. The planning permission approved the design in accordance with the amended plans: that is to say, excluding the previously proposed east wing extension. The planning permission document itself made no express reference to any plans.
10. In due course, in early 2008, the property was placed on the market with the benefit of the planning permission which had been granted. It seems that the estate agents who had been instructed by the defendants at that stage had not been told of the amendment to the plans and the sales particulars made no reference to such amended plans. (It may be noted that the sales particulars of the estate agents contained the usual disclaimers.) Offers were not forthcoming and throughout 2008, the asking price was successively reduced from £700,000 to £550,000.
11. The claimants are all members of the same family. The third and fourth claimants are the parents of the second claimant, whose husband is the first claimant. In early 2009 they had been looking for a property where they could all, in effect, live together, albeit in two separate residential units.
12. They became aware of this particular property and it appealed to them. Their understanding from the sales particulars was that the planning permission, and the approved plans, were such as to permit a U-shaped development: that is to say, including the east wing extension. That was a very important feature for their own purposes.
13. There was then a meeting on 2 May 2009, when the first and second claimants met the defendants at the farm. The claimants' case was that in the course of this meeting the defendants produced the unamended plans - that is to say, the plans incorporating the east extension - and represented to the claimants that these were the plans effectively incorporated in, and approved by, the planning permission as granted. The defendants denied in due course making any such representation. But the judge preferred the claimants' evidence on this. It also seems that copies of the unamended plans were sent by the defendants by post to the claimants under cover of a business card, those being received on around 5 May 2009.
14. It was held by the judge that there had been a further oral misrepresentation by the defendants as to the unamended plans at a meeting at the farm on 3 May 2009. At a yet further meeting on 2 June 2009, at the farmhouse, the first claimant attended with his architect. The main purpose of this was to discuss revising the development internally so as to reduce it to two units, instead of the three units for which planning permission had been granted. The discussion on that occasion was yet again, as the judge found, by reference to the unamended plans and the first defendant made no attempt to correct the matter.
15. The architect, as I gather, also said at this meeting that planning advice should be sought by the claimants with regard to their proposed revision to incorporate two units rather than three units into the development.
16. There was then a yet further meeting at the farmhouse on 11 June 2009. This was attended by the first claimant and his architect and also by a planning consultant instructed by the claimants. At this meeting, the proposed revision to convert the development into two units was further discussed, and again, it was further discussed by reference to the unamended plans. This, again, was in the presence of the defendants.
17. In due course, the claimants instructed solicitors. The solicitors' undisputed evidence at trial was that the claimants had not asked them to obtain the plans or full details of the planning permission, as they had been instructed that the claimants had sorted those things out between themselves and the defendants. The solicitors were also informed that the claimants had retained their own planning consultants.
18. So far as the defendants were concerned they had provided their own solicitors, as was not disputed at trial, with the unamended plans. Further, according to the unchallenged evidence of the solicitor involved, they told that solicitor that the claimants knew that they were not the approved plans. It is not in fact altogether clear (and the judge made no finding on the point) as to whether the defendants had themselves kept any copies of the amended plans in their own possession.
19. In the event, pre-contract enquiries in due course submitted by the claimants' solicitors made no enquiry at all about the plans by reference to which the planning permission as granted was based. Nor was any letter sent on such a topic. The draft contract, when it was prepared, contained no term relating to the precise extent of the existing planning permission and contained no term with regard to the plans which were applicable to that planning permission as granted.
20. In mid June 2009, the claimants instructed the planning consultants to pursue the revision which they wanted. The consultants and the first claimant had a meeting with the Sevenoaks District Council on 23 June 2009 to discuss this issue. It seems that nothing was said by the Council's representative at that meeting about there being any amended plans or about the current planning permission being limited only to an L-shaped development.
21. Subsequently, a representative of the claimants' planning consultants inspected the planning file at the District Council's premises. This was on 28 July 2009. She expressly noted that there was no mention of any east wing extension in the committee report, dated 12 January 2006, which she had studied. That report said this, in the relevant respects:

"Green Belt Principle.

3.9 In principle, the re-use of rural buildings is appropriate development in the Green Belt subject to their re-use being possible without adverse impact on the openness. The conversion of these buildings to residential use must be considered in the light of Policy H12 of the local plan."

[...]

"3.11 Having carefully studied the structural report and from site inspection I consider the buildings are structurally sound and can be converted without major rebuilding or extension." [My emphasis added].

Then, in:

"3.15 I consider that the scheme meets the requirements of policies EN1 and H12 and is appropriate development in the Green Belt.

Visual Amenity.

3.17 The proposal does not involve any new build and retains the historic character of the byre [...]"

22. As it transpires, the amended plans most unfortunately (and it seems by some error of the Council) had not been placed on the Council's files available for public inspection. In consequence, the representative of the consultants attending that day did not see the amended plans.
23. The representative emailed to the first claimant the following day, that is to say, on 29 July. Amongst other things, in that email, she said this:

"In addition, as you know, I went to the Sevenoaks Council offices on Tuesday to view the planning file for the previous approval. Of interest to you may be the committee report and appendix, which I have sent as an attachment ...

"1. Strangely, there is no mention of the east wing extension in the committee report or initial supporting statement enclosed with the original submission. However, it is mentioned in the agent's letter, appendix A of the report, and obviously shown on the plans, so I do not think this is cause for concern ..."

24. It is not clear what knowledge of the local planning policies the planning consultant had. In the event, contracts were exchanged on 7 August 2009, with no further follow-up having been undertaken with regard to the amended plans. There were incorporated into the contract as exchanged, the Standard Conditions of Sale, fourth edition. There was also incorporated as a special condition a clause, Clause 8, which as the judge found was a condition in common use within the Eastbourne Law Society area. That clause provided as follows:

"The buyer hereby admits that he has inspected the property and he enters into this contract solely as a result of such inspection and upon the basis of the terms of this contract, and that in making this contract no statement made by the seller or his agent has induced him to enter except written statements, if any, made by the seller's conveyancers in replies to enquiries raised by the buyer's conveyancers or in correspondence between the parties' conveyancers."

25. About a fortnight after completion, the claimants' planning consultants were notified by the Council that the planning permission did not authorise the east wing extension to the barn building as it was contrary to local planning policies.
26. The approved drawings (that is to say, the amended ones) were then located by the Council and provided to the claimants on 15 September 2009. In consequence, the claimants then perforce further revised their own plans so as to omit the proposed east wing extension. The judge was to find that the diminution in value of the property without such extension as compared to the value of the property with such extension was £55,000.

The proceedings and judgment

27. Proceedings were commenced in the County Court on 10 June 2011. Reliance was placed on section 2(1) of the Misrepresentation Act 1967. It is important to note that it was not alleged, nor did the judge find, that the misrepresentations (which the defendants had denied making but which the judge had found proved) had been made fraudulently.
28. Turning to the judgment, some note should be taken of what the judge said in paragraph 2. He said this:

"The most important dispute of fact is what, if anything, was said and done at meetings between the parties on 2 and 3 May, and 2 and 11 June. These were not meetings in a formal sense, were really discussions of the sort one would expect between potential sellers and buyers."

The judge then briefly reviewed the evidence and found that he preferred the account given to him by the claimants and their various witnesses. He then made this finding at paragraph 6 of his judgment:

"6. I reject the defendants' evidence on this important issue, which I found unconvincing. I, therefore, find proved the following:

(a) the Brownings presented the plans showing the extension and the planning permission without mentioning that the planning permission did not cover the extension;

(b) at the time they were aware that the planning permission did not cover the extension;

(c) at the time the defendants were aware that the claimants were proposing a conversion into two dwellings based on the enlarged footprint, ie that which included the extension; and

(d) that had the claimants known the true position, they would not have bought the property for the reasons given both by Mr Lloyd and Mr Ramage which I accept."

29. The judge found (although this is challenged in the respondent's notice) that those misrepresentations had induced the making of the contract so far as the claimants were concerned. The judge went on to excuse the planning consultants' representative of any responsibility; but he was somewhat critical of the District Council on the basis, as the judge put it,"not all was done as it should have been."
30. The judge rejected further arguments of non-inducement, novus actus interveniens and contributory negligence. But he found, as I have indicated, that the claim failed by reason of the exclusion clause contained in condition 8. His essential reasoning was expressed concisely in paragraph 18 of his judgment in these terms:

"18. In this case this was a transaction conducted with both parties having equal bargaining power, in my judgment. They both had solicitors acting for them in the conveyance and whilst it might not necessarily be described as a commercial contract, it certainly had the clothing of formality about it and, of course, it does seem to me to be of some importance that it is a clause that must view being included in conveyances, certainly within the Eastbourne area, but I suspect more likely up and down the country every day of the week. It is of course trite law to say the parties provided they are on an equal footing and are advised can enter into such agreements as they wish."

Submissions and Disposition

31. It is said on behalf of the appellant purchasers that this was erroneous. It is said that the judge placed too much reliance on the fact that the parties were legally advised and adopted too "formulaic" on approach; and thereby, it is said, failed sufficiently to balance the factors relevant to this particular transaction and to the placing of this particular clause into this particular transaction. Had the judge properly balanced the position, so it is said, he would and should have found that this exclusion clause failed to satisfy the requirements of section 11 of the Unfair Contract Terms Act 1977. It was common ground at trial, I might add, that the Act was capable of applying to clauses framed as non-reliance clauses such as this one.
32. We were referred in the written arguments to a number of authorities. But I do not myself think it necessary to refer them at all here, or to cite from them at any length. Certainly, a number of such authorities, including the seminal case of George Mitchell (Chesterhall) Limited v Finney Lock Seeds [1983] 2 AC 803, at page 815G emphasise that an appellate court will always have respect for a trial judge's evaluation on the facts and circumstances of a particular case as to whether or not an exclusion clause is fair and reasonable. There is, as it were, to be accorded a margin of appreciation to a trial judge's decision in this regard. That said, if this court concludes that the judge was wrong in this case then this court should of course interfere.
33. I would agree with the submission of Mr Smithers, appearing on behalf of the appellant claimants, that the ultimate question is not whether this clause is in general a fair and reasonable clause: the ultimate question is whether or not it was a fair and reasonable clause as contained in this particular contract.
34. But this does not at all mean ignoring the general purpose behind clauses such as this one. Nor can one ignore the purpose behind deploying this clause as a special condition into this particular contract. Such clauses are designed to achieve certainty. They are designed to forestall disputes as to whether things were or were not orally said prior to exchange of contracts, and to forestall trials on contested issues of fact on such matters: such as indeed arose in this very case and which took in the event some four days to resolve in the County Court. That is in itself a reasonable position for each party to be presumed to wish to take and a reasonable aim for them to wish to achieve. Indeed, Mr Smithers accepted, and rightly so, that such a condition is not in itself intrinsically objectionable.
35. There are, as I see it, other matters also strongly indicating that this condition was a reasonable and fair one to be introduced into this particular contract:

(1) First, each side had, and as they each knew, legal advisers. That was, as the judge duly found, plainly material as to the reasonableness of including this particular condition into the contract. Moreover, it was the case, as was known to all concerned, that the claimants had in addition instructed architects and planning consultants. That was a relevant factor, too.

(2) Second, the contract was one for the sale of land. It is generally well known that such contracts do indeed, as the judge put it, have a status of "formality" about them. Contracts relating to the disposition of property are designed by law to require that all the agreed terms are set out in one contractual document signed by each party.

Third, this condition was not a "take it or leave it" condition of the kind sometimes imposed in small print on consumers, acting without legal advice, in consumer transactions. It was a special condition agreed by the parties' lawyers in circumstances where the parties had equal and corresponding negotiating positions. Moreover, such condition had the general imprimatur of the Eastbourne Law Society and was, it is to be inferred, in common use. That, too, is a further factor indicating reasonableness.

(4) Fourth and I think this is a particular striking feature in the present case the condition, expressly by its terms, permitted the claimants to rely on written statements made by the defendants' solicitors in replying to pre-contract enquiries or otherwise in correspondence. Thus, if the claimants wished to rely on what had been said to them orally the means for giving legal effect to that were readily available: that is, by an appropriate written pre-contract enquiry or solicitor's letter. Such a request would reveal just what the defendant vendors were prepared formally to commit themselves to.

36. The position in general terms has a degree of similarity to that arising in the case (one involving a major commercial land development transaction) of FoodCo UK LLP & Ors v Henry Boot Developments Limited [2010] EWHC 357(Ch). There, in a non-reliance clause of broadly similar kind to the present one, Lewison J, at paragraph 177 of his judgment, listed five particular features relevant to the assessment of the fairness and reasonableness of a condition such as this as contained in a contract for the disposition of land. Those observations of his correspond to the ones which I have already set out and which I think are relevant to the circumstances of this case. I would respectfully endorse the approach of Lewison J: and indeed Mr Smithers did not really seek to challenge it in argument.
37. Given all this, we pressed Mr Smithers as to just what were the factors which the judge had left out of the balance in favour of the claimant purchasers. What was it that made this condition (accepted by Mr Smithers to be a reasonable one in general terms) unreasonable in the particular circumstances of this case?
38. With all respect to him, he struggled to answer. He stressed that the representations had been made on a number of occasions in circumstances where the defendants knew of the importance to the claimants of an E-shaped building. But that is a very two edged argument. If the matter was perceived to be of such importance, all the more reason, one might think, to secure written confirmation before any contracts were exchanged. The ready means for doing so, and for securing appropriate legal protection, were, as I have said, contained within Condition 8 itself.
39. Mr Smithers also asserted that the defendant vendors were in a "unique position" to know the truth about the approved amended plans. That, as I see it, is of debatable significance even if right. In any case it is not right. It is not right because the position was known to, and could have been ascertained from, Sevenoaks District Council itself. It was, one can accept, most unfortunate that Sevenoaks District Council had apparently not placed the amended plans on the public file. But the vendors, the defendants, could not be expected to have known that. Nor could they be taken to have known or anticipated that the purchasers, having instructed architects and having instructed planning consultants, would not in due course ascertain the true position before committing themselves to an exchange of contracts.
40. Mr Smithers sought nevertheless to place much emphasis on the fact that the purchasers' investigations at the Sevenoaks District Council Offices had indeed not revealed the true position with regard to planning and with regard to the amended plans. The planning consultant's representative had herself considered the committee report which did not indicate any approved extension and also it did not attach any plans to the grant of permission for the development. She herself had noted the lack of plans appended.
41. Those matters, as revealed by the committee report and the lack of availability of any plans amended thereto, had indicated on the face of it at least a potential problem or gap. The representative in due course informed the claimants of this on 29 July 2009 by her email, albeit indicating her own view that that presented no cause for concern. But she did not herself know what the claimants' lawyers were doing, or instructed to do and nor did the lawyers know what she was doing: and her own instructions, it appears, were in fact limited in this regard. Of course what the purchasers' own advisers (be they lawyers, architects, or planning consultants) were actually doing and advising at this stage would in any case not have been known to the vendors.
42. It seems to me that the potential uncertainties revealed from those investigations and enquiries, such as they were, of the District Council yet again would reinforce the desirability of the claimant purchasers either making more detailed enquiries of the District Council or instructing their solicitors of the point identified by the planning consultants: so that written confirmation could be sought from the vendors' solicitors as to the planning permission before the claimants committed themselves to any contract.
43. In my view, none of the matters advanced by Mr Smithers begin to displace the reasonableness of this condition as included in this contract. If anything, they simply tend to confirm its reasonableness. This present case, as it seems to me, is at all events not a case of buyers being tripped up unfairly by small print. It is in fact something of an irony attaching to the claimant purchasers' present case that they have in effect themselves (by issuing and pursuing these proceedings) retracted their own statement, freely given in Condition 8 itself, as to non-inducement.

Conclusion

44. In my view overall this particular condition in this particular contract as shown to be fair and reasonable. The judge was right so to conclude. So, as I have said, I would dismiss this appeal. In such circumstances, I do not think it necessary to deal further with the issues raised by the respondents' notice.
45. LORD JUSTICE SULLIVAN: I agree.
46. LADY JUSTICE ARDEN: I also agree. Another factor, in addition to those which have been comprehensively dealt with by Davis LJ, is the fact that the pressure to exchange came from the appellants as purchasers and not from the respondent vendors. They therefore took a deliberate decision to exchange contracts in the knowledge that the information that they had on the planning position was incomplete. The proposed qualification for which Mr Smithers contended in the course of his submissions took no account of the potential unfairness to the vendors in these circumstances if the purchasers were able to cause the vendors to be under a liability for the statements that were made orally by the vendors personally in the course of negotiations.
47. The judge gave a summary of the factors that were taken into account by him. In my judgment the appellants cannot establish that he had left out any factor which was material and which would have caused a decision to be in the appellants' favour.
48. I conclude with the point that the judge referred to the filed skeleton arguments for the background and did not himself set out the statement of his findings. No doubt that was because there was a great deal in the factual background which was common ground. It may be that the judge was under the impression that those skeleton arguments formed part of the court records that could be inspected at a future date. They are not part of the court records, and therefore the result of the judge describing the background in this way is that third parties cannot generally ascertain it.
49. It is in my view preferable that a judge should summarise, however briefly, the background for himself or herself in the judgment rather than rely on documents which are of their nature not documents which third parties can see as of right.
50. I too, therefore, would dismiss this appeal.