England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		19/12/2012

Mrs Justice Asplin :

Introduction

1. This matter arises out of a share sale agreement dated 6 June 2003 (the Agreement) in respect of Harbour Estates Limited ('HEL'). HEL operates an estate agency business specialising exclusively in sales and letting of properties in the development at Chelsea Harbour, London SW10 0XF (Chelsea Harbour). HEL was owned by the Claimants Jennifer Ann Bonham-Carter, (Mrs Bonham-Carter), Mrs Antoinette Monique Horn (Mrs Horn) and her husband Adam Spencer Horn, (Mr Horn). By the Agreement, they sold the shares in HEL to the Defendant and Claimant by Counterclaim, Situ Ventures Limited ('SVL'). SVL was purchased on or about 10 March 2003 by the Part 20 Claimant, Jeremy Hammond (Mr Hammond) for the purpose of purchasing the shares in HEL. He is a fifty per cent shareholder in SVL and its controlling mind. The other fifty per cent of the shares in SVL are held by his wife, Nicola Hammond, (Mrs Hammond.)
2. Under the Agreement the purchase price for the shares was due as to £100,000 on completion and a further £700,000 by instalments over the following five years. By early 2009, approximately £173,000 of the purchase price remained outstanding.
3. In their claim, Mrs Bonham-Carter and Mrs Horn seek the outstanding balance which, but for any set off to which SVL may be entitled, is owing under the terms of the Agreement. The sum claimed in the claim form and Particulars of Claim is £173,497.49, but of that sum £15,614.77 has been paid to Mr Horn as a result of an order for summary judgment made on 4^th October 2011. It is not disputed that but for any set off, the balance of £157,882.72 remains outstanding from SVL. There is an issue as to the manner in which any interest should be calculated upon which Mr Bennett for Mrs Bonham-Carter and Mrs Horn and Mr Bromilow on behalf of SVL and Mr Hammond will make further submissions if necessary.
4. The counterclaim by SVL and Mr Hammond with which the trial was concerned is based upon the circumstances in which HEL was acquired. It is SVL and Mr Hammond's case that Mr Hammond was induced through SVL to purchase HEL as a result of a fraudulent misrepresentation made by Mrs Bonham-Carter and Mrs Horn regarding the proportion of property sales within Chelsea Harbour for which HEL was responsible.
5. The representations are pleaded at paragraphs 9 and 11 of the Amended Defence and Counterclaim in the following way:

"9. During the course of the said discussion, JBC (Mrs Bonham-Carter) and AMH (Mrs Horn) represented to JH (Mr Hammond) orally, that the Company had a market share of 95% in the sales of properties within Chelsea Harbour. By the said representations, JH understood that, and JBC and AMH intended to convey the said representations to be understood as being that, in any particular year of all the properties sold within Chelsea Harbour the Company was instructed to act on behalf of the vendor in relation to the sales of 95% of the said properties, and was the effective cause of the sale of and hence received commission on 95% of the sales of all properties sold within Chelsea Harbour in any given year."

…..

"11. During the course of the said negotiations, on occasions too numerous to particularise, JBC and AMH repeated the representation to JH that the Company was instructed on not less than 95% of the sales of properties within Chelsea Harbour, had a market share of 95%, and was the effective cause of the sale of and hence received commission on 95% of the sales of all properties sold within Chelsea Harbour in any given year ("the Representations")."

6. As a result of the alleged fraudulent misrepresentations SVL seeks damages representing the difference between the price it agreed to pay for HEL and its true value at the date of the Agreement. In addition, Mr Hammond in his personal capacity claims lost income on the basis that if the misrepresentations had not been made to him, and he had not caused SVL to buy HEL, and as a consequence of those misrepresentations it had not been necessary for him to work full-time at HEL instead of one day a week on a light touch basis, he would have been in employment and earning a substantial salary.
7. At the beginning of the trial I gave permission to the Claimants to re-amend the Amended Defence to Counterclaim. The nature of the re-amendment was to replace a denial in relation to the alleged misrepresentations as to market share with a non-admission on the basis that after such a passage of time neither Mrs Bonham Carter nor Mrs Horn was able to swear that they had definitely not made such a representation. The amendment to paragraph 6 of the Re-Amended Defence to Counterclaim went on:

"If (which is not admitted) either Mrs Bonham-Carter or Mrs Horn made any representation about market share, it is denied they intended to convey or that Mr Hammond could have reasonably understood them to mean that in any particular year the Company was instructed on behalf of the vendors of 95% of all properties sold, was the effective cause of those sales and therefore, received commission on 95% of sales within Chelsea Harbour."

Witnesses

Mr Hammond

8. I found Mr Hammond in general, to be an evasive and unreliable witness. Early in cross examination, he changed his evidence in relation to the extent of the alleged representations made and his understanding of them which are at the very heart of his case. I also found his evidence as to his discovery of the Record allegedly in November 2009, extremely unsatisfactory and inconsistent with the description given by his own solicitors in correspondence. This too is a central element of his case being a cornerstone of the allegation of fraud. These were numerous other inconsistencies in his evidence to which I refer. Accordingly, unless his evidence is consistent with contemporaneous documents or is otherwise corroborated, I prefer the oral evidence of others where it differs from his account of events.

Mrs Bonham- Carter and Mrs Horn

9. Mrs Bonham-Carter was an emotional witness who at times vented her frustration during cross examination. She also broke down when questioned about the period during which she had nursed her husband during his last illness. At times she was dismissive. On occasion I found her to be evasive particularly in relation to her use of percentages in relation to HEL's business, in relation to which I prefer the evidence of others.
10. I found Mrs Horn to be a straightforward albeit emotional witness who sought to assist the Court. She too broke down, in her case when questioned about her inability to understand graphs, the analysis of data and mathematics in general. In particular, she was distressed when questioned about the way in which percentages are calculated and their effect in numerical terms. For the reasons which I explain below, I accept that her distress in this regard was genuine and generally found her to be a careful and truthful witness.

Mrs Hammond and Mr Carson

11. Mrs Hammond is a director of SVL and is married to Mr Hammond. She accepted that in preparing her statement she had made enquiries of him in relation to dates and other matters. She also accepted that some of the phraseology of her witness statement was similar if not identical to that of her husband. I found her for the most part to be a reliable witness although there were certain aspects of her evidence in relation to which I prefer the evidence of others.
12. Mr Carson is Mr Hammond's brother in law. He has a financial background and has held ownership and executive roles during what he described as his entrepreneurial career. He had been asked in March or April of this year to recall conversations during a family holiday in April 2003. I found him to be a truthful witness to the extent that he was able to recall relevant matters, although for the most part his only source of information was Mr Hammond himself.

HEL Employees

13. Lucy Cameron who was employed as rentals negotiator for HEL from July 1999 gave her evidence in a careful manner and I found her to be a reliable and truthful witness. I should add that although she was primarily involved with rentals she gradually became more involved with sales. This was also true of Amanda Mieras (the manager of HEL appointed by Mr Hammond in 2003) and Caroline France (an office administrator employed by HEL from 1999) although I found Ms France evasive as to the details of HEL's performance since its purchase by SVL.

Mr Terry

14. Mr Terry of Beechcroft Associates Limited gave careful evidence and quite clearly was concerned to assist the Court. I found him to be completely straightforward and in my estimation he was a truthful witness. In this regard, I take into account the fact that he has nothing to gain from the outcome of this matter.

Mr Horn

15. Mr Horn is an independent Financial Advisor and is Mrs Horn's husband. He gave his evidence in a careful and measured manner and I found him to be an entirely trustworthy and straightforward witness.

Background

16. Mrs Bonham-Carter is an experienced estate agent who first became involved in sales and letting at the then new development at Chelsea Harbour on behalf of Savills and Hamptons in about 1987. Mrs Horn joined Mrs Bonham-Carter there in 1988. Savills and Hamptons had been appointed to deal with sales by the owners of the development. In 1992 Mrs Bonham-Carter and Mrs Horn formed HEL in order to capitalise on the personal goodwill they had built up at Chelsea Harbour. HEL was operated and owned by them in essentially equal shares. Subsequently, Mrs Horn transferred nine shares to her husband, Mr Horn.
17. It is accepted by all that the office of HEL at Chelsea Harbour is small and that prior to the purchase of HEL by Mr Hammond, there was only one computer which was used in the business. It is also accepted that Mrs Bonham-Carter never used the computer and that although Mrs Horn could and did use it occasionally, it was the secretary who used it and after her appointment in October 1999, it was the office administrator Amanda Mieras (Ms Mieras) who used it most. The business was run on simple lines using a Sage accounting system and a bookkeeper who came in for two mornings a month.
18. It is also not disputed that although they covered for each other and both put considerable effort into the business of HEL, sometimes working seven days a week, Mrs Bonham-Carter was primarily engaged with sales and Mrs Horn with the letting side of the business.
19. It is also not in dispute that prior to the purchase of the business by SVL much of the documentation was kept in paper format in files around the office and was often produced in long hand and typed up. This was certainly the way in which Mrs Bonham-Carter operated. It was Mrs Bonham-Carter's' evidence which is corroborated by that of Ms Mieras which I accept, was that she and Mrs Horn did not produce statistical graphs or business plans.
20. Both Mrs Bonham-Carter and Mrs Horn accepted, however, that they were interested to learn when a property came on to the market within Chelsea Harbour so that they could offer their services and that it was equally useful to know about prices achieved by other agents and accordingly, they kept their eyes and ears open. They also accepted that from time to time they obtained information about sales from residents with whom they were on friendly terms and occasionally from the porters. As a result, they were both of the firm view that the vast majority of sales in Chelsea Harbour in fact went through HEL.

The Record

21. It is also accepted that although it contains entries which date back to 1995, the compilation of a document which became known as "the Record", began some time in 1999. The Record is headed "Properties sold by other agents or privately in Chelsea Harbour" and is a list of properties, the price at which and date on which they were sold and the name of the agent through which they were sold or whether it was a private sale. The entries are arranged in chronological order and begin with a sale in June 1995 and end with an entry for 12 Kings Quay which states "Exchanged 3.10.03".
22. It was Mrs Bonham-Carter's evidence that she did not see the Record on the computer and had no recollection of having seen a printed copy. This is consistent with the fact that Mrs Bonham- Carter did not use the computer and there is no evidence whether documentary or oral to the contrary, whether as to her use of the computer or her sight of the Record in any form. Mrs Horn also confirms that Mrs Bonham-Carter made no use of the Record and relied upon her own feel for the price of properties in the Harbour.
23. This was also consistent with the evidence of Ms Mieras, the office administrator. She stated that she updated the Record on the computer for Mrs Horn and that she was provided with the information either by Mrs Horn or another member of staff. She also accepted that it could be used as a price guide as well as showing sales by other agents and private sales. Accordingly, I accept Mrs Bonham-Carter's evidence that she did not see the Record on the computer and I also accept that she did not see a hard copy and would not have needed to refer to it as a guide to past sales.
24. Mrs Horn added that she used the Record occasionally as a price guide particularly when Mrs Bonham-Carter whose experience was superior to hers, was busy nursing her husband during his last illness 1999-2000 and was not available to assist with valuations. This is consistent with Ms Mieras' evidence. She said that it was used as a record of past sales and in addition, could be used as a record of competitive activity. In fact, in cross examination, Mr Hammond accepted that the Record was and could be used as a price guide (amongst other things). Mrs Horn's evidence that she used the Record as a price guide is also entirely consistent with her reference to and the context in which she drew attention to it in the hand over notes which she prepared in August and September of 2003 to which I refer at paragraph 98. Accordingly, I accept Mrs Horn's evidence in this regard.
25. Mr Hammond also accepted that he had been told Ms Mieras that she had no recollection of Mrs Bonham-Carter having had the Record. Nevertheless, both with regard to her and Mrs Horn he says that she knew the Record could be used to calculate market share and deliberately suppressed it, something to which I will return.
26. Mrs Bonham-Carter says that she recalls Mrs Horn having told her that she, Mrs Horn had agreed with an acquaintance of hers, William Carrington who was starting a property data base, to exchange information about sales and prices. Mrs Horn says that Mr Carrington offered to provide details of prices obtained by other agents in Chelsea Harbour free of charge if Mrs Horn gave him details of the prices which HEL had achieved.
27. Mrs Horn says that when the information was obtained she would ask the typist to update the Record and would check to see whether the prices were in line with those of HEL. This is consistent with Ms Mieras' evidence and I accept it. She also says that William Carrington sometimes also told her about the price at which private sales took place and that these too would be added to the Record.
28. There is no independent evidence as to whether information was in fact obtained from William Carrington. He was not called as a witness. In this regard, Mr Bromilow points out on behalf of Mr Hammond and SVL that little of the information in relation to Chelsea Harbour appears to be on Lonres, the database for which Mr Carrington was responsible and that therefore, the exchange of information which Mrs Horn suggests took place does not appear to have resulted in the use of the information by Mr Carrington. As a result he says it is unlikely in fact, to have taken place. In cross examination, Mrs Horn accepted that Mr Carrington was unlikely to have been the only source of information especially as the Record contained information on sales back to 1995. She also accepted that she had a relatively good level of knowledge of the sales in Chelsea Harbour and that it was a relatively small development. She was also adamant that whether or not information appeared on Lonres she had received some information from Mr Carrington. In my judgment given the dates to which the Record relates and Mrs Horn's evidence in cross examination which I accept, it is more likely than not that the Record was compiled from a variety of sources one of which was Mr Carrington.
29. Mrs Horn's evidence and that of Ms Mieras which I accept is that the Record was generally available at all times on the office computer and that prior to the compilation of the hand over notes to which I shall refer, a hard copy was kept in the office in Mrs Horn's desk drawer.

Preparation for sale of HEL

30. As a result of personal circumstances by the end of 1999, Mrs Bonham-Carter and Mrs Horn had decided that they wished to sell HEL. In early 2000, they contacted Beechcroft Associates Limited (Beechcroft) in order to assist them with the sale. Beechcroft provided corporate finance advisory services and it was agreed that they would draw up an information memorandum (the Information Memorandum) and agree a list of potential purchasers.
31. In fact, the real activity in relation to the preparation for sale did not take place until early 2001. As part of the preparation, Beechcroft with the input of Mrs Bonham-Carter and Mrs Horn started to produce the Information Memorandum setting out details in relation to HEL's business. The Information Memorandum went through numerous drafts, the first of which was produced on 12 April 2000. Mr Terry's unchallenged evidence in this regard was that in order to obtain relevant information for a memorandum Beechcroft provided its clients with an outline containing headings and discussed the information provided. Mr Terry stated that this was the manner in which the drafts of the Information Memorandum were compiled and that either he or his fellow director would have met with Mrs Bonham-Carter and Mrs Horn and taken notes in order to refine the draft document.
32. The first draft of the Information Memorandum dated 12 April 2000, makes reference at paragraph 3.1 to HEL "Having been responsible for the vast majority of sales and lettings over the nine years since the development [Chelsea Harbour] was built . . . " Mr Terry accepted that it would have been likely that Beechcroft would have preferred a number to be placed upon the market share and it was Mrs Bonham-Carter and Mrs Horn's evidence that the request for a percentage had emanated from Beechcroft.
33. The second draft of the Information Memorandum dated 11 June 2000 was the subject of some manuscript amendments, the first of which it is accepted is in Mrs Bonham-Carter's handwriting. The reference to "the vast majority of sales" in paragraph 3.1 was replaced by the insertion of 98%. Mrs Bonham-Carter stated in cross examination that the replacement of the phrase by the percentage had come about as a result of discussion between her, Mrs Horn and Beechcroft. It was Mrs Horn and Mrs Bonham-Carter's evidence that the percentage was inserted on the basis of their feel for the Chelsea Harbour market both as to sales and lettings and that it was intended that it would be substantiated later. I accept their evidence in this regard.
34. The third draft of the Information Memorandum dated 15 August 2000, contains the typed amendments as a result of Mrs Bonham-Carter's manuscript changes. The figure of 98% has therefore, been inserted. Under the heading "4.3 Competition" it stated:

"There is no direct competition at Chelsea Harbour. However a few properties are sold through other London agents."

35. Mr Terry stated that although his company did not carry out audits they naturally preferred all matters to be verified and that Mr Ball and Mr Webb acquaintances of Mrs Bonham-Carter and Mrs Horn became involved in around January 2001 in order to provide Beechcroft with the kind of detail which was necessary in order properly to complete the Information Memorandum. This accords with Mrs Bonham-Carter's evidence that she involved Mr Ball who had experience in marketing and Mr Webb, a chartered accountant for this purpose. They were both given access to the office and it was Ms Mieras' unchallenged evidence that she was asked to assist them.
36. On 15 February 2001, presumably as part of that process a document was created on the computer most probably by Ms Mieras, which listed the properties sold by HEL in Chelsea Harbour by year from 1992 to 2000 and also stated that 25 properties had been sold by other agents since 1995. 1992 was the first year of trading for HEL. It was clear from the contemporaneous records that Mrs Bonham-Carter was not in the office that day and it was more likely than not that the request to produce the information had emanated from Mr Webb who was trying to pull together information for the Information Memorandum.
37. Ms Mieras accepted in cross examination and I accept her evidence in this regard, that details of the sales by HEL would have been obtained from the Sales Details File which was generally available in the office and that although she did not come up with the figure herself, the figure of twenty five sales by other agents since 1995 must have been gleaned at least with assistance from the details in the Record, the first entry in which is for 1995. She also accepted that it would not have been necessary to use the Record for the purposes of the manuscript figures inserted in Mrs Horn's handwriting setting out HEL sales per financial rather than calendar year. In fact, the Record itself does not support the figure of 25 for sales by others and Mrs Horn herself could not say where it had come from. The manuscript figures inserted by Mrs Horn reveal a total of 236 properties sold by HEL in the financial years from 1992 to April 2001.
38. It was also Mrs Horn's evidence that she personally did not think of the Record when Messrs Ball and Webb were seeking information for the Information Memorandum whether in 2001 or 2002 and she stated that if she had, she would have given it to them without hesitation as it would have simplified matters. I accept her evidence in this regard.
39. In the meantime, Mrs Bonham-Carter sent out a valuation letter on behalf of HEL on 6 February 2001 which stated "Harbour Estates have been responsible for 98% of the sales since we formed our company ten years ago." On 26 February 2001 she sent a letter containing a similar statement but on this occasion referring to 90% and used the same percentage in a letter in May. She says that she was assisted with these letters by Mr Ball and Mr Webb, that they probably provided the percentages and that she believed them to be correct at the time. She said that it had not been usual to send out such letters before this and that generally, she did not work in percentages.
40. Contrary to Mrs Bonham-Carter's evidence, Mrs Horn stated in cross examination that it was normal HEL practice to confirm valuations in writing once they had been given orally, usually at the potential vendor's property. In cross examination Mrs Horn was also taken to a letter which she had written to a prospective vendor of a property in Chelsea Harbour on 3 April 1998 in which she had confirmed an oral valuation of a property in writing and also stated that HEL was "responsible for selling 95% of property in Chelsea Harbour." Her explanation of the use of the percentage was that it had been a "guesstimate" based on her feel and that of Mrs Bonham-Carter of their market. There was also a series of such letters using a 90% figure in March and May 2001 and a single letter in July 2001 which refers to 95%. I accept Mrs Horn's evidence that oral valuations were confirmed in writing and prefer her evidence in this regard to that of Mrs Bonham-Carter.
41. I also reject Mrs Bonham-Carter's evidence on the use of percentages and prefer that of Mrs Horn who said they used them in correspondence based on their feel for the Chelsea Harbour market rather than statistical material. Her evidence in this regard is consistent with that of Lucy Cameron, (Ms Cameron). She stated that Mrs Bonham-Carter and Mrs Horn would regularly tell clients that HEL sold 95% of the properties in Chelsea Harbour. In cross examination however, she did accept that percentages were not discussed in the office and that she might have heard the figure of 95% from another member of staff rather than either Mrs Bonham-Carter or Mrs Horn. Nevertheless when this is taken together with the letters to which I have already referred and a faxed message of 24 July 2001 from Mrs Bonham-Carter to Mr Ball in which she stated that the statistics showed that HEL was responsible for 92% of the sales in Chelsea Harbour, in my judgment on the balance of probabilities, Mrs Bonham-Carter's blanket denial as to the use of percentages is more likely than not to be incorrect. I should add that her evidence in relation to the use of 92% was that she had been provided with the information by Mr Webb and believed it to be correct at the time which I accept is more likely than not to have been the case.
42. In fact, HEL dispensed with the services of Beechcroft in about May 2001. At that stage, the final draft of the Information Memorandum dated 8 May 2001 still contained the 98% figure. In fact, the percentage was changed in manuscript to 90% at some stage. There was no evidence as to when that may have taken place.

The Information Memorandum

43. Mrs Bonham-Carter and Mrs Horn decided to shelve the project of selling HEL because they had been under pressure and the business was not doing as well as they would have liked. Thereafter, towards the end of 2001 or the beginning of 2002, once the business had picked up they decided to revive the effort to sell the business and they asked Mr Ball and Mr Webb to finish the work on the Information Memorandum.
44. The final version of the Information Memorandum was completed in March 2002. The relevant parts read:

"Important Notice

The information in this memorandum has been provided and approved by the directors of Harbour Estates Limited ("The Directors"). It has not been independently verified. Neither the Directors nor any of their advisors, representatives, officers, agents or employees make any representation, warranty or undertaking, express or implied, with respect to this Information Memorandum and no responsibility or liability is accepted by any of them as to the accuracy, completeness or reasonableness of this Information Memorandum. The projections included in this Information Memorandum have been prepared by the Directors and unless specifically noted have not been independently verified.

. . . .

The Information Memorandum and all other information to be supplied is being delivered to prospective purchasers for information purposes only and on the express understanding that such prospective purchasers shall use it only for the purposes set out above.

. . .

SECTION FOUR: BUSINESS OPERATIONS

. . .

4.2 Income

As a generalisation around 30 of the 310 properties change hands each year and the Company acts as agent on the vast majority.

It is estimated that this activity amounts to the Company being responsible for around 95% of sales and lettings over its ten year business trading span since 1992.

. . . .

SECTION FIVE: MARKETING CONTEXT

. . .

5.3 Competitive Activity

The Company is in the highly privileged position of being a sole operator within Chelsea harbour.

However, a few properties are sold through the offices of other London agents.

. . .

SECTION EIGHT: FINANCIALS

. . ."

45. At Section 8.5 under the heading 'Property Sales Statistics' relevant property sales statistics for HEL were set out for the years 1993 to 2002 although the last was stated to be an estimate. The sales figures ranged from 13 in 1993 to 36 in 1998, were 15 in 2001 and estimated at 24 for 2002. In total they showed that 260 properties had been sold over ten years and therefore, on average 26 were sold by HEL per annum. A note read as follows: "Properties sold are normally 25-35 per year in respect of Chelsea Harbour development. The company to date has not sold any properties outside Chelsea Harbour."
46. In fact, Mr Hammond accepted in cross examination that his own researches carried out once full details of sales were available from the Land Registry in 2005, supported the conclusion that on average there were 30 sales in Chelsea Harbour each year and he noted this in his memorandum headed "Over the last 6 years" to which I refer at paragraph 109 below. It is also not suggested that the year on year statistics which appeared in the Information Memorandum were inaccurate in any way.
47. It is Mrs Bonham-Carter and Mrs Horn's evidence that it was Mr Ball who came up with the figure of 95% for HEL's market share for the purpose of the Information Memorandum. They say that as a result of their experience they gave Mr Ball the estimate of 30 sales per year in Chelsea Harbour and that they did not check any records in order to come up with the estimate. Given their reliance on general knowledge and the fact that they did not produce detailed statistics, I accept their evidence in this regard.
48. In their pleading Mrs Bonham-Carter and Mrs Horn state that the HEL's records showed that it had sold 236 properties over the first nine years of its existence and that Messrs Ball and Webb estimated that there would be a further 24 sales in 2002 for the purpose of the property sales statistics in the Information Memorandum. On this footing, the estimated market share of 87% of sales over ten years from 1993 was arrived at. To this Messrs Ball and Webb added the 100% figure to reflect HEL's virtual monopoly in lettings which gave an average of 93.5% for both sales and lettings which they rounded up to 95%. It is not in dispute that HEL had a virtual monopoly in lettings.
49. Neither Mr Ball nor Mr Webb was called to give evidence and in cross examination Mrs Bonham-Carter accepted that she could not recall being informed of the detail of the calculation at the time but that it had been explained to her quite recently.
50. In cross examination Mrs. Bonham-Carter was adamant that she did not think in percentage terms in relation to market share or as to market share in any real way come to that. This was despite appreciating that as an estate agent her commission was calculated on a percentage basis. She said that she worked in general terms only and provided information to Messrs Ball and Webb only on that basis. She was certain that she never kept a record and in this regard I accept her evidence.
51. In my judgment despite the fact that Mrs Bonham-Carter and Mrs Horn quoted percentages in letters to clients, given that the business was run on simple lines and that they had employed Mr Webb and Mr Ball to assist in bringing together the details for the purposes of the Information Memorandum and given that the figures which had been drawn together support the calculation which Mrs Bonham-Carter describes, in my judgment, it is more likely than not that Messrs Ball and Webb calculated the percentage of 95% for the purposes of the Information Memorandum in the manner described.

Marketing of HEL

52. Thereafter, Mrs Bonham-Carter and Mrs Horn received a number of offers for HEL. The first offer from a rival estate agency, Beaney Pearce was for £811,000 but was subsequently reduced to £460,000. The second offer was made by Terje Gilge of Farrar & Co in the sum of £500,000. A third offer was for £925,000 but by November 2002, it had been withdrawn.

3 December 2002 meeting

53. At that stage in November 2002, Mrs Bonham-Carter and Mrs Horn approached Mr Hammond for advice about a sale. Mr Hammond is the son of long-standing family friends of Mrs Bonham-Carter and had been a management consultant and thereafter held a number of senior management posts the latest being that of managing director of British American Tobacco's operations in Jamaica. He had given up his job with British American Tobacco earlier that year and returned to the UK and was looking for the right long term position.
54. Mr Hammond, Mrs Bonham-Carter and Mrs Horn met at the Conrad Hotel in Chelsea Harbour over lunch on 3 December 2002. At that stage it was not anticipated that Mr Hammond would himself be a prospective purchaser of HEL.
55. No one kept a note of the discussion which took place over lunch and after such a passage of time, Mrs Bonham-Carter and Mrs Horn's recollections of the discussion were unclear. However, they asserted that Mr Hammond was shown the Information Memorandum and that it was made clear that HEL was the only agent with a physical presence at Chelsea Harbour and that over the years HEL had been involved in a large majority of the sales and virtually all the lettings.
56. In his witness statement in accordance with the Amended Defence and Counterclaim to which I referred at paragraph 5, Mr Hammond stated that at the meeting Mrs Bonham-Carter and Mrs Horn told him that HEL sold 95% of all properties sold in Chelsea Harbour. In fact, in cross examination, contrary to paragraph 11 of his pleading and that of SVL, Mr Hammond accepted that it had never been represented that HEL's sale percentage in Chelsea Harbour was 95% in each year of its existence and that he assumed that the percentage related to the ten year period in which the business had been operating and to sales including private transactions. He also went on thereafter, to accept that the representations made were the same as what was set out in the Information Memorandum.
57. Mr Hammond was asked in cross examination why he had not questioned Mrs Bonham-Carter and Mrs Horn on the figures for sales in the Information Memorandum which revealed that HEL had sold 260 properties over ten years being an average of 26 per annum whereas it was estimated that an average of 30 properties were sold in Chelsea Harbour each year and as a consequence the percentage of HEL sales could only have been 86.66% odd. First, he explained that he took account of the effect of start up in the first year in which it was clear that the percentage was much lower. He went on to state that of course, he had appreciated that 95% of 30 was impossibility because it would not produce a whole number of sales.
58. Mr Hammond also accepted that before he purchased HEL in 2003, he had seen the final figure of 20 sales for HEL in the 2002 financial year and was also aware that the Information Memorandum stated that there were 25 to 35 sales overall each year. Mr Hammond accepted that as a consequence HEL's percentage share would have been 66% in 2002 but that he had not questioned Mrs Bonham-Carter and Mrs Horn about this. He said that he accepted that the average of 30 sales per annum in Chelsea Harbour was a 'guesstimate'. He also accepted that he had the figures of the year ended 30 April 2003 before the purchase was complete and that they revealed that HEL had been involved in 18 sales, some 60% of the whole. He accepted that he had asked no questions in this regard and that it was impossible to check the precise extent of HEL's market shares.
59. He also said that he did not question their statement at the lunch because he was only seeking to advise them at that stage. In addition, he says that Mrs Bonham-Carter and Mrs Horn proffered the information before they referred him to the Information Memorandum which was not produced until near the end of the lunch. He accepted however, that he was referred to the relevant pages and that he did see the passage in the Information Memorandum at 4.2 which mentioned the 95% as an estimate of HEL's activities in sales and letting over its ten year trading span. He also accepted that he saw the disclaimer under the heading "Important Notice" at the beginning of the Information Memorandum.
60. Lastly, in this regard, he also accepted that neither Mrs Bonham-Carter nor Mrs Horn provided any figures about the business other than those which were in the Information Memorandum itself and he added that the oral representations made at the lunch and the content of the Information Memorandum in that regard were one and the same. This accords with Mrs Bonham-Carter's evidence in cross examination that if she had been pressed she would have repeated what was in black and white in the Information Memorandum. This was her evidence notwithstanding the amendment to the pleadings replacing denial of the representations with a non-admission.
61. On 9 December 2002, Mr Ball forwarded Mr Hammond a copy of the Information Memorandum as promised at the lunch. That day, Mr Hammond sent Mrs Bonham-Carter and Mrs Horn by email what he called a précis of the views which he had expressed at the lunch. It set out many of the difficulties and disadvantages which had led to the failure to attract a suitable offer for HEL. It stated:

"We agreed that inherent problem with a sale is that without the principals, future revenue generation is curtailed/handicapped, exposed to competition, and therefore risky at best. In other words, as with most people business, there is nothing really to sell aside from the people. Even that is rather tenuous over time as no barrier to competitive entry exits. Equally true is the old Hilton hotels adage of location, location, location. In this case, it's very good for the Harbour but rather poor for anywhere else as it doesn't have High Street frontage for marketing to passing 24 hr trade. Furthermore, the one possible saving grace is that in your location, there probably isn't sufficient money for more than one operator. As I said at lunch, that I'm afraid is the harsh reality of it all."

The précis contains no reference to the market share of HEL at all. On the contrary, it refers to HEL being "exposed to competition", there being "no barrier to competitive entry" and nothing to sell but for the people.

62. Mr Bennett on behalf of the Part 20 Defendants also drew attention to a letter from Mr Hammond's solicitors dated 31 March 2011 in which they articulated his claim. It makes reference to the only asset of importance to a buyer being the market share. When pressed in cross examination, Mr Hammond said that the importance of the market share was implied in his précis of 9 December 2002. In my judgment, even though Mr Hammond was acting as an adviser at that stage, had a representation as to 95% market share been made, as the only factor of importance to counter balance his concerns about competition which he did express, it is more likely than not that he would have mentioned it in his précis.
63. The following day having informed Mrs Bonham-Carter and obtained her permission to share the Information Memorandum, he met with an estate agent acquaintance of his, Annie Richmond. At their meeting they decided that they might purchase HEL together. In fact, Ms Richmond did not proceed with the proposed collaboration.
64. In any event, Mr Hammond expressed his definite interest as a purchaser of HEL in a telephone call to Mrs Bonham-Carter on 21 January 2003. He was given unrestricted access to HEL's office and its records from that time. It is not disputed that there were no restrictions upon the access which Mr Hammond was given whether as to areas of the office or as to categories of document whether in paper form or kept on the computer. Nor is it disputed that Mr Hammond conducted his due diligence from this time until April 2003.
65. On 30 January 2003, as part of his due diligence, Mr Hammond turned up on Primelocation, a sales website, five potential sales in Chelsea Harbour which were being handled by agents other than HEL. He made enquiries of Mrs Bonham-Carter and Mrs Horn and was informed that in each case HEL was instructed jointly with the agent which appeared online. He accepted that he had made no further enquiries in order to establish whether the sales were completed through HEL and therefore, the effect which this would have on HEL's percentage market share for 2003. He also accepted that he had made no enquiries about private sales and had not appreciated that they were of any significance. This is contrary to his evidence and that of his wife, in cross examination when they stated that they saw private sales as being as much competition for HEL's commission as any other source. Given that no enquiries were in fact made in relation to private sales, I prefer Mr Hammond's evidence in chief in this regard.
66. Mr Hammond produced a Discussion Paper setting out his conclusions in relation to HEL together with a number of illustrative graphs and tables which he presented to Mrs Horn at a meeting in Chelsea Harbour on 18 February 2003. Mrs Bonham-Carter was away in southern Africa and was unable to attend.
67. In the Discussion Paper under a heading "Challenge" and under a sub-heading of "future revenue generation" he noted "exposed to competition and therefore risky at best." Under the sub-heading of "People" he noted "no barrier to competitive entry exists." His "absolute limit" for the valuation of the business was £480,000.
68. Mr Hammond says that at this meeting he explained to Mrs Horn that the only justification for the premium she and Mrs Bonham-Carter were seeking for HEL over and above the £480,000 valuation was the fact that the business accounted for 95% of all sales in Chelsea Harbour. Mrs Horn's evidence in cross examination was that she had little or no recollection of the meeting. In cross examination Mr Hammond accepted that he suspected that Mrs Horn had not made a representation as to the alleged 95% market share year on year at that meeting.
69. Mrs Horn reported to Mrs Bonham-Carter in an email of 21 February 2003 in which she stated that Mr Hammond had not put forward a proposal as such. She added:

"He covered some valid points, raised some queries for us to consider and really we need to think about what we actually want – he is very flexible and keen. It is probably best you have your own meeting with him to go over the same ground and then we can get together, decide what we want and put our proposal forward to the others and see who is most willing to meet us. . . . "

70. I should add that a further offer for the business of £700,000 had been received on 3 February 2003. Once Mrs Bonham-Carter was back in the country, she met up with Mr Hammond and Mrs Horn on 28 February 2003, so that Mr Hammond could go through his presentation again. Mr Hammond says that once again on that occasion he made clear that the gap in the price for HEL between the value of the business which he had calculated to be £480,000 and £800,000 odd could only be justified on the basis of its near monopoly position by which he meant the sale of 95% of properties sold in Chelsea Harbour. Neither Mrs Bonham-Carter nor Mrs Horn have any recollection of this. In fact, in cross examination Mr Hammond stated that the 95% figure had been mentioned not in the context of the premium after all but in the context of his researches into sales by other agents on the Primelocation site. This is not mentioned at all in his witness statement and I reject his evidence in this regard.
71. It was Mrs Bonham-Carter's evidence in cross examination that Mr Hammond was excited about the prospect of purchasing HEL, that he was aware of the offers which had been made including one in November 2002 for £925,000 which had been withdrawn, he had been through the files and done his own due diligence and that she was not aware that he was paying a premium on the basis of the dominant market position. She also said that he saw the opportunity to replicate the model at other developments including the nearby Imperial Wharf, something which he actually did successfully. In fact, he also sought to expand the business at two other sites. I accept her evidence save for her contention that she was not aware that the price for HEL took account of its dominant market position which given the contents of the Information Memorandum itself, I find unsustainable.
72. There were a number of other meetings which took place on 10 and 14 March, 3 and 14 April and 9 May 2003. It is not disputed that those meetings took place. The position is less clear in relation to meetings on 15^th and 19^th May 2003. However, in cross examination Mrs Bonham-Carter accepted that it was quite possible that she, Mrs Horn and Mr Hammond had also met on the two later dates in May.
73. In cross examination Mrs Bonham-Carter refused to accept that she told Mr Hammond that HEL had a 95% market share at any of the meetings but stated that if pressed she would have repeated what was in the Information Memorandum. Mrs Horn was also adamant that they had not made representations about the 95% figure at the meetings and added that the meetings had been about the Agreement. Given their timing, in my judgment, this is more likely than not to have been the case.
74. In particular both Mrs Bonham Carter and Mrs Horn denied that they had answered three specific questions allegedly posed by Mr Hammond with the representation as to 95% market share in each year of trading. Mr Hammond says that they were repeated on practically every occasion the three of them met. The three issues were: (i) why was HEL's marketing spend so low, (ii) why did HEL actively encourage clients to move to multiple agency instructions when selling their properties and (iii) how was it that HEL was able to maintain a 2.5% average commission rate while most other small agencies in London were being forced to cut fee levels? Mrs Horn stated in fact, that she did not recall the questions but that she would not have answered in the way Mr Hammond contends, in particular in relation to the final question. In this regard, Mrs Horn's response in the Questionnaire prepared by Mr Hammond in relation to the purchase had been that all the agents charged the same and accordingly, I accept her evidence in this regard.
75. In fact, Mr Hammond was unable to give a date or dates on which the alleged responses had been given to his three questions and for the first time in cross examination alleged that the answers had been given not at HEL's office but in rental property at Chelsea Harbour. This is not corroborated by either other oral testimony or contemporaneous documentation and accordingly, I reject his evidence in this regard.
76. With regard to the issue of marketing spend, the position had been set out at paragraph 5.2 of the Information Memorandum and was to the effect that personal contact and HEL's footfall in the Harbour were the important ingredients. In fact, Mr Hammond accepted this to be the case.
77. Equally in relation to the alleged issue as to multiple agency, Mr Hammond was unable to provide a date or dates when the alleged answer was given but said that it was post February 2003 and before the Agreement was signed and that it was made at a meeting. In my judgment, in the light of the vagueness of his response together with the fact that there is no clear causal connection between multiple agency and market share, I also reject his evidence in this regard.
78. In addition Mr Hammond says the fact that HEL had a 95% market share also meant two things to him: first that the business was not facing notable competition and therefore wouldn't require a great deal of day to day input from him and secondly, given the enduring success of the business which had flourished as a virtual monopoly for ten years, there was clear scope for replicating the model in surrounding developments. As I have already mentioned, he did in fact, replicate the model elsewhere.
79. He also says that he made clear at the first meeting that the business had little value to a capital investor because replacement employees would eat up the profit. It was Mrs Bonham-Carter and Mrs Horn's evidence that they would have remembered if Mr Hammond had stated his intention only to work in the business one day a week or to give it a light touch, because they had often both worked seven days a week to maintain the business. In my judgment given that Mr Hammond says that it was his own intention to operate a light touch and to employ staff to manage the day to day business of HEL, it is more likely than not that he did not make the assertion for which he now contends.
80. On 6 March 2003, Mr Hammond produced a Questionnaire to which I have already referred, containing questions arising from his due diligence. It was Mrs Horn's evidence that although she had filled out the Questionnaire and given a positive answer to whether HEL sales had followed industry trends, and knew of the number of sales HEL had transacted and had compiled the Record containing other sales, she was not aware that the percentages given in the Information Memorandum or as Mr Hammond contends, by oral representation, were incorrect. She said that she did not think of the Record other than as a reflection of what HEL was doing and did not think in terms of market share. She said she saw the question in the Questionnaire as being directed at whether the prices at which HEL was selling properties had kept up with others not within Chelsea Harbour. Given my conclusion at paragraph 24 about Mrs Horn's use of the Record and the matters to which I refer at paragraph 102 and the fact that neither Mrs Bonham-Carter nor Mrs Horn took an analytical approach to the business, I accept Mrs Horn's evidence in this regard.
81. On 10 March Mr Hammond met with Mrs Bonham-Carter and Mrs Horn and offered £900,000 for HEL. It was Mrs Hammond's evidence which I accept that when she and Mr Hammond decided to go ahead with the purchase of HEL, it was on the basis that Mr Hammond would still need to find full time employment but that he would have a light touch remote management role. She also stated that the intention was that once their children were older, she could take on the remote management role.

Heads of Agreement

82. As a result of Mr Hammond's offer, on or about 10 March 2003 a draft Heads of Agreement document was produced on the basis of an asking price of £900,000. It was presented at a meeting that day attended by Mr French from HEL's accountancy firm, Mrs Bonham-Carter and Mrs Horn. Mr Hammond said for the first time in cross examination that he had explained the significance of the 95% to Mr French at that meeting. He did not call Mr French to corroborate his evidence and given that this was the first occasion on which he had made such an assertion and it is otherwise uncorroborated, I reject it.
83. The offer was subsequently reduced to £800,000 on 14 March 2003 and the draft was amended accordingly. In the second version of the draft Heads of Agreement express reference was made to a personal guarantee by Mr Hammond in respect of the sale proceeds. It had been produced by Sellens French chartered accountants to HEL and it is clear from Mr French's letter to Mrs Bonham-Carter of 11 March 2003 that the reference to the guarantee had not been agreed by Mr Hammond but was something upon which he thought Mrs Bonham-Carter should take a view.
84. Mr Hammond instructed solicitors Oughton Graeme on 24 March 2003 and after an initial contact with Mr Oughton, the matter was handled by a more junior member of staff, Mr Dan Baker. In cross examination Mr Hammond stated that he had sought standard warranties and that he may have mentioned the 95% issue in passing only. He admitted that he had not told Mr Dan Baker that a warranty as to market share was crucial to him. He also accepted that he had told Dan Baker that he was relying on the Information Memorandum. Mr Baker was not called as witness on behalf of SVL and Mr Hammond.
85. Mrs Bonham-Carter had surgery on her ankle around that time and was restricted in her movement thereafter. It is accepted that as a result she did not attend the office of HEL in the following weeks and that meetings if and when they took place were at her flat.
86. For completeness, I should also mention that SVL was incorporated on 26 March 2003 and it was intended that it would be the purchaser of the shares in HEL.
87. The Hammonds left for a holiday on 16 April 2003. It was during this period that Mr Carson, Mr Hammond's brother-in-law and Mr and Mrs Hammond say that they discussed the purchase of HEL. It was Mr Carson's evidence that Mr Hammond told him that although the price of HEL was high it was because of the near monopoly it held and that he had been assured repeatedly by the vendors that it sold 95% of the properties in Chelsea Harbour. Mr Carson also said that Mr Hammond had told him that he intended to work full time elsewhere and to get someone experienced to deal with the day to day management of HEL.
88. Mr Carson also stated that he warned Mr Hammond against giving a guarantee and stated that the high purchase price, the lack of meaningful warranties in relation to market share and the inability to verify critical data (such as market share) made the provision of sureties untenable. In fact, in cross examination Mr Carson accepted that Mr Hammond had told him that it was very difficult to estimate the market share of HEL with any certainty. He also accepted that in fact, he did not know whether Mr Hammond had even sought warranties in relation to market share at that stage. It was Mr Hammond's evidence that such warranties were not sought until after the holiday.
89. Mrs Hammond's evidence was that if the vendors were not able to give a warranty as to the 95% market share, then a personal guarantee should be out of the question. She also confirmed that Mr Hammond told her that none of the information he had obtained whilst carrying out due diligence had enabled him to make a sensible determination of market share. She says that her position was no warranty on market share – no personal guarantee.
90. On their return from holiday, Mrs Hammond emailed her husband on 9 May 2003. She says that the content of her email was intended as an aide memoire for him at his meeting with Mrs Bonham-Carter and Mrs Horn which was intended to take place that day. The email contains numerous references to specific clauses in the draft Agreement and includes the following:

"- limit guarantee to #500,000 refe 6.6

….

purchase price is made up of two sections:

Guaranteed #500,000

Premium #300,000 – dependant on no completion establishing themselves with the Harbour"

In cross examination Mrs Hammond stated that the email had not been a comprehensive list and the failure to record the warranty/guarantee quid pro quo was merely an omission.

91. By contrast, Mrs Horn's husband's uncontroverted evidence was that at no stage did Mrs Horn or Mrs Bonham-Carter for that matter, tell him that they intended to or had talked to Mr Hammond about HEL's market share or that he had raised the issue himself. By a letter dated 28 May 2003, Mrs Horn father in law, a retired solicitor who was advising them about the transaction, stated that he considered it crucial that the guarantee be reinstated. He also wrote an attendance note of a meeting on 28 May in which he recorded that Mrs Bonham-Carter "wanted out and was prepared to give way" It also records that Mr Hammond was not willing to give the guarantee. It makes no reference to the alleged guarantee/warranty quid pro quo which one might expect if it had been mooted.
92. Mr Horn's unchallenged evidence was that his father showed him each draft of the Agreement as well as the relevant correspondence and that he had no recollection whatever of any discussion about the inclusion of a warranty about market share to be given by the vendors or seeing any draft which referred to such a warranty. It is also the evidence of Mrs Horn and Mrs Bonham-Carter that there had never been a question of a market share warranty in return for a guarantee. Also there is no evidence to corroborate that of Mr Hammond that he even told Dan Baker that he wanted a warranty as to market share inserted in the Agreement.
93. In my judgment, if the explanation of the quid pro quo put forward by Mr and Mrs Hammond were correct there would have been references in the drafts of the Agreement to such a warranty and there would at least, be notes of attempts to draft such a clause and attendance notes referring to it. Furthermore, in my judgment it would be more likely than not that Mr Horn would have been made aware of such drafts either by his father or by perusal of the documentation himself. Furthermore, such a quid pro quo would be more likely than not to have featured in Mrs Hammond's email of 9 May 2003 had it been under consideration. Accordingly, on the balance of probabilities, I reject the evidence of Mr and Mrs Hammond in this regard.
94. The final version of the Agreement contained a number of standard warranties but as I have already mentioned nothing relating to the market share of HEL. It also contained the following relevant provisions:

"7.5 This Agreement (including the documents and instruments referred to herein) supersedes all prior representations, arrangements, understandings and agreements between the Parties (whether written or oral) relating to the subject matter hereof and sets forth the entire complete and exclusive agreement and understanding between the parties hereto relating to the subject matter hereof.

7.6 No provision contained in this clause, or elsewhere in this Agreement, shall operate so as to exclude any liability of one of the parties in respect of a fraudulent misrepresentation made by that party to the other, or to restrict or exclude any remedy which the other party may have in respect of such misrepresentation."

95. Mr Hammond's attention was drawn to clause 7.5 of the Agreement, but he had no answer to why in the light of his alleged reliance upon oral representations he had had no issue with the inclusion of such a clause in the Agreement.
96. By the Agreement Mrs Bonham-Carter and Mr and Mrs Horn agreed to sell their shares in HEL to SVL, a company set up by Mr Hammond for that purpose. The final price which SVL agreed to pay for the shares in HEL was £800,000, to be paid by way of an initial payment of £100,000 (clause 3.3.5 of the Agreement) followed by bi-annual instalment payments, the annual total of those instalments being between £100,000 and £200,000 save for the final year (clause 6 of the Agreement). It was expected that all that the instalments would be paid from profits made by HEL.

Post sale

97. As I have already mentioned, the Agreement was signed on 6 June 2003. One of the first things which Mr Hammond did after the completion of the sale of HEL was to purchase computers and the relevant software suited to the estate agency business and when Caroline France (Ms France), the new manager arrived in July 2003 she says that there were computers on every desk.
98. As agreed, Mrs Horn stayed on until 30 September 2003 to assist in the smooth hand over of the business. As part of that process she produced a hand over document which was intended as a bible of all relevant information. It records under the heading "Valuations":

"- Before visiting any property to carry out a valuation we always look up in Sales Details file (found in right hand cupboard behind Jeremy's desk) to see what it was last sold for and if any verbal valuations have been done since.

Also in the file (yellow tab denotes) property sold by other agents or privately Lonres is a good site to check up on sold property under archive. . . ."

"Sales"

. . . HEL virtually sell 90% of the properties here and that we are open 7 days a week (very unusual amongst agents.)"

99. It is not disputed that the hand over notes were produced by Mrs Horn with the assistance of Ms France who had been hired by Mr Hammond as the manager of the business in July 2003. She and Mrs Horn sat in the office together whilst they were typed. It is also not disputed that those notes have been generally available in the office since they were produced. It was Ms France's evidence that they have been on her desk for the nine years since she joined HEL. She also accepted in cross examination that she thought that Mr Hammond was aware of the hand over notes and he accepted that he knew where they were.
100. There was no dispute between all those who gave evidence on Mr Hammond's behalf who had also worked with Mrs Bonham-Carter and Mrs Horn prior to his purchase of HEL that they considered both Mrs Bonham-Carter and Mrs Horn to be honest and that it was not consistent with their characters to have concealed the Record from Mr Hammond. In fact, it is Mr Hammond's evidence that he found the Record behind Ms French's desk where presumably it had been all along. Mr Hammond admitted that he could have had access to it from the start by which he meant May 2003. However, as I have already mentioned, it is his evidence that he did not find the Record until November 2009, something to which I return.
101. When cross examined about the use of the 90% figure in the hand over document in comparison with 95% in the Information Memorandum, Mrs Horn stated that the 95% related to sales and lettings and that the figure of 90% in the hand over notes must have come from Messrs Ball and Webb, although there is no evidence to corroborate this.
102. When questioned over her ability to appreciate the difference between 90 and 95% Mrs Horn became extremely agitated and said that she had no appreciation of percentages at all and that she had had to be provided with a special device to calculate her blood sugar levels for the purposes of diabetes because she was so poor at mathematics. This is consistent with Mr Horn's evidence in re-examination when he confirmed his wife's evidence about the special device and also stated that she was extremely poor at anything other than basic mathematics. I accept their evidence in this regard.
103. It was Ms France's unchallenged evidence that after he had taken over the business Mr Hammond set up a spread sheet in which sales information was entered to provide a history of sales activity in Chelsea Harbour whether by HEL or other agents and that Ms Mieras kept it up to date. He also produced a second spread sheet called 'Competitor Analysis'.
104. It was Ms France's evidence that despite having typed the handover notes with Mrs Horn she had no recollection of the Record itself. She accepted that it would not have been particularly relevant to her. She also accepted that as Mrs Horn says she may well have fished out the Record and shown it to her but that she had no recollection of having seen it. She said that she would have gained the information she needed on valuations from paperwork in relation individual properties.
105. She also accepted that in the hand over months before Mrs Horn left, she had what she described as an information overload and had a huge amount to learn. She also accepted that the records were all in documentary form, that access was not restricted in any way and that the Sales Detail File in which Mrs Horn says the Record was kept was on the shelf behind Mr Hammond's desk.
106. It was also not disputed that the final entry in the Record was dated 3 October 2003 which is after Mrs Horn had left HEL and that furthermore, it is in a different format from the other entries. The document was last printed and saved on 17 October 2003. It was unclear in fact, who may have entered the final figures or printed it out although Ms France surmised that it was likely to have been Ms Mieras although it might have been Mr Hammond himself, something which he denies. It was Ms Mieras' evidence that it was likely to have been her.

Subsequent events

107. In fact, SVL faced difficulties paying the instalments due to the effects on the property market caused by the worldwide financial crisis in 2008. On 3 July 2008 there was a meeting at which Mrs Bonham-Carter recalls that Mr Hammond complained that the figures he had been given at the time of the sale were inaccurate. Various meetings took place thereafter in order to seek to resolve the fact that instalments remained due under the Agreement.
108. It is Mr Hammond and SVL's case that they had been aware that HEL had never in fact had a market share of 95%, having first established that this was the case by an analysis of Land Registry records carried out during 2005. However, it was not until November 2009 that Mr Hammond says that he discovered the Record. As a result, he says that he concluded that oral misrepresentations made to him by Mrs Bonham-Carter and Mrs Horn in the run up to the execution of the Agreement were deliberate and accordingly fraudulent. Despite this SVL made one further instalment payment under the Agreement. Having done so it withheld any further sums on the basis of the alleged fraudulent misrepresentations as to market share.
109. At the final meeting attended by Mrs Bonham- Carter, Mr Hammond and Mr Horn, on 6 October 2009, Mr Hammond had presented a paper headed "Over the last 6 years". It contained a number of statements under the heading "There has been a lot to be disappointed about:" including "rather than the depicted virtual monopoly, the business was in fact one in decline" and "Having to become an Estate Agent". Under the heading "There has also been a lot to be grateful for:" he also noted "On average 30 properties did change hands in CH over the first 10 years of HE." The paper makes no mention of the alleged fraudulent misrepresentation and specifically, the 95% figure is not referred to.
110. Nevertheless, Mr Hammond says that the representation as to 95% market share was discussed at that meeting. Mrs Bonham-Carter says that she has no recollection of such a discussion. Mr Horn's evidence was that he had no recollection of even discussing the phrase "rather than the depicted monopoly, the business was in fact one in decline" which does appear in Mr Hammond's paper. Mr Horn made a manuscript note of the meeting which was subsequently typed up. The note makes no reference to any discussion as to purported monopoly or market share. In evidence in chief, Mr Horn stated that had market share and the percentage of 95% been discussed he would have noted it and in this regard, I accept his evidence.
111. It was at that meeting that Mr Hammond handed Mr Horn and Mrs Bonham-Carter a copy of management accounts for the five months to 1 May 2009. It is not disputed that as a result, Mr Horn pressed Mr Hammond about his drawings from HEL and Mr Horn says that Mr Hammond accepted that he had been withdrawing £5,000 per month in cash. In cross examination Mr Hammond asserted for the first time, that this was by way of repayment of a loan. There is nothing to support such a contention and it was Mr Horn's evidence that no such explanation was proffered at the meeting. Furthermore, no such reference appears in Mr Horn's notes of the meeting. Accordingly, taking all those matters into consideration, on the balance of probabilities, in my judgment it is more likely than not that such an explanation was not given and I reject Mr Hammond's evidence in this regard.
112. It was Mrs Bonham-Carter's recollection that after one of the meetings convened in order to seek to resolve the issue of the outstanding amount of the purchase price for HEL, Mr Hammond told her that he had been the victim of fraud. Mr Hammond also accepted that he had made such an assertion. As I have already mentioned the last of these meetings was on 6 October 2009.
113. Thereafter, on 28 October 2009 Mr Horn senior wrote to Oughton Graeme making reference to the possibility of the issue of a winding up petition against SVL. Mr Hammond took legal advice and it was after that in November 2009 that he says he discovered the Record and the alleged fraud. Surprisingly, in Mr Horn's solicitors' letter of 20 November 2009 it was stated that he had come across the Record in 2005 whilst he was collating data obtained from the Land Registry.
114. The first written allegation of fraudulent misrepresentation was made in Mr Hammond's solicitors' letter of 31 March 2011, some fifteen months after the correspondence had begun.
115. In the light of the fact that it is Mr Hammond's case that he became aware of the alleged fraud when he discovered the Record and that both he and Mrs Bonham-Carter recall his use of the word fraud after one of their meetings to seek to resolve the issue of the outstanding payments, the last of which was on 6 October 2009, on the balance of probabilities, in my judgment it is more likely than not that Mr Hammond had the Record by 6 October 2009, rather than date in November of that year for which he contends, but did not seek to deploy it until after the winding up of SVL had been threatened.

Employment intentions

116. It was also Mr Hammond's evidence that he intended only to give HEL seven or eight hours of his time each week and to do so remotely from another location. He accepted in cross examination that having purchased HEL he was not in a position to start his new regime until December of 2003 because it was necessary to set up the new IT systems he had purchased. He renewed his job applications in the new year of 2004 and was on the short list for a senior post at Foxtons in May 2004. However, he never received an offer of employment. Furthermore, he gave up his one day plan after September 2004.

Relevant legal principles

117. The parties relied upon the familiar principles of the law of fraudulent misrepresentation, which I will now summarise. I should mention that they disagree as to whether, assuming I find that fraudulent misrepresentations were made by Mrs Bonham-Carter and/or Mrs Horn that both SVL and Mr Hammond himself in his personal capacity can claim damages. I consider this issue in more fully detail below.
118. It goes without saying that first it is for SVL and Mr Hammond to identify the false statement which they allege was made by Mrs Bonham-Carter and/or Mrs Horn and that they understood that the representation was being made to them. In order to determine whether the representation was false it must be given its natural meaning and interpreted on an objective basis: Akerheim v De Mare [1959] AC 789 at 803-4.
119. Where even when considered objectively, the statement is ambiguous it will be for the representee to establish the meaning of the words which he actually understood. It is not enough for him simply to claim that one of the meanings is actionable: Cartwright "Misrepresentation, Mistake and Non-Disclosure 3^rd ed at para 3.06 and 3.07.
120. The truth of a representation, particularly in a case such as this, may not be a clear-cut question. The Court's approach, at least in marine insurance was set out by Rix J in Avon Insurance plc v Swire Fraser Ltd [2000] 1 All ER (Comm) 573). A representation in that context is treated as true if it is "substantially correct", which is to say that the difference between what is represented and what is in fact the case would not be considered material by a reasonable purchaser. This principle has been adopted in a non-insurance context by Christopher Clarke J in Raiffesen Zentralbank Osterreich AG v Royal Bank of Scotland Plc [2010] EWHC 1392 (Comm) [2011] 1 Lloyd's Reports 123 at [149]:

"It is not necessary for what was said to be entirely correct, provided it is substantially correct, and the difference between what is represented and what is actually correct would not have been likely to induce a reasonable person in its position to enter into the contract."

121. Third, the false representation must be material. Both parties, agreed that materiality was an essential ingredient in order to found a claim for deceit, relying on Downs v. Chappell [1997] 1 WLR 426. In this regard, I note in particular the passage in the judgment of Hobhouse LJ at paragraph 433 upon which Mr Bromilow sought to rely in subsequent written submissions:

"A representation will be material when its tendency, or its natural and probable result, is to induce the representee to act on the faith of it in the kind of way in which he is proved to have in fact acted. The test is objective."

122. In this regard, Mr Bennett in further written submissions also referred me to paragraphs [81] and [82] of the judgment of Christopher Clarke J in the Raiffesen Zentralbank case which are in the following form:

"81. RZB must show that RBS made to it a statement which amounts to a representation , that is to say a statement of fact, upon which RBS was entitled to rely. Whether any and if so what representation was made has to be "judged objectively according to the impact that whatever is said may be expected to have on a reasonable representee in the position and with the known characteristics of the actual representee." MCI WorldCom International Inc v Primus Telecommunications Inc [2004] EWCA Civ 957 per Mance LJ [30].The reference to the characteristics of the representee is important. The court may regard a sophisticated commercial party who is told that no representations are being made to him quite differently than it would a consumer.

82. In the case of an express statement, "the court has to consider what a reasonable person would have understood from the words used and in the context in which they were used": IFE Fund SA v Goldman Sachs International [2007] 1 Lloyds's Rep 264 per Toulson J at [50] (upheld by the Court of Appeal at [2007] 2 Lloyd's Rep 449.) The answer to that question may depend on the nature and content of the statement, the context in which it was made, the characteristics of the maker and of the person to whom it was made, and the relationship between them."

It is therefore plain that Mr Hammond's experience and business acumen is of relevance in this regard.

123. Fourth, SVL and Mr Hammond must prove that they were induced by the false representation to purchase the shares in HEL. In their submissions, both Mr Bennett and Mr Bromilow framed the discussion of this issue in terms of "reliance". However, I was referred during the course of proceedings to Downs v Chappell [1996] CLC 1492, in which Hobhouse LJ observes that the test is rather one of inducement; reliance may carry similar meaning, but it is not the correct criterion. It seems to me, therefore, that the correct formulation of the question must be whether the false representation induced SVL and Mr Hammond to purchase the shares in HEL. The test in considered in detail at [153] to [194] of Christopher Clarke J's judgment in the Raiffeisen case. In summary, at [153] Christopher Clarke J held:

"The authorities establish the following:

A claimant who seeks to claim damages for misrepresentation must show that the representation in question played a real and substantial part in inducing him to enter into the contract in question;

But it is not necessary for him to prove that the representation was the sole inducement to his decision or that it played a decisive part;

It is not, however, sufficient for him to show merely that he was supported or encouraged in reaching his decision by the representation in question.

See Dadourian v Simmons [2009] EWCA Civ 169 at paras 99 and 100."

124. Having reviewed the relevant authorities, Christopher Clarke J went on to hold at [162] that they show that the representation must play a causative part in inducing the contract and that the "but for" test is engaged. At [171] he held as follows:

" . . The authorities shows that inducement is, in essence, a question of causation and that the misrepresentation must be an effective cause of the representee entering into the contract in the "but for" sense. "But for" causation means that unless the alleged cause (X) had come about the alleged result (Y) would not have occurred. In the present context that means showing that, unless the representee had had the representation made to him, he would not have contracted (or would not have done so on the same terms). . . ."

125. The passages at paragraphs [180], [185 – 187] and [190] of his judgment are also of particular relevance here:

"[180] Mr Zacaroli submitted that a claim for misrepresentation requires consideration of what the representee would have done if no representation had been made to him. That is, in my judgment, generally speaking, correct because the claimant must establish the causative impact of the representation on his decision. His essential complaint must be that he entered into the contract on the terms on which he did as a result of which he was told ie. that, had he not been told what he was told, he would not have done so. If he would have entered the relevant contract even if the representation had not been made, he has no valid complaint: McGregor on Damages, 18^th Ed para 41-002; Sir Christopher Staughton in Assicurazioni Generali SpA v Arab Insurance Group [2003] 1 All ER (Comm) 140 at [187]. . .

. . . .

[185] . . . a claimant who says that even if he had been told the whole truth it would have made no difference to his readiness to enter into the contract will be likely to fail to establish that he was induced to enter into the contract by the misrepresentation in question. There is an inherent contradiction in someone saying that a representation was an inducing cause and accepting that, if the truth had been told, he would have contracted on the same terms anyway.

[186] If, however, it is clear that, unless the representation had been made to him, the claimant would not have entered into the contract, it is irrelevant to ask what would have happened if he had been told the truth. In those circumstances, the court will not speculate on what might have happened in that event: see Spencer Bower, op cit, para 122. . . . .

[187] It is not, therefore, necessary for the representee to establish that he would have acted differently if he had known the truth. And it may not be sufficient either. If it were, a claimant who gave no thought to any representation, or did not understand it to have been made, might be entitled to recover.

. . . .

[190] . . since the representee must show that the representation was an inducing cause it will be relevant to ask what he would have done if no representation had been made to him since the answer to that question is likely to determine whether the representation was a cause of his contracting or only an encouragement to him to do so."

126. Fifthly, it must be proved that Mrs Bonham-Carter and/or Mrs Horn intended that the false representation should induce Mr Hammond and/or SVL to enter into the Agreement. Lastly, they or either one of them must prove that they suffered loss as a result, a matter to which I return below.
127. In addition, for a misrepresentation to be fraudulent, it must be proved that Mrs Bonham-Carter and/or Mrs Horn: (i) knew that the misrepresentation was untrue; (ii) made the misrepresentation without a genuine belief in its truth; or (iii) were reckless as to its truth, in the sense of making the misrepresentation without caring if it was true or not: Derry v. Peek (1889) 14 App Cas 337, in particular Lord Herschell's speech at p.374. He went on to add:

"Although I have taken the second and third as distinct cases, I think that the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in what he states"

128. In this regard, I was also referred by Mr Bennett to a passage in Lord Herschell's speech at page 375 of the report which is in the following form:

"In my opinion making a false statement through want of care falls far short of, and is a very different thing from, fraud, and the same may be said of a false representation honestly believed though on insufficient grounds."

129. As Mr Bennett pointed out, citing Angus v. Clifford [1891] 2 Ch 449, the dishonesty of each party against whom allegations of deceit are made must be proved separately. Accordingly, I must be satisfied in the case of each of Mrs Bonham-Carter and/or Mrs Horn that they had the requisite state of mind to be liable in deceit.
130. Second, it is necessary that Mrs Bonham-Carter and/or Mrs Horn subjectively intended that SVL and/or Mr Hammond should understand the representation in the sense that they did i.e. its false sense and rely upon it in that sense. Mr Bennett referred me to Angus v Clifford [1891] 2 Ch 499 and Akerhielm v De Mare [1959] AC 789 PC in support of this proposition. The particular passage in Angus v Clifford in the judgment of Lindley LJ at 466 is as follows:

"If it is fraud, it is actionable, if it is not fraud, but merely carelessness – it is not. The passages about knowledge – knowingly making it, and making a statement without believe its truth, are based upon the supposition that the matter was really before the mind of the person making the statement, and, if the evidence is that he never really intended to mislead, that he did not see the effect, or dream that the effect of what he was saying could mislead, and that the particular part of what he was saying was not present to his mind at all, that I should is proof of carelessness rather than fraud."

131. Lastly, in this regard, the representee must establish that he subjectively interpreted the representation in the sense in which the court has found it be false. In this regard, Mr Bennett referred me to a passage at page 324 of the judgment of Cotton LJ in Arkwright v Newbold (1881) 17 Ch D 301 as follows:

"In my opinion, it would not be right in an action of deceit to give a plaintiff relief on the ground that a particular statement, according to the construction put on it by the Court, is false, when the plaintiff does not venture to swear that he understood the statement in the sense which the Court puts on it. If he did not, then, even if that construction may have been falsified by the facts, he was not deceived."

Standard of Proof

132. Finally, I should add that it is clear that the burden of making good the claim is on SVL and Mr Hammond. It was also accepted in further written submissions by both Mr Bennett on behalf of Mrs Bonham-Carter and Mrs Horn and by Mr Bromilow on behalf of Mr Hammond and SVL that the standard of proof to be applied is the normal civil standard of the balance of probabilities but that the seriousness of an allegation such as fraud may be relevant because the court is entitled to have regard to the inherent probability or improbability of any allegation. The court is therefore, entitled to have regard to the fact that in the main, people do not engage in acts of fraud.
133. They accepted in further written submissions that Re B (Children) (Care Proceedings: Standard of Proof [2009] 1 AC 11 and Dadourian Group International and ord v. Simms and ors [2009] EWCA Civ 169 do not alter the core principles expressed by Lord Nicholls in H (Minors) Re [1996] AC 563 at 586D to 586E which is in the following form:

"When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is proved on the balance of probability."

Damages

134. In relation to damages, Mr Bromilow referred me to Downs v Chappell at 439 for the proposition that damages representing loss of income and capital may be awarded in a claim in deceit. In this case, the issue arises from the fact that there are two separate claims one on behalf of SVL and the other by Mr Hammond himself.
135. His pleaded case on behalf of SVL is that it is entitled to the difference between the price paid for HEL being £800,000 and its true value at the date of the execution of the Agreement.
136. In addition, Mr Bromilow submitted that the representations were made not only to Mr Hammond as agent or controlling mind of SVL but also to him in his personal capacity. Mr Bromilow said that these heads of damage do not overlap and do not amount to double recovery as Mr Bennett contends. He submitted that the loss claimed by Mr Hammond is not merely reflective of HEL's loss. He submitted that Mr Hammond's position is analogous to a situation in which a misrepresentation is made to directors of a company which causes the company to buy a product which is worthless. At the same time, as a result of the misrepresentation, one of the directors invests in the supplier company personally and his investment is also lost. In such circumstances, he says that the losses suffered by the company and the individual are both caused by the misrepresentation but are not reflective of each other. Putting the company in the position it would have been in as if the fraudulent misrepresentation had not been made would not prevent the individual director from being compensated for his loss, nor would such compensation amount to double recovery.
137. Although I was not referred to any authority in this regard, I accept that it is possible to make a representation with the intention that it be relied upon by the representee in more than one capacity.

Issues

138. Accordingly, the issues in the Third Party Claim and Counterclaim are as follows:

i) Did Mrs Bonham-Carter and/or Mrs Horn represent to Mr Hammond on behalf of SVL and/or in his personal capacity that HEL had a market share of 95% of all property sales in Chelsea Harbour whether year by year or otherwise?

ii) If one or both of them did, did she or they intend thereby to convey that in any particular year HEL was instructed on behalf of vendors in 95% of all Chelsea Harbour sales, and that it was the effective cause of and received commission on 95% of all sales?

iii) If they did, were those representations false?

iv) If they were false, were Mrs Bonham-Carter and Mrs Horn aware they were untrue, or reckless as to whether they were true or not?

v) Were the representations likely to induce reliance upon them?

vi) Was Mr Hammond induced by those representations personally to cause SVL to enter into the Agreement?

vii) Did SVL enter the Agreement having been induced by the representations?

viii) If so, did SVL suffer any loss as a result and, if so, what loss?

ix) Similarly, did Mr Hammond suffer any loss personally as a result for which he is entitled to claim and, if so, how much?

(i) Did Mrs Bonham Carter and/or Mrs Horn represent to Mr Hammond on behalf of SVL and in his personal capacity that HEL had a market share if 95% of all property sales in Chelsea Harbour whether year on year or otherwise?

139. I have set out the representations as pleaded at paragraphs 9 and 11 of the Amended Defence and Counterclaim at the beginning of my judgment. At paragraph 9 the representation is set out without reference to year on year but it is stated that Mr Hammond understood and Mrs Bonham-Carter and Mrs Horn intended to convey by the alleged representation that "in any particular year of all the properties sold within Chelsea Harbour, HEL was instructed to act on behalf of the vendor in relation to the sales of 95% of the said properties, and was the effective cause of the sale of and hence received commission on 95% of the sales of all properties sold within Chelsea Harbour in any given year." At paragraph 11 it is pleaded that the representation itself included the matters which at paragraph 9 are stated to be the manner in which the representation was understood and was intended to be conveyed.
140. In his closing submissions, Mr Bennett on behalf of Mrs Bonham-Carter and Mrs Horn took this point and submitted that Mr Hammond's case as to the representation in the wider, paragraph 11 sense could not be sustained on the evidence. He referred to the fact that Mr Hammond having admitted in cross examination that Mrs Bonham-Carter and Mrs Horn never said to him that HEL had a 95% market share on all properties sold in Chelsea Harbour in any given year but had only made the simpler representation that HEL sold 95% of the properties within Chelsea Harbour and that he had assumed that it applied over the ten year period of HEL's existence rather than year on year.
141. In my judgment, in the light of Mr Hammond's evidence, it is obvious that the case as to the wider representations, if that it is what is intended by paragraph 11 of the Amended Defence and Counterclaim cannot be sustained. That does not mean that it is not necessary to consider the representation as pleaded at paragraph 9, what it is alleged to have been intended to be conveyed by it and what it is alleged was understood by it.
142. I shall proceed accordingly. Did Mrs Bonham-Carter and/or Mrs Horn represent to Mr Hammond that HEL had a market share of 95% of all property sales in Chelsea Harbour? In this regard, the reference to sales allegedly included private sales but did not include lettings.
143. In this regard, I have found at paragraph 51 that despite their assertions that they did not think in percentage terms, both Mrs Bonham-Carter and Mrs Horn had used percentages when describing HEL's business dominance in Chelsea Harbour in correspondence and had provided what in my judgment was a "guesstimate" for the purposes of the drafts of Information Memorandum albeit that the final percentage was provided by Messrs Ball and Webb. However, there is a conflict of oral evidence as to whether the alleged oral representations were made. The furthest which Mrs Bonham-Carter was willing to go was to accept that if pressed at the lunch on 3 December 2002, she would have repeated what was in the Information Memorandum Both she and Mrs Horn denied that they would have answered the three questions which upon which Mr Hammond relied in the way in which he alleges.
144. In my judgment, on the balance of probabilities, had the representation been made at the lunch as Mr Hammond contends (whether in the wider or the narrower form) it would have been reflected in the documentation produced immediately thereafter. On the contrary, Mr Hammond's email of 9 December 2002 containing his précis of the views expressed at the lunch makes no mention whatever of the alleged representation. In fact, it does quite the reverse. It emphasises HEL's vulnerability to competition which is at least in part inconsistent with a representation as to 95% market share having been made at the only meeting which had taken place at that stage. The précis does not even set out the alleged representation as to market share as a balancing factor to be set against the alleged vulnerability.
145. There is also no documentary evidence to corroborate Mr Hammond's assertion that the representation was repeated on occasions too numerous to particularise, during the period after the December 2002 meeting until the Agreement was executed in June 2003.
146. Had such a representation been made in my judgment, on the balance of probabilities, reference would have been made to it at least somewhere in the relevant documentation. However, as I have found, there was no reference to it in Mr Hammond's Discussion Paper which was the basis for the meeting with Mrs Horn on 18 February 2003. On the contrary, in just the same way as with the précis, the Discussion Paper focuses on HEL being exposed to competition. Equally, Mrs Horn's email to Mrs Bonham-Carter in which she reported on the 18 February 2003 meeting, makes no mention of any reference by Mr Hammond or otherwise, to market share.
147. As I mentioned at paragraph 70 I reject Mr Hammond's evidence with regard to the alleged repetition of the representation at the 28 February 2003 meeting attended by Mr Hammond, Mrs Bonham Carter and Mrs Horn.
148. In addition, Mr Hammond's assertions that the representation was made thereafter are not supported by any oral evidence of those directly involved or by any references in the contemporaneous documentation. In my judgment, had the representation been made whether on the earlier occasions or on or after 28 February 2003 and before the Agreement was executed, it is more likely than not that reference to it would have been made whether in correspondence in hard copy or by way of email or in the numerous drafts of the Agreement. There is no reference whatever.
149. In my judgment, Mr Hammond's evidence in relation to the alleged representation is also inconsistent with the form of the Agreement. It includes at clauses 7.5 and 7.6 provisions to the effect that reliance cannot be placed upon representations unless they are found to be fraudulent. Mr Hammond contends nevertheless, that he told his solicitor Mr Baker, that the oral representation as to market share had been made and was important to him. Had this been the case, in my judgment it would be very unlikely that clauses 7.5 and 7.6 would have been included in the form in which they appeared, or at least that there would not have been extensive negotiations about them.
150. This also goes for the lack of a warranty as to market share which Mr Hammond suggested had been dropped as a quid pro quo for his refusal to give a personal guarantee for the purchase price. But for Mr Hammond's oral evidence there is no evidence to support this whatsoever and that of his wife and brother in law which I have rejected, and in my judgment, the terms of Mrs Hammond's aide memoire email to which I referred at paragraph 90 is inconsistent with a quid pro quo having been discussed.
151. This is also consistent with Mr Horn's evidence in relation to the drafts of the Heads of Agreement and their negotiation and Mr Horn senior's attendance note of 28 and 29 May 2003 which makes no mention of any warranty as to market share and the matters to which I have referred at paragraphs 91-95. It is also consistent with the evidence in cross examination of Mrs Horn and Mrs Bonham-Carter to the effect that they had no recollection of any discussion about a warranty of this kind.
152. Lastly, in my judgment, had the alleged misrepresentations been made, Mr Hammond would have set them out in his "Over the last 6 years" document to which I referred at paragraph 109. This is all the more so in the light of my finding that it is more likely than not that Mr Hammond had already had sight of the Record by that time. In such circumstances, had the alleged representations whether on the wider or narrow basis been made it is extremely unlikely that Mr Hammond would not have referred to them when attempting to negotiate with regard to the outstanding instalments of the HEL purchase price.
153. Accordingly, in my judgment, issue (i) should be answered in the negative in relation to both Mrs Bonham-Carter and Mrs Horn and that is an end to Mr Hammond and SVL's counterclaim against them in fraudulent misrepresentation. However, in case I am wrong in this regard, I will consider the other relevant issues.
154. Before turning to Issue (ii), it is necessary to consider how a representation to the effect that HEL had a market share of 95% of all property sales in Chelsea Harbour would reasonably be understood. In this regard, in my judgment it is relevant that it was Mr Hammond's evidence that the representation was made in the context of the Information Memorandum and that he did not contend at any stage that the alleged oral representation was different in any way from that which appears in the Information Memorandum itself. In fact, it was Mr Hammond's evidence in cross examination that he understood the representation to apply to the ten year period in which HEL had been trading. This is consistent with the relevant facts in the Information Memorandum.
155. The other related information which formed the context of the alleged representation was that it was stated that it had been estimated that HEL's activity amounted to around 95% of sales and lettings over the ten year period, the figures for properties changing hands every year was described as a generalisation and the sales in the tenth year had been estimated.
156. In my judgment a representee (who had Mr Hammond's experience of business) would have understood it to have been an estimate in relation to sales and lettings combined, given that the figures provided did not support 95% in respect of sales alone and given the use of the phrase "sales and lettings" would also have reasonably understood that it related to activity by agents rather than including private sales. In my judgment such a phrase would be reasonably understood as redolent of activity by agents. In addition such a reasonable recipient would have understood such a representation to relate to the ten year period in which HEL had been trading. This is supported by the fact that in cross examination Mr Hammond accepted that was indeed how he had understood it.

(ii) If one or both of them did, did she or they intend thereby to convey that in any particular year HEL was instructed on behalf of vendors in 95% of all Chelsea Harbour sales, and that it was the effective cause of and received commission on 95% of all sales?

157. In the light of my conclusions, this issue (ii) does not arise. In any event, I will deal with it shortly. Did Mrs Bonham-Carter and/or Mrs Horn intend to convey to Mr Hammond and/or SVL that HEL was instructed on behalf of vendors in 95% of all Chelsea Harbour sales and that it was the effective cause and received commission on 95% of all sales?
158. In the circumstances, the question is artificial. In any event, Mr Bennett stressed that it is important to take into consideration once again the context in which the representation was allegedly made, namely that of the Information Memorandum. As I have already mentioned, Mr Hammond accepted that the representations which he alleged were made were the same as the content of the Information Memorandum itself. Furthermore, the representations were allegedly first made at the lunch at the Conrad Hotel when the Information Memorandum was shown to Mr Hammond and thereafter they sent him a copy as promised. Mr Bennett points out the "Important Notice" contained in the Information Memorandum and submitted that in that context, Mrs Bonham-Carter and Mrs Horn cannot have intended Mr Hammond or SVL to have relied upon the representations in the form in which Mr Hammond alleges which I accept.

(iii) and (iv) Were those representations false and if they were false, were Mrs Bonham Carter and Mrs Horn aware they were untrue, or reckless as to whether they were true or not?

159. Mr Bromilow submits that the representation despite being shorn of any time period was nonetheless unambiguous. He says that the use of the present tense must necessarily mean that the situation portrayed was current and ongoing. He also points out that on any basis whether market share was based on volume, value and in both cases excluding private sales and "unknown" sales, the percentage at least for the four years 1999 – 2002 is not 95%. He also submits that given the wording of the alleged representation, namely 95% of all sales in Chelsea Harbour, it is not open to Mr Bennett to suggest that the figures were "broadly accurate". He says that a specific figure was used and it was either correct or not.
160. There can certainly be no doubt but that if taken on a year on year sense in relation to sales the percentage was false. However, I have found that if the representation was made it should have been understood in the context of the information and figures contained in the Information Memorandum. In that regard, Mr Hammond himself accepted in his document headed "Over the last 6 years" that on average 30 properties had changed hands each year in Chelsea Harbour and the percentage was described as an estimate based on the figures for sales which were provided (and in part estimated) together with lettings. The statement in the Information Memorandum makes clear that it was intended to be an estimate. Taken as such, in relation to the ten year period and in relation to sales and lettings in my judgment it was not false.
161. If I am wrong about that, it is necessary to consider whether Mrs Bonham-Carter and/or Mrs Horn were aware that the alleged representation was false. It is pleaded that they were aware because they knew from the Record that HEL's market share in relation to sales was considerably below 95% and that they also knew this from the information they received from porters and residents at Chelsea Harbour. It is necessary to show that they either knew of the falsity or were reckless as to it. Mere carelessness is not enough to amount to dishonesty and genuine belief as to the truthfulness of a statement will not amount to fraud.
162. First, I have already found for the reasons set out at paragraphs 21-23 that Mrs Bonham-Carter did not use the Record and did not see a copy of it on the computer or in hard copy. Accordingly, any contention that Mrs Bonham-Carter knew that the representation was false as a result of the Record cannot be made out.
163. Mrs Horn on the other hand was for the most part the author or at least, the instigator of the compilation of the Record. Her evidence was that she considered it to be a tool for price comparison and did not realise that it could be used to verify market share. Despite the fact that this appears quite a surprising position to take up, having heard Mrs Horn give evidence as to her ability with figures and mathematical propositions, which was corroborated by her husband, I accept her evidence in this regard. As I determined at paragraph 24 and for the reasons I set out there, conclusion is supported by the fact that there is no evidence to suggest that she ever tried to hide the Record and left it on the computer and in paper format amongst HEL's files in the office during the period in which Mr Hammond was conducting due diligence. Furthermore such knowledge would be completely inconsistent with having drawn attention to the Record in the hand over notes which she prepared with Ms France in August and September 2003, after the Agreement had been executed. It is also inconsistent with her evidence that she caused further entries to be made in the Record in the period from July to September 2003. In my judgment, on the balance of probabilities, she would only have done so if she expected further reference to be made to the Record, something which she would hardly have encouraged if she had been aware that it could be used to determine market share in a way which would reveal her to have been dishonest.
164. It was accepted by Mrs Bonham-Carter and Mrs Horn that they gleaned information from residents and porters to a lesser extent from time to time and that they had a feel for the market at Chelsea Harbour. However, in my judgment this is insufficient basis for the conclusion that they knew or were reckless as to whether the alleged representation was false. It would have been necessary for them to have had a precise recollection or records in relation to what they had been told and evidence of the number of sales in each year of which they were informed by this means. The evidence in this regard was all of an entirely general nature.
165. Furthermore, in this regard, I bear in mind that Mr Hammond was the son of old friends of Mrs Bonham-Carter and that both she and Mrs Horn continued to meet Mr Hammond socially until 2009. I also take account of Mrs Bonham-Carter's evidence of shock when Mr Hammond mentioned fraud to her. I accept her evidence in this regard. In my judgment this together with the conduct to which I referred at paragraphs 163, is completely inconsistent with that which might be expected of a person who was aware that representations were untrue or was reckless as to it.
166. In conclusion, on the balance of probabilities I find it less likely than not that Mrs Bonham-Carter and Mrs Horn either knew of the alleged falsity of the representation or were reckless as to it.

(v), (vi) and (vii) Were the representations likely to induce reliance upon them ? Was Mr Hammond induced thereby personally to cause SVL to enter into the Agreement and did SVL enter the agreement having been induced by the representations to do so?

167. Had I found that the representation had been made, the very lack of any mention of the representation in the documentation to which I referred, together with the matters to which I refer below, would have led me to conclude that Mr Hammond and SVL did not rely upon the alleged representation nor were they induced to enter the Agreement as a result of the representations. I remind myself that the test is whether the representations played a real and substantial part in inducing them to enter the Agreement. Had he been so induced, it seems to me that it would have been more likely than not that reference to the representation would have been made in the contemporaneous documentation.
168. Furthermore, Mr Hammond was given access to HEL's office and all documentation from 23 January 2003 until the Agreement was executed and he accepted in cross examination that he had done his own extensive due diligence. I have also come to this conclusion as a result of the matters set out at paragraphs 57, 58, 65 and 95. In the light of these matters I would have found that he did not rely upon the representation.

(viii) and (ix) Did SVL and/or Mr Hammond suffer any loss result and if so, what loss?

169. Had I found in favour of SVL, the final question would have been as to the loss suffered as a result of the fraudulent misrepresentation. It was agreed by the experts that in relation to SVL that the value of HEL at the date of the Agreement was £537,5000 some £262,500 less than the contractual purchase price. Its damages therefore, would be £265,500 plus interest against which the outstanding purchase monies under the Agreement, of £157,882.72 would fall to be set off.
170. A further question would have arisen as to whether Mr Hammond himself could also claim for loss of earnings. The figure agreed by the experts for his loss of earnings for the period from April 2005 was £676,000.
171. I dealt with this matter in principle at paragraphs 134-137. In this regard, Mr Bennett submitted that any misrepresentation could only have been made to induce SVL to enter into the Agreement and that Mr Hammond cannot himself have relied upon it in the manner in which Mrs Bonham-Carter and Mrs Horn must have intended he should. He says that it is artificial to suggest that they intended that SVL should rely upon the alleged representation to enter into the Agreement and at the same time that they intended Mr Hammond to rely upon the same representation to cause SVL to enter the agreement. They had no reason he says to intend that Mr Hammond should rely upon the representations personally and the representations they made to him continued as representations made to him on behalf of SVL.
172. Mr Bromilow says that there is nothing to prevent more than one person relying on a fraudulent misrepresentation. He says that if SVL relied on the representations it was only because Mr Hammond was doing so. Mr Bromilow says that the proper measure of damages is the difference between what would have happened if the representations had not been made and as a result Mr Hammond had continued his search for employment and what actually happened, namely that HEL was purchased and he ended up working there full time.
173. As I have already found in principle, in my judgment, there is no reason why Mr Hammond could not also have recovered for lost earnings. I see nothing artificial in suggesting that SVL and Mr Hammond may both have relied on the alleged representations. Nor do I consider that there would be any overlap in the damages which would have been suffered.
174. Furthermore, if I am wrong about the representations having been made and the other requisite elements on the facts of this case and in particular, the size and nature of HEL's business, the way it had been run by Mrs Bonham-Carter and Mrs Horn and the relatively intimate nature of the negotiations on the balance of probabilities I consider it more likely than not that it was intended that Mr Hammond should rely on the alleged representations personally.
175. However, I have already found that neither SVL nor Mr Hammond were induced to enter into the Agreement as a result.
176. Furthermore, the evidence of Ms France was that by about September 2004 she was in a position to manage the business by herself. If and to the extent Mr Hammond spent more than one day a week on the business of HEL after that, it cannot have been as a result of any representation made by Mrs Bonham-Carter and/or Mrs Horn.