Jersey Unreported Judgments

Property.

[2021]JRC200

Royal Court

(Samedi)

29 July 2021

Before     :

Advocate Matthew John Thompson, Master of the Royal Court

 

Advocate A. D. Hoy for the Plaintiff.

Advocate H. Sharp for the Defendant.

contents

		Paras
1.	Introduction	1
2.	background	2-5
3.	Key documentation	6-15
4.	The Order of Justice	16-23
5.	Evidence	24-35
6.	Submissions	36-53
7.	Discussion and Decision	54-83

judgment

the master:

Introduction

1.        This judgment contains my written reasons for refusing the defendant's application for reverse summary judgment under Part 7 of the Royal Court Rules 2004, as amended ("the Rules").

Background

2.        The background to the application concerned the sale of a flat from the defendant to the plaintiffs conducted by way of a Share Purchase Agreement ("SPA") dated 21^stJuly 2020.  The material terms of the SPA are set out later in this judgment. 

3.        The essence of the plaintiffs' allegation is that certain replies to enquiries that the defendant provided to the plaintiffs as part of the correspondence leading up to the sale were wrong or incomplete.  In particular, the plaintiffs assert that answers relating to whether or not the flat's electrical systems had been tested were false. They therefore seek damages based on the alleged cost of remediation works required to correct various electric faults said to have been discovered within the flat.  

4.        The defendant's application for summary judgment under Part 7 of the Rules was summarised in her skeleton argument at paragraph 4 as follows: 

"i. The 'Replies to Enquiries' were deliberately and expressly qualified by the Defendant in an email dated 18th June 2020 at G41 in which it was made crystal clear to the Plaintiffs that these replies were, inter alia, not guaranteed.

ii. Paragraphs 6.5 and 6.5.5 of the SPA at G17 confirms that no Warranty shall apply to any 'matter, fact or information' contained in the correspondence between the parties leading up to the sale including the Replies to Enquiries. The Warranty, however construed, has no applicability when one has regard to the email dated 18th June 2020. On the contrary, the email overrides any warranty given.

iii. Paragraph 6.4.3 of the SPA at G16 required the Plaintiff to have conducted all due enquiries before being able to rely upon any Warranty. The Plaintiffs should have conducted an electrical survey as Mr Durlo appears to concede at paragraph 27 of his affidavit given that the Defendant had not provided unqualified answers to the enquiries made."

5.        What was at the heart of the defendant's application was therefore the effect of an email dated 18^th June 2020 sent by the defendant's lawyer to the plaintiff's lawyer and whether this email precludes the plaintiffs' claims. 

Key documentation

6.        On 18^th June 2020 the defendant's lawyer sent to the plaintiffs their replies to certain written enquiries made by the plaintiff's lawyer.  These enquires were made using a standard template.  In respect of electrical systems, the request for information sought confirmation amongst various other services that: 

"electrical systems ... have been tested (and where applicable certified by a suitably qualified person) and are all in good working order and fit for purpose."

7.        A reply to this enquiry was "our client confirms"; the same reply also contained the request "confirmed by N&W whom I was informed was a manager of the block where the flat was located.

8.        During the course of argument, I was referred to request 4.4 of the standard enquiries which was an enquiry about drains.  The relevance of this enquiry was that the answer provided was "please rely on your own researches".

9.        Request 11.2 repeated the request about electrical systems (amongst other systems) and again sought confirmation that they had been tested and were all in good working order and fit for purpose.  The answer to this request was "our client confirms".

10.      The enquiries made were wide-ranging and were made under the headings of "Sale Documents, Charges, Title Boundaries & Servitudes, Services, Planning & Works, Notice, Environmental, claims and Disputes, Fixtures & Fittings, The Company, and The Shares". 

11.      The email of 18^thJune 2020 was at the heart of the dispute and reads as follows:-

"Laurie Nehwati [mailto:LNehwati@lgl.je] Sent: 18 June 2020 14:03 To: Kerry Fernandes Cc: Natalie Harris; Paul Scally Subject: RE: 705867.3 : 13 Charles Court, Ingouville Lane, St Helier

Dear Kerry Please see attached completed table and supporting documents. Please confirm receipt due to volume size. Please note the attached replies are (except in the case of any enquiry expressly requiring and given a personal reply from this firm) given on behalf of the Vendor and without responsibility on the part of this firm. The responses are believed to be correct and given in good faith, but the accuracy is not guaranteed. They do not therefore obviate the need to make appropriate title searches, third party searches, enquiries, surveys and inspections that a prudent purchaser should undertake, and which will be assumed by the Vendor to have been undertaken. The replies are given on the basis that they are limited to the period of the Vendor's ownership of the property and the Vendor is only aware of and only has notice of matters within her actual knowledge. It is not implied that the Vendor or this firm have made any enquiries before giving any reply."

12.      The relevant provisions of the SPA are as follows:-

""Warranties" the warranties given by the Seller in accordance with Clause 6 and Schedule 3 (and "Warranty" shall be construed accordingly); and

"Warranty Claim" any claim by the Buyer or any person deriving title from the Buyer in connection with the Warranties, which claims shall be subject to the terms of Clause 6. 1.1 References to a Clause, Schedule or paragraph are references where the context so admits to a clause, schedule, or paragraph of this Agreement. 1.2 The Clause, Schedule and paragraph headings in this Agreement are for case of reference only and shall not be taken into account in the construction or interpretation of the Clause, Schedule or paragraph to which they refer.

6.1 Subject to this Clause 6, the Seller warrants to the Buyer that the Warranties in Schedule 3 are true and accurate at the Completion Date.

6.2 The Buyer shall not be entitled to make any Warranty Claim under this Agreement and the Seller shall have no liability in respect of the Warranties:

6.2.1 if such Warranty Claim would not have arisen but for a change in legislation after the Completion Date;

6.2.2 if such Warranty Claim arises as a result of any action, decision or inaction of the Buyer; or

6.2.3 unless legal proceedings (giving full details of the specific matter in respect of which such Warranty Claim is made) shall have been issued by the Buyer against the Seller within a period of three (3) years after the Completion Date."

13.      The relevant warranty in schedule 3 for the purposes of the application before me was warranty 13.5 which states, "the Replies to Enquires are true, complete and accurate." 

14.      Clause 6.5 of the SPA qualified the warranties given as follows:-

"6.5 The Warranties shall be qualified to the extent that they shall not apply to and no warranty or representation shall be implied or inferred or deemed to be implied or inferred in respect of any matter fact or information which would be disclosed or made apparent:

6.5.1 by an investigation of the Public Registry of Jersey or an enquiry with any Ministerial Department of the States of Jersey, any Parochial or licensing authority or any of the utility companies in Jersey;

6.5.2 by a physical examination of the Apartment and/or the Property;

6.5.3 by an examination of the Directors and Shareholder Minute Books, the Register of Members, Directors and Secretaries and other statutory records maintained by the Company such as have been made available to the Buyer's Lawyers or by an examination of the public file of the Company at the Jersey Financial Services Commission;

6.5.4 any matter which was divulged, provided for, noted or referred to in the latest accounts of the Company;

6.5.5 the information contained in all correspondence up to and including the Completion Date between the Seller's Lawyers and the Buyer's Lawyers (including the Replies to Enquiries), together with all enclosures or attachments thereto and all matters referred to in such enclosures."

15.      Finally, it is appropriate to refer to Clause 11 of the agreement as follows:-

"11. ENTIRE AGREEMENT

11.1 This Agreement supersedes all prior agreements, arrangements and undertakings between the Parties and (together with the written correspondence between the Seller' Lawyers and the Buyer's Lawyers and the Replies to Enquiries) constitutes the entire agreement between the Parties relating to the subject matter of this Agreement.

11.2 The Buyer acknowledges and agrees that in entering into this Agreement the Buyer does not rely on any undertaking, promise, assurance, statement, representation, warranty or understanding (whether in writing or not) of any person (whether party to this Agreement or not) relating to the subject matter of this Agreement, save as expressly set out in this Agreement."

The Order of Justice

16.      At paragraph 9 of the order of justice the plaintiffs pleaded as follows-:

"By paragraph 13.5 of Schedule 3 of the SPA, the Defendant warranted that the replies given by the Defendant's lawyers to enquiries made by the Plaintiffs' lawyers (the "Replies to Enquiries") were true, complete and accurate."

17.      This led the plaintiffs to then plead at paragraph 10 the following:-

"10 In reliance upon and induced by these Representations, the Plaintiffs agreed to purchase the Shares granting the right of exclusive occupation of the Apartment for £345,000."

18.      This led to the following allegations at paragraphs 12 to 14:-

"12. Approximately six months after the Completion Date, the Plaintiffs discovered an electrical fault within the Apartment. The Plaintiffs commissioned an Electrical Inspection Report (the "EIR") at the behest of the Company's property manager who had requested that the Apartment be subject to a periodic electrical inspection. The EIR reported extremely concerning issues with the Apartment's electrical systems, including a lack of protective tubing on the power supply to the sockets, high resistance readings, the absence of earth wires, poor workmanship and a complete disregard of the relevant wiring regulations.

13. It transpired that the Defendant had relocated and/or added additional sockets in various rooms of the Apartment including the addition of wiring in the bathroom to service a heater, extractor fan, speaker and lighted mirror all of which were installed by the Defendant. The Defendant also replaced the consumer unit in the Apartment (together the "Electrical Works").

14. The Plaintiffs have also since been advised of safety issues with the replacement consumer unit including:

a) the absence of a periodic inspection and testing notice;

b) the absence of an RCD six monthly notice:

c) the absence of warning mixed colour notice;

d) the absence of a danger notice;

e) the absence of protection against mechanical damage where cables enter the consumer unit; and f) the absence of RCD protection on some lighting circuits."

19.      There are also allegations that the defendant had breached the Building Bye-Laws (Jersey) Law 2007 and that no test of electrical systems had been carried out.   The plaintiffs therefore alleged allegation at paragraph 18(b) as follows:-

"...therefore, the representations made by the Defendant in the Replies to Enquiries were knowingly false and a misrepresentation."

20.      The reply that the electrical systems had been tested was also alleged to be false (see paragraph 21).

21.      This led to the following allegation in the amended order of justice that the representations made by the defendant were false.  In the order of justice paragraph 22 pleaded that:-

"The representations were made fraudulently, in that the Defendant well knew that they were false."

22.      These allegations however had been amended by the time the matter came before me and the allegations of fraud withdrawn.  This amendment however pre-dated certain evidence filed in relation to the present application by the plaintiffs which I address below. 

23.      I have referred to certain parts of the plaintiffs' order of justice because the claim pleaded is one of misrepresentation based on the answers given to the replies to enquiries.  Part of the argument before me was whether the plaintiffs were entitled to bring claims in misrepresentation having regard to the terms of the SPA.  I consider this question below.

Evidence

24.      The defendant filed an affidavit sworn on 10^thJune 2020 in support of her application.  At paragraph 10 of her affidavit she deposed as follows:-

"10. The Order of Justice at paragraph 5 does not plead to or otherwise mention the 18th June 2020 email. For my part, I was not guaranteeing the information provided in these Replies and therefore the Plaintiffs were not entitled to place any (legal) reliance on the answers provided. This was particularly so given that I had not organised any electrician to inspect the property before it was sold. I had not done so because I understood that the provision of qualified answers was an appropriate solution. The buyers were entitled to request access to have these particular tests done if they so wanted. The wording in the 18th June email clearly indicated that the answers were on the basis of my actual knowledge only (those answers not being guaranteed) and not as a result of any tests having been carried out."

25.      She further contended that the warranty at paragraph 13.5 referred to above did not represent any material departure from her position as set out in the email of 18^th June 2020.  This led her to state at paragraph 14:-

"Rather, the plaintiffs knew that the electrics had not been the subject of survey and whilst I was providing information in good faith in the replies, that information was not guaranteed by me."

26.      At paragraph 15 of her affidavit she then deposed that certain electrical works were carried out by a qualified electrician and at the time she had not been told that a certificate was needed for relatively minor works and she had no reason to think otherwise.  Also, in paragraph 15 the defendant made the observation that:-

"The enquires made by VL did not ask me if any electric works had been carried out by me."

27.      The first plaintiff filed an affidavit in response dated 23^rdJune 2020.  Paragraph 12 of the affidavit read as follows:-

"12. We had no reason to suspect that any work had been carried out by PDZ in relation to the electrics in the Property. PDZ confirmed in paragraph 11.2 of the Replies to Enquiries [p42] that she had not undertaken any other works requiring either planning or building permission. Further, in response to paragraph 11.2 of the Replies to Enquiries [p42] PDZ confirmed that all electrical systems forming part of and serving the Property had been tested and certified by a suitably qualified person where applicable and were all in good working order and fit for purpose. Given what we know now, that statement was not true."

28.      The first plaintiff also relied on a statement from a neighbour which gave evidence that he was aware that the defendant's husband had told the neighbour that the defendant and her partner had done certain electrical work at the property themselves.  The neighbour provided a statement exhibited to the first plaintiff's affidavit.

29.      The first plaintiff further had spoken to the electrician who had carried out certain works at the property.  According to his affidavit, the electrician's evidence was that he had only rewired a bathroom and replaced a consumer unit and that any other electrical work was carried out by the defendant.  The defendant's electrician had also advised the first plaintiff that there were some underlying faults in the living room and study room and therefore the circuits in those rooms failed the tests he carried out. 

30.      The first plaintiff then deposed at paragraph 27 that:-

"27 Had we been made aware that the Electrical Works had been undertaken, or had PDZ refused to provide a confirmation to the enquires relating to electrical works, we would have investigated this further and obtained our own electrical survey prior to completion. Instead, we relied on the positive confirmations that PDZ provided which we were entitled to do. To do otherwise would render the whole process a nonsense."

31.      The first plaintiff further relied on his conversations with the plaintiff's electrician to assert that the defendant had the requisite knowledge that any tests on the electrical systems had not been carried out and simply chose not to tell the plaintiffs. 

32.      The defendant filed an affidavit in response from a Mr Lawrynowicz, her husband, which contained a summary of certain Whatsapp exchanges he had had in Polish with the defendant's electrician.  The relevant exchanges contained in exchange asking the electrician "So you haven't tested".  The reply to this was "No".

33.      Advocate Hoy also provided a copy of a statement provided by the electrician to Mr Daniel Smith Senior Building Controls Surveyor at the government of Jersey, which further confirmed the extent of the tasks carried out by the electrician and supported the first plaintiff's summary of the electrician's evidence.  This letter also stated that Mr Lawrynowicz and his brother-in-law had both carried out certain electrical works at the property.  The electrician also explained in his letter that he had quoted a fee for testing, but that Mr Lawrynowicz decided not to take up the quote, against the advice of the electrician. 

34.      No objection was taken by Advocate Sharp to this statement being included in the bundle or put before me. 

35.      Finally, I record that the defendant did not file any other evidence in response to the allegations made by the plaintiff, although under the Rules she was entitled to do so.  The evidence filed on behalf of the plaintiffs for the purposes of the hearing before me was therefore unchallenged in the sense that, no evidence in response was filed rebutting the same. 

Submissions

36.      Advocate Sharp for the defendant firstly accepted that it was right for me to proceed on the assumption, because this was a summary judgment application, that the defendant had carried out certain electrical works and that these works had not been tested.  He made this concession because this was a summary judgment application where his client had not filed an answer.  He was right to do so.

37.      He submitted that the key sentence in the email of 18^th June 2020 was that "The responses are believed to be correct and given in good faith, but the accuracy is not guaranteed".  The reply meant that the onus was on the plaintiffs to make their own enquiries.  The effect of this email was therefore that the plaintiffs could not rely on the replies to the enquiries.  The next part of the email made this clear by saying the onus was on the plaintiffs to carry out their own third-party searches, enquiries, surveys and inspections "that a prudent purchaser should undertake".

38.      Advocate Sharp contended that the wording in the email was sufficiently clear wording to exclude the plaintiffs' right to otherwise sue for misrepresentation or on the warranties based on Mackie v Scott [2018] JRC 102A.  He emphasised in particular paragraph 62 of that decision.  While Mackie was about the effect of "le tout tel" clause in sales of immoveable property, its reasoning also applied to vendors of property through a sale of shares (known colloquially as a share transfer sale) to say to a purchaser that they should make their own enquiries. 

39.      Advocate Sharp accepted that his argument did not allow vendors to give answers that were fraudulent, but vendors were entitled to say they were not guaranteeing the information they had provided.  In other words, by not guaranteeing the accuracy of any answers given, the entire responsibility for verifying the accuracy of any answers given passed to a purchaser. 

40.      Advocate Sharp was critical of the plaintiffs' pleading for not addressing the effect of the 18^th June 2020 email at all.  He was also critical of the first plaintiff's affidavit for only addressing the email by arguing it was in conflict with the warranty without addressing what it actually meant. 

41.      As the onus was placed on the purchasers (i.e. the plaintiffs) to verify the accuracy of the answers given, what the defendants had done or not done was irrelevant.  Laurie Nehwati's email of 18^th June 2020 was clear that the plaintiffs could not rely on the answers given and had to obtain their own surveys.  Whether the plaintiffs did so was a matter for them. 

42.      Advocate Sharp accepted as he had to that Mackie excluded deliberately false answers but argued that there was a distinction between dishonest answers and saying that the answers were not being guaranteed. 

43.      The warranty in schedule 3 at clause 13.5 was also of no application because of what was said in correspondence and the email of 18^th June.  There was therefore no need to modify the terms of the SPA.  The warranty did not advance the position of the plaintiffs any further because it did not change what had already been excluded by the 18^th June email. 

44.      Advocate Hoy submitted that there was a distinction between hidden defects and the ability to rely on information provided.  Just as for sales of immovable property and the effect of the le tout tel clause explored in Mackie, clause 6.9 of the SPA contained the equivalent provision.  However, the plaintiffs' complaint was about the warranty given by clause 6.1 and schedule 3 not being accurate.  As they were not accurate the plaintiffs were entitled to sue for misrepresentation.  This was recognised by clause 6.4.2 of the SPA which provided that any breach of representation, covenant, undertaking or warranty did not give rise to a right on the part of the plaintiffs to rescind the SPA.  By implication therefore clause 6.4.2 recognised that the claims for breach of representation could be brought. 

45.      The effect of clause 6.5.5 was to create express representations rather than the party having to rely on any implied warranty. 

46.      The effect of the 18^th June 2020 email was not to exclude claims in misrepresentation.  It also did not qualify the warranty given.  Representations were separate from warranties as was clear from paragraph 33 of Mackie so that claims for misrepresentation based on untrue answers could still be brought. 

47.      To give effect to the defendant's construction would create "a liar's charter" because there would be no point to these questionnaires even though there were now standard questionnaires in place for pre-contract enquiries prior to a sale of immoveable property approved by the Law Society of Jersey. 

48.      Advocate Hoy also contrasted the reply to requests 4.2 and 11.2 with the reply to 4.4 where the defendant had said in respect of enquiries about drains "rely on your own researches".  She had not made the same statement in respect of electrical systems when she could have done so.  He therefore suggested the defendant's argument, that the effect of the email of 18^th June 2002 was to override the express answers given to individual requests, was a perverse argument.

49.      Advocate Hoy also relied on Mackie at paragraph 62 which required answers to be accurately and correctly given.  As the introductory words to the replies themselves made it clear that the plaintiffs would be relying on the responses given, the onus was on the vendors to say if they did not have any knowledge, or to qualify their answers where their knowledge was limited. 

50.      Advocate Hoy further criticised the defendant because the email of 18^th June 2020 also stated that the responses were believed to be correct.  The plaintiffs, as purchasers, were entitled to rely on the answers given without making further enquiries.  

51.      The plaintiffs' fundamental position was that the defendant had not given a true answer.  What the case needed was a pleading from the defendant to answer the claims brought.  If the defendant's position had been that the plaintiffs should carry out their own enquiries or tests, the place to state that was within the replies to the enquiries not in a covering email.  The reliance on the email if allowed would permit purchasers to give untrue answers and would make the whole pre-contract enquiry process nugatory. 

52.      Advocate Sharp in reply pointed out that in his skeleton argument Advocate Hoy accepted that the 18^th June 2020 email was part of the replies to enquiries whereas his focus in oral argument was on the replies themselves rather than on the effect of the email. 

53.      Secondly, Advocate Sharp disagreed that his argument would render the whole process of pre-contract enquiries pointless.  A vendor was entitled to require a purchaser to make their own enquiries. 

Discussion and Decision

54.      While the defendant's application was based on the effect of the email 18^th June 2020 and therefore was a question of construction, I concluded that the correct starting point to reach my decision was the relevant background and evidence.  In particular, the affidavit of the first plaintiff, which was not challenged by evidence being filed in reply, showed an arguable case that the defendant, when she provided answers to request 4.2 and 11.2, knew that electrical works had been carried at the property during her period of ownership and that such electrical works were untested.  This is clear from the evidence of the electrician referred to in the first plaintiff's affidavit and in the electrician's letter to Mr Daniel Smith Senior Building Control Surveyor.  It is further supported by the answers to the WhatsApp conversations recorded in Mr Lawrynowicz's affidavit referred to at paragraph 32 above. 

55.      It is further arguable that the defendant knew that the answers she had given were untrue.  She could have filed evidence in response to the first plaintiff's affidavit but has chosen not to do so.  Accordingly, Advocate Sharp was right to concede that I should proceed on the assumption that the defendant knew that her answers about testing of electrical systems were untrue.  However, I would go further because as matters stand there is arguable evidence to show that the defendant knew her answers were untrue which evidence the defendant has chosen not to rebut. 

56.      The question I therefore have to consider was whether the email of 18^th June 2020 was sufficient to exclude any liability on the part of the defendant for the answers given where such answers are either arguably known to be untrue or are assumed to be untrue. 

57.      Before I explore this question any further, it is appropriate also to make certain observations about the plaintiffs' amended order of justice.  Although the essence of the plaintiffs' claim is that the defendant gave false answers, that claim is pleaded as a claim in misrepresentation rather than a breach of warranty.  However, clause 11.2 of the SPA provides as follows: -

"11.2 The Buyer acknowledges and agrees that in entering into this Agreement the Buyer does not rely on any undertaking, promise, assurance, statement, representation, warranty or understanding (whether in writing or not) of any person (whether party to this Agreement or not) relating to the subject matter of this Agreement, save as expressly set out in this Agreement."

58.      In other words, the parties appear to have agreed that all claims for misrepresentation are excluded unless they fall within the terms of the SPA which only allows for claims for breach of warranty.  I have made these observations because while they ultimately do not affect the decision I have reached, if the matter is not resolved the plaintiffs will need to amend their pleading in light of the observations in this judgment.  

59.      The other part of the plaintiffs' amended order of justice it is appropriate to refer to is that on the one hand the plaintiff alleges at paragraph 18(b) that the defendant's replies to the enquiries in relation to the electrical testing were knowingly false as well as being a misrepresentation.  However, at paragraph 22 the plaintiffs have withdrawn an allegation that the representations were made fraudulently in that the defendant knew that they were false.  There is potential for inconsistency between paragraphs 18(b) and paragraph 22 in relation to the allegation that the defendant knew that her reply to that electrical testing were false.  While that allegation may not be one of fraud it is one of dishonesty and so the pleading needs to be clear that dishonesty is being alleged. 

60.      By reference to the evidence before me summarised above an allegation of dishonesty is clearly arguable.  I therefore have no difficulty with the plaintiffs further amending their order of justice to plead such an allegation in due course on production of an appropriate amendment for consideration.  That amendment will also have to deal with whether claims for deliberate misrepresentation are excluded by clause 11.2 of the SPA. 

61.      The need for amendment to the plaintiffs' order of justice did not however affect the central question I had to decide namely the effect of the email of 18^th June 2020 and whether that email was sufficient to mean that the plaintiffs are permitted to rely on answers to enquiries either arguably known to be untrue or assumed to be untrue.  Amendments to pleadings would only be necessary if the email did not preclude a claim for breach of warranty. 

62.      In respect of the answers to requests 4.2 and 11.2, I regarded these as significant because the questions were binary in nature in this case.  What I mean by that is that they were questions in relation to electrical systems that were within the defendant's own knowledge.  In this case the defendant knew that electrical works had been carried out and knew that those works had not been tested because she and/or her partner on her behalf obtained a quotation for testing which they chose not to take up. 

63.      I have referred to the defendant's knowledge about her answers to these specific questions because I accept there will be other scenarios where answers to questions put in pre-contract enquiries are not known to a vendor, or a vendor may not have the requisite degree of knowledge.  The answer to request 4.4 about drains illustrates the point.  The defendant in this case made it clear that the plaintiffs had to make their own enquiries about drains and carry out their own surveys if they chose to do so.  The reply was therefore a clear transfer of risk from the vendors to the purchaser about whether the drains were in working order or not.  That is not surprising because an owner of a property being sold may well not know what the condition is of drains that are hidden from view. 

64.      Similarly, a vendor may not know the condition of other pipes or indeed wiring and so could again qualify any replies to make the extent of a vendor's knowledge clear.  In the present case both the current evidence and alternatively the assumption on which the defendant accepts I should proceed means that the defendant did know that certain electrical works had been carried out and those works had not been tested.  By contrast, the defendant did not know the general condition of entire electrical systems in the property which had been built a number of years before being acquired by the defendant.  What vendors should do in such circumstances is be clear about what they know and what they do not know so that prospective purchasers can then make an informed decision about the enquiries they wish to make or surveys they wish to carry out.  In this case the defendant could have replied by saying that certain electrical works had been carried out during her period of ownership which had not been tested but otherwise the defendant as vendor had no knowledge of the general state or condition of the electrical wiring at the property. 

65.      Such a reply was what Deputy Bailiff Le Cocq (as he was then known) had in mind in Mackie at paragraph 62 where he stated as follows: -

"62. Nor am I persuaded that the Plaintiff's interpretation would render it unsafe for any vendor to answer any pre-sale questions. In my view that might well be the case if one anticipates that the vendor's lawyers would answer such questions inaccurately or without due enquiry. It seems to me, however, that the Defendant's argument overstates the position. It will be perfectly possible for a vendor in answer to any question to express limitations on the extent to which they have made enquiries or the extent to which they have been able to research the point or indeed as to their knowledge generally. There may be answers to pre-conveyancing questions that can be answered with absolute certainty and clarity by a vendor and others which cannot. It is open to the vendor, in answering such questions, to express those answers in ways that make it clear that they can be relied upon as to their finality or accuracy by a purchaser or cannot. In other words there might be a positive representation or merely an answer not amounting to a representation that is as helpful as possible. That is a matter to be made clear on the face of the pre-contractual correspondence."  (Emphasis added)

66.      The defendant in the present case could have expressed limitations on the answers to the specific questions posed but chose not to do so in the answers themselves.  Yet, the question about whether they had tested the electrical systems was one that in this case the defendant was able to answer with absolute certainty and clarity as it was an answer within her own knowledge.  What Mackie expects is for a vendor's answers to be made clear on the face of the pre-contractual correspondence.  The replies to enquiries 4.2 and 11.2 on the arguable evidence before me or alternatively on the assumption that Advocate Sharp conceded should apply means, apart from the email of 18^th June 2020, were not clear in the manner expected. 

67.      Although Mackie is a case about the purchase of immovable property rather than an acquisition of such property by a purchase of shares in a company, in my judgment the observations in Mackie apply with equal force to an acquisition of such property by way of a share transfer.  The underlying issue is essentially the same namely purchasers are seeking information about a property to decide what tests or enquiries they might (or might not) wish to carry out or pay for. 

68.      There are also other helpful parts of Mackie it is appropriate to refer to.  As noted at paragraph 33 there is no obligation on a purchaser to verify the truth of representations of a fact made by a vendor.  Unless the email of 18^th June 2020 saves the defendant, the plaintiffs were therefore otherwise entitled to rely on the answers to the replies to enquiries given in relation to electrical systems. 

69.      Mackie is also pertinent because the terms of clause 6.9 of the SPA that state "the buyer accepts the apartment and the property in the state and condition in which they are found at the completion date, with all and any hidden or apparent defects".  This is the equivalent contractual provision to the "le tout tel" clause that appears in sales of immoveable property.  The observations of Deputy Bailiff Le Cocq about such a clause at paragraph 54 therefore apply with equal force to clause 6.9 At paragraph 54 he stated as follows: -

"54. It seems to me that those words must be taken together and mean that the purchaser is taking the property with all its apparent or hidden defects. It does not expressly deal with or cover the position where a representation has been made upon which the purchaser has relied."

70.      The Mackie case however is different in one respect from the present case.  In the Mackie there were no allegations that any representations or confirmations given by the Defendant were deliberately false but merely they were representations that were wrong in fact (see paragraph 7).  In Mackie it was also conceded that the le tout tel clause did not cover defects where there was fraudulent misrepresentation on the part of the defendant in relation to the existence of such defects (see paragraph 48).  Deputy Bailiff Le Cocq appeared to have proceeded on the basis of this concession at paragraph 61 where he stated: -

"61. If the Defendant's interpretation of the clause is correct that would render nugatory much if not all of the pre-contractual correspondence and inquiries. It would not matter what answer was given to any question provided the answer was not deliberately misleading or false."

71.      I have referred to this passage because the le tout tel clause or the equivalent in clause 6.9 cited at paragraph 69 above do not exclude liability for deliberate misrepresentations.  Yet it is conceded that I have to proceed on the assumption that the defendant knew the answers to the replies to enquiries 4.2 and 11.2 were known to be false.  I also repeat my view that there is sufficient evidence to show that those replies were arguably known by the defendant to be untrue.  This is not conducting a mini-trial but simply is a conclusion made on the basis that the defendant has chosen not to respond to such arguable evidence.

72.      I therefore turn to the central question which is whether the email of 18^th June 2020 and what it means, in particular phrase "the accuracy is not guaranteed".

73.      I firstly observe that the email was sent by Le Gallais & Luce.  There is no evidence from Le Gallais & Luce about what this email might mean.  The first part is an exclusion of liability on the part of Le Gallais & Luce for the replies given.  It is not clear to me whether the next sentence containing the phrase "the answers are not guaranteed" is therefore a statement from Le Gallais & Luce or from the defendant or both.  The position is not clear without evidence from the author of the email. 

74.      The email then contains a warning that the replies do not obviate "the need to make appropriate title searches, third party searches, enquiries, surveys and inspections that a prudent purchaser should undertake, and which will be assumed by the Vendor to have been undertaken."

75.      The difficulty with the submissions put by Advocate Sharp, that this warning excluded any liability for the answers given to the enquiries made, is that if I were to have accepted this argument then the system of pre-contractual enquiries would serve no purpose.  Purchasers could not rely at all on any replies given.  The present case illustrates this position because for many of the replies the defendant chose to give express confirmations without any qualifications.  Although the vendor might have taken a more cautious approach and have responded to specific enquiries with more precise descriptions of their knowledge, as the Mackie case at paragraph 62 contemplated, the defendant in this case chose not to and instead gave a series of express confirmations apart from in respect of drains.  Yet Advocate Sharp's arguments would mean that these replies despite all the express confirmations serve no purpose.  A vendor could say what they liked as the accuracy was not guaranteed. 

76.      The view I reached was that the defendant should not be permitted to qualify those answers in a covering email with a generic statement of the accuracy of the answers is not guaranteed.  While that statement is understandable in respect of information in the hands of third parties which can be found by enquiries e.g. of the Planning Department or through checks of Share Registers to give two examples, I concluded that such phraseology is not sufficient to exclude liability for answers directly known to a vendor.  To exclude such liability more is required.  Purchasers such as the plaintiffs will focus on the replies to the specific questions which are wide ranging in nature to decide what further enquiries or investigations they might wish to carry out.  A more generic email, which I accept in this case forms part of the pre-contractual correspondence, requires more if a vendor is to exclude liability completely for the answers given.  Otherwise the pre-contractual enquiry process would become pointless if a phrase such as the accuracy is not guaranteed can exclude liability altogether for detailed answers given to enquiries. If that is a vendor's position, a vendor should make that clear in the answers to the precontract enquiries themselves and by seeking to amend any contractual documentation so that no warranties are given.  

77.      Again, Mackie v Scott is helpful in support of the conclusion I reached.  At paragraph 57 Deputy Bailiff Le Cocq stated: -

"In my judgment clear wording would need to be incorporated into any such provision to remove the Plaintiff's right to sue on misrepresentation. No such wording is included, and it would not have been difficult, had that been the clear intention in the clause, to include such wording."

78.      There is no such wording in the replies to the enquiries themselves; in my judgment the wording in the email is too generic to exclude liability for answers known to a vendor.  Whether that liability is for deliberate misrepresentation or for breach of warranty does not matter; the wording in either scenario was not sufficient to exclude liability.  To exclude such liability what is required is clear words (see Mackie v Scott at paragraph 58) and the quotation from English text on the interpretation of contracts which states, "any ambiguity or lack of clarity must be resolved against that party."  There was insufficient clarity in the email of 18^th June to exclude the reliance that a purchaser can place on answers to representations at least where those answers are matters within a vendor's own knowledge.  The phrase relied upon cannot also be used to permit vendors to give answers they know to be untrue.

79.      For all these reasons the defendant's application for summary judgment was dismissed. 

80.      Finally, I wish to record that following the dismissal of the summary judgment application I immediately stayed proceedings other than the costs of the present application to enable the parties to mediate their differences. 

81.      This was because I was concerned that these proceedings may become uneconomic if they not uneconomic already.  While the plaintiffs' claim is for a sum in excess of £100,000 for the entire cost of repair works said to be required, whether that sum is justified is an entirely separate question from whether or not the arguable case I have found exists turns out to be justified at trial.  I note that initially the cost of repair was first put at a much lower figure of just under £30,000 which would have meant the proceedings should have been issued in the Petty Debts Court. 

82.      While the plaintiffs are of course entitled to seek whatever damages they consider they have suffered, the damages they can claim are those that flow from a breach of warranty having been established and/or a deliberate misrepresentation being proved at trial.  It is significant to remember that the defendant appears to have carried out certain electrical works to the property, not a complete rewiring.  Some of the wiring appears to have been installed when the property was built or at least before the defendant's period of ownership.  It will therefore be an issue for trial, if the matter does not settle, to explore the extent of repair works required following on from any deliberate misrepresentation or breach of warranty proved to have been made.  However, whatever the true cost of any repairs, these proceedings are at the lower end of the Royal Court's jurisdiction; they therefore cry out for parties to talk to each other to try to resolve their differences, however strongly they feel about the merits of the case. If they do not the parties will quickly incur more costs if they have not done so already. than is at stake in the present action. 

83.      If the case does not settle during mediation, then the parties are required to return for a directions hearing before me on which the question of the further amendment to the plaintiffs' pleading and the filing of an answer by the defendant will be explored. 

Authorities

Royal Court Rules 2004.

Building Bye-Laws (Jersey) Law 2007.

Mackie v Scott [2018] JRC 102A.