It
is standard in commercial property for the Seller to be required to provide
replies to enquiries. This is usually done in the form of CPSEs (commercial
property standard enquiries).
In
a recent case (Greenridge Luton One Ltd and another v Kempton Investments Ltd
[2016] EWHC 91 (Ch), the courts showed how they deal with misrepresentation in
a routine commercial situation.
Brief
facts of the case
In
Greenridge, the Seller’s replies to enquiries did not disclose that the current
tenant had withheld service charge payments on account of an ongoing
disagreement with the Seller. Contracts were exchanged and a deposit paid.
Following exchange of contracts, the Buyer became aware of the service charge
dispute and subsequently rescinded the contract under the terms of the
contract. The Seller refused to return the deposit, which in turn resulted in
the commencement of the proceedings by the Buyer.
The
matters of question in this case were; whether a false representation had been
made to the Buyer during the negotiations of the contract or if it had been
made in the contract itself, whether the Buyer was induced to enter into the
contract by reason of any misrepresentation, whether any misrepresentations
were attributable to fraud or recklessness and whether the Buyer was entitled
to damages.
The
High Court held that the Buyer was entitled to terminate the agreement and have
its deposit returned because of the false representation that there were no
service charge disputes. The Buyer was also entitled to damages for the deceit
which amounted to £395,948. The damages awarded by the court were for the costs
incurred in the purchase which had been wasted as a consequence of the misrepresentation,
that is, professional, survey fees and other costs relating to the proposed
structuring of the purchase.
Be
cautious
Answering
CPSEs (commercial property standard enquiries) can be a laborious task for the
seller particularly where there are time constraints. It is, however, important
to ensure the replies are not overlooked and are considered in full and with
accuracy. To avoid such a claim it is
important that sellers ensure that buyers are provided with up-to-date replies
to enquiries and kept informed of any changes.
Tolhurst
Fisher has one of the largest specialist property teams in the region and, as
such, is ideally placed to advise on this and any other property related
matter.
For
further information contact us on 01702 352511
