fbpx

Failure to Reveal All Proves Costly for Developer

10th April 2017 By Arman Khosravi

The standard pre-contract enquiries made by a solicitor when a client is intending to purchase a property include querying whether there are any disputes which may affect the value of the property being purchased.

When a woman bought a flat in a block of flats for £240,000 from the developer in 2012, the replies to the relevant questions were anodyne. However, a number of issues were already extant relating to the inadequacy of a biomass boiler used for hot water and heating in the block, the excessive levels of service charges imposed on the flat owners and the refusal by the developer to establish an independent management company.

She sued the developer for misrepresentation and claimed damages based on the difference between the market value of the flat based on a full knowledge of the circumstances and what she had in fact paid.

The developer denied that there had been any misrepresentation.

The court found that as a matter of fact the boiler issues were ones about which the developer had made a misrepresentation and ruled that it should pay her £25,000 in compensation.

The developer appealed and pointed out that when the woman sold the flat and moved on, she made a profit of £35,000. By that time, the heating issue was being rectified under the guarantee, so, argued the developer, while she had disclosed the issue to her purchaser, it did not affect the selling price. She had therefore made no loss.

Lord Justice Floyd of the Court of Appeal commented in his judgment, "The contention that a wrongdoer should be able to take advantage of a rise in the market value of an apartment when he had induced the purchase by a misrepresentation is, at first sight, rather surprising."

Although in some cases the profit from a later event could be brought into account, this was not one of them. The existence of an insurance policy (an NHBC guarantee) relating to the boiler was the reason why the woman had not suffered a loss and there is an established principle that where a claimant has been able to use an insurance policy to reduce or extinguish her loss, this is not to be brought into account.

Accordingly, the developer’s appeal was dismissed.

Source: Concious

Latest News

Tenants Can Purchase Freehold When Landlord Cannot Be Found

11th June, 2024 By

The Leasehold Reform, Housing and Urban Development Act 1993 gives qualifying leaseholders the right to join together to buy the freehold of their properties – a process known as collective enfranchisement. A recent case demonstrated that this right can be exercised even when the landlord cannot be found. The leaseholders of two flats in a terraced house wished to purchase it from the landlord, but were unable to ascertain his whereabouts and therefore could not serve notice on him under Section 13 of the Act. They therefore applied for an...

Court Refuses to Set Aside Divorce Order Applied for by Mistake

6th June, 2024 By

While the courts have a range of powers to set aside orders, they will only exercise them in limited circumstances. In a somewhat surprising case that has attracted much comment, the High Court declined to set aside a final order of divorce that had been applied for by mistake. A couple separated in January 2023, after more than 21 years of marriage. In October that year, while financial remedy proceedings were still ongoing, the wife's legal representatives inadvertently applied for a final order of divorce in respect of her instead...

Waiting Time for Grants of Probate Falls

3rd June, 2024 By

Following concerns last year about delays in processing probate applications, recent figures from HM Courts and Tribunals Service show that waiting times for grants of probate are continuing to improve. The average time from submission of a probate application to probate being granted fell to 11.3 weeks in March 2024, a decrease from 13.7 weeks in February and 13.8 weeks in January. This is the lowest figure since March 2023, when the average was 10.8 weeks. The longest waiting time since then was in November, at 15.8 weeks: that month,...

Late Appeal Against Tax Penalties Rejected

31st May, 2024 By

It is incumbent on taxpayers to make sure they fully comply with their obligations to file returns and pay any tax due. The point was illustrated by a recent case in which a taxpayer whose return had not been received by HM Revenue and Customs (HMRC) failed to persuade the First-tier Tribunal (FTT) that he should be permitted to appeal against the resulting penalties. On the evening of 31 January 2014, the man had completed his 2012/13 Income Tax return on HMRC's website. Shortly afterwards he went to Cyprus, and...