William Sindall Plc v Cambridgeshire County Council
Court of Appeal
Citations: [1994] 1 WLR 1016; [1994] 3 All ER 932.
Facts
The buyer agreed to buy land from the seller for £5,082,500. Clause 14 of the contract stated that the land was sold subject to any third-party and public rights over it. This did not prejudice the seller’s duty to disclose all such rights known to it. Special condition 17(e) stated that the buyer was deemed to purchase with full notice all such rights, without the seller needing to define what they were in advance.
Before purchase, the seller told the buyer that he was not aware of any rights or liabilities encumbering the land other than those mentioned in the contract. In fact, there was a private sewer under the land. The buyer found the sewer after purchase, and realised that the land was worth less than half or what they paid. They told the seller that they were rescinding the contract for misrepresentation and common mistake. They later applied to the court for a declaration to that effect.
Issue(s)
- Could the claimant void the contract for misrepresentation or mistake?
Decision
The Court of Appeal held in favour of the seller. Properly construed, the contract put the risk of unknown rights and liabilities on the purchaser. This left no possibility for the contract to be voidable for mistake.
Additionally, the seller had not made any misrepresentation. They had truthfully disclosed all rights and liabilities that they were aware of, making clear that the disclosure only included those rights and liabilities they were aware of. They did not represent that there were no other rights or liabilities encumbering the land. At most, clause 14 and the seller’s statements represented that the seller had made reasonable investigations into the matter. The seller had done so.
In any case, the sewer did not seriously interfere with the use of the land. Even if the buyer had established misrepresentation, the court did not believe that it would not be equitable to rescind the contract. At most, the court would have awarded damages in lieu of rescission under s.2(2) of the Misrepresentation Act 1967.
This Case is Authority For…
This case mainly considers the equitable doctrine of mistake, instead of the common law doctrine. This equitable doctrine was created in Solle v Butcher [1950] 1 KB 671. This doctrine was subsequently abolished in Great Peace Shipping Ltd v Tsavliris (International) Ltd [2002] EWCA Civ 1407.
Hoffman LJ noted that clauses 14 and special condition 17(e) were not clauses excluding liability for misrepresentation. Instead, they made clear that no misrepresentation had been made in the first place. In particular:
‘They qualify the obligations to convey as beneficial owner and give vacant possession and therefore qualify any representation which could be implied from having undertaken these obligations.’
The clauses therefore did not fall to be investigated for unreasonableness under s.3 of the Misrepresentation Act 1967. This shows that not all clauses which prevent liability for misrepresentation are exclusion clauses.
Other
The court explained that the measure of damages under s.2(1) and s.2(2) of the Misrepresentation Act 1967 are different.
- The measure for s.2(1) is ‘the damage flowing from having entered into the contract’.
- The measure for s.2(2) is the ‘damage caused by the [contractual subject matter] not being what it was represented to be’. This is normally calculated as the difference between the value of what the claimant thought he was buying and what he actually received. The compensation awarded should not exceed that which would be awarded for breach of contract had the representation been a term of the contract.
