The case of Harsten Developments Ltd v Bleaken serves as a useful reminder of the importance of providing accurate responses to pre-contract enquiries, and describing a property correctly in sales particulars. In this case, the Bleakens, who were selling land forming part of their property for development, discovered to their cost the consequences of providing inaccurate information.
After purchasing the property in 2006, the Bleakens obtained planning permission for the construction of a small house on part of the property, and then sold that building plot by auction in October 2007. Following the purchase of the building plot, the developer discovered that the eastern boundary was not where it had thought it was and that there was a pipe running under part of the land.
The Bleakens stated in the Seller's Property Information Form (SPIF) that the box hedge was either owned by the neighbouring property or that they accepted responsibility for it. However, this was not consistent with the auction particulars which stated: "The box hedge to the rear and east will be owned by the plot and it is assumed that these will be removed to provide the above quoted dimensions."
If the majority of the box hedge was not included in the sale, the house permitted by the planning permission could not be built on the plot.
There was a pipe running under part of the building plot, which had not been revealed in the SPIF. The Bleakens' case was that they did not know the pipe was there. However, evidence was given at trial by the lady who had sold the property to the Bleakens in 2006 that she had revealed the presence of the pipe to them, and the judge preferred her evidence to that of Mr Bleaken. The developer's case was that the pipe meant that the house would have to be redesigned and this would entail a new planning permission.
Points to note
The auction particulars contained the usual disclaimer that whilst they were believed to be correct, they did not constitute any part of the offer or contract and any intending purchaser must satisfy himself as to the correctness of each of the statements. The judge was of the view that although the particulars stated that they were without responsibility on the part of the vendor, it did not prevent the reference to the box hedge having the character of a representation. Whilst the Bleakens should have checked the auction particulars and noticed that the comment about the ownership of the box hedge differed from that given by them in the SPIF, the judge's decision is rather surprising, given that the developer, as part of the auction pack, had a copy of the SPIF and should have been alerted to the discrepancy in information about the ownership of the box hedge.
It would be interesting to know whether the judge would have come to a different conclusion if it had been a straightforward sale and purchase, rather than an auction. In such a case, would the judge have said that the developer should have made more enquiries to ascertain the ownership of the box hedge boundary?
The developer purchased the property at the height of the property market in 2007. If it had not done so, one may question whether it would have been so keen to rescind the contract and get the purchase price back. The claims that the developer submitted in relation to its damages were rejected by the judge as being "highly suspect". Was it just a case of a developer not wanting to progress with the development of a property that it may not be able to sell during a recession?
In relation to the pipe, if the Bleakens did know about it, they should obviously have revealed this in the SPIF. However, should the developer have discovered it on an inspection of the property? The judge stated that the manhole into which the drain ran might have led to a person becoming aware of the drain, but that the manhole was not on the property.
The lesson from the case is that sellers cannot rely on the principle of "buyer beware"; replies to pre-contract enquiries, and information contained in sales particulars, must be carefully checked. The judge reminded the Bleakens that they had an obligation to make certain themselves that replies given in the SPIF were accurate; it was not enough just to copy out the replies that they had been given when they had purchased the property.
Failure to provide accurate information could, if it is relied upon by the buyer, lead to an action for misrepresentation. In this case, the contract was rescinded, the land returned to the sellers and the purchase price returned to the buyer, almost five years after completion.