Doe & Anor v Skegg & Anor

In a property sale, questions in a seller’s property information form must be construed according to their ordinary and commercially relevant meaning. A dispute may include continuing objectionable conduct that has led to a threat of legal proceedings, even where no proprietary right is contested. A letter concerning repeated trespasses may affect the property and fall within a question about letters sent affecting it in any way.

Under Misrepresentation Act 1967, section 2(1), the representor must prove reasonable grounds for believing the representation to be true. Fraud requires the claimant to prove knowledge of falsity, lack of belief in truth, or recklessness. Fraud may be inferred from the circumstances and the maker’s conduct.

The claimants purchased a residential property from the defendants after receiving completed seller’s property information forms. The forms contained negative answers to questions concerning disputes, complaints, and letters or discussions affecting the property.

Before completion, the defendants had experienced continuing difficulties involving trespasses and objectionable conduct by a neighbouring resident. The first defendant had written to the resident’s parent threatening legal proceedings, but the form did not disclose the matter.

The issues were whether the relevant questions covered the circumstances, whether the answers were false, whether the defendants lacked reasonable grounds for believing them to be true, and whether the answers were fraudulent. The trial concerned liability only; questions concerning the nature and quantum of damages were reserved.

1. Outcome. The claim succeeded on liability. The assessment of loss and the nature of recoverable damages were reserved.
2. Construction of the form. The question asking whether the sellers knew of any disputes about the property was not confined to disputes involving asserted proprietary rights. A dispute existed by the date of the threatening letter because the continuing conduct had resulted in a demand that it cease and a threat of litigation. The dispute was about the property because it involved trespasses. The negative answer to question 2.1 was therefore false.
3. The question asking whether the sellers had sent letters affecting the property in any way was of wide scope. The threatening letter concerned repeated trespasses onto the property and fell within the question. The negative answer to question 3.1 was also false. The claim based on question 2.3 failed because the letter complained about the son’s conduct and requested his parents’ intervention; it was not a complaint about conduct by the neighbouring owners. Questions 2.2 and 3.2 were not relevant to the dispute.
4. Statutory misrepresentation. Under section 2(1) of the Misrepresentation Act 1967, damages were recoverable unless the defendants proved that they had reasonable grounds to believe, and did believe up to the contract date, that the representations were true. They failed to discharge that burden.
5. Fraud. The claimants bore the burden of proving fraud. The court inferred that the first defendant knew the significance of disclosing the dispute, deliberately considered whether to disclose it, and withheld it because disclosure might prevent a sale or reduce the price. The representations were therefore made knowingly untruthfully or without belief in their truth, and were fraudulent.

First-instance decision. No prior or subsequent appellate decision is stated in the judgment.