Butler- Creagh v AIDA Hersham

In deceit, a representee need not verify a representation before relying on it, particularly where the representor creates urgency to discourage investigation. A representation of opinion may be actionable where it conveys an assertion of genuine belief or relevant expertise. The representation must have been a substantial factor in the claimant’s decision. Damages are assessed at the date of the transaction and may include consequential loss, but the claimant must prove that the expenditure flowed from the deceit and was reasonably incurred to mitigate loss or preserve the asset. A quantum meruit founded on unjust enrichment requires proof of enrichment and an evidential basis for valuation.

The proceedings concerned the purchase of Fawley Court. Richard Butler-Creagh claimed a £5m fee from Aida Hersham for allegedly allowing her to take over his position in the proposed purchase. Cherrilow Ltd, the purchasing vehicle, claimed damages for deceit and a declaration that it owed him nothing. Butler-Creagh brought a non-contractual cross-claim against Cherrilow for services allegedly rendered.

The central issues were whether a concluded oral agreement existed, whether representations induced Cherrilow to purchase the property, the recoverable loss, and whether Butler-Creagh had any quantum meruit entitlement.

1. Butler-Creagh’s contractual claim and quantum meruit claims. No concluded oral agreement for a £5m fee was established. The alleged bargain was inherently unclear, was contradicted by the subsequent drafting process, and was unsupported by reliable evidence. The two later documents relied upon did not confirm the existence of the alleged oral agreement. The quantum meruit claims also failed. Butler-Creagh could not demonstrate an enrichment of Cherrilow, and there was no reliable evidence defining the services, their value, or any accrued entitlement.

2. Deceit. Cherrilow was induced to purchase by material dishonest representations, including claims concerning exclusivity, value, development prospects, relevant experience, funding and urgency. Representations made to Hersham could be passed on to, and relied upon by, the corporate vehicle which Butler-Creagh knew was intended to acquire the property. Cherrilow did in fact rely on them, and they were at least a substantial factor in the decision to exchange contracts.

3. A statement of opinion may constitute an actionable misrepresentation where it carries an assertion of genuine belief or implies that it is based on relevant expertise. The claim that Butler-Creagh had extensive relevant development experience was factual in character and supported the actionable character of his valuation and development estimates.

4. Cherrilow was not barred from relying on the representations because it failed to make independent checks. The law imposes no general duty to verify a representation before acting upon it, and contributory negligence is not a defence to deceit where the defendant deliberately created urgency to discourage investigation.

5. Damages. The appropriate transaction date was 10 December 2008, when Cherrilow became committed to the purchase. The basic loss was the difference between the property’s true value at that date and the price paid. Consequential losses were recoverable in principle, but expenditure could not be recovered merely because it had been incurred. It had to be shown to result from the deceit and to be reasonable or necessary to mitigate loss or preserve the asset. The claim succeeded, subject to the unresolved abatement issue and the limits identified in the judgment.

6. Cherrilow’s claim in deceit therefore succeeded. Butler-Creagh’s claim against Hersham and cross-claim against Cherrilow were dismissed.