Quilter v Hodson Developments Ltd

In a claim for misrepresentation by omission in a property sale, a dispute may be inferred from persistent dissatisfaction, communications and the surrounding evidence. The absence of a formal complaint or use of the word dispute is not decisive. An appellate court should not disturb primary factual findings supported by evidence, or a trial judge’s choice between competing expert valuations after hearing the experts. Damages are ordinarily the difference between the property’s represented value and its true value at the transaction date. A later sale is relevant only where it forms part of continuous dealing or reflects an obligation to mitigate. An insurance-like benefit acquired with the transaction is not ordinarily deducted.

Alison Quilter purchased an apartment from Hodson Developments Limited after pre-contract enquiries asked about existing disputes affecting the property. She alleged that Hodson’s omissions impliedly represented that no relevant disputes existed, including disputes about the communal biomass heating system.

The Central London County Court rejected two alleged disputes but found that continuing heating and hot-water problems constituted a dispute which should have been disclosed. The judge awarded £15,000, calculated by reference to diminution in value, and awarded Ms Quilter 70% of her costs.

Hodson appealed on the factual findings, the use of hearsay and technical reports, the assessment of damages following Ms Quilter’s later sale, the valuation evidence and costs. The central issues were whether the heating problems amounted to a relevant dispute and whether the later sale or NHBC guarantee reduced the recoverable loss.

The appeal was dismissed. All six grounds of appeal failed.

1. The finding that there was a dispute about the biomass system was a conclusion of primary fact. There was evidence from residents of persistent dissatisfaction and notification of that dissatisfaction to Hodson. The absence of the word dispute in correspondence or minutes did not prevent the judge from drawing the inference. The extent of the defects was preliminary; the essential issue was whether there was a dispute. The finding was plainly open to the judge and was not susceptible to appellate interference.

2. The judge’s reliance on hearsay evidence was secondary. The important evidence came from live witnesses, whose evidence supported the finding. A subsidiary reference to hearsay did not vitiate the conclusion. The judge was also entitled to prefer live evidence to service documents produced late in the trial.

3. The MCA report was capable of supporting the conclusion that the system had performed poorly, notwithstanding its later withdrawal. The NHBC report was prepared later, but remained capable of supporting the conclusion that the system had not worked satisfactorily. The judge was entitled to take both reports into account.

4. The normal measure of damages for the misrepresentation was the difference between the property’s actual value and the price paid. A later profit is brought into account only where the later transaction forms part of the continuous dealing which gave rise to the wrong. Hussey v Eels [1990] 2 QB 227 supported that approach. A later sale undertaken in the ordinary course of domestic life was not such a transaction. The different result in Kennedy v van Emden [1996] P.N.L.R. 409 was explained by the claimant having obtained what she had bargained for. The removal of the relevant prohibition by the Housing Act 1988 did not alter that distinction.

5. The NHBC guarantee was in the nature of insurance. Under the principles reflected in Bradburn v Great Western Railway (1874) LR 10 Exch 1 and Parry v Cleaver [1970] A.C. 1, a benefit from insurance acquired as part of the transaction was not brought into account to reduce the claimant’s loss.

6. Once the factual findings were upheld, the challenge to the expert valuation could not succeed. The judge had heard the competing experts and was entitled to choose between their valuations. The costs order was also within the proper range. An issue-based approach was not required to be applied mechanically, and an appellate court should not interfere where the order was one a reasonable judge could make.

• Court of Appeal (Civil Division): dismissed Hodson Developments Limited’s appeal against the judgment of HHJ Saggerson.
• Central London County Court: found a relevant dispute concerning the biomass heating system, awarded Alison Quilter £15,000 in damages and awarded her 70% of her costs.