Eryl Rosser v Pacifico Limited

Under Misrepresentation Act 1967, a seller’s description of property may represent that it is lawfully capable of being used for the described purpose. An express statement that the seller is unaware of planning breaches may imply that the seller has reasonable grounds for that belief where the seller has superior information. A purchaser’s ability to make independent enquiries is not, by itself, a defence to a misrepresentation claim. Damages are assessed on the tortious measure, including loss flowing from the transaction, but not expenditure which provides the claimant with a corresponding benefit.

The claimant purchased a leasehold apartment from the defendant. The property was marketed and documented as having two second-floor bedrooms, one served by a Velux window. The window lacked planning permission and had to be removed, making that room unsuitable for use as a bedroom.

The claimant alleged that the defendant represented both that the room was capable of lawful use as a bedroom and that there were no works lacking necessary consents. She claimed damages under sections 1 and 2(1) of the Misrepresentation Act 1967.

1. Liability. The claim succeeded. References to the front second-floor room as a bedroom, considered objectively and in context, represented that it was at least capable of lawful use as a bedroom. The Law Society Property Information Form also carried an implied representation that the defendant had reasonable grounds for believing that no work lacked the necessary consents.
2. The defendant had superior information because it had acquired and developed the property and knew what work had been undertaken. Its director had not made the reasonable enquiries required before answering the form. The fact that the purchaser could have made further enquiries was no defence. The representations were false, were relied upon, and caused loss.
3. Damages under the Misrepresentation Act 1967 were assessed on the tortious measure. The capital loss was the difference between the price paid and the property’s value without the Velux window and the resulting bedroom use. The court awarded £30,000, £1,399.60 for related stamp duty, £2,535 for removing the window and making good, and £208.32 for professional advice.
4. The claimant had reasonably mitigated her loss by arranging removal of the window with other works. The cost of installing a bathroom was not recoverable: it did not flow from the misrepresentation and provided a corresponding benefit.
5. Judgment was entered for the claimant in the total sum of £34,142.92.