OWNERSHIP OF LAND: REPLIES TO ENQUIRIES AND CONSEQUENCES OF PROVIDING FALSE INFORMATION

The case of Greenridge Luton One Ltd & Anor v Kempton Investments Ltd [2016] EWHC 91 (Ch) (22 January 2016) gives a stark example of the consequences of providing false information in replies to enquiries.

In relation to a sale of office buildings near Luton Airport, the seller (with the help of his solicitor) had indicated in replies to pre-contract enquiries that no disputes existed and that there were no service charge arrears.

In fact, by the time of sale, the solicitor had for some time been involved in extensive correspondence with one of the tenants, who disputed the level of service charges and had begun to withhold payments of the quarterly service charge demand as a result. The pre-contract enquiries had not been updated to reflect this.

The sale went ahead and the buyer only later found out about the service charge dispute.

The court held that:

• Untrue representations had been made
• The buyer had relied on those representations and that they were induced to enter into the contract as a result of the misrepresentations
• Because the untrue representation that there were no arrears of service charge resulted from fraud or recklessness, the buyer was entitled under the contract to have its deposit returned.
• The buyer was entitled to damages of £395,948 in respect of costs incurred in relation to its prospective purchase of the property, which had been wasted following the rescission of the contract.