Hardy v Griffiths: let the buyer beware
Julia Madden, 1st February, 2016
Mr and Mrs Griffiths thought they’d found the perfect house in Laughton Manor. A 150-year-old Victorian Manor House set close to the South Downs complete with 44 rooms, 12 acres of land, a cottage, lake and helicopter pad. But looks can be deceiving…
Mr & Mrs Griffiths originally agreed to buy the property for £4.5 million.
As part of the conveyancing process, Enquiries before Contract were raised. These included the question of whether the property had been subject to flooding, rising damp, or wet and dry rot.
The form of the question made it clear it wasn’t intended to be a substitute for a survey. Rather it was asked for historical perspective only.
In response, the sellers answered they were not aware of any such issues. And that the buyers will appreciate it’s an old property and no warranty as to condition was being given.
Before contracts were exchanged Mr & Mrs Griffiths decided to pull out, stating they agreed to pay too much for the property. It appeared they hadn’t read the replies to enquiries.
When the property went back on the market, Mr and Mrs Griffiths started negotiating again. The sellers accepted their offer of £3.6million, subject to exchange of contracts taking place within 24 hours.
They didn’t get a survey or even consider the extent of the land contained in the title. Despite the fact that, since they had last viewed the property, the sellers had sold off a plot of land. They exchanged contracts the next day and paid a deposit of £150k
The contract was in a fairly standard form. It contained the usual clauses, such as the buyer confirming that it accepts the property in the physical state it is in at the date of exchange.
It also contained a special clause. This stated that the buyer had not relied on any oral or written representations, save for representations confirmed in writing by the sellers’ conveyancers.
There was a lengthy period of delay with the parties both agreeing to extensions of time to the completion date.
Mr and Mrs Griffiths then tried to arrange a mortgage. The valuer identified the property was affected by dry and wet rot and rising damp.
After some wrangling, the sellers lost patience and served notice to complete, which Mr and Mrs Griffiths failed to comply with.
The sellers then rescinded the contract and sued Mr and Mrs Griffiths for the balance of the 10% deposit (£210,000).
Mr and Mrs Griffiths argued that it was the sellers who were in breach of contract. And they were entitled to withdraw and get a refund of their £150k deposit.
They alleged they were entitled to do so because:
- The sellers had been reckless in not giving them the full picture about potential damp problems
- The sellers had misled them during oral conversations about the condition of the property and the extent of the land sold off
- The written Replies were inaccurate because they didn’t disclose the existence of damp
The basic common law rule of caveat emptor (buyer beware), as confirmed by the standard conditions, applied.
A vendor of land is not required to disclose physical defects – it’s up to the buyer to investigate the property. In this case, the buyers chose not to get a survey.
As fraud had not been alleged, there was no contractual basis for the buyers to escape the contract on the basis of an alleged reckless failure to inform the buyers about damp and/or alleged misrepresentation.
In any event, the judge, Amanda Tipples QC, found the sellers had not even been reckless or made any misrepresentation. They hadn’t known there was damp, and she preferred the sellers’ evidence on what had been said to the buyers when they visited the property.
She put the knife into Mr Griffiths saying that he refused to give simple answers to the questions put to him in the witness box because he couldn’t resist arguing his case.
The judge also held that the non-reliance clause was reasonable and enforceable. She argued Mr and Mrs Griffiths could have raised the point in correspondence and got specific assurances.
As for the Enquiries before Contract, the judge found the sellers’ responses truthful. And there was no evidence to show that Mr and Mrs Griffiths had even read them.
The judge concluded that the sellers were entitled to rescind and get the deposit topped up to 10%. Even though they re-sold the property and didn’t make a loss.
What this means for you
This case is a salutary reminder to get a building survey before you exchange contracts, so you know exactly what you’re buying.
All in all, a very sorry tale. But the result is hardly surprising.
What is surprising is the identity of the claimants. Mr Griffiths is in fact a top QC at the London bar and Mrs Griffiths is a top commercial solicitor.
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