Case for misrepresentation - or not?

[horleyox]

I am a first time poster and first time litigant, so my apologies for this outpouring...


I purchased a listed property from a BtL landlord in August 2014. I needed to complete within 3 weeks for personal reasons. All seemed in order until my own research identified planning and building control issues with the property that had not been disclosed in the SPIF or by my solicitor's searches and additional enquiries. I attributed a general lack of compliance/paperwork to the death of her son in the property - advised by a neighbour - around the same time as these works took place.


I requested an indemnity policy or £30k price reduction for three specific potential liabilities (no completion certificate for some works carried out in 2010, no planning permission for a balcony that had been installed, and a claim of water ingress to neighbouring property that was apparently still 'currently being investigated but all indications suggest not to blame". The vendor agreed to a £15k price reduction and we completed the transaction.


Within weeks I discovered that the vendor had already spent £2k on unsuccessful repairs on the drain system to overcome the neighbour's water ingress issue. A month before she put the property on the market the managing agent had advised her that the specialist contractor recommended the next step to sorting the problem was to rip out the kitchen and dig out the concrete ground floor.


I discovered widespread woodworm, wet rot and structural issues - all well covered up and not identified by my limited specialist survey pre-contract that was arranged to address evident rising dampness on the ground floor (failed DPC).


I then discovered the boiler was illegally installed, having been supplied by the vendor's ex-husband and installed by a mate of the appointed builder who did the works four years earlier. Reported the matter to Gas Safe, who inspected and declared it unsafe


I then discovered (failed) DPC and woodworm treatments (without rectification works) were arranged by the vendor in 2009 and not disclosed. Nor were the associated 30 year guarantees. I would not have bought the property if I had known that the vendor had installed a DPC less than five years earlier and it had already failed (turns out there are groundwater flooding issues at the property, also not disclosed).


I looked at the SPIF more closely and worked out that 20% of her responses were false.


I raised allegations of false statements, non-disclosure and illegal works with the vendor's (conveyancing) solicitor at the end of April 2015. Response "Information given in good faith, did not try to mislead you and strongly refutes your allegations". I advised that I intended to seek redress through litigation. The firm's litigation solicitor then asked for evidence, which I provided, along with a Schedule of Works and estimates, quotations and provisional sums totalling over £65,000 to carry out unknown, post-contract remedial works.


A letter of response finally arrived in late July two weeks after the 28 day period initially agreed for a response and after a threat of Court proceedings. The defendant's solicitor said she had psychologically distanced herself from the property, admitted inaccurate (but not dishonest) information in the SPIF but no misrepresentation as inaccurate information given by their client did not induce you (me) to exchange contracts. Should have had a full structural survey on such an old property. And anyway, caveat emptor applies. My response pointed out the degree of inaccuracy in the SPIF amounted to dishonesty, many assertions made in this letter relating to information the vendor said she provided to my solicitor pre-contract were simply false and that caveat emptor does not apply where deliberate dishonesty has occurred.


Nothing more heard so I then made an offer of formal mediation. In August I received the response that his client and his firm still did not understand my claim. So I represented all the information and documents already sent in strict Pre-Action Protocol format. This resulted in the vendor apparently seeking advice from Counsel.


Three weeks later I have receive a demand for my conveyancing file, given I had apparently foregone legal privilege by referring to correspondence between myself and my solicitor at some point, and the threat of a pre-action disclosure application (at my expense) if not forthcoming. The offer of a possible informal meeting instead of formal mediation was made, but only after my solicitor had handed over my conveyancing file and all correspondence between us.


I have now reached Day 150 after more than 13 weeks of clearly deliberate delays by the defendant's solicitor. I have threatened Court proceedings, only to receive the same retort each time that such an action would be premature and inappropriate.


I sought preliminary legal advice from two firms (one the firm that did my conveyancing) at the outset, but would like to avoid significant further legal costs if I possibly can. A Google search shows that her litigation solicitor prides himself for his tactics of delay, stamina and nerve! He clearly doesn't take me or my claim seriously and has been regularly rude and unprofessional in the way he addresses me in correspondence between us.


Any comments on the validity of my claim, and suggestions on how I should now proceed would be much appreciated.

[R0b]

Re: Case for misrepresentation - or not?

Hi Horleyox,

Did this informal meeting ever take place? why is the lawyer saying the application is premature and inappropriate? has he addressed your issues except for taking counsels advice? Also what did the two law firms say on prospects of success?

Liability for inaccurate replies can arise through misrepresentation, negligent misstatement and fraudulent misrepresentation. When you say 20% of the responses were false, can you explain further for us. A representation is a statement of fact and not an opinion, bear in mind some responses may be an opinion and others could be framed as an opinion but are in fact a statement.

If you have relied on that statement and induced you to exchange contracts then you may have a case against the seller - is there any limited liabilty statement at the end or anything?

Any remedies will be either rescission and/or damages. how much is the value your looking to claim?

[horleyox]

Re: Case for misrepresentation - or not?

Hi R0b,

Thanks for your reply. The informal meeting has not taken place. It was only offered as a sop for giving up my conveyancing file and to counter my offer of formal mediation.

The lawyer says any application would be premature and inappropriate under the Practice Direction - Pre-Action Conduct and Protocols directive from the MoJ.

I received a letter of response to my claim back in July, but this argued there was no misrepresentation despite the client's 'inaccuracies' as I would have exchanged contracts regardless. The defendant apparently sought advice from Counsel after I re-submitted my claim to her solicitor in protocol format, including a list of documents and statements confirming wider dishonesty on her part. This advice resulted in the assertion that I had foregone legal privilege in my correspondence and the demand for my conveyancing file.

As for advice, one said that I would have to provide evidence that that the vendor and the agent were aware of significant material defects in the property prior to completing the sale. The other concluded that I had a case for seeking remedy for fraudulent misrepresentation as a result of the vendor's dishonest non-disclosure of relevant information in the SPIF and when responding to additional enquiries.

The vendor only completed three quarters of the questions in the SPIF and some 20% of her responses turned out to be inaccurate. For example, non-disclosure of disputes with neighbours (2.1), of building works (4.1a), of existing warranties and guarantees (5.1b, 5.1c). All factual issues, not opinions. As for the illegal boiler, she blames the contractor, and anyway, the managing agent arranged Gas Safety Certificates while the property was rented out that appeared to show the boiler was in good working order. She deliberately distanced herself from everything, using her ex-husband and current partner as go-betweens with contractors, but her name appears on every invoice and guarantee I have uncovered since completion. Her solicitor asserted in his letter of response that information and records I had uncovered had in fact been provided by his client to my solicitor pre-exchange. But no corroboration and my solicitor concurs that none of this information was forthcoming during the conveyancing process.

Her solicitor has also pointed out that I cannot rely on verbal statements under the terms of the contract, but this does not apply. I am seeking £100k in financial redress and damages or recission of the contract, plus expenses since incurred.

[R0b]

Re: Case for misrepresentation - or not?

Well, first of all given the sum you are seeking you might be wise to instructing a solicitor to deal with this even if you deal with all the pre-action protocol yourself. Obviously you will have to bear the court costs which can be high especially where you are claiming for a large amount - something to be mindful of.

Suppose it all depends on the actual wording of the answers to those questions on the form depends on whether it gives rise to a misrepresentation.

In relation to the application being premature, if there has been nothing that has moved forward since the suggested informal meeting then I cannot see why the application would be premature. based on what you have said, am I to assume that you have sent a letter before action? If so, it might be prudent to refer back to that and give them a reasonable number of days (14?) to provide a substantive response to the points raised in your LBA. That way, they would have had another 14 days in order to resolve the matter. 13 weeks of delays or little progress does not on the face of it seem premature to move forward with making an application to the court in addition to the further 14 days or however much you give them. The judge will then decide if it is premature or not, and if so he might adjourn the matter for a later date.

As regards to one of the questions relating to neighbour disputes, there is a case which might work in your favour relating to this and fraudulent misrepresentation - McMeekin v Long 2003, the seller had to pay the buyer £67.5k in damages for fraudulent misrepresentation. The seller stated on the SPIF that they did not know about any neighbour disputes or complaints. The buyers found out after moving in that there had been disputes about access and other things. The judge held that the questions were so simple the sellers must have known that they were not being truthful.

As for the remaining questions, the seller may also be liable but I am not so sure about the boiler situation, there could be arguments that she had reasonable grounds to believe that the boiler was legal and correct.

[horleyox]

Re: Case for misrepresentation - or not?

Yes, the preliminary advice came with word that court costs are now 5% of the sum claimed and I should budget £25-30k worst case for legal costs, of which I may only be able to recover 70% from the defendant. So, best case scenario is recovering around £85k; worst case is being out of pocket up to £70k. For the defendant, BCS down around £10k, WCS it costs her £150k.

She wrote only one comment on the SPIF (dishonest as it turned out); the other inaccuracies where she responded were down to ticking the 'wrong' boxes. More inaccurate comments came from additional enquiries made by my solicitor, but the general tactic was to leave things out and see if the buyer found her out.

I have received five emails from her solicitor since he provided a very tardy Letter of Response dismissing my claim back in July. None attempted to move things along - mention of the requirement to offer ADR (only to ignore an offer of formal mediation), the comment that he and his client still did not understand my claim, a complaint that I had presented my case piecemeal and then, after his client had sought advice from Counsel, the offer of an informal meeting but only after my solicitor provided a copy of my conveyancing file and the accompanying threat that if I didn't his client could make a court application for Pre-Action Disclosure together with a claim for costs. Her solicitor argues that the offer of an informal meeting constitutes a willingness to engage in ADR with me, but not before they get my file. In his opinion, therefore, Court proceedings remain premature and inappropriate. Nothing has moved forward since I submitted my original claim, and then again in Pre-Action Protocol format in mid-August. I only received their LoR after sending a letter recorded delivery threatening proceedings after granting a further 14 days, on top of the 28 days agreed at the outset, if it was not forthcoming. It eventually arrived after 6 weeks.

Thanks for your advice on writing a final letter offering a further grace period before taking action. Thanks too for the information on the 2003 case - interesting. Despite my best efforts to avoid it, it appears I shall have to retain legal representation and I'm guessing they'll have to initiate proceedings.

[R0b]

Re: Case for misrepresentation - or not?

Instructing a solicitor would be a wise option, you could of course, if you wished to keep costs to a minimum and given the fact a letter before action has been sent, would be to explain this to the solicitor and point out that you have complied with everything in so far as the Pre action Protocol and is now a matter of making an application to the court which is the specific reason you are instructing them. They will no doubt try to wangle some extra billable hours which is likely to be repetitive work you've done already (less the time it takes to read your case) in there so make sure to confirm in writing what you are after. Of course if there is something you have missed during the course of the dispute they will likely point it out to you.

As for the letter, I would actually suggest referring back to the offer of meeting/mediation and how long it has been since with no movement, giving them a further 14 days to arrange something otherwise you will press ahead with your application. This will show the judge that you have been willing to seek an alternative method of resolution and due to their ignorance/delays you have had no option but to bring the matter to the attention of the courts.

Representing yourself is obviously the other option but it's always a risky option when things might not be so clear cut, you have to look at it objectively and think what defences could the other side raise which could potentially defeat your claim and how you can overcome that. My experience and knowledge of property law is limited and extends to commercial stuff only but whichever you decide i'm happy to answer anything you might not understand

[horleyox]

Re: Case for misrepresentation - or not?

The solicitors I have approached (a different firm from the one that provided the preliminary advice and did the conveyancing) want 4-5 hours of an associate's time to review my case and the same again to prepare and file papers for the Court. So about £2,500-£3,000 to kick-off. Sound reasonable?

[R0b]

Re: Case for misrepresentation - or not?

seems fairly reasonable to me in terms of hours, might worth asking to keep it under the £2,500 mark. also worth asking the PQE of the associate who would be dealing with your case and whether the hourly charge reflects their experience. Some firms have little structure and an associate can be anyone from a newly qualified right up to partner. Hourly charges also depend where you are based i.e. London is more expensive than the north.

There is guidelines on the hourly rates for solicitors and for example, a Grade B fee earner would be someone who has around at least 4 years experience would be around 140-160 outside of London (bear in mind pretty much most firms will charge over and above this) so that gives you a bit of an idea. I would think a reasonable hourly wage for someone with at least 4 years PQE would be around the £200-£250 mark per hour.Just my opinion on this and all depends on the status of the firm your instructing and whether that particular department your instructing is recognised for the work they do.

[horleyox]

Re: Case for misrepresentation - or not?

Thanks again. I've been quoted £195-£225/hr for associate and lower level inputs and much more for partner time. I took a look at the Legal500 - the defendant's representative is ranked Tier 5 in his discipline (Civil Litigation) and is employed by a Tier 5 ranked firm. The firm/head of department I'm opting for is ranked Tier 3 for Property Litigation.

[R0b]

Re: Case for misrepresentation - or not?

Any reference on the Legal 500 is good and just because their lawyer/firm is tier 5 does not necessary mean they are not as good - rankings are based on a number of things such as strength of the team, acquisitions, IT infrastructure, new clients brought in, prestige of clients etc.

I personally wouldn't look to pay a partner rate on this, it's a fairly straightforward case and partners usually reserved for the more complex issues. They're likely to pass the work off to their associates/paralegals and sign it off charging you at a partner rate an associate of sufficient PQE would suffice for a matter something like yours.

Don't forget regarding charges they may also decide to instruct a barrister (which you probably want someone more junior) on this or they may deal with it themselves, something to make a note of.

[horleyox]

Re: Case for misrepresentation - or not?

I am also seriously thinking about making a separate claim against the selling agent for misrepresentation as they managed the property as a rental on behalf the seller for several years before it was put up for sale and it turns out were aware of many of the undisclosed remedial defects. So, for example:

1) Regarding water ingress to a neighbouring property, while the agent stated in an email to me pre-contract that "there are ongoing investigations" and "early tests are pointing to the problem not being attributed to the property", when in fact they had already gone well beyond the investigation stage and received authorisation almost a year earlier to carry out a £2,000 repair to the drain system in an unsuccessful attempt to alleviate the neighbour's water ingress problem. I have a full file of correspondence over the period of a year between the neighbour and the managing agent providing evidence of attempts to try to resolve the issue and get the landlord/seller to authorise additional rectification works, right up to the month before she put the property on the market;
2) Regarding the illegally-installed boiler, the agents arranged the annual Gas Safety Certificates but didn't notice that these were little more than box ticking exercises in the words of the Gas Safe inspector. The inputs/outputs/pressure readings for two of them were too low and should have apparently rung alarm bells and the third recorded maximum/optimum readings which would have apparently been impossible to achieve, given the significant/dangerous loss of gas pressure by the time it reached the boiler; and
3) The rear terrace/balcony at the property did not have planning permission. The agent didn't mention it when selling the property, but had told previous tenants (I have a written statement from one) that it was illegal and they couldn't use it.

I could go on, but do you think there is the basis for a claim against the agent too? If so, should I handle it in the same was as with the seller? Or should I be making a joint claim against the seller and the agent? Also, I have no idea of what sort of remedy should/could be sought from the agent in terms of quantum or comparables.