Cleaver and Others v Schyde Investments Ltd: CA 29 Jul 2011

The parties had contracted for the sale of land. The purchaser secured the rescinding of the contract for innocent misrepresentation. A notice of a relevant planning application had not been passed on by the seller’s solicitors. The seller appealed saying that the judge had been wrong to find that condition 7.1.3 of the Standard Conditions of sale failed under the 1977 Act.
Held: The appeal failed. ‘There is nothing self-evidently offensive, in terms of reasonableness and fairness, in a contractual term which restricts a purchaser’s right to rescind the contract in the event of the vendor’s misrepresentation to cases of fraud or recklessness or where the property differs substantially in quantity, quality or tenure from what the purchaser had been led to expect, and to confine the purchaser to damages in all other cases. That is a perfectly rational and commercially justifiable apportionment of risk in the interests of certainty and the avoidance of litigation.’
Longmore LJ said: ‘This case is a good example of the width of the interference with freedom of contract generated by section 11 of the Unfair Contract Terms Act 1977. My initial reaction was that a term restricting rescission (in non-fraudulent cases) to instances where the property differed substantially in quantity, quality or tenure from what it had been represented to be was, in general, a reasonable clause. The Law Society (with, of course, no axe to grind on behalf of either vendors or purchasers) had promulgated the clause, taking into account judicial criticism of its predecessors.
But the question is not whether the clause is, in general, a reasonable clause. The question is whether it was a reasonable clause in the contract made between this vendor and this purchaser at the time when the contract was made. On the particular facts of this case both parties were aware of and wished (if possible) to exploit the development potential of the property. The planning position (and any change to it between the answer to enquiries and completion) was of obvious materiality. Yet the mere existence of an application for planning permission can hardly be said to make the property different in quantity, quality or tenure from what it had been represented to be.’

Laws, Longmore, Etherton LJJ
[2011] EWCA Civ 929
Misrepresentation Act 1967 3, Unfair Contract Terms Act 1977 11(1)
England and Wales
CitedFlight v Booth 24-Nov-1834
The auction particulars stated that the land was subject to covenants restricting use of the property for certain offensive purposes. After successfully bidding it was shown to be subject to other substantial restrictions against non-ofensive trades . .
DistinguishedMorgan and Another v Pooley and Another QBD 7-Oct-2010
The claimants had bought a property from the defendants and now sought damages in misrepresentation saying that the defendants had failed to disclose a planning application for an adjacent farm as regards a track bordering the property.
Held: . .
CitedGeorge Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd HL 1983
A seedsman sought to rely upon an exclusion clause preventing any claim by a purchaser by way of set off against its sales invoices. The House was asked whether a contractual term was ‘fair and reasonable’ within the meaning of section 55 of the . .
CitedOverseas Medical Supplies Limited v Orient Transport Services Limited CA 20-May-1999
The appellant challenged a finding that it was responsible for the loss of medical equipment being transported from Tehran to the UK, and of failing to insure it as required, the contractual term exempting it from responsibility being an . .
CitedGoff v Gauthier 1991
. .
CitedWalker v Boyle 1982
A property was sold subject to the National Conditions of Sale (19th edition). Condition 17(1) of the conditions provided that ‘no error, the statement or omission in any preliminary answer concerning the property . . shall annul the sale’. There . .

Lists of cited by and citing cases may be incomplete.

Land, Contract

Updated: 02 November 2021; Ref: scu.443231