High Court awards damages to buyer following rescission of property contract for fraudulent misrepresentations in pre-contractual enquiries - DAC Beachcroft

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High Court awards damages to buyer following rescission of property contract for fraudulent misrepresentations in pre-contractual enquiries

Published On: 10 February 2016

Our London Commercial Litigation team has secured a win for property investment client Greenridge following rescission of a contract. Greenridge rescinded the property contract shortly before completion after discovering fraudulent misrepresentations in the seller's replies to enquiries (CPSEs).

The Court found that (i) the replies to the CPSEs provided to the buyer were inaccurate and contained misrepresentations by stating there were no service charge arrears, when in fact there were; (ii) the buyers had relied on the misrepresentations and been induced to enter the contract; and (iii) the representations had been made recklessly or fraudulently.

In the circumstances, the rescission of the contract had been valid and the buyers were entitled to return of the deposit together with damages for deceit in the sum of £395,948. The ruling serves as an essential reminder that sellers and/or their advisors should always ensure that:

  1. Replies to enquiries are compiled with appropriate care and attention so that information which should be disclosed is, in fact, disclosed and not concealed;
  2. Buyers are provided with up-to-date replies to enquiries and kept informed of any change in circumstances that will affect the accuracy of the replies. This is particularly important in circumstances in which a sale becomes protracted or replies to CPSEs are issued to an alternative buyer; and
  3. When asked for clarification of responses or further supporting documentation, those requests are complied with.
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