PROVING THINGS 42: SILENCE DOES NOT PROVE INDUCEMENT

Mediatelegal

We are returning to the case of Francis -v- Knapper [2016] EWHC 3093 (QB).  That case has been looked at in relation to a failure to prove damages.  However the claimants also had major evidential problems in proving misrepresentation.

KEY POINTS

  • For a party to succeed in a case for misrepresentation they have to establish that they relied on those representations.
  • The evidence in this case did not establish reliance.
  • The evidence given by one of the claimants in another (related) action contradicted the claimants’ current case.
  • The failure to set out the issues dealt with in the earlier witness statement in the evidence given in the current action was damaging to the claimants’ credibility.

THE CASE

The claimants were bringing an action alleging that representations made by vendors and their solicitors had led to their purchasing of a holiday park.

Inducement
  1. Clerk & Lindsell on Torts, 21st Ed., at §18-01, states that the tort of deceit involves the following “perfectly general principle“, namely that “where a defendant makes a false representation, knowing it to be untrue, or being reckless as to whether it is true, and intends that the claimant should act in reliance on it, then in so far as the latter does so and suffers loss the defendant is liable” (my emphasis). The essence of the wrongful conduct is making (or procuring the making of) a statement intended to be acted upon, knowing it to be untrue or having no belief in its truth. The tort of deceit protects claimants from the harmful consequences of statements made to them that ought never to have been made. For the claimant, therefore, the essence of the claim is that the making of a statement that ought not to have been made has caused him loss. Hence, it is the claimant’s burden to show “that he acted in reliance on the defendant’s misrepresentation. If he would have done the same thing in the absence of it, he will fail. What is relevant … is what the claimant would have done had no representation at all been made.” (Clerk & Lindsell, supra, at §18-34).
  2. As Clerk & Lindsell goes on to say at §18-35, whilst the claimant must show “that he was induced to act as he did by the misrepresentation, it need not have been the sole cause. Provided it substantially contributed to deceiving him, that will be enough.
  3. Mr and Mrs Francis plead in classical fashion that “The Park Representations, within the CPSE, were intended to induce and did induce [them] to enter into the [Agreement]“, because “[they] relied on the Park Representations in agreeing to the Sale“, i.e. they relied on the answers given by the Vendor to CPSEs 8.1 and 8.9 in concluding the Agreement. Mr and Mrs Francis both gave evidence about this at trial. I found their evidence unsatisfactory and unconvincing.
  4. Mr Francis’ evidence in chief (by paragraphs 6 and 7 of his witness statement for trial) was as follows:

6. We did not obtain a full survey. The reasons for this were that the vendor Company was run by the chalet owners who had full knowledge of the site and the management of the site over a number of years and Mr Knapper, the Solicitor acting for the vendor on the sale was, himself, a chalet owner (since May 2006) and heavily involved in the site and, between them, they would be able to provide accurate information about the site and any defects or problems experienced to be supplied in any pre-contract enquiries.

7. We expected the pre-contract enquiries to be honest and accurate.

  1. Mrs Francis’ evidence served for this trial was a witness statement of four sentences identifying herself, saying she had read her husband’s statement and saying she believed its contents were true. In the absence of objection, I allowed her, in evidence in chief, also to be shown and to verify extracts from a statement of hers dated 25 January 2011, made in the service charge litigation. Those extracts included this paragraph:

12. … We did not secure a survey at the time of purchase. It was unnecessary for us to do so because

(i) we relied upon a statement made by Mr Knapper in [CPSEs] on behalf of [the Vendor] … that the site did not suffer from any structural or inherent defects. … I exhibit the relevant page … . In fact that statement proved to be wholly inaccurate;

(ii) we knew that on the acquisition of the site we would have the benefit of the service charge provisions in the standard form lease granted to chalet owners and would be able to charge for the maintenance of the estate and for necessary works of repair renewal and rebuilding etc.

  1. I have significant concerns about that evidence. Mr and Mrs Francis’ oral evidence, under cross-examination, did nothing to alleviate those concerns:-
  2. Firstly, my clear conclusion having seen and heard Mr and Mrs Francis, as I indicated at the start of this judgment, is that any and all decisions were Mr Francis’ alone. I do not think Mrs Francis, as a matter of either involvement or recollection, was properly able to say more than that all relevant decisions will have been taken by Mr Francis on whatever basis he saw fit. Generally, as regards Mrs Francis, I found her as a witness nervous, extremely defensive and generally uncooperative. I regret to say that in my assessment she came to court to defend a position and argue the case rather than to assist me in getting to the truth on the facts in relation to this key issue of whether she and her husband were misled by the CPSE answers into contracting to buy the Park.
  3. Secondly, conspicuously absent from Mr Francis’ statement is any evidence that he ever looked at, or was otherwise aware of, the CPSE answers. Mrs Francis’ 2011 statement implicitly asserted that she and her husband saw, or were otherwise aware of, the answer to CPSE 8.1(a); but it gave no real evidence even about that. Under cross-examination, Mr and Mrs Francis both claimed to have gone through the CPSE answers with Mr Griffiths of Henriques Griffiths, face to face at a meeting. Mr Francis said he (no mention of Mrs Francis) went to Mr Griffiths’ office for this, for a meeting that would have lasted half an hour to an hour, whereas Mrs Francis had it that Mr Griffiths came to see them both at home. To my mind, neither account rang true. Whilst it is possible that over the years Mr and Mrs Francis have persuaded themselves that there must have been such a meeting, I find there was not. Henriques Griffiths’ conveyancing file was disclosed. It is quite possible that the file as disclosed is incomplete after all these years, however it does include notes of attendances upon Mr Francis but none of any meeting to go through the CPSE responses. Mr Francis agreed that there is no reason why Mr Griffiths could not have given evidence, but he was not asked to do so. Furthermore, it is entirely in keeping with Mr Francis’ approach to this transaction, as I describe below, that at the time he had no real interest in the CPSEs.
  4. Thirdly, Mr Francis’ claim to have taken comfort from the fact that Mr Knapper was not only the Vendor’s conveyancing solicitor, but himself a chalet owner since May 2006 and someone who had been heavily involved in the site, also did not ring true. That is not something he (or Mrs Francis) had said before, when explaining the decision not to have a survey, and there is neither evidence nor reason to suppose that Mr Francis knew those facts about Mr Knapper prior to concluding the Agreement. On the correspondence, it appears that Mr Knapper first mentioned that he was a chalet owner in a letter to Henriques Griffiths on 25 February 2008, the day before exchange of contracts. When challenged on this part of his statement, Mr Francis suggested that (a) Mr Drummond had told him the facts mentioned about Mr Knapper when he (Mr Francis) first met Mr Drummond – but Mr Drummond gave no such evidence and the point was not put to him on behalf of Mr Francis – and (b) the notion that Mr Knapper’s chalet ownership and involvement in the site added comfort to the CPSE answers in fact came to him by way of advice from Mr Griffiths. I do not accept that evidence. In my judgment, paragraph 6 of Mr Francis’ statement was an invention, and under the pressure of cross-examination about that, Mr Francis further invented those elaborations.
  5. Fourthly, it is troubling that Mr Francis’ statement for this trial did not refer to what was paragraph 12(ii) of Mrs Francis’ 2011 statement, that is to say that in Mr Francis’ mind no survey was required because he believed the cost of any works of maintenance, repair, renewal or rebuilding that might be required at the Park could be re-charged to chalet owners under the service charge provisions of the chalet leases. I noted a substantial and uncomfortable pause when Mr Francis was confronted with this omission. He insisted that the omission had not been a deliberate attempt to mislead the court, but it was rightly put to him that what had been omitted was on any view very important evidence, and he could not explain the omission.
  6. In my judgment, the freeholder’s service charge entitlement was in fact the only consideration operating on Mr Francis’ mind in deciding to buy, so far as concerns the physical condition of the Park and the degree to which work would be needed after acquisition. It may be he did not have a clear or full idea, when concluding the Agreement, that all of the work would be required that in the event he decided after purchase to undertake. But in my judgment that is not because he was misled by anything said by or on behalf of the Vendor about the condition of the Park or any need for work to be done to it. It is because it was not a matter of interest or concern to him. He visited the Park three times before entering into the Agreement: on a date shortly before 22 October 2006, he had a quick look round, with Mrs Francis, after which they went to find Mr Drummond (who was not on site at the time) and agreed with him that they would buy (minus the chalet park) for £1,600,000; he then visited with Mr Griffiths on 9 November 2007, spending several hours on site; at some point thereafter, but before withdrawing from that initial agreement in early December 2007, he stayed in one of the chalets, probably over a weekend, with Mrs Francis and their children. It was perfectly plain, and I am certain Mr Francis concluded, that the Park was rather tired and run down in parts – suffering, indeed, from long-term neglect. The amenity centre, as I mention further below, was most obviously in need of care and attention. He was a man who was happy to trust his own, experienced judgment as to the condition of the Park. In that respect, he was content to buy so long as, and his only interest was whether, such work as might prove to be necessary would be for the chalet owners’ account. He received advice from Mr Griffiths that it would be. Whilst there is no record of that advice (it does not appear to have been in writing), I infer that it was sufficiently firm or confident that Mr Francis was happy to proceed, since that is what he did.
  7. Fifthly, Mr (and Mrs) Francis’ evidence in chief failed to acknowledge or take account of their appreciation of the run-down condition of the amenity centre, as observed by them, and Mr Francis’ pre-contract plans for it. Mr Francis noted when he first went into the building the obvious smell of significant damp. He admitted as much in evidence before HHJ Cotter QC in the service charge litigation. Before me, he sought to suggest that this was only really something he noticed after completion, but I do not accept that. With his knowledge and experience, and having considered carefully the evidence on the point he gave before HHJ Cotter QC, I am confident that it was obvious to Mr Francis the amenity centre had a real damp problem and was in need, at a minimum, of substantial refurbishment (aside from the modern conservatory). He also experienced first-hand, when visiting the site before the Agreement, the leaking amenity centre roof, and realised this was a long-standing issue as it had caused a hole to develop in the carpet. In fact, as I find, he concluded that the amenity centre should be demolished and rebuilt and that was his intention when negotiating to purchase the Park and when entering into the Agreement. Mr Francis refused to accept this in evidence, but in my judgment he must have been the source (nor could he identify any other possible source) for what his accountant, Chris Ross, said at the time, in an e-mail to Richard Alexander, the Vendor’s accountant, on 14 November 2007, namely that: “There might be a value to attribute to Fixtures and possibly goodwill but in view of the trading position and the fact that our client will seek to demolish and rebuild the club house suggests that he does not consider the value to be much” (my emphasis). There is no reason to think that Mr Ross would get that wrong, or make it up. It was said within a week of Mr Francis’ long site visit with Mr Griffiths. I find that Mr Francis had seen enough on that visit to conclude that he would knock down and rebuild the amenity centre after purchase. Whether it had problems beyond those he had identified for himself (e.g. rot in the roof timbers, which he may well have appreciated only later), was in my judgment a matter of indifference to him.
  8. Mr Francis’ approach to the decision to contract might, to some, seem risky, even without knowing as with hindsight is now known that after purchase the chalet owners, led by Mr Knapper, would go to war with Mr Francis over his ability to re-charge necessary works through the service charge. At its lowest, it was a bold and self-confident approach. But Mr Francis, I find and by his own admission, is (or at any rate was at the material time) a bold and self-confident property dealer / developer. In unrelated proceedings resulting in a judgment dated 19 December 2013 of HHJ McCahill QC, sitting as a High Court judge in the Bristol District Registry, Matchmove Ltd, of which Mr Francis was the de facto controlling mind and driving force, was sued in relation to a dispute that arose in 2007 about a building plot and adjacent meadow in Longwell Green, Bristol. In his judgment at [115], HHJ McCahill QC described Mr Francis as follows, a description put to him by Mr Bacon at this trial and in substance accepted by Mr Francis as accurate and fair:

For Martin Francis at that time, his word was his bond. That was his reputation. It was how he did land deals. He regarded any deal as done and binding on a handshake, and the rest was a mere technicality. He expected people to trust his word and to act on it as a deal done, even in the absence of a written agreement. He admitted so much in cross-examination, when he accepted that, in his life and in his way of operation, ‘a deal is a deal’ and that he is a man of his word which could be absolutely relied upon.

  1. Before me, Mr Francis cavilled slightly at the use of the word “technicality“. He told me “any deal I have done was always finalised by a solicitor“, so “Technicality, no, it is the legal side of it“. That does not affect the substance of the judge’s assessment, so far as is material to the present case. Mr Francis decided whether to buy, both generally and in this case, without reference to details such as the CPSEs. He realised that legalities had to be satisfied, meaning that a final, formal, transaction would have to be finalised by his solicitors. But he left them to get on with that and took no active role or interest in the process. He would, of course, expect them to explain anything important to him. When shown the Agreement in the trial bundles (strictly, a draft of it, see paragraph 3 above), Mr Francis had no recollection of it at all. He also had no recollection that the Vendor had disclosed the flash flood (see paragraph 11 above).
  2. That might not make it impossible, in principle, for there to be a sound claim of inducement in relation to misrepresentations in the CPSE answers. However, it does make the claim of inducement pleaded and pursued at this trial impossible on the facts. That claim was that Mr (and Mrs) Francis themselves paid conscious attention to the CPSE answers, were reassured by them, and had them in mind as one of the reasons why they decided to conclude the Agreement by exchanging contracts in February 2008. My conclusion on the evidence is that nothing of the sort occurred.”

    THE PROVING THINGS SERIES