Q purchased a property in a development from H. The purchase price paid on completion was £240,000. Two years later Q sold the property for £275,000.
Prior to the exchange of contracts H was sent the standard form of pre-contract enquiries. It was found at trial that H had impliedly represented by omission that it was not aware of certain disputes in relation to the heating system, which affected the value of the property.
At trial, the judge below found that in light of the defects to the property at the time of Q’s purchase the actual market value was £225,000. Applying the normal measure of damages in such situations; namely, the difference between the actual value of what was acquired and the price actually paid, the judge awarded Q £15,000. The increase in the market value of Q’s property did not alter the position on damages. Q was entitled to take advantage of the market increase in the value of her property. H appealed arguing that the normal measure of damages did not accord with the overarching principle of compensation.
In dismissing the appeal, the Court of Appeal robustly affirmed the decision of the court below and provided further clarity on the assessment of damages in this area. On the facts of the present case, H was not entitled to take advantage of the increase in value of Q’s property in circumstances where Q’s purchase of the property had been induced by H’s misrepresentations. Q was under no obligation to mitigate her loss by re-selling her property. Her decision to do so was unconnected with the defects but arose out of a change in her family circumstances. Accordingly, Q had no duty to account for her gain. She was able to recover her loss calculated on the traditional basis of the difference between the value of the property as represented and the property’s true value at the date of purchase Hussey v Eels  2 QB 227, applied. Further, it was held that the repair of the heating system at the time of sale of Q’s property, under a policy of insurance, did not reduce or extinguish her loss and accordingly was not to be brought into account when calculating damages Bradburn v Great Western Railway (1874) LR 10 Exch 1 and Parry v Cleaver  A.C. 1, applied.
Elizabeth Dwomoh / 21st Dec 2016
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