William Sindall plc v Cambridgeshire County Council [1993]
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William Sindall plc v Cambridgeshire County Council [1993] EWCA Civ 14 is an English contract law case that dealt with misrepresentation and the application of discretion under Section 2(2) of the Misrepresentation Act 1967.
William Sindall plc entered into an agreement to purchase land from Cambridgeshire County Council, relying on the council's assurance that there were no easements affecting the property. However, post-completion, it was discovered that a private sewer, dating back 20 years, existed on the land. Complicating matters, the property market experienced a significant crash after the purchase, causing a drastic reduction in the land's value. William Sindall plc initiated legal action, seeking rescission based on misrepresentation and common mistake.
Regarding the mistake, the court held that the contract allocated the risk of unknown sewers to the buyer. Rescission for common mistake on equitable grounds was deemed impossible unless the mistake was fundamental, referencing the principle from The Great Peace [2002].
Hoffmann LJ, in delivering the judgment, concluded that there was neither misrepresentation nor operative mistake. However, if the exercise of discretion under Section 2(2) was necessary, he outlined three factors to consider:
Hoffmann LJ stressed the distinction between Section 2(1) and Section 2(2) of the Misrepresentation Act, noting that the latter focuses on damage caused by the property not being as represented. He suggested that the purpose of Section 2(2) is to prevent unfair oppression of representors when someone seeks to exit a contract due to minor misrepresentation. In this instance, Hoffmann LJ would have exercised discretion under Section 2(2) to prevent William Sindall plc from escaping a disadvantageous bargain.
Evans LJ acknowledged the substantial loss to the Council, emphasising that the land's value had significantly declined, making it worth only a fraction of the purchase price plus interest. Additionally, the Council would have to repeat the tendering process, further compounding their losses.
William Sindall plc entered into an agreement to purchase land from Cambridgeshire County Council, relying on the council's assurance that there were no easements affecting the property. However, post-completion, it was discovered that a private sewer, dating back 20 years, existed on the land. Complicating matters, the property market experienced a significant crash after the purchase, causing a drastic reduction in the land's value. William Sindall plc initiated legal action, seeking rescission based on misrepresentation and common mistake.
Regarding the mistake, the court held that the contract allocated the risk of unknown sewers to the buyer. Rescission for common mistake on equitable grounds was deemed impossible unless the mistake was fundamental, referencing the principle from The Great Peace [2002].
Hoffmann LJ, in delivering the judgment, concluded that there was neither misrepresentation nor operative mistake. However, if the exercise of discretion under Section 2(2) was necessary, he outlined three factors to consider:
- The nature of the misrepresentation, in this case, a £5 million land sale with a remediation cost of £18,000.
- The loss caused if the contract were upheld, indicating the power to award damages for the misrepresentation itself, not compensating for the loss.
- The gross disparity in loss, emphasising that the loss of the bargain for the council was £8 million, compared to Sindall plc's loss.
Hoffmann LJ stressed the distinction between Section 2(1) and Section 2(2) of the Misrepresentation Act, noting that the latter focuses on damage caused by the property not being as represented. He suggested that the purpose of Section 2(2) is to prevent unfair oppression of representors when someone seeks to exit a contract due to minor misrepresentation. In this instance, Hoffmann LJ would have exercised discretion under Section 2(2) to prevent William Sindall plc from escaping a disadvantageous bargain.
Evans LJ acknowledged the substantial loss to the Council, emphasising that the land's value had significantly declined, making it worth only a fraction of the purchase price plus interest. Additionally, the Council would have to repeat the tendering process, further compounding their losses.
