The Sheriff Appeal Court has ruled that sellers of a house, who allegedly misrepresented to a prospective purchaser that they had no experience of flooding at the subjects, were not able to rely upon the terms of the Scottish Standard Clauses (Edition 2) to protect them from an action seeking reduction of the sale on the basis of misrepresentation.
The pursuers were clear that the issue of flooding was important to them and they were intending to develop the property. A flood report was exhibited which classified the flood risk as low but recommended that the sellers be asked to confirm whether the property or surrounding area had been flooded before. The defender’s solicitors then confirmed by email that the defenders had no experience of flooding at the subjects. The missives were then concluded.
The pursuers subsequently discovered that the previous year the stream which passed through the subjects had overflowed and that at least one of the defenders was aware of flooding in the garden from time to time. They sought to reduce the agreement to purchase the house alleging the flood risk position had been misrepresented.
One of the defender’s arguments was that clause 2.1 in the Scottish Standard Clauses referred to a present state of affairs (“the property is not affected by”) a past state of affairs (flooding in the previous five years). The Sheriff Appeal Court disagreed finding that “”the meaning contended for by the defenders makes little sense. It is unlikely that a purchaser would wish to have a warranty that the property is not presently affected by flooding when such a circumstance might be expected to be obvious to the purchaser or his surveyor in any event. It is also unlikely that he would not wish to know about the propensity to flood. The defenders’ construction also gives rise to uncertainty, since it introduced an element of subjective assessment into what must be disclosed…”
We don’t imagine the defenders will expect to be flooded with offers when the property is put back on the market.