Francis & Anor v Charles Knapper & Ors [2016] EWHC 3093 (QB)

[2016] EWHC 3093 (QB)Case No HQ14X00724
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 01/12/2016
Before
MR JUSTICE ANDREW BAKER
Between
Martin FrancisClaimantsRebekah Katherine FrancisClaimantCharles Edward Swatman KnapperDefendantsFursdon Knapper (a firm)DefendantWilliam DrummondDefendant
Jonathan Seitler QC and Emily McKechnie (instructed by Enigma Solicitors, Plymouth) for ClaimantsFrancis Bacon (instructed by Caytons Law, London) for First and Second DefendantsThe Third Defendant in person for in personHearing Hearing dates: 2, 3, 4, 7, 8, 11 November 2016
Approved JudgmentI direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Introduction

[1]Martin and Rebekah Francis, the claimants, are a married couple. Mr Francis is a builder and property dealer and developer. Mrs Francis assists with the paperwork in relation to the property dealing activities, but the business is very much Mr Francis’ and all decisions made in or concerning the business are and were his. By April 2008, when Mr and Mrs Francis completed the property transaction that is the subject of these proceedings, Mr Francis had been buying and selling property for something like 25 years. He had by then bought and sold about 50 properties.[2]Point Curlew Country Holiday Estate (‘the Park’), renamed Atlantic Bays Holiday Park under the Francis’ ownership, was and is a site of about 27 or 28 acres near Padstow in Cornwall. In 2006-2008 it comprised an established chalet park housing around 160 fixed chalets held from the site owner on long leases, a touring park for visiting caravans and tents, and an area under development to house new lodges, together with an amenity centre containing a range of amenities and services and a two-bedroom site manager’s flat. I shall refer to the leaseholders on the established chalet park as ‘chalet owners’. The site had been a naval camp during the Second World War, and in the main the amenity centre block dated from that time, although a large, modern conservatory had been added relatively recently.[3]By a sale and purchase agreement (‘the Agreement’) concluded by way of exchange of contracts on 26 February 2008, Mr and Mrs Francis contracted to buy the freehold of the Park for £1,350,000. None of the parties to the litigation located for disclosure any original or copy of the Agreement as exchanged, but the trial bundles contained a final draft for it and it was common ground that the Agreement as exchanged was on the terms of that draft. The vendor was St Merryn Holiday Estate Management Company Limited (‘the Vendor’), a company owned by the chalet owners. The transaction was not quite a fire sale, but it was urgently required by the Vendor on account of its poor financial health. Mr Francis was aware of that and saw the Park as a good business opportunity, because he had the skills, funds and experience to complete the new lodges development and he took the view that the cost of any necessary work to the existing developed areas could be re-charged to the chalet owners under the service charge provisions of their leases.[4]Mr Knapper, the first defendant, was and is a solicitor; the second defendant, Fursdon Knapper, was and is his firm. He is now the managing partner of the firm, and was a partner of the firm at the time of the facts alleged to give rise to liability herein, although at the time of some of the earlier events I refer to below, in the summer of 2006 in particular, he was engaged by the firm as a consultant and was not a partner, for reasons that do not matter for the purpose of this judgment. Mr Knapper and the firm were jointly represented before me and it was accepted that the firm has vicarious liability to the extent of any liability on the part of Mr Knapper herein. Mr Knapper acquired the lease of one of the chalets in May 2006, so he was a leaseholder and a shareholder in the Vendor when the Francis’ purchase of the site was negotiated, concluded and completed. The firm, acting principally by Mr Knapper, were the Vendor’s conveyancing solicitors in the transaction.[5]Mr Drummond, the third defendant, was the Managing Director of the Vendor. He was first employed as site manager at the Park in early 2003. As he joined, the indication was that he would be asked, all going well, to become Managing Director in due course. He was appointed Managing Director in the event in March 2005, with effect from 1 April 2005. He left when the sale to Mr and Mrs Francis completed on 22 April 2008.[6]Mr and Mrs Francis claim that they were induced to conclude the Agreement by misrepresentations made by certain answers to pre-sale enquiries. Those enquiries were in a British Property Federation standard form, the Commercial Property Standard Enquiries CPSE.1 (version 2.6) (‘the CPSEs’). Those alleged representations were referred to at trial as the ‘Park Representations’ and concerned aspects of the physical condition of the Park. Mr and Mrs Francis further claim that they were induced to agree final completion balances by a misrepresentation in correspondence as to how many chalet owners had and had not paid their service charges for 2008 (the ‘Service Charges Representation’).[7]In relation to the Park Representations, the claim seeks damages for deceit, alternatively negligent misstatement. In relation to the Service Charges Representation, the claim is for damages for negligent misstatement only. All claims are made against Mr Knapper and his firm. Only the deceit claim is made against Mr Drummond. There was also a conspiracy claim, alleging that Mr Drummond and Mr Knapper conspired to deceive Mr and Mrs Francis, but that was abandoned after the conclusion of the evidence at trial.[8]Mr and Mrs Francis’ ownership of the Park has not been a happy one. They have been embroiled in litigation of one sort of another about the Park ever since their acquisition. Primarily, prior to this action, the litigation has concerned the extent of, and the conditions attaching to, their entitlement to recoup expenditure on the Park through the service charge payable by chalet owners under their leases. In that respect, I am sure their purchase has not been the happy or easy venture they envisaged when buying. But that does not mean they were ‘sold a pup’, let alone deliberately so, in the manner they allege in their Park Representations claim (or at all); and it has nothing to do with the Service Charges Representation claim.[9]Mr Knapper has been a central figure in that litigation. Before Mr and Mrs Francis’ purchase, from mid June 2006, just a few weeks after he acquired his chalet, Mr Knapper was also a central figure in major internal strife at the Park, as I shall describe. In my judgment, his behaviour has left a lot to be desired in certain respects. But that does not mean he committed fraud (or actionable negligence), as is now alleged. Whether he did so turns upon a careful examination of the evidence about the particular matters alleged and not upon general criticism of Mr Knapper’s conduct or character. One aspect of that is a consideration of whether specific relevant inferences are properly to be drawn against Mr Knapper, as is submitted on behalf of Mr and Mrs Francis, from certain particular aspects of his conduct. Whether any of that matters at all, though, depends on whether Mr and Mrs Francis have shown that they were induced to conclude the Agreement by misrepresentations created by the CPSE answers, and so I turn to that first.

The Park Representations

[10]The Park Representations, as alleged, arise out of the following CPSE answers given by the Vendor on 8 November 2007:
“[8.1] If the Property has been affected by any of the following, please supply details: (a) Structural or inherent defects; No (b) … (c) Defective Conduits, fixtures, plant or equipment; No (d) … (e) FloodingNo … [8.9] In respect of all Conduits, fixtures, plant or equipment which will remain part of the Property or which will serve the Property after completion of the Transaction: (a) … (b) Please confirm that, as far as you are aware, there are no items requiring significant expenditure within the next three years; Confirmed (c) …”
[11]In relation to the answer given to CPSE 8.1(e), I should refer also to CPSE 17.2, which asked for information about the insurance claims history of the Park. In the main CPSE response provided on 8 November 2007, that was not answered. Mr and Mrs Francis’ solicitors, Henriques Griffiths, reverted by letter to Fursdon Knapper dated 7 December 2007 asking for, amongst other things, an answer to CPSE 17.2. Fursdon Knapper, acting by Mr Knapper, replied on behalf of the Vendor, by letter dated 10 December 2007. They answered CPSE 17.2 as follows:
“One claim for flash flood damage to the flat and reception area which was paid in full. There are no outstanding insurance claims.”
The first part of that answer plainly qualified the answer that had been given to CPSE 8.1(e), albeit that was not expressly drawn out in Fursdon Knapper’s letter. Reading together the answer that had been given to CPSE 8.1(e) and that answer to CPSE 17.2, the Vendor stated that the Property had not been affected by flooding except for one incident of flash flooding that caused damage to the site manager’s flat and reception area that was covered by insurance.[12]A number of other preliminary points arise as to the meaning and effect of the answers to CPSEs 8.1 and 8.9, as relied on to found the claims now made.[13]Firstly, the point is taken that the CPSEs were sent out and returned at a time when Mr and Mrs Francis were negotiating not the Agreement, but a possible purchase of the Park excluding the established chalet park, for £1,600,000. There are two consequences: i) it was argued, although perhaps not with much vigour in closing, that the ‘Property’ the subject matter of the CPSE answers was the Park minus the chalet park, since that is what was to be purchased at the time; ii) it seemed to me the question arose whether any representations made by the CPSE answers could properly be regarded as having been made with reference (in prospect) to the Agreement.[14]I do not think the ‘Property’ in the CPSEs, or therefore the subject matter of the Vendor’s answers, is restricted to the Park without the chalet park. As a defined term in the CPSEs, ‘Property’ was defined to have “the meaning given … in the Particulars [and] includes any part of it and all buildings and other structures on it”; and the Particulars identified the Property as “Point Curlew Country Holiday Estate” without limitation or further explanation. The integrated nature of the Park site, as a physical location and as regards utilities and services, rendered the condition and history of the site as a whole a matter of probable interest to a purchaser. In my judgment, the CPSEs at issue asked about, and the answers to them made statements about, the condition and history of the entire Park. They could be falsified by matters concerning the established chalet park, not at the time intended to be conveyed to Mr and Mrs Francis if the deal went ahead, as well as by matters concerning, say, the amenity centre or the caravan park.[15]Although the CPSEs were answered in November 2007 in respect of what would have been a different transaction, on 20 and 21 February 2008, a few days before the Agreement was concluded and in relation to it, Fursdon Knapper wrote to Henriques Griffiths asking for (amongst other things) confirmation that there were “no further enquiries outstanding”. There had been no pre-sale enquiries since Mr and Mrs Francis withdrew from the prior negotiations. In context, I have no doubt that in checking that there were no further enquiries, Fursdon Knapper’s letters had in mind, and would have been understood by Henriques Griffiths as having in mind, the CPSEs as previously answered. The CPSE responses, therefore, although provided originally in the context of a different offer for the sale of less than the whole site, in my judgment were effectively adopted and reiterated, for the purpose of the revised offer to purchase the entire site. Any representations made thereby were, therefore, repeated with a view to the Agreement, by then in immediate prospect, and were not made only three months previously with a view to the different transaction that did not proceed.[16]Secondly, bearing in mind the identity of the defendants before me, the point is taken that the CPSEs are by nature enquiries of the vendor in respect of a proposed commercial property transaction, so that the answers provided in this case, to the extent they constituted representations calculated to induce Mr and Mrs Francis to contract to purchase the Park, were representations made by the Vendor, not by Mr Knapper or Fursdon Knapper or Mr Drummond. They were communicated to Henriques Griffiths, acting on behalf of Mr and Mrs Francis, by Fursdon Knapper, acting (in the person of Mr Knapper) on behalf of the Vendor. Their content, as I find below, was provided to Mr Knapper by Mr Drummond. But they were representations by, and only by, the Vendor.[17]That conclusion is confirmed or reinforced by this explanation and disclaimer in the opening section of the CPSEs:
“(B) The replies to the enquiries will be given by the Seller and addressed to the Buyer. … (C) The replies are given without liability on the part of the Seller’s solicitors.”
[18]In my judgment, that is fatal to the negligence claim in relation to the Park Representations, which is made against Mr Knapper and Fursdon Knapper only. Mr Seitler QC for Mr and Mrs Francis recognised in closing that this was a real difficulty for the negligence claim, although he did not abandon the submission made in opening that this case on its facts falls outside the normal rule confirmed by Gran Gelato v Richcliff (Group) Ltd [1992] Ch 560. That normal rule is that the vendor’s solicitor owes no duty of care to the purchaser in respect of the vendor’s pre-contractual representations.[19]Even without the CPSE explanation and disclaimer quoted above, I do not agree that this case falls outside that normal rule. The suggestion was that, in respect of the CPSE answers as provided to Henriques Griffiths, Mr Knapper had stepped outside or beyond his role as the Vendor’s solicitor and had undertaken, as interested and involved chalet owner, some measure of personal responsibility for the accuracy of the answers. But I did not find anything of that sort in the evidence. Had there been something in the evidence that might otherwise have tended to suggest some undertaking of responsibility by Mr Knapper, it would most likely be trumped by the CPSE explanation and disclaimer in any event. The CPSE is a standard form that a commercial property vendor’s solicitor will expect to be asked to complete. Nonetheless, it is by nature a form submitted by the purchaser for completion by the vendor. It is the purchaser’s request that information be provided by the vendor without liability on the part of the vendor’s solicitor who in practice will inevitably return the completed form in due course. To step outside the rule in Gran Gelato would therefore require some indication that personal responsibility was being undertaken notwithstanding that at the purchaser’s instigation and express request, the process was one in which the vendor’s solicitor was to have no liability.[20]The negligence claim in respect of the Park Representations therefore fails at the outset. However, as Mr Bacon for Mr Knapper and Fursdon Knapper accepted, rightly in my view, the CPSE disclaimer does not protect against liability for deceit if such liability is otherwise established.[21]As to that, if the elements of deceit are otherwise made out in relation to Mr Knapper or Mr Drummond, then there is liability accordingly (including, in the case of Mr Knapper, vicarious liability on the part of Fursdon Knapper) notwithstanding that the representations were, strictly, representations by the Vendor. If Mr Drummond or Mr Knapper caused or procured the Vendor to make representations in order to induce the sale, knowing them to be untrue or without any belief in their truth, and Mr and Mrs Francis suffered loss as a result, he has the same liability as if he had personally, in his own name, so misrepresented matters.[22]Thirdly, reliance was placed upon Clause 11 of the Agreement, which was in these terms:
“11. Disclaimer The Buyer admits that: 11.1 he has inspected the Property and purchases it with full knowledge of its actual state and condition and shall take the Property as it stands; 11.2 he enters this Agreement solely as a result of his own inspection and on the basis of the terms of this Agreement and not in reliance upon any representation or warranty either written or oral or implied made by or on behalf of the Seller (save for any representation or warranty contained in written replies given by the Seller’s solicitors to any written preliminary enquiries raised by the Buyer’s solicitors) [my emphasis]; 11.3 This Agreement contains the entire agreement between the parties.”

The Buyer admits that:

[23]Nothing in Clause 11 could operate to exclude liability for fraud (as Mr Bacon accepted for Mr Knapper and Fursdon Knapper). Clause 11 is thus irrelevant, since I have concluded for other reasons that the claim in negligence in relation to the Park Representations cannot succeed, and the Service Charges Representation claim is not about what did or did not induce the Agreement. However, it seems to me the words I emphasised in Clause 11.2 except from it, i.e. they except from any exclusion of liability effected by Clause 11.2, a liability for representations made by the CPSEs. So the negligence claim in respect of the Park Representations, if otherwise viable, would not have been defeated by Clause 11.[24]Drawing the threads together, the Vendor, by its answers to the CPSEs, made, so far as is now material, the following representations, calculated to induce Mr and Mrs Francis to conclude the Agreement, in respect of which Mr Knapper (and therefore Fursdon Knapper) or Mr Drummond could in principle have liability on the basis identified in paragraph 21 above, namely that: i) The Park had not been affected by structural or inherent defects. ii) The Park had not been affected by defective Conduits, fixtures, plant or equipment. iii) The Property had not been affected by flooding except for one incident of flash flooding that caused damage to the site manager’s flat and reception area that was covered by insurance. iv) So far as the Vendor was aware, there were no items requiring significant expenditure within three years, in respect of any Conduits, fixtures, plant or equipment that were to remain part of the Park or that would serve the Park after completion. In relation to (ii) and (iv) above, ‘Conduits’ was defined by the CPSEs to mean “the pipes, wires and cables through which utilities and other services are carried”.

The Position in Fact

[25]In what follows, I set out my findings on the evidence as to whether, and if so why and to what extent, those Park Representations were misrepresentations as at February 2008, when it is said they induced Mr and Mrs Francis to conclude the Agreement. The Park had not been affected by structural or inherent defects[26]This was not true, in that, as I find on the evidence: i) There was rot in the roof timbers of the amenity centre, a structural defect (bearing in mind the CPSE definition of ‘Property’, so that the Park for these purposes includes all buildings or structures on the site). ii) The amenity centre walls were badly affected by damp and mildew, an inherent defect. iii) For a period measured in years, and on any view until (and including) the autumn of 2007, the Park had suffered from poor drainage leading on occasion to localised flooding in various parts of the chalet park and on the caravan park, an inherent defect. Mr Drummond gave evidence the gist of which was that works had been done on his watch that he believed had dealt with these issues by the time the Agreement was entered into. He submitted as part of that evidence a copy of a site diagram on which he had marked up, for the purposes of the trial, the locations and nature of those works. However, I also had evidence from Mr Francis, which I accept, that he encountered the problem as a persistent issue after acquiring the Park. Even if Mr Drummond had been correct in thinking that the problem had been resolved, the representation that the Park had not been affected would still have been false. The Park had not been affected by defective Conduits, fixtures, plant or equipment[27]This was not true, in that, as I find on the evidence: i) The main storm water drainage pipe that ran through the caravan park to the chalet park had collapsed some years before February 2008. This caused water to back up in the chalet park (and was part of the drainage/flooding problem I referred to in paragraph 26.iii) above). New pipe had been laid to one side of the Park, but very few of the existing chalets had been connected to it. ii) Some foul water drainage system manholes had no covers and some had ill-fitting covers so that the foul water system would flood with rain water, leading to foul water backing up through the manholes. iii) The on-site sewage pump system, housed in its own small pump house at the Park, was inadequate for the needs of the site. A need to upgrade it had long been recognised by the Vendor, and it was work intended to be done in conjunction with the development work for the new lodge area at the Park; but the need to upgrade it was independent of the new development, albeit(a) it was obviously convenient, all things being equal, to do any work at the same time as the development work, and(b) the development if completed successfully was set to increase the population of the Park, which would place yet greater demands on the already inadequate sewage system, rendering its upgrade even more essential. It is said against making a finding that the sewage system was deficient that to date it has still not been upgraded. But that does not mean all was as it should be, and I accept Mr Francis’ evidence that the pump station as acquired in 2008 was liable to frequent breakdowns and that the system as it then stood was creating what Mr Francis described as “a 15ft pit full of sewage which could have caused a real problem for children straying from the adjacent play area”. (I do not, though, accept Mr Francis’ evidence that the pump house had no roof and no door when the Park was sold. He put on a new, tiled roof, and replaced the door to make it more secure, but in my judgment he was either exaggerating or mistaken in his recollection when he said there had been none there at all in late 2007 / early 2008.) The work needed to upgrade the pumping station, and install a new rising main, had been costed at c.£141,000 (a little over £68,000 for upgrading the pumping station and just over £73,000 for the new rising main). None of the work had been done. The Property had not been affected by flooding except for one incident of flash flooding that caused damage to the site manager’s flat and reception area that was covered by insurance[28]As appears from paragraphs 26.iii) and 27.i) above, this was not true. The Park, both in the caravan park and in the chalet park, had suffered from flooding problems for years. Even had those problems been resolved by February 2008, this representation would have been false; but in fact, they had not been resolved. Further, it was not true that the flash flood incident had only caused damage to the manager’s flat and reception area. A number of chalets had also suffered damage. So far as the Vendor was aware, there were no items requiring significant expenditure within three years, in respect of any Conduits, fixtures, plant or equipment that were to remain part of the Park or that would serve the Park after completion[29]This was not true. The Vendor, through Mr Drummond as Managing Director and the Board as a whole, was of the view that the amenity centre needed to be refurbished and re-roofed, and that the sewage system needed to be upgraded as referred to in paragraph 27.iii) above. Both were regarded by the Board as “essential major works” in the summer of 2006. A list of such works prepared by the Board dated 17 July 2006 included “Upgrade sewerage system” and “Total refurbishment of the Amenity Centre”. The works had not been undertaken by the Vendor (or even begun), but only because of lack of funds. In relation to the rot in the amenity centre roof timbers, the Board had accepted the view of Barry Edwards, one of the Directors, in September 2005 that “immediate treatment was … unnecessary, [but] the issue needed to be addressed in the not too distant future”. No more specific timescale appears to have been put on the need to deal with the roof rot, but I am sure that the “not too distant future” did not mean only after November 2010 (as it would need to if it were to be more than three years after the CPSE answers were given, even assuming (favourably to the defendants) that that is the yardstick rather than three years from February 2008).[30]The other “essential major works” identified by the Board as of summer 2006 were: i) The repair and maintenance of site roads. I accept Mr Drummond’s evidence that these works had been done by November 2007. ii) The replacement and re-siting of the children’s play area. Again, I accept Mr Drummond’s evidence that this had been done by November 2007. iii) “Surface water drainage”. Here, I accept Mr Drummond’s evidence that work had been done, as he described in his evidence by reference to his marked-up site diagram. I also find, which was the gist of his evidence, that he believed that what had been done was what was required to deal with the surface water drainage issues at the Park. Though I have also accepted Mr Francis’ evidence that those issues persisted, so that Mr Drummond’s view has been shown to have been optimistic, this Park Representation was a representation only as to the Vendor’s awareness at the time of the need for significant expenditure. Having accepted Mr Drummond’s evidence as to his understanding and belief at the time, and in any event on the evidence, there is to my mind no basis for finding that the Vendor was aware at the material time of a need for yet further surface drainage works.

Inducement

[31]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).[32]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.”[33]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.[34]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.”
[35]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.” (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.”
[36]I have significant concerns about that evidence. Mr and Mrs Francis’ oral evidence, under cross-examination, did nothing to alleviate those concerns:-[37]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.[38]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.[39]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.[40]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.[41]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.[42]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.[43]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.”
[44]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).[45]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.[46]This boldness, and simplicity, of approach on Mr Francis’ part is borne out and reinforced by the way he went about the deal generally. By mid 2006 he had a settled ambition to own and build some form of holiday let development or holiday park. After the briefest of initial visits to the site in October 2007, he decided that he was happy to pay £1,600,000 for the Park, minus the chalet park. He was quite unable to explain where that figure had come from, or how it had been calculated or derived, other than to say he judged it to be the right price. At the time, the Vendor was marketing through commercial property agents called Miller Commercial a lesser portion of the site, just the caravan park and amenity centre, seeking offers in excess of £750,000. The Vendor had in fact received an offer subject to contract for that lesser portion, of £700,000, but I could not say on the evidence that Mr Francis was aware of that. Mr Francis accepted that he had never before bought a holiday park property anything like this, but he was adamant that:(a) he took no advice from anyone on what price to offer;(b) he did not see any valuation of any kind before making his offer;(c) he was told that what was for sale was the Park minus the chalet park, and the Vendor was asking for £1,800,000. It is difficult to know what to make of (c). There is no other evidence that prior to Mr Francis’ arrival on the scene, the Vendor was marketing otherwise than as per the Miller Commercial particulars I have referred to. I very much doubt that Mr Drummond would have told Mr Francis that the Park minus the chalet park was up for sale at £1,800,000, and it was not put to him that he had done so. Upon that minimal (some might say) evaluation, Mr Francis was willing not only to offer £1,600,000, but also (a) to pay a non-refundable deposit of £100,000 to secure the Vendor’s attention and (b) to complete as quickly as the solicitors could manage, i.e. within (he estimated) 6-8 weeks. Mr Francis said he did not realise that his £100,000 deposit was to be non-refundable, but in my judgment that is plainly what he and his wife agreed, in writing, as I am sure he realised at the time, in the handwritten agreement between them and Mr Drummond that she drew up and they all signed, in Mr Drummond’s case “SUBJECT TO DIRECTORS AGREEMENT”. It provided that Mr Francis would “give £100,000 … deposit to be cashed if the directors of [the Vendor] are to accept on Monday 22nd October 2007 my offer of [£1,600,000] non returnable subject to the following” (my emphasis). The ‘subjects’ that followed simply listed the parts of the site covered by the offer. This was an agreement to pay £100,000 outright for the Vendor’s acceptance of the £1,600,000 offer. That £100,000 would stand as deposit (and therefore part payment) if the deal thereafter completed but was “non returnable” if it did not, so long as the offer had been accepted ‘clean’ by the Board of the Vendor on 22 October 2007.[47]That offer appears to have been accepted and Miller Commercial drew up a typed Memorandum of Heads of Terms and Conditions dated 26 October 2007. It stated (arguably incorrectly) that everything was ‘subject to contract’. The handwritten agreement had not expressed the offer to be ‘subject to contract’ and provided that the next step after acceptance of the offer would be completion, within 6-8 weeks. Be that as it may, the parties through the solicitors (Fursdon Knapper for the Vendor, Henriques Griffiths for Mr and Mrs Francis) proceeded to treat the matter as ‘subject to contract’, no point has ever been taken that the parties were in fact bound as of 22 October 2007, and in the event this initial deal fell through in early December 2007 for reasons that do not now matter.[48]By January 2008, the Vendor was negotiating a sale of the entire Park, to a Mr Hopkins, for £1,400,000. Mr Francis admitted to an awareness that there was another buyer, but did not accept that he knew his identity or the price he had offered. Mr Francis decided to make a new offer, which was accepted and led to the Agreement as ultimately concluded, to buy the Park in its entirety for £1,350,000. He was unable to provide any rationale or explanation for that figure, at one point suggesting that Mr Griffiths had suggested it to him, which I find most unlikely. The likelihood, to my mind, is that Mr Francis was in fact made aware that the other buyer’s offer was £1,400,000, and pitched his offer just below but with an ability (and funding) to move quickly, judging (correctly as it turned out) that that would win the day. Mr Knapper gave evidence, which I accept, that in the meantime Mr Hopkins was ‘kept warm’ (my phrase, not his) until Mr and Mrs Francis actually exchanged contracts in February 2008: Mr Knapper remembers telephoning Mr Hopkins to say that the Vendor had now exchanged and so would not be taking Mr Hopkins’ offer any further.[49]The inducement claim I have in mind as perhaps not impossible on my findings of fact would be a claim that focused upon the impact of the CPSE answers on Mr Griffiths. Was he in some way influenced by them? Might he have reported to or advised Mr Francis in some way that would have made some difference to what actually happened? It is far from clear to me that it would have made the slightest difference to Mr Francis or, therefore, to what actually happened, if CPSEs 8.1 and 8.9 had been answered in such a way as to involve no misrepresentation, e.g. had they told Mr and Mrs Francis to rely on their own enquiries or assessment, as Mr Seitler QC put to Mr Drummond they should have. But in any event, as I said, no case of indirect inducement, through influencing initially the mind and therefore the conduct of Mr Griffiths, was pleaded. Pressed with this difficulty in closing, Mr Seitler QC argued that the case (meaning Mr and Mrs Francis’ case) was that the “mechanism for reliance was through the solicitor”, that this was merely not made explicit in the pleading (rather than being not pleaded), and was “obvious” in a case concerning something like the CPSEs. Mr Seitler QC made that argument by reference to the plea at paragraph 58 of the Particulars of Claim that “If the true position had been stated to the Claimants, as it should have been, the Claimants would not have purchased the Park at all, alternatively would have purchased the Park at a lower price than the Sale price”. But that is not a relevant plea (there was no obligation to disclose “the true position” to Mr and Mrs Francis), and in any event it is not the plea of reliance. That was at paragraph 38 of the Particulars of Claim and was that “The Claimants [i.e. Mr and Mrs Francis] relied on the Park Representations in agreeing to the Sale”. To my mind, that is not apt to alert defendants fairly or at all, especially defendants accused of fraud, to a case that Mr and Mrs Francis gave no consideration to the CPSEs themselves, but nonetheless there was reliance on the responses to CPSEs 8.1 and 8.9 because they operated in some way on Mr Griffiths. It would be unfair to the defendants to consider finding against them on the basis of such a case. As it happens, in the event (given in particular the lack of evidence from Mr Griffiths), I could not find more than that he might have mentioned to Mr Francis that the Vendor was saying he (Mr Francis) should rely on his own judgment in relation to the matters dealt with by CPSEs 8.1 and 8.9 (if the Park Representations had not been made); and if Mr Francis had been told that, he would have proceeded to exchange at £1,350,000, exactly as he did, based indeed upon his own judgment in relation to such matters, together with Mr Griffiths’ advice about the freeholder’s service charge rights.[50]Finally, I have not overlooked that in law there is a rebuttable presumption of inducement where a contract has been concluded following misrepresentations by or on behalf of one party to it calculated to induce the other party to enter into the contract. I have had that well in mind generally; likewise in particular various references in the authorities to the reason for that presumption, leading it is sometimes said to it being an uphill task to rebut it, especially in a case of fraud. But I have reached clear conclusions on the evidence as to what actually influenced Mr Francis. The CPSE answers did not influence him at all. On the particular facts of this case, in my judgment the presumption was comfortably rebutted.[51]The Park Representations claims therefore fail and will be dismissed. In deference to the time spent on this at trial, I should nonetheless deal with Mr Drummond’s and Mr Knapper’s states of mind in respect of the CPSE answers I have found to have been untrue. I shall therefore turn to that next, although in the circumstances I do not propose to rehearse the evidence in as much detail as I might have done if there could be liability, but will concentrate on setting out my reasoned conclusions.

Mr Drummond’s State of Mind

[52]It is convenient to start by setting out my findings as to how the CPSE answers were put together and provided by Fursdon Knapper (acting by Mr Knapper) to Henriques Griffiths. On this, Mr Knapper’s evidence was clear, consistent and supported by both the contemporaneous documents and the inherent probabilities, and I accept it. Mr Drummond’s evidence was something of a moveable feast, because (as I assessed him) he had no real recollection but at the same time was experiencing a dawning realisation of how inaccurate, with hindsight, some of his CPSE answers had been. From the documents, and Mr Knapper’s evidence, what happened was this: i) Mr Knapper sent the CPSE form to Mr Drummond by e-mail, as a blank form, asking for it to be completed and returned. ii) Mr Drummond identified that some of the questions (not otherwise relevant to these proceedings) required input from Richard Alexander, the Park accountant. So he forwarded the blank form to Mr Alexander and he (Mr Alexander) hand wrote answers to those questions. iii) For the rest of the CPSEs, Mr Drummond sought generally to complete the form, hand writing answers as he went through. His handwritten answers included answering “NO” to all parts of CPSE 8.1. He returned the form with his answers written in to Mr Knapper. iv) However, Mr Drummond had not answered every question, e.g. he did not answer CPSE 8.9. That is not unusual, it was not something to cause Mr Knapper concern and it did not in fact cause him concern. v) As one might expect, Mr Knapper telephoned Mr Drummond to get his instructions on the unanswered questions. Mr Knapper added by hand, to the version of the form Mr Drummond had returned to him, answers given to him by Mr Drummond over the telephone, or it may be answers worded by Mr Knapper to reflect the factual instructions Mr Drummond gave him. In general, there was no discussion about the questions Mr Drummond had answered, and in particular there was no discussion about his answers to CPSE 8.1. As a careful solicitor should, though, Mr Knapper did of course sense check the answers Mr Drummond had provided and if he identified an answer that logically could not be correct, he raised that with Mr Drummond and after discussion made a correction to reflect Mr Drummond’s instructions (e.g. Mr Drummond had put “N/A” against CPSE 18.2 but logically that could not be right). vi) CPSE 8.9(b) asked for confirmation that there were no items requiring “significant expenditure” within three years in respect of “Conduits, fixtures, plant or equipment which will remain part of the Property or which will serve the Property after completion of the Transaction”. It seems fair to imagine that there may have been some discussion about what were “Conduits, fixtures, plant or equipment” or what might amount to “significant expenditure”. But whether there was, and if so its content, is (unsurprisingly) lost in the mists of time – this was nine years ago, after all. The upshot, though, I find, was that by some form of words or other, Mr Drummond instructed Mr Knapper that the confirmation requested by CPSE 8.9(b) could be given. Mr Knapper therefore wrote “Confirmed” against CPSE 8.9(b). vii) A typed version of the full set of answers as of the conclusion of that telephone call was prepared by Mr Knapper, typing up the final handwritten answers in red against each question. That was then the document sent to Henriques Griffiths for Mr and Mrs Francis. viii) Reverting to CPSE 8.9(b), Mr Drummond under cross-examination by Mr Seitler QC for Mr and Mrs Francis gave evidence that he had not really understood the question on the form, he thought Mr Knapper should sort out how to answer it and left him to do so. I do not accept that evidence. It is inconsistent with Mr Knapper’s account as to how he (Mr Knapper) came to put the answer he did against CPSE 8.9(b), which account I believed and was not challenged by Mr Seitler QC for Mr and Mrs Francis, or by Mr Drummond. It is inconsistent with the probabilities, since (as I find below) Mr Knapper did not have sufficient knowledge to answer the question. This evidence of Mr Drummond’s was, in my judgment, wishful thinking on his part in the witness box as he began to appreciate the desirability of distancing himself from the answer that had been given.[53]That brings me to a curious feature of the case, as closed by Mr Seitler QC for Mr and Mrs Francis. Having obtained from Mr Drummond the evidence I have just referred to about how CPSE 8.9(b) was answered, Mr Seitler QC on instructions ‘accepted’ it on behalf of Mr and Mrs Francis and in consequence abandoned any claim against Mr Drummond in respect of CPSE 8.9(b) (and also abandoned the conspiracy claim). That abandonment was not conditional upon my acceptance of the evidence in question, although it was clear that Mr Bacon, for Mr Knapper and his firm, would be inviting me to reject it and I have now done so.[54]Those being the facts as to the way in which the CPSEs were answered, the issue is not, or is not simply, Mr Drummond’s knowledge of the matters of fact that rendered inaccurate the answers that he gave to CPSEs 8.1(a), 8.1(c) and 8.1(e). The issue is Mr Drummond’s state of mind when providing those answers to Mr Knapper. Of course, what Mr Drummond knew about the Park, its physical condition and what work was required on site, will inform any finding as to his relevant state of mind. But it is not the only factor and the question, ultimately, is his state of mind overall: was he, in providing answers or instructions to Mr Knapper, so that the completed CPSEs form could be sent to Henriques Griffiths, getting Mr Knapper to say things on behalf of the Vendor that he (Mr Drummond) appreciated to be untrue as he did so, or as to which, as he did so, he (Mr Drummond) had no belief in their truth? That is the state of mind of the fraudster as a matter of English law. That fraudster’s state of mind will be formed from a blend of knowledge or belief as to relevant matters of fact, the degree to which those matters are in mind at the material time, and an understanding as to what the statements made or to be made will convey to the representee.[55]Looking back to my findings (in paragraphs 26 to 28 above) as to the inaccuracies in the Park Representations arising out of CPSE 8.1, I find that Mr Drummond knew at least that: i) There was rot in the roof timbers of the amenity centre. ii) The amenity centre walls were badly affected by damp and mildew. iii) The Park had suffered from poor drainage for years, leading sometimes to flooding in the chalet park and on the caravan park. He thought the issue had been addressed satisfactorily, but he knew full well that it had been a real problem at the Park. (It is not clear to me whether he knew, and I do not find that he knew, more specifically, that the main storm water drainage pipe had collapsed.) iv) The on-site sewerage pump system was inadequate for the needs of the site and earmarked for a major upgrade irrespective of the development project, although it would of course be more convenient to undertake the work alongside the development work. He knew, in particular, of its inclusion in the Vendor’s plans for the immediate future (indeed for the immediate past) and that it had only not been undertaken because the Vendor was running out of money. v) The flash flood incident (in late June 2005, particularly well known to Mr Drummond as the site manager’s flat that was badly affected by it was his home on site) caused damage to a number of chalets (and not just to the main block).[56]The question then is what to make of Mr Drummond’s evidence to me that he thought at the time he gave them that his answers to CPSE 8.1 were correct, given especially that he conceded rather readily in cross-examination that they were not in fact correct, having been shown contemporaneous documents of what he knew at the time. He did not, I think, have a good explanation for that contrast. He said at the end of his evidence that he was “beginning to come to the conclusion that I might have been a bit naive in my answers, one or two of them” (i.e. “naive” at the time in one or two of his CPSE answers).[57]He sought to excuse his ‘naivety’ by saying that he had never seen a set of pre-sale enquiries like the CPSE before and that Mr Knapper would have been aware of that and would have taken his answers up with him if he (Mr Knapper) had thought they were not right. He said he thought, at the time, that Mr Knapper “would see everything that was on the go through the John Sandoz people”. This claim – a claim to have thought at the time that Mr Knapper knew enough about the physical state of the Park to know whether Mr Drummond was giving incorrect answers to the CPSEs – was, I concluded, a self-serving adoption of the case Mr Drummond had seen Mr Seitler QC spend two days putting to Mr Knapper in cross-examination.[58]Mr Drummond also noted, in these final remarks in his evidence, that he had been “desperate to leave” and that Mr Knapper knew that too.[59]These side-swipes at Mr Knapper were unattractive and unsatisfactory. As I shall find below, Mr Knapper did not have the knowledge at the time to be second guessing Mr Drummond’s answers to CPSE 8.1. Nor in my judgment did Mr Drummond at the time have reason to think that Mr Knapper would have such knowledge. The CPSEs may have been unfamiliar to him, whereas of course they were familiar to Mr Knapper, but the questions that matter, those at CPSE 8.1, are not complex or difficult; and Mr Drummond’s knowledge of the true position in relation to those questions was not old or obscure, but a key part of his ‘stock in trade’ knowledge as site manager at the Park and (latterly) as managing director of the Vendor.[60]With that knowledge of the relevant condition and history of the Park, in my judgment Mr Drummond could not have thought that the answer to CPSE 8.1(a), CPSE 8.1(c) and CPSE 8.1(e) was in each case “NO”, unless he gave no thought at all to what those questions were asking and, therefore, what his answers would convey. Now carelessness even in a high degree, as to what a statement will convey, is not fraud; and I do not find against Mr Drummond that he gave his answers to CPSE 8.1 conscious as he did so that he was not telling the truth. In Mr Drummond’s case, therefore, it comes to this: did he go beyond a careless lack of focus upon what the Vendor would be saying to Mr and Mrs Francis, based on his answers to CPSE 8.1, to the point where he was saying “NO” to those questions without any belief in the truth of those answers? In my judgment, he did. He did not form an understanding, badly mistaken, careless, but honest, as to what his answers would convey, so as therefore also to have a positive belief, wrong-headed but honest, that his answers were accurate. With regret, I conclude that he just gave the answers he thought ought to be given to get the CPSEs back to Mr Knapper, without forming any belief as to what his answers would say to his purchasers and, therefore, without belief in the truth of his answers. Had Mr and Mrs Francis relied on the answers to CPSE 8.1(a), 8.1(c) or 8.1(e), and loss had resulted, Mr Drummond would have been liable in deceit accordingly.

Mr Knapper’s State of Mind

[61]On the evidence of his contemporaneous correspondence and conduct, and his performance in the witness box, Mr Knapper was and is a difficult character: long-winded, rather pompous, very argumentative, quite infuriating. The key to his evidence, as to its substance, was a distinction between his view, quickly formed in the summer of 2006, that the Board of the Vendor, led by its then Chairman, Alan Curson, was incompetent and unfit to be in charge of the development project at the site, and his consequent lead role in attacking the Board and its handling of that project, on the one hand, and his involvement in or knowledge of the problems with the physical condition of the existing, developed, parts of the site that falsified (as I have held) some of the CPSE answers given by him on behalf of the Vendor.[62]I have already set out my findings as to how the CPSE answers were put together, accepting Mr Knapper’s evidence about that over Mr Drummond’s. Looking at the matters that in fact falsified those answers (paragraphs 26 to 30 above), Mr Knapper’s evidence was that he did not know of them at the time. As an experienced solicitor, in commercial property matters in particular, I have no doubt that Mr Knapper had a clear and accurate understanding of what the CPSE answers would convey. The case for Mr and Mrs Francis is simple: Mr Knapper’s evidence is false; he knew full well about the flooding problems, the state of the amenity centre, and the inadequacy of the sewerage system; he knew of the Board’s view that (funds allowing) that system needed to be upgraded, and the amenity centre needed to be refurbished and re-roofed, in the short term; he therefore knew full well, as he provided the CPSE answers, that they were false as regards CPSEs 8.1(a), 8.1(c), 8.1(e) and 8.9(b).[63]Although in principle observations equivalent to those in paragraph 54 above apply also in the case of Mr Knapper, in his case on the facts the matter does come down to a simple question of knowledge. If I reject his evidence and find that in late 2007 / early 2008, he did know of the matters of fact that rendered those CPSE answers untrue, then he would have been liable in deceit had Mr and Mrs Francis relied on those answers and loss had resulted.[64]The argument for rejecting Mr Knapper’s evidence, and finding that he did have that knowledge, involved three strands, relied on by Mr Seitler QC both individually and cumulatively: i) Firstly, it was contended that the problems with the site, as regards drainage/flooding, sewerage, and the amenity centre, were such common knowledge amongst chalet owners that they were bound to have been shared with Mr Knapper in the ordinary course of the life of the chalet owning community at the Park. ii) Secondly, it was contended that Mr Knapper could not have conducted the campaign he conducted against the Board and its handling of the development project, or the legal work he did subsequently for the Board, without being fully briefed about the history of the site and its problems; and in any event, his fellow ring-leaders in that campaign included chalet owners such as John Sandoz and Steve McCausland who were well aware of the historic, and ongoing, problems with the site and would surely have shared that knowledge with Mr Knapper, their champion in the campaign. iii) Thirdly, it was contended that the correct inference to draw from certain particular aspects of Mr Knapper’s subsequent conduct is that he indeed had knowledge at the time, the proper explanation for that conduct being a guilty desire to distance himself from that truth or keep evidence of it away from Mr and Mrs Francis.[65]Mr Seitler QC also argued that Mr Knapper had a personal, financial motive to dissemble. Of course, motive does not prove anything, but it can explain why a person might be tempted to lie and might give in to that temptation. That can in turn help to discharge the famously heavy burden a claimant has, due to the inherent improbability, all things being equal, of fraud or dishonesty, in seeking to persuade the court that a deceit was indeed practised.[66]Taking the point on motive first, the Vendor owed fees to Fursdon Knapper. In the event, Mr Knapper billed for, and the firm was paid, £31,500 + VAT. That represented a discount of something like 25% against fees assessed on a time basis on Mr Knapper’s then hourly rate, a discount volunteered by Mr Knapper. In addition, he (strictly, I think, his firm) had ‘undertaken’, as he put it in one e-mail at the time, that various other creditors of the Vendor, owed around £60,000 in aggregate, would be paid out of the sale proceeds. Allowing for the amount required to repay the Vendor’s bank borrowing and the direct costs of the sale (other than Fursdon Knapper’s fees), this meant it would be ‘tight’, as Mr Knapper put it in the same e-mail, to see everyone paid out of the sale price agreed with Mr and Mrs Francis. I do not accept that this created much in the way of motive on the part of Mr Knapper to be other than truthful in handling the CPSEs. Mr Knapper, as I find, did not understand the ‘undertakings’ to create a liability to make payments beyond any ability to do so, in the event and after repaying the bank, out of any remaining balance of net sale proceeds (and I think he was correct in that understanding). The fees owed to Fursdon Knapper were not insubstantial, but not so significant to Mr Knapper, in my judgment, as to be a factor likely to influence his behaviour in dealing with the CPSEs.[67]Before I take in turn the three main strands of the case against Mr Knapper on the evidence, I should deal with a pleading point taken by Mr Bacon. In short, he submitted that most of the matters relied on by Mr Seitler QC were not pleaded and argued that I should disregard those matters and focus solely on the matters relied on in the Particulars of Claim as particulars of knowledge on the part of Mr Knapper as to the falsity of the CPSE answers. I do not accept the premise for that argument. The particulars of knowledge, in my judgment, gave fair and sufficient notice that the case for Mr and Mrs Francis was that the knowledge alleged was to be inferred from Mr Knapper’s involvement in the affairs of the Park since acquiring his chalet in May 2006. The chalet owners’ meeting on 11 June 2006 and the letter from the Board dated 17 July 2006 that I shall mention further below are both referred to specifically in the pleading, but the pleading is not tied to those specific matters. It relies on Mr Knapper’s involvement in the Park’s affairs, his acting as legal advisor to the Board and his working closely with the Directors (all, as alleged, stated quite generally). The first and second main strands of the case put at trial just explored the detail of that. The third main strand of the case put at trial raised a point on Mr Knapper’s behaviour in the service charge litigation that was specifically pleaded, and certain particular points arising out of the witness evidence he gave at trial that it is fair to raise without any specific pleading.

Common Knowledge

[68]I find that it was known or understood by at all events some chalet owners, by the summer of 2006 when Mr Knapper acquired his chalet, that there had been drainage/flooding issues on site, affecting the caravan park and the chalet park, that the sewerage system was regarded as inadequate and in need of upgrading, and that the amenity centre was earmarked for refurbishment and re-roofing. I could not say on the evidence how widespread that knowledge or understanding was, but it extended beyond the Board and included at least some of those who came to be supporters of Mr Knapper in the battle with the Board that was to follow, e.g. Mr Sandoz and Mr McCausland. I am also unable to say on the evidence, and do not find, that there was knowledge outside the Board specifically that rot had been found in the amenity centre roof timbers.[69]On Mr Drummond’s evidence, there was prior to the summer of 2006 and the strife that then erupted, a good community atmosphere at the Park and a degree of socialising amongst chalet owners. It is not implausible to suppose, therefore, that Mr Knapper might have been told something of problems with drainage/flooding, sewerage, or the amenity centre, by other chalet owners. But I do not accept that must have happened, nor that it is not at least equally plausible for him to say, as he did in his evidence, that it did not. In fact, he did not socialise or engage in the communal life of the site generally. His rapid immersion in, and to some degree creation of, problems at the site in the battle with the Board that followed, meant that it was more like work than play to be on site, although the chalet had been intended as a weekend/holiday retreat, and that in turn meant his wife was reluctant to spend time there. Between buying their chalet in May 2006 and the completion of the sale of the Park to Mr and Mrs Francis in April 2008 some two years later, Mr Knapper visited the site only 15-20 times, and his wife came with him on only about half of those visits. In my judgment, there was in truth nothing of real substance in this first strand of the case against Mr Knapper. If a case of relevant knowledge is to be made out, it must be by reference to the second and third strands of that case.

Battle with the Board etc

[70]The Vendor’s 2006 AGM was held on 15 April 2006. A Special Resolution at that meeting increased the borrowing powers of the company by £500,000, to £1,250,000. This was required because the Board had overspent heavily on the development project, as against budget, and the market for holiday homes had slumped so that they were not achieving sales of new lodges. The Vendor’s bank was willing to lend an additional £250,000 (which would take the principal sum borrowed to £850,000) but only on condition that a further £300,000 was raised from the shareholders. The Board proposed, and it was part of the Special Resolution as passed, that this be raised by way of “supplementary maintenance charge”.[71]Although the Special Resolution had been passed, some of the chalet owners (I suspect many, but the evidence did not really quantify this) were unhappy with the situation, both the specific business of the supplementary charge and the more general business of the Board’s handling of the project as a whole. A chalet owners’ meeting was planned for 11 June 2006 to air and explore these grievances further. On 10 June 2006, Mr Sandoz called on Mr Knapper at his chalet – it was Mrs Knapper’s birthday that day, and she and Mr Knapper were at the Park for a weekend away to celebrate. Mr Sandoz introduced himself and invited Mr Knapper to the owners’ meeting. Mr Sandoz, it seems, had been made aware of Mr Knapper as a new owner and of the fact that he was a solicitor. He was keen to get Mr Knapper involved. He provided Mr Knapper with a copy of a letter dated 22 May 2006 that Mr Jarvis, the Vendor’s company secretary, had sent out addressed to “all Shareholders / Leasheholders”. Mr Knapper had not received it directly from Mr Jarvis as Mr Jarvis was still using the address of a previous owner of Mr Knapper’s chalet as the correspondence address for that chalet. The Board acknowledged that there was disquiet about the April AGM Special Resolution amongst what it described as a small minority; it claimed that Mr Sandoz was drumming up support for an Extraordinary General Meeting to revisit things and was putting about “half truths, innuendo and very biased opinions”. The Board went on to put its side of the story on the development project overspend and financing.[72]Mr Knapper attended the meeting, in fact he was asked to and agreed to chair it, which involved primarily just keeping order, preventing disgruntled chalet owners from all talking at once or talking over each other. It was obvious to Mr Knapper that there was indeed much disquiet over the supplementary charge, and the development project overspend generally. He formed a strong provisional view from what he was hearing that the demand for further funding was really a demand to raise from the chalet owners as shareholders further working capital for the Vendor, which in his view was not something that could properly be done through the service charge provisions of the leases. He threw himself into that issue, and the fight to challenge the existing Board, particularly Mr Curson, as a result of and following the meeting.[73]Thus, within weeks of acquiring his chalet in May 2006, Mr Knapper became actively engaged in, and a ringleader of, what quickly became an unpleasant, bitter and personal battle with the Board. He orchestrated a vote of no confidence in the Board on 8 July 2006 that was only narrowly defeated. Mr Curson, a particular target of Mr Knapper’s agitations, resigned, realistically regarding that victory as pyrrhic given the closeness of the result. His leadership of the company was irreparably damaged, he had to go, so he did the decent thing. Later in 2006, Mr Knapper played a pivotal role, through legal advice he gave to the Board, in the termination of the services of Godfrey Chapples, who had been engaged as project manager for the development project. By then, he had also arranged for Fursdon Knapper to take over from another firm as conveyancing solicitors to the Vendor; and by late 2006 he was effectively acting, through Fursdon Knapper, as the Vendor’s standing solicitor, at the request of the reconstituted Board following Mr Curson’s departure. I had evidence from both Mr Drummond and Mr Knapper himself that the relationship between Mr Knapper and the Board remained relatively tense or strained, but that the view had been taken by Mr Curson’s successor that it was “better to have Mr Knapper inside the pot, pissing out, than on the outside pissing in”.[74]During this period (June 2006 to early 2007), in my judgment Mr Knapper badly blurred his personal interest as a chalet owner in what was happening at the site and his position as a solicitor at Fursdon Knapper, and such retainers as Fursdon Knapper did obtain (through him), to act for some of the chalet owners in sending a letter of 2 July 2006 to the ICSA (the Institute of Chartered Secretaries and Administrators) about Mr Curson’s conduct (since he was a chartered secretary), later to act for the Vendor in respect of conveyancing, and later again to give advice on various matters as company solicitor as and when requested by the Board.[75]During the early part of that period in particular, on a number of occasions he sought to use his position as a solicitor and the name of the firm unfairly to advance his personal interests. This was most unattractive. It was also in breach of professional conduct standards as a solicitor, to my mind blatantly so. Mr Knapper talked to the Law Society’s professional conduct department on one occasion – before, I think it must have been, he signed a long letter dated 26 June 2006, on Fursdon Knapper headed paper and under his signature as ‘Solicitor’, addressed “To the Shareholders [of the Vendor]”, which was essentially his position paper for the planned Extraordinary General Meeting at which the vote of no confidence in the Board was held. He said that he spoke to the Law Society because he thought what he was doing was close to the edge of what was allowed. But I do not believe he had identified the problem. His evidence about this conversation with the Law Society was not very clear, but it indicated to me that all he raised with them was a concern, in general terms, as to whether the firm could act, and do so through him, though he (at the time a consultant with the firm) and his wife (a partner in the firm) were interested parties. In effect, he was asking, I think, whether he (and his wife) could be clients in a matter handled by the firm and, if so, whether he could be the case-handler. But that is not the issue at all. The issue is that, in relation to the objectionable correspondence, he and his wife were not clients of the firm; there was no relevant matter; he was simply letter-writing in respect of personal affairs – as ‘Angry of Chalet 94’ – in which the fact that he was a solicitor was (or should have been) irrelevant (except that, incidentally, it might have given him a familiarity with legal points that a non-lawyer might not have had) and the firm had no involvement. His correspondence sought to use the fact he was a solicitor, and the name of the firm, to boost his chances of prevailing in the (personal) fights he was picking.[76]I was rather surprised by the evident degree to which Mr Knapper found that difficult to grasp. But I think it was an honest failure to grasp the point. He was not dissembling in court, pretending not to appreciate (now or at the time) that his behaviour was inappropriate; he genuinely did not see the point. In the result, very unattractive though this aspect of the facts is, I do not regard it as having any real bearing on the credibility of the evidence that matters. That is his evidence that he did not know at the time of the matters of fact rendering untrue, as I have found, the answers to CPSEs 8.1 and 8.9.[77]Now that evidence was also attacked as to its substance by reference to the degree to which, as I have summarised above, Mr Knapper threw himself into the fight with the Board, and later acted as the Vendor’s company solicitor. The submission for Mr and Mrs Francis was that, quite apart from the fact that they should have been written (if at all) simply as personal letters, Mr Knapper could not sensibly have written the letters he wrote, considering their tone and content, or later provided the advice and other legal services he provided as company solicitor, without having fully informed himself about all aspects of the recent history of the Park. The mastering of his ‘brief’ that he must have undertaken, it was submitted, would surely have included discussions with other chalet owners, especially those aligned with him in the battle with the Board such as Mr Sandoz, on all and any matters of concern they might have.[78]This was most acutely true, it was argued, of his letter of advice as to Mr Chapples’ position. For that letter in particular, but also for his letters and conduct generally, it was not credible to find that Mr Knapper was “all bluff and bluster”, that being the effect, it was said, of accepting Mr Knapper’s evidence that he was unaware of the physical issues rendering the CPSE answers false.[79]That submission was vigorously (but fairly) pursued with Mr Knapper in cross-examination, and forcefully put in closing. But I do not accept it: i) It was not necessary, either for the letter of advice in relation to Mr Chapples, or for Mr Knapper’s other correspondence or conduct, for him to have made himself aware, or been made aware of, the drainage / flooding, sewerage, or roof rot issues. I accept Mr Knapper’s evidence that he did not himself experience, so as to become aware directly of, any issue with drainage/flooding or sewerage. In relation to the amenity centre, he could see, as anyone could, that it was tired and in need of attention; but not that it needed major works, e.g. damp-proofing or re-roofing. To Mr Francis’ eye, as I have found, without knowing anything of rot in the roof timbers, the amenity centre needed major work, indeed he had formed the view that it would be better to knock it down and rebuild. But Mr Francis was an experienced and successful builder and property developer; Mr Knapper was nothing of that sort. ii) Mr Seitler QC and Mr Bacon both emphasised in their submissions the fallibility of human memory. I was referred especially to observations of Leggatt J. in Gestmin SGPS S.A. v(1) Credit Suisse (UK) Ltd &(2) Credit Suisse Securities (Europe) Ltd [2013] EWHC 3560 (Comm) at [15]-[22]. I respectfully venture to doubt whether judicial notice can be taken of everything Leggatt J. says there (I have in mind particularly [16]-[18] and [21]), although nor do I suggest that expert psychological evidence on memory formation and retention should be any part of our normal trial processes. I would also express the fallacy, that Leggatt J. says at [22] must be avoided above all, in terms slightly less dismissive of the potential value of witness testimony, thus: it is essential to avoid the fallacy of supposing that because a witness has confidence in his or her recollection and is honest, that recollection is necessarily reliable. I do though agree with Leggatt J. (also at [22]) that the utility of oral testimony “is often disproportionate to its length” and “its value lies largely … in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events.” Where the issue is the knowledge or state of mind of a witness at some point in the past, a key part of that critical scrutiny is the testing, through cross-examination of that witness, of the credibility in his or her individual case of the inferences that it is said should be drawn from the documentary record or other known facts. Hence the appropriateness and utility of testing Mr Knapper in cross-examination in this case as to whether his correspondence and conduct at the time sits comfortably with his claim of ignorance then of the facts that matter now. iii) There is nothing in the documentary record or other known facts that directly contradicts that claim. Nor, as I have already said, is there anything in his correspondence or conduct at the time that can only be explained by rejecting that claim. More than that, however, what speaks loudest, and positively confirms that claim, is Mr Knapper’s silence about the facts in question at the time. Reading through his contemporaneous correspondence, and assessing him from what I saw in the witness box, I am confident that if Mr Knapper had understood there to be unresolved drainage/flooding issues, an inadequate sewerage system, or structural defects in the amenity centre requiring major works (rather than just a bit of overdue TLC), he would have complained about those, long and hard, in the course of his battle with the Board. iv) The plausibility of my assessment, that Mr Knapper could be in the vanguard of that battle yet ignorant of the facts that matter now, is reinforced by the EGM on 8 July 2006, which was videoed at Mr Knapper’s request. The complaints about the Board, its composition, its handling of the development project, its competence going forward, were debated vigorously over several hours without any reference to those matters that mean the CPSE answers were not correct. That was so even though the money problems at the Park, created by the overspend on the development project (and a lack of sales of new lodges), had caused those matters to be matters of un-commenced “essential major works” to the knowledge (as it would have been) of many in the room. The EGM thus demonstrates rather vividly, to my mind, how the matters that engaged and exercised Mr Knapper could be explored fully and effectively without having the knowledge it is now alleged Mr Knapper (must have) had.[80]Generally, therefore, the documentary record, in my judgment, supports Mr Knapper’s claim of ignorance. Mr Seitler QC submitted, however, that there were specific documents that I should find Mr Knapper received that put a different complexion on things. In my judgment, they do not: i) The Board issued a letter to all shareholders (which by then included Mr Knapper) dated 17 July 2006, following the EGM. It announced the resignation of Mr Curson and addressed (amongst other matters) the legitimacy, according to the Board, of the supplementary service charge demand that had been made, which was one of Mr Knapper’s particular issues. The Board’s letter is also the document with the list of “essential major works” that I have referred to more than once already, included as part of an explanation of some of the history. Mr Knapper says he did not receive that letter and I accept that evidence. It was sent by Mr Jarvis, and the documentary record shows, as Mr Knapper has claimed, that he had not correctly updated his records with Mr Knapper’s contact details as shareholder. Moreover, it is to my mind highly improbable that if Mr Knapper had seen that letter, so as to know that the problems with the development project had also badly affected plans for “essential major works”, he would not have included that as a further charge against Mr Chapples in the detailed contract termination letter he drafted when the Board, following his advice, concluded that they would dispense with Mr Chapples’ services. ii) Mrs Goddard, a chalet owner who later became a named lead claimant in the service charge litigation, sent to Mr Jarvis by fax and post a letter dated 1 August 2006 in reply to the Board’s 17 July letter. She referred to “all the mismanagement that has been going on” and said that she found the Board’s letter “a joke”. She referred to the “essential major works” mentioned in the Board’s letter and said of them inter alia that: surface water drainage work had not been done, chalets were still flooding and nothing had been done to resolve that problem; if anything had been done in the way of upgrading the sewerage system, it had done nothing to benefit the original chalet park area; and as regards totally refurbishing the amenity centre, “all we can say is what, where and when?”. But there is no direct evidence that Mr Knapper ever saw this letter, or that Mrs Goddard ever discussed these issues with him. His evidence was clear in both respects: he did not see the letter; he did not discuss those matters with Mrs Goddard. As with other points relied on by Mr Seitler QC, in my judgment not only is there nothing in known facts or other evidence pointing inevitably or strongly to a probability that Mr Knapper is not right about that, in fact the probability is that if he had had contemporaneous knowledge of that sort of complaint by Mrs Goddard, he would have adopted and championed it at the time, and that would have generated the direct evidence of his knowledge that is lacking. In short, I do not believe there is any particular reason, let alone strong reason, to reject Mr Knapper’s evidence on Mrs Goddard’s letter, and I accept it. iii) Mr Drummond’s October Newsletter 2006 to all chalet owners included a brief item under the heading “Forthcoming Maintenance”, which said that estimates had been requested for lighting around one of the car parking areas and there were to be “Various path improvements and new paths”, “Tree cutting and roots” and “Drainage previously promised”. It is probable that Mr Knapper did receive this Newsletter and to his credit he did not pretend otherwise, or that he would not have read it with interest. But I agree with him that this would not have alerted him to anything other than the fact that planned routine maintenance included some work on drainage. iv) On behalf of the Board, Mr Drummond circulated to all chalet owners a questionnaire dated 31 October 2006. It asked what improvements they would like to see made to the amenity centre, the caravan park, the site and the administration of the Vendor company. I accept as honest Mr Knapper’s lack of recollection of seeing or knowing of that questionnaire at the time. But I think he is likely to be mistaken. Unlike letters from Mr Jarvis sent out by reference to his shareholder database, the questionnaire would have been sent by Mr Drummond, who had Fursdon Knapper’s address on his systems as correspondence address for Mr Knapper as a chalet owner. I take from his lack of recollection, and the lack of any response by him to the questionnaire, that if Mr Knapper did see it he did not pay it much attention. Mr Seitler QC was not so much interested in the questionnaire itself as in the fact that at least some of the responses, including that of Mr Sandoz in particular, made comments that could have alerted Mr Knapper, had he seen them, to problems with the physical condition of the Park going beyond what he had observed for himself. However, in my judgment there is no particular reason for thinking that Mr Knapper saw anyone else’s response, and if he had done so and it (alone or with others) had caused him to think there were major problems with the physical condition of the Park, I believe there would in all probability be evidence recording that thinking on his part. Furthermore, someone collated responses to produce a single-page list, “TOP 12 OWNERS QUESTIONARES” (sic.), and nothing listed was or revealed any of the matters now of interest in the charges of fraud against Mr Knapper. It is not at all clear that Mr Knapper saw that list at the time, but it is an indication that though some questionnaire responses may have hinted at matters that would now be of interest, they were not seen as the big messages coming out of the questionnaires and there is no reason to assume or infer that Mr Knapper, if he was told anything about any of this at the time, was told about anything not on the list. v) In March 2007, a document was created for the Board’s use entitled “POINT CURLEW – ISSUES & ACTIONS”. It covered a lot of ground and matters to be dealt with. They included a proposed asbestos survey of the amenity centre roof (on which, I mention in passing, an asbestos survey was in due course carried out and its results were provided to Mr and Mrs Francis before they contracted to buy the Park), proposed drainage works to the caravan site set for winter 07/08 (these being, I infer, the works in fact done under Mr Drummond’s instruction as I have mentioned already), and proposed sewage works costed at approximately £125,000 stated as “Completion of sewage connection required”. That last would have alerted any reader to the fact that major expenditure was seemingly required, and planned, on the sewerage system, which would be bound (if in mind) to affect any honest answer to CPSE 8.9(b). The other matters would not in my judgment have caused Mr Knapper to be concerned about the accuracy of any of the CPSE answers that matter in these proceedings even if he had the ‘Issues & Actions’ document in mind when considering those answers. Mr Knapper’s evidence was that he never saw that document at the time anyway. Again, I am invited to reject that evidence as a dishonest distancing from events to avoid a finding of knowledge; and again, I do not believe that is what Mr Knapper was doing, and I do not reject his evidence on this document, but rather accept it. vi) Finally, Mr Seitler QC submitted that Mr Knapper saw a valuation report prepared by Edward Symmons for the Vendor’s bank. No complete copy of that report has emerged on disclosure, but it appears to have been in existence by late February 2006 and to have been in play between the Vendor and the bank when Mr Curson was obtaining the extension of the Vendor’s borrowing facilities approved at the April 2006 AGM. The report valued the Park at £1,400,000, although the part copy that found its way into the trial bundles is annotated in an unidentified hand to suggest an alternative calculation valuing the Park at £1,690,000. Its only relevance at this stage is that it contains a table comparing actual spend (as at, I assume, early 2006) against budget in the development project. That table, if considered by Mr Knapper, would have revealed to him that the project plan had included upgrading the sewerage pumping station and installing a new rising main at an expected cost of c.£141,000, with an actual spend of nil, indicating that none of that work had yet been done as of early 2006. Mr Drummond gave evidence that he handed a copy of this report to Mr Knapper and Mr Alexander on a train journey to see the bank, in August 2007, but Mr Knapper handed it back to him saying he did not need it for the meeting. It is also possible, but somewhat speculative, that the table of actual spend against budget was the source of information for Mr McCausland in some of his comments at the July 2006 EGM. Again, Mr Knapper said he had no recollection of ever receiving or reading the Edward Symmons report, and in my judgment that evidence was honest. Given Mr Drummond’s evidence, which I accept, I find that Mr Knapper is mistaken in thinking that he never saw it at all. But Mr Drummond’s evidence suggests that Mr Knapper did not read it in any detail or focus on its contents, which in turn probably explains why over nine years later Mr Knapper has no recollection of even seeing it. Mr Drummond’s evidence does not provide any sufficient basis for finding that Mr Knapper knew that major and expensive sewerage works were required or planned, but had not been undertaken or even begun, and in my judgment he did not know any such thing when considering the CPSEs in November 2007, or generally when handling the conveyance of the Park to Mr and Mrs Francis between October 2007 and February 2008.

Specific Bad Behaviour

[81]The principal point here is that in the service charge litigation, Mr Knapper was found to have misled the court about the existence of relevant documents, being documents that the Vendor was storing in Mr Jarvis’ chalet. I agree with Mr Seitler QC that I am no position to go behind the findings of HHJ Cotter QC about that, although I disagree with his suggestion that I am in a better position than was the learned judge to see that those findings were correctly made because I have had the benefit of seeing Mr Knapper cross-examined and hearing from Mr Drummond that he had told Mr Knapper that the documents in question represented essentially all the Vendor’s, and Mr Curson’s, documents relating to the Park, which were being cleared out of the site office and other locations as part of effecting a clean hand-over to Mr and Mrs Francis since they were buying the land and buildings, with all fixtures, fittings and plant, not the Vendor company or its documents. I disagree with that suggestion because(a) HHJ Cotter QC had the benefit, as I understand it, of two full days of argument exclusively or almost exclusively focused on this one point of the chalet documents, whereas it occupied relatively little time at trial before me, either generally or in Mr Knapper’s cross-examination in particular, and I have to say I did not find that much if any light was shed on the point thereby, and(b) a principal benefit I have gained from Mr Knapper’s cross-examination has been the ability to see him as a difficult, but essentially honest, character, which if anything causes me concern as to whether HHJ Cotter QC’s findings were definitely accurate, however justified they no doubt were on the material and argument as presented to him on that occasion.[82]As Mr Seitler QC submitted, in essence HHJ Cotter QC found that the chalet documents would include documents that were relevant to the inquiry into the historic condition of the Park that arose within the trial before him in the service charge litigation, that they would have had an effect on the judgment he gave upon that trial, that they were put in Mr Jarvis’ chalet by the Vendor to the knowledge of Mr Knapper, and that Mr Knapper misled the court about that at a case management hearing in the service charge proceedings.[83]It is greatly to Mr Knapper’s shame that he did that in the heat of the service charge litigation. But I do not accept the further inference that Mr Seitler QC says I should draw, namely that Mr Knapper did what he did because he knew or suspected that the documents would prove his own prior knowledge of problems with the Park rendering false the CPSE answers he had provided to Mr and Mrs Francis. I have given particularly anxious consideration to whether this episode should affect my assessment of Mr Knapper or the probabilities and inferences from the evidence more generally; but it does not. Knowing of this episode, and being the more wary of Mr Knapper’s evidence because of it, I still find I believed him in his evidence that he did not know of the inaccuracy of the CPSE answers now relied on against him in these proceedings.[84]The other points relied on under this heading were specific matters on which, it was submitted, Mr Knapper’s evidence at trial could be seen to have been incorrect or unsatisfactory. Thus: i) his witness statement, and therefore his evidence in chief, said that he saw the April 2006 AGM Minutes only ‘long after’ the date of the AGM, but in fact it was obvious from the documents, and Mr Knapper accepted in cross-examination, that he would have seen them at the 11 June 2006 owners’ meeting he was asked to chair, i.e. about six weeks later, and indeed he sent a copy with his letter to ICSA dated 2 July 2006; ii) his evidence that he was not the one who asked for the July 2006 EGM to be video recorded and his wife was not involved in the setting up of the video camera was contradicted by the minute of the Board meeting just prior to the EGM and by Mr Drummond’s evidence; iii) his witness statement substantially understated the degree to which he was involved in setting up and driving the agenda for the July 2006 EGM, and assisted the chalet owners who were unhappy with the April AGM decisions in relation to it; iv) he had produced additional documents, including the 2 July 2006 letter to ICSA, during the course of his oral evidence.[85]As to i) to iii), these are uncomfortable aspects of Mr Knapper’s evidence but I do not believe or find that they show his primary evidence to be false. Indeed the EGM in particular, as I have said, is a part of the story that supports that primary evidence. Nothing occurred or was said at that meeting that would count against Mr Knapper on the critical question of his knowledge of the physical problems with the site that matter now. The inaccuracies in Mr Knapper’s evidence about that meeting do not seem to me to take the argument for Mr and Mrs Francis anywhere. As to iv), Mr Knapper was of course cross-examined as to why further documents were appearing so late in the litigation and he dealt with those questions candidly. I was not left with the view that there had been anything wilful or tactical about it.

Conclusion re Mr Knapper

[86]In all the circumstances and for all the reasons set out above, I find that Mr Knapper did not provide the Vendor’s answers to CPSEs 8.1(a), 8.1(c), 8.1(e) and 8.9(b) (or any of them) knowing or believing them to be untrue, or without any belief in their truth. He provided them on the information and instructions of Mr Drummond, the Vendor’s managing director, which he (Mr Knapper) did not think he had reason to disbelieve, doubt or second-guess. The claim in deceit against Mr Knapper (and his firm) therefore fails independently of my ruling against Mr and Mrs Francis on inducement.

Negligence

[87]Nor would the claim in negligence have succeeded against Mr Knapper or Fursdon Knapper if that claim had overcome the CPSE disclaimer and the rule in Gran Gelato and if I had then found for Mr and Mrs Francis on inducement. In respect of the CPSEs, Mr Knapper simply carried out a normal, careful, job of going through the form, having received, as often happens, an incomplete initial set of answers from Mr Drummond, managing director of his client, the Vendor, checking them for obvious error (e.g. an answer that could not logically be correct), and taking instructions so as to provide answers where Mr Drummond had originally left blanks.[88]There was nothing unusual, suspicious or alarming about the fact that Mr Drummond initially did not answer all the questions, and I say again that Mr Knapper had no reason to disbelieve, doubt or second-guess Mr Drummond’s instructions. There could be no finding of negligence against Mr Knapper in those circumstances.

Loss

[89]The loss alleged is a difference between the purchase price of £1,350,000 that Mr and Mrs Francis paid for the Park and the market value of the Park, as acquired. The evidence as to whether there is any such loss, and if so its amount, is very unsatisfactory. That was in truth conceded by Mr Seitler QC for Mr and Mrs Francis, whose primary submission in the circumstances was that if the Park Representations claim succeeded, I should give judgment for damages to be assessed and directions for a separate assessment of damages. By contrast, Mr Bacon submitted for Mr Knapper and Fursdon Knapper that: Mr and Mrs Francis had had ample opportunity to prove, if they could, that they had suffered a loss, in other words to provide, if they could, satisfactory evidence that the value of the Park as purchased was not the £1,350,000 they paid for it (and if so by how much); the admitted unsatisfactory nature of the evidence at trial meant they simply had not done so; the proper conclusion was therefore that they had failed to prove loss and the claim should be dismissed on that ground whatever the findings might be on other issues.[90]The principal evidence on quantum was an expert report of Christopher Tucker, a chartered surveyor and registered RICS valuer with over 30 years of experience in the valuation and sale of caravan parks / holiday parks. He was appointed jointly under the case management orders for this trial, and neither party asked any supplementary questions after he provided his report or applied for him to be called at trial to be asked any questions. His evidence is thus agreed. It values the Park in April 2008 at £1,450,000, with no major defects, and expresses the opinion that even if there were major defects they would not affect that valuation if their cost of cure was re-chargeable to chalet owners under the service charge provisions of the lease.[91]Mr Seitler QC submitted that the latter opinion was not expert evidence, so that I can ignore it. He said the expert was there trespassing on matters of law, in particular he was addressing the question of law whether a subsequent recovery from the chalet owners of the costs of work actually undertaken (if any) would be res inter alios acta so as not to affect the damages assessment in this case even where the need to carry out those works suppressed any valuation of the Park in April 2008 otherwise used in that assessment. I disagree. In my judgment, Mr Tucker was providing an expert opinion on a commercial property market question upon which the court does not have specialist knowledge and requires the assistance of such evidence, namely whether and if so how the re-chargeability of the cost of necessary works under extant leases affects the price willing buyers pay and willing sellers expect to be paid for commercial property of this type.[92]Given that conclusion, and the expert’s starting valuation of £1,450,000, some £100,000 more than Mr and Mrs Francis paid for the Park, they can only prove loss if they can prove(a) that there were matters at the Park as acquired in April 2008 requiring costly works that have not been taken into account in that valuation,(b) the cost for such works that a willing seller and willing buyer would probably allow to the buyer, by a reduction in price, as of April 2008, if they would not be works re-chargeable under the service charge provisions of the chalet leases, and(c) the extent to which, if at all, those works were indeed not so re-chargeable.[93]In truth, Mr and Mrs Francis have made no attempt to discharge that burden. They are not assisted by Mr Tucker’s report because he cannot give evidence as to (a) or (c), and can only give evidence as to (b) by reference to primary factual or expert evidence not of his own as to the probable actual cost, assessed as at April 2008, of any works identified under (a). A ‘Scott Schedule’ procedure was ordered for the purpose at least of identifying Mr and Mrs Francis’ detailed pleaded case as to (a), and the probable actual cost of works as I have just mentioned. The Scott Schedule they served under that procedure, which represents the best particulars for any such case they were able to provide in the light of all the disclosure and factual witness evidence in the case, was considered by Mr Tucker in his report to see if he could not at least provide hypothetical valuation opinions, but he concluded that he was not able to do so as the Scott Schedule did not enable him to identify any meaningful assumptions that might be made.[94]In the circumstances, in my judgment Mr and Mrs Francis indeed had ample opportunity to prove, or at the very least coherently identify, a case on loss, but failed to do so. In a supplementary note for opening, provided at my direction after I had seen his skeleton argument for trial, Mr Seitler QC made a manful attempt to construct a case from the general factual material available. But in my judgment the attempt failed to provide any satisfactory basis upon which I could reach any quantified conclusion as to whether the Park as purchased was worth less than Mr Tucker’s starting point valuation of £1,450,000, let alone less than the £1,350,000 paid for it by Mr and Mrs Francis.[95]In the circumstances, my finding as to loss is that Mr and Mrs Francis have not shown that, had the inaccurate CPSE answers induced their purchase, loss was caused thereby.

The Service Charges Representation

[96]The Agreement made provision for the freeholder’s service charge entitlement to be apportioned between the Vendor and Mr and Mrs Francis. The parties’ intention was to settle that at completion by including in a final completion balance calculation:(a) a credit in favour of Mr and Mrs Francis for the 2008 annual service charge amounts that had been paid to the Vendor;(b) a debit against Mr and Mrs Francis for the 2008 maintenance expenditure incurred by the Vendor (since it was entitled to recoup that expenditure from the service charge amounts collected from the chalet owners);(c) a further debit against Mr and Mrs Francis in respect of 2007 service charge arrears owed by some chalet owners (since after completion those would be collected by Mr and Mrs Francis as successors in title to the Vendor under the leases, but would relate to the period of the Vendor’s ownership of the site). That way, Mr and Mrs Francis would not need to undertake any further accounting to the Vendor after completion.[97]Henriques Griffiths on behalf of Mr and Mrs Francis were told, as regards (a) above, that 100 chalet owners had paid for 2008 and 64 had not. That is the Service Charges Representation. It is common ground that it was incorrect. By reason of actual payments, in some cases, and in other cases agreements reached with Mr Drummond to set off sums due from the Vendor, many fewer than 64 chalet owners had not paid. After the event, Mrs Francis set out in an e-mail an analysis and summary of the true position, as she had been able to ascertain it after completion. It was not challenged at trial, and I accept it. It showed that (a) above calculated accurately would have been £34,741.52 more than (a) above calculated on the assumption that 64 chalet owners had not paid.[98]The Service Charges Representation claim is that: i) Mr Knapper personally, or Fursdon Knapper as a firm, owed a duty of care to Mr and Mrs Francis as regards the accuracy of the Service Charges Representation, notwithstanding in particular (again) the rule in Gran Gelato (see paragraph 18 above). ii) Mr Knapper, or respectively Fursdon Knapper acting by Mr Knapper, was careless in respect of the Service Charges Representation, making and/or reiterating/confirming it without having taken reasonable care to find out whether it was accurate. iii) The Service Charges Representation induced Mr and Mrs Francis to agree the final completion balance and settle up on completion as they did. iv) They have therefore suffered loss of £34,741.52 by reason of Mr Knapper’s carelessness.[99]In my judgment, Mr and Mrs Francis are wrong in all four elements of the claim, which therefore fails, although I recognise that even though those four elements can be stated as four, separate, necessary elements of the claim, my conclusions on the first two are not entirely independent of each other on the facts, and my conclusions on the third and fourth depend on one particular finding I make.[100]Starting at the end, since it is the simplest point, the claim wrongly asserts or assumes that but for Mr Knapper’s alleged breach of duty, Mr and Mrs Francis would have learned the true position as regards the 2008 service charge account at or prior to completion, and the completion balance they paid would then have been £34,741.52 less. That is not established on the evidence. At the completion meeting – which became heated, and from which Mr Francis stormed out in a temper – Mr Drummond provided a list that he believed at the time to be accurate of those who had paid for 2008. Furthermore, both as regards the ‘income’ side of the final service charge account balance (items (a) and (c) in paragraph 96 above) and as regards the ‘expenditure’ side (item (b) above), Mr and Mrs Francis were not at all sure, at the time, that they had got the correct figures out of the Vendor, but they declined a proposal to put a sum in escrow so that the matter could be finalised after completion.[101]Had Mr Knapper not said anything on the topic of 2008 service charge payments in earlier correspondence (which is the proper counter-factual for this negligent misstatement claim), in my judgment Mr Drummond would have provided that same list and the completion balance would have been calculated accordingly, exactly as it was. Nobody is suggesting that Mr and Mrs Francis were not entitled, in principle, to the additional £34,741.52 by which the completion balance as calculated under-credited them for 2008 service charges paid. They have, or rather they will have had (it would now be time-barred), a good claim for that against the Vendor, but the Vendor would have been unable to pay. That is also the position they would have been in, I find, if Mr Knapper had never made the Service Charges Representation.[102]As regards inducement, the third element of the claim asserted, again the question is what would have happened if Mr Knapper had never made the Service Charges Representation. So again, the finding is that Mr and Mrs Francis would be in no different position. Indeed, given what happened at the completion meeting, I find more specifically that Mr Knapper’s reference in prior correspondence to the 100 / 64 split, as opposed to Mr Drummond’s information and a decision to take the risk of its inaccuracy by declining the escrow proposal, was not a factor in what happened on completion.[103]As regards duty, Gran Gelato, and carelessness: i) In a letter dated 20 March 2008, in the post-exchange solicitors’ correspondence setting up completion, Mr Knapper wrote to Henriques Griffiths that “You should already have an apportionment by email but for the sake of clarity your client should deduct from the sale price the sum of £64,417.67”. ii) In fact, the e-mail referred to had not been sent already, but was sent (from Mr Knapper to Mr Griffiths) on 26 March 2008. It explained the breakdown of the £64,417.67 and identified the factual information on which it was based. That included the following:
“The service charges collected so far are from 100 chalets and lodges … There are a further 64 chalets that have not yet paid ground rent or service charges which amounts to £80,000.00 plus VAT.” iii) A substantial correspondence followed, at one point causing Mr Knapper to say he was “losing the will to live”, as to what the Vendor, through Mr Knapper, was saying about the expenditure to date (item (b) in paragraph 96 above); iv) During that correspondence, by e-mail on 2 April 2008 Mr Knapper wrote that he was: “… somewhat surprised by your client’s attitude towards the service charge surplus. This is not his money but money paid by the chalet owners towards their liability under the lease. Mr & Mrs Francis can rely on the figures given by this firm and included in his total expenditure for the year. …” (my emphasis). I think, although this was not explored specifically with Mr Knapper, the reference to “his” total expenditure for the year must have been a reference to Mr Drummond as Managing Director of the Vendor; v) Now the “service charge surplus” was the 2008 service charge account balance ((a) LESS (b) in paragraph 96 above) that would be credited to Mr and Mrs Francis at completion. Mr Knapper’s specific reassurance that they could rely on the figures given by Fursdon Knapper was a clear undertaking by him, on behalf of the firm, stepping outside the firm’s role as merely solicitors acting for the Vendor, about the figures making up the service charge surplus figure being proposed by the Vendor. In my judgment, had matters rested there, Fursdon Knapper (but not, I think, Mr Knapper separately as an individual) would rightly be held to have volunteered a level of responsibility for those figures such that it would be just and proper to impose a duty of care on them over their accuracy, by way of exception to the normal rule in Gran Gelato. vi) However, matters did not rest there. Towards the end of the following day, 3 April 2008, Stephen Mackie of Henriques Griffiths, on behalf of Mr Griffiths, e-mailed Mr Knapper saying that he (Mr Griffiths) “needs your firms assurance (not as agent for the Company) that this all there is to be revealed. Any new matters revealed post completion will result in a claim for damages against a company with likely insufficient funds to pay which is why we need an assurance from your firm.”
Mr Knapper replied within the hour in these terms: “I cannot see how I can give an assurance in person as I am not a director of the company, I do not hold company records and I have no idea of what transactions have taken place since 1983. I can give assurances in relation to all the matters disclosed. I am quite prepared to give an assurance that I have made all enquiries of the managing director and the company secretary and that the information that has been provided by them has been passed to you. …” vii) Thus although in my judgment ((v) above), Mr Knapper’s 2 April e-mail did amount to an undertaking by him for Fursdon Knapper, the response was to indicate it was not being treated as such. Mr Knapper’s reply then confirmed that he could not and would not give any such assurance. As I read that reply, the second paragraph I have quoted (“I am quite prepared to give an assurance …”) sets out the “assurances in relation to all the matters disclosed” that the first paragraph said he could give. viii) It was thus made explicit that all Mr Knapper was doing was passing on the information provided to him by Mr Drummond as Managing Director of the Vendor (the reference to Mr Jarvis, the company secretary, related to a different topic). Mr Seitler QC obtained some possibly wider-ranging answers from Mr Knapper in cross-examination as to what “all enquiries” might mean. But to my mind, objectively, it indicated simply that all the enquiries Mr Knapper had made on the topics of then current debate had been made of either Mr Drummond or Mr Jarvis, as relevant, and he (Mr Knapper) had passed on accurately what he had received from them. So although, as I read Mr Knapper’s 2 April 2008 e-mail, Mr Knapper on behalf of Fursdon Knapper (a) made the Service Charges Representation and (b) clothed that with an undertaking of responsibility as of 2 April 2008, that was withdrawn in both respects the next day having had no consequence. ix) When it finally came to the completion meeting itself, as I have already said in dealing with the other elements of the Service Charges Representation claim, the relevant information was provided by Mr Drummond directly, Mr and Mrs Francis remained unhappy (Mr Francis angrily so), but they decided to take the risk of inaccuracy to get the completion finalised rather than have an escrow arrangement and an ongoing debate after completion. x) In those circumstances, in my judgment no relevant duty of care was owed by Mr Knapper or by Fursdon Knapper. Having withdrawn anything said on 2 April 2008 that might have gone further, Mr Knapper made, and put his and the firm’s name to, only the representation that the figures he had provided to Henriques Griffiths were as supplied to him by Mr Drummond as Managing Director of the Vendor. xi) In those circumstances also, I do not see how Mr Knapper’s failure independently to scrutinise, challenge or second-guess Mr Drummond’s information could be said to have been careless. (If he had undertaken some more substantial degree of responsibility for the accuracy of the information he passed on, then obviously that could affect whether merely relying on what he was told by Mr Drummond would have been sufficient to discharge that responsibility; hence the comment about the inter-connectedness of my conclusions as to duty of care and carelessness in paragraph 99 above).

Conclusion

[104]For the reasons set out above, Mr and Mrs Francis’ claims fail and stand to be dismissed. I shall hear Counsel, and Mr Drummond, in the usual way, as to the form of Order, also as to costs and any other consequential matters.