Approved Judgment - clients.squareeye.com

THE HONOURABLE MR JUSTICE EADY
Approved Judgment
Butler-Creagh v Hersham
ii) There was no urgency to exchange contracts in December 2008, in the sense
that there were any other willing purchasers in the offing; there would thus
have been time to take advice and make independent enquiries.
iii) They did not need to deal with or through him (or through Osmonds) and
could have gone straight to Mr Conway acting on behalf of the vendors.
iv) Moreover, Mr Butler-Creagh had no relevant expertise and was not able or
willing to purchase or develop Fawley Court himself.
v) The property was not worth £22.5m in the open market or even £16.5m.
vi) There was no reason to suppose that permission could be obtained for
conversion to a hotel, let alone that development could be completed within 26
months.
vii) Nor was there any reason to suppose that the property could be developed
without the purchaser having to invest millions of pounds in the process.
viii) There was no solid basis for assuming, even after a delay of several years and
the investment of tens of millions of pounds, that the project would yield a
profit of £32m (or indeed any other figure).
None of this had become apparent to them by 10 December 2008.
101. I have come to the conclusion, in the light of Mr Sewell‟s evidence, that Cherrilow
did place reliance, as always intended by Mr Butler-Creagh, on the false
misrepresentations of fact I have identified; moreover, had it not done so, the
decision, on the balance of probabilities, would have been not to take the open ended
risks. The purchase would not have been made. Mr Ramsden took some time going
through Mr Sewell‟s evidence with a view to showing that he had been rather lacking
in curiosity. He did seem rather vague while in the witness box, not to say semidetached,
but this does not assist the submission that there had been no reliance. He
plainly relied on something in coming to his recommendation to exchange contracts.
I would not accept the submission that he was a mere cipher; that “he simply acted on
the instruction to set up Cherrilow to purchase Fawley Court”. On the other hand,
virtually everything he knew derived from Ms Hersham. She had plainly passed on to
Mr Sewell the gist of the representations made to her – originally with the intention
that she should pass them on to Cherrilow or whatever other vehicle was to enter into
the transaction. The only information Mr Sewell had, on which to base his decision,
derived from Mr Butler-Creagh. It would be unreal to draw the conclusion that he
relied on anything else. He had consulted no one else and was not in a position to
form any independent judgment of his own.
102. The pleaded representations (even though not made directly to Mr Sewell) were at the
very least a substantial factor in the decision to exchange contracts. That is the test to
apply according to modern authority: see e.g. Smith New Court Securities Ltd v
Citibank NA [1997] AC 254, 285A, per Lord Steyn. (My conclusion coincides with
the “very likely assumption” discussed in McGregor on Damages (18 th edn) at 41-010
to 41-030.) The claim in deceit accordingly succeeds.