The Facts

In this appeal case, Co Mayo Estates Limited was selling three plots of land at auction. The buyer, Hidden Gem Limited, was a small family owned company, with a small land holding. The buyer was the winning bidder for the plots at auction and paid large deposits. It was the buyer's intention to develop the land for residential purposes.

Following the auction however, it quickly became apparent that all three plots were situated within protected ancient woodland and had been since 1600 AD. There was virtually no prospect of planning permission for development ever being granted. The buyer contended that the plots were therefore valueless and useless and refused to pay any further monies.

The seller subsequently sued for the balance of deposits. In response, the buyer sought to rescind the contracts for misrepresentation, claiming the return of the monies it had already paid along with the professional fees it had incurred.

The alleged misrepresentation relied upon by the buyer came from the auction pack. The sales particulars in the auction brochure said "currently each plot is mainly woodland…but clearly offers a number of opportunities for a purchaser to consider alternative uses or even development of each plot, subject to the necessary consents."

The auction pack was illustrated with a number of CGI images showing a residential development in a wooded area, all of which were marked "Subject To Planning Permission" and came with a statement that "buyers are deemed to rely solely on their own enquiries with regard to any development potential that may exist but are invited to utilise the computer generated image shown in these particulars as an idea to take forward pre-application planning advice with the local authority.”

The Decision

The Court appeared to have some sympathy for the buyer, acknowledging that some wording within the sales particulars was "not well chosen" and the CGI images, in particular, may have encouraged "unwise speculation". However, the court found that much of the wording was heavily qualified which resulted in them dismissing the claim for misrepresentation for two reasons:

• The Court looked at the meaning of the auction pack read as a whole and considered that the wording used was sufficiently vague;
• The Court held that the question of whether the land was usable for any residential development at all was a binary question. To say that it was, or that it was not, would have been a representation of fact with an ascertainable meaning. The auction particulars in this case merely suggested that it might have been.

Practical points

From a buyer's perspective, the decision clearly reinforces that buyers should carry out due diligence and raise appropriate enquiries before committing to purchase a property. In an auction, those investigations should be made before bidding for land.

Sellers are reminded again to exercise caution when making any representations in sales particulars and to be as transparent as possible to avoid allegations of misrepresentation at a later date. It is clear from the judgement that mock up photos, showing a potential development, without any knowledge about the development potential of the land may not be the wisest approach.