Mead & Anor v Babington & Anor

Mr Nicholas and Mr Anthony Babington, father and son, appeal from a decision of HHJ Harris QC sitting in Oxford in which he held them liable for misrepresentation in connection with the purchase of a site on the Costa Blanca in Spain and the construction of a villa on that site. The Babingtons were estate agents with offices with offices at Long Crendon in Buckinghamshire. Mr Mead was originally an executive in the Axa Insurance Group living in Monks Risborough, also in Buckinghamshire. He wanted to buy a villa in Spain. He and his wife responded to an advertisement from the Babingtons Estate Agency and were informed they could be introduced to the Babingtons’ Spanish agent or representative.

They were introduced to a Mr Mura, who introduced them in turn to a Spanish lawyer for the purposes of buying the site. Mr Mura also persuaded them to make a contract with his company, GIM, for the purpose of having the villa built. Mr and Mrs Mead bought the site but the building contract went disastrously wrong. They paid Mr Mura a large percentage of the contract sum but there was very little progress with the work. Mr Mura kept making excuses about the difficulty of constructing the foundations but no progress continued to be made. Eventually Mr and Mrs Mead terminated the contract with GIM but have been unable to recover the money they paid or any damages.

The judge held that in the course of discussions Mr Anthony Babington made statements as follows:

“1.

In sales documentation provided to the claimants, that they were offering properties in conjunction with GIM.

“2.

In a letter dated 22 October 2001 from the defendants to the claimants, that ‘Babingtons are working with some of Spain’s most reliable developers and estate agents all known to ourselves’.

“3.

In a telephone conversation between Mr Anthony Babington on behalf of the defendants and Mr Mead, that GIM was such a developer known to them whom the defendants were working with and who was known to be suitable [for the] arrangement of the purchase [of the] plot of land and the construction of a required villa upon it, or to carry out the necessary construction itself;

“4.

In a letter dated 15 November 2001, that Mr Mura, Managing Director of, and/or GIM was the defendant’s, ‘agent and representative’ in Spain.”

The question was whether any of those things was actionable.

The judge made no finding that the first representation was made. He held that the second representation (a) was never intended seriously but was merely a puff and (b) was honestly made. He said that the third representation was true to the extent that Mr Mura was, “suitable” to arrange the purchase of the plot and had in fact put Mr and Mrs Mead in touch with the Spanish lawyer who dealt with the conveyancing, but false to the extent that Mr Mura was not “suitable” for carrying out construction of the villa. He then held that the representation was not fraudulent nor was it negligent because Mr Anthony Babington had been out to Spain and seen Mr Mura at work. He could not have been expected to do any further investigation of Mr Mura’s creditworthiness or his honesty. He was entitled to take him at face value.

With regard to the fourth representation however, he held that Mr Mura was not the Babingtons’ agent. Indeed, he held that the Babingtons were in fact Mr Mura’s agents and had agreed to pay commission to Mr Mura in respect of any successful introduction of an English buyer. This fourth representation that Mr Mura was the Babingtons’ “agent and representative” in Spain was thus false to Mr Anthony Babington’s knowledge. The judge went on to hold that the misrepresentation was one of the inducements causing Mr and Mrs Mead to contract with Mr Mura and that there was liability for any resulting loss.

On the question of reliance, the judge expressed himself in this way in paragraph 28 of his judgment:

“But I think it probably and find as a fact on the evidence that Mr Mead did act to some extent in reliance upon the representation feeling that the Spanish agent of a local English estate agency, which he thought to be of good standing, was likely to be a significantly safer bet than a Spanish seller that he might happen upon independently at arm’s length.”

The first and perhaps main ground of the Babingtons’ appeal is that there was no evidence to justify the finding of reliance on the statement that Mr Mura was the Babingtons’ agent as inducing Mr and Mrs Mead to make their disastrous contract with Mr Mura. It is always difficult for an appellant to reverse a finding of a fact of a judge unless it is quite clear that there was no evidence to support it. Mr Andrew Fraser-Urquhart made a spirited and forceful attempt to persuade us that there was indeed no such evidence. But the following evidence did exist. First, paragraph 5 of Mr Mead’s first statement of 3 March 2005 said:

“The fact is that we did rely upon the representations as is set out in our Particulars of Claim.”

Secondly, paragraph 6 of the Particulars of Claim together with its statement of truth stated that the claimants were induced by and acted in reliance upon each of the representations, including the fact that Mr Mura, or GIM, was Babingtons’ agent.

Thirdly, paragraph 19 of Mr Mead’s second statement of 4 August 2006 says this:

“Further, we wished to meet with the Defendants’ Agent and Representative as we were reassured by what the Second Defendant had told us of Mr Mura and believed that we had found the exact arrangement we wished to use for our purchase; a developer providing a reliable service that worked closely with and was recommended by an English Estate Agent …”

Fourthly, in Mr Mead’s own evidence he said inter alia:

Mr Fraser-Urquhart submitted that there was no specific evidence linking the fact that Mr and Mrs Mead had made a contract with Mr Mura with the false representation that Mr Mura was their agent. He said that all the evidence to which I have just referred was effectively the evidence of a global reliance on all four representations put together. But the formal position is that each representation was said to be relied on and, no doubt wisely, there was no cross-examination directed to the question of the fourth representation on its own. One can well imagine what the answer would have been.

In those circumstances, the judge had to do his best on the evidence before him. HHJ Harris obviously thought it was a fair inference that Mr Mead had relied on the knowingly false misrepresentation that Mr Mura was the Babingtons’ agent. That is an inference that, to put it at its lowest, was open to the judge. Many judges would have made the same inference. Despite Mr Fraser-Urquhart’s submissions, there is in my judgment nothing in this first ground of appeal.

The second ground of appeal is that there was no evidence that Mr Anthony Babington intended, when he made the knowingly false representation that Mr Mura was his agent, that Mr Mead should actually make a contract with Mr Mura. The only intention was that a negotiation should take place.

This is not an argument which I, for my part, can accept. It seems to me that the one follows from the other. If Mr Babington intended that negotiation should take place with Mr Mura, that is at least with a view to the possibility that a contract might result. It is, with respect to this argument, nit-picking to accept that there was an intention that negotiation should take place but not an intention that a contract should result. Mr Fraser-Urquhart sought to rely on Tackey v McBain [1912] AC 186 for the negative proposition that there is no absolute rule to the effect that the intention of a representor is irrelevant to the question whether a representation was actionable, and for the more positive proposition that an intention to induce a contract had to be proved, if that was the relevant loss for which a claim was made.

But that case was different on its facts. There the defendant, a director of an oil company, untruly stated to a broker that the company had received no news of a major find, intending thereby to protect the company’s interests rather than to induce any particular shareholder to sell his shareholding. It was held by the judicial committee of the Privy Council that no action for fraud lay at the suit of the shareholder because the representation had been intended to be made to the world, or at least to someone other than the claimant. It was not made to induce the particular individual to suffer loss.

In the present case by contrast the representation was at all times aimed at Mr and Mrs Mead, and it is an inevitable inference that Mr Babington intended them to make a contract with his supposed agent Mr Mura just as much as he intended them to negotiate with Mr Mura. That approach is in my judgment supported by the other case to which were referred, Goose v William Sandford (No 2) [2001] Lloyd’s Reports PN 189, where this court held that there was no requirement that the representation had to be intended to be acted on in the manner in which damage resulted to the claimant. It was not the specific action of the claimant which had to be intended; it was only necessary that there should be an intention that the representation should be acted on -- see Morritt LJ at paragraph 48 of that decision. No doubt that will be subject to the rules on remoteness of damage but no question about that arises in the present case.

I am therefore of the view that the second ground of appeal also fails and therefore that the appeal as a whole must be dismissed.

I agree.

I also agree.