- April 4, 2013
- Posted by: Josiah Hincks Solicitors
- Category: Business Law Updates
A factual error in a letter circulated to tenants of a block of flats led to a lengthy court dispute that required the intervention of the Court of Appeal to resolve. The letter, which was drafted by a non-lawyer, had indicated that tenants were being invited to participate in the purchase of the property’s freehold whereas the reversionary interest that was proposed to be purchased was in fact a long lease.
The tenants of one of the flats (the appellants), who participated in the purchase, argued that they had relied to their detriment on the terms of the inaccurate letter. They said that they had expected to receive a share of the freehold and they refused to accept that they would continue to be liable to pay ground rent. The letter had specifically stated that there would be ‘no ground rent to pay’ if the acquisition was successful.
It was argued by the appellants that the terms of the letter were binding and meant that, subsequent to the purchase, the single-purpose company established to achieve the acquisition was obliged to extend participating tenants’ leases free of charge and could claim no more than a peppercorn or nominal ground rent.
However, in upholding a first instance decision to like effect, the court ruled that, whatever the appellants may have understood the letter to mean, it did not amount to a clear and unambiguous promise that no ground rent would be payable or that the reversionary interest to be acquired was the freehold. Even had such promises been made, the appellants had failed to establish on the evidence that they had participated in the acquisition in reliance upon them.