An interesting article by Mark Pawlowski in the New Law Journal recently explores whether the principle of 'caveat emptor' ("let the buyer beware") has become outdated in English law as compared to other jurisdictions.
In particular, there is focus on two American cases. In Stambovsky v Ackley the vendor had publicly reported supernatural activity in their home and reported to Reader's Digest and the local newspaper that they had seen poltergeists on numerous occasions in the house. However, they failed to disclose this to the purchaser.
The State of New York found in the purchaser's favour with the judge stating that it was highly unlikely that the purchaser could have found out this information for themselves and that the caveat emptor rule does not render every act of non-disclosure immune from legal redress.
Similarly, in Reed v King, a vendor was found to be entitled to damages after they discovered that the home they had bought had been the site of a violent multiple murder. Again, the American courts ruled that, as this fact was only known or readily accessible to the vendor, he had a duty to disclose it.
The author contrasts these cases with that of Sykes v Taylor-Rose in English law. This case involved a house that had been the scene of a brutal murder of a young girl whose body parts had been hidden around the house. The vendors, who themselves had not known of the history when they purchased the property, but became aware of it whilst living there, failed to disclose the murder to the purchaser.
After finding out the history the purchaser moved out and sold the property, disclosing the murder, for £8,000 less than they bought it for and for £25,000 less than its market value, had the murder not taken place. The English courts, unlike their American counterparts, were not willing to create an exception to the principle of caveat emptor even in such extreme circumstances.
Instead, they focused on the wording of question in the pre-contract enquiries to try to work out whether there had been an actionable misrepresentation. The court decided that the enquiry presented a subjective rather than objective obligation of disclosure such that the vendor's responsibility was to disclose whether or not, in their honest opinion, there was information to which a purchaser was entitled.
Mr Pawlowski concludes by wondering whether some statute akin to that of section 42 of the Fair Trading Act 1987 in Australian law could be introduced in England to protect purchasers who find that they have purchased a 'horror house'.
For my part, I wonder whether the subjective interpretation of the then standard pre-contract enquiries (they have changed since Sykes v Taylor-Rose was decided in 2004) would have favoured the purchaser had Stambovsky v Ackley been decided in England.
Whether or not you or I believes in such things (I, for the record, do not), the vendor clearly did believe that their house was haunted by poltergeists. Applying the reasoning in Sykes, the vendor would have surely therefore believed that the purchaser would be entitled to this information. They had been keen enough to tell the press after all.
Perhaps all it would have taken to erode the principle of caveat emptor in England was a poltergeist, not new legislation...
Interestingly, in Australia, several states have enacted specific legislation imposing a mandatory obligation on sellers to disclose so-called 'stigma events' when selling their property.