A Reminder To Get Replies To Enquiries Right

The High Court decision in First Tower Trustees Limited v. CDS (Superstores International) Limited [2017] EWHC B6 (Ch) is a salutary reminder of some of the pitfalls to avoid when providing replies to pre-contract enquiries as well as the limitations of non-reliance clauses.

Background

On 30 April 2015, First Tower let warehouse premises in Barnsley (Bays 1-3) to CDS. At the same time the parties entered into a conditional agreement for CDS to take a further lease of adjacent premises (Bay 4).

Prior to entering into these arrangements, CDS received from First Tower:

a report, held out by First Tower as relating to the premises, which led CDS to believe there were no significant asbestos problems ('the Report'); and replies to CPSEs dated 16 February 2015, of which the critical response was to enquiry 15.7: CPSE.1 Enquiry 15.7: "Please give details of any actual, alleged or potential breaches of environmental law or licences or authorisations and any other environmental problems (including actual or suspected contamination) relating to: (a) the Property; or (b) land in the vicinity of the Property that may adversely affect the Property, its use or enjoyment or give rise to any material liability or expenditure on the part of the owner or occupier of the Property." First Tower's reply: "The Seller has not been notified of any such breaches or environmental problems relating to the Property but the Buyer must satisfy itself" ('the Reply'). After providing this information, but prior to 30 April 2015 (so before CDS contracted to take the premises), First Tower received an email from a third party consultant reporting a health and safety risk caused by the presence of asbestos in Bays 1-3 which also raised the possibility of asbestos in Bay 4 ('the Email'). First Tower did not alert CDS to this development, nor did it amend its replies to enquiries.

Almost immediately after going into occupation of Bays 1-3, CDS discovered asbestos. Later, before the second lease completed, asbestos was found in Bay 4. CDS terminated the agreement for lease in respect of Bay 4 by exercising a contractual right to terminate, which was triggered by the parties' failure to agree the costs required to make Bay 4 fit for occupation (rather than by any breach of contract by First Tower). In the meantime CDS had incurred significant cost and inconvenience dealing with the asbestos in Bays 1-3.

CDS claimed damages for losses suffered as a result of the unavailability...