Haringey LBC v Hines
 EWCA Civ 111
Pill and Rimer LJJ and Peter Smith J
The Court of Appeal allowed an appeal against a finding that the appellant was liable in damages for deceit arising from the sale of a flat under the right to buy, holding that the basic principles of fairness required that where a party was being accused of fraud, the particular fraud had to be specifically put to that party so that he or she might answer it. Before a finding of dishonesty can be made it must not only be pleaded but also put in cross-examination.
The appellant was the tenant of a flat. In December 2001, she applied to exercise the right to buy under Pt 5, Housing Act 1985. In October 2002, the right to buy was completed and the respondent authority granted the appellant a long lease of the flat. The appellant’s discount was £38,000 on the basis that she had occupied the flat as her only or principal home since 1993.
In 2008, the authority formed the view that the flat had ceased to be the appellant’s only or principal home before the right to buy was completed. Their decision to issue proceedings was based on information given to their pay-roll department by the appellant, who had been their employee at that time. On February 27, 2002, she had written stating “I have recently moved”, supplying a new address in Harlow. On July 2, 2002, she had written from the Harlow address asking for additional maternity leave. The Harlow address was the home of her partner and father of her second child. The appellant had also registered the birth of her second child at the Harlow address, had changed her GP from one near the flat to one in Harlow and had enrolled her elder child in a school in Harlow.
The authority brought a claim in the county court against appellant on the basis that a representation made by her in May 2002 that she wished to proceed with the purchase was a fraudulent one, alternatively a negligent or innocent one, which had induced them to grant the lease. Success in the pleaded case of deceit required the Judge to find that when she had written to the authority in May 2002 she was dishonestly representing that she was still occupying the flat as her only or principal home.
The circuit judge declined to rescind the lease but held that the authority were entitled to damages for common law deceit and awarded the authority the amount of the discount (£38,000) together with interest of over £20,000. He also ordered her to pay 80% of the authority’s costs.
The appellant appealed to the Court of Appeal on the ground that the judge had been wrong to hold that she had fraudulently deceived the authority. The authority cross-appealed on, inter alia, the ground that the judge had been wrong to refuse rescission.
The Court of Appeal allowed the appeal and dismissed the cross-appeal. The judge’s decision that the authority had made good their case in deceit was unsound. The authority had failed to put their case on deceit to the appellant in cross-examination. “It is a basic principle of fairness that if a party is being accused of fraud, and is then called as a witness the particular fraud alleged should be put specifically to that party so that he/she may answer it. That was never done in this case…” per Rimer L.J., at .