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Misrepresentation (Definition of 'actionable' misrepresentation -…

- - - - Lord Denning MR: "where the meaning is not clear, it should be given the meaning intended by the maker, or which he knew or ought to have known the recipient would put on it"
  - - - Kleinwort Benson Ltd v Malaysia Mining Corp (1989) - a representation is not an undertaking to do, or not to do something - it is a statement asserting a given state of affairs
      - Conduct can amount to a statement of fact, if coupled with attempts at concealment
        
        Gordon v Selico (1986)
        
        Spice Girls Ltd v Aprilia (2002)
      - Opinion
        
        General rule - layperson's opinion - if misrepresentor has no greater knowledge than representee - is not a statement of fact - Bisset v Wilkinson (1972)
        
        Exceptions
        
        If misrepresentor has greater knowledge than misrepresentee, opinion may be a statement of fact - Smith v Land & House Property Corp (1885)
        
        Lord Justice Bowen: "but if the facts are not equally well known on both sides, then a statement of opinion by one who knows the facts best involves very often a statement of material fact, for he impliedly states that he knows facts which justify his opinion"
        
        Expert opinion may be fact - if expert gives opinion in area of their expertise - Esso v Marden (1976)
      - Future intention
        
        General rule - a statement of future intentions is not a statement of fact - Beattie v Ebury (1872)
        
        Mellish LJ: "A representation that something will be done in the future cannot be true or false at the moment it is made"
        
        No duty to inform other party of change of future intention - Wales v Wadham (1977)
        
        Exception - a dishonest statement of intention IS a statement of fact - Edgington v Fitzmaurice (1885)
        
        Bowen LJ: The state of a man's mind is as much a fact as the state of his digestion... A misrepresentation as to the state of a man's mind is, therefore, a misstatement of fact"
      - Silence
        
        General rule - silence is not a statement of fact - no general duty in English law to disclose information
        
        Keates v The Earl of Cadogen (1851)
        
        Sykes v Taylor-Rose (2004)
        
        Exceptions
        
        Half truths - Dimmock v Hallett (18886)
        
        Continuing representations - With v O'Flanagan (1936)
        
        Contracts - ubberimae fidei e.g. insurance contracts - contract of utmost good faith
    - - Pankhania v Hackney LBC (2000)
  - - - Bank held liable because was shown opinion not held honestly, and that manager knew that likely to rely on it
  - - - Does statement relate to issue that would influence a reasonable person? - Pan Atlantic Insutance Co Ltd v Pine Top Insurance Co Ltd (1995)
        
        If statement IS material, court generally infers inducement - Smith v Chadwick (1884)
        
        UNLESS claimant can prove defendant was not induced (subjective test) - Museprime Properties v Adhill Properties (1991)
        
        If statement IS NOT material, no inducement
        
        UNLESS claimant can prove they were induced (subjective test) - Museprime
    - - Misrepresentation must play a "real and substantial part" in inducing - JEB Fasteners v Marks Bloom (1983) - additional to objective test - misrepresentor can use to subjectively prove wasn't real or substantial
      - Need not be the ONLY inducement - Edgington v Fitzmaurice (1885)
      - No inducement where
        
        Claimant did not hear or see the misrepresenttion - Horsfall v Thomas (1862)
        
        Claimant did not rely on misrepresentation - Smith v Chadwick (1882)
    - - General rule - no general duty to check a representations - Redgrave v Hurd (1881)
      - Exception - the more commercial a transaction, the more reasonable it is to check - claim will be subject to contributory negligence if negligently check - Smith v Eric S Bush (1990)
        
        Difficult to ascertain how commercial a transaction is
      - No inducement if rely on own investigation and not the misrepresentation - Attwood v Small (1838)
        
        However - even if claimant has investigated, partial reliance on misrepresentation is sufficient - Edgington v Fitzmaurice (1885)
        
        If misrepresentation is fraudulent then investigation ignored by court - S Pearson & Son v Dublin Corp (1907)
- - - - 1) Knowing it was untrue, or
      - 2) Without belief in its truth, or
      - 3) Reckless as to its truth
        
        Reckless = "a disregard for the truth" and is "where the defendant has shut his eyes to the facts, or purposely abstained from inquiring into them... just as fradulent as if,,. knowingly stated that which was false" - Thomas Witter v TBP Industries (1996) per Jacob J
      - Derry v Peek (1889) per Herschell LJ - here tram operator invited investment - stated had right to use steam in prospectus - but right subject to final consent of Board of Trade, who refused - on the facts, found that they did have an honest belief at the time they made the statement
    - - Difficult claim to make unless there is very good evidence - burden on misrepresentee to prove actual fraud - has to be the only explanation
    - - Court will ignore any investigation by misrepresentee - S Pearson v Dublin Corp (1907)
      - Once proven, motive is irrelevant - Derry v Peak (1889(
      - Maximum remedies available
  - - - Burden of proof on misrepresentor to show reasonable grounds/belief - reversed from fraudulent
      - Howard Marine v Ogden (1978) - "fiction of fraud" - even if fraud not proved, if can't show reasonable belief then treated as having made a fraudulent representation in respect to remedies
        
        Buyer asked how much weight barges could carry - seller checked Shipping Register and reported back - overstated - court said should have consulted own ship papers
      - Must be a contract between claimant and defendant for claimant under Act - with advisors etc., would have to sue for negligent misstatement in tort
  - - - Outcome depends on what you can prove
- - - - Must inform of intention to rescind - Car & Universal Finance v Caldwell (1965) - have to tell them or start proceedings - here misrepresentor disappeared after selling to third party buyer - decided that third party would be the loss - Caldwell had reported it stolen to police and AA before the car was sold - contract was voided and buyer didn't have good title
      - Bars to recission
        
        1) Third party rights - Phillips v Brooks (1919)
        
        Where someone else has interest in property so misrepresentee can't be put back in same position - in Phillips, they didn't act quickly enough - third party had good title, in contrast with Caldwell
        
        2) Affirmation - Long v Lloyd (1958)
        
        Can't act inconsistently with intent to rescind
        
        3) Impossibility - Clarke v Dickson (1858)
        
        Where factually impossible to restore position before contract - aka subject matter changes - in Clarke, shares were sold and company was then converted to limited liability partnership
        
        4) Lapse of time- Leaf v International Galleries (1950)
        
        Mistake case - hung painting he had bought in house for five years - found out was a Constable forgery - court found too long had passed - has since been doubted and suggested that in cases of fraudulent misrepresentation should start at discovery - but binding
      - Court will do what is "practically just" - Erlanger v New Sombrero Phosphate (1878)
        
        Won't let small problems get in the way - here investors had made a small profit - courts just took this into account when calculating putting them back in old position
  - - - Fraudulent misrepresentation
        
        Try to put in position as if hadn't entered into contract at all - measure of damages - Tort of deceit
        
        Doyle v Olby Ironmongers (1969)
        
        All loss "directly flowing" from transaction
        
        Does not have to be foreseeable
        
        As long as not rendered too remote by claimant
        
        New Smith Court v Scrimgeour Vickers (1997) - confirmed Doyle
        
        Claimant must mitigate as soon as fraud discovered - take reasonable steps not to make position worse
        
        Damages reduced by any benefit accruing as result of misrep - offset
        
        Loss of profit
        
        East v Maurer (1991) - wouldn't give expectation measure of damages, as if what he said was true - instead entitled to reliance measure, as if had bought similar business in area - need evidence to show what would have made - no hypotheticals
        
        Clef Aquitaine v Laporte (2000) - small profit made with no loss - argued could have entered into more profitable contract - had to show there was an alternative
        
        Defence of contributory negligence not available - Standard Chartered Banking v Pakistan Nat Ship (2003)
      - Negligent
        
        Under Section 2(1) - same as for fraudulent - confirmed in Royscott Trust v Rogerson (1991)
        
        Except damages may be reduced by a contributory negligence claim - Gran Gelato v Richcliff (Group) Ltd (1992)
        
        Section 2(2) - "court may award recission or damages in lieu of recession"
        
        Looks at nature and effect of misrepresentation
        
        Any S2(1) damages reduced by S2(2) damages in lieu - S2(3)
      - Innocent - S2(2) - damages in lieu of rescission - no automatic rights
  - - - If relevant - equitable remedy - Whittington v Seale-Hayne (1900)