• In the case of Museprime v Adhill [1991] 61 P & CR 111, the courts held the burden of proof falls on the representee to show they were induced by the false statements made when a reasonable person would not have contracted based on the misstatements.
  • This contract law case is about misrepresentation, sale of land and rescission.
  • This case relates to an auction between a landlord and tenant.

Facts of the Case

  • C purchased 3 properties at an auction based on a representation regarding the agreed rents. At the auction, D pointed out the revised rents could still be negotiated to different values.
  • C therefore did not carry out the sale contending that the “trigger” notices weren’t high enough.
  • C contended the representations induced them into a contract even if the notices were unreasonable.

Issues

  • Is oral notice sufficient?
  • Did the tenants agree to increase the rent?
  • Should the contract be terminated on the ground of misrepresentation?

Held by High Court

  • Rescission granted – representations regarding the revised rents were material.

Scott J

Oral notice

  • Oral telephone comments did not suffice as a counter-notice. “Trigger” notices were valid.

Misrepresentation

  • This case referred to Overbrooke Estates Ltd v Glencombe Properties Ltd [1974] 3 All ER 511 where there was an innocent material misrepresentation during an auction.
  • C relied on the misrepresentations but the addendum contained errors to be corrected.
  • A material representation is a statement inducing the other into the contract on the agreed terms.

Rent

  • The phrasing of the notice is not consistent with the intention the document should make up the notice triggering the rent review.
  • The notices act as trigger notices in accordance of the lease agreement provisions. There was no written counter-notices.
  • “In my judgment a fair reading of the rent review provisions justifies the conclusion that the counter-notice being referred to is a notice that is to be in writing. The use of the verb “serve” suggests a written notice. The importance of the notice in view of the deeming provision and in order to operate the time requirements of the arbitration provisions suggest the need for certainty as to time of service. One may find that certainty with a written notice but it is likely to be absent with an oral informal notice.”
  • “I have come to the conclusion that in this case there was a misrepresentation; it was material; it did induce the plaintiff to enter into the contract; and that at the time when the defendant purported to terminate the contract pursuant to condition 22 the plaintiff was entitled to rescind for misrepresentation. In my judgment, the misrepresentation case for rescission asserted in the statement of claim succeeds.”

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