Boris Ignachkov Legal Principles and Key Points
- In the case of First Tower Trustees Ltd v CDS (Superstores International) Ltd [2018] EWCA Civ 1396, C had received information including a report and email regarding the danger of asbestos contamination before contract completion but did not inform D.
- This case concerns misrepresentation, unfair contract terms, exclusion clauses and contractual estoppel.
- This case falls under contract law, equity and property law.
Facts of the Case
- D rented warehouse premises from C. D agreed with clause 5.8 of the lease that the agreement had not been signed in reliance on C’s representations made. The lease stiuplated that C consented to the agreement as its capacity as trustee.
- Prior to contract formation, C claimed there were no environmental concerns with the property despite knowing the warehouse was contaminated with asbestos.
- C, the trustee companies, contended it was not misrepresentation to the tenant.
Issues
- Do the clauses come under s 3 of the Misrepresentation Act 1967?
- Did the trust fund amount restrict the landlord’s liability?
Held by Court of Appeal
- Appeal dismissed – liability was not restricted by the trust assets and D only consented to the contractual obligations based on C’s misrepresentation.
Lewison LJ
Does the lease constrict C’s liability for damages for misrepresentation?
- Clause 5.8 is a contract term excluding misrepresentation liability.
- Clause 5.8 was unreasonable especially considering the circumstances during and after contract formation. This approach had been adopted in Lloyd v Browning [2013] EWCA Civ 1637.
- “Although there might be a case where, on exceptional facts, a clause which precludes reliance on replies to enquiries before contract might be held to satisfy the test of reasonableness even where those replies have in fact been relied on, I find it very hard to imagine what those facts might be” [75]
- Trustees can only restrict third party liability through contract as demonstrated in Muir v City of Glasgow Bank [1879] 4 App Cas 337. Otherwise there are no constraints on a trustee’s capacity – Investec Trust (Guernsey) Ltd case [2018] 2 WLR 1465.
Leggatt LJ
Misrepresentation
- C cannot use this clause to justify restricting liability for representation.
- This case is relevant to Springwell Navigation Corpn v JP Morgan Chase Bank [2010] 2 CLC 705 where it was held clauses stating no representation were made constitute as an attempt to exclude or restrict liability.
- Clause 5.8 does not satisfy the exclusion clause reasonableness test in accordance with the Unfair Contract Terms Act 1977.
Restricting liability
- Contractual estoppel and non-reliance clauses may fall under s 3 of the Misrepresentation Act 1967 following similar cases such as Raiffeisen Zentralbank Osterreich AG v Royal Bank of Scotland Plc [2010] EWHC 1392 (Comm).
- “Whenever a contracting party relies on the principle of contractual estoppel to argue that, by reason of a contract term, the other party to the contract is prevented from asserting a fact which is necessary to establish liability for a pre-contractual misrepresentation, the term falls within section 3 of the Misrepresentation Act 1967” [111]
