• 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]

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