Howard Marine and Dredging Co v A. Ogden and Sons [1978] Q.B. 574

Howard Marine hired barges to Ogden for transporting excavated material. During negotiations its representative gave an inaccurate figure for the barges' carrying capacity, relying on information in Lloyd's Register. The barges' own documents contained the correct figure. Their actual capacity was less than represented, and a dispute arose over hire charges and the losses associated with the shortfall. Ogden relied on misrepresentation; Howard Marine maintained that its representative had honestly believed the information provided. The dispute required the court to assess whether the basis for that belief satisfied the statutory defence.

Had Howard Marine proved reasonable grounds for believing its inaccurate statement true so as to avoid liability under section 2(1) of the Misrepresentation Act 1967?

The Court of Appeal majority held that Howard Marine had not discharged the burden under section 2(1) of the Misrepresentation Act 1967. Its representative had relied on an incorrect capacity figure in Lloyd's Register, although more reliable ship documents supplied the correct information. An honestly held belief was insufficient without reasonable grounds for holding it up to the contract. The majority found the explanation for preferring the register inadequate in the circumstances. Liability did not depend on separately proving the common-law tort of negligent misstatement. The decision illustrates the statutory reversal of the burden once the relevant misrepresentation, contract and loss are established, rather than a rule that every inaccurate representation is fraudulent.

Under section 2(1) of the Misrepresentation Act 1967, a contracting representor must prove both actual belief and reasonable grounds for believing its statement true until the contract was made to escape the statutory liability. Honest reliance on a source may fail that objective requirement.

Howard Marine is a leading illustration of why statutory misrepresentation must be kept distinct from deceit and negligent misstatement. The central issue was the representor's justification for its belief, including the reliability of information available to it. It does not require a representor to prove that every possible source was investigated. Analyse the particular statement, the source selected and contrary information before deciding whether the statutory defence is established. The majority's conclusion was contested, which makes precise explanation preferable to slogans about strict liability.