• In the case of Pankhania v Hackney LBC [2002] EWHC 2441 (Ch), there was a clear misrepresentation because NCP was a business tenancy.
  • This contract law case is related to auctions and misrepresentation.
  • Previous rulings aren’t binding and a misrepresentation of law is actionable according to Kleinwort Benson Ltd v Lincoln City Council [1999] 2 A.C. 349.

Facts of the Case

  • D sold a commercial property used as a car park to C. The documents during the auction only suggested a licence in relation to the land existed.
  • C claimed damages from D for not bringing up the possibility that a business tenancy agreement existed.
  • The first representation related to the car park and the second related to the planning permissions.

Issues

  • Were the purchases made by relying on the false representations?
  • Should damages be awarded under s 2(2) of the Misrepresentation Act 1967?
  • Were the occupiers tenants or contractual licensees?

Held by High Court

  • D liable to damages on car park representations but fail on planning representations – C was induced to buy after reasonably relying upon the representation.

Rex Tedd QC

Exclusive possession

  • The term of exclusive possession excluding the freeholder gives rise to business efficacy as per The Moorcock [1889] 14 PD 64.
  • The commercial property was occupied according to Street v Mountford [1985] A.C. 809.
  • “If a tenancy existed, it would be for the vendors to obtain vacant possession before sale, the inference being that sale of the property subject to a protected tenancy would be unattractive, the obvious reason being that potential purchasers would be deferred.” [33]

Misrepresentation

  • The misrepresentation on the car park of NCP is actionable.
  • “There is nothing to indicate that the representor regarded the legal effect of the documents as doubtful, or that they constituted, or might constitute a protected tenancy nor that it was for the reader to make his own enquiries, rather than rely on the representations.” [40]
  • The vendors made deliberate false statements to C causing C to suffer a loss.
  • “The representations in the planning guidelines and catalogue are not retrospectively falsified by her actions.” [99]

Exclusive Industry Scoop

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