First Tower Trustees Ltd v CDS (Superstores International) Ltd [2018]
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First Tower Trustees Ltd v CDS (Superstores International) Ltd [2018] EWCA Civ 1396 revolves around English contract law and specifically addresses the implications of the Misrepresentation Act 1967.
The central dispute involved CDS Ltd's assertion that Clause 5.8 in its lease agreement with FTT Ltd was unjust. This clause stated that CDS did not rely on any representations made by FTT. Prior to entering into the contract, FTT claimed ignorance of any environmental issues on the property. However, it was later revealed that FTT was indeed aware of asbestos contamination in the warehouse, necessitating remedial action.
The presiding judge determined that the lease was entered into based on a misrepresentation by the landlord. Additionally, Clause 5.8 sought to exempt FTT from liability for misrepresentation, a provision deemed unreasonable under both the Misrepresentation Act 1967 Section 3 and the Unfair Contract Terms Act 1977 Section 11. Notably, the judge ruled that FTT's liability was not restricted to the extent of the trust's assets.
Lewison LJ contested the idea that a contractual estoppel, where parties are bound to accept something even if known to be untrue, could serve as a defence against a claim under the Misrepresentation Act 1967 Section 3. Similarly, he rejected the notion that a non-reliance clause was immune from scrutiny. Lewison LJ emphasised that the Misrepresentation Act 1967 Section 3 should be interpreted in a manner aligning with the policy of preventing escape from liability unless reasonable. However, when a non-consumer contract merely described a party's primary obligation, characterised as a basis clause, there was no need for the reasonableness test. In this instance, Clause 5.8 was deemed unreasonable.
The judge underscored the importance of pre-contract enquiries in conveyancing. While acknowledging the possibility of exceptional cases where a clause precluding reliance on replies could meet the reasonableness test, such scenarios were challenging to envision. Importantly, the landlord's liability was determined not to be limited solely to the extent of the trust fund. Although the lease contract specified the landlord's role as that of a trustee, limiting liability in contract, this restriction did not apply to tort or damages payable under Misrepresentation Act 1967 Section 2.
The central dispute involved CDS Ltd's assertion that Clause 5.8 in its lease agreement with FTT Ltd was unjust. This clause stated that CDS did not rely on any representations made by FTT. Prior to entering into the contract, FTT claimed ignorance of any environmental issues on the property. However, it was later revealed that FTT was indeed aware of asbestos contamination in the warehouse, necessitating remedial action.
The presiding judge determined that the lease was entered into based on a misrepresentation by the landlord. Additionally, Clause 5.8 sought to exempt FTT from liability for misrepresentation, a provision deemed unreasonable under both the Misrepresentation Act 1967 Section 3 and the Unfair Contract Terms Act 1977 Section 11. Notably, the judge ruled that FTT's liability was not restricted to the extent of the trust's assets.
Lewison LJ contested the idea that a contractual estoppel, where parties are bound to accept something even if known to be untrue, could serve as a defence against a claim under the Misrepresentation Act 1967 Section 3. Similarly, he rejected the notion that a non-reliance clause was immune from scrutiny. Lewison LJ emphasised that the Misrepresentation Act 1967 Section 3 should be interpreted in a manner aligning with the policy of preventing escape from liability unless reasonable. However, when a non-consumer contract merely described a party's primary obligation, characterised as a basis clause, there was no need for the reasonableness test. In this instance, Clause 5.8 was deemed unreasonable.
The judge underscored the importance of pre-contract enquiries in conveyancing. While acknowledging the possibility of exceptional cases where a clause precluding reliance on replies could meet the reasonableness test, such scenarios were challenging to envision. Importantly, the landlord's liability was determined not to be limited solely to the extent of the trust fund. Although the lease contract specified the landlord's role as that of a trustee, limiting liability in contract, this restriction did not apply to tort or damages payable under Misrepresentation Act 1967 Section 2.
