First Tower Trustees Limited v CDS (Superstores International) Limited [2018] EWCA Civ 1396
Facts
FTT let warehouse premises to CDS in 2015. After taking possession, CDS discovered that the premises contained asbestos which rendered them unusable. In replies to pre-contract enquiries FTT had stated that it was unaware of any relevant notices or potential hazards but stated that CDS should satisfy itself. In the event it became clear that FTT had been told of asbestos contamination prior to completion but has not told CDS or corrected the reply to the enquiry.
CDS brought proceedings against FTT claiming that the position had been misrepresented. FTT relied on a provision in the lease that the lease “had not been entered into in reliance wholly or partly on any statement or representation made by or on behalf of [FTT]”
Issues
At trial, the first issue was whether the provision in the lease was a misrepresentation. If there had been a misrepresentation, the second issue was whether the provision in the lease as an attempt to exclude liability for misrepresentation for the purposes of section 3(1) of the Misrepresentation Act 1967. Having found in favour of CDS on those two points, the trial judge then had to consider whether the provision satisfied the test of reasonableness in section 11(1) of the Unfair Contract Terms Act 1977.
Decision
The trial judge concluded that the provision was unreasonable and found FTT liable for misrepresentation. FTT appealed unsuccessfully.
The Court of Appeal had to consider the provision against the background of the authorities which establish that parties are able to bind themselves contractually to accept a state of affairs which is inaccurate. In this case, CDS had effectively bound itself to accept that it had not relied on FTT’s replies to the pre-contract enquiries.
The Court of Appeal held that the provision was an attempt to exclude liability within section 3(1) as FTT would have been liable for misrepresentation but for that clause. It was also held that the provision was unreasonable. Central to this part of the Court of Appeal’s reasoning was that the provision deprived CDS of the right to rely on FTT’s replies to the pre-contract enquiries with the consequence that those replies were had no meaningful value.
Comment
This decision is a reminder of the risks associated with non-reliance clauses, particularly in property cases where the standard conveyancing practice has been followed. Such clauses can fall foul of sections 3(1) and 11(1) because they are inherently designed to exclude liability rather than to delineate primary contractual obligations. It would seem that the Court of Appeal has laid down a marker that non-reliance clauses will be of no effect where they prevent a party from relying on pre-contract enquiries.
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