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Update: CoA refuses landlord’s appeal in First Tower Trustees Ltd & Anor v CDS Superstores Ltd

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Summary: In our previous blog concerning this case, we explained that a landlord sought, unsuccessfully, to avoid a tenant’s claim for damages for a misrepresentation in the landlord’s replies to pre-contract enquiries, by relying on a “non-reliance” clause in the relevant Agreement for Lease. The Court of Appeal was equally unimpressed with the landlord’s arguments, and confirmed that the non-reliance clause was unreasonable and, therefore, inoperable.

See our expert insight 'How reliable is a "non-reliance" clause?' here.

Section 3 of the Misrepresentation Act 1967 provides that a contract term which excludes or restricts liability for misrepresentation, or which excludes any remedy for misrepresentation, is enforceable only to the extent that it satisfies the reasonableness test set out in section 11 of the Unfair Contract Terms Act 1977 (“UCTA”). The non-reliance clause in this case provided:

The tenant acknowledges that this lease has not been entered into in reliance wholly or partly on any statement or representation made by or on behalf of the landlord.

As drafted, although this clause was wide enough to catch the landlord’s replies to the tenant’s preliminary enquiries, the judge at first instance held that the clause was subject to section 3 of the Misrepresentation Act, and did not satisfy the UCTA reasonableness test.  It therefore could not operate in the landlord’s favour. The landlord appealed.

Court of Appeal Decision

The Court of Appeal unanimously upheld the High Court decision, agreeing that the non-reliance clause failed the UCTA test of reasonableness. Further, the Court of Appeal stated that the judge was right to stress the importance of pre-contract enquiries and thus the landlord did not limit its liability for the misrepresentation.

Why is this case important?

It is easy to treat replies to pre-contract enquiries as a routine matter but this case emphasises the importance of giving accurate replies to enquiries. The Court of Appeal did not rule out the possibility that in the future there might be an exceptional clause which prevents reliance on preliminary enquiries, but did say that it found it hard to imagine how such a clause might be drafted.

If you have any queries concerning this case, please contact Wendy.Miller@bclplaw.com.

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