Pattinson v Flack

In a claim for deceit, a material false representation made with a view to inducing a contract gives rise to a rebuttable inference of inducement when the claimant enters the contract. Actual reliance may be established even though the claimant had the means, or an opportunity, to discover the truth. The fraudulent representor cannot avoid liability by arguing that the claimant should not have made the payment. On an appeal against findings of fact, the Court of Appeal reviews the evidence but intervenes only where the finding is palpably wrong or outside the generous ambit of reasonable disagreement.

Spencer Flack bought a historic Lotus 16 racing car from Jeffrey Pattinson and Queensgate Industries Ltd for £180,000. The trial judge found that Pattinson had represented the car as Innes Ireland’s 2.5 litre Grand Prix car, implying that it was an historic Formula 1 car, and had thereby induced the purchase by deceit. Damages of £76,747.50 were awarded.

The defendants appealed the finding that Flack relied on the representation. They relied on an earlier warning from John Harper and documents which could have revealed the car’s Formula 2 history. The central issue was whether the judge was entitled to find actual reliance despite that warning and the available information. An application to adduce further evidence was also made.

1. Fresh evidence and disposition. The Court of Appeal refused to admit evidence from Julian Sutton. No adequate explanation had been given for failing to obtain it with reasonable diligence before trial. Although the evidence was credible, it was unlikely to have materially altered the result. The appeal was dismissed.
2. Appellate review. On an appeal against findings of fact, absence of evidence supporting a finding is an error of law. Where there is evidence supporting the finding, the Court of Appeal reviews the evidence under CPR 52.11(3), but should intervene only if the finding is palpably wrong or outside the generous ambit within which reasonable disagreement is possible. The approach was adapted from Lord Fraser’s speech in G v G (Minors: Custody Appeal) [1985] 1 W.L.R. 642 at 659, although that case concerned a different appellate task.
3. Reliance on fraudulent misrepresentation. Where a defendant makes a material statement with a view to inducing a contract, and the claimant enters into it, a fair inference arises that the statement induced the contract. The inference is rebuttable. A claimant’s actual reliance is not defeated by having the means, or even an obligation, to discover the falsity. Chadwick LJ relied on Redgrave v Hurd (1881) 20 ChD 1 and explained the wider principle by reference to Standard Chartered Bank v Pakistan National Shipping Corporation [2002] UKHL 43.
4. Application. The trial judge was entitled to find that Harper’s warning made little impression because of Flack’s enthusiasm and his belief that Harper was attempting to dissuade him from buying the car. There was no sufficient evidence that Flack knew the truth and took the risk that the car could nevertheless be raced. The judge’s finding that Pattinson’s representation finally persuaded Flack that the car could compete in Formula 1 events was supported by the evidence and fell within the permissible range of factual conclusions. It was immaterial that Flack might have purchased the car without the representation.

Ward LJ gave the leading judgment. Chadwick LJ concurred, and Sir Denis Henry agreed with the reasons given by the other judges. The decision was unanimous.

• Court of Appeal (Civil Division): In [2002] EWCA Civ 1762, the appeal against the finding of reliance and the damages for deceit was dismissed. The application to adduce further evidence was refused.
• High Court, Chancery Division: On 19 December 2001, Mr Geoffrey Vos QC sitting as a Deputy High Court Judge entered judgment for Spencer Flack for £76,747.50 in damages for deceit.