Peekay Intermark Ltd. & Anor v Australia and New Zealand Banking Group Ltd.

An earlier informal misrepresentation does not induce a contract where the contracting party receives the definitive contractual terms, knows that they define the proposed transaction, and signs them without reading them solely because of an unsupported assumption that they match the earlier description. This does not displace the rule that a claimant is not defeated merely because the truth could have been discovered.

A signed contractual acknowledgement that the party has read and understood a risk disclosure statement, including the nature of the transaction, may create a contractual estoppel. It can prevent that party from alleging a lack of understanding of the transaction, where the documents themselves were not misrepresented.

Peekay invested US$250,000 through ANZ in a Russian GKO-linked product. Its representative had been given an informal description suggesting that investors would have an interest in the underlying GKO. The final terms instead described a structured deposit, under which the GKO was only a reference obligation and the investor had no such interest or control on default.

The representative signed and returned the final terms and an Emerging Markets Risk Disclosure Statement without reading them. After the GKO defaulted, Peekay recovered only a small part of its investment. The Deputy Judge in the Commercial Court held that Peekay had been induced by misrepresentation and awarded damages under section 2(1) of the Misrepresentation Act 1967. ANZ appealed.

1. Appeal allowed unanimously. Lord Justice Moore-Bick gave the principal judgment, with Mr Justice Lawrence Collins agreeing. Lord Justice Chadwick agreed and added reasons. The Deputy Judge’s conclusion that Peekay was induced by the earlier description of the investment could not stand.

2. The court accepted that the description could carry an implicit representation of fact: that the GKO-linked product was structured to give the investor an indirect proprietary interest in the GKO. Such a representation was capable of supporting a claim under section 2(1) of the Misrepresentation Act 1967.

3. However, the final terms were the first and only formal description of the transaction which Peekay was invited to make. They clearly described a structured deposit and its default consequences. The representative knew that the documents contained the definitive terms, but signed them without reading them. No one had represented that the documents matched the earlier informal description or that they need not be read.

4. The rule in Redgrave v Hurd, (1881) 20 Ch. D. 1, means that a claimant is not normally defeated merely because the truth was discoverable. But the earlier authorities did not concern a case where the signed contract itself clearly set out the true nature of the transaction. On the primary facts, Peekay entered the contract because of its own assumption about the documents, not because it relied on the earlier representation.

5. As an independent basis for allowing the appeal, the signed Risk Disclosure Statement formed part of the contract. It confirmed that Peekay had read and understood it, had understood the nature of the transaction, and had determined that it was suitable. In the absence of a misrepresentation about those documents, that contractual acknowledgement estopped Peekay from alleging that it did not understand the investment. The court permitted ANZ to amend its notice of appeal to raise contractual estoppel, but not estoppel by representation, which had not been tried below.

• Court of Appeal (Civil Division): In [2006] EWCA Civ 386, allowed ANZ’s appeal and set aside the judgment for Peekay.
• Commercial Court: The Deputy Judge gave judgment for Peekay and awarded damages for misrepresentation under section 2(1) of the Misrepresentation Act 1967.