Mead & Anor v Babington & Anor

A finding that a claimant relied on a particular misrepresentation may stand where the evidence, viewed in context, makes that inference open, even if the evidence also concerns reliance on several representations collectively. In a misrepresentation claim, the representor need not intend the representation to be acted on in the precise manner in which the loss occurs. It is sufficient that the representation was intended to be acted on, subject to remoteness. Where a representation is directed to identified claimants and intended to lead them to negotiate with a supposed agent, an intention that a contract might result may be inferred. A decision concerning a statement made generally to protect a company, rather than to induce the claimant’s transaction, is distinguishable.

The claimants sought damages after a Spanish villa development transaction arranged through the respondents, estate agents. The Oxford County Court found that one respondent knowingly misrepresented that the Spanish developer was the respondents’ agent and representative, and that the misrepresentation induced the claimants to contract with the developer. The respondents appealed. They argued that the evidence did not support a finding that the claimants relied on that particular representation and that there was no evidence of an intention to induce the contract, as opposed to negotiations. The Court of Appeal considered those two issues.

1. Appeal dismissed. The trial judge was entitled to find that the respondents’ false representation that the Spanish developer was their agent was an inducement to the claimants’ contract.
2. On the first ground, an appellate court should not disturb a factual finding of reliance where evidence supports it and the inference drawn was open to the trial judge. The evidence included pleadings, witness statements and the claimants’ account that they believed the developer was working closely with, and was effectively the United Kingdom arm of, the respondents. Although the evidence could be described as reliance on all the representations collectively, it was open to the judge to infer reliance on the particular representation concerning agency.
3. On the second ground, the representation was directed to the claimants. An intention that they should negotiate with the supposed agent carried, at least, an intention that a contract might result. It was overly technical to distinguish an intention to negotiate from an intention that the claimants should enter into a contract.
4. Tackey v McBain [1912] AC 186 did not assist the respondents. That case concerned a statement made generally to protect a company, rather than to induce the particular claimant to suffer loss, and was materially different on its facts.
5. The approach in Goose v William Sandford (No 2) [2001] Lloyd’s Reports PN 189 supported the conclusion that the representation need not have been intended to be acted on in the precise manner in which the claimant’s damage occurred. It was enough that the representation was intended to be acted on. No issue of remoteness arose.

• Court of Appeal (Civil Division). On 15 May 2007, the court dismissed the appeal in [2007] EWCA Civ 518.
• Oxford County Court. HHJ Harris QC held the respondents liable for misrepresentation arising from the purchase of the Spanish site and the construction contract.