Axa Sun Life Services Plc v Cannon & anor

A representation about a party’s present intention or expectation is not false merely because the anticipated event later fails to occur. A warranty requires a promise, not merely a statement of intention or belief. Where performance depends on regulatory approval, statements that approval is intended or expected do not ordinarily amount to a promise that approval will be obtained. The absence of evidence does not justify an inference of breach without a proper evidential basis. A statement made after the contract was concluded cannot have induced its formation.

The claimant sought repayment of a development allowance advanced under an agreement appointing the defendants as agents to promote and sell its financial products. The defendants counterclaimed and claimed set-off, alleging that representations and contractual assurances had been given about the availability of an existing client base and the approval of a proposed introducer.

The claimant denied misrepresentation, warranty, implied terms and collateral agreement. It also relied on an entire agreement clause and raised issues concerning the reasonableness requirement under Misrepresentation Act 1967. The court decided the claim and counterclaim after a three-day trial.

1. Claim and counterclaim. The claimant’s repayment claim succeeded, subject to undisputed adjustment of the figures. The defendants’ counterclaim and set-off failed.
2. A misrepresentation is a false statement of fact, including a statement of the representor’s present opinion, intention or belief. It is distinct from a promise. The statements relied upon here represented what the claimant’s representative intended and expected would happen. They were true statements of his state of mind when made.
3. The later failure to make the clients available did not make those representations false. The defendants would have needed to establish a warranty, namely a promise that the clients would become available. The evidence disclosed no such promise.
4. The parties understood that approval depended on the proposed introducer satisfying the requirements of both the claimant and the Financial Services Authority. No reasonable person could have understood the claimant to promise that those requirements would be met. The court could not infer from the absence of evidence why approval failed that the claimant had committed an act or omission amounting to breach.
5. The alleged collateral agreement failed for the same reason. A later statement about the importance of releasing the clients could not have induced the agreement because it was made after the agreement had been concluded, and it was not shown to have been intended to induce it.
6. The court therefore did not decide the scope or effect of the entire agreement clause or the contractual discretion clause. It also allowed both parties to rely on late witness statements because no injustice was shown.
7. Obiter: the court emphasised the continuing duties of parties and solicitors to preserve and disclose relevant documents, referring to the White Book guidance and the authorities cited there.

First-instance judgment. No prior appellate decision is stated in the judgment.