Ross River Ltd & Anor v Cambridge City Football Club

For permission to appeal, an arguable point is insufficient where success would not affect the result because an independent ground supports the order. Fraudulent misrepresentation made to influence contractual negotiations gives rise to a rebuttable presumption of inducement. The trial judge need not state the relevant finding in a particular formula if the judgment contains its substance. In assessing effect, the comparison is between the false statement and the truth, not between the statement and silence. Improper conduct occurring after an earlier contract does not establish an entitlement as of right to rescind that contract. Any jurisdiction to grant such relief is, at most, discretionary.

Ross River Ltd and Blue River LP purchased the football club’s ground under an agreement containing an overage provision. They later agreed to pay the club £900,000 in return for surrendering its overage entitlement.

After a seven-day trial, Briggs J found unauthorised payments to the club’s chief executive and fraudulent misrepresentations by the purchasers’ representative. He set aside the overage agreement but declined to set aside the earlier sale agreement: [2007] EWHC 2115 (Ch). The claimants sought permission to challenge the findings concerning bribery and misrepresentation. The club sought permission to challenge the refusal to rescind the sale agreement. The central questions were whether the misrepresentation reasoning disclosed an arguable error and whether later improper conduct gave the club an entitlement, or at least a discretionary remedy, to rescind the earlier contract.

Lord Justice Lloyd gave the reasons, and Lord Justice Wall agreed. Both applications for permission to appeal were refused.

1. Claimants’ application. The bribery issue was potentially arguable in isolation, but an appeal on that issue would be academic if the separate finding of fraudulent misrepresentation remained intact. The claimants therefore had to show an arguable error in the misrepresentation reasoning.
2. Where fraudulent representations are made with a view to influencing contractual negotiations, inducement is presumed, subject to being disproved by the representor. Briggs J had not treated that presumption as irrebuttable. Although he had not expressly stated that the May representations remained operative in October, that conclusion was the gist of his reasoning. His assessment of the club solicitor’s attitude towards the representor was relevant evidence of their continuing effect.
3. In assessing inducement, the proper comparison was between the false statement and the truth, rather than between the statement and silence. That comparison could remain relevant even though the contract was made months after the representation. There was consequently no realistic prospect of successfully challenging the finding of inducement.
4. Club’s application. The club was entitled to rescind the overage agreement. The trial judge had also held that there was no jurisdiction to rescind the earlier sale agreement because the bribery and fraud post-dated it. Even if a discretionary jurisdiction existed, he would have refused relief because requiring the purchasers to transfer the land back would cause positive injustice. The Court of Appeal found no basis to challenge that exercise of discretion.
5. The club’s suggested entitlement as of right to rescind the earlier agreement was not arguable on the facts. In Panama and South Pacific Telegraph Works Company v India Gutta Percha Telegraph Works Company (1875) 10 Ch App 515, James LJ had adopted that approach, but Mellish LJ reached the same result on a more cautious basis, so James LJ’s reasoning was not the ratio. The earlier case also involved circumstances potentially connected with the original contract; no such connection existed here. The Court therefore left open only the possibility of discretionary relief, which could not assist the club in light of the trial judge’s unassailable alternative conclusion.

• Court of Appeal (Civil Division): refused both renewed applications for permission to appeal in [2008] EWCA Civ 772; the formal order was application refused.
• High Court, Chancery Division: Briggs J, after trial, set aside the overage agreement but declined to set aside the earlier sale agreement in [2007] EWHC 2115 (Ch).