Lambson Fine Chemicals Ltd v Merlion Capital Housing Ltd

When a contractual representation refers without qualification to an expert report, the reference ordinarily covers the report as a whole. It is not confined to remedial recommendations while excluding findings, tables or incorporated earlier reports. A party cannot convert an expert’s failure to emphasise or act on identified contamination into a representation that the contamination was absent. Contractual provisions allocating risk may reinforce that construction. A specific representation incorporated into an agreement remains capable of reliance despite general entire-agreement or non-reliance wording.

The claimant sold a heavily contaminated industrial site to the defendant and leased it back to carry out demolition works. The defendant retained part of the purchase price and counterclaimed the cost of removing Blue Billy-contaminated soil discovered in the central area.

The counterclaim alleged that a director’s letter, confirming that he knew of no contamination other than that specifically identified in a URS environmental report, was fraudulent or otherwise actionable, and that the claimant was liable in contract or warranty. The court also considered the sale agreement’s risk-allocation clauses and a later agreement under which the claimant agreed to contribute to specified remediation costs.

1. Construction of the second letter. The reference to the URS report meant the whole Final URS Report, including its borehole results, references to the Travers Morgan reports, and findings indicating cyanide or possible Blue Billy contamination in the central area. The phrase “specifically identified” did not limit the representation to areas for which URS recommended remedial work.
2. The director had no knowledge of contamination beyond that identified, directly or indirectly, in the report. The defendant’s case depended on treating URS’s omission of remedial recommendations as a positive statement that no contamination existed in the central area. That construction was artificial and unsupported by the report.
3. The second letter therefore contained no actionable misrepresentation, fraudulent or otherwise, and created no relevant collateral warranty or contractual term imposing liability for the remediation claimed. The defendant had received full disclosure and bore the risk of shortcomings in the investigation and reporting.
4. Clauses 9.5, 9.6 and 15.1 of the sale agreement reinforced that conclusion. They allocated to the defendant matters revealed by enquiries which it had made or ought prudently to have made, matters evident on inspection, and the implications of the disclosed contamination. Clauses 13.1 and 13.2 did not exclude reliance on the second letter, which was expressly required and incorporated into the sale agreement.
5. The parties later made a binding, freestanding agreement that the claimant would contribute to specified remediation costs up to the equivalent of five working days. That agreement did not amount to an admission of liability for the principal counterclaim.
6. The claimant was entitled to the remaining retention and agreed interest. After crediting the defendant’s agreed sums for extended occupation and the remediation contribution, judgment was entered for the claimant for the balance of £31,420.72, payable within 14 days of formal hand-down. The principal counterclaim was rejected.