County Leasing Ltd v Quotepool Ltd

An appellate court will not interfere with a trial judge’s finding that misrepresentations induced a transaction merely because the representee received advice or had time to reconsider. The question is whether, on the evidence, the transaction would have occurred without the representations. A gap between agreements does not justify substituting a different finding where the judge found that a composite package induced them all. A party cannot complain on appeal that evidence in a potentially privileged solicitor’s file was not tested where no disclosure application was made at trial. Costs are pre-eminently a matter for the trial judge’s discretion and will stand absent a misdirection in principle or other clear error.

County Leasing Limited appealed from an order made by Her Honour Judge Hampton in the Northampton County Court on 16 December 2010. The underlying claims concerned sale-and-leaseback transactions involving land and equipment, which the defendants alleged had been induced by misrepresentations. In the claim against Quotepool Limited, the judge set aside the lease, ordered possession and mesne profits, awarded damages to Quotepool, and ordered County Leasing to pay 50% of Quotepool’s costs.

Etherton LJ refused permission to appeal on the papers. County Leasing renewed its application before Rimer LJ, relying on five grounds concerning reliance, legal advice, the interval between the sale and leaseback, and costs. The central questions were whether the trial judge’s factual findings and discretionary costs order disclosed any realistic basis for appellate intervention.

Rimer LJ refused permission to appeal on all five grounds.

1. Reliance on misrepresentation. If the evidence established that the representee would have entered the transactions even without the representations, the necessary reliance would be absent and the claim would fail. However, the trial judge had considered the evidence that Mr Hawkes consulted his accountant and nevertheless found that the representations induced the transactions. There was no proper basis for the Court of Appeal to second-guess that finding.
2. Solicitors’ advice and disclosure. The judge had implicitly accepted that Mr Hawkes’s solicitors had not advised him about the misleading nature of the representations. The proposed challenge depended on the non-disclosure of the solicitors’ file, which was prima facie privileged. No application for disclosure had been made at trial and no disclosure order had been sought. The point therefore afforded no realistic ground of appeal.
3. Composite transaction. The judge expressly found that the misrepresentations induced all the agreements forming part of the package. The interval between the sale of the land and the subsequent leaseback did not justify replacing that factual finding with a different one.
4. Costs. Quotepool had failed to retain possession but had succeeded in setting aside the lease and obtaining damages, while County Leasing had recovered possession only on an alternative basis rather than on its pleaded forfeiture case. The judge was entitled to regard the parties as having achieved success on both sides and to award Quotepool 50% of its costs. Costs were pre-eminently a matter for her discretion, exercised after hearing the trial and assessing the relative successes. There was no real prospect of showing a misdirection in principle or that the order fell outside the wide ambit of that discretion.

• Court of Appeal (Civil Division): Etherton LJ refused permission to appeal on the papers on 1 February 2011. On renewal, Rimer LJ refused permission on all grounds in [2011] EWCA Civ 705.
• Northampton County Court: Her Honour Judge Hampton’s judgment led to an order dated 16 December 2010 setting aside the lease, ordering possession and mesne profits, awarding damages to Quotepool, and ordering County Leasing to pay 50% of Quotepool’s costs.