Deslauriers and another v Guardian Asset Management Limited

A statutory claim for misrepresentation requires a material misstatement that induced the contract and was not believed on reasonable grounds. It is distinct from negligent misstatement: the statutory claim concerns pre-contract conduct, whereas a tortious duty may continue after contracting if responsibility for professional advice was assumed.

Silence is not normally a misrepresentation, but a partial statement may mislead if it omits a material matter. An arm’s-length commercial lender ordinarily owes no duty to advise an experienced borrower about internal lending policies or regulatory constraints. A registered judgment creditor has the rights of an equitable chargee, but the statutory power to order sale must be read with the wider discretion to stay sale where it is not desirable.

The appellants were property developers who borrowed TT$18.6m from Guardian Asset Management Limited, secured by a mortgage, and later defaulted. Rahim J gave judgment on the promissory notes and dismissed their counterclaim. The Court of Appeal of Trinidad and Tobago dismissed their liability appeal.

In a separate enforcement dispute, Rahim J ordered the sale of the Victoria Square property. The Court of Appeal upheld that order. The appellants argued that a deed had placed the property on trust for their children, that non-registration did not defeat priority, and that sale should await realisation of the mortgaged Hevron Heights development. The appeals concerned the alleged trust, registration priority, the statutory discretion to stay execution, and the reserve price.

Both appeals were dismissed.

1. Liability. A claim under section 3(1) of the Misrepresentation Act requires a misrepresentation which induced entry into the contract and which the maker did not believe, on reasonable grounds, to be true. It is distinct from tortious negligent misstatement. A statutory misrepresentation must occur before the contract; later statements may provide evidence of an earlier misrepresentation but are not themselves actionable under the Act.
2. Silence is not generally a misrepresentation. A partial statement may become misleading if it omits a material matter. Materiality is assessed when the statement is made. Since the evidence did not establish any discussion of further funding, GAM’s lending limits were not material to the loan negotiations. The claim also failed because there was no evidence that GAM’s limits differed from those applicable to banks, or that disclosure would have avoided the loss.
3. A duty of care for negligent misstatement under Hedley Byrne & Co Ltd v Heller [1963] UKHL 4; [1964] AC 465 requires an assumption of responsibility for professional advice. Such a duty can continue after a contract is made. The relationship between an arm’s-length commercial lender and an experienced commercial borrower did not give rise to a duty to advise about internal lending policies or external regulatory constraints.
4. Trust. Applying Milroy v Lord (1862) 4 De GF & J 264; 45 ER 1185, a voluntary settlement is effective only where the settlor has done everything necessary to transfer the property, either to the beneficiaries or trustees, or has declared that the settlor holds it on trust. The court cannot perfect an imperfect gift by adopting a different mode of constitution. Applying Richards v Delbridge (1874) LR 18 Eq 11, the settlor’s intention to divest beneficial ownership must be clearly evinced. The deed contemplated a future transfer to trustees and did not constitute Mrs Deslauriers a trustee.
5. Registration and enforcement. Section 16(1) of the Registration of Deeds Act governed priority between the alleged equitable interest and GAM’s registered judgment. Priority was determined by the dates of registration. Sections 5 to 8 of the Remedies of Creditors Act gave GAM the rights of an equitable chargee.
6. Sections 38 and 54 of the Remedies of Creditors Act had to be read together. Section 38 created a prima facie right to sale once the statutory conditions were proved. Section 54 provided a wider discretion to stay sale if it was undesirable, whether or not a receiver or other equitable execution was ordered, and whether or not the debtor made a separate application. The uncertain value and sale timetable of Hevron Heights did not show that sale of Victoria Square was undesirable or that the debt could be paid promptly by other means.
7. The reserve price was a matter for the trial judge. No error of law or clear error was shown, and the Board would not interfere with the judge’s choice of the more recent, lower valuation. Submissions on costs were directed to be made in writing within 21 days.

1. Privy Council. On 9 November 2017, in [2017] UKPC 34, both the liability appeal and the enforcement appeal were dismissed.
2. Court of Appeal of Trinidad and Tobago. The liability appeal was dismissed on 3 February 2016. The appeal against the order for sale of Victoria Square was dismissed on 24 July 2015, and final leave to appeal was granted on 15 February 2016.
3. High Court of Trinidad and Tobago. Rahim J gave judgment for GAM on 25 October 2011. On 27 October 2014 he ordered the sale of the Victoria Square property.