Choi v Park & Anor

A claim under section 2(1) of the Misrepresentation Act 1967 succeeds where a contracting party knowingly makes false statements which materially induce entry into the agreement and cause loss. The claimant must prove the contract, the misrepresentation, inducement, loss, and the defendant’s liability as if the representation had been fraudulent. An unlawful means conspiracy requires concerted action, unlawful means, the requisite intention or foreseeability of damage, and resulting damage. Suspicion alone does not establish the necessary knowledge of the unlawful facts. In assessing disputed commercial evidence, the court may place limited reliance on recollections of conversations and give greater weight to contemporaneous documents and known or probable facts.

The claimant entered into a written agreement with the first defendant concerning commercial premises. He alleged that the first defendant falsely represented that a long lease remained available, that the landlord had consented to the subletting and proposed assignment, and that the rent was £9,500 per month. He claimed damages for fraudulent misrepresentation under section 2(1) of the Misrepresentation Act 1967 and unlawful means conspiracy against both defendants.

The first defendant maintained that he had acted for a company, that the claimant knowingly accepted an unlawful sublet, and that no assignment had been promised. The second defendant denied participating in any conspiracy. The central issues were whether the first defendant was the contracting party, whether the representations were made and induced the agreement, and whether the second defendant knowingly participated in unlawful conduct.

1. Misrepresentation. The agreement was executed between the claimant and the first defendant personally. It identified him as landlord and made no reference to the company. He was therefore the correct defendant.
2. The first defendant falsely represented that the lease had more than sixteen years remaining, that the landlord had consented to the sublease and subsequent assignment, and that the rent payable to the landlord was £9,500 per month. The claimant was unaware that the landlord’s consent had not been obtained or that the subletting was unlawful.
3. The representations were made knowingly and deliberately to induce the claimant to enter the agreement and pay the premium and rent. They were material. Had the claimant known the true position, he would not have entered into the transaction. His misrepresentation claim under section 2(1) of the Misrepresentation Act 1967 therefore succeeded.
4. In assessing the evidence, the court followed the approach in Gestmin SGPS SPA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm), treating documentary evidence and known or probable facts as particularly important where recollections of conversations were disputed.
5. The unlawful means conspiracy claim failed. The second defendant was not present at the material meetings, was not a party to the agreement, and there was no evidence that she knew the relevant facts or agreed that false representations should be made. Suspicion was insufficient; a high degree of blameworthiness and an agreement to act were required.
6. The claimant recovered £91,532.52. This comprised recoverable premium and rent payments and £1,800 for refurbishment work. The remaining refurbishment claims and an alleged £10,000 cash payment were not proved. Consequential applications, including costs, were to be dealt with in writing.

First-instance decision. No appellate history was stated in the judgment.