Following on from Quilter v Hodson Developments Limited, the court has again been tasked with considering the implications of replies to enquiries, but this time asked to consider whether a failure to update replies to enquiries amounts to misrepresentation.
In First Tower Trustees Ltd and another v CDS (Superstores International) Ltd  EWHC B6 (Ch (20 February 2017), First Tower Trustees Limited wanted to enter into a lease of an environmental premise (“the Property”) with CDS (“Landlord”). Before doing so, enquiries were sent to the Landlord, a trust company. In response to the enquiries, the Landlord stated that it was unaware of notices or breaches relating to environmental problems. However, the position changed before the completion of the lease when the Landlord became aware of the presence of asbestos in the Property.
The Landlord failed to update the replies to the enquiries, and the parties entered into the Lease. The Tenant later claimed damages for the cost of remedial works and alternative accommodation because of the asbestos, and claimed that there had been a breach of the Landlord’s covenants for quiet enjoyment, non-derogation from grant, and vacant possession. The court rejected these claims but found that the Landlord trustees were liable for misrepresentation. This is notwithstanding the fact that the lease contained a clause excluding liability for reliance on misrepresentations made by the Landlord. The court found that this clause was not reasonable under the circumstances and therefore didn’t satisfy the reasonable test under the Unfair Contract Terms Act 1977 (“UCTA”). The court also found that the trustees’ liability for misrepresentation was not limited to the extent of the trust assets. The Tenant was awarded the full costs of the asbestos remedial works and the costs of alternative warehouse accommodation while the premises were incapable of use.
This case serves as a reminder to Landlords to be mindful of the importance of giving accurate information in response to enquiries and to be aware that if the position changes, the replies should be updated, where appropriate.
The full case can be found here.