Replies to Enquiries – Misrepresentation

The importance of giving accurate and full information in replies to enquiries has been underlined by a recent case in which a tenant successfully counterclaimed against its landlord for the cost of remedial works for asbestos removal and associated costs of temporary accommodation.

In the case, First Towers Trustees Ltd v CDS (Superstores International) Ltd (2017), the landlord (First Tower) had leased premises to the tenant (CDS).  In replies to enquiries, the landlord had claimed that it had no knowledge of any environmental problems affecting the property.  The landlord had, in fact, become aware of the presence of asbestos in the property prior to completion of the lease.

The lease contained a fairly standard clause acknowledging that the tenant had not entered into the lease in reliance on any representation made by the landlord.

The lease completed on 30 April 2015.  The tenant commenced various works and discovered asbestos on 14 May.  There was a period of non-occupation whilst remedial works were carried out and the tenant refused to pay the rent.  The landlord claimed for the unpaid rent and the tenant counterclaimed for its losses.

The court invoked the provisions of section 3 of the Misrepresentation Act 1967 which provides that any term of a contract which excludes or restricts:

“(a)any liability to which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was made; or (b)any remedy available to another party to the contract by reason of such a misrepresentation”

is of no effect except in so far as it satisfies the requirement of reasonableness.

Given the well-recognised importance of pre-contractual enquiries, it was highly unreasonable for the landlord to withhold, in its replies to those enquiries, knowledge of a serious problem.  The landlord was therefore held liable under section 3 of the Misrepresentation Act 1967.

The tenant was awarded the full costs of the asbestos remedial works and the costs of alternative warehouse accommodation whilst the premises were incapable of use.

This case provides a salutary lesson for landlords not to try to rely on non-reliance clauses to get them off the hook where replies to enquiries are concerned.  It is necessary to produce full information to a prospective tenant – or at least an accurate reply – to avoid this type of situation arising.