First Tower Trustees Ltd v CDS (Superstores International) Ltd
Court of Appeal
Citations:  EWCA Civ 1396;  1 WLR 637.
A lease stated that the landlords executed the lease in their capacity as trustees of a trust. Another clause stated that the tenant did not rely on any pre-contractual statement in agreeing to the lease.
The tenant was initially unable to occupy the property due to the discovery of asbestos. They brought a misrepresentation claim against the landlords. The tenant alleged that the landlords had stated in negotiations that there were no environmental problems with the property. The landlords had two responses.
- Firstly, the tenant was precluded from arguing that they had relied on the representation due to the contract terms. The claim must, therefore, fail.
- Secondly, if the landlords were liable, it was in their capacity as trustees only. This meant that the available damages was limited to the value of the trust fund.
At trial, the judge held that the clause was unreasonable and that the landlords’ liability was not limited to the value of the trust. The landlords appealed.
- Was the exclusion clause unreasonable under s.3 of the Misrepresentation Act 1967 or s.11 of the Unfair Contract Terms Act 1977?
- Was the landlords’ liability limited to the value of the trust fund?
The Court of Appeal held in favour of the tenant. The clause was an exclusion clause and so subject to the reasonableness tests under the two statutes. The trial judge had not made any error of law in applying the reasonableness test. Therefore, the court would not disturb his findings.
For the landlords to limit their liability to the value of the trust fund, the contract had to contain clear language to that effect. Merely describing the capacity in which the landlords executed the lease did not communicate that they intended to limit their liability to the value of the trust fund. The contract therefore did not have that effect.
This Case is Authority For…
If the effect of a clause is to preclude liability for misrepresentation, it is an exclusion clause for the purposes of the Misrepresentation Act 1967 and the Unfair Contract Terms Act 1977. This effect cannot be avoided by phrasing the term as a ‘no reliance’ clause rather than an explicit exclusion clause.
The decision of a trial judge on matters of unreasonableness will only be disturbed on appeal if they misdirected themselves in law, ignored relevant factors or took into account irrelevant factors.