Inntrepreneur Pub v Sweeney

Inntrepreneur Pub Co (CPC) Ltd v Sweeney [2002] EWHC 1060 (Ch)

Whether a purported misrepresentation allows a lease term to be rescinded

Facts

The claimant, who was a landlord of various public houses, brought an action for an injunction against the defendant, the tenant of one of these establishments, for specific performance on the basis that the tenant was in breach of a tie for the supply of beer contained within the tenant’s lease. The defendant sought to defend the action under section 2(1) of the Misrepresentation Act 1967 on the basis that the claimant had mispresented its intention to release the tie during negotiations for the lease. The defendant had also commenced a separate action against the claimant on the basis that the tie breached Article 81 of the Treaty establishing the European Community.

Issues

The issue in this context was whether a misrepresentation was a defence to an application for an injunction and whether it could be relied upon to rescind part of a lease.

Decision/Outcome

It was held that under the 1967 Act and at common law, the remedy for misrepresentation was damages only, and therefore it could not be raised as a defence to an application for an injunction. Whilst a misrepresentation did give the right to rescind a contract, a tenant could not retain the lease and simply rescind part of it. Given that there was significant similarity between the parties’ separate claims against one another, the court could offset the defendant’s potential damages under that claim against the damages sustained by the claimant in this judgment.