Inntrepreneur Pub Co (CPC) 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Whether a purported misrepresentation allows a lease term to be rescinded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 misrepresented 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.
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The pub was the Royal Oak near Basingstoke. Inntrepreneur had undertaken to the Secretary of State, rather than to its tenants, to release its pubs from the tie in 1998. Before that date the Secretary of State released it from the undertaking. Sweeney argued that statements made to him during negotiations nevertheless created an enforceable obligation to release his pub.
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
Section 2(1) of the Misrepresentation Act 1967 provided a remedy in damages; it did not itself give a right to remove the beer tie from the lease. Whilst an inducing misrepresentation could give a right to rescind the 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.
Park J decided the issues in favour of Inntrepreneur. He did not accept that the statements about the undertaking created enforceable personal obligations to Sweeney. Sweeney had not established a misrepresentation or negligent-misstatement claim entitling him to damages, and his defence to enforcement of the beer tie failed.
