Museprime Properties Ltd v Adhill Properties Ltd [1990] 2 EGLR 196; (1991) 61 P & CR 111
Landlord and tenant – Contract for the sale of land – Commercial property
Facts
Three properties (940, 942, 944) contained commercial premises and residential accommodation. The rent review on each property was scheduled after five years which would be triggered by a notice. For properties 942 and 944, the terms in the notice would be deemed agreed if the tenant did not respond within a month. The landlord requested double the amount of rent at the next review, in each of the three properties. The tenant complained in writing regarding 940 and made comments on the telephone regarding 942 and 944. Later, all three properties were sold at auction to the plaintiff. During the sale, the defendant stated that in each case, the tenant had made an offer for rent which had been rejected. This implied the rent could still be negotiated. The plaintiff later discovered that the rent on 942 and 944 was likely already agreed by way of the notices and did not complete the purchase on the basis of misrepresentation.
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Issue
The issue was whether the representations about outstanding rent reviews induced the plaintiff to buy the properties and entitled it to refuse to complete for misrepresentation. This also required consideration of whether the tenants’ telephone comments were effective counter-notices.
Decision/Outcome
The court found in favour of the plaintiff. It was held that with regards to each property, the trigger notices had been valid and that the oral comments made over the telephone in relation to property 942 and 944 could not be considered as effective counter-notices. On this basis, the plaintiff could rely upon the misrepresentation of the defendant with regards to the negotiation of the rent for the properties.
Scott J explained that a representation is material if it induces the recipient to contract, whether alone or alongside other inducements. If it would have induced a reasonable person to contract, inducement is presumed and the representor must show that the recipient did not rely on it. Otherwise, the recipient must prove actual inducement; an unreasonable reliance does not by itself defeat the claim.
