For those who recall sharing Andrew’s bemusement at Mr Justice Eder’s decision on s.2(1) of the 1967 Act, the Court of Appeal – in one of Lord Justice Moore-Bick’s final decisions – yesterday restored some measure of orthodoxy: Taberna Europe CDO II Plc v Selskabet AF 1.September 2008 in Bankruptcy [2016] EWCA Civ 1262, see at [33]-[47].

 

The point was obiter – the Court having already held that Roskilde was entitled to rely on the disclaimer included in the ‘investor presentation’ published on its website as an answer to Taberna’s claim – but as it had been fully argued, and the issue was one ‘of some importance’, the Court considered the authorities, in particular Roscot Trust Ltd v Rogerson [1991] 2 QB 297, and concluded that ‘section 2(1) of the Act entitles the representee to recover only such damages as flow from his having entered into a contract with the representor’: at [47].

 

 

Jonathan

 

 

Jonathan Pagan
Senior Associate

Freshfields Bruckhaus Deringer LLP
65 Fleet Street
London EC4Y 1HS
T +44 20 7785 5321
M +44 7841 878 681
jonathan.pagan@freshfields.com
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A puzzling case today of interest to those who follow the fortunes of the English Misrepresentation Act 1967. In Taberna Europe CDO II Plc v Selskabet AF1 [2015] EWHC 871 (Comm), Taberna bought loan notes issued by Roskilde, a thoroughly bad Danish bank, on the secondary market from Deutsche Bank. They did so on the basis of negligent misrepresentations by Roskilde, and in due course claimed against the successor body to Roskilde, which it was arguable under Danish law had to pick up the tab for misrep claims.

They successfully recovered €26 million under s.2(1) of the MA 1967. This says:

"Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true."

The obvious riposte, made forcibly by the defendant, was that Taberna bought from Deutsche and the representations were made by Roskilde. But Eder J was having none of it. By buying the notes Taberna were put into direct contractual relations with Roskilde, one imagines by assignment, and (apparently) this was therefore a case where "a person has entered into a contract after a misrepresentation has been made to him by another party thereto". (See [105]).

Does anyone share my immediate instinct that this is a very rum interpretation of the 1967 Act?

Andrew