Smith v Land and House Property Corp
A statement of opinion by a party who knows the facts can imply that he knows facts justifying it, and may be a misrepresentation.
Facts
The Land and House Property Corporation put up a hotel for sale by auction, describing it as let to Mr Frederick Fleck, a most desirable tenant, at a rent of £400 a year. In fact, Mr Fleck had been behind with his rent for some time, had paid the previous quarter's rent only in instalments and under pressure, and nothing had been paid towards the quarter that was then due. A buyer agreed to buy the hotel. Shortly afterwards Mr Fleck went bankrupt, and the buyer refused to complete. The sellers sued for specific performance.
Legal principle
The Court of Appeal held that the buyer was entitled to refuse to complete, because the description of Mr Fleck as a most desirable tenant was a misrepresentation. Bowen LJ explained that where the facts are equally well known to both parties, an opinion by one of them is often only a statement of opinion. But where the facts are not equally known, and one party knows them much better, a statement of opinion by that party often involves a statement of a material fact, because it impliedly states that he knows facts that justify his opinion. The sellers knew facts that made their description of the tenant untrue.
Related cases on misrepresentation
- Attwood v Small (1838) 6 Cl & F 232
- Bisset v Wilkinson [1927] AC 177
- Car and Universal Finance Co Ltd v Caldwell [1965] 1 QB 525
- Derry v Peek (1889) 14 App Cas 337
- Dimmock v Hallett (1866) LR 2 Ch App 21
- Edgington v Fitzmaurice (1885) 29 Ch D 459
- Esso Petroleum Co Ltd v Mardon [1976] QB 801
- Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
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