A misrepresentation is a false statement of fact, that is the statement relates to something in the past or present. A statement ‘that something will be done in the future cannot either be true or false at the moment it is made’. Similarly, a statement of opinion is not of itself liable to characterisation as true or false. As such, it is commonly said that statements of intention or opinion are not actionable as misrepresentations. Nevertheless, statements of intention and opinion may give rise to liability for misrepresentation because the express statement may justify the implication of an ancillary statement of fact.
As regards statements of opinion, consider the following:
A solicitor, Gilbert, acting for the seller of a piece of land replied was asked whether the land was subject to any restrictive covenants. He replied that it was not so far as he was aware. While the statement was made honestly, and was strictly true, Gilbert had not troubled to look at the title deeds to the property. The statement was held to be a misrepresentation:
‘[Gilbert] allowed himself, in his zeal for his client, to make statements which were calculated to lead the other side to believe that he was stating facts within his own knowledge, and his statements in fact misled them, so that what he said amounts to a mis-statement of facts.’ (Lord Esher MR at 787-8)
A seller described his property as being let to one Frederick Fleck, ‘a most desirable tenant’. In fact, Fleck was behind on his rent payments. Held: the description of Mr Fleck was a false statement that nothing had occurred to render him an undesirable tenant.
‘The vendors state that the property is let to a most desirable tenant, what does that mean? I agree that it is not a guarantee that the tenant will go on paying his rent, but it is to my mind a guarantee of a different sort, and amounts at least to an assertion that nothing has occurred in the relations between the landlords and the tenant which can be considered to make the tenant an unsatisfactory one. That is an assertion of a specific fact . . .
It is often fallaciously assumed that a statement of opinion cannot involve the statement of fact. In a case where the facts are equally well known to both parties, what one of them says to the other is frequently nothing but an expression of opinion. The statement of such opinion is in a sense a statement of fact, about the condition of the man’s own mind, but only of an irrelevant fact, for it is of no consequence what the opinion is. But if the facts are not equally well known to both sides, then a statement of opinion by one who knows the facts best involves very often a statement of a material fact, for he impliedly states that he knows facts which justify his opinion’
Bowen LJ.
But an implication will not always be justified: it will depend upon the facts of the case. So contrast the previous cases with the following:
The claimant, Bisset, brought an action to recover an amount due under an agreement for the sale of certain land. The defendant counter-claimed for rescission of the agreement on the grounds of misrepresentation or, alternatively, for damages for deceit.
The agreement, made in 1919, provided for the sale of two plots of land, Homestead and Hogan’s, comprising approximately 2,062 and 348 acres respectively, at Avondale on the south island of New Zealand.
The defendants agreed to pay £13,260, with £2,000 being due on the signing of the agreement and the balance in five years’ time, with interest being paid half-yearly in the meantime.
The defendants intended to use the land for sheep-farming, although one of them had no relevant experience. The other had previously been in charge of an extensive sheep-farm carried on by his father. The father accompanied and advised the son during the sale negotiations and carefully inspected the land at Avondale. During those negotiations the claimant stated that land “would carry 2,000 sheep” based on one team of horses working the land. While the claimant had carried out sheep-farming on part of the Homestead plot, he had no experience of farming Hogan’s.
Having gone into possession, the buyers soon experienced difficulties caused partly by their inexperience. After two years the price for sheep and wool fell to levels such that the defendants would have lost money even had the land been capable of carrying 3,000 sheep. The defendants reduced their flock and turned to cropping and dairy-farming, but failed to pay the instalments of interest as provided for in the agreement.
At trial, the defendants failed to prove that that the farm, if properly managed, was not capable of carrying two thousand sheep.
Sim J held that the claimant’s statement had been one of opinion and had been honestly made.
The Court of Appeal reversed the decision.
The Privy Council ruled that the decision of the trial judge should be restored.
Lord Merrivale: ‘In ascertaining what meaning was conveyed to the minds of the now respondents by the appellant’s statement as to the two thousand sheep, the most material fact to be remembered is that, as both parties were aware, the appellant had not and, so far as appears, no other person had at any time carried on sheep- farming upon the unit of land in question. That land as a distinct holding had never constituted a sheep-farm . . . As was said by Sim J: “In ordinary circumstances, any statement made by an owner who has been occupying his own farm as to its carrying capacity would be regarded as a statement of fact . . .
This, however, is not such a case. The defendants knew all about Hogan’s block and knew also what sheep the farm was carrying when they inspected it. In these circumstances . . . the defendants were not justified in regarding anything said by the plaintiff as to the carrying capacity as being anything more than an expression of his opinion on the subject.”
In this view of the matter their Lordships concur.
Whether the appellant honestly and in fact held the opinion which he stated remained to be considered. This involved examination of the history and condition of the property. If a reasonable man with the appellant’s knowledge could not have come to the conclusion he stated, the description of that conclusion as an opinion would not necessarily protect him against rescission for misrepresentation. But what was actually the capacity in competent hands of the land the respondents purchased had never been, and never was, practically ascertained . . .
. . . It is of dominant importance that Sim J negatived the respondents’ charge of fraud.
. . . The defendants failed to prove that the farm if properly managed was not capable of carrying two thousand sheep.’
To similar effect, a statement of intention will give rise to liability for misrepresentation where the maker of the statement does not hold that intention. This is because the court will imply a statement that the maker is telling the truth.
The defendants, directors of a company, the Army and Navy Provision Market (Ltd), invited subscriptions for debenture bonds totalling £25,000. The prospectus stated that the purpose of the issue was to enable the company to complete the development of its premises, to purchase horses and vans, and to develop arrangements for the direct supply of cheap fish from the coast. The real object of the fund-raising however was to pay off the company’s pressing liabilities. The claimant subscribed for some of the bonds partly in reliance on the statements in the prospectus and partly on the basis of an erroneous belief that the bonds would be secured by a charge over the company’s property. The company became insolvent and the claimant brought an action claiming the return of his advance of £1,500 on the ground that he had been induced into the transaction by the defendants’ fraudulent misrepresentations. Held: affirming the decision of Denman J, the defendants were liable in deceit.
‘A mere suggestion of possible purposes to which a portion of the money might be applied would not have formed a basis for an action of deceit. There must be a misstatement of an existing fact: but the state of a man’s mind is as much a fact as the state of his digestion. It is true that it is very difficult to prove what the state of a man’s mind at a particular time is, but if it can be ascertained it is as much a fact as anything else. A misrepresentation as to the state of a man’s mind is, therefore, a misstatement of fact. Having applied as careful consideration to the evidence as I could, I have reluctantly come to the conclusion that the true objects of the Defendants in raising the money were not those stated in the circular … I am satisfied that the objects for which the loan was wanted were misstated by the Defendants, I will not say knowingly, but so recklessly as to be fraudulent in the eye of the law.’ (Bowen LJ at 483).
Just as a statement may be implied from something which the defendant said, an implication may be drawn from what the defendant did: put another way, a statement may be made by conduct and not simply by words. Thus ‘a nod or a wink, or a shake of the head, or a smile’ (Walters v Morgan (1861) 3 De GF & J 718, 724 (Lord Campbell)) may be sufficient to constitute a representation. See for example:
The defendant was found guilty of obtaining property through false pretences. He entered Mr Vincent’s shop in Oxford High Street wearing an Undergraduate’s cap and gown. He said he was a member of Magdalen College. Vincent let the defendant take away some boot-straps on credit. Bolland B said that if nothing had passed in words, the wearing of the cap and gown would have been sufficient evidence of a false pretence that he was a member of the University.
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