Section 2(2) Misrepresentation Act 1967 – Claimant charity granting leases to persons of limited means – Defendant applying to be put on waiting list – Defendant misrepresenting resources of other member of prospective household – Claimant granting lease – Claimant seeking rescission of lease – Whether case appropropriate for award of damages in lieu of rescission – Lease ordered to be set aside
One of the objects of the claimant charity (the association) was to grant shared ownership residential leases to persons who could not afford such an entry into the property market. A prospective lessee had to establish his eligibility by completing a waiting list application form that required him, inter alia, to reply yes or no to a question asking whether he or any member of his prospective household owned any interest in any property (the relevant inquiry). In or about January 1997 the defendant agreed to set up home with his father (the father) who owned a part share of a property that was occupied by the defendant’s mother (the George Road house). In March 1997 the father sent to the association a completed application form signed by himself and the defendant. The relevant inquiry was answered in the negative. In April 1997 the father, having seen a suitable house (the property), attended an interview with an officer of the association where he confirmed that the particulars given in the application form were correct. In August 1997 the association, acting with the father’s consent, granted a shared ownership lease of the property in the sole name of the defendant.
In 1998 the existence of the father’s interest in the George Road house came to the notice of the association, which, after making a number of inquiries, brought proceedings for rescission of the lease. Having concluded that the association had relied upon a serious misrepresentation that was attributable to the defendant as well as the father, the judge proceeded to consider whether to exercise the power, given by section 2(2) of the Misrepresentation Act 1967, to award damages in lieu of an order for rescission.
Held: The lease would be set aside.
Having regard, as section 2(2) requires, to the nature of the misrepresentation and the loss that the association would suffer if the lease were upheld, it would not be equitable to make an award under the section. The losses suffered were: (i) the loss of one property from its stock that could otherwise be allocated to eligible candidates; and (ii) the public interest damage to the reputation and undertaking of the association that would follow if it permitted false applications from ineligible candidates: cf Rushcliffe Borough Council v Watson (1991) 24 HLR 124. Neither type of damage was assessable in pecuniary terms.
Patrick Rolfe (instructed by Prince Evans, of Ealing) represented the claimant; Rowland Morris (instructed by Houseman Rohan & Benner, of Crawley) represented the first defendant; the second defendant appeared in person; the third defendant did not appear and was not represented.
Alan Cooklin, barrister
