The lessee of a Scottish grouse moor has triumphed in a Supreme Court claim that the landlord misrepresented the grouse population on the land.
The Court overturned an earlier decision of the Inner House and ruled that the limited liability partnership set up to take the tenancy could rely on a negligent misrepresentation made to one of its partners prior to it being formed.
Lord Reed said that the Earl of Seafield and other owners of the grouse moor at Castle Grant, near Grantown-on-Spey, had recognised that substantial investment was required in order to increase the number of grouse on the moor, and, being unwilling to undertake that investment themselves, sought to attract a tenant.
Cramaso LLP, a limited partnership formed by Alistair Erskine and his wife, ultimately took the tenancy following discussions carried out by Mr Erskine with chartered surveyor, Jonathan Kennedy, acting on the owners behalf in 2006. After taking part in a shoot, Mr Erskine had become concerned that the shooting planned for that season would leave an inadequate breeding population on the moor. He expressed his concern in an email, which Mr Kennedy forwarded to the owners’ chief executive, Sandy Lewis.
Mr Lewis then sent what Lord Reed described as “the critical email”, which he said could be forwarded to Mr Erskine.
Lord Reed said that it gave information, sent previously to another possible tenant, about the grouse counts carried out on the moor earlier that year and the estimated grouse population of the moor.
In October 2006 Mr Kennedy forwarded the critical email to Mr Erskine, and he decided to proceed with the transaction, with the lease signed in the name of Cramaso on various dates between 8 December 2006 and 18 January 2007.
However, Lord Reed said: “Mr Erskine subsequently discovered that the counting areas were not representative of the moor as a whole, that the grouse population was smaller than he had believed, and that it would in consequence take longer for the population to recover to the point where shooting could take place at the level which he had intended. He considered that Mr Lewis had deliberately misled him in the critical email in order to induce him to take on the lease, and brought the present proceedings on that basis.”
At first instance, the Lord Ordinary concluded that no duty of care could be owed to the tenant, Cramaso, as it did not exist when the email was sent.
Both parties accepted on appeal that this conclusion was wrong, but the Inner House nevertheless found in favour of the owners and held that, at the time the email was sent, there was no-one other than Mr Erskine whose reliance upon it could have been foreseen. As a result there was no proximity and consequently no duty of care to it and it could not recover damages.
Lord Reed found that, instead of viewing the representation as an event whose legal consequences were fixed at the time when the statement was made, the case in fact concerns a continuing representation capable of remaining in effect until the contract is concluded.
He said: “In principle, the possibility that a representation may continue to be asserted, and may have a causative effect so as to induce the conclusion of the contract, is not necessarily excluded where, as in the present case, the contracting parties are not the original representor and representee.
“In such a case, it is possible that the inference can be drawn from the parties’ conduct that they proceeded with the negotiation and conclusion of the contract on the basis that the accuracy of the representation continued to be asserted by the representor, implicitly if not expressly, after the identity of the prospective contracting party had changed. In such circumstances the representation may have continued to have a causative effect, so as to induce the conclusion of the contract.”
He added: “In continuing and concluding the contractual negotiations with the appellant, through its agent Mr Erskine, without having withdrawn the representation earlier made to Mr Erskine as an individual, the respondents by their conduct implicitly asserted to the appellant the accuracy of that representation; and they did so in a situation where it continued to be foreseeable that the representation would induce the other party to the negotiations to enter into a contract. They therefore assumed a responsibility towards the appellant for the accuracy of the representation. They therefore owed the appellant a duty of care, which they failed to fulfil.”
As a result, he ruled that Cramaso is entitled to recover damages for any loss suffered as a result, under section 10 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985. The case will have to return to the Court of Session for a further hearing in relation to remedies.
Cramaso LLP v Ogilvie-Grant, Earl of Seafield and Others (Scotland) Supreme Court (Lord Mance, Lord Clarke, Lord Reed, Lord Carnwath, and Lord Toulson) 12 February 2014
Alan Dewar QC and Graeme Hawkes (Instructed by Anderson Strathern LLP) for the appellant
Craig Sandison QC and David Thomson (Instructed by Brodies) for the respondents
The lessee of a Scottish grouse moor has triumphed in a Supreme Court claim that the landlord misrepresented the grouse population on the land. The Court overturned an earlier decision of the Inner House and ruled that the limited liability partnership set up to take the tenancy could rely on a negligent misrepresentation made to one of its partners prior to it being formed. Lord Reed said that the Earl of Seafield and other owners of the grouse moor at Castle Grant, near Grantown-on-Spey, had recognised that substantial investment was required in order to increase the number of grouse on the moor, and, being unwilling to undertake that investment themselves, sought to attract a tenant. Cramaso LLP, a limited partnership formed by Alistair Erskine and his wife, ultimately took the tenancy following discussions carried out by Mr Erskine with chartered surveyor, Jonathan Kennedy, acting on the owners behalf in 2006. After taking part in a shoot, Mr Erskine had become concerned that the shooting planned for that season would leave an inadequate breeding population on the moor. He expressed his concern in an email, which Mr Kennedy forwarded to the owners’ chief executive, Sandy Lewis. Mr Lewis then sent what Lord Reed described as “the critical email”, which he said could be forwarded to Mr Erskine. Lord Reed said that it gave information, sent previously to another possible tenant, about the grouse counts carried out on the moor earlier that year and the estimated grouse population of the moor. In October 2006 Mr Kennedy forwarded the critical email to Mr Erskine, and he decided to proceed with the transaction, with the lease signed in the name of Cramaso on various dates between 8 December 2006 and 18 January 2007. However, Lord Reed said: “Mr Erskine subsequently discovered that the counting areas were not representative of the moor as a whole, that the grouse population was smaller than he had believed, and that it would in consequence take longer for the population to recover to the point where shooting could take place at the level which he had intended. He considered that Mr Lewis had deliberately misled him in the critical email in order to induce him to take on the lease, and brought the present proceedings on that basis.” At first instance, the Lord Ordinary concluded that no duty of care could be owed to the tenant, Cramaso, as it did not exist when the email was sent. Both parties accepted on appeal that this conclusion was wrong, but the Inner House nevertheless found in favour of the owners and held that, at the time the email was sent, there was no-one other than Mr Erskine whose reliance upon it could have been foreseen. As a result there was no proximity and consequently no duty of care to it and it could not recover damages. Lord Reed found that, instead of viewing the representation as an event whose legal consequences were fixed at the time when the statement was made, the case in fact concerns a continuing representation capable of remaining in effect until the contract is concluded. He said: “In principle, the possibility that a representation may continue to be asserted, and may have a causative effect so as to induce the conclusion of the contract, is not necessarily excluded where, as in the present case, the contracting parties are not the original representor and representee. “In such a case, it is possible that the inference can be drawn from the parties’ conduct that they proceeded with the negotiation and conclusion of the contract on the basis that the accuracy of the representation continued to be asserted by the representor, implicitly if not expressly, after the identity of the prospective contracting party had changed. In such circumstances the representation may have continued to have a causative effect, so as to induce the conclusion of the contract.” He added: “In continuing and concluding the contractual negotiations with the appellant, through its agent Mr Erskine, without having withdrawn the representation earlier made to Mr Erskine as an individual, the respondents by their conduct implicitly asserted to the appellant the accuracy of that representation; and they did so in a situation where it continued to be foreseeable that the representation would induce the other party to the negotiations to enter into a contract. They therefore assumed a responsibility towards the appellant for the accuracy of the representation. They therefore owed the appellant a duty of care, which they failed to fulfil.” As a result, he ruled that Cramaso is entitled to recover damages for any loss suffered as a result, under section 10 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985. The case will have to return to the Court of Session for a further hearing in relation to remedies. Cramaso LLP v Ogilvie-Grant, Earl of Seafield and Others (Scotland) Supreme Court (Lord Mance, Lord Clarke, Lord Reed, Lord Carnwath, and Lord Toulson) 12 February 2014Alan Dewar QC and Graeme Hawkes (Instructed by Anderson Strathern LLP) for the appellantCraig Sandison QC and David Thomson (Instructed by Brodies) for the respondents
