Jemma, was a restaurant owner. She decided to shift from London to the countryside. In order to execute this move, she attended an auction in Borehampton with an idea of purchasing ?lot 69.' This ?lot 69' is described in the auctioneers' catalogue as ?a perfect development opportunity for anyone wishing to set up a good sized country hotel in an idyllic surrounding.' ?Lot 69' comprised of two significant properties owned by Borchester Council. The first property was Arcadia. This property was a country house with 6 bedrooms and a small garden. On surveying this property, Jemma was planning to renovate the small garden and convert it into a twelve bedroom hotel. Adjoining the garden was a piece of land described in the catalogue as ?ready for immediate occupation at the end of the current license.' Jemma being a creative individual wanted to use this piece of land by developing and converting it into a landscaped garden with a swimming pool and a car park for 50 cars. After concluding the contract, Jemma discovered that the adjoining land was ?already let under a renewable commercial tenancy agreement to Fred and not under a license terminable on immediate notice as she had believed from the wordings in the catalogue.'
[...] Those two elements, first that the building was listed and then that Fred's land was under a renewable commercial tenancy agreement, lead us not to consider in this case an innocent misrepresentation on the behalf of Borchester Council. According to Ewan McKendrick[7], “innocent misrepresentation occurs when the representor had reasonable grounds for believing that his or her false statement was true”. Therefore, innocent misrepresentation would require for the Council not to have had in its possession these two relevant information at the time of the conclusion of the contract, which we cannot believe is true. [...]
[...] In our case, the catalogue displaying the information was probably only given to people taking part of the sale, which eludes the question of “public general circulation”, as it was only a few people who had access to the catalogue. Then, the clear intention of the Council for the recipient to rely on the information displayed in the catalogue can be imposed. The third factor is that it must be reasonable for the representee to rely on the statement, which was developed and proved above. Therefore, the negligent misrepresentation at common law on the behalf of Borchester Council can be proved in our case. [...]
[...] In the claim for negligent misrepresentation the measure of damages for negligent misrepresentation is the same as for fraudulent misrepresentation. This logic has been applied in the case Royscot Trust Ltd v Rogerson where unforeseeable losses were recoverable for the claimant, even though it was a claim for negligent misrepresentation. As seen before, section of Misrepresentation Act 1967 states that representor is liable unless he proves that he had reasonable grounds to believe and did believe up to the time that the contract was made that the facts represented were true”. [...]
[...] In Jemma's case, if we consider that a Council is a body of people elected to manage the affairs of a county, Borchester Council was in possession of that special skill and had certainly better knowledge than Jemma in whether or not she would be able to develop her twelve bedrooms hotel and her car park. The second factor required to consider negligent misrepresentation is the purpose for which the statement was made. According to Ewan McKendrick[13], “where the representor makes a statement with the intention that the representee rely upon it, then liability is likely to be imposed” such as in the case Smith v. [...]
[...] This second solution is interesting because it offers three advantages over a common law negligence claim. First, it does not require the existence of a Hedley Byrne “pre-existing contractual relationship” between the two parties, avoiding then controversial debates about proving it such as in the case Gosling v. Anderson where the defendant would not have been able to prove misrepresentation before 1967 because he was unable to prove the existence of fraud. The second advantage of a claim under section of Misrepresentation Act 1967 is that representor is liable unless he proves that he had reasonable grounds to believe and did believe up to the time that the contract was made that the facts represented were true”[17]. [...]
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