Importance to parties - Couchman v Hill (pregnant cow)
Strength of party position – Dick Bentley v Howard Smith (false information re car mileage)
Unlikely to be a term if representor tells representee they must verify truth (reverse Couchman)
Is it a mere puff?
Dimmock v Hallet – “fertile and improvable” – too vague
Carlil v Carbolic Smoke Ball – “three times daily for two weeks” & bank deposit – not mere puff
Mitchell v Valherie – “immaculate style” was mere puff, “perfect presentation nothing to spend” was not
Elements of Misrepresentation
False Factual Statement
Must be able to be presently true or false. Courts fearful of extending liability too far.
Conduct
Gordon v Selico – Actively did something to cover up dry rot
Opinion
Smith v Land and House Property Corp – Bowen CJ – when facts are not equally known, a statement of opinion by the party with knowledge is an implied statement that he knows facts justifying his opinion. Desirable tenants case.
Matters relevant to a determination of whether a statement of opinion is a misrepresentation:
The relative knowledge and position of each parties
The actual words used and meaning conveyed
Whether fraud is established. Did the person giving the opinion have a genuine belief in his or her opinion no matter how erroneous?
Bisset v Wilkinson – fraudulent if a) on facts reasonable person would not have held opinion or b) it was not actually held. On the facts it was honestly stated (had no prior experience).
Law - Eaglesfield – not actionable unless fraudulent. See also Taylor.
Intention
Edgington v Fitzmaurice – implied factual statement that you hold the intention.
Applied in Ritter.
Silence
Old rule – not actionable – Keates v Earl of Cadogan – caveat emptor
Half-truth
Dimmock v Hallet – “farms are fully let” was a misrepresentation because one had given notice. Your silence makes a statement which is otherwise true, untrue.
Becomes false
With v O’Flanagan – Clinic reduced in value between misrepresentation and contract. Duty to make sure statement is correct. See also Jones v Dumbrell.
Duty to disclose
Fiduciary relationships (McKenzie v McDonald), insurance contracts, sometimes guarantees.
Addressed to misled party
Peek v Gurney – Prospectus was addressed to first-time share purchasers, not purchasers of shares from others.
Sufficient that A communicates to X while intending misrepresentation to reach and induce (be acted upon) by B, or a class (including B), or even public at large (Peek).
Material
Would a reasonable person have been influenced by the statement to enter the contract? (Nicholas v Thompson).
Filters out trivial cases; does not apply where statement is fraudulent.
Inducement
Misrepresentation does not have to be sole reason, just has to be ‘real’ inducement (materially affected decision) (Edgington)
Redgrave v Herd – failure to verify accuracy of representation (even if easy) not a bar to claim.
No inducement where:
Unaware of misrepresentation
Knowledge of falsity – but, even if knowledge that part of statement is untrue, but does not know extent of falsity, might still be misrepresentation (Gipps v Gipps NSWCA)
Contracting on a different basis – Holmes v Jones – P became aware of false number of cows but later purchased property on totally different basis as regards stock.
Onus of proof
On representee (Gould).
If statement was by its very nature calculated to induce then there is an evidentiary presumption that you did rely.
May not apply outside fraud cases. Strongest in fraud cases (Smith v Kay per Lord Chelmsford LC).
Types of Misrepresentation
Fraudulent
Action in deceit; scenarios from Derry v Peek:
Making a statement knowing it is false
Making a statement without believing it is true
Making a statement recklessly/carelessly as to whether it is true/false (higher standard than negligence).
Krakowski v Eurolynx Properties – Can be fraudulent without evil motive/malice.
Inquiry always to subjective state of representor’s mind: question is whether the statement, as its maker believed it would be understood, conveys a true or false impression (Krakowski; John McGrath Motors).
Negligent
Hedley Byrne v Heller: A person to whom a negligent statement has been made could recover damages in tort if a special relationship existed.
MLC v Evatt – damages available for negligent misrepresentation. Also per Barwick CJ, no need for special skill (rejected PC).
Shaddock v Paramatta City Council - Gibbs CJ - a person should be under no duty to take reasonable care that advice or information which he gives to another is correct, unless he knows, or ought to know that:
the other relies on him to take such reasonable care and may act in reliance on the advice or information which he is given, and
it would be reasonable for that other person so to rely or act
Innocent
No damages, only rescission. Only where not negligent or fraudulent. Residual.
