Museprime Properties Ltd v Adhill Properties Ltd [1991]

Court: High Court

Facts: Museprime Properties Ltd purchased three properties at auction, relying on the auctioneer's representations, made as an agent of Adhill Properties Ltd, that revised rents had yet to be agreed with the tenants. In reality, revised rents had already been settled, and for two of the properties, the agreed rent was too low for Museprime. Museprime sought rescission of the contract, arguing that the misrepresentations had induced them to enter into the sale.

Issue: Whether the misrepresentations made by the auctioneer induced Museprime to enter into the contract.

Held: The High Court granted rescission of the contract, finding that the misrepresentations had indeed induced Museprime to enter into the sale. Scott J established that a representation is material if it induces the person to contract on those terms. Furthermore, if a misrepresentation would have induced a reasonable person to enter into the contract, the burden of proof shifts to the representor to show that the representee was not induced by the misrepresentation. Conversely, if the misrepresentation would not have induced a reasonable person, the onus is on the representee to prove they were induced.

Key Judicial Statements: Scott J: "A representation is material … if it is something that induces the person to whom it is made, whether solely or in conjunction with other inducements, to contract on the terms on which he does contract." Additionally, if a misrepresentation would have induced a reasonable person to enter into the contract, the burden is on the representor to show the representee was not induced.

💡 Leveluplaw: underscores that in cases of misrepresentation, the key factor is whether the misrepresentation would have induced a reasonable person to enter into the contract. The burden of proof shifts to the representor if the misrepresentation is deemed material.