Thomas Witter Ltd v TBP Industries [1996]

Court: High Court

Facts: D negligently misrepresented the profit estimate of a company it sold to C. The contract included a non-reliance clause stating: “… the Purchaser acknowledges that it has not been induced to enter into this agreement by any representation or warranty other than the statements contained or referred to in Schedule 6.” Significant changes had been made to the company since the sale, including staff changes and alterations to pension arrangements. C sued for misrepresentation under Section 2(1) of the Misrepresentation Act 1967 (MA 1967), seeking both damages and rescission.

Issue: Whether rescission was barred due to changes in the company and whether the non-reliance clause was valid under Section 3 of MA 1967.

Held: D was liable for damages under Section 2(1) MA 1967 for negligent misrepresentation, but rescission was barred. The non-reliance clause was void under Section 3 MA 1967.

Key Judicial Statements - Jacob J: It was impossible to restore the parties to their original positions due to the extensive changes in the company. The company had undergone numerous staff changes, including the departure of key personnel, and adjustments to pension arrangements. The power to award damages in lieu of rescission does not depend on the current right to rescission but on whether it existed in the past. Bars to rescission are based on various factors unrelated to the parties' behavior. Thus, had the misrepresentation been innocent, rescission would be barred, but damages could still be awarded under Section 2(2) MA 1967.

💡 Leveluplaw: This case clarifies that a non-reliance clause cannot exclude liability for fraudulent misrepresentation under Section 3 of MA 1967.