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2, 3 OCTOBER 1957





[1958] 2 ALL E.R. 79






I J Lindner QC and T M Eastham  – for the defendant

C Montgomery White QC and E I Goulding – for the plaintiff


Oscar Mason & Co (for the defendant)

Charles H Wright & Brown (for the plaintiff).

F Guttman Esq Barrister.



COMMERCIAL LAW – CONTRACT:Misrepresentation- Innocent misrepresentation – Whether ground for rescission of contract – Sale of reversion in trust fund set aside to pay an annuity- Statement, in particulars of sale, that annuitant was believed to have no aggregable estate- No reasonable ground for belief

ESTATE ADMINISTRATION/MANAGEMENT:- Trust fund set aside to pay annuitant – Contract of sale – Annuitant – Misrepresentation as to possession of aggregable estate by annuitant – Relevance





At an auction a vendor (the trustee in bankruptcy of the owner) offered for sale, subject to a reserve price, the absolute reversion in a trust fund which had been set aside to pay an annuity to a lady who was then sixty-nine years old. The reversion was offered subject to all death duties which might become payable. The particulars of sale stated that estate duty would be payable on the death of the annuitant” who is believed to have no aggregable estate. The conditions of sale stated that the information regarding duty was believed to be correct, but the vendor accepted no responsibility as to what duties would become payable or the amount thereof. At the end of these conditions of sale the firm name of the vendor’s solicitors appeared. Inquiries had been made on behalf of the vendor concerning the annuitant’s estate, but no information justifying a belief that she had no aggregable estate had been forthcoming. That statement of belief was inserted in the particulars mistakenly, but honestly. The purchaser sought rescission of the contract on the ground that he had been induced to enter into it by misrepresentation.


Held- The purchaser was entitled to rescind the contract for innocent misrepresentation because (i) in the circumstances of this case (viz, that the vendor’ s knowledge of facts relevant to the estate of the annuitant was superior to that of the purchaser and the name of the solicitors of the vendor appeared on the conditions of sale) the words “is believed to have no aggregable estate” impliedly represented that there were reasonable grounds for that belief, and (ii) this implied representation was of a most material fact, was untrue (though innocently made) and induced the purchaser to enter into the contract.


Dictum of Bowen LJ in Smith v Land & House Property Corpn ((1884), 28 Ch D at p 15) applied.


Appeal dismissed.



A statement of opinion or belief is in form a subjective statement, and the question whether such a statement has also any objective connotation has been much disputed in other fields than the law of misrepresentation. A recent example of the construction of words predicating the existence of a particular state of mind, and some indication of a possible limit to a subjective construction, will be found in Ross-Clunis v Papadopoullos, at p 24, letter c, ante.


As to an implied representation of the existence of a belief held by the representor, see 23 Halsbury’ s Laws (2nd Edn) 14 paras 17, 18.


Case referred to in judgment

Smith v Land & House Property Corpn (1884), 28 Ch D 7, 51 LT 718, 49 JP 182, 35 Digest 10, 27.



This was an appeal by the defendant, the vendor, from a judgment of Upjohn J dated 3 May 1957, in an action by the plaintiff, the purchaser, claiming, among other relief, rescission of a contract of sale by auction on the ground of a fraudulent misrepresentation contained in the particulars of sale. Upjohn J held that there was an innocent material misrepresentation and granted the relief claimed with costs. A counterclaim by the defendant to enforce the contract was dismissed. The facts appear in the judgment of Lord Evershed MR




3 October 1957. The following judgments were delivered.



The present action and appeal arise out of a sale at an auction on 17 February 1955, of an absolute reversion in a trust fund. Because much in the case depends on the exact nature of the subject-matter of the sale as stated in the particulars, I shall read what was described as ” lot 11″ more or less fully. It is stated thus:

” Lot 11. The absolute reversion receivable on the decease of a lady aged sixty-nine (born Dec. 30, 1885) to the whole of a trust fund now represented by ,8,000 2 1/2 per cent. consols, of estimated value ,5,210.”


Then, in italics, appear these three sentences:

“This sum has been set aside to pay an annuity of ,200 per annum to the lady mentioned above. The trustee is the Public Trustee. Estate duty will be payable on the death of the annuitant who is believed to have no aggregable estate.”


Then appear additional condition of sale as to lot 11. Condition 1 states that the reversion is derived under a will bearing a particular date and that the probate of the will is to constitute the root of title. Conditions 2 and 3 read:

“2.     The vendor sells as the trustee in bankruptcy of the beneficial owner.

  1. The reversion is sold subject to all death and other duties which may be or become payable in respect thereof. The above information regarding duty so payable is believed to be correct, but the vendor accepts no responsibility as to what duties will in fact become payable nor as to the amount which will become payable and no compensation shall be paid or allowed in respect of any error as to duties.”


Condition 4 states where completion is to take place. Condition 5 is that the particulars of the investment are as provided by the Public Trustee Office on a particular date and are believed to be correct and the reversion is sold subject to such variation as may occur therein before completion of sale. The vendor accepts no responsibility for the estimated value of the investment.”


Condition 6 relates to expenses, and condition 7 relates to requisitions on title. Condition 8 says that the sale is subject to a reserve price. Condition 9 provides:

“These additional conditions shall prevail notwithstanding anything inconsistent with or contrary thereto in the general conditions which (in so far as they are not varied by these conditions) shall apply to the sale of this lot.”


Then appears in heavy leaded type: “Solicitors as to lot 11C Messrs Oscar Mason & Co Cliffords Inn, Fleet Street, EC4″.


That subject-matter having been put up for auction on 17 February 1955, the plaintiff entered into a contract to purchase the reversion for the sum of ,2,825, but the contract was not completed by January, 1956. In the end the plaintiff stated that he had been misled by the representation which he said was to be found in the third sentence of the passage in italics in the particulars, the words ” who is believed to have no aggregable estate” . He, therefore, sought rescission of the contract. The defendant, the trustee in bankruptcy of the reversioner, repudiated that claim and, by counterclaim, sought to enforce the contract.


The statement of claim in the action places the main emphasis on an allegation that the alleged representation was not only untrue but was made dishonestly. The learned judge acquitted the defendant and his agents and representatives of dishonesty, but he held the plaintiff entitled to relief on the basis of an innocent material misrepresentation on which the plaintiff had acted. At an early stage in this appeal the question arose whether, on the pleadings, if fraud was rejected, it remained open to the plaintiff to proceed on the ground of innocent misrepresentation, and we came to the conclusion that he was so entitled. No question now arises as to dishonesty, so that we must now consider the case on the footing that it is open to the plaintiff to proceed on the basis of innocent misrepresentation. In order that the plaintiff may succeed on such a ground it is necessary that three things should be established: (i) he must show that the language relied on imports or contains a representation of some material fact; (ii) he must show that the representation is untrue; and (iii) he must show that, in entering into the contract, he was induced so to do in reliance on it. The learned judge concluded all those three matters in the plaintiff’s favour, and he, therefore, gave to the plaintiff the necessary relief in the action and dismissed the counterclaim. Although counsel for the defendant put all the points forcibly and attractively before us, in my judgment there is no ground shown for this court to disturb the learned judge’ s conclusions. I will, therefore, deal with each of the three essential points in turn.


The first point is, to my mind, the most significant and perhaps the most difficult: Is there here a representation of a material fact? The essential words are those which I have already read: ” who [the annuitant] is believed to have no aggregable estate” . At first sight, therefore, this is a statement of an opinion; but a statement of opinion is always a statement of fact to the extent that it is an assertion that the vendor does, in fact, hold the opinion which he states. If, however, that was all that there was in the matter, plainly the defendant would succeed on the judge’s finding; for the judge held that there was no dishonesty on the part of the defendant or his agent; in other words, he held that the defendant through his agent did believe that the annuitant had no aggregable estate. The question therefore arises: Is that all that these few words import? On that, there is some considerable guidance for us in Smith v Land & House Property Corpn ((1884), 28 Ch D 7), a decision of this court. The contract in that case was one for the sale of a hotel at Walton-on-the-Naze, which at that time, according to what is said in the report, was apparently regarded as being in the ” last stage of decay” . The question which arose in that case emerged from a reference in the particulars to the effect that the tenant of the hotel was regarded by the vendor as a most desirable tenant. It turned out, in fact, that those words were singularly inappropriate to him, since he was habitually in arrear with his rent, and the business which he was able to do in the decaying town was regarded as quite inadequate to support the rent for the hotel. Those are matters of fact, however, peculiar to that case. For present purposes the guidance which I seek is to be found in the language of Bowen LJ where he said (28 Ch D at p 15):

“In considering whether there was a misrepresentation, I will first deal with the argument that the particulars only contain a statement of opinion about the tenant. It is material to observe that it is often fallaciously assumed that a statement of opinion cannot involve the statement of a fact. In a case where the facts are equally well known to both parties, what one of them says to the other is frequently nothing but an expression of opinion. The statement of such opinion is in a sense a statement of a fact, about the condition of the man’ s own mind, but only of an irrelevant fact, for it is of no consequence what the opinion is. But if the facts are not equally known to both sides, then a statement of opinion by the one who knows the facts best involves very often a statement of a material fact, for he impliedly states that he knows facts which justify his opinion.”


It is that last sentence which is particularly pregnant for present purposes. I observe two things; first, that the learned lord justice is not laying down a universal rule. His language is:

“a statement of opinion Y involves very often a statement of a material fact”


Secondly, he says that, for that possibility to arise, one party must know the facts better than the other. He is not saying that one party must know all the facts; it suffices for the application of the principle if it appears that, between the two parties, one is better equipped with information or the means of information than the other is.


It is often and truly said that each case must depend on its own facts; and I apprehend that the real question for the court is to say, on the basis of the facts and in the context of this case, whether this is an instance in which the representation that the vendor has reasonable grounds for his belief ought to be imported. Counsel for the defendant contended that to hold, as the judge did, affirmatively on that point was to lay down the principle that, wherever it is stated that one party entertains a particular belief, then it must follow that there is a representation that he has grounds reasonably supporting his belief. I lay down no such general proposition. The question her is whether in this case, and in the context of the particulars concerning lot 11, such a representation of reasonable grounds to support the belief ought to emerge; and, as the judge held, I think that in this case the answer is in the affirmative.


First, it is to be noted that the subject-matter of the sale was a reversion to a sum of consols under a will. Anybody seeking to buy such a property must obviously first consider when the subject-matter is likely to come to hand. The age, therefore, of the annuitant on the determination of whose life the reversion falls in is of vital importance. It is, however, no less important to the purchaser to know how much will be left of the capital fund when duties have been paid at the death of the annuitant. Therefore, it is of the utmost importance to a purchaser to know (if he can find out, which he may or may not be able to do) whether the impost of estate duty will be limited to the appropriate rate for the sum of the reversion alone or whether the rate will be affected by the circumstance that the annuitant has other considerable means, disposable capital of his or her own, which, for duty purposes, will be aggregated with the sum providing the annuity. Therefore, the statement ” who is believed to have no aggregable estate” is one obviously and vitally affecting the subject-matter being offered. As the learned judge pointed out, anybody who has any experience in dealing with properties of this kind must be very much alive to that point.


The next thing to notice about the particulars is the item at the end: ” Solicitors as to lot 11, Messrs Oscar Mason & Co” Ca well known firm of solicitors of standing and repute. What would be the effect of this language on the mind of a possible purchaser. Clearly, I should have thought, it would flow from the language used, and would be intended to be understood by a reader of the particulars, that persons who knew the significance of this matter, and who were experienced and competent to look into it, were expressing a belief founded on substantial and reasonable grounds. As between the vendor and the prospective purchaser, it is quite plain that this is a case within the category stated by Bowen LJ namely, a case where the vendor’ s knowledge or means of knowledge is far superior to that of the purchaser. The purchaser can know nothing whatever which could guide him on this point. He does not know the annuitant’ s name and he knows nothing about the will except the date. On reading the particulars, he has no possible means of knowing whether the annuitant is, or is not, a woman of means. It is, no doubt, possible that a purchaser might find out. He could communicate with the Public Trustee, just as the purchaser in Smith v Land & House Property Corpn could have made inquiries about the desirability of the tenant; but in this case it is far less likely even than in Smith v Land & House Property Corpn that a purchaser could have found the answer. The Public Trustee would probably have been unable to tell him anything. It is very doubtful whether the will in question could have been successfully identified. On the other hand, the vendor, the defendant, is the beneficial owner of the reversion by virtue of the bankruptcy of the reversioner. A considerable amount of fact which would be quite unknown to a purchaser is, therefore, available to him, and there is also available to him the means of information and inquiry. He could inquire of the annuitant or of other persons about the circumstances relevant to this matter of aggreeable estate. I observe that the sale was subject to a reserve price. A purchaser would note that and would obviously assume that the reserve price would have been fixed with due regard to this matter of aggreeability.


I am, therefore, entirely of the same opinion as was the learned judge, namely, that this is a case in which there was not merely the representation that the defendant entertained the belief, but also, inescapably, the further representation that he, being competently advised, had reasonable grounds for supporting that belief. The learned judge put the matter thus in his judgment. He first observed that, if the purchaser was not entitled to suppose that the vendor was in possession of facts which enabled him to express an opinion which was based on reasonable grounds, that would, he thought (and I agree with him) make business dealings, certainly in this class of business, almost impossible. He said:

“It must be remembered that in this case the purchaser going to the auction had no means whatever of finding out anything about the annuitant’ s means. When the contract was signed, the purchaser did not even know the name of the annuitant. On the other hand, the vendor must be expected to be in possession of facts unavailable to the purchaser and the purchaser is entitled to suppose that he is in possession of facts which enable him to express an opinion which is based on reasonable grounds. As I have already said, if that is not so, business relationships become quite impossible. It may be different where the facts on which the opinion is expressed are equally available to both parties. Then the opinion may be no more than an expression of opinion, but, where the opinion is expressed on facts assumed to be available to the vendor, which certainly are not available to the purchaser, and that opinion is expressed to induce the contract, in my judgment the purchaser is entitled to expect that the opinion is expressed on reasonable grounds.”


The learned judge, using that general language in relation to this case, was reflecting the language of Bowen LJ which he then proceeded to quote in the next paragraph of his judgment. I, therefore, am satisfied that the relevant language in the present case involved the representation that there were reasonable grounds for the belief, and certainly that was a representation of a most material fact.


The next question, then, is: Was that representation true? On that, counsel for the defendant did not argue with very great strenuousness, and, indeed, I think that he would have had difficulty in doing so. The grounds on which the belief was expressed are set out in summary by the learned judge in his judgment. The sources of information which were tapped consisted of the bankrupt herself, of the bankrupt’s mother, and, at her suggestion, of another lady, a Mrs Gould. A communication was also addressed to the annuitant herself, who was a half-sister of the bankrupt. The bankrupt’s father, who was also the father of the annuitant, had married twice, and it appears that the issue of the first marriage and the issue of the second marriage were not entirely friendly. It is quite plain, that, when inquiries were made about the annuitant, the first thing that emerged was that the persons consulted knew very little about her. Mrs Gould said that she had had no direct contact with the annuitant for some time, but added the somewhat significant piece of information that the annuitant spent some part of her time at Nice. Since the amount of the annuity was, 200 sterling per annum, it might have been thought that that piece of information at any rate carried a certain element of caution with it. The bankrupt herself could add little more, although it is fair to say that both she and Mrs Gould indicated that they did not think that the annuitant would probably leave very much. The annuitant passed on to her brother the letter of inquiry which she received, and the inquirer was told, in effect, that it was none of his business, and no information was given.


The question then arises: Was that information such as to justify a reasonable person, who had any awareness of the significance of the matter, asserting as an inducement to a possible purchaser that the annuitant was believed to have no aggregable estate? I think the question has only to be put to be answered. It is quite plain that that very meagre information formed no basis whatever on which a responsible person could put forward that view as an inducement for somebody to buy the reversion. The inquiry was made, as one would expect, by a representative of the firm of solicitors whose concern in the matter was stated in heavy leaded type in the particulars. The learned judge was obviously somewhat troubled by the extraordinary fact that any responsible member of a well-established firm of solicitors could possibly have asserted a belief on such flimsy grounds. That was a consideration which was in his mind when he had to consider, on the question of costs, the justification of the allegation of fraud, including that of recklessness; but the judge had the advantage of seeing the managing clerk concerned and he was satisfied that the managing clerk, although in this respect, unhappily, quite inept, was, none the less, honest. He was inept because this subject-matter was far outside the ordinary scope of his professional duties, he being a litigation clerk; and it became quite manifest that he himself had no comprehension at all, when he started dealing with this matter, of the meaning of the words “aggregable estate” and certainly never comprehended at any stage the importance of the alleged belief to a would-be purchaser of a reversion.


At this stage I will deal with another point raised by counsel for the defendant. From what I have said it will be appreciated that the inquiries were made by, and the whole preparation of these particulars was in the hands of, the firm of solicitors whose name I have mentioned. The defendant, very naturally and properly, left the matter to the solicitors to do the work for him. The draft form of particulars sent by the auctioneers was amended by the solicitors and returned to them; and the defendant naturally and properly relied on it. Counsel for the defendant put forward the argument that this question of belief and grounds of belief in a context such as this has a subjective quality about it, so that, even if it were wholly unreasonable for the solicitors concerned to have put forward a belief about there being no aggregability, it was quite otherwise in the case of the defendant, who was said to be an accountant. It was said that it would suffice for the defendant to say: “I made no inquiries myself. I relied, as I submit that I am entitled to do, on a competent firm of solicitors, and, I having so relied and they having prepared this draft for me, I, reasonably, accepted it”. I am bound to say, after hearing the argument, that I am still, for my part, quite unable to apprehend it at all. The defendant, as the trustee in bankruptcy, is the vendor who asserts the belief. He did not give evidence; there was no reason why he should; but the evidence in his case proved that the belief was put forward founded on inquiries which were made by the solicitors and which produced results quite incapable reasonably of supporting the belief. The defendant accepted and ratified what had been done by his agents, as he was entitled to do; but he must abide by the consequences. All that they put forward he must be treated as having put forward himself. The extravagance of the argument, if I may so describe it, is revealed by this. I put to counsel for the defendant the suggestion that, if his argument were right, it would follow that, if the solicitors, having made an inquiry, were then informed that the annuitant was in fact possessed of a quarter of a million pounds of her own money, but, owing to some mental aberration on their part, the solicitors thought that it did not matter and that that money was not aggregable, still, apparently, the defendant would be able to say that he reasonably entertained the belief put forward by way of inducement merely because the solicitors asserted it. I think that the proposition, so illustrated, has really only to be stated to be rejected.


There remains the third necessary condition essential to the plaintiff’s case, namely, that he relied on the representation which, I hold, was implicit and was untrue. On that, we have not really had any argument. The learned judge heard the plaintiff and was quite satisfied that the plaintiff did, in fact, rely on this representation. That, therefore, is the end of the matter.


Some other subsidiary points were indicated, but, in my judgment, none of them contained any substance. It was said that the implied representation as to grounds of belief was in some sense subsidiary; from which it was sought to say that, once the belief put forward was held to be honest, however incredibly, that was the end of the matter. I can find no basis in authority or good sense for that view, and I reject it.


Another point was made on condition 3 of the conditions of sale. That condition, which I read, stated among other things that

“Y the vendor accepts no responsibility as to what duties will in fact become payable nor as to the amount which will become payable Y”.


It was suggested that, somehow or other, that statement so qualified the effect of the preceding representation as to make it ineffective for the purposes of this action. I am quite unable to accept that argument. I observe that condition 3, for one thing, repeats the representation, for it says: “The above information regarding duty so payable is believed to be correct Y “What condition 3 is concerned with is to say that, whatever be the position today, when the annuitant dies, which may be ten or fifteen years hence, the vendor is not himself to be responsible at all for or in respect of the payment of any duty. In other words, the condition seems to me to deal with an entirely different point and cannot, in my judgment, in the least qualify the representation which, I hold, was earlier made as an inducement and, in fact, relied on by the plaintiff.


The last matter on which I would say a few words is that of costs. It was said to be a hard thing for the defendant to have to pay all the costs, seeing that the charge of fraud, which played so prominent a part in the statement of claim, failed entirely. I feel some sympathy with the defendant on that matter. He goes from this case without the smallest imputation having been made on his personal honesty; but the learned judge considered the matter and thought, when he looked at the correspondence, that it contained at any rate some justification for a charge of recklessness. I have already said that that charge might well have succeeded, had it not been for the managing clerk of the solicitors satisfying the court that he was able to entertain this very astonishing belief owing to his entire ignorance of the subject-matter with which he was dealing. The judge, having considered the whole matter, directed in his discretion that the costs of the action and of the counterclaim should be paid by the unsuccessful defendant. It would be a difficult matter in any case on costs alone to disturb the judge’ s discretion; but no basis for such a disturbance has really been put forward, and in any case (and this is conclusive of the matter) the point is not raised on the notice of appeal. For the reasons which I have given, I think that the appeal fails and must be dismissed.




I entirely agree with everything which my Lord has said. In the course of the passage from the learned judge’ s judgment which Lord Evershed MR read, the learned judge, after pointing out that the statement of belief in the particulars that the annuitant was believed to have no aggregable estate was made with a view to inducing the contract, expressed the view that the plaintiff, as purchaser, was entitled to expect that the opinion was founded on reasonable grounds. It appears to me that the real point in this case is whether the learned judge was right or whether he was wrong in that view. Counsel for the defendant submitted that he was wrong, but I am abundantly satisfied that he was perfectly right. In the first place, one has to remember that the plaintiff knew practically nothing whatever about the subject-matter of the sale or the title from which it derived or the circumstances which affected its value. All he knew about it was that which was stated in the particulars, namely, that it was a reversionary interest then represented by a sum of ,8,000 consols receivable on the death of a lady aged sixty-nine, that the reversion derived under a will dated 13 March 1916, which was proved in December, 1917, and that the trustee of that will was the Public Trustee. That really is all that the plaintiff knew. Short of writing to the vendor’ s solicitors, who are named in the particulars, and persuading them to help him in ascertaining further particulars, I cannot see that he was in a position to do anything whatever for himself. It would have been of little use even to have written to the Public Trustee, because the plaintiff could not have informed the Public Trustee anything about the will under which the reversion derived except its date and the date of its probate. It might be, such is the efficiency of the Public Trustee’ s Office, that that would be sufficient, after a great deal of research, to discover who the testator was and the terms of the will; but, short of that, as my Lord has pointed out, the plaintiff was helpless in this matter. On the other hand, the defendant vendor, who has to be identified for this purpose, I think, with the bankrupt herself, the owner of the reversion, was in a far stronger position, to put it at its lowest, than was the plaintiff to ascertain all relevant facts bearing on the reversion, and, more particularly, bearing on its value and what it was likely to bring in on the death of the annuitant.


That being so, I should have thought that it was fairly obvious in this case that the statement purporting to come, as it did come, from the defendant’ s solicitors, and expressing a belief vital in relation to this legal transaction, inevitably would suggest to the plaintiff that the opinion was being expressed on reasonable grounds; for it was a matter which everybody concerned, and especially a solicitor, must know would vitally affect the value of the reversion which the plaintiff was proposing to buy, in that a matter which obviously affects the value of a reversion more than anything else is whether the value will be reduced because of the principle of aggregation when the reversion falls in. For my part, accordingly, even in the absence of authority, I should have thought, on the facts of this particular case, that it was abundantly clear that the learned judge was right when he said that the plaintiff was entitled to expect that the opinion or belief was expressed on reasonable grounds, and I should have come to that conclusion if there had been no authority on the matter at all. There is, however, the authority to which Lord Evershed MR referred and to which the learned judge referred, namely, Smith v Land & House Property Corpn ((1884), 28 Ch D 7), and, in particular, the judgment of Bowen LJ in that case, which, when applied to this particular case (and we are only dealing with the facts of this particular case), supports beyond doubt the conclusion at which the learned judge arrived and with which, as I have said, I entirely agree.


None of the other points which were addressed to us and were relied on in this appeal appear to have very much substance in them, and there is nothing that I can add to what Lord Evershed MR has said with regard to them. I entirely agree with the conclusions at which he has arrived. I agree that the appeal should be dismissed.




I also agree that the appeal should be dismissed, and in the circumstances I do not think that there is anything that I can usefully add to the reasons given by my brothers.


Appeal dismissed.



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