THE SCOPE OF s2(2) OF THE MISREPRESENTATION ACT 1967

Floods of Queensferry Ltd v Shand Construction Ltd [2000] BLR 81

In Floods of Queensferry Ltd v Shand Construction Ltd [2000] BLR 81, HH Judge Humphrey LLoyd QC refused to follow the decision of Mr Justice Jacob in Thomas Witter Ltd v TBP Industries Ltd [1996] 2 All ER 573 in which Mr Justice Jacob had held that a party could claim damages for misrepresentation under s2(2) of the Misrepresentation Act 1967 even though it was unable to rescind the contract at the time of the hearing. It was held to be sufficient that a right to rescind had existed at some time in the past. Judge LLoyd QC held that this approach could not be reconciled with the wording of s2(2) which stated that damages can be awarded ‘in lieu’ of rescission. He therefore concluded that the loss of the right to rescind has the consequence that the court has no jurisdiction to award damages under s2(2). As far as the award of damages under s2(2) is concerned Judge LLoyd stated that the court has a broad discretion to do what is equitable and that, had it been appropriate to award damages on the facts of the case, the contractual measure of damages would have provided the most appropriate basis for the award of damages.