Exemption clauses mean what they say — and so does the Misrepresentation Act 1967

Common sense in spades yesterday from the CA, in one of Moore-Bick LJ’s last judgments, contained in the financial misinformation case of Taberna Europe CDO II Plc v Selskabet AF [2016] EWCA Civ 1262. Taberna bought loan notes issued by Roskilde, a thoroughly bad Danish bank. They bought them not directly but on the secondary market from Deutsche Bank, allegedly on the basis of negligent misrepresentations by Roskilde. In due course, having lost their money, they claimed under the Misrepresentation Act 1967, s.2(1), against the successor body to Roskilde, which it was arguable under Danish law had to pick up the tab for misrepresentation claims. Three interesting issues arose:

(1) Roskilde’s pitch included two exemptions: “No liability whatsoever is accepted as to any errors, omissions or misstatements contained herein”, and “Neither the Bank nor any officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this presentation for any purpose.” Eder J held them inapplicable to Taberna’s claim on the basis of contra proferentem and Canada SS Lines v R [1952] AC 192. The CA disagreed, downplaying the supposed presumption against exoneration for negligence, and saying (at [23]): “In the past judges have tended to invoke the contra proferentem rule as a useful means of controlling unreasonable exclusion clauses. The modern view, however, is to recognise that commercial parties (which these were) are entitled to make their own bargains and that the task of the court is to interpret fairly the words they have used.” This adds to a line of recent cases (and in our view a very sound one) to similar effect, most recently Transocean Drilling v Providence Resources [2016] EWCA Civ 372, noted here in this blog.

(2) Did s.2(1) of the Misrepresentation Act apply at all, since Taberna bought from Deutsche Bank and not Roskilde? Eder J had held that the Act applied, because by buying the notes Taberna came into contractual relations with Roskilde, presumably by assignment. This holding looked odd at the time, and the CA specifically discountenanced it: the 1967 Act applies only to contracts directly induced between representor and representee.

(3) Was contributory negligence pleadable against a claim under s.2(1) of the 1967 Act? The answer, again sensibly, was said to be Yes, though the question didn’t arise since (a) Roskilde wasn’t liable anyway and (b) Taberna hadn’t been negligent.

Altogether a good day for down-to-earth contract lawyers. We congratulate Sir Martin and wish him a happy retirement.

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