Deslauriers and another v Guardian Asset Management Ltd (Trinidad and Tobago)
| Jurisdiction | UK Non-devolved |
| Judge | Lord Mance,Lord Kerr,Lord Hughes,Lord Lloyd-Jones,Lord Briggs |
| Judgment Date | 09 November 2017 |
| Neutral Citation | [2017] UKPC 34 |
| Court | Privy Council |
| Docket Number | Appeals No 0032 of 2016 and 0062 of 2016 |
| Date | 09 November 2017 |
[2017] UKPC 34
Lord Mance
Lord Kerr
Lord Hughes
Lord Lloyd-Jones
Lord Briggs
Appeals No 0032 of 2016 and 0062 of 2016
Privy Council
From the Court of Appeal of Trinidad and Tobago
Appellants
Peter Knox QC
Ian Benjamin
(Instructed by Charles Russell Speechlys LLP)
Respondent
Gavin Kealey QC
Elizabeth Lindesay
(Instructed by Clyde & Co)
Heard on 11 and 12 October 2017
The appellant defendants Mr and Mrs Deslauriers are property developers whose projects have been sited in the past both in Trinidad and Tobago and in the United States of America. At the beginning of October 2007 they entered into a commercial loan under which they borrowed TT$18.6m from the respondent claimant ("GAM"), which is a company administering pension, insurance and investment funds. They gave promissory notes for repayment and the loan was secured by a demand mortgage of parcels of land belonging to them. The loan could be repaid at any time after the first anniversary (thus October 2008) and was repayable in any event on 2 April 2009. Interest was payable quarterly. It was paid up until January 2009, but neither further interest nor the principal was repaid. After several agreed extensions of time had passed, GAM sued for repayment and interest on 20 November 2009. The Deslauriers both denied liability and counterclaimed damages. After a trial in July 2011, Rahim J gave judgment for GAM on 25 October 2011. The Deslauriers' appeal against that judgment was dismissed by the Court of Appeal on 3 February 2016. In the meantime, there had been further dispute over GAM's efforts to enforce its judgment. The judge directed sale of property owned by the Deslauriers at 28–29 Victoria Square in Port of Spain ("the Victoria Square property"), and the Court of Appeal upheld his order on 24 July 2015. There are now before the Board two further appeals by the Deslauriers:
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(A) against the liability judgment: [2016] JCPC 62; and
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(B) against the enforcement judgment: [2016] JCPC 32.
The Deslauriers did not dispute the loan or its non-payment. The essence of their defence was a complaint that GAM had let them down by leaving them unable to access further borrowing to complete a development which was in train at the time of the loan, residential apartments called Hevron Heights at Champs Fleurs. Their case was, in summary:
(a) the loan was required to help fund Hevron Heights;
(b) until late 2007 the Deslauriers were borrowers from their longstanding bankers, the Republic Bank;
(c) GAM aggressively pursued the Deslauriers for their business, against their reluctance to leave the Republic Bank;
(d) the TT$18.6m borrowed was only the first tranche of funding needed for Hevron Heights, which was going to cost in the region of TT$60m in all;
(e) the Deslauriers made clear to GAM that they would need more funding later;
(f) although they enquired of GAM what differences there were between it and a conventional bank, GAM told them that the only difference was that the loan was not repayable before its first anniversary; GAM failed to tell them of any internal or external lending limits which might inhibit its ability to make further loans to finance the later stages of Hevron Heights;
(g) when they did ask for more money at the end of 2008, GAM refused their application and indicated that one (or the) reason was that there were lending limits which an additional loan would exceed;
(h) the result was that they took the loan from GAM, and stayed with it, when otherwise they would have borrowed elsewhere from a lender who would have been able to offer further finance;
(i) in consequence they had been unable to complete Hevron Heights and had suffered loss of profit put at some TT$24m.
This complaint found expression in a number of different ways in the Deslauriers' Defence and Counterclaim:
(a) further advances were a condition precedent to the obligation to repay;
(b) GAM was in breach of a contractual obligation to finance the whole of the Hevron Heights project, giving rise to a counterclaim in damages which should be set off against the claim under the promissory notes;
(c) the failure to disclose any lending limits to which GAM was subject made the answer to the question about the difference between it and banks a misleading one; this amounted to a misrepresentation for which the Deslauriers were entitled to damages;
(d) GAM was under a duty of care to advise the Deslauriers of any lending limit and liable in damages for negligent breach of it.
Argument (a) has not been pursued and no more need be said about it, except that it was advanced at the trial and some of the judge's findings of fact were located in the section of his judgment rejecting this argument. It was clearly unfounded since the promissory notes themselves generated an obligation to repay and were in no sense conditional in their terms.
Mrs Deslauriers, who had conducted the business with GAM, appeared in person at the trial and gave evidence. For GAM evidence was given by Mr Ramdeen, who had handled the other end of the negotiations. Mrs Deslauriers' evidence, and her conduct of the trial, concentrated entirely on argument (b), viz a contractual promise to fund the entire project, which she said GAM had broken.
Arguments (c) and (d) were at times confused in the Defence and Counterclaim, and (c) might be said to have been but elliptically pleaded. They are of course different. (c) was summarised in the prayer as a claim for damages "for misrepresentation". It is reasonably clear that that meant, in the present case, a claim under section 3(1) of the Misrepresentation Act (12 of 1983; Ch 82.35). Such a claim involves proving (i) a misrepresentation which (ii) induces the claimant to enter the contract and which (iii) GAM did not believe on reasonable grounds to be true. There was no reference to the Act, still less to section 3(1), and no allegation that GAM did not believe the alleged misrepresentation to be true. But the claim for damages for misrepresentation was distinctly made separately from the claim for damages for negligence (as to which see below), and inducement was alleged in the narrative of events pleaded. It was sufficiently clear that what was being alleged was a misstatement about GAM's own lending limits, whether internally or externally imposed, and that as such GAM must have known the true position. So the claim under section 3(1) was — just — sufficiently made.
A claim under section 3(1) of the Misrepresentation Act involves no tortious duty of care; its gist is simply that a contracting party misstates a material matter which induces the other party to enter the contract. Such a misrepresentation, if made, can only come before the contract, here the loan. Anything passing between the parties after the loan might be evidence from which a pre-contract misrepresentation could be inferred, but it cannot itself amount to a misrepresentation actionable under the Act. Part of the explanation for the course of the trial, and the consequent form of the judgment, may well be that there is no sign that this point was appreciated either in the Defence and Counterclaim (which was professionally drafted) or by Mrs Deslauriers at the hearing. There was, however, no issue about the point before the Board, where Mr Knox QC readily accepted it; the Board has been grateful to him and to Mr Benjamin for their professional help, the more so since it is understood that it was given pro bono.
By contrast, if there was a tortious duty of care to avoid negligent misstatement, under the principle first enunciated in Hedley Byrne & Co Ltd v Heller [1963] UKHL 4; [1964] AC 465, that duty might well continue after the contract of loan was made, so that subsequent breach is actionable in damages. Such a duty of care would, however, require an assumption of responsibility by GAM for giving professional advice to the Deslauriers, which requirement is absent from any claim under the Misrepresentation Act. Once again, it is not at all clear whether these differences between a claim under the Act and a claim for tortious misrepresentation were appreciated in the drafting of the Defence and Counterclaim, and they very plainly did not figure in argument at trial. Certainly the written pleading contained no express assertion of the basis on which it could be alleged that there was the necessary assumption of professional responsibility for the care of the borrower. However, it distinctly pleaded a prayer for damages for negligence, which thus constituted argument (d).
Because the whole trial centred upon the Deslauriers' complaint that they had been promised funding for the entire project, the judge (correctly) focussed his judgment principally upon that issue. That is not to say, however, that he did not address separately the various claims made. He did, albeit that he did not repeat findings of fact already made when he moved on to a different basis of claim. GAM's case, as pleaded by way of Reply and Defence to Counterclaim and as spoken to by Mr Ramdeen, had been that there had been no discussion about future funding at all, save that Mrs Deslauriers had indicated that she proposed to fund Hevron Heights from other sources, including the deposits taken from prospective purchasers of the apartments. It was also the fact that, although it was clear from the discussions prior to the loan that the money would be used for Hevron Heights, the loan was principally required to re-finance the existing indebtedness to Republic Bank. That in turn had not been principally for Hevron Heights but for a quite separate development which the Deslauriers were undertaking at the Victoria Square property.
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