Pankhania v Hackney LBC

Pankhania v Hackney London Borough Council [2002] N.P.C. 123

Commercial property – Misrepresentation at sale – Commercial property

Facts

P brought a claim for damages for the misrepresentation at the point of sale by H, of commercial property that was used as a car park by NCP. The land was licenced to NCP in 1988. There was exclusive possession of the property for an agreed term which had the effect of creating a business tenancy agreement as per the Landlord and Tenant Act 1954. The documentation that had been created for sale, at an auction, referred to the land that suggested only a licence agreement was in place on the property, which could be terminated with three months’ notice. P purchased the property and found out this was not the case. P brought an action to claim for the misrepresentation of H.

Issue

H argued that any misrepresentation was a misrepresentation as to law and as per the case of Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, this was not actionable. Therefore, the court had to first consider whether the wording used in the sale documentation could amount to a misrepresentation and if so, whether P could action such a claim. 

Decision/Outcome

The court gave a partial judgment to P. The court found that having assessed the representations made in the sale documentation, H had represented the agreement between NCP and themselves as a licence which could be terminated. This was deemed a clear misrepresentation. As for the second issue, the court found that the decision in the previous case of Kleinwort no longer applied and on this basis, P’s claim was actionable.