Home Information Cases Peekay Intermark Ltd & Harish Pawani v Australia & New Zealand Banking Group Ltd (2005)

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Peekay Intermark Ltd & Harish Pawani v Australia & New Zealand Banking Group Ltd (2005)

Summary

By signing, without reading, terms and conditions relating to an investment that was fundamentally different to the investment product that had been orally explained to him, a company director had not shown that he was content to contract on those terms irrespective of any prior misrepresentation or that he was not induced by and did not rely on the misrepresentation in making the investment.

Facts

The first claimant company (P) claimed damages under the Misrepresentation Act 1967 s.2(1) for alleged misrepresentation of an investment product marketed by the defendant (Z). The second claimant (H), who was a director of P, had been invited by Z to invest on behalf of P in a bond issued by the Russian Treasury. During telephone discussions about the investment Z represented that P would have an interest in the underlying bond, which was confirmed in the indicative terms sheet sent to H. After H had agreed to make the investment he signed, without reading, the final terms and conditions which disclosed that the investment in fact gave P no interest in the underlying bond and no control over the liquidation of the investment in the event of sovereign default. Following default Z had liquidated the investment and made a small return to P. P sought to recover the difference between its investment and the amount of the return. P contended that Z had misrepresented the nature of the investment, that any divergence between what had been verbally explained to H and the final terms and conditions should have specifically been drawn to H's attention and that the misrepresentation had continued despite the signing of the final terms and conditions. Z contended that the signing of the final terms and conditions had nullified and superseded any misrepresentation and showed that H was prepared to contract on the basis of those terms and conditions and was therefore not induced by any misrepresentation.

Held

On the facts, the investment product had been misrepresented in a fundamental respect and H had reasonably understood that P would acquire an interest in the bond. In failing to read the final terms and conditions P took the risk that they contained subsidiary or ancillary terms that were not to his liking. However, the signing of the final terms and conditions did not nullify or supersede the prior oral misrepresentation about the nature of the product being marketed. H had no reason to think that the terms and conditions that he was expecting to receive would relate to a fundamentally different product from that which had been described to him. H had assumed that any material change from the product discussed would have been pointed out. Signing the terms and conditions did not show that he was content to contract on those terms irrespective of any prior misrepresentation or that he was not induced by and did not rely on the misrepresentation in making the investment. H was induced by the misrepresentation and would not have made the investment if he had known the true nature of the product. P was entitled to the difference between its investment and the return it actually received.

Judgment for claimant.

Queen's Bench Division
Richard Siberry QC
Judgment date
25 May 2005
References

​LTL 1/6/2005 : Times, June 10, 2005

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