Misrepresentation: whether material

In Master Yield Ltd v Ho Foon Yung Anesis ([2013] HKEC 898, CA) L induced T to enter into a tenancy agreement by a misrepresentation to the effect that it would be possible to install air-conditioning units on the external walls of the property. In fact, the consent of the incorporated owners was needed for this. Had they known, T would not have taken the lease and it was reasonable for T to take that attitude. The question was whether or not the misrepresentation was material and had induced the contract.

Lam JA said:

‘The ultimate question is whether a representee was induced by the representation and it is a question of fact to be asked in respect of this particular representee (as opposed to an objective reasonable bystander). The effect of a representation on an objective reasonable bystander is only relevant in terms of onus of proof.’ ([22])

That is, it is enough that the representee was subjectively influenced. If an objective reasonable bystander would have been influenced, the burden of proof shifts to the representor to show that there was no influence ([21]).

The representation need not have been the only factor influencing the representee to enter into the contract, just one of the factors ([26]).

Since in this case a reasonable, objective bystander would have been influenced and L had not shown that the representation had not influenced T, the misrepresentation claim succeeded. T was entitled to damages under section 3 of the Misrepresentation Ordinance.

Michael Lower

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