The court held that, where a contractor had misled the client in order to secure the contract, that amounted to fraudulent misrepresentation, rendering the contract voidable.
In Fitzroy Robinson Limited v Mentmore Towers Limited  EWHC 1552 (TCC), Coulson J held that a statement by a contracting party made during pre-contract negotiations to the effect that a certain employee would be involved throughout the duration of the project in the critical role of team leader was a representation designed to induce the defendants to enter into the contract. Once the representation was no longer true, the party making the statement had a duty to inform the other party of that change, before the contract was concluded. Failure to do so constituted a fraudulent misrepresentation.
Fitzroy Robinson Limited (FRL) repeatedly represented to the defendants during the pre-contract negotiations that Mr Blake would act as team leader throughout the duration of the project on both the Piccadilly and Mentmore sites. That representation was not only made orally at various meetings but was also made in writing – the bid documents were based almost exclusively on Mr Blake, his previous work and the experience, expertise and skills that he would bring to the project. The court concluded that that was not a statement of future intent but rather a representation of fact as to the services and personnel that FRL would provide to the defendants.
Mr Blake resigned from FRL before the project contracts were executed, but FRL knowingly and dishonestly failed to correct the false representation as to Mr Blake’s involvement in the project because it knew that disclosure of that information might affect whether or not it was awarded the contract. As a result, at the time that the contract was concluded, there was a false representation that was deliberate and made for a specifi c purpose, namely to ensure FRL got the job.
Although not making new law, the judgment sets out three key practical points:
- Consultants must always inform their clients promptly of any changes to key personnel, or risk being found guilty of professional misconduct, breach of contract, and/or negligent – or even fraudulent – misrepresentation
- Even where fraudulent misrepresentation has been proven, recovery of damages is uncertain. In this case, once the client discovered the misrepresentation, he did not seek to rescind the contract. Although quantifi cation of loss was held over to a quantum hearing, typically damages for fraudulent misrepresentation in these circumstances would be limited to disruption and duplication of work arising out of the team leader’s resignation
- Those drafting professional appointments should always include an express term dealing with key personnel
To read the judgment, go to: http://www.bailii.org/ew/cases/EWHC/TCC/2009/1552.html