In November 2017, the Board of the Judicial Committee of the Privy Council (the Board) gave judgment on an appeal against, inter alia, liability under a commercial loan for TT$18.6 million brought by Mr and Mrs Delauriers from the Court of Appeal of Trinidad and Tobago (the Court of Appeal).
Mr and Mrs Deslauriers (the Appellants) are property developers based in Trinidad and Tobago. They entered into a loan facility with Guardian Asset Management Limited (GAM). GAM was a non-bank lender that administered pension, insurance and investment funds. The loan was repayable in full by 2 April 2009 and interest was payable in quarterly instalments. In 2008, the Appellants applied for further lending from GAM and, in 2009, GAM notified the Appellants that it would not advance a further loan to them. The Appellants made the interest payment due in January 2009 but made no further interest payments and failed to repay the principal by 2 April 2009.
The Appellants did not dispute their default under the loan or the moneys owed by them. They issued a counterclaim that essentially blamed GAM for their inability to access further borrowing. The essence of their claim wasthat, pre-contract, GAM should have told them that it had lending limitations, but that it failed to do so. The Appellants' claim was for loss suffered as a result of GAM's alleged misrepresentation and/or negligent misstatement. GAM refused their 2008 application for a second loan on the basis that such further borrowing would take them over lending limits. The Appellants said that, prior to entering the loan facility, they told GAM that the loan in question was only the first tranche of funding they required for a development project. They also said that they were aggressively pursued by GAM for their business, and that, when they asked GAM to compare the terms they were offering against those of other lenders, GAM should have told them that the terms on offer included lending limits.
GAM's case was that there had in fact been no discussion of future lending, except that Mrs Delauriers had told GAM that she planned to fund the development project from other resources. The Board upheld the decision of the Court of Appeal and first instance court to reject the Appellants' evidence. The Board affirmed that failure to say something that is immaterial is not a misrepresentation. The Board concluded that, as the first instance court had found that there was no evidence of any discussion of future lending, the Appellants' claim for misrepresentation had to fail. If future lending was never discussed, then it could not be a material subject. There was simply no opportunity for GAM to disclose its lending limits so they were irrelevant.
The Board went on to provide some unsurprising commentary on the relationship between a commercial lender and a commercial borrower. They restated that the relationship is an arm's-length one. It is not a relationship of adviser-client. They said it would be very unusual in such a relationship to assume that a commercial lender has a duty to disclose its internal policies or the external influences on its business practices. The Board said that it would still hold this to be the case, even where a borrower indicated that they intended to borrow further sums in the future.