MSE News: Mortgage blow as building society hikes SVR

howardtheduck

Well, there’s always misrepresentation.

A misrepresentation is a false statement of fact or law which induces the representee to enter a contract. Where a statement made during the course of negotiations is classed as a representation rather than a term an action for misrepresentation may be available where the statement turns out to be untrue. There are three types of misrepresentation: innocent misrepresentation, negligent misrepresentation and fraudulent misrepresentation.


The affect of a finding of misrepresentation is the contract is voidable ie the contract exists but may be set aside by the representee. The remedy available depends on the type of misrepresentation, but generally consists of rescission and or damages. The right to rescind the contract may be lost in some circumstances. The law relating to misrepresentation is mainly found in common law with the Misrepresentation Act 1967 providing some further details.

In order to amount to an actionable misrepresentation certain criteria must be satisfied:


False statement

There must be a false statement of fact or law as oppose to opinion or estimate of future events:


Bisset v Wilkinson [1927] AC 177


Esso Petroleum v Mardon[1976] QB 801


A statement of opinion may amount to an actionable misrep where the representor was in a position to know the facts:



Smith v Land & House Property Corp (1884) 28 Ch D 7


A statement as to future intent can not amount to a misrep unless the representor had no intention of carrying out the stated intent:



Edgington v Fitzmaurice (1885) 29 Ch D 459

False statement of law will now amount to an actionable misrepresentation:


Pankhania v Hackney [2002] EWHC 2441


Silence will not generally amount to a misrepresentation:



Smith v Hughes(1871) LR 6 QB 597


Unless it is a contract of uberrimae fidei. ie one of utmost good faith such as an insurance contract or where the representor is in a fiduciary position. In such contracts a duty exists to disclose all material facts and a failure to do so may give rise to an action for misrepresentation.



HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6




If a statement made becomes false because of a later change of circumstances, there is an obligation to disclose the change of circumstances:



With v O'Flanagan [1936] Ch 575




Inducement/reliance


Once it has been established that a false statement has been made it is then necessary for the representee to demonstrate that the false statement induced them to enter the contract. There can be no inducement or reliance if the representee was unaware of the false statement:


Horsfall v Thomas [1862] 1 H&C 90



If the representee or their agent checks out the validity of the statement they have not relied on the statement:



Attwood v Small[1838] UKHL J60

If the representee is given the opportunity to check out the statement but does not in fact check it out, they are still able to demonstrate reliance:



Redgrave v Hurd (1881) 20 Ch D 1

Types of misrepresentation

Once it has been established that a false statement was made and that it induced the contract, it is necessary to determine the type of misrep in order to determine the available remedy. A misrepresentation can be classed as either:

• Fraudulent misrepresentation

· Negligent misrepresentation under s.2 (1) Misrepresentation Act 1967


· Negligent misstatement at common law. See here

• Wholly innocent misrepresentation

Fraudulent misrepresentation

Lord Herschell defined fraudulent misrepresentation in Derry v Peek as a statement which is made either:

i) knowing it to be false,
ii) without belief in its truth, or
iii) recklessly, careless as to whether it be true or false

The burden of proof lies on the claimant:



Derry v Peek (1889) 5 T.L.R. 625

Negligent Misrepresentation under the Misrepresentation Act 1967


Under s.2(1) Misrepresentation Act 1967, a negligent misrepresentation is a statement made without reasonable grounds for belief in its truth. The burden of proof being on the representor to demonstrate they had reasonable grounds for believing the statement to be true.

This burden of proof is difficult to discharge:


Howard Marine v Ogden[1978] QB 574


Wholly innocent Misrepresentation



An innocent Misrepresentation exists where the representor can demonstrate reasonable grounds for belief in the truth of the statement. See s.2(1) MA 1967

Remedies

Remedies available for misrepresentation are dependent on the type of misrepresentation. For all types the remedy of rescission is available. This is putting the parties back in their pre-contractual position. Each party gives back the benefit which they have received under the contract. However, it is not always possible to rescind the contract and in some circumstances the right to rescind may be lost.



Remedies for fraudulent misrepresentation

Where there has been a fraudulent misrep, the innocent party is entitled to rescind the contract and claim damages. The damages that are awarded are not based on contractual principles but the damages available in the tort of deceit. There is thus no requirement that the damages are foreseeable:



Doyle v Olby [1969] 2 QB 158


Smith New Court Securities v Scrimgeour Vickers[1996] 3 WLR 1051


Remedies for negligent misrepresentation



S.2(1) Misrepresentation Act 1967 states that the same remedies are available where the statement was made negligently as if it were made fraudulently. Royscott v Rogerson confirmed that the principle in fraudulent misrep relating to tortious damages applied also in negligent misrep:



Royscott Trust v Rogerson[1991] 2 QB 297 (Case summary)


Remedies for innocent misrepresentation


Under s.2(2) Misrepresentation Act 1967 the remedies for an innocent misrep are rescission or damages in lieu of rescission. The claimant cannot claim both. Damages are assessed on normal contractual principles.

Bars to rescission

The right to rescind the contract may be lost where a third party acquires rights, where the representee affirms the contract, through lapse of time or where restitution in integrum impossible.


3rd party acquires rights

If a third party acquires rights in the goods, eg where they have been sold on or subject to a charge or mortgage, rescission will not generally be granted as it will prejudice the third party. If however, the representee does an act to rescind the contract before a sale has taken place the 3rd party has not acquired any rights:

Car & Universal Credit v Caldwell[1964] 2 WLR 600


Affirmation

If the representee does an act to adopt the contract, or demonstrate a willingness to continue with the contract after becoming aware of the misrepresentation they will lose the right to rescind:

Long v Lloyd [1958] 1 WLR 753


Lapse of time

The right to rescind will be lost after a lapse of time. If the misrep is negligent or fraudulent, time only starts to run from discovery. If a wholly innocent misrep time runs from the entering of the contract:


Leaf v International Galleries [1950] 2 KB 86


Restitution in integrum impossible


Where it is impossible to restore the parties to their precontractual position, eg where the goods have perished or have been consumed, the right to rescind will be lost.

(IANYL)

MarkyMarkD

sarahbennett wrote: »

Very cleverly, Skipton's final letters are written for the benefit of the FOS/FSA/OFT, carefully drafted to attempt to give an excuse to these organisations to not consider the complaint, by asking you to consider if you are a consumer for example, that removes you from the remit of the free support, it gives the bodies an excuse not to consider our case, and in the context of being under resourced, one they might grab with both hands, very clever tactics on behalf of Skipton...

Sorry, Sarah, but you are just demonstrating (once again) your lack of industry understanding.

Of course, all final response letters are written with a view to the likelihood of their being viewed by the FOS, because a large proportion of customers are unwilling to accept even a totally reasonably-worded final response from a financial services organisation.

To give you an example of a typical one:

Customer: You didn't transfer my ISA when I asked you to do so
Financial Services Organisation (FSO): We never received a request from the other FSO
Customer: I'm going to totally irrationally and without any proof assert that you are lying
FSO (Final Response): We deal with all transfer out requests which we receive within 30 days per HMRC guidelines. We can evidence this. We have no interest in denying genuine transfer requests which we actually receive and we can evidence this. On the balance of probability, the customer's request was either not sent by the other FSO or was lost in the post.
Customer: I don't care what you say, I'm reporting you to the FOS.
FOS: The customer loses their claim because on the balance of probability, based on the fact that the FSO can evidence lots of procedures, and the customer cannot evidence that the letter was received and simply ignored, they lose. End of case.

It is this sort of situation which makes me very depressed about consumer action in general, and some of the advice on this site in particular. The case above is 100% totally genuine, by the way.

It's a fatuous use of the FOS which at the end of the day costs everyone money and delays genuine claims.

Incidentally, the loss claimed in the 100% totally genuine case referred to above was £35. A good use of everyone's time? You judge for yourselves.

So, getting back to this situation, of course the final response letter is worded to scope the complaint out of the FOS's jurisdiction.

I find the argument that a BTL borrower is a "consumer" completely bogus, and I don't think the FOS will entertain it for a moment. The FSA's regulation does NOT cover BTL mortgages, and the FOS's coverage is effectively the same as the FSA's apart from some "grandfathered" rights (e.g. if you have a residential mortgage which was taken out pre-FSA regulation, it would be covered by FOS but not by FSA).

If the government had intended BTL mortgages to be regulated by FSA or FOS, they'd have made the legislation explicitly cover it.

MarkyMarkD

PhylPho wrote: »

It's the kind of thing that lets operators like Skipton off the hook. And the Ombudsman from having to lock horns when it would infinitely prefer life to be smooth and trouble-free.

For itself.

Having met very senior people from FOS, and heard them give various speeches, your view of their approach is 100% divergent from the truth. They view the number of complaints that they have generated as a success, and they do not wish to minimise the level of complaints in the slightest.

Be realistic - the FOS is a government job creation scheme, with the great benefit (for them) that all the costs are borne by Financial Services Organisations, not by the government themselves. So why on earth would you believe that they do anything for an easy life?

For the record, they are entirely focused on what their legal powers are. They cannot judge in favour of a consumer because they feel it's right to do so. They can only judge in favour of a consumer if the consumer has a legitimate claim under their powers.

You still haven't explained the ambiguity you are referring to. If you enlightened us, possibly 95% of us would think your "ambiguity" was in fact a case of "trying it on". As so many FOS claims in fact are.

JPS29

MarkyMarkD wrote: »

If the government had intended BTL mortgages to be regulated by FSA or FOS, they'd have made the legislation explicitly cover it.

The same argument could then be applied to the exceptional circumstances clause. Should Skipton have wanted no misunderstanding they should and could have explicitly entered a floor in boe rates into the contracts rather than a vague catch all clause

VIGILANT22

All those Skipton complaints whose info will be shared with HMRC..

JPS29

VIGILANT22 wrote: »

All those Skipton complaints whose info will be shared with HMRC..

We communicate this to them anyway in our tax returns.....:D

VIGILANT22

JPS29 wrote: »

We communicate this to them anyway in our tax returns.....:D

Yes you may do.......and others...who hold several properties mortgaged by or not mortgaged by Skipton?

sarahbennett

Vigilant22 surely you are not stating that it is OK for Skipton to commit a crime if it is doing so against a criminal? Surely you are not stating that those who have been betrayed by the Skipton and have the audacity to complain are most likely criminals? There are over 60,000 people affected by Skipton's actions, are you saying they are all criminals, or are you just saying that most likely those of them who are complaining are criminals? Please be more clear (and if possible, would you please be less offensive to others on this thread).

It is bad enough being betrayed by my building society without also being accused of criminality myself, from a thread that I am leaning on for advice and support. I have no objection to Mark's comments where he simply puts across the perspectives of the financial institutions, that is actually helpful to the discussion, but your comments go below the belt.

So who exactly is it you would like to accuse of criminal activity in the form of tax evasion? Your posts suggest a negative attitude towards those feeling wronged by their building society. Where does this bile come from? It does not occur to you that their concerns may be legitimate? Or that people may object to being robbed even by small amounts they can afford, and that some may do so principle?...

VIGILANT22

I will deal with this first

"(and if possible, would you please be less offensive to others on this thread).

I have never been offensive to anyone on this thread...however I think you need to realise this is neither yr forum or you the guardian angel of this thread...So just look after yourself and dont talk on behalf of others when yr not appointed to...What make you think yr in some elevated position....???

VIGILANT22

sarahbennett wrote: »

Vigilant22 surely you are not stating that it is OK for Skipton to commit a crime

They wouldn't be committing any crime...it is quite normal for lenders and HMRC to share info.........if you think this is below the belt???.....:T

and once again this is not yr private forum

Quote: surely you are not stating etc...x2??....bit excessive,,,,,think this all getting to you Sarah!