The Court of Appeal has allowed an appeal by Roskilde, a Danish
Bank, that it should compensate an investor who had acquired its
subordinated loan notes. We
reported in 2015 that the High Court had found Roskilde liable
to the investor, who claimed he had invested in the loan notes on
various false statements made by Roskilde in slides from an
investor presentation. Although the investor had not attended
the presentation, the slides were available on Roskilde's
website. The Court of Appeal agreed with the High Court that,
in this case, Roskilde had deliberately made the investor
presentation available to the investor.
However, the Court of Appeal disagreed with the trial
judge's conclusion that disclaimers included in the investor
presentation did not protect Roskilde from liability.
Statements to the effect that no representation was made in
relation to any information in the presentation, and that it should
not be relied on or act as an inducement to enter into any
contract, were effective. In addition, the Appeal Court held,
contrary to the judge's view, that further disclaimers
excluding liability were sufficiently clearly drafted to exclude
liability for misrepresentation.
The Court of Appeal also disagreed with the trial judge's
finding that the investor could claim against Roskilde for
misrepresentation, even though it had acquired the loan notes, not
directly from Roskilde itself, but by purchasing them from a third
party. It held that, although the loan notes represented
obligations of a contractual nature, they were better regarded as a
species of property, which the investor had acquired from the third
party. The loss the investor suffered could have been the
subject of a misrepresentation claim only if the investor had been
induced to buy the notes by representations made by the third
party. The investor had no claim against Roskilde, even
though Roskilde had made representations to it.
Companies seeking investment will find it easier to manage their
liability to investors as a result of this decision. It is
now clear that liability for misrepresentation does not extend to
investors acquiring equity or debt in the market rather than direct
from the company. However, companies still need to take care
to include appropriate, carefully drafted, disclaimers in investor
presentations and other marketing material.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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An assignment of rights under a contract is normally restricted to the benefit of the contract. Where a party wishes to transfer both the benefit and burden of the contract this generally needs to be done by way of a novation.
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