Inntrepreneur Estates Ltd v Hollard and another

Tenants entering into lease of public house – Business failing and tenants surrendering lease – Landlord claiming unpaid arrears of rent – Tenant counterclaiming for misrepresentations made by landlord as to barrellage inducing them to enter into lease – Whether innocent misrepresentations made – Judge finding for tenants – Landlord’s appeal dismissed In 1991 the defendant tenants took a 20-year lease of The Angel public house in Market Street, Poole, at a rent of £25,000 pa for the first year and £50,000 pa for the following four years. They agreed to purchase a minimum number of 40 barrels of beer from the claimant landlord in the first three months and thereafter 400 barrels for the following years. The business failed and the defendants surrendered the lease in March 1993 with arrears of rent amounting to £12,000. The claimant issued proceedings to recover the arrears, and the defendants counterclaimed alleging that they had been induced to enter into the lease by misrepresentations made by an agent of the claimant. The judge held that in March 1991 the agent had induced the defendants to enter into the lease by innocently misrepresenting that the barrellage was at about the same level as it had been in December 1990, when in fact it had fallen considerably. The judge accordingly gave judgment for the defendants on their counterclaim in the sum of £90,000. The claimant appealed contending that the judge’s finding as to misrepresentation was irreconcilable with the contemporaneous documents and contrary to inherent probability. The documents relied upon were: (i) an assessment of the future profitability of the pub prepared by the agent in April 1991 to enable a rent and minimum purchase to be put before a rent panel for approval; (ii) the rent panel’s decision, which was recorded in separate documents showing the proposal put to them; and (iii) a copy of the barrellage summary on which the agent made a number of manuscript jottings. Held: The appeal was dismissed. The representation made by the agent to the defendants had given them comfort that an earlier decline in barrellage had come to an end and that the pub was trading at a level that would enable it to pay for itself. The judge’s conclusion, that the defendants would not have agreed to enter into a lease of the public house had they known the full position, was entirely supported and not contrary to probability. Accordingly, the instant case was not one of the exceptional cases in which an appeal court should interfere with the judge’s findings of fact. Martin Rodger (instructed by Masons) appeared for the claimant; Julian Walters (instructed by Charles Russell) appeared for the defendants. Thomas Elliott, barrister