In the recent case of Taberna Europe CDO II plc v Selskabet AF 1.September 2008 in Bankruptcy (formerly Roskilde Bank A/S)  EWCA Civ 1262, the Court of Appeal decided that the content of a presentation published online and aimed at investors could give rise to liability for misrepresentation.
According to the Court of Appeal, the liability for misrepresentation could arise even where the investor placing reliance on the presentation was induced to enter in a contract with a third party and not the representor. Importantly, the Court of Appeal also established that potential liability for misrepresentation could be avoided by a valid disclaimer of liability contained within the same document.
Roskilde (a Danish regional bank) issued loan notes with a value of €80 million. Deutsche Bank acquired notes with a value of €27 million from Roskilde and sold the same on to Taberna (an Irish investment vehicle) on the secondary market.
Taberna contended that it had been induced to purchase the loan notes from Deutsche Bank by misrepresentations contained in a document published on Roskilde's website, particularly representations within that document as to the amount of non-performing loans on Roskilde's books. This document was described as an Investor Presentation ('Presentation') and stated that it had been produced solely for use by investors met during a specified road show (Taberna was not such an investor).
The Presentation also contained a series of disclaimers which sought to restrict the scope of any representations contained within the Presentation and to exclude Roskilde's liability for any statements made therein.
At first instance the High Court found Roskilde liable to Taberna for misrepresentation and awarded Taberna circa €26.5 million. Roskilde appealed.
The Court of Appeal upheld the High Court's finding that, notwithstanding that the Presentation contained a statement that it had been produced solely for use by a class of investors which did not include Taberna, Roskilde had intentionally made the Presentation available to potential investors and had deliberately made the Presentation available to Taberna with a view to Taberna relying on it for investment purposes.
Whilst the publisher of materials made available for a specific purpose will not generally owe a duty to an unconnected third party who seeks to rely on such publication for alternate purposes, the Court of Appeal found that, regardless of the Publication containing wording to the contrary, Roskilde's conduct was such that the representations made within the Presentation were deemed to have been made to Taberna.
This meant that Taberna was entitled to rely on the representations when purchasing the loan notes from a third party. As such, Roskilde would be liable to Taberna for any misrepresentations contained within the Publication, subject to the court's decision on the effectiveness of the disclaimers contained within the Publication.
At first instance, the court held that the disclaimers within the Presentation were ineffective as they were not contained in a contract between Taberna and Roskilde (they were merely contained in a non-contractual notice). The Court of Appeal overturned this decision and held that, whilst contractual exclusions would be required to avoid liability in relation to statements made in previous negotiations, a person may by way of non-contractual notice limit the scope of, and limit or exclude its liability in relation to, representations contained in the same document as the non-contractual notice.
As such, the notice contained in the Presentation meant that Taberna was not entitled to rely on the Presentation as a basis for its investment decisions and, furthermore, the exclusions of liability were effective notwithstanding that they were not contained in a contractual document between Roskilde and Taberna.
The Court of Appeal also highlighted the useful distinction between so called "duty negating clauses" (those which seek to restrict the scope of representations to prevent liability from arising) and so called "liability negating clauses" (those which restrict/exclude liability which would otherwise exist).
The decision also provides a reminder of the increasing willingness of courts to recognise that sophisticated commercial parties are entitled to make their own bargains and that the court's role is merely to fairly interpret the words they have used.
Although the disclaimer issue decided the case, Lord Justice Moore-Bick went on to express his view as to whether, in the absence of the disclaimer, Taberna would have been able to claim damages under s.2(1) of the Misrepresentation Act 1967 (Act). The Judge's view was that the Act applies only to a contract which the representee has been induced to enter into directly with the representor. It does not extend to obligations of a contractual nature which the representee acquires from a third party. In this case, there was no relevant contract between Roskilde and Taberna, meaning Taberna was not entitled to rely on s. 2(1) of the Act.
In the digital age when information is widely available electronically, the decision in this case serves as a timely reminder of the importance of exercising caution when making materials available that may be relied upon by third parties.
Those who publish materials may be exposed to claims from third parties who have relied on those materials, even where the third party relies on them to enter into a contract in which the publisher plays no part. Any notice that materials are only intended for use by a certain class of persons will not protect the publisher where it directs third parties of a different class to the materials, or where the publisher makes the materials available with a view to such third parties placing reliance on them.
The decision does, however, provide useful clarity that robust and clearly expressed disclaimers and exclusions of liability contained in non-contractual documents can protect against potential liability for errors or misrepresentations contained within the same document, particularly when dealings are between sophisticated commercial organisations.
It should be noted that the Court of Appeal placed importance on the fact that the Presentation in this case was intended to be read by experienced professional investors who must have been aware of the necessity to read investor presentations in their entirety. Even greater care must be taken when materials are intended for less sophisticated audiences or consumers. In such cases publishers must ensure that any notices are effectively brought to the reader's attention.
The decision also provides welcome clarification on the application of the Misrepresentation Act to secondary market purchases of contractual rights, such as loan notes.