Header Articles

Misrepresentations In A Commercial Context

June 2020

Misrepresentations In A Commercial Context


Considering an important recent case


The Court of Appeal judgement in CA Bushline Trustees Ltd v ANZ Bank NZ Ltd contains some useful guidelines for how the Courts are dealing with claims where there are allegations of misrepresentations that induced a party into a contract.


The Court of Appeal overturned the High Court ruling that the ANZ Bank should not have to compensate a farming family customer for the way it had represented the risk attached to interest rate swaps.


The Court of Appeal found that the ANZ Bank misrepresented the nature and effect of the swaps and failed to comply with its obligations in its margin and monitoring conduct. Importantly the Court of Appeal also differed from the High Court’s view on whether it was fair and reasonable for the bank to rely on a disclaimer clause in the contract.


The disclaimer clause stated: “to the maximum extent permissible by law, the bank will not be liable for the customers loss in any circumstances”.


The High Court found that the bank could rely on this clause to excuse it from liability. But the Court of Appeal said it was not fair and reasonable that the ANZ Bank should be able to say that notwithstanding what they promised they would do and represented to be true, that the customer had no claim against them even though they did not do what they said they would do and what they represented was false.


The Court of Appeal said that the legislation governing misrepresentations: “reflects the importance for the law in New Zealand… Of the values of fairness and reasonableness in everyday life”.


The Court of Appeal used the legislation to intervene on behalf of the customer and emphasised the importance of “fairness and reasonableness” in case such as this. This case shows the Court will take a liberal approach, even when there are commercial parties involved.


The case is now under appeal to the Supreme Court, and a Judgement as expected in the next few months.