Presentation disclaimers do work after all

On 8 December, the Court of Appeal overturned the Commercial Court’s decision in relation to s.2(1) of the Misrepresentation Act 1967 (negligent misrepresentation), and standard disclaimers in written publications issued by a bank. In Taberna Europe CDO II plc v Selskabet AF 1.September 2008(formerly Roskilde Bank A/S) [2016] EWCA Civ 1262, Taberna Europe CDO II plc entered into a secondary market purchase of subordinated notes from Deutsche Bank (which in turn had acquired them from Merrill Lynch, the original holder). The notes were originally issued two years earlier by Roskilde Bank, then the largest retail bank in Denmark and the first to collapse in the financial crisis. When deciding to buy the notes, Taberna claimed that it relied on representations made by Roskilde in an “investor presentation” on Roskilde’s website. The presentation included a disclaimer stating that Roskilde could not guarantee its accuracy, that no warranty or representation was made, and that no reliance should be placed on it.

Taberna made many claims, several of which were dismissed by the Commercial Court. However, going against previous judgements, the Commercial Court held that, although the presentation on which the disclaimer appeared was intended only to be read by the original investors, who had attended a roadshow on the notes, Roskilde had made it generally available to those who bought on the secondary market by putting it on its website and there was evidence that another bank, with Roskilde’s “encouragement” had directed Taberna to it. As a consequence of the Commercial Court’s decision, representations made in publications issued by financial institutions which are designed for the primary market on and before an issue of subordinated debt could have been actionable by secondary market purchasers long after the publications were first issued. The disclaimer offered no protection.

However, the Court of Appeal said that merely placing documents on a website could not itself be considered to create the degree of proximity necessary to give rise to a duty of care to anyone who reads it. It said there must be a connection between the maker of a statement and the recipient of a kind that enables the court to be satisfied the maker intended the recipient to rely on the relevant document in a particular way in order for a representation in that document to be actionable at the suit of the recipient. In this case, the judge held that Roskilde had deliberately made the presentation available to Taberna, and so the necessary connection existed.  Therefore, it was necessary to review the disclaimer to assess whether Taberna’s claim would succeed.  The Court of Appeal held that a disclaimer could in principle be effective even when “tucked away” at the back of a document, as professional investors should be well aware of the need to read a document in its entirety. Moreover, it held the bank could rely on a disclaimer which limited the nature and scope of the statements in the presentation to such an extent that a third party is not entitled to rely on them. This decision upholds the availability of the protection given by clear and unambiguous disclaimers in documents exchanged between commercial parties.

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