Baguda (M) Sdn. Bhd. v Brady Technology Sdn. Bhd.

Case Significance

Illustrates the strict requirements for rescinding a contract for misrepresentation or mutual mistake, holding that a party who approved and signed the relevant documents cannot later claim it was misled as to their content.

This High Court decision at Penang concerns a landlord's attempt to set aside an annex-building agreement and a series of tenancy agreements on the ground of mutual mistake and misrepresentation as to the size of the building, and the tenant's counterclaim for the renewal of its tenancy options. The plaintiff was the registered lessee of land on which stood a multi-storey factory-cum-office building, and it had let the land and building to the defendant. The parties later entered into an annex-building agreement and successive tenancy agreements. The plaintiff sought declarations that those agreements were void, alleging that the defendant had misrepresented, or that the parties were mutually mistaken about, an essential fact, namely the size or built-up area of the annex building. The defendant counterclaimed for declarations and specific performance of the renewal of the tenancies for further option periods, and also pleaded that the plaintiff's action was time-barred under the Limitation Act 1953.

The court set out the elements of an operative misrepresentation, namely an unambiguous false statement of fact, addressed to the party misled, which materially induced the contract. Applying that test, it held that the issue of misrepresentation did not arise on the facts. The annex-building agreement and the tenancy agreements reflected the parties' intention at all material times. When the intended size of the annex building was exchanged in the draft, the plaintiff made no amendment, which indicated that the plaintiff had knowledge of the intended built-up area; the actual size was set out in the submission drawings, which the plaintiff had agreed to, signed, and approved.

Having found that neither mutual mistake nor misrepresentation was made out, the court dismissed the plaintiff's claim and allowed the defendant's counterclaim with costs, although it declined the particular damages sought in two paragraphs of the counterclaim. The judgment is a useful illustration of the strict requirements for setting aside a contract for misrepresentation, and of how a party's own conduct in approving the relevant documents defeats a later claim that it was misled as to their content.