Barton v County Natwest Ltd [1999] Lloyd’s Rep Bank 408

Contract law – Burden of proof – Fraud

Facts

The plaintiff, County Natwest Ltd (CN), loaned money to a company of which Barton (B) was an officer and guaranteed the value of the loan. The company was unsuccessful and the plaintiff claimed for the money that was owed. B made a counterclaim against CN on the basis that he had relied upon representations made by CN to enter into such securities. B claimed that the judge failed to acknowledge the rebuttable presumption that if the reasonable person would have relied upon the false statement, there was a presumption that it had been relied upon and the evidential burden from this was on the party making the statement to prove otherwise.

Issue

Aside from the presumption, B had argued that CN was required to prove that B had not known about the statement before entering the contractual agreement, that B had known the statement was false prior to signing the contract and that B had clearly demonstrated that the statement did not play a part in his decision-making. CN argued that to be induced was a question of fact and therefore such a presumption would be ineffective.

Held

The appeal was allowed by the court. They found that it was not required that a method, as specific as the one introduced by the defendant was required to be proven. However, the court deemed the burden of proof to be placed on CN regardless of the evidence provided by B and required that positive evidence to be shown that B was not induced by their misrepresentation.