Bisset v Wilkinson [1926] UKPC 1 (20 July 1926)

Bisset sold land to Wilkinson for sheep farming, stating his opinion that the land could carry 2,000 sheep. The buyers sought rescission for misrepresentation when farming proved unsuccessful. The Privy Council held that the statement was honestly held opinion, not misrepresentation of fact, since neither party knew the land's actual sheep-carrying capacity.

Facts

The appellant, Bisset, owned land at Avondale in New Zealand which he agreed to sell to the respondents, Wilkinson and another, in May 1919 for sheep farming purposes. The land comprised two blocks totalling approximately 2,410 acres. During negotiations, Bisset stated that if the land was worked as he was working it, with a good six-horse team, his idea was that it would carry 2,000 sheep. Crucially, the land as a combined unit had never been used as a sheep farm before, and neither party knew its actual carrying capacity.

The respondents took possession but encountered difficulties. They were inexperienced farmers, and sheep farming became unprofitable due to falling wool and sheep prices. They eventually switched to cropping and dairy farming. When pressed for payment under the agreement, the respondents alleged misrepresentation regarding the land’s carrying capacity and sought rescission of the contract.

Issues

Primary Legal Issue

Whether the appellant’s statement about the land’s capacity to carry 2,000 sheep constituted a representation of fact (entitling rescission) or merely a statement of opinion (which would not ground relief without proof of fraud).

Secondary Issue

Whether any representation made was honestly held by the appellant.

Judgment

The Privy Council allowed the appeal and restored the original judgment of Sim J. in favour of the appellant.

Lord Merrivale, delivering the judgment, emphasised the critical distinction between statements of fact and statements of opinion. The Board noted that where facts are equally known to both parties, a statement of opinion is merely that. However, where one party has superior knowledge, a statement of opinion may imply knowledge of facts justifying that opinion.

The decisive factor was that both parties knew the appellant had never carried on sheep farming on the combined land in question. As Sim J. had found:

In ordinary circumstances, any statement made by an owner who has been occupying his own farm as to its carrying capacity would be regarded as a statement of fact …. This, however, is not such a case. The defendants knew all about Hogan’s block and knew also what sheep the farm was carrying when they inspected it. In these circumstances … the defendants were not justified in regarding anything said by the plaintiff as to the carrying capacity as being anything more than an expression of his opinion on the subject.

The trial judge had also found that the appellant honestly held the opinion he expressed, thereby negativing any suggestion of fraud.

Legal Principles

The case established important principles regarding misrepresentation:

• An erroneous statement of opinion, even if relied upon and inducing a contract, gives no title to rescission unless fraud is established.
• Where both parties are aware that the representor has no factual basis for certainty about a matter, a statement will be treated as opinion rather than fact.
• A representation of fact may be inherent in a statement of opinion, particularly where the speaker has superior knowledge.
• The existence of an opinion in the person stating it is itself a question of fact.

Implications

This case remains a leading authority on the distinction between statements of fact and statements of opinion in the law of misrepresentation. It establishes that context is crucial: the same words may constitute a statement of fact in one situation but mere opinion in another, depending on the relative knowledge of the parties. The decision protects vendors who honestly express opinions about matters where the true position is unknown to either party, whilst preserving remedies where superior knowledge exists or fraud is present.

Verdict: Appeal allowed. The judgment of Sim J. was restored, and the respondents were ordered to bear the appellant’s costs in the Privy Council and below.

Source: Bisset v Wilkinson [1926] UKPC 1 (20 July 1926)