The claimant had won a personal injury case and the matter had been settled with a substantial payout by the appellant insurance company. The company now said that the claimant had grossly exaggerated his injury, and indeed wasfiully recovered at the time of the settlement. It had however known something of the deceit, and the CA had said that having proceeded with that knowledge they could not now resile from the agreement.
Held: The insurer’s appeal succeeded, and the settlement was set aside. They had not at the time known the full extent of the exaggeration by the claimant A claimant basing his claim in deceit in an alleged misrepresentation, had to demonstrate that the defendant had made a misrepresentation where the falsity wen to the misrepresenytation, and was intended to lead, and had in fact lead, the claimant to accrue a detriment. In law, he did ned to establish that he had in fact believed the misrepresentation. The representee’s state of mind might remain relevant to the issue of inducement.
Toulson L said: ‘To establish the tort of deceit it must be shown that the defendant dishonestly made a material false representation which was intended to, and did, induce the representee to act to its detriment. The elements essential for liability can be broken down under three headings: (a) the making of a materially false representation (the defendant’s conduct element); (b) the defendant’s accompanying state of mind (the fault element); and (c) the impact on the representee (the causation element). Where liability is established, it remains for the claimant to establish (d) the amount of any resulting loss (the quantum element).’
Judges:
Lord Neuberger, President, Lady Hale, Deputy President, Lord Clarke, Lord Reed, Lord Toulson
Citations:
[2016] 3 WLR 637, [2016] UKSC 48, [2016] 4 All ER 628, [2016] 2 All ER (Comm) 755, [2016] WLR(D) 423, [2017] AC 142, UKSC 2015/0099
Links:
Bailii, Bailii Summary, SC, SC Summary, SC Summary Vid, SC 2016 Jun 16 am, SC 2016 Jun 16 pm, WLRD
Jurisdiction:
England and Wales
Citing:
Cited – Ladd v Marshall CA 29-Nov-1954
Conditions for new evidence on appeal
At the trial, the wife of the appellant’s opponent said she had forgotten certain events. After the trial she began divorce proceedings, and informed the appellant that she now remembered. He sought either to appeal admitting fresh evidence, or for . .
Appeal from – Hayward v Zurich Insurance Company Plc CA 31-Mar-2015
The claimant sought damages alleging his back had been injured at work. The insurers accepted liability but said that the claimant had exaggerated the extent of his injury. The claim was settled, but later a neighbour of the claimants said that the . .
Cited – Fairclough Homes Ltd v Summers SC 27-Jun-2012
The respondent had made a personal injury claim, but had then been discovered to have wildly and dishonestly exaggerated the damages claim. The defendant argued that the court should hand down some condign form of punishment, and appealed against . .
Cited – Edgington v Fitzmaurice CA 7-Mar-1885
False Prospectus – Issuers liable in Deceit
The directors of a company issued a prospectus, falsely stating that the proceeds were to be used to complete alterations to the buildings of the company, to purchase horses and vans and to develop the trade of the company. In fact it was to pay off . .
Cited – Smith v Kay HL 1859
A party who has practised deception with a view to a particular end, which has been attained by it, cannot be allowed to deny its materiality.
Lord Cranworth rejected what he described as ‘a very desperate argument’ that a representation could . .
Cited – Pan Atlantic Insurance Co Ltd and Another v Pine Top Insurance Co Ltd HL 27-Jul-1994
The plaintiff had written long term (tail) insurance. The defendant came to re-insure it. On a dispute there were shown greater losses than had been disclosed, and that this had been known to the Plaintiff.
Held: ‘material circumstance’ which . .
Cited – Briess v Woolley HL 1954
A fraudulent misrepresentation made in the course of pre-contractual discussions by a shareholder in a company. He was subsequently authorised by the other shareholders to continue the negotiations as their agent, and in due course a contract was . .
Cited – Barton v Armstrong PC 5-Dec-1973
(New South Wales) The appellant had executed a deed on behalf of a company to sell shares to the respondent in the context of a long running boardroom battle. He said that the deed had been obtained by duress and was voidable. The respondent was . .
Cited – Gipps v Gipps 1978
(Court of Appeal of New South Wales) In order to defeat a claim in misrepresentation, it is necessary for the false belief to be ‘wholly dissipated’ for knowledge to defeat misrepresentation. Huttley JA said: ‘Any other rule would be an affront to . .
Cited – Gould v Vaggelas 6-Nov-1984
A deceit was alleged.
Wilson J said: ‘The representation need not be the sole inducement in sustaining the loss. If it plays some part, even if only a minor part, in contributing to the course of action taken a causal connection will exist.’ . .
Cited – Downs v Chappell; Downs v Stephenson Smart (a Firm) CA 1996
The plaintiff purchased a book shop. He claimed that in doing so he had relied upon the accounts prepared and signed off by the respective defendants.
Held: The judge had been wrong by testing what would have been the true figures as against . .
Cited – Standard Chartered Bank v Pakistan National Shipping Corporation, Standard Chartered Bank v Pakistan National Shipping Corporation and Others and Another and Others (Nos 2 and 4) HL 6-Nov-2002
Fraudulent Misrepresentation by Company Director
Fraudulent bills of lading had been issued in order to rely upon letters of credit issued by the bank. The director signing the bills sought to avoid personal liability, saying it was the Act of the company. The defendant company also appealed on . .
Cited – Ross River Ltd and Another v Cambridge City Football Club Ltd ChD 19-Sep-2007
The club sought to rescind agreements for leasing its ground, saying that the developers had made a secret payment to its chairman.
Briggs J said: ‘First and foremost, in a case where fraudulent material misrepresentations have been . .
Cited – Australian Steel and Mining Corpn Pty Ltd v Corben 1974
Complaint was made that a statement (as to the identity of a purchaser to whom Mr Corben, who had decided to sell, was to give an option to purchase) was a ‘but for’ cause of the agreement. Mr Corben would not have persevered with the deal if he had . .
Cited – BP Exploration Operating Co Ltd v Chevron Transport (Scotland) HL 18-Oct-2001
A ship owned by the defenders caused substantial damage whilst moored at the claimant’s docks. The claim was made against different members of the defendants as they asserted and denied responsibility. The last company asserted that the claim was . .
Cited – Sharland v Sharland SC 14-Oct-2015
The Court considered the impact of fraud upon a financial settlement agreed between divorcing parties where that agreement is later embodied in a court order? Does ‘fraud unravel all’, as is normally the case when agreements are embodied in court . .
Cited – Arkwright v Newbold CA 1881
Cotton LJ discussed the tort of deceit and said: ‘In my opinion, it would not be right in an action of deceit to give a plaintiff relief on the ground that a particular statement, according to the construction put on it by the court, is false, when . .
Cited – Betjemann v Betjemann CA 1895
A father and his two sons had carried on the business as partners from 1856 to 1886; the father died in 1886 but the sons continued the business until 1893 when one of the sons died. The deceased son’s executor brought an action against the . .
Cited – Strover v Harrington 1988
A property was at first wrongly described by the agents as having mains drainage. Correcting information was sent to the buyer’s solicitors by the Agents, but the solicitors did not pass on the correction to their client. The mistake was later . .
Cited – Lazarus Estates Ltd v Beasley CA 1956
There was a privative clause in the 1954 Act. A landlord’s declaration under the Act that work of a specified value, supporting an increase in rent, had been carried out on leased premises, could not be questioned after 28 days of its service on the . .
Cited – HIH Casualty and General Insurance Limited and others v Chase Manhattan Bank and others HL 20-Feb-2003
The insurance company had paid claims on policies used to underwrite the production of TV films. The re-insurers resisted the claims against them by the insurers on the grounds of non-disclosure by the insured, or in the alternative damages for . .
Cited – Kyle Bay Ltd (T/A Astons Nightclub) v Underwriters CA 7-Feb-2007
The claimant had been insured under a business interruption insurance policy issued by the respondent defendaants. A claim had arisen, and had been settled, but the caimant said that the parties had mistaken the basis of the policy and had settled . .
Cited – Redgrave v Hurd CA 1881
The plaintiff, an elderly solicitor wishing to retire, advertised for someone to enter into partnership with him and to buy his house. The defendant responded to the advertisement and negotiations followed, in which the plaintiff stated that the . .
Cited – Smith v Chadwick HL 18-Feb-1884
Unclear Words Insufficient as Representation
A purchaser claimed to have entered into the contract in reliance on the truth of a misrepresentation by the seller. The plaintiff claimed damages for deceit through having been induced to buy shares in an iron company by false representations in a . .
Lists of cited by and citing cases may be incomplete.
Personal Injury, Torts – Other
Updated: 21 April 2022; Ref: scu.567606
