High Court decision highlights the need to prove inducement in claims for fraudulent misrepresentation

In a recent decision, the High Court has rejected a claim for misrepresentation, finding that although a fraudulent misrepresentation had been made it had not induced the claimant to enter into the relevant transaction: Ahuja Investments Ltd v Victorygame Ltd [2021] EWHC 2382 (Ch).

The decision highlights the dangers of failing to lead evidence of reliance in fraud cases.

The claimant alleged that it was induced to enter into the purchase of a shopping mall by the defendant's fraudulent (alternatively negligent) misrepresentations about the leases and rental income from retail units in the centre.

The High Court found that the defendant did make the misrepresentations and had done so fraudulently. However, it held that the claimant had not relied upon the misrepresentation in deciding to enter into the contract.  That finding was based in large part on the claimant’s failure to call its former solicitor to give evidence, in circumstances where it had obtained information from the solicitor in the course of the proceedings, but had successfully claimed litigation privilege in respect of the relevant communication. As there was no explanation from the claimant for the failure to call the solicitor to give evidence, the judge inferred that his evidence would be unhelpful to the claimant's case.

The decision demonstrates that, while the courts will not lightly draw adverse inferences from a failure to call a witness, it may do so in an appropriate case.

Read more on the decision here on our Litigation Notes blog.