The High Court has confirmed that a claimant’s conscious awareness or understanding of an implied representation is an essential element for a claim for misrepresentation Loreley Financing (Jersey) No 30 Limited v Credit Suisse Securities (Europe) Limited & Ors [2023] EWHC 2759 (Comm).
The decision is helpful for defendants facing such claims in two particular respects:
- Requirement for awareness. The court’s consideration of the “awareness” requirement in the context of misrepresentation claims adds to the growing body of case law on this important topic. The court concluded that the law does require a claimant to prove that a representation (however made) is received by the representee and that to satisfy the requirements of reliance the representee must be aware of it / have it actively present to their mind when they act on it. The awareness requirement also logically precedes the presumption of inducement, so claimants will need to prove this first, before having the benefit of that presumption.
- Assumptions based on conduct. The court rejected the notion that mere assumption of the representee based on the representor’s conduct is sufficient in terms of proving reliance on the representation. The awareness/understanding bridge between representation and inducement is always necessary and it is distinct from assumption. While the court conceded that the more obvious the representation, the more likely it is that the representee would have understood it to have been made, this does not remove the necessary requirement to evidence such understanding. The court therefore confirmed that inducement cannot be established by reference to the “counterfactual of truth” (i.e. had the representee known the true position they would not have acted as they did) without satisfying an awareness test.
In addition, the court also commented on the non-compliance with the new witness statement requirements set out in Practice Direction 57AC. The decision serves as a useful reminder of the risk to the weight given to witness evidence which arises when those rules are not complied with.
For more information see this post on our Banking Litigation Notes blog.
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