Significant development in deceit: Privy Council decides no requirement for “conscious awareness” by claimants
An important decision from the Privy Council this week has significant implications for claims brought in deceit and for damages for misrepresentation. The Privy Council’s judgment in Credit Suisse Life (Bermuda) Ltd v Ivanishvili [2025] UKPC 53 has reversed a recent line of cases and confirms that there is no general requirement to prove a claimant’s “conscious awareness” of the false representation. The judgment is given by Lord Leggatt on behalf of the Board comprised of Lord Hodge, Lord Briggs, Lord Richards and Lady Simler.
Background
To be successful in a claim for a false representation, the claimant must show that the defendant (1) made a representation (either expressly or impliedly, through words or conduct) which (2) is false, (3) the defendant does not believe it to be true, (4) the defendant intends the representation to be believed by the claimant, and (5) causes the claimant to believe that the representation is true. In recent case law, however, the courts had introduced a gloss on these requirements; that the claimant must prove that it relied on the representation by showing that the claimant was consciously aware of the representation.[1] This had introduced complexity into deceit cases for claimants as to what they need to prove regarding their state of mind.
This difficulty has now been addressed in the Privy Council’s judgment which has confirmed that there is no blanket rule in the law of England and Wales that claimants must prove they had conscious awareness of the false representation.
What is deceit?
The elements of the tort of deceit, set out above, are usually straightforward to apply in cases of express representations. However, in some cases the defendant’s representations are less apparent, for example where the deceit takes advantage of the claimant’s unspoken expectations or involves concealment. Some examples discussed in the judgment include:
- A defendant dines at a restaurant but decides not to pay for his food and when the waiter leaves the room, he does a “runner”.[2]
- A defendant is selling his property. The defendant deliberately covers up dry rot so that the prospective buyer will not see it.[3]
- When a defendant makes a false representation, a pneumatic drill starts up outside the claimant’s window, so that she cannot hear anything but the drilling noise for the crucial 30 seconds when the representation is being made.[4]
The judgment in this case highlighted that it is clear that in the first two examples, the defendant has deceived the claimant and in the third example the defendant has not. What is the basis for making those distinctions?
Conscious awareness
In recent High Court decisions the answer was that the claimant must show that she was consciously aware of the representation in order to show that she relied upon the misrepresentation. These cases
include Marme Inversiones 2007 SL v Natwest Markets plc [2019] EWHC 366 (Com); Loreley Financing (Jersey) No 30 Ltd v Credit Suisse Securities (Europe) Ltd [2023] EWHC 2759 and Leeds City Council v Barclays Bank plc [2021] EWHC 363 (Comm); [2021] QB 1027 (Comm) (in which Hausfeld appeared for the Claimants).
There was a tension between these High Court judgments and prior decisions (including the examples set out above), and, as pointed out by the Privy Council, the High Court’s approach in Marme, Leeds and Loreley had been subject to academic criticism and was called into question in Crossley v Volkswagen AG [2021] EWHC 3444 (QB); [2023] 1 All ER (Comm) 107.
The difficulty with the “conscious awareness” requirement is that, while it is clearly not present in the third example where the drill prevented the claimant from hearing the representation, it does not address why the first and second examples above constitute claims in deceit. The High Court accepted that in cases like the first example, the waiter was unlikely to consciously consider the defendant’s representation that he would pay for his meal. The Court sought to address this by holding that in such cases there was a “quasi-automatic understanding”, so there was deceit. However, it is difficult to define what circumstances would amount to a “quasi-automatic” understanding and what was merely an assumption by the claimant without conscious awareness of a representation.
The Privy Council in Credit Suisse Life (Bermuda) Ltd v Ivanishvili disagreed with this analysis of the position. It held that the waiter who serves a customer in a restaurant does not give any conscious consideration to whether a customer intends to pay for their meal, the waiter simply assumes this is the case based on established social norms and expectations. If a defendant takes advantage of that assumption, there is no reason why he should only be liable in the (unlikely) case where the waiter can say that he specifically considered whether the customer was going to pay, but not liable at all in a (far more realistic) case where the waiter understandably gave it no conscious thought. Similarly, in the second example above, the very nature of the deceit – covering up a defect – means that the claimant would not give the representation any conscious thought because the representation had been concealed.
The Privy Council therefore held that “under the law of England and Wales […] it is not a legal requirement of a claim for deceit that the claimant was aware of the representation or understood it to have been made” (para. 178). The requirement to prove reliance can be met by showing that the claimant “acted on an assumption where it can be shown that the assumption was one which the claimant would naturally be expected to make in response to the defendant’s words or actions” (para. 176).
Comment
Although the Privy Council’s judgment was heard on appeal from Bermuda, it was accepted by the parties that the law of deceit was the same as the law of England and Wales. The judgment is therefore highly persuasive and likely to be followed in future cases in this jurisdiction.
The judgment provides welcome clarity for claimants, which restores the test of inducement and reliance to one of factual causation. It is especially appropriate in a modern context where decisions are increasingly made by machines, online and by algorithms, all of which can be defrauded, but none of which have identifiable consciousness. It has important implications for future fraud and misrepresentation claims, as well as claims for misleading statement or dishonest omissions by the issuer of securities under s 90A of the Financial Services and Markets Act 2000.[5]
Footnotes
[1] Marme Inversiones 2007 SL v Natwest Markets plc [2019] EWHC 366 (Com); Loreley Financing (Jersey) No 30 Ltd v Credit Suisse Securities (Europe) Ltd [2023] EWHC 2759 and Leeds City Council v Barclays Bank plc [2021] EWHC 363 (Comm); [2021] QB 1027 (Comm), discussed below.
[2] See Director of Public Prosecution v Ray [1974] AC 370, discussed by the Privy Council at para 133-135.
[3] See Gordon v Selico Ltd (1986) 18 HLR 219, discussed by the Privy Council at para 131-132.
[4] This example was given in Leeds City Council v Barclays Bank plc [2021] EWHC 363 (Comm); [2021] QB 1027, and is discussed by the Privy Council at para 165.
[5] See Allianz v Barclays Plc [2024] EWHC 2710 (Ch), discussed in our perspectives article here and Persons Identified in Schedule 1 v Standard Chartered Plc [2025] EWHC 698 (Ch), discussed in our perspectives article here.