Can a deceit claimant succeed even if not consciously aware of the false representation? The Privy Council now says yes.
The issue
In Credit Suisse v Ivanishvili [2025] UKPC 53, an appeal from the Bermuda Court of Appeal, the Board had to decide whether awareness of a false representation is necessary in order to succeed in a deceit claim.
The question arose in the context of a major private banking fraud. The plaintiffs had purchased an investment product following a meeting with a relationship manager at Credit Suisse.
The Chief Justice of Bermuda held that, in recommending the product, the relationship manager had impliedly represented that the bank did not intend to manage the investment assets fraudulently. Those representations were false, known to be false, and induced entry into the policies.
However, the plaintiffs had not pleaded and proved that they had any conscious awareness or understanding of the representations made to them.
The Bermuda Court of Appeal held that this lack of awareness and understanding was fatal. It noted and followed a series of first instance cases in England and Wales to that effect. It rejected the contention that it was sufficient that the plaintiffs had acted on an (unconscious) assumption that the assets would not be managed fraudulently.
The issue for the Privy Council was therefore straightforward: is it a legal requirement of deceit that the plaintiff was aware of, and understood, the representation? The case proceeded on the basis that Bermudan law was the same as that in England and Wales.
The decision: no awareness requirement in law
The Board began from a simple principle: a person who causes another person to suffer loss by deceiving that other person is liable to compensate them for that loss.
Deceiving someone involves making a false representation of fact (or law), without belief in its truth, which is intended to be and is believed by the claimant.
On the key point in dispute, the Board held that conscious awareness of the representation is not required.
Why unconscious assumptions still count
The Board recognised that people routinely act on background assumptions generated by others’ statements or conduct without ever formulating those assumptions in their own minds.
It illustrated this with straightforward examples: a waiter assumes that a customer ordering a meal intends to pay for it, and a taxi driver assumes that a passenger asking to be taken somewhere is willing to pay the fare.
Deliberately exploiting such an unconscious assumption can still amount to deceit, even where the claimant acts without consciously considering the representation.
In doing so, the Board effectively distinguished between:
This is likely to be particularly important in cases alleging implied representations by conduct.
Why this matters in the share sale context
In my own principal field, share sale disputes, parties frequently allege fraudulent implied representations based on conduct.
For example, a buyer may complain of an implied representation arising from the seller:
In such situations, the buyer may well act on an unconscious assumption based on the seller’s conduct, rather than ever pausing to think, in terms, that the seller is representing that the projections have not been doctored or that the accounts are reliable.
It is clear from the Privy Council’s decision in Ivanishvili that such lack of conscious awareness will not prevent a claim in deceit from succeeding, as long as the claimant can prove the other elements, including reliance on the assumption arising from the conduct and causation.
The upshot is that a defendant can no longer defeat a deceit claim simply by saying that the claimant never consciously registered the representation.
