Mark William Taylor & Anor v Bank Of Scotland Plc
[2023] EWHC 3185 (Ch)
Vegesentials Limited & Anor v The Shanghai Commercial & Savings Bank Limited
5 January 2024
[2024] EWHC 7 (Ch)
High Court
A bank employee lied about investors having money to invest in a new product. The company lost money because of the lie. The court said the bank was responsible and the company should be compensated for their loss, taking into account the chance of finding other investors.
Key Facts
- •Vegesentials Limited and Fibre Water Limited (Claimants) sued Shanghai Commercial & Savings Bank Limited (Defendant) for fraudulent misrepresentations.
- •The misrepresentations were contained in a letter stating potential investors had £20 million to invest in FibreWater.
- •The investors, Sika Enterprise Co Ltd and HCI (ITSB) Group, had no such funds.
- •The bank's employee, Chi-Wen Chiang, made the fraudulent misrepresentations.
- •The claimants claimed that due to the misrepresentation they lost a potential investment from Alpha Imtiyaz.
- •The bank argued about applicable law, reliance, vicarious liability, causation and quantum.
Legal Principles
Applicable law in tort is determined by the Rome II Regulation.
Rome II Regulation, Article 4
Vicarious liability depends on actual or ostensible authority.
Armagas Ltd v Mundogas SA [1986] AC 717
In deceit, reliance doesn't require belief in the truth; inducement is sufficient.
Hayward v Zurich Insurance Co plc [2016] UKSC 48; Holyoake v Candy [2017] EWHC 3397 (Ch)
Causation in deceit considers whether the misrepresentation was a substantial factor in producing the loss, not just the 'but for' test.
Smith New Court Securities Ltd v Citibank NA [1997] AC 254; Allied Maples Ltd v Simmons & Simmons
In loss of chance claims, the claimant must show a real and substantial chance of the benefit being conferred, and the court assesses the chance when determining quantum.
Allied Maples Ltd v Simmons & Simmons
When precise quantification of loss is impossible, the court uses a broad approach.
One Step (Support) Ltd v Morris-Garner [2019] AC 649
Outcomes
English law applied.
The damage occurred in England and Wales, and the fraud wasn't manifestly more closely connected with Taiwan.
The bank was vicariously liable.
Chiang had ostensible authority due to his position and use of bank letterhead and stamp.
Claimants relied on the letter.
Although suspicious, the letter induced the claimants' actions, despite 'red flags'.
Causation established.
The letter was the substantial cause of the loss, despite the claimant's other decisions.
20% chance of Alpha Imtiyaz investment.
There was a real, but not certain, chance of investment based on accepted witness evidence.
Claim for damages succeeded.
The court assessed damages based on expert evidence, applying a 20% loss of chance.
Indemnity granted.
In principle, an indemnity was appropriate for a potential claim under the sponsorship agreement.
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