High Court Holds Bank Vicariously Liable for Fraudulent Misrepresentation: Key Issues Explored & Damages Awarded

Citation: [2024] EWHC 7 (Ch)
Judgment on


The case of Vegesentials Limited & Anor v The Shanghai Commercial & Savings Bank Limited ([2024] EWHC 7 (Ch)) involves intricate legal issues surrounding fraudulent misrepresentation, vicarious liability, reliance, causation, and the quantification of loss in a commercial context. The High Court of Justice meticulously dissected the evidence presented, applying established legal principles to determine the liability of the defendant bank and corresponding damages owed to the claimants.

Key Facts

The claimants sought damages for fraudulent misrepresentations made by Mr. Chi-Wen Chiang, a former corporate banking relationship manager of the defendant bank, regarding free funds of potential investors to support a new product, FibreWater. Despite subsequent admission of the fraudulent nature of the representations, the bank contested on grounds involving applicable law, the claimant’s reliance on the misrepresentation, vicarious liability, causation, and the quantum of loss.

The court examined the background and development of FibreWater, the claimant’s business model, market research, and the fundraising campaign efforts, which culminated in the questionable involvement of Sika/Henrikson as proposed investors via Mr. King and ensuing events which ultimately led to the claimant’s business collapse.

Applicable Law

The court applied the Rome II Regulation, particularly Article 4, to resolve conflicts of law and determined English and Welsh law as the applicable law. This conclusion was grounded on the place of damage occurrence criterion and rejected the notion that the tort was manifestly more connected with Taiwan.

Vicarious Liability

Under principles established in Armagas Ltd v Mundogas SA, the consideration was whether the bank’s employee acted with actual or ostensible authority. Despite internal procedures suggesting otherwise, the court found that the bank appeared to provide Mr. Chiang with sufficient authority to email the Letter, thus rendering the bank vicariously liable.

Reliance and Causation

In applying the rationale from Hayward v Zurich Insurance Co plc and Holyoake v Candy, the court found that the claimant was indeed induced by the Letter, based on the actions it undertook thereafter, including entering agreements premised on the expectation of incoming funds. The court approached causation pragmatically, assessing whether there was a sufficient causal connection, and established that the Letter was the substantial cause of the loss.

Loss of a Chance

Following Allied Maples Group Ltd v Simmons & Simmons, the claimant had to demonstrate a lost opportunity caused by the bank’s misrepresentations. The court concluded that there was a 20% real (as opposed to speculative) chance of securing investment from Alpha Imtiyaz had the fraudulent Letter not been received.


To quantify damages, the court engaged with complex financial analysis, relying on expert testimony and applying concepts of discount cash flow and risk adjustment. Disputed assumptions underlying the claims were carefully scrutinized, leading to a judgment that damages would be substantially less than the claimant’s calculations but indeed more than zero.


The High Court held the defendant bank vicariously liable for its employee’s fraudulent misrepresentation. The claimant was found to have placed genuine reliance on the misrepresentation, which was deemed a substantial factor in their financial loss. The claimant thus was entitled to damages based on the loss of a 20% chance of securing the investment from Alpha Imtiyaz, with further financial specifics to be fine-tuned between the parties’ experts.

Additionally, the court upheld the provision of an indemnity relative to a potential future claim under the sponsorship agreement with Sir Andy Murray, on principle.


The ruling underscores the court’s role in scrutinizing the facts and expert opinions to render a judicious and fair outcome in complex commercial disputes. The principles applied indicate the court’s commitment to establish liability where deceptive corporate practices lead to substantial financial loss. This meticulous judgment reinforces precedents in deceptive misrepresentation and provides a detailed roadmap for calculating damages, illustrating how courts tackle cases where quantification of loss is particularly challenging.