Module 9 - Intentional Infliction of Economic Loss Flashcards
Derry v Peek (1889)
If fraud can be proven an action lay in deceit
Action in deceit
- Misrepresentation of fact
- Knowledge of the fact (scienter)
- Representer intends reliance
- Actual reliance; and
- Damage
Felton v Johnson (2000)
Facts:
Df wanted to sell franchises in NZ - gave prospective purchasers promotional material
Material indicated product use by many companies (which was true).
Material however failed to indicate that the use by other companies was trial only. No actual contracts. Trials weren’t going well either
Issue:
Does silence amount to a “representation” for the purposes of deceit
Held:
In this case silence did amount to a representation - should have disclosed the rest of the information to five the full picture
Principle:
Silence can amount to a representation
Magill v Magill (2006)
Issue:
Whether the tort of deceit was available in domestic relations (particular consideration towards dispute between spouses with respects to paternity).
Held:
In the circumstances, the former wife was not liable in deceit
Reason:
Tort of deceit is not appropriate in marital relations
Unsuitable environment in which to construct legal rights and obligations
Derry v Peek (1889)
Facts:
Prospectus issued by tram company
Stated trams would use steam power but needed consent (which was not given)
Directors belief that company would receive consent was not reasonable
Issue:
Directs believed in the truth of the statements but their belief was not reasonable; therefore
Did it amount to deceit
Held:
Fraud is proved when it is shown that a false representation has been made:
knowingly
without belief in its truth; or
recklessly, careless whether it is true or false
Must always be an honest belief in its truth
Peek v Gurney (1873)
Facts:
Directors inserted a number of statements about the company into a prospectus
Statements were false
Prospectus had been prepared for the people specifically invited to acquire shares
Plaintiff bought shares in the company after relying on the statements in the prospectus
Issue:
Could the person who bought the shares sue for deceit
He had relied on statement but had the directors intended the statements to be relied on by people purchasing the shares
Held:
The prospectus was not raised for other investors, not the plaintiff
Principle:
Defendant only liable for representations made to persons whom it is intended should act upon them
Commercial Banking Co v RH Brown & Co (1972)
Facts:
Wool seller was about to deliver a large quantity of wool to a purchaser - concerns as to financial position
Seller asked their bank to make an enquiry to the buyers bank
Buyers bank offered false reassurance as they had no honest belief
Statements were made to NSW with a disclaimer - only for banks use
Issue:
Given the disclaimer, could the buyers representative be said to have made the statements intending that a potential customer of their client would rely on them
Held:
Buyers bank knew the reason for the enquiry
Appellant bank therefore could be said to have made statement intending that buyer would rely on it
Principle:
Not necessary that representations be made directly to a person - sufficient if intended the representation would be passed to a person (either an identifiable person OR someone within an identifiable class).
Gould v Vaggelas (1985)
Facts
Wanted to buy a resort on one of the Whitsunday Islands
Mr Vaggelas was representing the sellers
Vaggelas made a number of representations about the profitability
Goulds went ahead with the purchase, however resort was not as profitable
Bank called in mortgages, and they lost a lot of money
Issue
On appeal, Vaggelas lawyers argued that the judge was wrong as the Goulds did not rely on the representation made by Vaggelas
Also argued that Goulds had suspicion that figures were incorrect, and had voiced these concerns to their accountant
Decision
The Goulds had suffered detriment in reliance on Vaggelas representations
“The plaintiffs have the onus of proving that the representations they complain of were material, and that they were induced to act upon them”
Court to presume that statement of fact used to induce person to buy is a material factor, even if not the determinate factor
Suspicion of fraud and actual knowledge of fraud are two different things
Principle:
Representation need not be the sole inducement but it must be a contributing factor
Krakowski v Eurolynx Properties (1995)
Facts: Plaintiffs purchased commercial strata title from df for investment purposes. Df failed to disclose it had concluded collateral agreements that were not annexed to the sale contract.
Issue: Reduced the overall rental return of the property by $300,000
Held: High Court held that silence about the existence of the collateral agreement amounted to a misrepresentation of fact.
Angus v Clifford
Mere carelessness is not sufficient to satisfy the element of scienter
Middleton v Aon Risk Services Australia [2008]
“Negligence, even gross negligence, is not fraud” - McLure J
Wood v Balfour (2011)
Facts: Appellans bought the respondents house. Extensive termite damage was discovered. Appellants alleged that the respondents had concealed the terming damage.
Issue: Had to prove the respondents knew of the damage, conscious of it at the time, chose not to disclose it.
Held: Court not satisfied that this was proved
Langridge v Levy
The motive of the representer is irrelevant
Representation must be made with the intention that the pf should act upon it, the statement need not be made directly to the plaintiff
Representer need not have intended a specific individual to rely upon the representation Provided that the pf is one of the class which the representer intended should rely upon it
Davies v London & Provincial Marine Insurance Co (1878)
If a statement is true when made, but later found to be false, the part is required to communicate the fact to the representee
CBS v Brown (1972)
Disclaimer cannot protect against fraud. A representer who fraudulently gives information with the intention that it be relied on by another, could not avoid liability by claiming that the info is for the use of the recipient only.
