In Ludsin Overseas Ltd v Eco3 Capital Ltd [2013] EWCA Civ 413, on appeal in the Court of Appeal, Jackson LJ (with whom Arden LJ and MacFarlane LJ agreed), considered the ingredients to the tort of deceit. Under the heading 'Did the judge correctly identify the ingredients of the tort of deceit?' and after considering the cases of: (a) Derry v Peek (1889) 14 App Cas 337; (b) Nocton v Lord Ashburton [1914] AC 932; and (c) Armstrong v Strain [1952] 1 KB 232, Jackson LJ said, at paragraph 77:
'What the cases show is that the tort of deceit contains four ingredients, namely:
i) The defendant makes a false representation to the claimant.
ii) The defendant knows that the representation is false, alternatively he is reckless as to whether it is true or false.
iii) The defendant intends that the claimant should act in reliance on it.
iv) The claimant does act in reliance on the representation and in consequence suffers loss.
Ingredient (i) describes what the defendant does. Ingredients (ii) and (iii) describe the defendant's state of mind. Ingredient (iv) describes what the claimant does.'
No 'intention to deceive' ingredient to tort of deceit
It had been contended that 'intention to deceive' was 'an element of the tort of deceit.' (paragraph 75)
Jackson LJ rejected this contention, stating:
(a) at paragraph 78:
'I do not accept that “intention to deceive” is a separate or free standing element of the tort of deceit. The phrase “intention to deceive” is merely another way of describing the mental element of the tort. It is a compendious description of ingredients (ii) and (iii) as set out in the preceding paragraph.'
and,
(b) at paragraph 80, as to 'intention to deceive':
'This is not a mantra which the judge must recite before holding a defendant liable for the tort of deceit....the defendant will be liable if the four ingredients set out above are established.'
Label
The tort of deceit can also be called 'fraudulent misrepresentation'. Jackson LJ said, at paragraph 80:
'That tort can equally well be described as fraudulent misrepresentation. Regardless of what label is applied, the defendant will be liable if the four ingredients set out above are established.'
[It is noted here there there does not appear to be universal acceptance that all fraudulent misrepresentations are torts of deceit]
3 Authorities
In getting to this distillation of the ingredients to the tort of deceit, Jackson LJ (as stated) considered the cases of: (a) Derry v Peek (1889) 14 App Cas 337; (b) Nocton v Lord Ashburton [1914] AC 932; and (c) Armstrong v Strain [1952] 1 KB 232. As to:
(a) Derry v Peek (1889) 14 App Cas 337, Jackson LJ said, at paragraph 72:
'In Derry v Peek the directors of a company issued a prospectus describing tramways which they proposed to construct. The prospectus stated that a “great feature of the undertaking” was that the company would be able to use steam or mechanical motive power, instead of horses. In the event the Board of Trade refused consent for the use of steam or mechanical power, except on certain parts of the tramways. In those circumstances the venture failed and the company was wound up. Sir Henry Peek, a baronet who had invested substantial sums in reliance on the prospectus, sued the directors for fraudulent misrepresentation. The plaintiff failed at trial, but succeeded in the Court of Appeal. The House of Lords reversed the Court of Appeal's decision and restored the decision of the trial judge, essentially because the mental element of the tort had not been established. Some of the law lords speak of the directors having held an honest but mistaken opinion (e.g. Lord Bramwell at page 149). Others speak of the directors having no intention to deceive (e.g. Lord Halsbury L.C. at page 344). In the course of his speech Lord Herschell reviewed the authorities at some length and then summarised the principles as follows at page 374:
“Having now drawn attention, I believe, to all the cases having a material bearing upon the question under consideration, I proceed to state briefly the conclusions to which I have been led. I think the authorities establish the following propositions: First, in order to sustain an action of deceit, there must be proof of fraud, and nothing short of that will suffice. Secondly, fraud is proved when it is shown that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false. Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states. To prevent a false statement being fraudulent, there must, I think, always be an honest belief in its truth. And this probably covers the whole ground, for one who knowingly alleges that which is false, has obviously no such honest belief. Thirdly, if fraud be proved, the motive of the person guilty of it is immaterial. It matters not that there was no intention to cheat or injure the person to whom the statement was made.”'
(b) Nocton v Lord Ashburton [1914] AC 932, Jackson LJ said, at paragraphs 73 - 74:
'In Nocton v Lord Ashburton the plaintiff, a mortgagee, claimed that he had released part of the security which he held on the basis of his solicitor's advice; the solicitor had given the advice in bad faith, because he knew that the security would be insufficient; the plaintiff suffered loss in consequence. The plaintiff failed at trial, because fraud had not been proved. The Court of Appeal reversed that decision, but the House of Lords restored the decision of the trial judge. In a famous passage at page 963, Lord Dunedin said this:
“Now, as I understand the matter, if the action had been brought at law, under the old system it could have been based either (1) on fraud, or (2) on negligence, and the relief in either case would have been damages. But if based on fraud, then, in accordance with the decision in Derry v Peek, the fraud proved must be actual fraud, a mens rea, an intention to deceive. It is an action of deceit.”
Lord Parmoor at page 978 referred to Derry v Peek and then said:
“That case decides that in an action founded on deceit, and in which deceit is a necessary factor, actual dishonesty, involving mens rea, must be proved.”'
(c) Armstrong v Strain [1952] 1 KB 232, Jackson LJ said, at paragraphs 75 - 76:
'In Armstrong v Strain the purchasers of a bungalow relied upon an estate agent's representation. The estate agent, Mr Skinner, did not know that the representation was untrue. The vendor, Mr Strain, did not authorise Skinner to make the representation or know that Skinner was making it, but he did know of facts which rendered it untrue. Devlin J dismissed the purchasers' claim for fraudulent misrepresentation. The Court of Appeal upheld that decision, essentially on the basis that the court cannot combine the knowledge of an innocent principal and agent, so as to produce dishonesty. Romer LJ said at page 247:
“I can see no sufficient ground for disturbing any of the judge's findings of fact. Of these findings the most important, for present purposes, were that neither Strain, nor either of his agents, Uren and Skinner, was fraudulent. Inasmuch as there are no intermediate stages recognized by the law between fraud on the one hand and innocence on the other, the case has accordingly, on these findings, to be approached on the footing that each of these men was entirely guiltless in relation to the sale transaction in general and, in particular, to the representations on which the plaintiffs bought the bungalow. Strain, Uren and Skinner are, however, being sued for deceit, and the essentials of such an action have been prescribed by the highest authority.”
In support of these conclusions Romer LJ cited the passages in Derry v Peek and Nocton v Lord Ashburton which I have set out above.
Jackson LJ's 4 ingredient analysis was applied in: (a) Pentagon Food Group Ltd v B Cadman Ltd [2024] EWHC 2513 (Comm), HHJ Tindal Sitting as a Judge of the High Court, paragraph 101; (b) McDonald's Restaurants Ltd v Shirayama Shokusan Co Ltd [2024] EWHC 1133 (Ch), Edwin Johnson J, at paragraph 117.
Further Authority
In Shaw v Coleman Capital LLP [2026] EWHC 2546 (BP), HHJ Matthews (sitting as a Judge of the High Court) said, under the heading 'Deceit/fraudulent misrepresentation', at paragraphs 80 to 83:
'The elements of the tort of deceit are (1) a representation which is (2) false, (3) dishonestly made, (4) intended to be relied on, and (5) in fact relied on: see AIC Ltd v ITS Testing Services [2006] EWCA Civ 1601, [251]. In relation to the concept of a representation, the court has to consider what a reasonable person would have understood the words to mean used in the context in which they were used: IFE Fund SA v Goldman Sachs International [2006] 2 CLC 1043, [50]. A representation as to future conduct may well amount to a promise, but it is still a representation of fact as to the state of mind of the representor, and in particular whether the representor has the genuine intention of fulfilling the promise. As Bowen LJ said in Edgington v Fitzmaurice (1885) 29 Ch D 459, 483, “the state of a man’s mind is as much a fact as the state of his digestion”. For the purposes of the tort of deceit, a representation is made dishonestly if it is made either (i) knowing that it is untrue, or (ii) without any belief in its truth, or (iii) recklessly (that is, not caring whether it is true or not): see Derry v Peek (1889) 14 App Cas 337, 374.
A person who assists another to commit a tort such as deceit is jointly liable for it, if the assistance is more than trivial and is made pursuant to a common design. This will cover, for example, the director of a company where the director causes the company to make a misrepresentation. Thus, in Lifestyle Equities CV v Ahmed [2025] AC 1, Lord Leggatt (with whom all the other justices agreed) said:
“35. These rules of attribution [of acts of officers and agents to a company] do not, however, operate in reverse to cause acts attributed to the company to be treated as if they were not acts of the individual who actually did those acts. It does not follow that, because an act done by a director or other individual is treated as the company's act for which the company can be held liable, the director is immunised from liability…”
In this connection, Lord Leggatt referred to the decision of the House of Lords in Standard Chartered Bank v Pakistan National Shipping Corporation (Nos 2 and 4) [2003] 1 AC 959, where the House of Lords had held that
“The fact that the director's representation and knowledge would also be attributed to the company ‘cannot detract from the fact that they were his representation and his knowledge’ and made him liable for deceit (para 20).”
There is one other point that needs to be made in this context. In civil cases, the standard of proof to be achieved is the balance of probabilities. This is in contradistinction to the position in criminal cases, where the standard is beyond a reasonable doubt. For this purpose, it makes no difference that the civil case concerned involves an allegation of facts which would otherwise amount to a criminal offence: see eg Hornal v Neuberger Products Ltd [1957] 1 QB 247, 256, 261, 265. The standard is still the civil standard, because the consequence of proof is not a criminal conviction, leading to punishment by the state for the harm done to society. Instead, it is civil liability to the claimant, resulting in compensation or other civil remedy to the claimant alone for the wrong done to him or her.' [words underlined as in italics in original]
Collatory Case Series
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