On 24 November 2025, a key judgment given by the Board of the Privy Council (the Board) overturned long-held case law.
The Board hears final appeals from some member states of the British Commonwealth. Its judges are Justices of the UK Supreme Court, so its rulings are considered to be very strong indications of how it would rule on equivalent matters in cases being brought under English law.
The case law rule for deceit claims before the Board was that victims of misrepresentation were required to be aware of the misrepresentation in order to succeed in their claims. But in this decision the Board ruled that it is not a legal requirement in a deceit claim that the claimant must be aware of the representation on which the claim is based.
The facts
The case, Credit Suisse Life (Bermuda) Ltd v Bidzina Ivanishvili [2025] UKPC 53, concerned a wealth adviser at Credit Suisse, Mr Lescaudron, who had been committing fraud. He had misappropriated funds, transferred assets to unrelated client accounts, and paid himself secret commissions. He was convicted and imprisoned for these fraud crimes.
The Claimant was Mr Ivanishvili who is the former prime minister of Georgia. He transferred US $750 million to Credit Suisse for life insurance premiums, with the sums to be invested as directed by the life insurance policyholders decided. The policyholders were two companies connected to Mr Ivanishvili. The funds generated by the investments were to be held by Credit Suisse on trust for the policyholders.
In fact, Credit Suisse Life (CS Life) allowed Mr Lescaudron to misappropriate the funds. The Claimant then brought a case alleging breach of contract, breach of fiduciary duty, and fraudulent misrepresentation against CS Life.
How did the case progress through the courts?
The first Bermudian court found that the fraudulent misrepresentations had induced the Claimant to purchase the life insurance policies. It awarded him damages to place him in the financial position he would have been in, if the assets had been professionally managed and not fraudulently mismanaged.
The Bermudian Court of Appeal reversed this decision. It followed English law, which requires that a claimant must have a conscious awareness or understanding of the representations made, and on which he relied to enter into the transaction. The Claimant had not had the conscious awareness or understanding of the misrepresentations in this case.
The Claimant appealed the case to the Board. For the final appeal the parties accepted that there had been an implied representation by CS Life that funds would not be managed fraudulently. CS Life had not declared that the funds would not be managed fraudulently, but the parties agreed that this had been an unwritten contractual obligation of CS Life.
In its submissions to the Board, CS Life also accepted that:
- This implied representation was in fact fraudulent because of the illegal manner in which Mr Lescaudron had been managing the underlying portfolio, and that
- This implied representation of proper management had persuaded the Claimant to purchase the life policies.
What did the Privy Council decide?
The Board of the Privy Council said that the representations were simple but fundamental. It was natural for the Claimant to assume that CS Life was not acting fraudulently. The Board explained:
“Mr Ivanishvili would certainly have assumed that the relevant portfolio had not been and was not in the future to be fraudulently managed; but that is not to say that he applied his mind to whether CS Life was making any representation to him.”
Before this case, when bringing a claim for deceit, a claimant needed to show that they were aware of the representation or that they understood that it had been made. There is now no such awareness requirement. A claimant must still show that they relied on the misrepresentation, but they do not need to have consciously considered it before entering into the contract.
To demonstrate the necessary element of reliance in these implied misrepresentation claims, the claimant must demonstrate that:
- The implied representation caused the claimant to hold a false belief; and
- The claimant acted on that false belief and suffered loss as a result
The Board stated that,
“It is an everyday feature of human experience that people form and act on beliefs without any conscious awareness or thought. If someone takes advantage of such unconscious mental processes to deceive another person and cause her to act to her detriment, there is no reason why a claim for damages should not lie. The mischief is no less than in a case involving conscious awareness.”
The Privy Council also rejected an argument that in the case of an unclear representation, a claimant would need to prove that they understood the representation the way intended by the defendant.
How 3CS can help
Our expert dispute resolution solicitors provide strategic and effective assistance in resolving misrepresentation claims. For assistance, please get in touch with your usual 3CS contact.
