CL-2018-000297, CL-2018-000404, CL-2018-000590, - [2025] EWHC 2364 (Comm)

Was SKAT Misled?

As I noted in paragraph 105 above, SKAT alleged that it was induced to pay the 4,170 tax reclaims giving rise to these proceedings by misrepresentations made to it, in each instance, by the content of the documents it received, given that they were submitted so as to request from it, as the Danish national tax authority, a refund of Danish dividend tax. SKAT put the case on the basis that:

The law on what a claimant must show, concerning the effect upon it of a false statement, for a deceit claim to be capable of succeeding (subject to considering the defendant’s state of mind), is currently summarised in Clerk & Lindsell on Torts as follows (24^th Edition at 17-36 to 17-37, omitting immaterial footnotes):

“17-36 … a claimant … must show that he¹⁷⁶ acted (or in a suitable case refrained from acting) in reliance on the defendant’s misrepresentation. If he would have done the same thing even in the absence of it, he will fail. What is relevant here is what the claimant would have done had no representation at all been made. In particular, if the making of the representation in fact influenced the claimant, it is not open to the defendant to argue that the claimant might have acted in the same way had the representation been true.¹⁸¹ …

¹⁷⁶

Or a machine, such as a computer, under his control: see Renault UK Ltd v Fleetpro Technical Services [2007] EWHC 2541 (QB) … at [122] (defendants causing to be inserted into computer orders for cars with a fleet discount to which they knew they were not entitled).

¹⁸¹

See Downs v Chappell [1997] 1 W.L.R. 426 at 433; Bank of Tokyo-Mitsubishi UFJ Ltd v Baskan Gida Sanayi VE Pazarlama AS [2009] EWHC 1276 (Ch) … at [1005]; OMV Petrom SA v Glencore International AG [2016] EWCA Civ 778 … (Romanian state oil buyer deceived on an industrial scale with regard to what oil it was buying: nothing to the point, even if true, that it was so desperate for oil it would have bought in any case) (discussed in A. Summers, “Deceit, difference in value and date of assessment” (2017) 133 L.Q.R. 41). Note, however, that the point was left studiedly open by Males J in Leni Gas & Oil Investments Ltd v Malta Oil Pty Ltd [2014] EWHC 893 (Comm) at [20].

17-37 There is some issue whether a person can be said to have acted in reliance on an implicit misrepresentation about an issue that was never present to his mind at the time. In Leeds City Council v Barclays Bank Plc,¹⁸⁵ Cockerill J gave a negative answer to the question, thus discounting a plea by a local authority that it had entered into a swaps contract with a bank on the basis of an implied representation that the bank had not engaged in dishonest interest rate manipulation. At the time the prospect of such manipulation had not been in the authority’s contemplation at all; it therefore could not say that it had known about, let alone relied on, any representations about it. With respect, however, this must be open to some doubt. Such a holding seems inconsistent with the jurisprudence on half-truths and misrepresentation by deliberate concealment;¹⁸⁶ furthermore, there seems nothing incoherent in the idea of a party holding, and acting upon, an implicit if subconscious belief that there is nothing unusual or untoward about a given transaction.¹⁸⁷

¹⁸⁵

[2021] EWHC 363 (Comm); [2021] Q.B. 1027. See too Marme Inversiones 2007 SL v Natwest Markets Plc [2019] EWHC 366 (Comm) at [286], where Picken J had said, obiter, that a showing of reliance required proof that the representee had “given some contemporaneous conscious thought to the fact that some representations were being impliedly made”; Groen v Heath [2024] EWHC 1654 (Ch) at [37]. Note also ACL Netherlands BV v Hewlett-Packard The Hague BV [2022] EWHC 1178 (Ch) at [505]-[506] and Allianz Funds Multi-Strategy Trust v Barclays Plc [2024] EWHC 2710 (Ch) (cases under the Financial Services and Markets Act 2000, s.90A and Sch.10A Pt 2, respectively; same rule applied). On the other hand, for the rule in the Barclays case to apply the statement must be implied; an express statement that nothing is wrong, if brought to the attention of the representee or his agent, will potentially engage liability. See Patarkatsishvili v Woodward-Fisher [2025] EWHC 265 (Ch) at [86]-[103].

¹⁸⁶

See cases such as Schneider v Heath (1813) 3 Camp. 506 and Gordon v Selico Ltd (1986) 18 H.L.R. 219, where liability in deceit arose from acts intended precisely to hide the fact that any issue arose on which a representation could be made. This point was adverted to by Waksman J in the later Crossley v Volkswagen AG [2021] EWHC 3444 (QB) at [76] … .

¹⁸⁷

See Crossley … at [46]-[97]. There, in a claim arising out of the alleged concealment of untoward emission test results on cars, Waksman J declined despite the Leeds case to strike out a claim in deceit by purchasers claiming to have been duped; and this even though the purchasers presumably had never dreamt that anything might be wrong on the emissions front.”

Some care is needed to understand the reference in 17-036, at f.n.181, to a counterfactual of whether “the representation had been true”. That might be thought to posit a case where that which was represented had been true rather than false (as it must have been for there to be a question of liability for deceit). Reference to the authorities cited in f.n.181 makes clear, however, that the case posited is, rather, one in which the representee was told that which was in fact true, concerning the subject matter of the representation. For example, the statement of principle by Hobhouse LJ (as he was then) in Downs v Chappell [1997] 1 WLR 426 at 433D, which Clerk & Lindsell cite as the primary source for their proposition, is that the trial judge in that case “was wrong to ask how [the plaintiffs] would have acted if they had been told the truth” (my emphasis, i.e. not “… if that which they were told had been true”).

The currently fashionable controversy referred to by Clerk & Lindsell at 17-37 was the subject of argument in this case. SKAT contended that there was no general requirement of contemporaneous conscious awareness of the kind mentioned by Picken J in Marme Inversiones (see Clerk & Lindsell at f.n.185). There were submissions about that case, about Leeds City Council (Cockerill J) and Crossley (Waksman J), and about more recent cases, especially Loreley Financing (Jersey) No 30 Ltd v Credit Suisse Securities (Europe) Ltd [2023] EWHC 2759 (Comm) (Cockerill J, adhering obiter to the view she expressed in Leeds notwithstanding Crossley) and Farol Holdings Ltd v Clydesdale Bank Ltd [2024] EWHC 593 (Ch) (Zacaroli J, as he was then, also obiter on this point).

In the last of those, Zacaroli J noted at [221] that the issue with which the earlier judgments had been grappling is that “sometimes the court has found that a misrepresentation was relied on, apparently without a finding that the representee gave conscious or active thought to the representation (see for example the cases … summarised at §380 of Loreley). An extreme example (discussed from §105 of Leeds) is the representation by a diner at a restaurant, made by the conduct of ordering a meal, that they have an intention to pay for it (see DPP v Ray [1974] AC 370 …). It is highly unlikely that the waiter who took the order gave any thought to whether such an implied representation was being made.”

Zacaroli J doubted “the utility (as did Cockerill J) of breaking down this causation question into distinct elements and seeking to find a single universally applicable test for those elements. It is essential to keep in mind that in every case it is necessary to show, as a matter of fact, that the claimant’s decision to take the action (or refrain from taking action) which caused it loss must have been caused by the representation made by the defendant. The evidence required to satisfy the requirement will differ greatly depending on where on the spectrum the case lies (from “it goes without saying”, at one end, to a complex representation said to be implied from conduct and statements, at the other)” (ibid at [223]).

It is not necessary in this case to resolve this contemporaneous consciousness controversy (which may be more apparent than real anyway). There is a danger, I think, that the recent judgments considering it veer towards over-complication. I see force in the observation quoted immediately above (although I would say “was caused” rather than “must have been caused”), and in the fact that Zacaroli J set the controversy in the causation context of “[the] identification of the appropriate counterfactual if the statement had not been made”, a question of fact (ibid, at [218]) that falls to be considered because “[the] relevant question … is whether the claimant would have [acted as it did] if the representation had not been made …” (ibid, at [217], which I have generalised from “entered into the contract”, per Zacaroli J, which was the action alleged to have been induced in Farol Holdings).

The intent to pay that in DPP v Ray the House of Lords judged to be represented implicitly, if diners order a meal at a restaurant without confessing that they do not intend to pay, realistically can only not be conveyed (assessing the matter objectively) if the confession is made. To ask whether the apparent intent to pay influenced the waiter in putting the order through to the kitchen, for the purpose of a misrepresentation claim, is therefore, ultimately, to ask what would have happened if when ordering the meal the diners had said the like of, “oh, by the way, we don’t intend to pay”. Echoing the Editors of Clerk & Lindsell, supra, there would be nothing incoherent about concluding that there was reliance by the waiter on the representation regarded by the court as implicit if the answer was that the waiter would have refused to serve the table and asked the party to leave, or would have served the table further only if reassured that they were joking about not intending to pay, or would have called the restaurant manager over to deal with the situation. If the evidence revealed instead a disloyal waiter who loathed the restaurant and would have served the table anyway, taking pleasure in the prospect of the restaurant losing out, then other causes of action might exist, but a claim requiring proof that the impliedly represented intent to pay caused loss should fail.