Making fraud pay

Facts

Mr Sear was negotiating with Kingfisher Builders for them to carry out works of extension and improvement to his home for more than £200,000.  He was not sure and so Kingfisher Builders took him to see a previous customer, Mrs Whale who showed him their workmanship and praised the company.  What he did not know was that she was a partner in the company and in a relationship with the proprietor.  This convinced Mr Sear to employ Kingfisher Builders.  Eventually the parties fell out and Kingfisher was ordered to repay a substantial amount.  It was insolvent.  Mr Sear sued Mrs Whale for fraudulent misrepresentation.

Held

Mrs Wale had made misrepresentations to Mr Sear which were fraudulent, and which had induced him to enter into a contract as a result of which he had suffered serious losses.  She was ordered to pay damages of £250,000.

Commentary

The Misrepresentation Act, 1967 gives various remedies for innocent, negligent, and fraudulent misrepresentation.  Many business people think that trading through a limited company gives protection against personal liability.  This case demonstrates that crime can be made to pay, to the victim.

For more information, help or advice please contact Rob Langley on 0191 211 7975 or email [email protected].