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The Privy Council has handed down an important judgment in Credit Suisse Life (Bermuda) Ltd v Ivanishvili (Credit Suisse Life), resolving a long-standing and much-debated question in the law of deceit: whether a claimant must have had contemporaneous conscious awareness of a representation in order to establish reliance for the purposes of deceit. According to the Privy Council, the answer is no.
A copy of the Privy Council’s judgment is available here.
The emergence of the “conscious awareness” debate
The elements of deceit are well-established: a false representation; knowledge or recklessness as to its falsity; intention to induce; reliance; and loss. The recent debate has centred on the reliance element. In particular, must a claimant demonstrate that the representation was actively present in their mind when they acted?
The suggestion that “conscious awareness” is a potential element of deceit
Several modern authorities in financial services and investment contexts have appeared to endorse the existence of a requirement for conscious awareness:
- Leeds City Council & Ors v Barclays Bank Plc & Anor [2021] EWHC 363 (Comm) (Leeds City Council) concerned certain implied representations relating to the setting of LIBOR rates. The Court emphasised that the claimants needed to be aware of the relevant representations at the time of contracting.
- Along similar lines, in Loreley Financing (Jersey) No 30 Ltd v Credit Suisse Securities (Europe) Ltd & Ors [2023] EWHC 2759 (Comm) (Loreley), the Court held that a representation must be “actively present” in the claimant’s mind in order for reliance to be established.
The difficulties this created for claimants
A strict awareness requirement creates significant evidential challenges. Representations relied on in deceit claims may be implied, or operate through assumptions about the counterparty’s conduct, assumptions which may never be consciously present in the claimant’s mind. Moreover, a claimant’s conduct and decision-making may have been influenced by wider environmental or market factors which were affected by the representation, and not directly by the representation itself. A claimant may struggle to show that an implied representation, an unspoken representation as to conduct, or a representation based on or influencing certain assumptions or characteristics about the environment or market in which the claimant operated, was consciously present in the claimant’s mind, even if it materially influenced their decision-making.
The broader view
At the same time, other cases have taken a broader view. In various business, consumer, and mass-claim contexts away from financial services or investment products – including a claim relating to the Spice Girls’ participation in a marketing photoshoot (Spice Girls Ltd v Aprilia World Service BV [2002] EWCA Civ 15) – the Courts have accepted that representations can operate through the informational environment surrounding the parties or common assumptions underlying a transaction, without a distinct moment of conscious recognition on the part of the claimant.
The Privy Council’s approach
The rejection of a requirement for “conscious awareness”
In Credit Suisse Life, the Board of the Privy Council rejected the idea that conscious awareness and understanding of the representation is a freestanding requirement of the tort of deceit. The Board said it had “no hesitation” in adopting this approach.
The Board confirmed that reliance remains a question of causation: the claimant must show that the false representation operated on their mind and contributed to their decision, but need not show a discrete moment of conscious awareness of it. The judgment notes that a representation may influence a claimant’s decision-making without being consciously recognised by the claimant:
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.
An example of this is where a claimant acts on an unconscious assumption – such as a trust in their counterparty’s integrity – which the defendant knowingly exploits.
The “mistake” in Leeds City Council and Loreley
The Board considered that the “mistake” made in the Leeds City Council and Loreley line of authorities was to “treat what in practice needs to be shown to establish deceit in particular factual circumstances as if it were a necessary element of the cause of action“.
Instead, these cases illustrate that conscious awareness of the representation may be relevant evidence in some factual settings, particularly where the representee is sophisticated and the representation is implied. It is not, however, an absolute requirement for establishing a claim in deceit, and reliance may be established in the right circumstances where the claimant had no conscious awareness of the representation.
Implications for investment and securities litigation
For claimants, Credit Suisse Life highlights the importance of showing how the representation influenced the decision architecture – in the form of documents, processes, or assumptions – without needing to prove an explicit moment of conscious engagement with the representation on the part of any individual.
For defendants, challenges to reliance should focus on whether the representation had any real influence on the decision, rather than on gaps in witness recollection about the claimant’s state of mind and seeking to determine the precise content of the information the claimant was aware of at the time of contracting.
The decision will have particular significance in securities and structured finance disputes involving, for example, institutional or collective decision-making, where no single individual could be said to have made the relevant investment decision, complex products where a representation as to the specific nature of the product may not be immediately apparent, or where there may be reliance on the behaviour of the market or standard market practices.
In collective investor actions, the decision alleviates a potential barrier because requiring a large number of individual investors participating in a collective action to prove – on an individual basis – conscious awareness of specific representations contained in prospectuses, other offering documents, or information published on the market more generally risks being unworkable. Prior to Credit Suisse Life, it also potentially meant that passive, tracker, or index funds could not bring claims in deceit in relation to representations made by an issuer of securities because the fund was structured to respond to the market as a whole rather than specific representations – it never consciously considered any representations. It looks as though the Privy Council’s decision has potentially opened the door for such funds to bring claims in deceit in connection with losses on investments.
Jennifer Morrissey is Head of Securities and Investment Disputes in the Commercial & Regulatory Dispute team, and Edward Argles is a Senior Associate in the team. They regularly act for investors in deceit claims. This has included claims relating to the acquisition of securities issues by a hydrogen fuel cell company listed on AIM, and the mismanagement of a real estate investment trust whose shares were listed on the Main Market of the London Stock Exchange.
Case citation: Credit Suisse Life (Bermuda) Ltd v Ivanishvili [2025] UKPC 53