Einde inhoudsopgave
Cross-border Enforcement of Listed Companies' Duties to Inform (IVOR nr. 87) 2012/6.4.3.1
6.4.3.1 Common law action for deceit
mr.drs. T.M.C. Arons, datum 07-05-2012
- Datum
07-05-2012
- Auteur
mr.drs. T.M.C. Arons
- JCDI
JCDI:ADS372056:1
- Vakgebied(en)
Ondernemingsrecht (V)
Voetnoten
Voetnoten
Derry v Gurney (1873) L.R. 6 HL 377; Hudson, para. 24-22.
Derry v Peek (1889) 14 App. Cas. 337, Lord Herschelf, p. 376.
Hudson (2008), para. 24-28.
It is important to note that an action on tort cannot be brought after the expiration of six years from the date on which the cause of action accrued, i.e. all the elements necessary to establish liability have been fulfilled (s. 2 Limitation Act 1980).
(1880) 5 App. Cas. 317.
The same provision was inserted in s. 111A Companies Act 1985 by s. 131(1) Companies Act 1989. A person is no longer be debarred from obtaining damages or other compensation from a company by reason of holding shares in the company.
In order to make a claim for fraudulent misrepresentation or deceit, the claimant has to prove the following elements:
The defendant made a statement of present fact or law. There is no liability for non-disclosure. However, there is liability if a partial statement is made while at the same time a key piece of information was withheld which, if revealed, would show that what was stated was in all circumstances untrue, was withheld.;1
The defendant made the statement knowing it not to be Crue, not honestly believing it to be Crue or reckless as to whether it was Crue or false.;2
The defendant intended the claimant, or at least a class of persons of whom the claimant is a member, to rely on the untrue statement;
The claimant must in fact have relied on the statement.3 If the initial untrue statement was later corrected, the claimant cannot claim for deceit in case he had been made aware of the correction and therefore had no right to rely on the original untrue statement.; and
The claimant must suffer a loss as a result of relying on the statement.
If these elements are proven by the claimant, common law regards the defendant as having acted fraudulently and subsequently liable for the losses occurred. Dishonesty on the part of the defendant is not required.
In case of a claim for damages in tort for deceit, every person who knew that the statements in the prospectus were untrue can be held liable for the prospectus.4 As a consequence, the directors of the issuing company who had knowledge of the untrue statements in the prospectus can be held liable. The question arises whether the issuing company itself is also liable for deceit? In Houldsworth v City of Glasgow Bank,5the House of Lords ruled that shareholders cannot sue their own company. In section 655 Companies Act 20066 this court decision is reversed: a person is not debarred from obtaining damages or other compensation from a company by reason only of his holding or having held shares in that company. The lead manager and/or the other syndicate banks are only liable with respect to their own statements on the truthfulness of the information contained in the prospectus.