0n 24/11/2025 the Judicial Committee of the Privy Council delivered an important judgment reaffirming the scope of liability for fraudulent misrepresentation. In Credit Suisse Life (Bermuda) Ltd v Ivanishvili & Others [2025] UKPC 53, the Privy Council held that a claimant alleging deceit does not need to show contemporaneous awareness or understanding of the fraudulent representation at the moment it was made. What matters is that the deceit induced the claimant to act and caused loss.

1. Background

The dispute arose after assets worth over US $750 million were transferred into investment-linked life policies issued by Credit Suisse Life (Bermuda) (“CS Life”). These assets were ultimately controlled by the claimants’ relationship manager at Credit Suisse, who later pleaded guilty in Switzerland to multiple offences.

The Privy Council described his conduct as including:

“misappropriating assets, transferring assets from the policy accounts to those of unrelated clients … and enriching himself by making investments … on which he received secret commissions.”

Proceedings were commenced in Bermuda for breach of contract, breach of fiduciary duty, and fraudulent misrepresentation.

The trial judge upheld all claims.

The Bermuda Court of Appeal concluded that the absence of contemporaneous awareness or understanding of the alleged misrepresentations defeated the deceit claim. In reaching that view, it relied on several first-instance authorities from England and Wales which appeared to impose such a requirement. The Court of Appeal further rejected the argument that it was enough for the plaintiffs to have acted under an implicit assumption that their assets would be managed honestly and not subjected to fraud.

This left one clear question for the Privy Council: does the tort of deceit require proof that the claimant actually recognized and comprehended the representation at the time it operated? The appeal proceeded on the shared premise that Bermudian law mirrors the position in England and Wales.

2. The central issue: Is contemporaneous awareness required?

The Court of Appeal’s approach introduced an additional requirement into the tort of deceit.

The Privy Council rejected this, confirming that the classic elements of a cause of action in deceit remain unchanged.

In its analysis, the Privy Council reaffirmed the established elements of the tort of deceit. To succeed, a claimant must prove the following:

1. A representation was made by or on behalf of the defendant;
2. The representation was false;
3. It wasmade fraudulently, meaning the maker did not believe it to be true;
4. It was intended that the claimant rely on the representation; and
5. The claimant did rely on it, and suffered loss as a result.

The Privy Council emphasized that inducement does not require instantaneous or detailed comprehension. This is particularly relevant where victims place trust in financial professionals or where fraud is concealed behind complex structures.

In reaffirming this principle, the Privy Council emphasized that the law does not impose an artificial requirement of moment-by-moment awareness. As noted in the judgment:

“Statements of the essential elements of a claim in deceit do not traditionally include a requirement that the claimant was aware of the representation relied on and understood it to have been made”

The Court then reviewed the authorities that had been relied upon in England and Wales to support an awareness requirement. After analyzing these cases, the Court concluded that the theory cannot stand in the face of longstanding precedent where liability in deceit has been imposed even though the claimant had no conscious awareness of any representation at all.

Examples given by the Privy Council included ordinary commercial exchanges, where people act on assumptions rather than conscious processing:

“The waiter… does not stop to think that, by placing an order, the customer is representing that he has the means and intention to pay… The waiter just assumes this to be the case.”

In such cases, the representation operates on the claimant’s mind without conscious awareness, yet the law has always treated these as classic instances of deceit where the assumption is induced by the defendant’s conduct.

3. Significance of the Judgment

The Privy Council’s decision provides a definitive clarification of the law of deceit. Its significance lies in several key points:

1. The law of deceit is restored to its orthodox foundations

The Privy Council expressly rejected the line of first-instance authority suggesting that a claimant must prove contemporaneous awareness or understanding of the representation.

This removes uncertainty introduced by cases such as Raiffeisen, Leeds, and Loreley, and realigns the law with longstanding principles drawn from Derry v Peek, Gordon v Selico, and Spice Girls.

2. Inducement can occur without conscious processing

The Privy Council’s reasoning recognizes that misrepresentations can influence conduct without the claimant being consciously aware of them.

This reflects commercial reality: clients often act on trust, assumptions, and established expectations rather than moment-by-moment analysis of every implied representation.

3. Assumption-based reliance remains actionable

The Privy Council confirmed that reliance formed through unconscious assumptions, if caused by the defendant’s conduct, can found liability in deceit.

This is particularly important in cases involving implied representations of honesty, investment integrity or competence.

4. The ruling limits defendants’ ability to defeat fraud claims by raising artificial awareness arguments

The decision closes off or limits a defence strategy increasingly seen in financial-fraud litigation: arguing that a claim must fail because the victim did not consciously identify the representation at the time. The Privy Council made clear that such arguments have “no foundation” in established doctrine.

5. Practical implications for misrepresentation claims

The judgment will have real impact on claimants alleging deceit in complex financial and commercial settings:

• Cases involving implied representations, particularly representations of honesty, proper management, or compliance, are now more straightforward to plead and prove.
• Victims of concealed or sophisticated frauds are not prejudiced by the fact that the misrepresentation operated subtly or indirectly.
• Defendants cannot demand evidence of “active awareness” or “split-second understanding” as a condition of establishing inducement.