The Privy Council Decision on “Conscious Awareness” in Fraudulent Misrepresentation Claims

Is it a legal requirement for a claim in deceit that the claimant be aware of the representations on which the claim is based?

The Privy Council considered this question in the recent Bermudan case of Credit Suisse Life (Bermuda) Ltd v Ivanishvili [2025], holding that the answer is no. While this decision was based on Bermudian law, the Privy Council's decisions can have a highly persuasive effect in the English courts.

The decision has a real potential to be significant, if followed by the English courts, given that it has determined that the claimant does not have to be consciously aware of the misrepresentation.

The case

Mr Bidzina Ivanishvili, the former Prime Minister of Georgia, invested significant sums into two life insurance policies with Credit Suisse Life (Bermuda) Ltd (“CS Life”) on behalf of himself and close family members. He decided to invest in the first policy after meeting with his relationship manager, Mr Patrice Lescaudron, in March 2011, and later chose to invest in the second policy following a subsequent meeting with Mr Lescaudron in June 2012. It was during these meetings that Mr Lescaudron proposed the respective policies.

In 2015, it was discovered that Mr Lescaudron had been fraudulently dealing with the policy assets for a number of years. He was subsequently prosecuted and convicted of fraud, mismanagement, aggravated mismanagement and forgery.

Mr Ivanishvili (and the other named policyholders) began proceedings against CS Life in August 2017, claiming damages for breach of contractual and fiduciary duties. In October 2020, they also advanced a claim for fraudulent misrepresentation.

At trial, Chief Justice Hargun decided almost every contested point in favour of Mr Ivanishvili, holding that CS Life was in breach of contractual and fiduciary duties and that the plaintiffs had been induced to enter into the policies by fraudulent misrepresentation. CS Life appealed. The Bermudian Court of Appeal dismissed the appeal on breach of contract and fiduciary duty but allowed the appeal on misrepresentation.

CS Life then appealed to the Privy Council, arguing that the Court of Appeal was wrong to uphold the damages awards for breach of contract and fiduciary duty. Mr Ivanishvili cross‑appealed against the dismissal of the misrepresentation claim.

The Privy Council’s Decision

Lord Leggatt, delivering the judgment, held that Chief Justice Hargun was correct to find that CS Life breached its contractual obligations — namely, its obligation to invest the policy assets in accordance with the mandates set out in the policy documents — though the Privy Council did allow a readjustment of the start date for damages. It took a cautious approach to the alleged breach of fiduciary duty, reserving its opinion on the basis that this would not impact the outcome of the case.

Although the Privy Council ultimately dismissed the misrepresentation claim on limitation grounds, it agreed with Chief Justice Hargun’s reasoning and held that:

“It is not a legal requirement of a claim for deceit that the claimant was aware of the representations or understood them to have been made.” (at [para 179]).

In Mr Ivanishvili’s case, it was therefore not necessary for him to have been consciously aware that, when proposing the policies, Mr Lescaudron was making fraudulent representations about how he intended to manage the policy assets.

This could precipitate a departure from the position as determined in certain of the leading cases in the English courts: that some form of conscious awareness or understanding of the representation was required (Raiffeisen Zentralbank Österreich AG v Royal Bank of Scotland plc [2010], Marme Inversiones 2007 SL v NatWest Markets plc [2019], Leeds City Council v Barclays Bank plc [2021], Loreley Financing (Jersey) No 30 Ltd v Credit Suisse Securities (Europe) Ltd [2023]).

However, the Privy Council examined these cases, together with a body of caselaw where there was no conscious awareness, such as where a seller of a flat deliberately covers up dry rot (Gordon v Selico [1986]); where a person orders food in a restaurant, thereby representing that he or she has the means and intention to pay for the meal (DPP v Ray [1974]); or where a misrepresentation is made to a machine (Renualt UK Ltd v Fleetpro Technical Services Ltd [2007]). It determined that either it had to decide that such cases were wrongly decided or:

"…it must reject the theory which has gained some currency following the dicta in Raiffeisen that contemporaneous awareness and understand of the representation is in law an essential element of a deceit claim. The Board has no hesitation in adopting the latter course." (at [para 157]).

Key reasoning

The Privy Council provided its underlying reasoning which included:

• A rejection that awareness of a representation is the "logical bridge" between the representation and reliance. The requirements that: (1) a representation must deceive the claimant by causing them to hold a false belief; and (2) reliance on that false belief causes loss, can logically be achieved without the claimant being consciously aware of the representation at the time: the Board concluded that "It is an everyday feature of human experience that people form and act on beliefs without any conscious awareness or thought" (at [para 162]).
  
• Awareness may be required, in certain circumstances, to establish that a defendant's representations caused a claimant to hold a particular false belief. However, previous cases have been wrong to treat awareness of a representation as a necessary element.
  
• That there is a misconception that a distinction needs to be drawn between cases where the claimant has relied on a representation and cases where the claimant has acted on an assumption. These categories are not mutually exclusive, and in fact it is common for a person to act on an unconscious assumption and reliance on a representation. What matters is whether the claimant has acted on an assumption which the claimant would naturally be expected to make in response to the defendant's representations.  

Our view

Although Privy Council judgments are not binding in England and Wales, they carry highly persuasive weight. We note this is particularly likely given that at para 179 of the Privy Council's judgement, it concluded it was not a legal requirement "…under the law of England and Wales and of Bermuda…" for a claim of deceit that the claimant was aware of the representation or understood it to have been made. Further, many of the same judges sit on both the Privy Council and the UK Supreme Court.

If followed by the English courts, the decision potentially lowers the bar for establishing fraudulent misrepresentation. The evidential burden of proving conscious awareness of the representation would be removed, shifting the focus toward the wrongdoer’s conduct. Implied representations, including those arising through conduct or unconscious assumptions, may become grounds for claims even if the claimant never consciously considered them at the time. This shift could enable fraudulent misrepresentation cases in a similar vein to those seen post LIBOR manipulation (which relied on a representation that the LIBOR benchmark had been honestly and properly set) to be pleaded with greater success. 

We consider that this decision has the potential to substantially expand the potential scope of deceit claims as previously unviable claims may now have sufficient grounds, and places emphasis on demonstrating how the defendant’s representations influenced the claimant’s decision-making, even at an unconscious level.