Renault UK Ltd v Fleetpro Technical Services Ltd & Anor

A fraudulent misrepresentation may be made to a machine acting on behalf of the claimant where the machine is programmed to process the transaction differently if accurate information is supplied. Knowledge of the truth held by an agent who is party to the fraud is not attributed to the principal. However, reliance is defeated where the principal itself has actual or blind-eye knowledge of the truth. Blind-eye knowledge requires a firmly grounded and targeted suspicion, followed by a deliberate decision to avoid confirming the facts. A person who personally makes a fraudulent misrepresentation remains liable even when acting for a company. Damages require proof of loss directly caused by the fraud; an account of profits was not established as an available remedy and, in any event, was inappropriate where the claimant had profited from the transactions.

Renault UK Ltd operated a discounted vehicle scheme intended for members of the British Airline Pilots Association. Fleetpro Technical Services Ltd, acting through its sole director Russell Thoms, placed orders using the relevant fleet code although most end purchasers were not entitled to the scheme. Renault claimed damages for fraudulent misrepresentation and an account of Fleetpro’s profits.

The court considered whether the representations were made to Renault despite being processed through a dealer and computer system, whether knowledge held by the dealer’s employee was attributable to Renault, whether Renault had actual or blind-eye knowledge, whether Mr Thoms was personally liable, and whether Renault had proved recoverable loss.

1. Fraudulent misrepresentation and automated processing. A representation may be made to a machine acting on behalf of the claimant where the machine is configured to process information in a particular way if the representation is made. The relevant representation was made to Renault when its computer was instructed to treat the orders as qualifying for the discounted scheme.
2. Agency and knowledge. The dealer employee who received and processed the orders knew of the misuse. That knowledge was not attributed to Renault because he was himself implicated in the fraud. The approach in Wells v Smith [1914] 3 KB 722 remained applicable. The reasoning in Strover v Harrington [1988] 1 Ch 390 did not require a different result in a case involving fraud.
3. Blind-eye knowledge. Adopting the formulation in Manifest Shipping Co. Ltd. v. Uni-Polaris Insurance Co. Ltd. [2003] 1 AC 469, blind-eye knowledge requires a firmly grounded and targeted suspicion of the relevant facts and a deliberate decision to avoid confirming them. Renault had such knowledge, or deliberately shut it out, through its responsible employees from the relevant dates. It therefore did not rely on representations made after 12 July 2005. Reliance was established only for orders placed between 14 June and 12 July 2005.
4. Personal liability. Mr Thoms was personally liable for the fraudulent misrepresentations which he made, notwithstanding that he acted as Fleetpro’s director. The principle in Standard Chartered Bank v. Pakistan National Shipping Corporation [2003] 1 AC 959 was applied: liability arose from his own fraud, not merely from his office.
5. Loss and remedies. Applying the approach in Doyle v. Olby (Ironmongers) Ltd. [1969] 2 QB 158, Renault had to prove loss directly flowing from the fraud. It failed to do so. The vehicles had been sold at a profit and would otherwise not necessarily have been manufactured or sold. An account of profits was not shown to be an established remedy for fraudulent misrepresentation. The interpretation of Murad v. Al-Saraj [2005] EWCA Civ 959 did not establish that remedy, and an account would in any event have been inappropriate.
6. Disposition. The claim failed and was dismissed.

First-instance decision. No prior appellate decision is stated in the judgment.