Nitron Group BV v Nitron Group BV & Ors

Where a claimant proves that knowingly false pre-contractual representations induced advance payments, the representor may be personally liable in deceit even where the statements were made as an agent. Personal liability in negligence requires a separate assumption of responsibility and will not ordinarily arise from conventional negotiations conducted for a company. An inference of dishonesty must be the only reasonable inference. An unrepresented defendant does not relieve the claimant of proving its case, and the court must ensure fair presentation. A claimant may recover the same loss from concurrent tortfeasors, subject to no double recovery.

The claimant, a company in liquidation, sued Mr Vasilyev and Sarsso Ltd for deceit and negligent misstatement. It alleged that representations concerning the availability and readiness of commodity cargoes induced it to enter four contracts with Barington Alliance LLP and make substantial pre-payments. The defendants did not participate in the proceedings.

The claimant also sought variation of a worldwide freezing injunction to permit related proceedings in Russia. The court determined service and jurisdictional matters, liability, causation, damages, and the injunction application.

1. Service and unrepresented defendants. The court was entitled to proceed on the presumptive validity of the order permitting service out of the jurisdiction, but had to be satisfied that service complied with the order. Service by the authorised alternative method was proved, and the defendants were properly before the court. Their non-participation did not relieve Nitron of proving its case on the balance of probabilities. The claimant also owed a duty of fair presentation by drawing potentially favourable factual or legal points to the court’s attention.
2. Representations and deceit. Mr Vasilyev represented that Barington had paid for the relevant cargoes and that they were held in a warehouse ready for immediate shipment. Those representations were untrue when made. He must have known that they were untrue, and Nitron relied on them in making the pre-payments. The court declined to infer an absence of intention to perform the contracts because that was not the only reasonable inference. The unsupported hearsay evidence concerning Mr Vasilyev’s assets did not establish deceit.
3. Personal and corporate liability. Although the representations were made on behalf of Barington, Mr Vasilyev could remain personally liable in deceit. However, the conventional contractual negotiations did not establish that he had assumed a personal duty of care to Nitron, so the negligence claim failed. The evidence did not show that he made the representations on behalf of Sarsso; the claims against Sarsso therefore failed.
4. Damages. Barington and Mr Vasilyev were concurrent tortfeasors in respect of the pre-payment loss. Nitron could obtain judgment for the full loss against both, subject to recovery only once. The goods supplied under a separate contract were not brought into account because that contract was not alleged to have resulted from the representations or form part of the causes of action advanced.
5. Disposition. Judgment was entered against Mr Vasilyev for €1,236,503.18 and £22,932.76, with pre-judgment interest of €51,808.49 and £563.77. The freezing injunction was varied to permit the specified Chuvash Republic proceedings and set aside against Sarsso. Nitron recovered 80% of its relevant costs, summarily assessed at £80,000.

Not stated in the judgment.