Manish Goyal & Anor. v BGF Investment Management Limited & Ors.

A representation of present intention may continue where the circumstances reasonably indicate that it represents the representor’s current intention. If the representation continues, a known change of intention may require correction. Whether it continues depends on the nature of the representation and its context. Representations of intention may be too ephemeral to have continuing effect. In a deceit claim by an indirect representee, the representor must have intended the representation to reach and induce that person, or a class including them. Mere expectation that it will be passed on is insufficient. The court also confirmed that reliance requires material influence, and that damages for deceit are normally assessed by comparing the value given up with the value received at the transaction date.

The claimants, founders and shareholders of an IT consultancy, sued an investment fund, its investment manager and individuals for deceit, damages under section 2(1) of the Misrepresentation Act 1967, and unlawful means conspiracy.

They alleged that, during negotiations for a minority investment and divestment transaction, the defendants impliedly represented that Mr Goyal would remain CFO and a senior executive after completion. They alleged that the representations induced both claimants to enter the transaction and that the defendants had conspired to remove Mr Goyal after completion. The central issues were whether the representations were made, whether they were dishonest and relied upon, whether an indirect representee could sue, and whether loss was established.

1. Claims dismissed. None of the alleged implied representations was made. The statements relied on were either acknowledgements, general descriptions of BGF’s investment approach, conciliatory comments, or statements which could not objectively be taken seriously as assurances about Mr Goyal’s future role.
2. A representation of intention is ordinarily a representation of the representor’s intention when made. It may nevertheless be continuing if it would reasonably be understood as representing the representor’s current intention. In that event, a change known to the representor may require correction. The question is fact-sensitive. Some representations of intention are ephemeral and become spent.
3. The court rejected the claim that the defendants’ conduct implied an intention that Mr Goyal would remain CFO. The evidence showed that Mr Snodgrass contemplated strengthening the finance function but had not formed an intention to remove Mr Goyal. Mr Balasubramaniam’s intentions fluctuated, and by late February 2019 he did not want Mr Goyal to remain CFO, but no actionable misrepresentation was thereby established.
4. Even if representations had been made, Mr Goyal had not shown reliance. He had independent reasons to proceed, including the need to resolve the dispute with Partho and the financial advantages of the transaction. Mrs Goyal relied on Mr Goyal’s decision, not on representations allegedly relayed to her.
5. For an indirect representee to sue in deceit, the representor must have intended the representation, directly or through transmission, to induce that person, someone in their position, or a relevant class. Mere expectation that the representation would be passed on is insufficient.
6. The conspiracy claim failed because no fraudulent misrepresentations were made, no sufficient case of concerted knowledge and unlawful conduct had been put, and no shared intention to injure was established. The statutory misrepresentation claim therefore also failed.
7. Had loss arisen, the normal measure would have compared the value of the claimants’ IBSL shares immediately before completion with the value of their IBSHL shares and options immediately afterwards. A later valuation date was not justified by the alleged lack of marketability.