Daido Asia Japan Co Ltd v Rothen (2001)
Even though the claimant had personally relied upon a company director when she made false statements she was not personally liable following the decision in Standard Chartered Bank v Pakistan National Shipping Corp (2000) Lloyd's Rep 218. However, because she had knowingly procured her company to commit the tort, she was liable as a joint tortfeasor.
The claimant ('Daido'), a Japanese company, sought damages as a result of a false representation made to it by the defendant ('R') who ran VIB International Ltd ('VIB'), a company that carried on a business of buying goods from high quality brand leaders and selling them abroad for "the grey market" or parallel import markets. Daido claimed that R required payment of the balance of the purchase price for a shipment of tea from Fortnum & Mason ('F&M'), when in fact R well knew that F&M had no intention of supplying the tea because it considered that previous shipments had been placed on the retail market in Japan in contravention of their terms of trade. In her defence R contended that: (i) Daido was not entitled to sue her because each party was engaged in a course of conduct designed to deceive F&M into selling goods for promotional purposes when in fact each of them knew that the goods were destined for the retail market in breach of F&M's conditions of sale, a defence of ex turpi causa; and (ii) when a false representation was made by a director on behalf of a company, only the company and not the director was civilly liable in deceit (Standard Chartered Bank v Pakistan National Shipping Corporation & Ors (No.2)(2000) 1 Lloyd's Rep 218).
(1) The claim of ex turpi causa depended on the relative turpitude of Daido's conduct as well as the extent to which it contributed to the loss (Standard Chartered Bank (supra)). Daido did not have to rely on its deception of F&M to found its cause of action against VIB. Its conduct and its connection with R's deceit were not such that to afford relief to Daido would affront the public conscience. Therefore R's defence of ex turpi causa failed. (2) The decision in Standard Chartered Bank had been the subject of judicial and academic criticism, in respect of a director's liability for deceit, as inconsistent with prior authority not cited to the Court of Appeal in that case. However, the judge regarded himself as bound by it so R was not personally liable on this basis. (3) However, R was liable as a joint tortfeasor because she knowingly procured VIB to commit the tort (a principle confirmed in Standard Chartered Bank). R was alone responsible for running VIB's affairs and the deceit had been entirely her responsibility.
Judgment for Daido.
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24 Jul 2001
Lawrence Collins J
Siward Atkins QC