Edgington v Fitzmaurice
Court of Appeal
Citations: (1885) 29 Ch D 459.
The defendants were the directors of a company. They issued a prospectus inviting investors to subscribe for debentures in the company. The prospectus claimed that the purpose of the debentures was to purchase and renovate company property and develop its trade. In fact, the directors intended to use the money to pay off the company’s debts.
The claimant advanced money after reading the prospectus. When he discovered what the money was used for, he sued the directors for deceit. By then, the company had gone insolvent. The directors responded that they were not liable for deceit because they had not made any statement of fact. They had merely made a statement of their future intentions.
- Was the statement as to the directors’ intentions for spending the money a statement of fact?
The Court of Appeal held for the claimant. The directors’ statements as to their future intentions was a statement of fact as to their present state of mind. As it was not true, there was a false statement of fact.
This Case is Authority For…
A statement as to future intentions is a statement of fact with regards to the speaker’s current statement of mind. If they do not actually intend to act as they have represented, this is an actionable misrepresentation or deceit.
Cotton LJ stated that the misrepresentation does not need to be the sole cause of the claimant entering into the contract for the purposes of deceit. Bowen LJ agreed, stating that it was only necessary for the misrepresentation to be ‘actively present’ in the claimant’s mind at the time, making it ‘part of the cause’.