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Discount scheme deception

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The chain of causation

Thoms and his company argued that Renault UK's decision to process the orders broke a chain of causation. Judge Seymour endorsed a ruling from 1914 upon which Renault UK relied.

He paraphrased the judgment in that case: "It was not a defence to a person who has committed deceit to say that the fraudulent misrepresentation concerned was made to an agent for the deceived, and the agent knew the truth.

"It does not seem to me that, in relation to matters of dishonesty and its consequences, it is appropriate for the court to adopt any less exacting standards today than those applied... nearly 100 years ago," wrote Judge Seymour.

Thom's personal liability

He also ruled that Thoms could not escape personal liability by hiding behind his limited liability company. "The true issue is whether an individual who has personally made a fraudulent misrepresentation, as Mr Thoms did in completing each of the orders placed by FleetPro with [Renault UK] with the Fleet Code 'BALPA' or '46172', can escape liability on the grounds that he made the misrepresentation on behalf of a company. The answer is negative," he wrote.

However, Thoms' exposure to liability became irrelevant.

Blind to the obvious

Two of Renault UK's own staff had turned a blind eye to the unusually large number of orders – 217 – received through the BALPA scheme in a 10 month period. In contrast, an affinity scheme with Microsoft had generated just five sales in three years.

Judge Seymour wrote: "As it seems to me, the only proper conclusion to draw from these circumstances is that [Renault UK employees] Miss Sample and Mr Wilson did indeed either understand perfectly well how the sales by FleetPro were being achieved... or each closed his or her eyes to what, if they had thought about it for a moment, was blindingly obvious."

However, that was not Renault UK's ultimate downfall. Its problem was that it made money from the deception.

"[Renault UK] made a profit of some sort on every vehicle. Moreover, it appeared that most, if not all, of the vehicles were manufactured to order by [Renault France]," wrote Judge Seymour. "Thus, if the order for a particular vehicle had not been placed, that vehicle would never have been produced and sold at a profit by [Renault UK]. Thus it appeared that, far from suffering a loss as a result of the misrepresentations complained of, [Renault UK] was in fact better off."

He concluded that although, technically, Renault UK had proved that it relied upon fraudulent misrepresentations made by FleetPro and Thoms, it failed to prove any loss. "Consequently this action fails and is dismissed," he wrote.

Copyright © 2007, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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