Liability Of Company Directors For Damages In Deceit - Useful Lessons From Inter Export LLC V Townley And Anor

Background

In 2012, Inter Export LLC, a supplier of sunflower oil registered in Ukraine, entered into a contract to sell oil to a UK-based company. In so doing, the supplier relied upon continuing representations made by a director of the purchasing company that the company would be able to pay for the oil. The oil was duly supplied, but not paid for.

Against a background of administration, followed by liquidation, of the purchaser in 2015 - 2016, Inter Export brought the present proceedings against the purchaser's directors for damages in deceit arising out of the representations made.

In March 2017, the first instance judge upheld the claim against Ms Lasytsya but dismissed it against the other director. Ms Lasytsya, as director of the purchaser, was held to be liable for damages in deceit, which were assessed on the basis of the market value of the oil obtained by the purchaser.

In its 21 September 2018 decision,1 the Court of Appeal dismissed Ms Lasytsya's appeal submissions that:

the factual findings at first instance were inadequate and unsupported by sufficient reasons; and the correct measure of damages was not the market value of the commodity sold. The issues before the Court of Appeal - inadequate findings and reasons for findings

In considering Ms Lasytsya's grounds of appeal, the Court of Appeal noted that Ms Lasytsya formulated "the issues almost as if an appeal were a construction summons to determine the meaning of the judgment and which particular evidence supported which particular finding. This is not the appeal process".

It was Ms Lasytsya's task to persuade the Court that the first instance judge did not find that the director had made the representations relied upon, or if the judge did make such findings, that they were against the weight of the evidence.

Taking these points in turn, the Court of Appeal held that the first instance judge had undoubtedly found that Ms Lasytsya had made the representations in July 2012 that the purchaser had sufficient funds to pay for the oil. The reasons for those findings were adequately described and open to the judge on the facts. The Court also rejected Ms Lasytsya's arguments that the reassurances as to the purchaser's availability of funds:

would not be continuing representations unless it was shown that Ms Lasytsya was aware that they were continuing representations; and were mere statements of intention, which would not be actionable, and not statements of existing facts. The...