KENYATTA UNIVERSITY

SCHOOL OF LAW PARKLANDS CAMPUS.

LAW OF TORTS 2
LCC 102
STREAM E, GROUP 5 CAT TWO
SUPERVISOR: MS KAMUNDE
GROUP LEADER: SOLONKA BRIAN PARENO

NAME
SOLONKA BRIAN
MAUREEN
WACHIRA
IAN KIVUI
MIRIAM
WANGARI
RACHEAL
MWANGI
AGNES WANJIRA
NDUTA NJOROGE
DAVID NYABUTO
BRIAN
NAMASAKA
IRENE NJERU

ADM. NO
L95S/14436/2015
L95S/14156/2015

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Contents
1

SIGNATURE

1) INTRODUCTION...................................................................................................... 3
2) DISTINCTION OF THE TORTS (TORT OF DECEIT/ FRAUD/ FRAUDULENT
MISREPRESENTATION.............................................................................................. 3
3) ELEMENTS OF THE TORT..................................................................................... 5
3.2) THE MISREPRESENTATION MUST BE MATERIAL TO THE TRANSACTION AND
RELATING TO FACT NOT OPINION............................................................................6
3.3) THE MISREPRESENTATION IS MADE WITH THE FALSITY BEING KNOWN BY THE
PARTY MAKING IT OR RECKLESSLY WITH DISREGARD OF IT BEING TRUE OR NOT.. .7
3.4) INTENTION TO INDUCE THE OTHER PARTY TO ACT OR REFRAIN FROM ACTING
UPON THE FALSE MISREPRESENTATION BEING MADE (INDUCEMENT).....................8
3.5) RELIANCE ON THE LIE BY THE OTHER PARTY TO HIS OR HER DETRIMENT.......8
3.6) THE LIE MUST PROXIMATELY CAUSE THE OTHER PARTY TO INCUR DAMAGE....8
4) DEFENCES OF THIS TORT....................................................................................... 8
4.1) Consent............................................................................................................ 8
5) REMEDIES TO THE TORT......................................................................................... 9
5.1) DAMAGES......................................................................................................... 9
5.1.1) CALCULATING DAMAGES FOR DECEIT.........................................................10
5.2) INJUCTION...................................................................................................... 10
6) HOW THE KENYAN COURTS HAVE APPLIED THE ABOVE DOCTRINES IN THE
KENYAN CASES......................................................................................................... 11
GENERAL REFERENCES............................................................................................. 13

TORT OF
DECEIT/FRAUD/FRAUDULENT
MISREPRESENTATION
1) INTRODUCTION
Tort of deceit is defined in the legal dictionary as a misrepresentation made with the
intent of defrauding someone, which subsequently causes injury to the same said individual.1
Fraud is defined as the intentional use of deceit, trick or some dishonest means which aimed at
depriving another of his money, property or legal right.2 Lord Hardwicke in a letter to Lord
Kames of 30th June 17593, stated that:
Fraud is infinite, and were a court once to ... define strictly the species of evidences of it, the
jurisdiction would be cramped, and perpetually eluded by new schemes which the fertility of
mans invention would contrive.
Fraudulent misrepresentation is one of the three types of misrepresentations therefore
before we define what fraudulent misrepresentation is what is a misrepresentation on itself? In
accordance to the halsburys laws of England is A misrepresentation is a positive statement of
fact, which is made or adopted by a party to a contract and is untrue.4 It may be made
fraudulently, carelessly or innocently. Basically what we mean by a misrepresentation is that it is
an untrue or a false statement of a material fact which induces another party into performing
some action for example under contract law a misrepresentation will induce the other party to
enter into a contract.
1 www.Freedictionary.com/deceit
2 www.Law.com
3 Cited in Holdsworth, A History of English Law (1972), vol 12, at 262
4 Halsbury's Laws of England, 4th Reissue (2003), Volume 31 on Misrepresentation
and Fraud
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Hence in light of the above definition of a misrepresentation a fraudulent

misrepresentation is can be defined as a false statement made by an individual and the same
said individual knows of the falsity of the statement and does not believe it to be true.

2) DISTINCTION OF THE TORTS (TORT OF DECEIT/ FRAUD/

FRAUDULENT MISREPRESENTATION
In light of the above definitions we could comfortably note that there is no clear line of
demarcation between the three definitions above however some slight differences can be made
not on the content but on the context on case scenario in which it is applied. An example is that
tort of deceit is basically found under the context of tort law, while fraud will appear under
criminal law however it can still be seen under tort and contract law and finally fraudulent
misrepresentation is founded mainly in the context of contract law.
As a matter of fact most legal scholars view fraudulent misrepresentation as synonym
of the tort of deceit. Fraudulent Misrepresentation initially was viewed as the tort of deceit and
was later defined by Lord Herschell in the famous case of Derry V Peek5 the facts of the case
were that a company had procured the passing of an act of parliament which allowed it to run
horse drawn tramcars in Plymouth and, subject to the consent of the board of trade, to run
tramcars powered by steam. Relying on this, the plaintiff, among others, bought shares in the
company. Later on the board of trade refused consent to steam-powered trams, and the company
was wound up, with many investors losing money. The directors were sued for the tort of deceit.
The House of Lords held that the directors believed that the consent of the Board of Trade was
more or else inevitable, given the passing of the act, they were inaccurate but dishonest, and
there was no fraudulent misrepresentation.
Their Lordships hence went further and described fraudulent misrepresentation as a false
statement that is made 1) knowingly
2) Without belief in its truth
3) Recklessly as to whether it be true or false

5 14 App.Cas. 337 (House of Lords, 1889).

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Henceforth the above can be duly noted as the difference between the above said torts. The line
of demarcation is thin however it is there despite the close similarities of the same said above
such as the fact that they are all made intentionally and they both contain some falsity in it and
are aimed at injuring the other party in terms of actual financial, contractual or legal loss.

3) ELEMENTS OF THE TORT

In order for a claim under this tort to be successful before the courts a number of elements
has to be ascertained in addition to the three main elements of general torts. Six elements must be
satisfied for the suit to be successful and these elements are:
3.1) A FALSE REPRESENTATION HAS TO BE MADE EITHER BY WORDS,
ACTS OR CONDUCTS
A misrepresentation has to be made in first stance and the general rule is that the false
representation need not be in the form of passive assertion; it may be through silence, a partial
revelation, subsequent falsity and even simple gestures. We will look at the forms of how a false
representation can be made without positive assertion or words:
The general rule is that silence will not amount to a misrepresentation, Fletcher v
Krell (1873)6 where the court ruled that there was no more misrepresentation due to the silence
of the defendant. However there are exceptions to that general rule where the court may find one
culpable in the case of being silent. In this case to remain silent about a material fact will lead to
culpability. These circumstances are:
3.1.1) contracts requiring good faith
These are contracts uberrimae fidei and these include insurance contracts, sale of
shares and land contracts. In this the principle used is that the one making the representation has
better knowledge of the facts hence failure to disclose the same said fact would be a detriment to
the other party. International management group UK ltd v Simmonds (2003)7 where failure of
the defendants part to disclose rumors to the insurance company when entering into the contract
was held to be a misrepresentation.
6 Fletcher v krell [1873]42 QB 55
7 International management group v Simmonds [2003] All ER (D) 199
5

3.1.2) subsequent falsity

In the case the statement was true when it was being made however a change in
circumstances due to the time factor makes the statement false. In this case keeping silent about
the change of circumstances will lead to you being culpable under the above said torts. With v
OFlanagan(1936)8 where in this case a doctor was selling his medical practice to a certain
buyer stating the practice to be 200 euros, which was true at that time however the doctor fell ill
and lost many customers and value of the practice dropped. It was held that failure to tell the
buyer amounted to a misrepresentation.
3.1.3) partial revelation
A party makes a true statement but fails to reveal more of the facts hence
misrepresenting the whole situation because of what he has left unsaid. Dimmock v Hallet
(1866) 9where the defendant told the plaintiff that there were people letting his land but failed to
disclose that the same said people will be moving out. This was held to be a misrepresentation
3.1.4) fi duciary relationship
This is the special existing relationship between persons or parties. This special
relationship gives or imposes the duty to disclose certain facts failure of which culpability may
be incurred. These include principle and agent, solicitor and client, trustee and beneficiary
relationships among others.

3.2) THE MISREPRESENTATION MUST BE MATERIAL TO THE

TRANSACTION AND RELATING TO FACT NOT OPINION
The falsity that has been must be in regard to transactions at hand and must be material
to the circumstances at hand. Liability cannot be incurred given for example you are selling a car
and lie on matters completely unrelated. The misrepresentation must also be relating to facts and
not mere opinions as will be shown below:

8 With v oflanagan[1936] ch 575, [1936] 1 All ER 727

9 Dimmock v Hallet[1866-1867] LR 2 Ch App 21
6

3.2.1) statement of fact and not mere opinion

The statement must be one of fact and a mere opinion will not lead to culpability. Bisset v
Wilkinson (1927)10 where it was held that the defendant could not be held liable in stating his
opinion that his farm could accommodate 2000sheep.
In determining whether one was giving a statement of fact or opinion the courts look at
the defendants state of mind. This principle was developed by Bowen LJ in the case of
Edgington v Fitzmaurice 11where he stated that:
The state of a mans mind is as much a fact as his digestion
Basically what this meant was that what a man was thinking at the time he was making the
representation is a statement of fact, and if it is false then it would lead to a misrepresentation. In
the above case of Edgington the plaintiff as found to be liable for fraudulent
misrepresentation when he sent prospectuses to the public asking for loans which would have
been used for improving buildings and businesses while as a matter of fact he did not intend to
use that money in that way.

3.3) THE MISREPRESENTATION IS MADE WITH THE FALSITY

BEING KNOWN BY THE PARTY MAKING IT OR RECKLESSLY WITH
DISREGARD OF IT BEING TRUE OR NOT.
This is what was defined as fraudulent misrepresentation by Lord Herschell in Derry v
Peek( 1889)12 that fraudulent misrepresentation is a false statement that is made either
knowingly, or without belief in its truth or recklessly as to whether it be true or false.
Hence a misrepresentation can be made recklessly or knowingly.

10 Bisset v Wilkinson[ 1927] AC 17

11 Edgington v Fitzmaurice [1885] 29 Ch D 459
12 ibid
7

3.4) INTENTION TO INDUCE THE OTHER PARTY TO ACT OR

REFRAIN FROM ACTING UPON THE FALSE MISREPRESENTATION
BEING MADE (INDUCEMENT)
There must be intention so as to induce the other party into acting or refraining from
acting based on the false statement being made. Intention can be inferred by the courts in
accordance to the conduct of the party making the false statement. Basically you must be trying
to effect the transaction you are getting into based on the lie you are making.

3.5) RELIANCE ON THE LIE BY THE OTHER PARTY TO HIS OR HER

DETRIMENT
There must be reliance by the other party of the misrepresentation for liability to be
incurred an example is that the buyer cannot sue you for something he doesnt buy in reliance to
that false statement made. If no reliance is present then there would be no liability. If you had
constructive knowledge of the misrepresentation then liability would not be incurred based on
the principles of consent or in other terms volenti non fit injuria

3.6) THE LIE MUST PROXIMATELY CAUSE THE OTHER PARTY TO

INCUR DAMAGE
The basic element of all torts is this one in that you must prove that you suffered
damage from the misrepresentation that was made and in addition prove to the courts the above
said damage be it legal or actual damage. You must suffer harm at the final transaction, if no
harm is suffered then there would be no remedy. This is in order for you to claim for
compensation.

4) DEFENCES OF THIS TORT

4.1) Consent
This can also be termed as volens under the Latin maxim volenti non fit injuria. This
shows that you voluntarily accepted the injury that youve suffered.
This is one of the main defenses of this tort is consent. In that the plaintiff knew of
the same false representation or deceit but went further with the transaction. If the defendant
proves this then he wont be liable at all for any damage that arose on the plaintiffs part.

5) REMEDIES TO THE TORT

Under this tort the remedies that may be attracted by law are two of them:
1) Damages
2) Injunction
3) Rescission (in the case of contract law)

5.1) DAMAGES
The main remedy for a person who has suffered damage in the case a false
misrepresentation is damages in the form of compensatory damages and other form of damages
depending on what the claimant claims and brings before the court. The defendant is liable for all
the losses which directly from the claimant.
This was further clarified in the Kenyan case of:
JOSEPH BWOGA ONDINJO V PATRICK ODHIAMBO ONSOGO AND 2 OTHERS13
In this case the plaintiff bought property from the defendants. The plaintiff alleged
that the defendants fraudulently misrepresented some facts during the sale of the suit premises in
an attempt to defraud him of his property.
Held: liability was found on the part of the 1st defendant. This was for fraud for selling the
premises to the 2nd defendant yet the premises belonged to the plaintiff at that time. The
defendant was required to pay damages amounting to Ksh.400, 000. This was to compensate the
plaintiff for the loss of her house and possible revenue from rent.
Judge R.N. SITATI said that the plaintiff must demonstrate that the damage he seeks to recover
must have flowed directly from the fraud perpetrated on him.

5.1.1) CALCULATING DAMAGES FOR DECEIT

The claimant is entitled to be put back into the position he or she would have been
if the deceit had not taken place. This means that if X, the claimant, was led to believe that he
13 EKLR civil suit 5934 of 1992
9

was buying a Toyota Fielder worth sh. 1,000,000 but Y, the defendant, knew that it was only
worth sh. 650,000, X is entitled to damages worth sh. 350,000.
The defendant must is liable for all losses directly flowing from their wrongdoing as is seen in
the case of:
ENG LTD V HARPER AND ANOTHER (2008)14
In this case it was established that the transferor had entered into a transaction
for the purpose of defrauding the creditors. The claimant said that if he had not bought the said
property he would have bought another which would have made him much profit and that their
deceit caused him to lose the money he would have earned from the other company. The court
found there was no reason why they should not award damages for the loss of chance.
NB: This kind of award is known as damage for loss of chance, and is allowed in Negligence.
It should also be noted that once a claimant comes to know of the fraud he or she should take the
necessary steps to mitigate the same said loss.

5.2) INJUCTION
An injunction is basically requiring the person to whom it is ordered to, to act or to
refrain from acting. This is clearly seen in the Kenyan case of:
PASTIFICIO LUCIO GAROFALO S.P.A V DEBENHAM & FEAR LTD15
The plaintiff, an Italian company, had been selling pasta in Kenya for over 20
years and on top of that it was a trade mark proprietor of the trade mark Santa Lucia registered
pursuant to the Trade Marks Act, Cap 506 and also engaged in the importation and distribution of
foodstuffs and general goods in Kenya. The defendant had been selling pasta in Kenya for about
8 years under the mark Santa Maria which trademark was similar to that of the plaintiffs and
was likely to deceive or cause confusion to the general public. The plaintiff sued claiming that he

14 Eng ltd v Harper and others [2009] EWHC 2633 (ch); [2009]WLR (D) 307
15 EKLR civil case no. 823 of 2010
10

suffered losses due to the defendants products which were retailing at a cheaper price compared
to theirs.
Held: The court issued an injunction against the defendants. Judge J.B. Havelock
clearly stated that where the Defendant caused (whether or not intentionally or by deceit) the
infringement and passing off of the Plaintiffs trademark is to be prevented from continuing
with the same.

6) HOW THE KENYAN COURTS HAVE APPLIED THE ABOVE

DOCTRINES IN THE KENYAN CASES
6.1) DCF ENGINERING LTD V JOHARI LTD AND 2 OTHERS.16
Plaintiff filed this suit against defendant alleging that the 1st defendant represented
by the 2nd defendant sold and transferred property to the plaintiff for Kshs.22, 500,000. The
plaintiff paid the said sum to the 2nd defendants clients account through his advocate. The cost
expended any additional costs in relation to legal fees. The plaintiff said that the entire
transaction turned out to be fraudulent and that the documents of ownership were falsely
obtained. He sued the defendant for misrepresentation and breach of contract. He claimed for
Kshs. 23, 813, 870 as incidental costs incurred in the sale transaction, damages for breach of
contract and costs of the suit.
6.2) FRANCIS CAREY APANGA V KENYA COMMERCIAL BANK LIMITED.17
The plaintiff sought on a mandatory injunction to compel the defendant to issue a
replacement to him inform of a cheque for bankers draft. The said bankers draft was
irretrievably lost, and the defendant is obliged under the law to replace it. He believed that there
was deceit on the defendants part in respect to the claim for replacement of the bankers draft.
It was held that the defendant should pay general damages, replace the bankers cheque
for the defendant was allegedly negligent for the fiduciary duty of care owed to him.

16 Kenya Law Reports : Civil case No. 376 0f 2013.

17 Kenya Law Reports: Civil Suit No. 182 of 2003.
11

6.3) NICHOLAS OTINGU MURUKA V EQUITY BANK LIMITED.18

The claimant sued for unlawful termination and illegal backdating of summary dismissal,
refusal to pay his dues and benefits during his suspension and unlawful discriminatory and
malicious dismissal by the respondent equity. He had been employed by the respondent with the
duties of appraisal of customer eligibility of credit facilities, verification of document and
assessment of customer eligibility. However, he was suspended on alleged involvement in
fraudulent transaction at his branch while he was on leave. These allegations were presented in
court as theft and conspiracy. He claimed for compensation for unfair termination and
discrimination. He wanted damages for 12 months pay, notice pay, certificate of service and cist
of suit.
It was held that respondent should be informed on the claimants outcome of their
investigations or issued notice for termination which in this case it was not given. The court
awarded Mr. Nicholas a monthly pay amounting Kshs.47,500, to be issued with certificate of
service within 14 days and a declaration that termination of employment of claimant by
respondent was unfair.

18 Kenya law Reports: case NO. 25 of 2013.

12

GENERAL REFERENCES
M Lunney and K. Oliphant, Tort Law : Text and Materials (4th Edition, OUP 2010) pp.37
Elliot C. Quinn, F,(2015).Contract Law. Tenth Edition. Hallow Pearson.
Clerk J. F. Lindsell & Dugdale A. M (2006). Clerk and lindsell on tort. London. Sweet and
Maxwell.
www.Kenyalaw.org
www.jstor.org
www.law.com

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