A company called Fleetpro Technical Services ran an affinity
scheme with Renault UK which entitled members of the British
Airline Pilots Association (BALPA) and their immediate families to
discounts on new Renault cars. Fleetpro took orders that were then
entered into Renault's computer system. Renault S.A., the French
parent company, then built each car to order.
The deception
Over a 10 month period, Fleetpro placed 217 vehicles through the
scheme. But only three of these orders came from eligible members
of the scheme. The other 214 vehicles were bought at a discount to
which the buyer should not have been entitled. It transpired that
the sole director and employee of Fleetpro, Russell Thoms, had been
running a website that passed on the discounts to other internet
brokers who resold the cars to members of the public.
Renault sued Fleetpro and Thoms, citing losses of almost
£700,000.
The evidence showed that when Thoms took orders via his site, he
sent them by email to a Renault fleet sales executive citing the
code BALPA or the number 46172, thereby representing that the order
was destined for a qualifying customer. The executive printed the
emails and his assistant entered them into the computer system of
Renault UK. That action ordered the car from Renault UK's parent
company in France and recorded the order as a beneficiary of the
discount scheme.
According to the judgment, the assistant's was "the last human
brain in contact with the claim that a particular order fell within
the terms of the discount scheme."
A fraudulent misrepresentation can be made to a machine
"The point of principle which thus arises is whether it is
possible in law to find a person liable in deceit if the fraudulent
misrepresentation alleged was made not to a human being, but to a
machine," wrote Judge Richard Seymour QC.
"I see no objection in principle to holding that a fraudulent
misrepresentation can be made to a machine acting on behalf of the
claimant, rather than to an individual, if the machine is set up to
process certain information in a particular way in which it would
not process information about the material transaction if the
correct information were given," he continued. "For the purposes of
the present action, as it seems to me, a misrepresentation was made
to the Importer [Renault UK] when the Importer’s computer was told
that it should process a particular transaction as one to which the
discounts for which the [pilots' affinity scheme] provided applied,
when that was not in fact correct."
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.
