Hayward v Zurich

This article clarifies the proof of inducement in the law on misrepresentation in light of the recent Supreme Court decision in Hayward v Zurich Insurance. It examines relevant case law and commentary on inducement, and concludes that the test of inducement is “influence on the mind of the representee”. It argues that such conclusion means that neither the representee’s disbelief in the truth of the misrepresentation nor knowledge of its falsity would automatically negate inducement as a matter of law. Finally, this article considers other issues in Hayward which were not fully addressed by the Supreme Court.

In order to establish an actionable misrepresentation, a representee must prove that he was induced by the misrepresentation, for example, to enter into a contract. The requirement of inducement is essentially one of causation, namely, the causal relation between the communication of the misrepresentation from the representor to the representee, and the representee’s change of position on the basis of that misrepresentation. The orthodox causation rule for inducement in deliberate misrepresentation cases, fraudulent or innocent, is that any contribution by the misrepresentation to the representee’s change of position, even if not material, is sufficient.1 It would seem that the law in this regard was reasonably clear, until recently when the Supreme Court was faced with an intriguing issue, namely, whether a representee’s belief in the truth of the misrepresentation is required as a matter of law. At first glance, the answer seems to be yes, as it would not otherwise be possible for a representee to prove that he was misled and hence induced. The Court of Appeal in Hayward v Zurich Insurance Co Plc 2 reached this conclusion. However, the Supreme Court overturned the ruling, holding that there is no such overriding requirement of belief.3 It is submitted that the Supreme Court’s