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WHEN IS THERE A FRAUD – WHAT IS FRAUD

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Dictum

Turning now to the meaning of “fraud” in connection with representations, it is firmly settled that whenever a man makes a false statement which he does not actually and honestly believe to be true, that statement is, for purposes of civil liability, as fraudulent as if he had stated that which he did not know to be true, or knew or believed to be false. So, in Derry v. Peek (1889) 14 AC 337 HL at 374, Lord Herschell in the judgment of the House of Lords succinctly stated that fraud is proved when it is shown that a false representation has been made by the representor (1) knowing, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false the third case being but an instance of the second.

– Iguh, JSC. Afegbai v. A.G Edo State (2001)

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FRAUD VITIATES; FRAUD MUST BE PLEADED AND PROVED STRICTLY

In the Duchess of Kingston’s Case (1775-1802) All E. R. Rep. 623 at 629 De Grey C. J., held that: “…Fraud is an extrinsic, collateral act, which vitiates the most solemn proceedings of Courts of Justice. LORD COKE says, it avoids all judicial acts, ecclesiastical or temporal.” Again in Fabunmi vs. Agbe (1985) 1 NWLR (Pt. 2) 299, Obaseki, JSC held at page 319 paragraph “C” that: “…Fraud is a serious crime and in civil matters, the particulars must be pleaded and proved strictly.”

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FRAUD LIFTS VEIL OF INCORPORATION

One of the occasions when the veil of incorporation will be lifted is when the Company is liable for fraud as in the instant case. – Galadima JSC. Alade v. Alic (2010)

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PARTIES BOUND BY CONTRACTUAL TERMS IN ABSENCE OF FRAUD

The well laid down position of the law is that Courts do not rewrite contact for the parties where the terms of the contract are clear. In the absence of fraud, duress and undue influence, misrepresentation, the parties are bound by their contract. It is only parties to a contract that can sue and be sued on it.

– Rhodes-Vivour JSC. Alade v. Alic (2010)

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FROM THE FACTS AND CIRCUMSTANCES OF THIS CASE IT SHOWS THAT ARBITRATION MAY BE MORE OPEN TO FRAUD

582. Regardless of my decision, I hope the facts and circumstances of this case may provoke debate and reflection among the arbitration community, and also among state users of arbitration, and among other courts with responsibility to supervise or oversee arbitration. The facts and circumstances of this case, which are remarkable but very real, provide an opportunity to consider whether the arbitration process, which is of outstanding importance and value in the world, needs further attention where the value involved is so large and where a state is involved. 583. The risk is that arbitration as a process becomes less reliable, less able to find difficult but important new legal ground, and more vulnerable to fraud. The present case shows that having (as here) a tribunal of the greatest experience and expertise is not enough. Without reflection, then a case such as the present could happen again, and not reach the court.

— R. Knowles CBE. FRN v. Process & Industrial Developments Limited [2023] EWHC 2638 (Comm)

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WHAT IS FRAUD?

What then is fraud or what in law can amount to fraud? In law, fraud has simply been defined as an advantage gained by unfair means; a false representation of fact made knowingly, or without belief in its truth, or recklessly, not caring whether it is true or false. Fraud also means an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right. It is also a false representation of a matter of fact whether by words or by concealment of that which should have been disclosed, which deceives another so he shall act upon it to his legal injury, Jowitt’s Dictionary of English Law, Vol. 1, 2nd Edition, p. 827; Black’s Law Dictionary, 8th Edition, p. 660.

— C.C. Nweze, JSC. APC v. Sheriff (2023) – SC/CV/1689/2022

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FRAUD IN CIVIL SUIT MUST BE SPECIFICALLY PLEADED

It is trite law that where fraud is alleged it must be specifically pleaded and the particulars of the fraud given in order to enable the party defending the allegation to understand the case he is facing and thereby prepare his defence.

– Amaizu, J.C.A. Adeniran v. Olagunju (2001)

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