Keep on running: the VW Saga

Photo by Felix on Unsplash


The picture above tells a story: it is a throwback to the glory days of the Volkswagen Corporation. Like my father before me, I’m a big fan of VW cars having been the owner of quite a few of the Corporation’s models. They were all terrifically reliable cars and I have no axe to grind here. What I should say is that none of my cars had a diesel engine.

VW cars with diesel engines are significant here because, in recent times, the manufacturer deliberately marketed them as environmentally friendly. Consumers could, therefore, purchase diesel cars from VW with something amounting to a clear conscience because they were not as bad for the environment as some of the older models.

Several years ago, VW was exposed for deliberately falsifying its data about the impact of environmentally harmful emissions caused by its diesel engines. It was a huge scandal and regulatory authorities in the United States of America imposed huge fines on the Corporation. Consumers in the USA also decided to pursue class legal actions against VW on the grounds of these patently fraudulent misrepresentations.

The scandal somewhat predictably and unimaginatively gained the moniker ‘Dieselgate’ and its ramifications were soon felt in the United Kingdom (of which we shall touch upon shortly in this Blog).

Yes, Dieselgate is back in the news. The scandal of VW deliberately falsifying emissions data in respect of its diesel engine models was a topic of debate at a class action hearing before the English High Court yesterday.

In Anthony Joseph Champion Crossley & Ors v Volkswagen Aktiengesellschaft and Others [2019] EWHC 783(QB), Mr Justice Waksman has determined that VW did insert what has become known as a ‘defeat device’ in its diesel engines. This device was rigged to ensure that when emissions tests were being carried out, a lower reading would be recorded. This would allow VW to claim that such diesel engines were much more environmentally friendly.

This is only a first, but important step, nonetheless, for purchasers and users of VW vehicles. The crux of the matter will be whether the emissions data published by VW was a material factor behind the decision of drivers to choose the manufacturer’s products. Cars are purchased for a multitude of reasons and it will be of critical importance for the consumers in this class action to demonstrate that environmental factors were a major reason for their decision to choose vehicles manufactured by the VW group.

A link to Mr Justice Waksman’s judgement and link to a BBC article about it can be found below:

UK drivers win first round in VW ‘dieselgate’ case

The High Court rules that the German firm installed ‘defeat devices’ in vehicles to cheat emissions tests.

Categories of misrepresentation

Misrepresentation comes in three sizes:

  • Innocent – the false statement is honestly made
  • Negligent – the false statement is carelessly made
  • Fraudulent – there is conscious dishonesty and the false statement is deliberately made.

If you are still in any doubt, VW’s claims about its diesel engines falls very much into the category of fraudulent misrepresentations.

This takes into the area of contract law known as misrepresentation i.e. where one party makes a false statement which induces or encourages the other party to enter a legally binding agreement. The false statement is the clinching factor in that it persuades or influences someone to enter a contract.

We have to be careful, however, because false statements of themselves do not necessarily affect the validity of contracts. A party might say something that is false, but it may have absolutely no bearing on the other person’s reasons for entering the contract.

The legal consequences of misrepresentation

A misrepresentation has the potential effect of making a contract voidable i.e. it may provide grounds for cancelling the agreement.

If an innocent party brings a successful claim for misrepresentation, she has a number of remedies:

  • Restitutio in integrum or rescission – where the parties are returned to their pre-contractual positions – if this is possible; and/or
  • Damages – in Scotland, this is only possible for negligent and fraudulent misrepresentations. Under English law, the Misrepresentation Act 1967 permits an innocent party to sue for damages in respect of an innocent misrepresentation.

There is nothing to prevent an innocent party upholding the flawed agreement and suing for damages (as in the well known Scottish case of Smith v Sim 1954 SC 357 where the new owner of a pub sued the previous owner for falsely inflating the turnover figures for the business, but critically he decided to keep the property).

When discussing the consequences of misrepresentation, I often highlight a number of cases where a false or misleading statement was made but, ultimately, this had little or no bearing on the other person’s decision to enter the contract.

In Attwood v Small (1838) 6 Cl & Fin 232, the owner of a mine made deliberately fraudulent statements about its production capacity. The prospective purchaser of the mine was not in the least bit swayed or influenced by these misrepresentations. Why? He decided to bring in his own surveyor to evaluate the capacity of the mine. The surveyor’s conclusions were broadly in accordance with that of the mine owner. Critically, however, it was the surveyor’s conclusions which persuaded the purchaser to enter the contract – not the original misrepresentation. The contract was not voidable and would stand. The purchaser, of course, would have a potential claim against the surveyor for negligence.

In Smith v Chadwick (1884) 9 App Cas 187, an action was brought by Smith, a steel manufacturer, against Messrs Chadwick, Adamson and Collier, who were accountants and promoters of a company. Smith claimed an amount of money as losses caused as a result of his decision to buy shares in the company, which were worth much less than what he had originally paid. The basis of Smith’s claim was that the company prospectus issued by Messers Chadwick, Adamson and Collier had contained several instances of false information. Among the misrepresentations that Smith identified was the statement that a particular Member of Parliament was a director of the company. In fact, this particular individual had withdrawn from the company the day before the prospectus was issued.

Held: the statement about the Member of Parliament – though clearly false – was not material because Smith had never heard of this individual. His decision to buy shares in the company had not been influenced in any way by this piece of information. Consequently, his action for damages was dismissed by the court.


Yesterday’s decision of the English High Court in Anthony Joseph Champion Crossley & Ors v Volkswagen Aktiengesellschaft and Others [2019] EWHC 783(QB) is only a first, but important step for purchasers and users of VW vehicles in the UK.

The crux of the matter will be whether the emissions data published by VW was a material factor behind the decision of drivers to choose the manufacturer’s products. Cars are purchased for a multitude of reasons and it will be of critical importance for the consumers in this class action to demonstrate that environmental factors were a major reason for their decision to choose vehicles manufactured by the VW group.

Related Blog Articles:

Copyright Seán J Crossan, 7 April 2020


Photo by Igor Rand on Unsplash

Should employers be permitted to insist on the inclusion of a “gagging clause” or non disclosure agreement (NDA) when they settle a claim outside court or tribunal for alleged harassment or discrimination?

Maria Miller MP, Chair of the Women and Equalities Committee of the House of Commons certainly doesn’t think so. Ms Miller is firmly of the view that the UK Parliament should introduce legislation, at the earliest opportunity, to outlaw the widespread use of “gagging clauses” or non-disclosure agreements.

A link to the Committee’s Report can be found below:

In April 2019, the BBC revealed that Ulster University in Northern Ireland had paid out approximately £226,000 as part of 6 settlement agreements involving former members of staff who had brought claims for discrimination and harassment while employed at the institution. These settlement agreements contained confidentiality clauses, “gagging” clauses or NDAs (the reader is free to decide which term is preferred). The BBC also discovered that 96 UK universities had used NDAs representing £87 million in value. A truly staggering figure and one can only wonder what would be the figure for settlements in privately run businesses.

Confidentiality clauses are often a staple feature of cases brought to the Employment Tribunal. The parties may well decide to settle the claim privately before proceedings are concluded. It tends to be the case that the employer party is keen to include a confidentiality clause in the settlement agreement as a condition of making a payment to the ex-employee. It should be said of course that in these types of settlement agreements, the employer is making the payment without admission of liability and the reason for choosing this method to resolve the claim can often be purely about simple economics i.e. you weigh how much it would cost you in legal expenses and disruption to your organisation for representation at a 5 day Tribunal hearing as opposed to settling the claim quickly.

NDAs started life as a way of ensuring that former employees who had previously worked for organisations were not tempted to disclose trade secrets (or other information) to their new employers which they had acquired in their old jobs.

Admittedly, the common law imposes a number of duties on employees such as:

  • to provide loyal service;
  • to act in good faith;
  • to ensure confidential information remains secure

Now, it would be something of a stretch for employers to argue that the above duties permitted them to ‘gag’ employees who had been the victims of discrimination and harassment in the work-place – hence the rise of the NDA. This is where employers get the victims to enter into a legally binding settlement agreement where, in return for a compensation payment (and sometimes an agreed reference), the victim promises not to discuss their situation with anyone other than his or her legal advisers.

Since the rise of the #MeToo and Time’s Up movements, there has been much more interest in these types of settlement agreements as more and more allegations about sexual harassment in the work-place have come to light. It has been alleged that individuals such as the disgraced American film producer, Harvey Weinstein and the British retailer, Sir Philip Green made use of NDAs to prevent people discussing how they were treated when they worked for these individuals. These agreements are seen as a sinister attempt to buy the victim’s silence by rich and powerful men who have seemingly bottomless pockets and inexhaustible legal resources.

Maria Miller and her colleagues on the Women and Equalities Committee are now saying time’s up for these types of arrangements.

Links to the stories about the work of the Women and Equalities Committee and the use of NDAs at Ulster University can be found below:

NDAs: MPs call for ban on ‘gagging clauses’ over ‘cover-up’ fears


In July 2019, the UK Government announced that it plans to introduce a Bill to Parliament in order to ban the widespread use (and abuse) of non disclosure agreements in employment contracts.

A link to this story on the BBC news site can be found below:

NDAs: New laws to crack down on ‘gagging’ clauses

A ban will be placed on NDAs that stop people speaking to police, doctors or lawyers, ministers say.
The scale of the problem of alleged harassment in the work-place and how employers deal with this can be seen in the article below which appeared in The Independent:

Copyright Seán J Crossan , 12 June and 21 July 2019