Outer House allows £5.25 million fraudulent misrepresentation action against Serco to proceed to proof

About this case:

• Citation:
  [2026] CSOH 100
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Sandison

Well-Fed Scotland CIC claims that Serco Limited and Serco Group plc induced it to commit resources to prospective government catering work despite, it alleges, never intending to enter into the commercial relationship represented to it. Lord Sandison held that the allegations required factual inquiry and appointed the action to a proof before answer with all averments and pleas standing. 

Well-Fed previously operated a community catering enterprise which funded food-related social programmes. It seeks £5.25 million in damages, together with orders concerning material said to embody its intellectual property and declarators relating to Serco’s “Speak Up” ethics process.

Christopher Gray, lay representative, appeared for the pursuer. Manson, instructed by Burness Paull LLP, appeared for the defenders.

The action arose from dealings beginning in March 2023, when a Serco employee contacted Well-Fed about a potential catering opportunity at the former RAF Scampton site in connection with a Home Office asylum accommodation contract. Well-Fed avers that during the following 26 months Serco repeatedly represented that large-scale government catering contracts were likely and that a commercial relationship between the parties was operative.

It claims that it relied on those representations by committing resources, including converting production to frozen food, altering working practices, incurring mobilisation and consultancy costs and recruiting additional staff. It alleges that the resulting expenditure caused it to become insolvent, cease food production and make staff redundant. 
Fraud allegations challenged

Serco argued at debate that the fraudulent misrepresentation case was bound to fail. The defenders submitted that fraud had to be pled with particularity and that many of the statements relied upon amounted only to opinions, commercial optimism or “puff”. They also emphasised that any government catering opportunities depended ultimately upon decisions made by HM Government rather than Serco itself.

Well-Fed maintained that the statements had to be considered as part of the whole course of dealings rather than individually. Its case was that Serco misrepresented matters within its own knowledge, including whether it genuinely intended to use Well-Fed as a supplier if relevant work materialised.

Lord Sandison considered that questions concerning the meaning, falsity and context of the representations were matters requiring evidence. He observed that, where the factual context played a significant role in determining the legal character of a statement, it would ordinarily be necessary to hear evidence. Given the “sheer extent, complexity and potential nuance” of the circumstances averred, this was not one of the rare cases in which such a claim could properly be dismissed on the pleadings alone. 

‘Selective shadow proof’

The judge rejected the contention that expressions framed as opinions could not support a case of fraud. Well-Fed’s allegation was that apparent opinions had been expressed without being genuinely held, with a view to inducing it to act to its detriment. Lord Sandison held that this was capable of amounting to fraudulent misrepresentation.
Similarly, whether particular statements were merely commercial puff could only properly be assessed in their factual context. The judge considered that Serco’s approach risked isolating individual communications from the broader course of dealings. He agreed with Well-Fed that in several respects the defenders were effectively inviting the court to conduct a “selective shadow proof on the pleadings alone”. 

Nor was the dependence of any catering work upon government decisions fatal to the action.

Well-Fed was not claiming anticipated profits from contracts which failed to materialise. Its damages case concerned expenditure allegedly incurred in preparing itself for contracts which, on its version of events, Serco never intended to share with it regardless of what work became available. Lord Sandison said a contingent opportunity could be “genuinely pursued or dishonestly held out”, and that determining the true state of affairs required evidence from those whose intentions were in issue. 

Confidentiality agreement

Serco also relied on a confidentiality agreement entered into in March 2025 which provided that discussions, negotiations or disclosure of confidential information would not amount to a representation or commitment to enter into a further agreement.

Lord Sandison held that the provision did not bar the fraud claim.

Referring to authority describing the principle that “fraud is a thing apart”, he noted the public policy rule that a party cannot rely upon contractual arrangements so as to benefit from its own fraud. Taking Well-Fed’s allegations as true for the purpose of debate, its case was that essentially all of its actions in dealing with Serco, including entering into the confidentiality agreement itself, resulted from the alleged fraud.

The agreement therefore did not prevent inquiry into the fraudulent misrepresentation case. Its entire agreement provision also expressly preserved fraudulent representations and reinforced the conclusion that the agreement was not intended to cover the situation alleged by Well-Fed. 

Intellectual property and ‘Speak Up’

Well-Fed claims that it transferred material developed over years of trading, including its recipe database, allergen matrix, nutritional and product specification sheets and menu specifications and rotations. Lord Sandison considered that what had been labelled a breach of confidence claim was, properly understood, a claim for the cost of compiling that intellectual property as part of the losses allegedly caused by fraudulent misrepresentation.

An alternative unjustified enrichment claim concerning the transfer of the material was also capable of proceeding. Any recovery on that basis would ultimately depend upon the extent to which Serco had been enriched, a matter which could be established at proof.

The court similarly allowed averments concerning consultancy costs to remain. Well-Fed also alleged that it had been induced to participate in Serco’s “Speak Up” process by a false representation that the ethics process was independent, thereby incurring further costs.

Lord Sandison held that, understood in that way, this aspect of the claim was “entirely relevant”. He added that there could be independent value in the court determining the serious allegations concerning a whistleblowing scheme operated by “a very substantial corporate undertaking enjoying the benefit of extensive public sector contracts”. 
AI and unrepresented litigants

In considering the form of Well-Fed’s pleadings, Lord Sandison also commented on the increasing number of litigants appearing without professional legal representation, a development he said had been “greatly facilitated by the ever-increasing availability and utility of artificial intelligence tools”. Unrepresented litigants were not entitled to greater indulgence in complying with procedural requirements. However, the court had to distinguish deficiencies in form from substantive legal inadequacy.

Such pleadings could contain superfluous material, excessive complexity or inaccurate legal terminology, but the proper task was to look through those defects and ask whether fair notice of the case had been given and, if so, whether it was bound in law to fail. Lord Sandison cautioned in particular against turning authorities requiring fraud to be pled with specificity into “formidable or even unsurmountable obstacles to the inexperienced pleader, and thus potentially to the vindication of justice”. 

He concluded that Well-Fed’s case met the threshold for inquiry. No finding has yet been made that Serco engaged in fraud or any other wrongdoing.

The action was appointed to proceed to proof before answer without any averments being excluded and with all pleas standing.