Royscott Trust v Rogerson [1991] 2 QB 297 Court of Appeal

The defendant, a car dealer, mis-stated the particulars of a sale by hire purchase to the finance company, the claimant. The finance company operated a rule whereby they would only advance money if a 20% deposit was paid by the company. The defendant stated the price of the car was £8,000 and the deposit paid was £1,600 leaving the loan advanced of £6,400. This was the amount the customer needed to borrow, although the price and deposit values stated were false. The customer later defaulted on the hire purchase agreement and sold the car on. The claimant brought an action against the defendant seeking damages of £3,625 representing the difference between £6,400 paid to the defendant minus the sum of £2,774 paid by the customer before defaulting. The defendant argued that there was no loss since the defendant acquired title to the car which was worth £6,400. The trial judge accepted neither submission. He held that if the figures on the hire-purchase agreement had shown a deposit of £1200 and a cash price of £6,000, then the Finance Company would have paid £4,800 to the Dealer and would have had no recourse against it since the deposit would have been correctly shown as £1200. Because the Finance Company were induced to pay an extra £1600, that was the relevant loss suffered by the Finance Company. Both parties appealed.

Held:

Damages under s. 2(1) Misrepresentation Act 1967 should be assessed on the basis of damages available in the tort of deceit not general contractual principles. This applies in the absence of fraud. The wording of s.2(1) was clear and not capable of an alternative construction.

Back to lecture outline on misrepresentation