• In the case of East v Maurer 1991 1 WLR 461, it was held that damages for deceit should compensate the claimant for all losses suffered which is to include loss of profits that could have been reasonably anticipated.

Facts of the Case

  • D ran two hairdressing salons in neighbouring areas.
  • C purchased one of the salons.
  • During negotiations, D falsely represented that he personally would not be working at his other salon.
  • C failed to make a profit and discovered that D was working full time at his salon.
  • C was unable to sell the salon for three years.
  • At trial, C was awarded damages of £33,328 including £15,000 for loss of profits during the period in which C owned the business.
  • D appealed against the award for loss of profits.

Issues in East v Maurer 1991 1 WLR 461

  • What was the correct amount of damages to be awarded to C

Held by Court of Appeal

  • Appeal allowed in part

Beldam LJ

  • Held that damages for deceit were assessed on the basis that C should be compensated for all losses suffered.
  • C had failed to earn expected profits from the business and was entitled to the loss of expected profits.
  • “The learned judge, as Mr. Nicholson has pointed out, had two clear starting points. First, that any person investing £20,000 in a business would expect a greater return than if the sum was left safely in the bank or in a building society earning interest, and a reasonable figure for that at the rates then prevailing would have been at least £6,000. Secondly, he says that the salary of a hairdresser’s assistant in the usual kind of establishment was at this time £40 per week and that the assistant could expect tips in addition. That would produce a figure of over £7,000, but the proprietor of a salon would clearly expect to earn more, having risked his money in the business. It seems to me that those are valid points from which to start to consider what would be a reasonable sum to award for loss of profits of a business of this kind. As was pointed out by Winn L.J., in the case of Doyle v. Olby , this is not a question which can be considered on a mathematical basis. It has to be considered essentially, in the round, making what he described as a “jury assessment”. Taking all the factors into account, I think that the learned judge’s figure was too high; for my part I would have awarded a figure of £10,000 for that head of damage, and to this extent I would allow the appeal.”

Exclusive Industry Scoop

  • This field is for validation purposes and should be left unchanged.