Boris Ignachkov Legal Principles and Key Points
- In the case of Royscot Trust Ltd v Rogerson [1991] 3 WLR 57, the court held that fraudulent misrepresentation damages are equivalent to innocent misrepresentation as per s 2(1) of the Misrepresentation Act 1967.
- This contract law case is about hire purchase and misrepresentation.
- This case brought up the issue of causation and whether selling the car constitutes as novus actus interveniens.
Facts of the Case
- D contracted with C to sell a car to a finance company. The finance company had a policy that they would not accept transactions unless the deposit was worth about 20% of the total price.
- D accidentally misrepresented the actual price and deposit price. selling the car for the wrong price of £6,400.
- C sold the car dishonestly after contracting to a third party. C owed over £3,500.
Issues
- Could the dealer have reasonably foreseen the loss?
- Can the finance company recover damages for misrepresentation?
- Was the customer’s sale an intervening act?
Held by Court of Appeal
- Appeal dismissed – C’s sale was not a new intervening act to the chain of causation but the cross appeal was approved.
Balcombe LJ
Innocent misrepresentation
- Damages for innocent misrepresentation can be claimed under s 2(1) of the Misrepresentation Act 1967.
- C entitled for compensation following losses incurred from the misrepresentation but the damages should not be too remote.
- D reasonably foresaw that C would sell the car as per Doyle v Olby (Ironmongers) Ltd [1969] 2 Q.B. 158.
- “It seems to me that to suggest that a different measure of damage applies to an action for innocent misrepresentation under the section than that which applies to an action for fraudulent misrepresentation (deceit) at common law is to ignore the plain words of the subsection and is inconsistent with the cases to which I have referred”.
Ralph Gibson LJ
Foreseeability
- The finance company would not have otherwise agreed to the terms of the agreement.
- “The particular damage suffered was loss through dishonest sale of the car, but it is clear law that, in determining foreseeability of damage for the tort of negligence, the essential factor in determining liability is whether the damage is of such kind as the reasonable man should have foreseen: see the discussion of the authorities in Banque Keyser Ullmann S.A. v. Skandia (U.K.) Insurance Co. Ltd. [1990] 1 Q.B. 665”.
- The damage caused by the negligent misstatement was foreseeable.
