Salt v Stratstone Specialist Ltd [2015] EWCA Civ 745

Salt bought a luxury car from Stratstone on the representation that it was new. It had in fact been manufactured earlier, suffered defects and undergone repairs. After recurring problems and discovery of its history, he sought to unwind the transaction for misrepresentation. The dealer resisted rescission, relying on matters including registration, use, depreciation and the time that had passed. The litigation required the courts to distinguish literal restoration of the original position from practical restoration, and to consider when damages could be awarded instead of rescission under section 2(2) of the Misrepresentation Act 1967.

Did registration, use, depreciation or delay make rescission unavailable, and could section 2(2) damages be awarded if the legal right to rescind no longer existed?

The Court of Appeal upheld rescission and rejected the dealer’s challenge. The car remained available for return, and exact physical or financial identity with the moment of sale was not essential if practical justice could be achieved. Registration and depreciation did not automatically make restoration impossible. If the representor sought an allowance for depreciation or use, it had to establish the relevant basis and amount; an assumed allowance was not a substitute for evidence. The Court also held that section 2(2) damages are awarded in lieu of an available right to rescind. They do not provide an independent remedy where that right has already been lost through an applicable bar. Delay therefore required proper analysis rather than operating as an automatic defeat merely because time had elapsed.

Rescission for misrepresentation may remain available where practical restoration can be achieved through returning the subject matter and appropriate adjustments. Registration, use and depreciation are not automatic bars. Section 2(2) damages in lieu presuppose an available right to rescind, rather than replacing a right already lost.

Salt is a modern corrective to an overly rigid view of restoration. It keeps attention on whether the transaction can fairly be unwound, with evidence supporting any allowance. It is also important for remedy selection: section 2(1) damages and section 2(2) damages in lieu are distinct. A claimant unable to rescind cannot simply invoke the latter as an automatic fallback. Students should identify the particular alleged bar and analyse its requirements instead of treating continued possession or ordinary depreciation as decisive.