Legal Principles and Key Points
- In the case of William Sindall plc v Cambridgeshire County Council  EWCA Civ 14, it was held damages should compensate for C’s loss based on what he incurred for the property.
- This contract law case concerned the sale of property, rescission, mistake and misrepresentation.
- Measure of damages under s 2(2) Misrepresentation Act 1967 should be less than the damages awarded under s 2(1) because awarding for consequential loss goes beyond the scope of rescission.
Facts of the Case
- C brought some land from D. The contract included conditions 14 and 7 from the National Conditions of Sale.
- D did not disclose a private foul sewer on the land to C. C sought to rescind the contract after spotting it on the land.
- After both parties contracted, the value of the land dropped significantly.
- Can the purchaser claim rescission for mistake?
- Did the vendor make an innocent misstatement?
- Should damages be awarded in lieu of rescission?
Held by Court of Appeal
- Appeal allowed – there had been no misrepresentation and the purchaser was entitled to contract rescission. D’s loss would have been greater if the contract was terminated than the loss C actually sustained.
- There are three factors to consider when applying s 2(2): the nature of the misrepresentation, the loss caused by the misrepresentation if the contract was validated and the loss caused to the reprentor as a result of contract rescission.
- “The difference in value between what the plaintiff was misled into believing that he was acquiring and the value of what he in fact received seems to me to be the measure of the loss caused to him by the misrepresentation in a case where he cannot rescind the contract and therefore retains the property which he received.”
- Equity has a broader understanding of what a fundamental mistake entails unlike contract.
- “It must be assumed, I think, that there is a category of mistake which is ‘fundamental’ so as to permit the equitable remedy of rescission, which is wider than the kind of ‘serious and radical’ mistake which means that the agreement is void and of no effect in law”.
- Under S 2(1) of the Misrepresentation Act 1967, “the misrepresentor is invariably deprived of the benefit of the bargain (e.g. any difference between the price paid and the value of the thing sold) and may have to pay additional damages for consequential loss suffered by the representee on account of having entered into the contract”.
- “In my view, section 2(1) is concerned with the damage flowing from having entered into the contract, while section 2(2) is concerned with damage caused by the property not being what it was represented to be.”
- “I think that section 2(2) was intended to give the court a power to eliminate this anomaly by upholding the contract and compensating the plaintiff for the loss he has suffered on account of the property not having been what it was represented to be. In other words, damages under section 2(2) should never exceed the sum which would have been awarded if the representation had been a warranty. It is not necessary for present purposes to discuss the circumstances in which they may be less.”