Royscot Trust Ltd v Rogerson
Court of Appeal
Citations: [1991] 2 QB 297; [1991] 3 WLR 57; [1991] 3 All ER 294; [1992] RTR 99.
Facts
The defendant was a car-dealer. They agreed to sell a car on hire-purchase terms to a customer. They contracted with the claimant, a finance company, to finance the deal. However, they overstated the value of the car and the deposit payable by the customer. If they had told the claimant the real figures, the claimant would not have agreed to finance the deal. The customer dishonestly sold the car to a third-party and stopped paying the hire-purchase fees.
The claimant sued the defendant for damages under the Misrepresentation Act 1967, alleging negligent misrepresentation. A dispute arose as to how damages should be assessed. s.2(1) of the Act states:
‘Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made the facts represented were true.’
The claimant argued that this provision entitled them to damages assessed as if the defendant was liable under the tort of deceit. This would mean that the claimant did not need to prove that the loss was foreseeable.
Issue(s)
- What is the measure of damages to be awarded under s.2(1) of the Misrepresentation Act 1967?
- Did the customer’s dishonest act break the chain of causation between the defendant’s misrepresentation and the loss?
Decision
The Court of Appeal held that damages for negligent misrepresentation are assessed on the same basis as the tort of deceit. This meant that the claimant was entitled to recover damages for all losses suffered, even those which were unforeseeable.
By this logic, the customer’s dishonest act could not break causation. In any case, the court held that the customer’s acts were foreseeable, and so would not have broken causation in any event.
This Case is Authority For…
Damages for misrepresentation are assessed on a tortious basis, not a contractual one. Damages for negligent misrepresentation are assessed on the same basis as fraudulent ones under the tort of deceit. This means that claimants can recover unforeseeable losses which would not be recoverable if they were suing for breach of contract.
