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Charles Mitchell
Fri, 23 Nov 2007 13:45:34 +0000
Deceit: damages and account


Andrew, David: Thanks for pointing us to these interesting cases. On the question whether a gain-based remedy should be available for the tort of deceit, I always find myself asking - why not? In Renault the judge did offer a reason, viz that the claimant had not only suffered no loss but had in fact made a profit itself. Iím not sure whether thatís necessarily a clincher, but it would be interesting to hear what other people think.

The judgeís other reason in Renault was that Arden LJ had previously said in Murad v Al-Saraj [2005] WTLR 1573 that an account of profits isnít available to victims of deceit, but I doubt whether much weight should be attached to that. At first instance in Murad the claim was allowed both on the basis that the claimants could have a gain-based remedy for the tort of deceit and on the basis that the defendant had to disgorge the profits of his breach of fiduciary duty. The CA allowed the claim on the second basis and itís not clear to me that any members of the court thought it necessary to decide whether the claim based on deceit was also available.

Halifax Building Society v Thomas [1996] Ch 217 also contains a dictum that an account of profits isnít available to victims of deceit - but that case was actually decided on the basis that the clamant could not ask for a gain-based remedy founded on the tort of deceit once it had affirmed the contract which had been induced by D?s fraudulent misrepresentation (a similar finding was made in the much earlier case of Selway v Fogg (1839) 5 M & W 83).

So it seems to me that there still isnít any clear English authority that as a general rule victims of deceit cannot claim a gain-based remedy; in principle it seems to me that this wouldnít be a good rule for English law to have; and looking back there are many older cases which say exactly the opposite, since they hold that a victim of deceit who is fraudulently induced to part with money can waive the tort and bring an action for money had and received: e.g. Hill v Perrott (1810) 3 Taunt 274; Abbotts v Barry (1820) 2 Brod & B 369; Edmeads v Newman (1823) 1 B & C 418 at 422-3; Holt v Ely (1853) 1 El & Bl 795 at 800.


Best wishes


Quoting David Cheifetz:


Compare the opposite result - bad guys had to cough up the profit - in 3Com Corporation v. Zorin International Corporation, 2006 CanLII 18351 (ON C.A.)

The defendants obtained a cheaper price for computers from 3Com by telling the distributor that the computers were intended for market X. They were sold in market Y for a higher price. The evidence was also that 3Com couldn't have sold the computers at the higher price. Defendants were held liable for the extra profit.


-----Original Message-----
From: Andrew Tettenborn
Sent: November 23, 2007 6:27 AM
Subject: deceit: damages and account

A nice little case in the English QBD that may have passed list members by. [Renault UK Ltd v. FleetPro Technical Services Ltd & Anor [2007] EWHC 2541 (QB).]

The makers of Renault cars operated a discount scheme in favour of members of BALPA (a labour union): the scheme was operated by Fleetpro, who ordered the cars. Under the scheme orders were sent to the Renault importers: they sent them to Renault in France, whereupon as and when orders came in Renault manufactured the necessary cars and shipped them.

Fleetpro did the natural thing and ordered 217 discounted cars for ordinary customers who they knew had nothing to do with BALPA. The cars were shipped: the importers made a profit on them, but (because they gave a rebate to the dealer involved) less than the profit they would have made on cars not covered by the scheme. The importers sued Fleetpro for deceit, and won on liability. On damages, however, held:

(1) the importers had proved no loss, i.e. they hadn't proved the sales came other than as extra sales, or that they'd otherwise have persuaded customers to buy their standard (over) priced cars.

(2) There was no jurisdiction, absent a fiduciary relationship) to award an account of profits against Fleetpro. Hence the latter kept a tidy (ill-gotten?) profit.

The latter holding seems particularly interesting.

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