Decided 21 March 1991 | End date March 21, 1991 | |
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Citation(s) [1991] EWCA Civ 12, [1991] 2 QB 297; [1991] 3 WLR 57; [1992] RTR 99 Judge(s) sitting Balcombe and Ralph Gibson LJJ Court Court of Appeal of England and Wales Similar Car and Universal Finance, Doyle v Olby (Ironmon, Howard Marine and Dredging, Derry v Peek, Esso Petroleum Co Ltd v | ||
Royscot Trust Ltd v Rogerson [1991] EWCA Civ 12 is an English contract law case, concerning the Misrepresentation Act 1967 and the extent of damages available under s 2(1) for negligent misrepresentation. It decided that under the Act, the appropriate measure of damages was the same as that for common law fraud, or damages for all losses flowing from a misrepresentation, even if unforeseeable.
Contents
Facts
Andrew Rogerson wanted to get a second hand Honda Prelude on hire purchase. He went to see the car dealer, Maidenhead Honda Centre Ltd. They agreed to sell Mr Rogerson a car for £7600. Mr Rogerson paid a £1200 deposit. To finance the rest, Mr Rogerson got the help of a finance company called Royscot Trust Ltd. On Mr Rogerson's behalf, Maidenhead did the application forms. But it falsely stated (i.e. misrepresented) that the cost of the car was £8000 and the deposit being paid was £1600. Royscot approved the loan. Had accurate figures been stated, Royscot would not have done this as its policy was only to lend money for hire purchase if 20% of the total cost was paid in the deposit (1200/7600 = 15.7%).
Mr Rogerson started to pay off his instalments, but subsequently ran into difficulties with money. In August 1987 he sold the car off, dishonestly, as he knew it was not allowed under the terms of the hire purchase agreement. He informed the finance company of this in August 1988, and stopped paying instalments in September 1988, with £3,625·24 left to pay.
In order to recover its losses, Royscot sued the car dealer, Maidenhead Honda Centre Ltd, alleging that the company's reliance upon the garage's innocent misrepresentation (fraud was not mentioned) induced it to enter into the hire purchase contract. It argued that, had the car dealer not given the wrong figures, it would never have entered the credit agreement, and therefore the subsequent loss was the car dealer's fault. The car dealer countered that the real cause of Royscot's loss was Mr Rogerson's dishonest sale of the car, because if he had not sold it, they would be entitled to repossession and discharge of their debt that way. The car dealer argued that Mr Rogerson's independent wrongful act broke the chain of causation between its misrepresentation and Royscot's loss.
The court had to consider whether under the Misrepresentation Act 1967, s.2(1), a misrepresentee is liable for all consequences of a false statement (as in a common law action for fraud), or if Mr Rogerson's independent act broke the necessary chain of causation (as in a common law action for negligence).
Judgment
Balcombe LJ and Ralph Gibson LJ held that for negligent misrepresentation under s.2(1), the correct measure of damages was tortious measure, and the same as that for the tort of deceit. The car dealer was liable for all the consequences of his misrepresentation, and therefore had to pay off the debts owed to Royscot Trust Ltd. In any case, Mr Rogerson's wrongful sale of the car was foreseeable and not a break in the chain of causation. The following passage of Balcombe LJ's judgment is key: