| DAMAGES — Deceit — Measure of damages — Loss of a chance — Whether damages recoverable
4 Eng Ltd v Harper and another [2008] EWHC 915 (Ch); [2008] WLR (D) 131
Ch D: David Richards J: 29 April 2008
There was no objection in principle to recovery of damages for loss of a chance in an action for deceit.
David Richards J, sitting in the Chancery Division, so held when assessing damages on the claim in deceit brought by the claimant, 4 Eng Ltd, against the defendants, Roger Harper and Barry Simpson. The claim in deceit was established against both defendants based on their knowledge of the falsity of a number of express representations contained in the share sale agreement on which the claimant had relied in agreeing to purchase Excel, a company owned and managed by them.
DAVID RICHARDS J said that the losses for which the claimant claimed damages included loss of opportunity to purchase and profit from another company, T Ltd. The claimant’s case was that, if it had not been induced by the defendants’ fraudulent misrepresentations to buy Excel, it would have bought shares in T Ltd, under its ownership the business would have performed well and that it had thereby been deprived of very substantial income and capital profits. The guiding principle to the award of damages in tort, both generally and specifically as regards fraud, was contained in the speech of Lord Blackburn in Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, 39, which had been cited by Lord Browne-Wilkinson in Smith New Court Securities Ltd v Citibank NA [1997] AC 254, 262–263. The defendants accepted that in principle damages for the loss of an alternative purchase, if caused by the defendants’ fraudulent misrepresentation and the claimant’s reliance on it, were recoverable in an action for deceit. The Court of Appeal had so held in East v Maurer [1991] 1 WLR 461. They submitted, inter alia, that the claimant’s claim involved an impermissible attempt to rely on two distinct strands of authority: damages for loss directly caused to the claimant and damages for loss of a chance. A combination of such claims involved no error of principle. If the loss of the chance was damage directly caused by the defendants’ deceit, it was as much within the scope of damages for deceit as payments or liabilities in fact made or incurred by the claimant or as damages for the loss of profits in a hypothetical alternative business established on the balance of probabilities as in East v Maurer. That decision pre-dated the decision of the Court of Appeal in Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602 by over four years. It was not an objection that the loss was assessed as a loss of a chance, not as a loss established on the balance of probabilities. It was true that it did not previously appear to have been decided that damages for loss of a chance were recoverable for deceit, but there was no objection in principle. If damages for loss of a chance were recoverable in negligence, why should they not also be recoverable in deceit?
|
