NOTES OF CASES
| DOI | http://doi.org/10.1111/j.1468-2230.1969.tb01234.x |
| Published date | 01 September 1969 |
| Date | 01 September 1969 |
NOTES
OF
CASES
DAMAGES
FOR
DECEIT
NOT
the least of the difficulties arising from
Doyle
v.
Olby
(Iron-
mongers)
Ltd.l
is to determine exactly what the facts were, but
the broad outlines of the story are clear. In January
1964
the
plaintiff bought a business from Olby (Ironmongers) Ltd. He was
induced to do
so
by various misrepresentations. The crucial one
a
was that the trade
of
the business was
when in fact half of
it
was obtained by one of the defendants,
Mr.
Cecil Olby, going out to canvass customers for two days a
week.4
Mr.
Cecil Olby’s remuneration for this work was not brought
into the accounts shown to the plaintiff by
Mr.
Leslie Olby,
a
director
of
Olby (Ironmongers) Ltd.,
so
that the accounts contained
a
“
blatantly wrong figure
”
for wages and management remunera-
tion.
A
further inducement to the plaintiff to buy was a covenant
by Olby (Ironmongers) Ltd. not to engage in any ironmongers’
business within ten miles of the business premises for five years;
but within two months of the purchase a company called
A.
Olby
&
Son
Ltd., which was with Olby (Iron-
mongers) Ltd.
in
<<
the Olby empire,” began to canvass old
customers of Olby (Ironmongers) Ltd.
It
was assumed that this
conduct by
A.
Olby
&
Son
Ltd. did not amount to a breach
of
the
covenant entered into by Olby (Ironmongers) Ltd.
Within five months of the purchase, in May
1964,
the plaintiff
brought an action against Olby (Ironmongers) Ltd., Cecil Olby,
Leslie Olby and
A.
Olby
&
Son Ltd. claiming damages
for
fraud
and conspiracy. The action came to trial a little over three years
later,
in
July
1967;
and this delay had serious consequences for the
plaintiff. He was unable to dispose of the business until about
January
196‘T9;
and meanwhile he continued to run
it
at a
loss.
The trial judge, Swanwick
J.,
found that the representations were
false to the knowledge of Cecil Olby and that his knowledge
“
must
be imputed to the other defendants because he was acting
on
their
behalf.”
10
He also found that there was a conspiracy to defraud
the plaintiff.
An
appeal against these hdings was abandoned,
so
that the sole issue remaining in dispute was the amount of damages.
1
[1969]
2
W.L.R.
673;
2
All
E.R.
119.
Subsequent references
in
this note
are to the latter report.
2
There is
also
a suggestion that the turnover of the business
was
misrepresented
(p,
120D); but
no
reference
is
made
to
this in the assessment of damages.
all over the counter
”
closely associated
”
3
p.
120B.
4
p. 1201.
5
Ibid.
0
p. l2OE.
7
p.
l26G.
8
It
is
interesting
to
note that the plaintiff never attempted to rescind.
9
p.
1U)H.
10
p.
l2lB.
556
SEPT.
1969
NOTES
OF
CASES
557
The trial. judge assessed the damages on two alternative bases,
both submitted by plaintiff’s counsel.” The first was the annual
cost
(EGOO)
of employing a part-time traveller, multiplied by two-
and-a-half
‘(
that being the normal basis for valuing goodwill.”
The second was the reduction
in
the value of the goodwill resulting
from loss of the customers who could only have been kept by
employing a canvasser. This loss reduced the value of the goodwil!
by
35
to
40
per cent. of the
24,000
at which the goodwill was
valued in the accounts.
On
both bases the damages were assessed
at
$1,500.
On
appeal this figure was raised to
25,500,
consisting of
(1)
the
difference between the amount which the plaintiff had paid for the
business and the benefits which he had derived from
it;
plus
(2)
consequential loss suffered by reason of the plaintiff’s having
attempted
to
run the business for some three years. The most
explicit criticism of the measure adopted below is contained in the
judgment of Lord Denning
M.R.:
((.
. .
the judge accepted, that the proper measure of damages
was the cost of making good the representation,’
or
what
comes to the same thing,
‘
the reduction in value of the good-
will
’
due to the misrepresentation.
In
so
doing he treated the
representation as a contractual promise
. .
.
I
think
it
was
the
wrong
measure. Damages for ’fraud and conspiracy are
assessed differently from damages for breach of contract.”
Winn
L.J.
similarly refers to the distinction drawn in
Mayne and
BLcGregor
on
Damages
(3
955)
between the measure of damages for
breach of contract and for deceit; and adds that the decision in the
instant case will support views there expressed.I3 Sachs L.J., while
agreeing with the other two judgments, does not in his own judgment
rely
on
any distinction between contract and deceit.
In
discussing the relevance of this distinction to
our
case,
two
quite separate issues arise. The first relates to what may be called
the prima facie measure of damages for breach of contract and
deceit.
So
far as the prima facie measure of damages is concerned, the
starting point is the much repeated statement that in an action
for
breach of contract the plaintiff is entitled to be put into the position
in which he would have been, had the contract
not
been broken,
while in tort he is entitled to be put into the position in which he
would have been, had the tort not been ~omrnitted.’~ From this
it
is thought to follow that in an action of deceit the plaintiff is
entitled to be put into the position in which he would have been,
had the representation not been made; while
in
an action
for
breach
of contract he is entitled to be put into the position in which he
would have been, had the representation been true. The logic of
The second relates to consequential loss.
11
p.
121D-F.
1.3
p.
l23D.
12
p.
l2lF-G.
14
See,
Mayne and
McCregor
on
Damages,
$
6.
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