Deceit The Lie of the Law




8.1 The two classic remedies for a fraudulent misrepresentation1 are the monetary remedies, principally compensatory damages in respect of the loss sustained by the representee by reason of the deceit, and the avoidance or rescission of the contract, disposition or other transaction procured by reason of the fraud.2 Both remedies are available to the claimant; no choice need be made.3


8.2 The injury to the claimant (the damnum) lies at the heart of the action in deceit. Unless there is damage, there is no cause of action at common law.4 The claim for damages in deceit is a claim for unliquidated damages.5 There are various types of injury which may result in monetary remedies. Compensatory damages are awarded for loss or damage which may be assessed and quantified in monetary terms,6 in particular property loss or damage, financial losses, third party liabilities, the impairment of parental rights,7 and losses associated with death or physical injury.8 Other types of injury may be catered for by other types of remedy.9

Causation, remoteness and mitigation

8.3 The injury which is to be compensated must have been caused by the deceit. Without that causal connection, there is no cause of action. Accordingly, in the curious case of Collins v. Cave,10 the plaintiff, the defendant and one Collins had entered into a joint speculation, with Collins providing all the capital, two-thirds of which was advanced on behalf of or as a loan to the plaintiff and the defendant; Collins wished to retire from the adventure and the defendant offered to take upon himself the whole of the adventure and the whole of the debt, provided that the plaintiff retired from the adventure as well. Collins consented to this arrangement and it appears that the plaintiff had agreed to it. In a particularly elaborate plan, the defendant intended to induce Collins to believe that the adventure had never been terminated, because of the plaintiff’s continued involvement, and to induce Collins to sue the plaintiff for the one-third capital contribution lent to the plaintiff, and to deter the plaintiff from calling the defendant as a witness (who would have had to affirm the agreement by which the plaintiff’s debt was assumed by the defendant) and to destroy the plaintiff’s credit as a witness. To this end, the defendant wrote a letter purportedly addressed to the plaintiff, but in fact directing it to Collins; in that letter, the defendant pretended that the plaintiff refused to concur in the arrangement. Collins sued the plaintiff and the dispute was referred to arbitration, on terms that neither the plaintiff nor the defendant would be examined as witnesses. Collins recovered the debt from the plaintiff and the plaintiff sued the defendant in deceit. The Exchequer Chamber held that the plaintiff’s liability to Collins did not result from the fraudulent representation, given that there was no sufficient reason why the defendant was not called as a witness or for concluding that the defendant would have committed perjury, or indeed that the arbitrator’s decision was in error. Wightman, J said that:

“The difficulty is, to say that the damage necessarily resulted from the fraudulent representation … we do not see that the damage which the plaintiff alleges himself to have sustained arose from the acts of the defendant.”

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