Date: Fri, 23 Nov 2007 15:45

From: Jason Neyers

Subject: Deceit: damages and account

Dear Charles:

The answer to your question depends, of course, on the principle underlying disgorgement. For those of us who buy the CJ justification for disgorgement there are good reasons why fraud will not support that remedy.

Also, the older cases you mention seem more consistent with the fraud destroying the underlying juristic reason for the transaction and therefore with restitution for unjust enrichment following rather than supporting for disgorgement for wrongs.

Cheers,

----- Original Message -----
From: Charles Mitchell
Date: Friday, November 23, 2007 8:46 am
Subject: RE: 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. I’m not sure whether that’s necessarily a clincher, but it would be interesting to hear what other people think.

The judge’s other reason in Renault was that Arden LJ had previously said in Murad v Al-Saraj [2005] WTLR 1573 that an account of profits isn’t 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 Court of Appeal allowed the claim on the second basis, and it’s 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 isn’t 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 the defendant’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 isn’t 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 wouldn’t 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.

--  
Jason Neyers  
Associate Professor of Law  
Faculty of Law  
University of Western Ontario  
N6A 3K7  
(519) 661-2111 x. 88435

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