#6617 - East V. Maurer - Commercial Remedies BCL

East v. Maurer

Facts

Ever changing style and fashion makes the ability to attract and satisfy intending customers a particularly valuable asset in the proprietor of a ladies' hair styling salon. According to the evidence, it was an attribute possessed by the first defendant who, in 1979, owned two salons in Bournemouth which he carried on under the name of Roger de Paris. One of the salons was at 44, Haven Road, Canford Cliffs. It had only recently been opened under the managership of a Mr. Mole. The other salon, at 37, Exeter Road, was closer to the centre of the town. The first defendant had, by 1979, been there, first as an employee and then as its proprietor since 1958.

By 1979, he had decided to concentrate his efforts at a smaller and more exclusive salon, he had decided to sell his Exeter Road business and to devote all his energies to Canford Cliffs. The plaintiffs bought the business at Exeter Road from him in September 1979. The second plaintiff, Mrs. East, intended to continue the business, but under the style and name of “Xellance.”

Misrepresentation by the defendant

He told them falsely that he had no intention of working at the Canford Cliffs salon unless, for example a staff emergency arose due to illness or for some other reason. He told them that he intended to open a salon abroad, probably in Switzerland. Such an intention obviously meant that his valuable personal contact with the clientele at Exeter Road could not follow him to the Continent and would probably not follow him to the Canford Cliffs salon because he would not be working there. His representations would obviously play a most significant part in inducing the plaintiffs to buy the salon, and so the judge held. He found that the representations were false to the first defendant's knowledge, and held that the plaintiffs were entitled to damages.

Question

In addition to the sums already mentioned, he awarded the plaintiffs loss of profits during the 3-year period arriving at a figure of 15,000. It is against the award of 15,000 for loss of profit that the defendants now appeal.

Holding

Difference between damages for deceit and damages in contract

That the measure of damages for the tort of deceit and for breach of contract are different, no longer needs support from authority. Damages for deceit are not awarded on the basis that the plaintiff is to be put in as good a position as if the statement had been true; they are to be assessed on a basis which would compensate the plaintiff for all the loss he has suffered, so far as money can do it.

Consequential loss of profits are recoverable

But as to the statements of principle to which I have referred, it seems to me clear that there is no basis upon which one could say that loss of profits incurred whilst waiting for an opportunity to realise to its best advantage a business which has been purchased, are irrecoverable. It is conceded that losses made in the course of running the business of a company, are recoverable. If in fact the plaintiffs lost the profits which they could reasonably have expected from running a business in the area of a kind similar to the business in this case, I can see no reason why those do not fall within the words of Lord Atkin in Clark v. Urquhart [1930] A.C. 28 , 68, “actual damage directly flowing from the fraudulent inducement.”

So I consider that on the facts found by the judge in the present case, the plaintiffs did establish that they had suffered a loss due to the defendants' misrepresentation which arose from their inability to earn the profits in the business which they hoped to buy in the Bournemouth area. I would therefore reject the submission of Mr. Shawcross that loss of...