Naughton v O’Callaghan: 1990

Damages Award to Restore Plaintiff’s Poistion

In 1981 the plaintiffs had bought a thoroughbred yearling colt called ‘Fondu’ for 26,000 guineas. In fact a mistake had been made and its pedigree was not as represented. Its true pedigree made it suitable only for dirt track racing in the United States, not for racing in this country. This mistake was not discovered until about two years later by which time the colt had been raced unsuccessfully in the UK and its value had as a result fallen to 1,500 pounds; substantial training fees had also been wasted. The defendants did not dispute that there had been a negligent misrepresentation. The issue was as to damages. The defendants said that the actual value of the colt at the time of its purchase was 23,500 guineas and that the plaintiff’s damages should be limited to the difference, 2,500 guineas: the ‘diminution in value’ test.
Held: The Court assessed the plaintiffs’ losses, including consequential losses, as at the date of their discovery of the misrepresentation. Waller J regarded it as unjust to take the normal date of assessment.
Waller J said: ‘Where an article purchased as the result of a misrepresentation could have been sold immediately after the sale for the price paid but by the time the misrepresentation was discovered its value had fallen by reason of a defect in it which had by then become apparent the appropriate measure of damages could be the difference between the purchase price and its value at the time the misrepresentation was discovered and not the difference between the purchase price and its actual value at the time of purchase provided that the article purchased was altogether different from that which had been expected.’
As part of their damages the plaintiffs claimed for the costs incurred in training and keeping the colt before the misrepresentation was discovered. The defendant argued that the expenditure would have been incurred anyway as the plaintiffs would, if they had not bought this particular yearling, have bought another one at the same sale. The plaintiffs accepted this but said that had they bought a different horse it might have paid for its keep and reaped for them rich rewards. Waller J said: ‘I have concluded that the plaintiffs are entitled to ask the court to look simply at the contract they made in reliance on the representation which induced them to enter into that bargain. They are entitled to say that there must be no speculation one way or the other about what would have happened if they had not purchased this horse and if no misrepresentation had been made to them.’


Waller J


[1990] 3 All ER 191, [1991] CLY 1319


England and Wales


AppliedDoyle v Olby (Ironmongers) Ltd CA 31-Jan-1969
The plaintiff had been induced by the fraudulent misrepresentation of the defendant to buy an ironmonger’s business for 4,500 pounds plus stock at a valuation of 5,000 pounds. Shortly after the purchase, he discovered the fraud and started the . .

Cited by:

ConsideredDowns v Chappell; Downs v Stephenson Smart (a Firm) CA 1996
The plaintiff purchased a book shop. He claimed that in doing so he had relied upon the accounts prepared and signed off by the respective defendants.
Held: The judge had been wrong by testing what would have been the true figures as against . .
CitedDowns and Another v Chappell and Another CA 3-Apr-1996
The plaintiffs had suceeded in variously establishing claims in deceit and negligence, but now appealed against the finding that no damages had flowed from the wrongs. They had been sold a business on the basis of incorrect figures.
Held: . .
CitedYam Seng Pte Ltd v International Trade Corporation Ltd QBD 1-Feb-2013
The parties had contracted for the international distribution of scent using a ‘Manchester United’ brand. . .
Lists of cited by and citing cases may be incomplete.

Torts – Other, Damages

Updated: 11 May 2022; Ref: scu.185448