(High Court of Australia) Dixon J said: ‘In an action of deceit a plaintiff is entitled to recover as damages a sum representing the prejudice or disadvantage he has suffered in consequence of his altering his position under the inducement of the fraudulent misrepresentations made by the defendant. When what he has been induced to do is to make a purchase from the defendant and part with his money to him in payment of the price, then, if the transaction stands and is not disaffirmed or rescinded what is recoverable is ‘the difference between the real value of the property, and the sum which the plaintiff was induced to give for it’ per Abbott L.C.J. Pearson v. Wheeler. As Sir James Hannen P. in Peek v. Perry pointed out, the question is how much worse off is the plaintiff than if he had not entered into the transaction. If he had not done so he would have had the purchase money in his pocket. To ascertain his loss you must deduct from the amount he paid the real value of the thing he got. It may be objected that the point of the application of this doctrine lies in identifying ‘the transaction’ and that what Mayo J. has done is to identify it as the purchase of the goodwill and that only. But what is meant is the transaction into which the representation induced the plaintiff to enter. The measure of damages in an action of deceit consists in the loss or expenditure incurred by the plaintiff in consequence of the inducement on which he relied diminished by the corresponding advantage in money or moneys worth obtained by him on the other side: Potts v. Miller. You look to what he has been induced to part with as the initial step. He is entitled to say that but for the fraud he would never have parted with his money; per Coleridge L.C.J. Twycross v. Grant. But he cannot recover the entire price he has paid unless the thing prove wholly worthless. If the thing has any appreciable value the damages must be reduced pro tanto: per Cockburn L.C.J., Twycross v. Grant. It must not be forgotten that after all deceit is an action on the case for special damages incurred in consequence of the defendant’s fraudulent inducement.’
Dixon J
(1952) 87 CLR 647
Austlii
Australia
Cited by:
Cited – Smith New Court Securities Ltd v Scrimgeour Vickers HL 21-Nov-1996
The defendant had made misrepresentations, inducing the claimant to enter into share transactions which he would not otherwise have entered into, and which lost money.
Held: A deceitful wrongdoer is properly liable for all actual damage . .
Cited – East v Maurer CA 1991
The plaintiffs had bought a hair dressing salon from the defendant, who continued to trade from another he owned, despite telling the plaintiffs that he intended not to. The plaintiffs lost business to the defendant. They invested to try to make a . .
Lists of cited by and citing cases may be incomplete.
Updated: 29 August 2021; Ref: scu.191189