Court of Appeal Rubs Salt in Stratstone's Wounds

Car enthusiast wins distinctive victory in the Court of Appeal in misrepresentation case

Car enthusiast, Geoff Salt, with representation from Coyle White Devine, has won a distinctive victory in the Court of Appeal in a misrepresentation case against specialist car seller, Stratstone Specialist Limited (trading as Stratstone Cadillac Newcastle) (“Stratstone”).

In Geoffrey Alan Salt v Stratstone Specialist Ltd [2015] EWCA Civ 745, the Court of Appeal confirmed that damages in lieu of rescission under s. 2(2) of the Misrepresentation Act 1967 (the “Act”) could only be awarded if rescission itself was still available as a remedy. (Damages may still separately be available for non-innocent misrepresentation under s. 2(1) of the Act.) In doing so it clarified conflicting case-law in the lower courts. It also confirmed that rescission should be the normal remedy for misrepresentation where possible, but that a victim representee should not be unjustly enriched at the representor’s expense as a result of the rescission. However, it is for the representor in such a case to prove that justice requires that he should be compensated for any depreciation or use of an asset acquired as a result of the misrepresentation.

Finally, the Court confirmed that while lapse of time can become a bar to rescission, this is only where a reasonable time has elapsed such that it would be inequitable in all the circumstances to grant.

In 2007, Stratstone had contacted Mr Salt and offered to sell him a “brand new” car for £21,895. After buying the car, numerous defects began to emerge and in 2008, Mr Salt sought to reject the car and asked for his money back; Stratstone refused and in 2009, Mr Salt was left with no alternative other than to issue proceedings in the County Court claiming that the car was not of merchantable quality and seeking damages. However, in 2010, following disclosure by Stratstone, Mr Salt discovered that the car was not “brand new”; not only did it suffer from numerous defects but, it had been manufactured in 2005, been involved in a collision and simply repaired and stored by Stratstone until its sale in 2007.

Having discovered the misrepresentation by Stratstone, Mr Salt amended his particulars of claim claiming misrepresentation and rescission.

At the trial, the District Judge found in favour of Mr Salt but (wrongly) concluded that he could not order rescission (whereby parties are returned to the position they were in before the contract was made) as the car had been registered to Mr Salt and it was several years since the purchase. Instead, he awarded Mr Salt £3,250.00 in damages for the difference between the value of the car new and the actual value of the car he bought. Mr Salt appealed this decision and the Circuit Judge agreed that rescission was still possible and that it was the appropriate remedy.

Stratstone appealed to the Court of Appeal but lost on all four grounds on which it appealed. The Right Honourable Lord Justices rubbed salt into the wound further by awarding Mr Salt’s costs in full, and on an indemnity basis taking into account the offers made by Mr Salt to settle the dispute. In the Judgment handed down on 16th July 2015, Longmore, LJ, stated that this was “a case that cried out for settlement. Mr Salt had tried to settle it at an early stage (as well as at later stages). Stratstone played for high stakes and has lost.“.

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Court of Appeal Rubs Salt in Stratstone’s Wounds

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