as to ability to supply cars
The case of Parallel Imports (Europe) Ltd (T/A Baglan Car
Centre) v Radivan & Anor is a reminder to dealers that
care needs to be exercised where there is a history of trading with
a supplier. It is mportant to ensure that the supplier has no
contractual, or other legal, right to treat monies paid over as
payment, or part payment, of an earlier debt.
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Facts
Parallel dealt in imported cars. Radivan acted as Parallel’s
agent. He represented to Parallel that 36 specified and identified
cars were available for purchase from Belgian car dealer Deprince.
This was in fact a misrepresentation because Radivan and his
company had acquired the cars themselves.
Relying on the misrepresentation, Parallel paid the
purchase price of €282,000 to Deprince. Deprince then supplied 10
different cars to Parallel and retained the entire purchase price
in settlement of an earlier contract between itself and Parallel,
which it alleged Parallel had breached. Parallel denied any such
liability to Deprince and sued Radivan for the recovery of the
purchase price as damages for misrepresentation.
At first instance, it was held that Radivan had made a
fraudulent misrepresentation which caused Parallel to pay over the
money. However, the court concluded that it had been a natural and
foreseeable consequence that on receiving the payment, Deprince
would allocate it towards what it considered due to it from
Parallel.
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By GlobalData Therefore, no damages were awarded to Parallel. It had
failed to prove it had suffered a loss, having failed to prove that
Deprince was not entitled to keep the money to meet the outstanding
liability. Parallel appealed.
On appeal
The Court of Appeal reaffirmed the principles applicable to the
assessment of damages for fraudulent misrepresentation. These
are:
1 The defendant is bound to make reparation for all the
damage directly flowing from the transaction.
2 Although such damage need not have been foreseeable, it must
have been directly caused by the transaction.
3 The claimant is entitled to recover by way of damages the
full price paid, giving credit for any benefits received as a
result of the transaction.
It was held that Parallel had paid for specified and identified
cars, not the acquisition of a right of action against Deprince for
failing to deliver them. The loss suffered was the price paid for
cars that were never received. The burden was on Radivan to prove,
not on Parallel to disprove, that Deprince was entitled to keep the
money in respect of an alleged existing liability. Radivan had
failed to call any evidence in order to discharge that burden and
Parallel was entitled to recover damages for fraudulent
misrepresentation.
Comment
Parallel was successful in recovering its money here but might
not have been had evidence been adduced by Radivan to prove that
there were indeed outstanding debts owing to Deprince. Dealers
should always bear in mind what their outstanding liabilities are
before entering into further contracts and paying over money.
The author is a director in Wragge & Co LLP’s Recoveries
& Finance team
