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 important 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.

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 a 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. Therefore, no damages were awarded to Parallel as it had failed to prove that 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 being:

• the defendant is bound to make reparation for all the damage directly flowing from the transaction;
• although such damage need not have been foreseeable, it must have been directly caused by the transaction;
• 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.

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For further information about this published aticle, contact Kathryn Hobbs on +44 (0)121 213 2397, Alexa Highfield on +44 (0)121 213 2396 or Matthew Purcell on +44 (0)121 213 2360

This published article may contain information of general interest about current legal issues, but does not give legal advice.