Parallel Imports (Europe) Ltd (T/a Baglan Car Centre) v Radivan & Anor

Damages for deceit compensate all financial loss flowing directly from the claimant’s alteration of position in reliance on the fraud. A claimant induced to pay for identified property which is unavailable and never delivered establishes direct loss by proving the payment, non-delivery and absence of repayment.

A supposed contractual right to claim delivery is not necessarily the benefit for which the claimant paid. If the defendant contends that a third party was entitled to retain the payment against an existing liability, the defendant must adduce evidence establishing that liability and its extent. Mere uncertainty about the third party’s rights does not defeat an otherwise proved claim.

Parallel Imports (Europe) Ltd, trading as Baglan Car Centre, paid a Belgian dealer for 36 identified cars after Maurice Radivan falsely represented that they were available. The cars were unavailable because Radivan’s company had already acquired them. Baglan received only 10 different cars, while the dealer retained the balance of the payment.

HHJ Chambers QC found fraudulent misrepresentation and causation but dismissed the damages claim. He held that Baglan had not proved that the dealer lacked an entitlement to retain the money against liabilities allegedly arising from an earlier contract for 500 cars. Baglan appealed from that decision. Radivan cross-appealed against the costs order.

The central issue was whether Baglan had proved loss, or whether it also had to disprove the dealer’s alleged entitlement to retain the payment.

1. Appeal allowed and cross-appeal dismissed. The Court, comprising Mummery, Dyson and Wall LJJ and giving a judgment delivered by Wall LJ, set aside the order dismissing the claim and entered judgment for Baglan for £124,172, with interest and costs.

2. The governing measure of damages in deceit requires the defendant to compensate all financial loss flowing directly from the claimant’s alteration of position induced by the fraudulent representation. Where property is purchased, the claimant may recover the price paid, subject to credit for benefits obtained from the transaction. The loss need not have been foreseeable, but it must have been directly caused by the transaction: Smith New Court Securities Ltd v Citibank N.A. [1997] AC 254 and Cemp Properties (U.K.) Ltd v Dentsply Research & Development Corporation [1991] EGLR 197 applied.

3. Baglan proved that Radivan fraudulently represented that the identified cars were available; that the representation was the immediate and effective cause of the payment; and that, apart from 10 different cars, the cars paid for were never received and the money was not repaid. Those findings established direct financial loss.

4. The supposed acquisition of an enforceable contractual right against the dealer did not mean that Baglan had obtained what it purchased. Baglan paid for identified cars, not for a right of action against a dealer which failed to deliver them.

5. Having proved fraud, inducement, payment, non-delivery and non-repayment, Baglan had proved all that was required to recover substantial damages. If Radivan contended that no real loss arose because the dealer was entitled to retain the payment against a pre-existing liability, it was for him to adduce evidence establishing that liability and its extent. He produced no evidence capable of establishing the dealer’s entitlement, any judgment in the Belgian proceedings, or any right of set-off.

6. It was unnecessary and undesirable to determine the wider disputes concerning the alleged 2001 contract, Radivan’s authority, ratification, variation, termination, the dealer’s possible contractual claims or the adequacy of Baglan’s pleadings.

1. Court of Appeal (Civil Division): By [2007] EWCA Civ 1373, allowed Baglan’s appeal, set aside the order dismissing the damages claim, entered judgment for £124,172 with interest and costs, and dismissed Radivan’s cross-appeal on costs.

2. High Court, Queen’s Bench Division, Cardiff Mercantile Court: HHJ Chambers QC found fraudulent misrepresentation but dismissed Baglan’s damages claim because Baglan had not proved that the Belgian dealer lacked an entitlement to retain the payment. He made no order for costs. No citation is stated in the judgment.