Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd
Smith New Court Ltd v Scrimgeour Vickers (Asset Management) Ltd [1996] UKHL 3 is an English contract law case concerning misrepresentation. It illustrates the damages available for deceit. Facts An employee of Scrimgeour, Mr Roberts, fraudulently told Smith New Court that there were close rival bids for buying shares in Ferranti IS Inc. Smith bought £23.1m worth of shares. Ferranti then revealed it was a victim of a massive fraud (the ‘Guerin’ fraud, an American businessman had sold them a worthless company) and the share price fell considerably. Smith sold the shares for £11,788,204, a loss of £11,353,220. Smith then brought an action for deceit. Judgment Court of Appeal The Court of Appeal awarded £1,196,010 in damages to reflect the difference between what was paid and the market value at the date of purchase. House of Lords Lord Browne-Wilkinson held that Smith New Court was entitled to the full loss of £11.3m. He laid down seven principles as follows: (1) the defendant must make reparation from all damage coming directly from the transaction (2) foreseeability is irrelevant (3) the full price paid can be recovered, minus any benefits he received resulting from the transaction (4) a general rule is that