46 In the present case Judge Dent found, and the defendants do not challenge, that the expenditure on re-fitting the restaurant was incurred in consequence of the defendants' false representations about the air conditioning. But, the defendants submit, his Honour did not attempt, on the other side of the equation by which damages must be measured, to assess any corresponding advantage obtained by the plaintiff.
47 In Potts v Miller at 297-8 Dixon J referred to what he described as Lord Atkin's dissatisfaction, expressed in Clarke v Urquhart; Stracey v Urquhart [1930] AC 28 at 67, with the rigid application the rule stated by Lord Campbell had received. Lord Atkin found it difficult to suppose that there was any difference in the measure of damages in an action of deceit depending upon the nature of the transaction into which the plaintiff was fraudulently induced to enter. "Whether he buys shares or buys sugar, whether he subscribes for shares, or agrees to enter into a partnership or in any other way alters his position to his detriment, in principle, the measure of damages should be the same, ….. I should have thought it would be based on the actual damage directly flowing from the fraudulent inducement." As will be seen this means that, in measuring the damages for deceit, the Court does not necessarily stop at the point of determining the difference between the amount expended in consequence of the inducement and the value of the advantage obtained as at the time it was obtained.
48 In Potts v Miller at 298-9 Dixon J, after quoting a passage from the judgment of Cockburn CJ in Twycross v Grant (1877) 2 CPD 469 at 544 about non-recovery for further deterioration of that which has been acquired, said:
"This reasoning makes it necessary to distinguish between the kinds of cause occasioning the deterioration or diminution in value. If the cause is inherent in the thing itself, then its existence should be taken into account in arriving at the real value of the shares or other things at the time of the purchase. If the cause be 'independent', 'extrinsic', 'supervening', or 'accidental', then the additional loss is not the consequence of the inducement. 'If a man buys a horse, as a racehorse, on the false representation that it has won some great race, while in reality it is a horse of very inferior speed, and he pays ten or 20 times as much as the horse is worth, and after the buyer has got the animal home it dies of some latent disease inherent in his system at the time he bought it, he may claim the entire price he gave; the horse was by reason of the latent mischief worthless when he bought; but if it catches some disease and dies, the buyer cannot claim the entire value of the horse, which he is no longer in a condition to restore, but only the difference between the price he gave and the real value at the time he bought.' Per Cockburn CJ at 544-545."