England and Wales Court of Appeal (Civil Division) Decisions

You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Routledge v McKay & Ors [1954] EWCA Civ 8 (10 March 1954)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/1954/8.html
Cite as: [1954] 1 WLR 615, [1954] 1 All ER 855, [1954] WLR 615, [1954] EWCA Civ 8

[New search] [Buy ICLR report: [1954] 1 WLR 615] [Help]

JISCBAILII_CASE_CONTRACT

		BAILII Citation Number: [1954] EWCA Civ 8
		Case No.:

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL.

Royal Courts of Justice
Strand, W.C.2

10th March 1954

B e f o r e :

THE MASTER OF THE ROLLS
(Sir Raymond Evershed)
LORD JUSTICE DENNING
and
LORD JUSTICE ROMER
____________________

Between:

	ROUTLEDGE
	-v-
	McKAY
	and
	NUGENT	(Third Party)
	ASHGROVE	(Fourth Party)
	MAWSON	(Fifth Party)

____________________

(Transcript of the Shorthand Notes of The Association of Official Shorthandwriters, Limited,
Room 392 Royal Courts of Justice, and 2 New Square, Lincoln's Inn, London W.0.2).

____________________

MB J. S. WATSON (instructed by Messrs Ranger, Barton & Frost, agents for Messrs G. F. Lees & Son, Birkenhead)
appeared as Counsel on behalf of the Appellant (Fifth Party).
MR F. D. PATERSON (instructed by Messrs Kinch & Richardson, agents for Messrs Percy Hughes & Roberts, Birkenhead)
appeared as Counsel on behalf of the Respondent (Fourth Party).
____________________

HTML VERSION OF JUDGMENT
____________________

(on Stamp Act point).

THE MASTER OF THE ROLLS: I think it desirable that I should say that in ay judgment it is the duty of the Court of Appeal to pay regard to what Parliament says in Section 14 of the Stamp Act, 1891. The Court cannot assume that there has been some decision by the Court below merely because in the Court below the document has been admitted in evidence. On the other hand, on the facts of this case I think that the exemption — exemption (3), which on the authorities should be, as I understand it, liberally interpreted - does cover this case, and therefore. I. think there has been no infringement of Section 14 of the Act; and we need say nothing mere about it.

LORD JUSTICE DENNING: I agree.

LORD JUSTICE ROMER: I agree.

JUDGMENT (on the appeal).

THE MASTER OF THE ROLLS: This appeal involves a question which has found many illustrations in the books, namely, whether upon a sale — in this case a sale or exchange of a motor bicycle with a sidecar combination — there was a warranty as regards the date when the motor cycle was originally put upon the market. The classic exposition of the law in regard to warranties is to be found in the Speech of Lord. Moulton in the case of Heilbut, Symons & Co. -v- Buckleton, and the passage most often quoted la at page 47 of the report in 1913 Appeal Cases. Though it has been many times cited I may perhaps be forgiven for citing once again some of the language which the noble Lord used. "It is evident", said he, "both on principle and on authority, that there may be a contract the consideration for which is the making of some other contract. 'If you will make such and such a contract I will give you one hundred pounds', is in every sense of the word a complete legal contract. It is collateral to the main contract, but each has an independent existence, and they do not differ in respect of their possessing to the full the character and status of a contract. But such collateral contracts must from their very nature be rare". Than, after a sentence which I can pass ever, "Such (collateral contracts) ...... must be proved strictly. Not only the terms of such contracts but the existence of an animus contrabendi on the part of all the parties to them must be clearly shown. Any laxity On these points would enable parties to escape from the full performance of the obligations of contracts unquestionably entered into by them and more especially would have the effect of lessening the authority of written contracts by making it possible to vary thorn by suggesting the existence of verbal collateral agreements relating to the same subject-matter.

Then, after dealing with the particular facts in the Hailbut, Symons case and after referring to certain cases on the Chancery side, Lord Moulton said, at page 49, "On the Common law side of the Court the attempts to make a person liable for an iinnocent misrepresentation have usually taken the form of attempts to extend the doctrine of warranty beyond its just limits and to find that a warranty existed in cases where there was nothing more than an innocent misrepresentation .... But in respect of the question of the existence of a warranty the Courts have had the advantage, of an admirable enunciation of the true principle of law which was made in very early days by Lord Chief Justice Holt with respect to the contract of sale. He says 'An affirmation at the time of the sale is a warranty, provided it appear on evidence to be so intended'". Then he says, a little later, "One often sees quoted the dictum of Mr Justice Bayley in Cave -v- Coleman where, in respect of a representation made verbally during the sale of a horse, he says that 'being wade in the course of dealing, and before the bargain was complete* it amounted to a warranty' - a proposition that la far too sweeping and cannot be supported".

Finally, after reference to and disapproval of the language of this Court in De Lassalle -v- Guildford, Lord Moulton at page 51 says: "It is, my Lords, of the greatest importance, is my opinion, that this House should maintain in its full integrity the principle that a parson is not liable in damages for an innocent misrepresentation, no matter in what way or under what form the attack is made".

Now in the present case I have already said that the subject-matter of the sale with which we are concerned was a motor bicycle, of somewhat ancient vintage. The Appellant here is the Fifth Party in proceedings which were begun in the form of an action by one who had bought this motor bicycle from another. That other himself introduced a Third Party; the Third Party introduced a Fourth Party and the Fourth a Fifth. The matter stopped there, not because there had not been other previous sales, but, as I understand it, because, upon the footing that a warranty was the question, and the only question, involved, the Statute of Limitations would have stood in the way of the Fifth Party bringing in a sixth and so on.

For reasons which will later appear, I confess that the result leaves an uneasy feeling in my mind that some injustice, in the end of all, may be done. Apparently by the display of a certain amount of mechanical ingenuity an earlier possessor of this machine (which first left the works of the makers in the month of October, 1930) proceeded to recondition. it and (is a measure) remake it so that, although substantially it remained the old 1930 model, it had acquired certain characteristics which this ingenious mechanic thought justified him in attributing to it a somewhat later origin.

The registration books or log books, (which were renewed from time to time) eventually showed on their face that this Douglas motor cycle combination was what is called "a late 1941 or 1943 model". I take the one before uss and against the item "Date of original registration under the Roads Act, 1920" it has "9.9.1941", and than the words "forty-one" written afterwards. In the Court below (so far, again, as I can judge from the Judge's notes of the evidence) it seems reasonably clear that in the ease of the final sale and in those which immediately preceded it the alleged warranty amounted to a statement to the effect which you find in the item from the log book which I have read. I assume that in each case there was an express affirmation of what there appeared; but it does not seem that there was anything more; yet (again so far as I can judge from the material before us) the parties or their representatives seem to have been content to let the matter proceed on the footing that such an express to statement, without more, did amount to a warranty. When, following the chain down, the matter came to be determined finally between the Fourth and Fifth Parties, the leaned Counsel for the latter for the first time raised the question in clear terms whether, as between him and the Fourth Party, there ever was a warranty at all; and he particularly relied upon the circumstances that in the sale (or exchange; for it was substantially an exchange) which took place between the Fourth and Fifth Parties a written Memorandum of Agreement was entered into at the time when the transaction took effect.

I shall have to refer presently in a little more detail to the evidence and to that Agreement; but, hearing in mind the passages which I have read from Lord Moulton's speech, in approaching this matter it is important to observe that, if there was a warranty, than there was a contract between the two parties to the effect that the seller, for good consideration, undertook to indemnify the buyer against any loss the buyer might suffer if in truth the origin of this motor, cycle was, net 1941 or 1942, bat some much earlier date. Such a contractual obligation could be part of the contract of sale itself or it might be collateral to it. In the present ease, for reasons which will appear, if there was a warranty it seems to me that it must have been collateral to the actual contract of sale or exchange, though I do not think that matter la necessarily conclusive of the question before us.

I have mentioned these anterior questions partly because of the feeling of. regret which I have about this ease and which 1 have already mentioned* bat also because (in fairness to the learned Judge) it seems clear to me that his attention was not directed, at any rate at any of the earlier stages to the essential requirements of a warranty; and particularly he did not have the advantage of refreshing his memory by looking again at Lord Moulton's Speech: So that when the matter came to be determined as between the Fourth and Fifth Parties the reference to what was stated in the log book had come to be treated (as far as I can see) as prima facie constituting a warranty; with the result that the learned Judge's Judgment was confined, in effect, to this: Was that prima facie effect of the reference displaced by the written contract? I found that conclusion on this passage from the notes of the Judgment: "I then dealt in some detail with the transaction between the Fourth Party and the Fifty Party. I accepted the evidence of Mr Philip Ashgrove, the Fourth Party, and I rejected any. evidence given by Mr John Mawson, the Fifth Party, which conflicted with that given by Mr Ashgrove. I found as a fact that before the purchase in question. in October, 1949, the Fifth Party gave a Warranty to the Fourth Party that the Douglas Motor cycle Combination was a 1942 model. There was no dispute that this "-- videlicet, that it was a 1942 model - "was incorrect. That, in so far as it is a question of fact, I found and in so far as it is a question of construction I held, that the written agreement signed on the 30th day of October, 1949, by the Fourth Party and the Fifth Party and having therein the words 'That when the £30 is paid over that this transaction is closed' was not intended to exclude any warranty".

Now Mr Paterson has very properly pressed upon us that, in so far as that la a matter of fact, then a finding by the County Court Judge, who heard the witnesses, would be conclusive in this Court provided, that there was some evidence upon which it could be founded. But I think (and I must state this at the beginning of my observations) that the learned Judge did not really direct his mind to the question whether there was, in the reference to the date of origin as it emerged from the evidence, a real intention to contract in the sense I have already described and in the sense which must be found to be present if what otherwise would, be a misrepresentation is to ha translated into a warranty. I think he did not apply his mind to that, because (for reasons which I have already stated) the parties had not really daring the earlier stages of the battle raised the matter and were content to assume that such a statement did constitute a warranty. I therefore do not feel that Mr Paterson's submission can be (in this case) an answer to the Appellant's appeal. I turn now to such few passages in the evidence as are necessary to be read. Mr Ashgrove, the buyer - I have said it was by way of exchange, but for present purposes it is to simpler to refer to him as the buyer - says that in a date in October, 1949, the Fifth Party, Mawson, appeared at his (Ashgrove's) house with this motor cycle. "Mawson told me it was a 600 c.c. machine instead of 500 c.c.". The relevance of that I will mention later. "It says 500 c.c. in registration book. I asked the model. He told me it was a late 1941-1942. He produced the registration book which was dated late 1941. This was outside my house". The evidence-in-chief showed that the matter was not than concluded; Mr Mawson went away after a suggestion for an exchange with an equalising payment. "Two or three days later Macao came back. I had had a document drafted. He said he had thought it ever and the transaction could go through. I produced the money and he produced the registration book".

In cross-examination he was first questioned about the preparation of the document. I think nothing turns upon that. It was also suggested to him that Mr Mawson had in fact added to the statements made about the date of origin a statement that he had heard from the Douglas Company that the date of the model was not 1941 or 1942, but 1936 or 1938. Mr Ashgrove denied that Mr Mawson said any such thing, and the Judge upon that matter disbelieved Mr Mawson. That was all that Mr Ashgrove said that was relevant. Mr Mawson, I think it may fairly be said, except upon this point of what the Douglas Company had told him (on which he was disbelieved) said nothing which could be taken to controvert the evidence of Mr Ashgrove, or which materially added to it.

On the oral evidence, therefore, all there is, and all the Judge found, or I think intended to find, was that on this first occasion (and before, be it noted, the bargain was eventually made), and in answer to a question, Mr Mawson specifically stated that it was 1942 model, and pointed to the corroboration of that statement found in the book.

Before I look at the Agreement, I must say that it is another matter which has caused me concern that when Mr Mawson so stated it appears that from what the Douglas Company had already told him he knew the true date to be 1936 or 1938. Of course, it does not follow from that fact that Mr Mawson was deliberately trying to deceive Mr Ashgrove; and in any case we are not here trying any action based on fraud. I therefore say no more, about it except to note the point and, noting it, to repeat the anxiety which I have felt about the whole matter.

I now turn to the written memorandum or contract which Mr Ashgrove had caused to be prepared and which was signed by

"It is agreed between the parties Mr Ashgrove .... and Mr Mawson .... that a 250 c.c. B.S.A. solo motor cycle No." so and so "now by" - "owned by", I suppose that means - "Mr Ashgrove to be exchanged for a Douglas flat twin 600 c.c. combination ..... owned by Mr Mawson and further Mr Ashgrove will pay the sum of £30 to complete the transaction. It is understood that when the £30 is paid over that this transaction is closed".

Now the point is made (and it is a significant one) that the Douglas motor cycle is expressly referred to as being of the capacity of 600 cubic centimetres, when on this registration book it is stated as having only 500 cubic centimetres capacity. It will be recalled from the passage of the evidence I have read that the true cubic capacity according to Mr Mawson was 600; that fact was deliberately and, carefully pointed out by Mr Mawson, who showed the discrepancy in that respect in the registration book, and the Agreement (and this is significant) expressly refers to that matter.

This document represents prima facie the record of what the parties intended to agree when the actual transaction took place. Mr Watson has contended that the terms of it necessarily exclude any warranty - that is to say, any collateral bargain, either contemporary or earlier in date. I am not sure that I would go as far with Mr Watson in that respect. But I think that as a matter of construction it would be extremely difficult to say that such an agreement was consistent with a warranty being given at the same time and so as to be intended to form a part of the bargain then made. I think, with Mr Watson, that the last words "It is understood that when the £30 is paid ..... this transaction is closed" would make such a contention exceedingly difficult. But I will assume that the warranty here was not a warranty given when this bargain was struck, but was a warranty which had been given on the earlier date, on which date alone, according to the evidence, any representation about the date of the Douglas was made at all.

Now if the earlier representation is to be a warranty then it has got to be contractual in form. In other words, so far as I can see, once the existence of a warranty as part of the actual bargain is excluded it must be a separate contract; and the difficulty, and I think the overwhelming difficulty, which faces the Respondent here is that when the representation was made there was than no bargain, and it is therefore, in my view, impossible to say that it could have been collateral to some other contract. But even apart from that, it seems to me that on the evidence there is nothing to support the conclusion, as a matter of law and bearing in mind Lord Moulton's observations, that in answering the question posed about the date of this Douglas there was anything more intended than a mere representation.

If that is the right analysis, then the problem which the Judge below felt he had to consider really never arose, because it was not a question whether on its construction this agreement negatived or excluded the possibility of an earlier warranty. On the view I take there really was no evidence before the Judge capable of supporting the existence of any earlier warranty at all, and I prefer to base my conclusion on that ground than upon the view that the agreement, according to its language, necessarily excluded a warranty. I have felt compelled to the conclusion that the learned Judge here had not before him any evidence which entitled him to conclude that there was given, and intended to be given, a warranty (in the proper sense of that word) when the reference to the data of origin of the motor cycle was made by Mr Mawson; and I only add that the written agreement tends to support that view rather than to controvert it.

I conclude (as I began) by a reference to my anxiety in the case, because I am bound to say that I feel at any rate some doubt - I will say grave doubt - whether en this evidence there ever was a warranty given by anybody to anybody else among those who were parities to these proceedings. Whether any earlier owner or Mr Mawson or anyone else might have been held liable upon a fraudulent misrepresentation does not now arise; but my sympathies certainly are with all these parties who were all undoubtedly misled by the circumstance that there got into a registration book a false date as a result of what I have called (and I am using the phrase so as to avoid any opprobrious significance) the mechanical ingenuity of an earlier proprietor.

In my judgment, this appeal must be allowed; and taking that view I do not say anything more upon Mr Watson's second point, that in any case the sum of damages awarded, £80, ought not to stand. Upon that matter it is sufficient to say that if that question had to be determined, as at present advised I am not satisfied that there is any ground upon which this Court could interfere with the award; but I need not express any concluded view upon it.

LORD JUSTICE DENNING: When a motor car or a motor cycle is sold second-hand from one person to another in succession down a line of persons, it often happens that each seller in the chain tells each buyer what year it is, basing his information on the statement in the registration book. Suppose that, unknown to either party, the statement in the registration book is false because some remote seller falsified either the number plate or the book; what is the legal position? Has each seller in the chain warranted the correctness of the entry in the registration book so that each seller is responsible to his buyer in damages; or has he merely made an innocent representation for which he is not liable in damages at all?

The answer must depend, of course, upon a proper application of the law about innocent misrepresentation and warranty as laid down by the House of Lords in Heilbut, Symons & Co. -v-Buckleton (l913 Appeal Cases, page 30). But in considering this question it is important to remember that the seller, unless he is the first owner, is not the originator of the statement about the year. He does not know for himself, of his own knowledge, what year the car or cycle is. He has to accept it from the book, and he cannot be expected to warrant its accuracy unless he in express terms makes himself responsible for it. In the ordinary way, therefore, the statement is only a representation and not a warranty. If the entry in the registration book should turn out to be false, the eventual buyer can sue the original wrongdoer in fraud without any trouble incidentally about the Statute of Limitations; but he cannot sue the innocent people in between who merely passed on a statement which was in the registration book.

Then I ask myself: Is there anything to take this case out of the ordinary? It seems to me that as between the Fourth and Fifth parties, for the reasons my Lord has given, this was only a representation and not a collateral contract at all. Mr Paterson relied on the fact that the seller did correct one statement in the registration book in that he corrected 500 c.c. to 600 c.c. No doubt any seller ought to correct any statement in the book which he knows or has reason to suppose is inaccurate; but that does not turn the representation about the year into a warranty. I cannot see that there was any evidence in this case (any more than in Heilbut, Symons & Co. -v- Buckleton) on which a warranty could be found. It is unfortunate that none of the Counsel in the case (and there ware five of them) referred the Judge to Heilbut, Symons & Co. -v- Buckleton; because it means that Mr Ashgrove, an entirely innocent party, is left to bear the whole harden when ha ought not to have been.

I agree with my Lord that the appeal should be allowed.

LORD JUSTICE ROMER: I also agree. Having regard to the law as laid down in the case of Heilbut, Symons & Co. -v- Buckleton, and especially in the Speech of Lord Moulton, it seems to me impossible to arrive at the view that the statement which Mr Mawson made to Mr Ashgrove amounted to a warranty. I confess that I have come to this conclusion with some reluctance, because not only did Mr Mawson think proper to give evidence before the learned Judge that was untrue, but it is plain that he knew perfectly well himself that when he told Mr Ashgrove (as he did tell him) that this motor cycle was a l941 model he had already been informed by the makers that it was earlier than that by some years. Indeed, apparently as a result of what he was told by the manufacturers he seems to have pondered for a time as to whether he would not sue the man who had sold it to him, but eventually he decided not to do so. Therefore, as I say, it is with some regret that I have come to the conclusion that Mr Ashgrove (who was perfectly innocent in that matter) should lose this appeal; but having regard to the law that is the result at which one must arrive, for no charge, of fraudulent misrepresentation was made against Mr Mawson.

(Appeal allowed. Order of Court below varied by ordering that the Fifth Party proceedings be dismissed. Respondent to pay costs of Fifth Party proceedings in County Court on Scale 3. No order as to coats in Court of Appeal. Appellant's own costs (within the terms of certificate) to be taxed as between solicitor and client under Legal Aid & Advice Act. Respondent's own costs to be taxed as between solicitor and client under Legal Aid and Advice Act).