B e f o r e :
LORD JUSTICE JENKINS
LORD JUSTICE PARKER
and
LORD JUSTICE PEARCE
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Between:
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(Transcript of the Shorthand Notes of The Association of Official Shorthandwriters, Ltd., Room 392, Royal Courts of Justice, and 2, New Square, Lincoln's Inn, London, W.C.2.)
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MR ERIC CROWTHER (instructed by Messrs Farmar & Miller, Sevenoaks, Kent) appeared on behalf of the Appellants, Plaintiff below.
MR LINDSAY CULLEN (instructed by Messrs Piesse & Sons agents for Abbott, Sturgess & Co, Richmond, Surrey) appeared on behalf of the Respondent, Defendant below.
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HTML VERSION OF JUDGMENT
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Crown Copyright ©
LORD JUSTICE JENKINS: The judgment which is about to be read by Lord Justice Pearce is the judgment of the court in this case.
LORD JUSTICE PEARCE: The plaintiff appeals from a judgment of Mr. Justice Glyn-Jones dismissing the plaintiff's claim to rescission of an executed contract of sale on the ground of innocent misrepresentation.
The learned judge in a clear and careful judge made findings of fact that may be summarised as follows.
Both parties carry on business as haulage contractors, the plaintiff at Sevenoaks, the defendant at Hampton Court. On Friday, 19th October, 1956,, the plaintiff read a newspaper advertisement inserted by the defendant, offering for sale at £850 a 1947 Dennis twelve/fourteen ton lorry described as in "exceptional condition". On the telephone that evening the defendant said to the plaintiff that it was "in first-class condition". The next day, Saturday, the plaintiff saw it at the defendant's premises. The defendant said that it was capable of forty miles per hour. The plaintiff said that he would be willing to pay £750 for it, if he was satisfied on a trial run, and it was agreed that on the plaintiff paying £5 the defendant would hold the vehicle for him until Monday. That night it was arranged on the telephone that the plaintiff might pay one half of the purchase price in cash and the remainder a few days later. The defendant repeated that it was a good vehicle.
On Monday, the 22nd October, the plaintiff took trade plates to the defendant's premises in order to take the lorry (which was unlicensed) for a trial run on the road. The defendant made various representations as to the lorry, one of which was that it would do eleven miles to the gallon. The defendant and the plaintiff drove it in turn. The speedometer was not working, there was a wire which had to be pulled in order to decelerate since the spring was missing from the accelerator pedal, and the plaintiff had difficulty with the fifth (or top) gear. The defendant having assured the plaintiff that there was nothing wrong with the vehicle about which he had not told him, the plaintiff there and then bought the lorry for £750 paying a cheque of £370 which together with the £5 already paid made up half the purchase price and left a balance of £375 to be paid later. Before leaving, the plaintiff said:
"If I find anything wrong your' phone won't stop ringing".
The defendant answered:
"It's quite all right".
On Tuesday, 23rd October, a receipt, was posted to the plaintiff by the defendant,
"Received from Mr. S. E. Long the sum of £375 by cheque being half payment of Dennis vehicle DDW 864 as tried and approved by the above. Balance remaining £375."
On Wednesday, 24th October the plaintiff drove the lorry to Rochester to pick up a small load. On the journey the dynamo ceased to function and the plaintiff was advised that night to fit a reconstructed dynamo. He noticed also that an oil seal was allowing oil to escape, that there was a crack in one of the wheels, and that he had used 8 gallons of fuel for about 40 miles.
That night he told the defendant of these defects. The defendant said that the dynamo was "all right" when the lorry left him and offered to pay half the cost of the reconstructed dynamo. This the plaintiff accepted. The defendant denied any knowledge of the broken oil seal.
The next day, Thursday, 25th October, the dynamo was fitted and the lorry was driven by the plaintiff's brother on a journey to Middlesbrough.
On the night of Friday, 26th October, the plaintiff heard from his brother that the lorry had broken down on its journey. In consequence, the plaintiff wrote to the defendant complaining of leakage or consumption of oil from the sump, of a fuel consumption of only 9 miles per gallon instead of 11, and of the fact that instead of the lorry being a 40 mph vehicle it was an effort to keep it at 25 mph with the 4 ton load. He ended,
"The above in addition to the oil cup retainer, the rear offside spring retaining bolt, and also one cracked wheel (one to my knowledge) the dodgy accelerator, has convinced me that you have wilfully and deliberately misrepresented the state of the vehicle and under these circumstances I ask for the return of my money, and the vehicle will be returned to you by about Tuesday (I hope it lasts that long)."
He has not persisted in that charge of fraud. On 14 November the Lorry was examined by an expert who gave evidence of many serious defects which he found, sufficient, in his opinion, to make it unroadworthy.
The learned judge found that the defendant honestly made the misrepresentations complained of, that the vehicle had probably deteriorated while out of use, and that it had the defects alleged. He said this:
"The fact remains that the plaintiff was induced to buy this vehicle by material representations made to him by the defendant which, though honestly made, were untrue, and I must therefore deal with Mr. Crowther's argument that in the circumstances of this case his client is entitled to rescind the contract."
Mr. Crowther's argument is founded on the view expressed on this somewhat vexed question by Lord Justice Denning in the comparatively recent cases of Solle v Butcher 1950 1 K.B. 671 at page 695, and Leaf v International Galleries 1950 2 K.B. 86 at page 90.
That view, while accepting so far as it relates to matters of title the well-established principle that rescission of a contract for the sale of land will not be granted after completion on the ground of innocent misrepresentation (see Wilde v Gibson 1 H.L.C., 605, and Brownlie v Campbell 5 A.C. 925, rejects as no longer authoritative Seddon v North Eastern Salt Co Ltd 1 Ch., 326, the well-known case concerning sales of shares, in which Mr. Justice Joyce clearly stated the law to be that the court would not grant rescission of an executed contract for the sale of a chattel or chose in action on the ground of innocent misrepresentation; and involves in the like condemnation Angel v Jay 1911, 1 K.B., 666, in which the same principle was applied to an executed lease.
The learned Lord Justice's view on this question, which has been ably and persuasively championed before us by Mr. Crowther, is thus expressed in Leaf v International Galleries (supra) at page 90:
"The observations of Mr. Justice Joyce in Sedon v. North Eastern Salt Company Ltd. are, in my opinion, not good law. Many judges have treated it as plain that an executed contract of sale may, in a proper case, be rescinded for innocent misrepresentation: see, for instance, Lord Justice Warrington, and Lord Justice Scrutton, in T. and J. Harrison v. Knowles & Foster; per Lord Atkin in Bell v. Lever Bros. Ltd., per Lord Justice Scrutton and Lord Justice Maugham, in L'Estrange v. F. Graucob Ltd. Apart from that, there is now the decision of the majority of this court in Solle v. Butcher which overrules the first ground of decision in Angel v. Jay."
In the earlier case of Solle v Butcher (supra), Lord Justice Denning (as he was then) had said that:
"The fact that the lease has been executed is no bar to this relief. No distinction can in this respect be taken between rescission for innocent misrepresentation and rescission for common misapprehension, for many of the common misapprehensions are due to innocent misrepresentation, and Cooper v. Phibbs shows that rescission is available even after an agreement of tenancy has been executed and partly performed. The observations in Seddon v. North Eastern Salt Company, Ltd., have lost all authority since Lord Justice Scrutton threw doubt on them in Lever Bros. Ltd. v. Bell and the Privy Council actually set aside an executed agreement in MacKenzie v. Royal Bank of Canada. If and in so far as Angel v. Jay decided that an executed lease could not be rescinded for an innocent misrepresentation it was, in my opinion, a wrong decision. It would mean that innocent people would be deprived of their right of rescission before they had any opportunity of knowing they had it. I am aware that in Wilde v. Gibson Lord Campbell said that an executed conveyance could be set aside only on the ground of actual fraud, but this must be taken to be confined to misrepresentations as to defects of title on the conveyance of land."
Lord Justice Denning's condemnation of Seddon v North Eastern Salt Co Ltd (supra) and Angel v Jay (supra) was by no means fully accepted by the two other members of the court in Leaf v International Galleries (supra). The Master of the Rolls (Lord Evershed) at page 93 said this:
"In the circumstances it is unnecessary, as my brethren have already observed, to express any conclusion on the more general matter whether the so-called doctrine which finds expression in the headnote to Seddon v. North Eastern Salt Company Ltd. ought now to be treated as of full effect and validity. The doubt on that matter is the greater since the observations of the majority of this court in Solle v. Butcher; but out of respect to the argument of Mr. Weitsman and because the matter is one of interest to lawyers … I venture to add some observations which may be relevant when the general application of this doctrine has to be further considered… Finally, I add this. True it is that since the observations of Lord Justice Scrutton in Lever Bros. Ltd. v. Bell and those of this court in Solle v. Butcher much greater doubt may be entertained about the validity of Mr. Justice Joyce's decision in 1905. The article that Mr. Justice read to us was written eleven years ago. There has been opportunity for Parliament to alter the law if it was thought inadequate. I am not saying that that is a ground on which we should conclude that the so-called doctrine of Seddon v. North Eastern Salt Company Ltd. is well stated or is in all respects correct, but the fact that it has stood for such a length of time, even though qualified, is, I think, another consideration deserving of some weight when this matter has further to be debated and to be adjudicated on."
At page 91 of the report, Lord Justice Jenkins said:
"So far as dealings in land are concerned there is a considerable body of authority to the effect that rescission on the ground of innocent misrepresentation will not be allowed after conveyance. For instance, there are the observations (1 H.L. Cas. at p. 632) of Lord Campbell to that effect in Wilde v. Gibson, and the doctrine has also been applied to leases in Angel v. Jay. In some of the cases, on the strength of the authorities dealing with sales of land, the proposition has been stated in general terms to the effect that no executed contract can be rescinded after completion on the ground of innocent misrepresentation. As appears from the recent decision of the majority of this court in Solle v. Butcher it seems probable that the proposition thus generally stated is unduly wide. In particular, it cannot be assumed that it necessarily holds good with respect to a sale of chattels passing by delivery. For the purposes of this case, however, I find it unnecessary to decide how far it is possible to obtain, on the ground of innocent misrepresentation, rescission of a contract for the sale of chattels passing by delivery after the contract has been completed by delivery of those chattels, and I propose to confine myself to considering whether, assuming such a claim to be open, this is a case in which it should properly be allowed."
The question was thus left open in Leaf v International Galleries but the court was unanimous in holding that on the assumption that the innocent misrepresentation did give rise to a right to claim rescission after the contract had been completed such right had in the circumstances of the case been lost by the time that the buyer purported to exercise it.
Mr. Crowther's able argument has not sufficed to resolve our doubts on the question of principle, but we think that it is unnecessary here, as it was in Leaf's case, to decide whether the innocent misrepresentation relied on by the plaintiff gave rise to a right to rescission after completion of the contract, because we are satisfied that his right to do so, if it ever existed, had been lost by the time that he purported to reject the lorry.
We should next refer to the facts of Leaf's case and the observations made by the members of the court on those facts. The contract was a contract for the sale of a picture which the sellers innocently misrepresented to have been painted by Constable. The buyer took delivery of the picture and kept it for a matter of five years. He was then informed on attempting to sell the picture that it was not a Constable. Thereupon he brought his action for rescission on the ground that the sellers had misrepresented, albeit innocently, the identity of the artist. He could have claimed damages for breach of warranty but refrained from doing so.
On these facts Lord Justice Denning after referring to sections 11(1)(c) and 35 of the Sale of Goods Act, 1893, said this at page 90:
"In this case this buyer took the picture into his house, and five years passed before he intimated any rejection. That, I need hardly say, is much more than a reasonable time. It is far too late for him at the end of five years to reject this picture for breach of any condition. His remedy after that length of time is for damages only, a claim which he has not brought before the court … although rescission may in some cases be a proper remedy, nevertheless it is to be remembered that an innocent misrepresentation is much less potent than a breach of condition. A condition is a term of the contract of a most material character, and, if a claim to reject for breach of condition is barred, it seems to me a fortiori that a claim to rescission on the ground of innocent misrepresentation is also barred. So, assuming that a contract for the sale of goods may be rescinded in a proper case for innocent misrepresentation, nevertheless, once the buyer has accepted, or is deemed to have accepted, the goods, the claim is barred. In this case the buyer must clearly be deemed to have accepted the picture. He had ample opportunity to examine it in the first few days after he bought it. Then was the time to see if the condition or representation was fulfilled, yet he has kept it all this time and five years have elapsed without any notice of rejection. In my judgment, he cannot now claim to rescind … "
Lord Justice Jenkins founded himself on the five years' delay as being far in excess of the reasonable time within which the right to claim rescission, if it ever existed, should have been exercised; and while expressing no dissent from, did not advert to, Lord Justice Denning's view to the effect that the buyer's acceptance of the picture in itself any right there might otherwise have been to claim rescission.
The Master of the Rolls (Lord Evershed ) at page 93 said:
"I also agree that this appeal should be dismissed, for the reasons which have already been given. On the facts of this case it seems to me that the buyer ought not now to be allowed to rescind this contract … " and a page 94 he said " If a man elects to buy a work of art or any other chattel on the faith of some representation, innocently made, and delivery of the article is accepted, then it seems to me that there is much to be said for the view that on acceptance there is an end of that particular transaction, and that, if it were otherwise, business dealings in these things would become hazardous, difficult, and uncertain."
As to the facts of the present case, Mr. Crowther contrasts the period of only a few days between the delivery of the lorry to the plaintiff and his purported rescission of the contract with the period of five years in Leaf's case. He says the plaintiff was entitled to a reasonable time within which to ascertain the true condition of the lorry and to exercise (if so advised) the right of rescission which for the present purpose he must be assumed to have had. It is of course obvious that so far as time is concerned this case bears no resemblance to Leaf's case.
Nevertheless, a strict application to the facts of the present case of Lord Justice Denning's view to the effect that the right (if any) to rescind after completion on the ground of innocent misrepresentation is barred by acceptance of the goods must necessarily prove fatal to the plaintiff's case. Apart from special circumstances, the place of delivery is the proper place for examination and for acceptance. It was open to the plaintiff to have the lorry examined by an expert before driving it away but he chose not to do so. It is true, however, that the truth of certain of the representations, for example, that the lorry would do eleven miles to the gallon could not be ascertained except by user and therefore the plaintiff should have a reasonable time to test it. Until he had had such an opportunity it might well be said that he had not accepted the lorry, always assuming, of course, that he did nothing inconsistent with the ownership of the seller. An examination of the facts, however, shows that on any view he must have accepted the lorry before he purported to reject it.
Thus, to recapitulate the facts, after the trial run the plaintiff drove the lorry home from Hampton Court to Sevenoaks, a not inconsiderable distance. After that experience he took it into use in his business by driving it on the following day to Rochester and back to Sevenoaks with a load. By the time he returned from Rochester he knew that the dynamo was not charging, that there was an oil seal leaking, that he had used 8 gallons of fuel for a journey of 40 miles and that a wheel was cracked. He must also, as we think, have known by this time that the vehicle was not capable of 40 miles per hour. As to oil consumption, we should have thought that, if it was so excessive that the sump was practically dry after 300 miles, the plaintiff could have reasonably been expected to discover that the rate of consumption was unduly high by the time he had made the journey from Hampton Court to Sevenoaks and thence to Rochester and back.
On his return from Rochester the plaintiff telephoned to the defendant and complained about the dynamo, the excessive fuel consumption, the leaking oil seal and the cracked wheel. The defendant then offered to pay half the cost of the reconstructed dynamo which the plaintiff had been advised to fit, and the plaintiff accepted the defendant's offer. We find this difficult to reconcile with the continuance of any right of rescission which the plaintiff might have had down to that time.
But the matter does not rest there. On the following day the plaintiff, knowing all that he did about the condition and performance of the lorry, despatched it, driven by his brother, on a business trip to Middlesbrough. That step, at all events, appears to us to have amounted, in all the circumstances of the case, to a final acceptance of the lorry by the plaintiff for better or for worse, and to have conclusively extinguished any right of rescission remaining to the plaintiff after completion of the sale.
Accordingly, even if the plaintiff should be held, notwithstanding Seddon v North Eastern Salt Co Ltd, (supra), to have had a right to rescission which survived the completion of the contract, we think that on the facts of this case he lost any such right before his purported exercise of it.
For these reasons we would dismiss this appeal.
Appeal dismissed with costs: Leave to appeal to the House of Lords granted.
