England and Wales Court of Appeal (Civil Division) Decisions

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Cite as: [1971] EWCA Civ 04, [1971] 3 All ER 907, [1972] 1 QB 198, [1972] QB 198, [1971] 3 WLR 603, [1971] EWCA Civ 4

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JISCBAILII_CASE_CONTRACT

		Neutral Citation Number: [1971] EWCA Civ 4
		Case No.:

IN THE SUPREME COURT OF JUDICATURE.
COURT OF APPEAL.
Appeal by defendant from order of
His Honour Deputy Judge Ellison at Bromley County Court
on 15th January, 1971

Royal Courts of Justice.

22nd July. 1971.

B e f o r e :

THE MASTER OF THE ROLLS (Lord Denning)
LORD JUSTICE PHILLIMORE
and
LORD JUSTICE MEGAW.
____________________

Between:

	KEITH LODER LEWIS	Plaintiff
	and
	AFTHONY JOHN AVERAY	Defendant

____________________

(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.)

____________________

Mr. DAVID PREBBLE (instructed by Messrs. Adams, Brown & Co.) appeared on behalf of the Respondent Plaintiff.
Mr. ROGER TITHERIDGE and Mr. BRUCE MARKLAm DAVID (instructed by Messrs. Amery-Parkes & Co.) appeared on behalf of the Appellant
Defendant.
____________________

HTML VERSION OF JUDGMENT
____________________

THE MASTER OF THE ROLLS: This is another case where one of two innocent persons has to suffer for the fraud of a third. It will no doubt interest students and find its place in the textbooks.

Mr. Lewis is a young man who is a post-graduate student of chemistry. He lives at Clifton near Bristol. He had an Austin-Cooper motor car. He decided to sell it. He put an advertisement In the newspaper offering it for £450. On the 8th May, 1969, in reply to the advertisement a man — I will simply call him the "rogue", for so he was — telephoned and asked if he could come and see the car. Re did not give his name. He said he was speaking from Wales, in Glamorganshire. Mr. Lewis said he could come and see it. He came in the evening to Mr. Lewis's flat. Mr. Lewis showed him the car, which was parked outside. The rogue drove it and tested it. He said he liked it. They then went along to the flat of Mr. Lewis's fiancée, Miss Kershaw, (they have since married.) He told them he was Richard Green and talked much about the film world. He led both of them to believe that he was the well-known film actor. Richard Greene, who played Robin Hood in the "Robin Hood' series. They talked about the car. He asked to see the log-book. He was shown it and seemed satisfied. He said he would like to buy the car. They agreed a price of £450. The rogue wrote out a cheque for £430 on the Beckenham Branch of the Midland Bank. He signed it "R.A. Green". He wanted to take the car at once. But Mr Lewis was not willing for him to have it until the cheque was cleared. To hold him off, Mr. Lewis said there were one or two small jobs he would like to do on the car before letting him have it, and that would give time for the cheque to be cleared. The rogue said: "Don't worry about those small jobs. I would like to take the car now." Mr. Lewis said? "Have you anything to prove that you are Mr. Richard Green? The rogue thereupon brought out a special pass of admission to Pinewood Studios, which had an official stamp on it. It bore the name of Richard A. Green and the address, and also a photograph which was plainly the photograph of this man, who was the rogue. On seeing this pass, Mr. Lewis was satisfied. He thought this man was really Mr. Richard Greene, the film actor, By that time it was 11 o'clock at night. Mr. Lewis took the cheque and let the rogue have the car and the log-book and the Ministry of Transport Test Certificate. Each wrote and signed a receipt evidencing the transaction. Mr. Lewis wrote'-

"Received from
Richard A. Green
59 Marsh Rd.,
Beckenham
Kent

the sum of £430 in return for Austin Cooper S Reg. No. A.H.T. 484 B chassis No. CA257 - 549597

Signed Keith Lewis.'"

The rogue wrote:-

"Received log-book No. 771835 and M.R.T. for Mini-Cooper S No. A.H.T. 484 B

R.A. Green."

Next day, the 9th May, 1959, Mr. Lewis put the cheque into the bank. A few days later the bank told him it was worthless. The rogue had stolen a cheque book written this £450 on a stolen cheque.

Meanwhile, whilst the cheque was going through, the rogue sold the car to an innocent purchaser. He sold it to a young man called Mr. Averay. He was at the time under 21. He was a music student in London at the Royal College of Music. His parents live at Bromley. He was keen to buy a car. He put an advertisement in the Exchange and Mart, seeking a car for £200. In answer he had a telephone call from the rogue. He said he was speaking from South Wales. He said that he was coming to London to sell a car. Mr. Averay arranged to meet him on the 11th May, 1969. The rogue came with the car. Young Mr. Averay liked it, but wanted to get the approval of his parents. They drove it to Bromley. The parents did approve. Young Mr. Averay agreed to buy it for £200. The rogue gave his name as Mr. Lewis. He handed over the car and log-book to young Mr. Averay. The logbook showed the owner as Mr. Lewis. In return Mr. Averay, in entire good faith, gave the rogue a cheque for £200. The rogue signed this receipts

'Sale of Cooper S to -A.J. Averay Received £200 for bhe Cooper S Registration No. A.H.T. 484 B, the said car being my property absolutely, there being no hire-purchase charges outstanding or other impediment to selling the car.

Signed Keith Lewis May 13th 1969."

A fortnight later, on the 29th Kay, 1969, Mr. Averay wanted the workshop manual for the car. So his father on his behalf wrote to the name and address of the seller as given in the logbook, that is, to Mr. Lewis. Then, of course, the whole story came to light. The rogue had cashed the cheque and disappeared. The police have tried to trace him, but without success.

Now Mr. Lewis, the original owner of the car, sues young Mr. Averay. Mr. Lewis claims that the car is still his. He claims damages for conversion. The Judge found in favour of Mr. Lewis and awarded damages of £330 for conversion.

The real question in the case is whether on the 8th May, 1969, there was a contract of sale under which the property in the car passed from Nr. Lewis to the rogue. If there was such a contract, then even though it was voidable for fraud, nevertheless Mr. Averay would get a good title to the car. But if there was no contract of sale by Mr. Lewis to the rogue - either because there was, on the face of it, no agreement between the parties, or because any apparent agreement was a nullity and void ab initio for mistake, then no property would pass from Mr. Lewis to the rogue. Mr. Averay would not get a good title because the rogue had no property to pass to him.

There is no doubt that Mr. Lewis was mistaken as to the identity of the person who handed him the cheque. He thought that he was Richard Green., a film actor of standing and worth: whereas in fact he was a rogue whose identity is quite unknown. It was under the influence of that mistake that Mr. Lewis let the rogue have the car. He would not have dreamed of letting him have it otherwise.

What is the effect of this mistake? There are two cases in our books which cannot, to my mind, be reconciled the one with the other. One of them is Phillips v. Brooks. [1919] 2 KB 243, where a jeweller had a ring for sale. The other is Ingram v. Little. [1964] 1 QB 31, where two ladies had a car for sale. In each case the story is very similar to the present. A plausible rogue comes along. The rogue says he likes the ring, or the car, as the case may be. He asks the price. The seller names it. The rogue says he is prepared to buy it at that price. He pulls out a cheque book. He writes, or prepares to write, a cheque for the price. The seller hesitates. He has never met this man before. He does not want to hand over the ring or the car not knowing whether the cheque will be met. The rogue notices the seller's hesitation. He is quick with his next move. He says to the jeweller, in Phillips v. Brooks: 'I am Sir George Bullough of 11 St. James'. Square"; or to the ladies, "I am P.S.A. Hutchinson of Stanstead House, Stanstead Road, Caterham'; or to the post-graduate student in the present case: "I am Richard Green, the film actor of the Robin Hood series". Each seller checks up the information. The jeweller looks up the directory and finds there is a Sir George Bullough at 11 St. James' Square. The ladies check up too. They look at the telephone directory and find there is a 'P.S M. Hutchinson of Stanstead House, Stanstead Road, Caterham,' The post-graduate student checks up too. he examines the official pass of the Pinewood Studios and finds that it is a pass for "Richard A. Green' to the Pinewood Studios with this man's photograph on it. In each case the seller feels that this is sufficient confirmation of the man's identity. So he accepts the cheque signed by the rogue and lets him have the rings in the one case, and the car and log-book in the other two cases. The rogue goes off and sells the goods to a third person who buys them in entire good faith and pays the price to the rogue. The rogue disappears. The original seller presents the cheque. It is dishonoured. Who is entitled to the goods? The original seller? or the ultimate buyer? The Courts have given different answers. In Phillips v. Brooks, the ultimate buyer was held to be entitled to the ring. In Ingram v. Little the original seller was held to be entitled to the car. In the present case the Deputy County Court Judge has held the original seller entitled.

It seems to me that the material facts in each case are quite indistinguishable the one from the other. In each case there was, to all outward appearance, a contract, but there was a mistake by the seller as to the identity of the buyer. This mistake was fundamental. In each case it led to the handing over of the goods. Without it the seller would not hove parted with them.

This case raises therefore the questions What is the effect of a mistake by one party as to the identity of the other? It has sometimes been said that, if a party makes a mistake as to the identity of the person with whom he is contracting, there is no contract, or, if there is a contract, it is a nullity and void, so that no property can pass under it. This has been supposed by a reference to the French jurist; Pothier; but I have said before, and I repeat now, his statement is no part of English law. I know that it was quoted by Lord Haldane in Lake v. Simmons, [1927] AC at page 501, and, as such, misled Mr. Justice Tucker in Sowler v, Potter, [1940] 1 KB 271, into holding that a lease was void whereas it was really voidable. But it has given rise to such refinements that it is time it was dead and buried altogether. For instances in Ingram v. Little the majority of the Court suggested that the difference between Phillips v. Brooks and Ingram v. Little was that in Phillips v. Brooks the contract of sale was concluded (so as to pass the property to the rogue) before the rogue made the fraudulent misrepresentation (see 1961 1 K.B. at pages 31, 51 and 60): whereas in Ingram v. Little the rogue made the fraudulent misrepresentation before the contract was concluded. My own view is that in each case the property in the goods did not pass until the seller let the rogue have the goods Again it has been suggested that a mistake as to the identity of a person is one things and a mistake as to his attributes is another. A Mistake as to identity, it is said, avoids a contracts whereas a mistake as to attributes does not. But this is a distinction without a difference. A man's very name is one of his attributes. It is also a key to his identity. If then, he gives a false name: is it a mistake as to his identity? or a mistake as to his attributes? These fine distinctions do no good to the law. As I listened to the argument in this case, I felt it wrong that an innocent purchaser (who knew nothing of what passed between the seller and the rogue) should have his title depend on such refinements. After all, he has acted with complete circumspection and in entire good faith whereas it was the seller who let the rouge have the goods and thus enabled him to commit the fraud. I do not, therefore, accept the theory that a mistake as to identity renders a contract void. I think the true principle is that which underlies the decision of this Court in King's Norton Metal Co. Ltd, Edridge Merrett & Co. Ltd. (1897) 14 TLR. 98, and of Mr. Justice Horridge in Phillips v. Brooks.[1919] 2 KB 243, which has stood for these last fifty years. It is this: When two parties have come to a contract -or rather what appears, on the face of it, to be a contract -the fact that one party is mistaken as to the identity of the other does not mean that there is no contract, or that the contract is a nullity and void from the beginning. It only means that the contract is voidable, that is, liable to be set aside at the instance of the mistaken person, so long as he does so before third parties have in good faith acquired rights under it.

Applied to the cases such as the present, this principle is in full accord with the presumption stated by Lord Justice Pearce and also Lord Justice Devlin in Ingram v. Little at pages 6l and 66. When a dealing is had between a seller like Mr. Lewis and a person who is actually there present before him, then the presumption in law is that there is a contract, even though there is a fraudulent impersonation by the buyer representing himself as a different man than he is. There is a contract and with the very person there, who is present in person, liable no doubt to be avoided for fraud, but still a good contract under which title can pass unless and until it is avoided. In support of that presumption, Lord Justice Devlin quoted, not only the English case of Phillips v. Brooks, but other cases in the United States where "the Courts held that if A appeared in person before B, impersonating C, an innocent purchaser from A gets the property in the goods against B". That seems to me to be right in principle in this country also.

In this case Mr. Lewis made a contract of sale with the very man, the rogue, who came to the flat. I say that he "made a contract" because in this regard we do not look into his intentions, or into his mind to know what he was thinking or into the mind of the rogue. We look to the outward appearances. On the face of the dealing, Mr. Lewis made a contract under which he sold the car to the rogue, delivered the car and the log-book to him, and took a cheque in return. The contract is evidenced by the receipts which were signed. It was, of course, induced by fraud. The rogue made false representations as to his identity. But it was still a contract, though voidable for fraud. It was a contract under which this property passed to the rogue, and in due course passed from the rogue to Mr. Averay, before the contract was avoided.

Though I very much regret that either of these good and reliable gentlemen should suffer, in my judgment it is Mr. Lewis who should do so.

I think the appeal should be allowed and judgment entered for the defendant.

LORD JUSTICE PHILLIIMORE: I share the regret expressed by my Lord. I think the law was conveniently stated by Lord Justice Pearce, as he then was, in the course of his judgment in Ingram v. Little, to which reference has already been made. At page 6l he said this

"Each case must be decided on its own facts. The question in such cases is this. Has it been sufficiently shown in the particular circumstances that, contrary to the prima facie presumption" — and I would emphasise those words — "a party was not contracting with the physical person to whom he uttered the offer, but with another individual whom (as the other party ought to have understood) he believed to be the physical person present. The answer to that question is a finding of fact."

Now, in that particular case the Court of Appeal, by a majority and in the very special and unusual facts of the case, decided that it had been sufficiently shown in the particular circumstances that, contrary to the prima facie presumption, the lady who was selling the motor car was not dealing with the person actually present. But in the present case I am bound to say that I do not think there was anything which could displace the prima facie presumption that Mr. Lewis was dealing with the gentleman present there in the flat - the rogue. It seems to me that when, at the conclusion of the transaction, the car was handed over, the log book was handed over, the cheque was accepted and the receipts were given, it is really impossible to say that a contract had not been made. I think this case really is on all fours with Phillips v. Brooks, which has been good law for over 50 years. True the contract was induced by fraud, and Mr. Lewis, when he discovered that he had been defrauded, was entitled to avoid it, but in the meanwhile the rogue had parted with the property in this motor car which he had obtained to Mr. Averay, who bought it bona fide without any notice of the fraud, and accordingly he thereby, as I think, acquired a good title. This action was in my judgment one which was bound to fail. I think the Judge was wrong in the decision to which he came and this appeal must be allowed.

LORD JUSTICE MEGAW: For myself, with very great respect, I find it difficult to understand the basis, either in logic or in practical considerations, of the test laid down by the majority of the Court in Ingram v. Little. That test is I think accurately recorded in the headnote at page 31 of the report, as follows; -

"where a person physically present and negotiating to buy a chattel fraudulently assumed the identity of an existing third person, the test to determine to whom the offer was addressed was how ought the promisee to have interpreted the promise."

The promisee, be it noted, is the rogue. The question of the existence of a contract and therefore the passing of property, and therefore the right of third parties, if this test is correct, is made to depend upon the view which some rogue should have formed, presumably knowing that he is a rogue, as to the state of mind of the opposite party to the negotiation, who does not know that he is dealing with a rogue.

However that may be, and assuming that the test as so stated is indeed valid, in my view this appeal can be decided on a short and simple point. It is the point which was put at the outset of his argument by Mr. Titheridge on behalf of the defendant appellant. The well-known textbook on the Law of Contract, Cheshire and Fifoot, in the 7th edition at pages 213 and 214, deals with the question of invalidity of a contract by virtue of unilateral mistake, and in particular unilateral mistake relating to mistaken identity. The learned editors of that work describe what in their submission are certain facts that must be established in order to enable one who seeks to avoid what to all appearances was a contract to avoid that contract on the basis of unilateral mistake by him as to the identity of the opposite party. The first of those facts is that at the time when he made the offer he regarded the identify of the offeree as a matter of vital importance. To translate that into the facts of the present case, it must be established that at the time of offering to sell his car to the rogue, Mr. Lewis regarded the identity of the rogue as a matter of vital importance. In my view, Mr. Titheridge is abundantly justified on the notes of the evidence and on the findings of the learned Judge in his submission that the mistake of Mr. Lewis went no further than a mistake as to the attributes of the rogue. It was simply a mistake as to the creditworthiness of the man who was there present and who described himself as Mr. Green. I should say that I think the learned Judge may possibly have been to some extent misled, because he seems to have assumed that the evidence given by the lady who is now Mrs. Lewis and who was then the plaintiffs fiancée was of some assistance. The learned Judge refers in many places to "they saw" or "they thought''. That is all very well, if there were evidence that the plaintiff himself heard or knew the same things as the fiancée heard or knew, or if she, having heard, for example, the name of Mr. Green when he first arrived, had mentioned that fact to Mr. Lewis. But there was no such evidence, and therefore all that the learned Judge recites about what Miss Kershaw heard and thought appears to me, with great respect, not to assist in this matter. When one looks at the evidence of the plaintiff, Mr. Lewis himself, it is, I think, clear, as Mr. Titheridge submits, that there was not here any evidence that would justify the finding that he, Mr. Lewis, regarded the identity of the man who called himself Mr. Green as a matter of vital importance.

I agree that the appeal should be allowed.

Appeal allowed. Judgment entered for defendant. No order as to costs on either side except legal aid taxation which is necessary. Liberty to make application for costs to be paid out of the Legal Aid Fund. Application under section 1 :)f the 1964 Act and Regulation 11 adjourned to give notice to the Law Society.