England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE CHANF 97/0808 CMS3

IN THE COURT OF APPEAL (CIVIL DIVISION )

(MR JUSTICE RIMER )

Royal Courts of Justice

Strand

London W2A 2LL

Tuesday 24th February l998

B e f o r e

LORD JUSTICE EVANS

LORD JUSTICE PETER GIBSON

SIR CHRISTOPHER SLADE

NATIONWIDE BUILDING SOCIETY Respondent

v.

(l) BRYAN LEWIS

(2) ALYN WILLIAMS Appellant

(formerly partners in the firm of

Bryan Lewis & Co)

(Computer Aided Transcription of the Stenograph Notes of

Smith Bernal Reporting Limited, l80 Fleet Street

London EC4A 2HD Tel: 0l7l 42l 4040

Official Shorthand Writers to the Court)

MR RUPERT JACKSON QC and MR PAUL PARKER (instructed by Messrs Reynolds Porter chamberlain, London WClV 7HA) appeared on behalf of the Appellant (Second Defendant).

MR NICHOLAS PATTEN QC and MR TIMOTHY HIGGINSON (instructed by the litigation solicitor of Nationwide Building Society, Swindon) appeared on behalf of the Respondent (Plaintiff).

J U D G M E N T

(As approved by the court)

©Crown Copyright

LORD JUSTICE EVANS: Lord Justice Peter Gibson will give the first judgment.

LORD JUSTICE PETER GIBSON: This appeal gives rise to a point of some interest and importance in partnership law. Can a salaried partner, who is in truth only an employee of a firm and allows his name to go on the firm's notepaper in a way which does not differentiate between him and the true principal or partners and so is held out to be a partner in that firm, be held liable to another, who has dealt with that firm, for the negligence or breach of contract by it in the absence of direct evidence of actual reliance by that other on the holding out?

The first defendant, Brian Lewis, and the second defendant, Alyn Williams, are solicitors. In July l990 Mr Lewis was practising on his own under the name of Brian Lewis & Co. It is convenient to call Brian Lewis & Co "the firm" even though Mr Lewis was at all times its sole principal. Mr Williams accepted an invitation from Mr Lewis to join him as a salaried partner in July l990 and he worked in that capacity until 23rd August l99l when he left the firm. In that period his name appeared on the firm's writing paper. The paper was headed "Brian Lewis and Company Solicitors". Then the names of Mr Lewis and Mr Williams with their degrees were printed side by side.

In April l99l one Philip Cliff applied to the plaintiff for a mortgage loan. In the application form against "Name and address of your solicitor" he wrote "B Lewis & Co" and gave the firm's address and against "Contact" he wrote "Mr B Lewis".

On 8th May l99l the plaintiff decided to retain the firm to act for it as well. In all its subsequent communications with Mr Cliff the plaintiff's practice was to refer not only to the reference number given to Mr Cliff but also to the solicitor acting for him, and so the name of the firm was typed and "Ref: Mr B Lewis" also appeared in every letter.

In its offer of an advance, which was addressed to Mr Cliff, it referred several times to "the solicitor" and what "the solicitor" had to do. In a printed document headed "Instructions to solicitors" but completed in type and addressed to the firm, again with the words "Ref: Mr B Lewis", it asked the firm to investigate the title and prepare the necessary deeds. Both in print and in type reference was made to "the solicitor". Those instructions were received by the firm on 9th May. On l0th May the firm replied on its headed writing paper and gave its reference as "BL/AW/GMK Cliff l6339" and in the body of the letter the plaintiff was thanked for its instructions. The letter continued:

"We accordingly enclose Report on Title in the above matter and await hearing from you."

The letter was signed "Brian Lewis & Co". The report on title on the plaintiff's printed form was signed in the same way. The report given was unqualified.

The letter and report were received by the plaintiff on l3th May. Subsequent communications in May from the plaintiff to the firm used different formats. A variation of the mortgage offer on an unspecified date in May was addressed to the firm, "Re Mr B Lewis". A more personal letter on 2lst May l99l from the plaintiff's sales support administrator was addressed to "Brian Lewis Solicitors", but commenced with the words "Dear Sir". Also a letter on 24th May from the customer adviser was addressed to "B Lewis & Co" and commenced "Dear Sir". Neither gave the firm's reference which had appeared in the letter of l0th May.

On 24th May the plaintiff decided to go ahead with the mortgage and a cheque for the mortgage advance was sent to the firm. The internal document of the plaintiff authorising the cheque specified which documents were examined. They include the report on title but no reference was made to the letter of l0th May. The mortgage transaction was completed on 4th July l99l.

Mr Cliff fell into arrears. The mortgage security was sold by the plaintiff at a price well below the amount owed by Mr Cliff. On 25th August l995 the plaintiff commenced proceedings in the Chancery Division against Mr Lewis and Mr Williams who were described as "formerly partners in the firm". The plaintiff alleged negligence and breach of contract on the part of the firm, amongst other things in failing to disclose to the plaintiff that there had been a simultaneous transaction entered into by Mr Cliff. The writ and the statement of claim are the first indications in the papers before us that the plaintiff had become aware of the existence of Mr Williams as connected with the firm.

Mr Lewis has been adjudicated bankrupt and the Solicitors' Indemnity Fund is not indemnifying him or supporting him in this litigation. We were told by Mr Rupert Jackson QC, appearing with Mr Parker for Mr Williams, that that is because dishonesty is alleged against Mr Lewis. Only Mr Williams has defended the action and he is backed by the Solicitors' Indemnity Fund. In his defence he denied being a partner in the firm and claimed that he was only an employee of Mr Lewis, but he admitted that he was held out as a partner of Mr Lewis by reason of the fact that his name appeared on the firm's writing paper. He denied any personal dealings with the mortgage transaction and denied liability.

That defence appears to have alerted the plaintiff to the fact that Mr Williams might not be a partner. In its reply the plaintiff averred that Mr Williams was held out to the world as a partner in the firm throughout all material times and, accordingly, was liable to the plaintiff as alleged. No act of reliance by the plaintiff on the holding out is pleaded.

Three preliminary issues were ordered to be tried:

(i) Is Mr Williams liable on the basis that he was a partner of Mr Lewis? (ii) Is Mr Williams liable on the basis that he was held out as a partner of Mr Lewis? (iii) Is Mr Williams liable on the basis that he was personally responsible for any act of omission of which the plaintiff complains in the action?

Those issues came before Mr Justice Rimer who heard evidence from Mr Williams but no oral evidence was adduced on the part of the plaintiff. In the judge's judgment on 23rd May l997, which is now reported ([l997] l W.L.R. ll8l), the judge answered the first and third issues in the negative and the second in the affirmative.

The only appeal from those decisions is by Mr Williams who appeals from the judge's decision on the second issue. The judge commenced his discussion of the second issue by referring to section l4(l) of the Partnership Act l890, which is in this form:

"Every one who by words spoken or written or by conduct represents himself, or who knowingly suffers himself to be represented, as a partner in a particular firm, is liable as a partner to anyone who has on the faith of any such representation given credit to the firm, whether the representation has or has not been made or communicated to the person so giving credit by or with the knowledge of the apparent partner making the representation or suffering it to be made."

As is said in Lindley & Banks on Partnership l7th ed. (l995) at paragraph 5-43, the doctrine that a person who holds himself out as a partner will be liable as such to all persons who rely on his representation was well established long before that Act and was in truth no more than an illustration of the general principle of estoppel by conduct. To establish liability under the section, the plaintiff must prove (a) holding out, (b) reliance thereon and (c) the consequent giving of credit to the firm.

The judge commented that in talking only in terms of giving credit section l4(l) might perhaps be viewed as expressed somewhat restrictively. But he referred to the view of the editor of Lindley & Banks at paragraph 5-52 that the expression should not be construed in a technical or restrictive sense but as describing any transaction of the firm. The judge said that he did not have to decide whether that view was correct as neither Mr Higginson, then appearing on his own for the plaintiff, nor Mr Parker, then appearing on his own for Mr Williams, argued that section l4(l) was to be construed restrictively, and Mr Parker was content to accept that the view expressed in Lindley and Banks was correct. Mr Parker also recognised that estoppels could arise in circumstances not falling within section l4(l).

The main argument before the judge was on reliance. The judge rejected the plaintiff's contention that there was no need for the plaintiff to prove that it placed reliance on Mr Williams's apparent status as a partner. He then turned to an alternative argument by the plaintiff that reliance should be presumed. The judge said that reliance might be presumed in some circumstances but there must be a factual basis justifying the presumption. He accepted that if 8th May l99l, when the plaintiff decided to retain the firm and instructed it, was the critical date, the factual basis was not established, but he held that that date was only the beginning of the relationship between the plaintiff and the firm. He referred to the purpose of the instructions as being to obtain advice from the firm and said that the advice came with the letter of l0th May and the enclosed report. The judge said at pages ll87:

"In my judgment, however, that letter was not one by which Mr Lewis was acknowledging a personal retainer of himself alone in the matter, or was offering his personal opinion on title. It may well be that the report was exclusively his work and I am prepared so to assume. But the letter was a response from what was apparently a two-partner firm, enclosing that firm's report on title. Correspondingly, when Nationwide received the letter, it was entitled to regard the enclosed report as being the advice of that two- partner firm. I find no difficulty in presuming in its favour that it relied on it as being a report which carried with it the implied imprimatur of both partners. If reliance of this sort was not precisely what Mr Lewis and Mr Williams intended by putting the latter's name on the notepaper, I cannot see why they did it. It may be that any presumption that Nationwide so relied on the title report is rebuttable and that it could be shown that it in fact relied on it only as being the advice of Mr Lewis. But Mr Williams has not attempted to show that. One of the ways Nationwide puts its case is, in effect, that the firm negligently failed to advise it of matters which materially qualified the advice contained in the title report. It is ultimately of the essence of Nationwide's case that it relied on that report."

Accordingly the judge held that Mr Williams was estopped from denying responsibility for it.

Mr Jackson challenges the judge's reasoning on two grounds. First, he submits that there was no act by the plaintiff which could amount to the giving of credit by the plaintiff to the firm, at any rate after the contract of retainer was made. Second, he submits that there is no evidence that the plaintiff did anything on the faith of, or in reliance on, the representation that Mr Williams was a partner and the judge was wrong to presume such reliance. We did not hear argument on Mr Jackson's first submission based on the meaning of "given credit" in section l4(l), as we indicated that as the plaintiff was not basing itself on section l4(l) alone and as the common law doctrine of estoppel by holding out was wider than section l4(l), it mattered not how the statutory language was construed. The position at common law seems to me to have been well expressed by Lord Esher MR in Re Fraser [l892] 2 Q.B. 633 at 637:

"The doctrine of 'holding out' is a branch of the doctrine of estoppel. If a man holds himself out as a partner in a firm, and thereby induces another person to act upon that representation, he is estopped as regards that person from saying that he is not a partner. The representation may be made either by acts or by words; but the estoppel can be relied upon only by the person to whom the representation has been made in either way, and who has acted upon the faith of it."

I should also quote from Lynch v. Stiff (1943) 68 C.L.R. 428 a decision of the High Court of Australia on the Partnership Act l892 of New South Wales which contains precisely the same wording as section l4(l) of the Partnership Act l890. At page 435 this appears in the judgment of the court (Chief Justice Latham, Mr Justice Rich, Mr Justice McTiernan and Mr Justice Williams):

"The doctrine of holding out is a branch of the law of estoppel. So far as the element of action by the party relying upon an estoppel is concerned, it is sufficient if that party acts to his prejudice upon a representation made with the intention that it should be so acted upon, though it is not proved that in the absence of the representation he would not have so acted."

What is therefore necessary, as the judge himself accepted, is for the plaintiff to show that it relied on or acted on the faith of the holding-out. The judge, as I have already indicated, also accepted that as at 8th May l99l there was no evidence of the plaintiff relying on the holding-out. The judge might have added that the same applied at the time the contract of retainer came into being, which was when, on l0th May l99l, the firm posted its acceptance of the instructions. That was a contract between the plaintiff and Mr Lewis acting as a solicitor under the trading name of the firm, Mr Williams not being a partner. Although the firm was, we are told, on the list kept by the plaintiff of solicitors who could be authorised to act for it, there is no evidence as to whether or not the plaintiff knew that Mr Lewis was the sole principal of the firm. Even before Mr Williams was employed by Mr Lewis, Mr Lewis practised under the style "Brian Lewis & Co Solicitors".

The position in law was that when the offer of a contract was accepted by the letter of l0th May l99l, it was accepted by Mr Lewis and not by Mr Lewis and Mr Williams. Mr Lewis had no actual authority to accept the retainer on behalf of Mr Williams and it is inconceivable that he intended to accept on behalf of his employee. Mr Patten QC, appearing with Mr Higginson for the plaintiff, has not argued for Mr Lewis having ostensible authority to act on behalf of Mr Williams and in any event for that to be established it would require proof that the plaintiff acted on the faith of the implied representation of authority.

Mr Patten supports the judge's reasoning. He submits that it can be presumed in the circumstances of this case that the plaintiff did act on the faith of, or on reliance on, the representation. He points out that the holding-out of Mr Williams as a partner was a continuous act. He submits that it is clear beyond doubt that it was the firm which the plaintiff retained. Mr Patten places particular reliance on the letter of l0th May, containing as it does the features to which I have already referred. In his skeleton argument he submitted that it was clear from authority that reliance on the doctrine of holding-out as a partner can be presumed.

For this proposition he referred to Hudgell Yeates & Co. v Watson [l978] Q.B. 45l. In that case a Mr Smith who was temporarily not qualified to act as a solicitor had been held out as a partner of the plaintiff firm of solicitors. The defendant, for whom the plaintiffs had acted in litigation sought, to resist a claim by the plaintiffs for their costs. His defence included the point that, although Mr Smith had not acted for him, his disqualification meant that there was a breach of the Solicitors Act l957, disentitling the plaintiffs from recovering their costs. That point failed, but there was some discussion by this court of the effect of Mr Smith being held out to be a partner. Lord Justice Megaw said at page 470:

"But what is the effect of a holding-out of someone as being a partner? A holding-out is relevant, and relevant only, as an estoppel. As it is put in Lindley on Partnership l3th ed. (l97l), p.l00:

´The doctrine that a person holding himself out as a partner, and thereby inducing others to act on the faith of his representations, is liable to them as if he were in fact a partner is nothing more than an illustration of the general principle of estoppel by conduct.'

For an estoppel to exist it is necessary to show, not only that there has been an unequivocal representation (here the holding-out), but also that the person seeking to assert an estoppel has acted on the faith of the representation: Freedman v. Cooke (l848) 2 Ex. 654. This requirement is stressed by Lord Blackburn in his speech in Scarf v. Jardine (l882) 7 App. Cas. 345, 357 where he says: ´I put rather an emphasis on those last words "against those who acted upon the faith that the authority continued."'"

Lord Justice Megaw then referred to the fact that the defendant could not say that he instructed the plaintiffs on the faith of the holding-out, nor that he suffered any detriment. Lord Justice Megaw continued at pages 470-1:

"So, though there was a holding-out - a continued holding- out - of Mr Smith as being a partner when he was not, there is no estoppel in favour of the defendant on the facts of this case. It is not that the defendant is estopped from alleging the holding-out. He is not. It is that the holding-out was irrelevant because the defendant's own assertion as to his state of mind involves that he did not rely on it. We are not here concerned with any question as to the burden of proof, or as to presumptions, in relation to reliance on a holding-out. As the defendant did not rely upon the holding-out and as, in law, Mr Smith was not a partner, the partners in the new partnership, which had come into existence before the defendant gave his instructions, are not contaminated so as to lose their entitlement to profit costs for work done, not being work done by Mr Smith, by reason of any question of partnership between them and the temporarily unqualified Mr Smith.

We do not, therefore, have to consider what the position would have been if the defendant had, or was deemed to have, relied upon the holding-out of Mr Smith as a partner."

Mr Patten fastened on the propenultimate and last sentences as suggesting a recognition by Lord Justice Megaw that reliance can be presumed.

It is not clear why presumptions were mentioned. It may be that the point arose in argument. But, while Lord Justice Megaw was not saying that there cannot be a presumption of reliance, plainly he was also not saying that there can be such a presumption. The point was simply left open as irrelevant to the decision in that case. Mr Patten also drew attention to the fact that Lord Justice Waller, when dealing with the doctrine of holding-out, did not talk at all of reliance. But Mr Patten did not suggest that reliance is irrelevant. In my judgment, whether one looks at section l4 with its clear requirement that it was on the faith of the representation that the person held out was a partner of the firm that credit is given to that firm, or whether one looks to the common law, reliance is a necessary ingredient to be established by a plaintiff, and I doubt if Lord Justice Waller was intending to suggest anything to the contrary.

Mr Patten also referred to Lindley & Banks where, he said, at paragraph 5-49 under the heading "Reliance" the text only dealt with knowledge of a holding-out as opposed to reliance upon it. But at paragraph 5-43 the editor had made clear that reliance on the representation was necessary both at common law and under section l4, and in paragraph 5-49 the first sentence reads:

"It need hardly be stated that, in order to establish liability under the section, a third party must show that he was aware of the holding out; if he was ignorant of it, he cannot have been misled or otherwise have acted ´on the faith' of the representation."

I emphasise the second part of that sentence. The editor was certainly not saying that proof of reliance was unnecessary if there was knowledge. I accept Mr Jackson's submission that the sense of what is said in Lindley & Banks is that knowledge is a precondition of reliance, not that it is sufficient in itself. In my judgment, therefore, Mr Patten has not shown us any authority for his proposition that reliance can be presumed.

Mr Patten submitted that it would make the doctrine of holding-out wholly artificial and unworkable if a person claiming an estoppel had to prove that he actually relied on the holding-out. I do not accept this. It does not seem to me to be impractical or unjust for the law to require a person claiming an estoppel to have to prove in a partnership context what he would have to prove in other contexts. Given that reliance is a necessary requirement, it is not obvious that there should be a presumption in favour of the person who claims reliance and is in a better position to know whether he did rely on the holding-out and who should thereby be able to prove it. The person held out, who is not in fact a partner, may well have difficulty in proving the negative, that the other person did not rely on the holding-out. Of course, there may be circumstances from which it would be appropriate for the court to infer that there was reliance on a holding-out. As is stated in Spencer-Bower and Turner on Estopped by Representation, 3rd ed. (l977) pages ll4 and ll5:

"Though on questions of fact the onus will be upon the representee, it may happen that the probability of inducement from a given set of facts is so great, or in other words the materiality is so plain and palpable, as to justify a finding of the inducement itself merely from the circumstantial context; but it must be remembered that the inference so made is one of fact and not of law."

Mr Patten rightly accepted that any "presumption" is one of fact rather than of law. He submitted that the judge was right so to presume in the circumstances of the present case. He said that concentration upon the retainer was misplaced because that only went to the plaintiff's case in contract and did not touch the plaintiff's case in negligence. He submitted that when the firm on l0th May l99l sent its unqualified report on title under cover of the letter of that date, it was making two relevant representations. One was that Mr Williams was a partner in the firm giving his authority to the report and the other was that the title investigated by the firm was unqualified. He further submitted that the relevant act of reliance by the plaintiff on the representation that Mr Williams was a partner was in going ahead with the mortgage transaction, that being an essential part of its claim in negligence. He submitted that it was unrealistic to compartmentalise the reliance by the plaintiff as between reliance on the representation that Mr Williams was a partner on one hand and reliance on the contents of the report on the other. In support of these submissions on reliance he pointed to the features of the letter of l0th May l99l, to which I have already referred, and to the report itself, signed as it was in the firm's name.

To my mind that is not sufficient to establish the fact of reliance. There is no evidence that anyone in the plaintiff noted from the letter that Mr Williams' name appeared as a partner, still less that it was relied on by the plaintiff. It was not suggested that there was some personal characteristic of Mr Williams that would bring him to the attention of the plaintiff. It is merely the fact that Mr Lewis had a partner that is said to be significant. I have to say that this seems to me unrealistic. It did not matter to the plaintiff whether or not Mr Lewis was the sole principal when the plaintiff retained the firm. Why should it matter to the plaintiff whether or not Mr Lewis was the sole principal less than a week later when it received the letter of l0th May and the report on title?

As is widely known, since l987 there have been compulsory indemnity arrangements for solicitors. Solicitors in practice are covered by the Solicitors' Indemnity Fund subject only to limited exclusions, such as for fraud, which are specified in the Solicitors Indemnity Rules. It would require the attribution to the plaintiff of quite extraordinary foresight that it would actively have had in mind the possibility that it might not recover damages from the firm for negligence or breach of contract if the firm had a sole principal and he was fraudulent, but might recover if there were more than one partner, one of whom was not fraudulent. It is certainly not obvious that the plaintiff would have noticed the name of Mr Williams appearing in print alongside that of Mr Lewis at the top of the letter of l0th May. Still less is it obvious that the plaintiff would have placed any reliance on the fact that Mr Lewis had a partner. I cannot see anything in the circumstances of this case to make it of significance that Mr Williams should give the report on title his imprimatur. The judge was prepared to assume that the report was exclusively the work of Mr Lewis and held that Mr Williams was not personally responsible for any act or omission of which the plaintiff complained. There is no evidence that Mr Williams had ever done any work for the plaintiff. It would be astonishing if the significance of the plaintiff hiring a partner had ever crossed the mind of anyone in the plaintiff.

As for the judge's assertion that Mr Lewis and Mr Williams intended the report prepared by Mr Lewis to convey that imprimatur, I find that difficult to accept. The judge sought to justify that assertion by saying that otherwise he could not see why the firm's notepaper should carry both names. I would respectfully suggest that a reason might be that it was to lend authority to Mr Williams in his communications with clients of the firm. Not being a partner but a mere employee, he was to be made to appear to be on a par with Mr Lewis. It does not follow that anything which Mr Lewis did on his own for clients was intended to have the authority of Mr Williams. Mr Patten submitted that there would be some clients who would be impressed by the fact that Mr Lewis had a partner. If this was really a matter of significance, there should have been evidence on the point. In my judgment, the judge was not justified in making his assertion without evidence and, I repeat, the plaintiff called no evidence at all.

We are left only with the documents and what can be inferred from them. I, of course, accept that the plaintiff did rely on the report on title and the representation contained in it that the title to the property to be mortgaged was sound. It does not follow from that that the plaintiff relied on the suggestion representation that Mr Williams was a partner giving his authority to that report.

In my judgment, therefore, the circumstances are simply not such as to justify the judge's conclusion that there has been reliance by the plaintiff on the holding-out. For these reasons I have reached the clear conclusion that the judge was wrong to answer the second preliminary issue in the affirmative.

For my part, I would allow the appeal, set aside that part of the judge's order and declare instead that the second defendant was not liable on the basis he was held out as a partner of the first defendant.

SIR CHRISTOPHER SLADE: I agree that this appeal should be allowed. But since we are differing from Mr Justice Rimer I will attempt to give my reasons shortly in words of my own.

In my judgment, Mr Williams, by agreeing to his name appearing on the notepaper of the firm, Brian Lewis & Co, agreed to Mr Lewis holding him out or representing him as a partner in the firm. Indeed Mr Patten has referred us to documentation which indicates that the two of them were insured on this basis. The relevant loss which Nationwide has suffered in the present case is the loss suffered by its having acted on Mr Lewis's negligent report on title. If therefore it could be shown that Nationwide had acted on this report in reliance on the representation contained in the firm's notepaper, Mr Williams would, in my opinion, be liable for that loss no less than Mr Lewis. In my judgment, however, this cannot be shown.

In my judgment, Nationwide's "Instructions to solicitors" dated 8th May l99l constituted an offer to retain the firm of Brian Lewis & Co, whoever might be the person or persons constituting that firm. In fact it was a one-man firm. In accordance with the ordinary principles of contract law, that offer was in my judgment accepted by that one-man firm, Mr Lewis, when he posted his letter of l0th May l99l enclosing his report on title. In my judgment, the contract of retainer, being a contract between Nationwide and the one-man firm, was concluded at that moment. There is no evidence that at that moment Nationwide had seen the firm's notepaper or that any representation had previously been made to it that Mr Williams was a partner in the firm. In the circumstances Mr Patten for Nationwide has not been able, and has not sought, to invoke the contract of retainer itself as a justification for imposing liability on Mr Williams for the negligence of Mr Lewis to which, it must be stressed, Mr Williams was in no way an actual party; he played no part whatever in the preparation of the offending report.

Mr Patten's principle submission has been that the report itself, in the light of the firm's letter which enclosed it, represented, inter alia, that Mr Williams was a partner and that Nationwide, in relying and acting on the substance of the report, must also be presumed to have relied on this representation, in addition to the representation as to title made in the report itself. Though Mr Patten invited us to treat these two representations as one composite representation, I do not feel able to accept this invitation. In my judgment, they were plainly two separate, distinct representations and must be treated by us as such.

For reasons explained at the beginning of this judgment, an employee who, in order to enhance his apparent status, allows his name to appear on the firm's notepaper as an apparent partner exposes himself to peril. Let there be no doubt about that. I would accept that, on the particular facts of some other cases, even in the absence of explicit evidence of reliance, the court might readily infer that persons dealing with the firm had done so in reliance on the representation that the employee was a partner, particularly, for example, if all their dealings had been with the employee himself. On the particular facts of this case, however, there is no evidence that Nationwide, when it acted on the report as to title, had had any dealings with Mr Williams or indeed even knew of his existence. There is no evidence that it noticed or paid any attention to the presence of Mr Williams's name on the firm's notepaper when, or at any time after, it received the letter of l0th May l99l and the accompanying report on title. In these circumstances, in agreement with Lord Justice Peter Gibson, I feel unable to presume or infer that Nationwide relied in any way on the representation made in the firm's notepaper when it acted on the report as to title.

Mr Justice Rimer said (at page ll87 of the report):

"It may be that any presumption that Nationwide so relied on the title report is rebuttable and that it could be shown that it in fact relied on it only as being the advice of Mr Lewis."

With respect to Mr Justice Rimer, I think this sentence indicates where he erred in his approach to this case. No presumption of reliance on the representation made in the firm's notepaper in my judgment arose. In cases such as this, though the plaintiff on the particular facts may be able to persuade the court to infer reliance, the burden of proof, in my judgment, must always rest on him. I do not think that any authority to the contrary has been cited to us. In the present case that burden has not, in my judgment, been discharged.

I would accordingly concur in allowing this appeal and in the form of order proposed by Lord Justice Peter Gibson.

LORD JUSTICE EVANS: I also agree for the reasons given in both judgments of my Lords and I will add just this.

I thought initially that the plaintiffs might succeed against the second defendant, Mr Williams, on the basis that Mr Brian Lewis had actual authority from Mr Williams to represent that Mr Williams was his partner, as he did in the letter dated l0th May l99l. But, in order to make out a claim against Mr Williams in the tort of negligence, the plaintiffs must show reliance on the representation that Mr Williams was a partner as well as upon the truth of a negligent misstatement. Mr Patten QC accepts that and in my view he is right to do so. He relies upon apparent rather than actual authority and it follows that reliance must be shown.

As for reliance, Mr Patten submits that "materiality" is enough, using that word in the same sense as in the insurance context explained by the House of Lords in the Pan Atlantic decision [1995] 1 A.C. 501. Again, I would agree. But even in that sense, in my judgment, reliance cannot be presumed in the circumstances of this case. Finally, I would emphasise that this was not a case where any representation was made before the retainer was entered into.

Order: Appeal dismissed with costs;

second issue be answered in the negative.