Dick Bentley Productions Ltd. And Another V Harold Smith (motors) Ltd. 3c6r5g

APRIL 30, 1965

E

F

THE WEEKLY LAW EEPOETS

[1965] 1 W.L.E.

a fact t h a t this was a mere ehimaera, and without such inference it cannot be said t h a t no injury would be done by the modification. Finally I come to the question of exercise of discretion, assuming there was jurisdiction. I do not for myself think t h a t the particular situation of the applicant, as having not very long since struck a bargain inconsistent with this particular outcome, is a factor in the exercise of discretion. I do not think t h a t the personality of the applicant or his past behaviour is relevant to the exercise of the discretion. I refer again to the fact t h a t tomorrow a n assign may make the same application. I think t h a t the decision (including the exercise of discretion) m u s t be related to the property and its history as such. Nor would I be prepared to rest m y decision on the exercise of discretion on t h e fact t h a t by its choice of words the L a n d s Tribunal appears to have asked itself why, having jurisdiction, it should not exercise it. I would fault the exercise of discretion on the fact, first, t h a t it was overlooked t h a t £ 200 would not be payable; second, I would say t h a t in this case the discretion should be otherwise exercised by analogy with section 84 (12), which was not in the mind of the tribunal. I t is to be inferred from subsection (2) t h a t the legislature considered t h a t in the case of leasehold land there should be n o modification until 25 years had elapsed from the definition of the restriction. H e r e the restriction was expressly redefined in 1950. Therefore by analogy the discretion should not be exercised in 1965. Accordingly, for these reasons, I would allow the appeal.

623 C. A. 1965 BlDLEY ' V. TAYLOR.

Russell L.J.

HARMAN L . J . Diplock L . J . , who cannot be here this afternoon, has authorised m e to say t h a t he has read both judgments and concurs in t h e m . Appeal allowed with costs. Order of Lands Tribunal discharged. Leave to appeal to House of Lords. Solicitors: Boodle,

Hatfield

& Co.; Isaac Joslin & Co.

G

C. J . E .

[COURT OF APPEAL.]

* D I C K B E N T L E Y P B O D U C T I O N S L T D . AND ANOTHER V. H A K O L D S M I T H (MOTOBS) L T D .

C. A. ig65

Mar. 2, 8 [ P l a i n t N o . S. 5 4 3 . ]

Lord Denning M.R., Danckwerts and

Sale of Goods—Warranty—Collateral warranty—Representation made Salmon L.JJ. with intention of, and inducing, other party to act on it—No reasonable foundation for representation—Sale of motor car— Statement of mileage—Subsequent ascertainment of history of car ing inference of substantially greater mileage—Maker of

624

[1965] 1 W.L.E.

C. A. 1965 DlOK BENTLEY PRODUCTIONS LTD.

v.

HAROLD SMITH (MOTORS) LTD.

THE WEEKLY LAW EEPOETS

representation in position to discover true warranty or innocent misrepresentation—Test.

APRIL 30, 1965 position—Whether

The plaintiff B., who was a customer of the defendant oar dealers and had told them that he wanted to buy a well-vetted oar (a '' quality '' British car, the history of which could be obtained from its makers), was told by S. on behalf of the dealers that he had found such a car. B. inspected it on the morning of January 23, 1960. The speedometer showed a mileage of 20,000. S., during the inspection, stated, inter alia, that the car had done only 20,000 miles since being fitted with a replacement engine and gearbox ; that the price was £ 1,850; and that he would guarantee it for 12 months. In the afternoon B. brought his wife to see the car and repeated to her in S.'s presence the statement by S. that it had done only 20,000 miles. After taking it for a short trial run, B. bought and paid for the car. Troubles began almost at once and continued throughout and beyond the guarantee period. In an action by B. claiming damages for, inter alia, breach of the warranty as to mileage, the dealers, while itting a statement as to mileage, claimed that it was made in the belief that it was true, and denied that it was in law a warranty or that B. was induced thereby to buy the car. The county court judge, having inferred from the history of the car supplied by the makers and other evidence that the mileage done was nearer 100,000, held that the statement as to the mileage was a warranty and that it had been broken; and he awarded damages to the plaintiff. On appeal by the defendants: — Held, dismissing the appeal, that the representation as to the mileage was a warranty binding on the seller, for, tested by what the intelligent bystander would infer from the conduct of the parties, it was a statement, made by a seller in a position to find out, but not having found out, the facts, in the course of negotiations for a contract, which was intended to, and did, induce the buyer to enter into the contract; and as the seller had not rebutted that inference by showing that it was an innocent misrepresentation and that he ought not to be bound by it, he was in breach of the warranty, and liable in damages. Oscar Chess Ltd. v. Williams [1957] 1 W.L.R. 370; [1957] 1 All E.R. 325, C.A. distinguished. APPEAL from Judge Herbert, sitting at Westminster county court. A company, Dick Bentley Productions L t d . , and Charles Walter Bentley (known as " Dick Bentley ") brought an action in the county court, claiming damages against the defendant company, Harold Smith (Motors) L t d . I t was agreed t h a t the effective plaintiff was the individual, Bentley. B y his amended particulars of claim he alleged t h a t by an agreement partly in writing and partly oral, made in J a n u a r y , 1960, between Bentley and one Harold Smith, acting for the defendants, the defendants had agreed to sell and the plaintiff to buy a Park Ward drop-head coupe Bentley motor car for the sum of £ 1,850. By paragraph 2 it was alleged t h a t Smith had represented or alternatively warranted t h a t " (c) the said car had throughout most of its life " been owned by Bolls Boyce L t d . and loaned by t h a t company " to a German baron and had had only one owner since it arrived

O

D

E

F

G

APRIL 30, 1965

A

B

C

D

E

F

G

H

THE W E E K L Y LAW EEPOETS

[1965] 1 W . L . E .

"back in England in 1959 "; and " (d) the said car had covered " only 20,000 miles since the fitting of " a replacement engine and ancillary parts and gearbox. The plaintiff claimed that, relying on those representations or warranties he bought the motor car, but that, contrary to the representations or warranties, the car was defective and in bad condition. By their defence, the defendants itted that Smith had stated, inter alia, that " to the best of " his belief the vehicle had done 20,000 miles since the replace" ment engine and ancillary parts and gearbox, that most of its " life it had been owned by Eolls Eoyce Ltd. and that it had been " lent to a German baron "; but it was denied that the statements were in law either representations or warranties, and it was claimed that they were made honestly and in the belief that they were true. Further, it was claimed that if the statements did amount to representations or warranties, the plaintiffs did not rely on them, and were not by reason thereof induced to purchase the motor car. The defendants also counterclaimed on matters not relevant to the present report, which is confined to the question of representation and warranty. The facts, substantially as stated by Lord Denning M.R. and found by the county court judge, were as follows: Bentley had been dealing with Smith for a couple of years, and had told Smith that he was on the look-out for a well-vetted Bentley car. In January, 1960, Smith found one and bought it for £ 1,500 from a firm in Leicester. He wrote to Bentley and said: " I have just " purchased a Park Ward power-operated hood convertible. It is " one of the nicest cars we have had in for quite a long time." Smith had told Bentley earlier that he was in a position to find out the history of cars. It appeared' that with a car of that quality the makers kept a complete biography of it. Bentley went to see the car. Smith told him that a German baron had had this car. He said that it had been fitted at one time with a replacement engine and gearbox, and had done 20,000 miles only since it had been so fitted. The speedometer on the car showed only 20,000 miles. Smith said that the price was £ 1,850, and that he would guarantee the car for 12 months, ineluding parts and labour. That was on the morning of January 23. In the afternoon Bentley took his wife over to see the car. He repeated to his wife in Smith's presence what Smith had told him in the morning; and in particular that Smith said it had done only 20,000 miles since it had been refitted with a replacement engine and gearbox. Bentley took it for a. short run. He bought the car for £ 1,850, gave his cheque, and the sale was concluded. The car was a considerable disappointment to Bentley. He took it back to Smith from time to time. A good deal of work was done oa it during the first 12 months' guarantee period. Further work was done on the car outside the guarantee period, the details of which are relevant only to the counterclaim. Thereafter the car was a good deal better; but it had given the plaintiff a lot of trouble, and eventually he brought the present action. VOL.

1

44

625 C. A. 1965 DICK BENTLEX PRODUCTIONS LTD.

v.

HAROLD SMITH (MOTORS) LTD.

626

[1965] 1 W . L . B . C. A. 1965

DICK BENTLEY PRODUCTIONS LTD.

.» •

HAROLD SMITH (MOTORS) LTD.

T H E W E E K L Y LAW BEPOKTS

APRIL 30, 1965

The county court judge, in his judgment on July 3, 1964 (as compiled from counsels' contemporary notes) referred to the " real history " of the car as obtained from Bolls Royce Ltd., namely, that it had been owned by a German baron from 1949 to 1952, and that it had then been involved in an accident. It was returned to the makers in 1952, when the speedometer read some 84,000 kilometres (viz. 50,000 miles). It was fitted with a completely.new 1952 body, the engine was reconditioned, and a new gearbox fitted; and it was returned to the German baron. He disposed of it in or about 1958 or 1959 and it came back to England, when the makers saw it again. Thereafter it had ed among dealers and at some stage the speedometer had been changed from kilometres to miles, showirg at the time of the sale to the plaintiff about 20,000 miles. The judge said that on issues of fact he preferred the evidence of the. plaintiff to that, of the defendant, and referred to " the '' reckless way in which Smith was prepared when giving evidence " to say things he thought would do him good, as when being " cross-examined he said: ' I did not discuss mileage with Mr. " ' B e n t l e y ' " when in paragraph 2 of the defence he had itted such discussion. The judge said that he was satisfied that the statements were not expressed to be statements of opinion but that they were statements of. fact, made at the time of the contract; that the representations were not dishonest; but that the important statement was that the car had done only 20,000 miles since the replacement engine and gearbox. He found that to be " palpably wrong " ; and having regard to the evidence, stated that: " I have no doubt at all that the car had done very " near 100,000 miles." He held, on the totality of the evidence that as a matter of law the statement as to mileage was a warranty; that Smith had stated, a fact that should have been within his knowledge; that he had jumped to a conclusion and stated it as a fact; that it was a fact on which a buyer interested in mileage would act; and. that there was, a warranty which was broken. Having found on the claim that the proper value of the car as it was at the time would be about £ 1,200 and that the price paid—<£ 1,850—would be the right price if the car had done about .20,000 miles since the reconditioned engine and gearbox had been fitted in 1952, and that the difference was at least £ 400, he gave jugdment for the plaintiff for £ 400 on the claim. The judge then went on to consider the counterclaim, and judgment was eventually entered for the plaintiff for £ 400 damages with costs on scale 4. The defendants appealed, the grounds so far as relevant being as follows: (1) that the judge erred in law in holding that the statements of fact made by the defendants to the plaintiff prior to the sale of the motor car were warranties; (2) that his finding that the car had done nearly 100,000 miles by the time the plaintiff purchased it was not ed by any evidence, or alternatively

A.

B

C

D

E

F

G

„

APRIL 30, 1965

A

B

T H E W E E K L Y LAW BEPOETS

[1965] 1 W . L . E .

was against the weight of the evidence; and (3) that the judge misdirected himself in holding that Smith " stated a fact that " should be within his knowledge." Colin Ross-Munro for the defendants. Graham Eyre for the plaintiff.

D

E

P

G

H

LORD DEXXIXG ILK. The plaintiff, Charles Walter Bentley, sometimes known as Dick Bentley, brings an action against Harold Smith (Motors) Ltd. for damages for breach of warranty on the sale of a car. [His Lordship stated the facts set out above and continued: ] The county court judge found that there was a warranty, that it was broken, and that the damages were more than £ 400; but as the claim was limited to £ 400, he gave judgment for the plaintiff for that amount. The first point is whether this representation, namely, that it had done 20,000 miles only since it had been fitted with a replacement engine and gearbox, was an innocent misrepresentation (which does not give rise to damages), or whether it was a warranty. I t was said by Holt C.J., and repeated in Heilbut, Symons & Go. v. Buckleton,1 that: " An affirmation at the time " of the sale is a warranty, provided it appear on evidence to be so " intended." But that word " intended " has given rise to difficulties. I endeavoured to explain in Oscar Chess Ltd. v. Williams 2 that the question whether a warranty was intended depends on the conduct of the parties, on their words and behaviour, rather than on their thoughts. If an intelligent bystander would reasonably infer that a warranty was intended, that will suffice. What conduct, then? What words and behaviour lead to the inference of a warranty? Looking at the cases once more, as we have done so often, it seems to me that if a representation is made in the course of dealings for a contract for the very purpose of inducing the other party to act upon it, and actually inducing him to act upon it, by entering into the contract, that is prima facie ground for inferring that it was intended as a warranty. I t is not necessary to speak of it as being collateral. Suffice it that it was intended to be acted upon and was in fact acted on. But the maker of the representation can rebut this inference if he can show that it really was an innocent misrepresentation, in that he was in fact innocent of fault in making it, and that it would not be reasonable in the

* (1854) 15 C.B. 130. t [1954] 1 W . L . E . 615 All E . E . 855, C.A.

1

[1954] 1

[1913] A.C. 30, 49, H . L . [1957] 1 W . L . E . 370, [1957] 1 All E.E. 325, C.A. 2

G. A. 1965 DICK BENTLEY PRODUCTIONS LTD.

v.

The following cases, in addition to those referred to in the judgments, were cited in argument: Hopkins v. Tanqueray *; Routledge v. McKay.t C

627

375;

HABOLD SMITH (MOTOBS) LTD.

628

[1965] 1 W . L . E . C. A. 1965

DICK BENTLEY PRODUCTIONS LTD.

v. HAROLD SMITH (MOTORS) LTD.

Lord Denning M.R.

T H E W E E K L Y LAW REPORTS

APRIL 30, 1965

circumstances for him to be bound by it. 3 In the Oscar Chess case 4 the inference was rebutted. There a man had bought a second-hand car and received with it a log-book- which stated the year of the car, 1948. He afterwards resold the "car. When he resold it he simply repeated what was in the log-book and ed it on to the buyer. He honestly believed on reasonable grounds that it was true. He was completely innocent of any fault. There was no warranty by him, but only an innocent misrepresentation. Whereas in the present case it is very different. The inference is not rebutted. Here we have a dealer, Smith, who was in a position to know, or at least to find out, the history of the car. He could get it by writing to the makers. He did not do so. Indeed, it was done later. When the history of this car was examined, his statement turned out to be quite wrong. He ought to have known better. There was no reasonable foundation for it. What happened was this: This car had been owned by a German baron from 1949 to 1952. It had then been involved in an accident. It was returned to the makers. The speedometer then read some 84,000 kilometres (i.e., 50,000 miles). It was fitted with a completely new 1952 body. The engine was reconditioned and a new gearbox was fitted. That was in 1952. It was returned to the German baron. He disposed of it in or about 1958 or 1959 and it came back to England. We do not know how many miles it had done from 1952 to 1959; but the judge inferred—and it seems to me there was ample evidence from which he could infer -—that, during the whole time while the German baron had it, from ,1949 to 1959, it had done very nearly 100,000 miles. On that footing, on its return to England in 1959 the speedometer would have read 160,000 kilometres. Afterwards, when the plaintiff's solicitors raised the point of mileage, Smith wrote a letter on July 18, 1961, to the plaintiff's solicitors purporting to justify his statement. He said: " From various sources it appears that the car had a considerable amount of storage whilst abroad and very little use to the extent that, when the car was returned in 1958 to this country, either at the end of '58 or early '59, the speedometer reading was then only 90,000 odd kilometres. A standard m.p.h. speedometer was fitted and, when Mr. Bentley bought the car from my company, the speedometer reading was then 20,000 miles." The judge said that there was no evidence whatsoever as to the reading of 90,000 kilometres. It was an entire invention of Smith. Nobody knew the mileage at the time, when the car was returned to England. The judge found that the representations were not dishonest. Smith was not guilty of fraud. But he made the statement as to 20,000 miles without any foundation. And the judge was 3 Note: The statement of the law in relation to warranty and innocent misrepresentation (supra) is in line with the recommendations contained in the 10th Report of the Law Reform

Committee on Innocent Misrepresentation ( (1962) Cmnd. No. 1782). M. M. H . * [1957] 1 W.L.R. 370, 375.

B

D

E

F

G

H

APRIL 30, 1965 A

B

C

THE WEEKLY LAW EEPOETS

[1965] 1 W.L.K.

well justified in finding that there was a warranty. The judge said: " I have no hesitation [in saying] t h a t as a m a t t e r of law ". the s t a t e m e n t was a warranty. Smith stated a fact t h a t " s h o u l d be within his own knowledge. H e had jumped to a " conclusion and stated it as a fact. A fact that a buyer would " act o n . " T h a t is ample foundation for the inference of a warranty. So much for the first point. [His lordship then dealt with an issue on the counterclaim and on the county court judge's award of damages, neither of which is relevant to this report, and concluded: ] The judge says the diminution in value owing to the breach of warranty is very considerably over £ 400, b u t making all allowances the n e t sum would be at least £ 400., I t seems to me that on this point there is nothing wrong in the way the judge has dealt with the case, and therefore on all three points I would hold the appeal fails and should be dismissed.

629 C, A. 1965 DICK BENTLEX PRODUCTIONS LTD.

o.

HAROLD SMITH (MOTORS) LTD. Lord Denning M.R.

DANCKWERTS L . J . ' I agree with the judgment of Lord Denning M.E.

D

E

SALMOSI L . J . I agree. I have no doubt a t all t h a t the judge reached a correct conclusion when he decided t h a t Smith gave a warranty to the plaintiff ar.d that that warranty was broken. Was what Smith said intended and understood as a legally binding promise? If so, it was a warranty and as such may be part of the contract of sale or collateral to it. I n effect, Smith said: " If you " will enter into a contract to buy this motor car from me for ." £ 1,850, I undertake t h a t you will be getting a motor car which " h a s done no more than 20,000 miles since it was fitted with a " new engine and a new gearbox." I have no doubt at all t h a t what was said by Smith was so understood and was intended to be so understood by Bentley. [His Lordship then considered the issue on the counterclaim and concluded: ] I accordingly agree t h a t the appeal should be dismissed. Appeal dismissed

G

Solicitors: Goodman,

with

costs.

Monroe & Co.; Harris, Chetham

& Co.

M. M. H .

[CHANCERY

DIVISION.]

* S. W . S T B A N G E L T D . v. MANN.

.

1965 Jan. 26, 27, 28, 29; [1964 S. No. 2819.] Feb. 1, 2, 3, 26. Restraint of Trade — Master and servant — Bookmaker's manager — Stamp J. Names and addresses of all customers known to employer—Covenant not to carry on the business of bookmaker within 12 miles of [.Reported by Miss A. F. RICKETTS, Barrister-at-Law.]