A GUARANTEE

Hokitika Guardian, 28 August 1928, Page 3

A GUARANTEE

fraudulent misrepresentation ALLEGED. BANK MANAGER SUED.

CHRISTCHURCH, August 25. In the Supreme Court, his Honour -Mr Justice Adams gave judgment in the Groymouth case, Harry Digby James v. Edward Ernest Bayly Mubin. The question of law the Court was called upon to decide was: “Does the statement of claim disclose any legal cause of action against, the defendant? ” The question was argued before his Honour at Christchurch on June 29th last. In the opening portion of his judgment, his Honour set out the salient points of the statement of claim. They were, briefly, that defendant, the manager of the Grey mouth lira itch ol the Bank of New South Wales, requested plaintiff to guarantee the account c?f one Bundle at the bank and on lus advice plaintiff did so; later, with others, he guaranteed the current account of the company into which Randle’s business was turned. Altorwards plaintiff and the other guarantors were called upon by the bank to pay £32,000. Plaintiff alleged that lie discovered afterwards that the representations made by the defendant were untrue, and that the advice given by defendant was given “ negligently, carelessly, and recklessly,” and that by reason (a) of the fraudulent and false representations, or in the alternative

(b) by reason of the advice negligently, carelessly, and recklessly given lie signed the several guarantees and lost €2500. His Honour held that the representations fall within the express terms of Section (i of Lord Tenterdcn’s Act, which reads: —

“ No action shall he brought whereby to charge any person upon or by reason of any representation or assurance made or given concerning or relating to the character, credit, ability, trade or dealers ol any other person, to the intent or purpose that such other person may obtain credit, money, or goods upon (sicj unless such representation or assurance he made in writing signed by the party he to charged therewith.” I cannot entertain any doubt that all the representations alleged concern and relate to the credit, ability, trade, and dealings of the company, and, il in fact made, were so made to the intent that the company might obtain credit with or money from the hank. 1 lie representations relied upon and alleged to have been fraudulent was made orally, and therefore by force of the Statute no action can he brought whereby to charge the defendant thereon. in passing. 1 observe that, although the words of Section <i of Lord Tenterden’s Act are general—“ any representation or assurance made, etc.” the section is restricted to fraudulent

misrepresentations or assurances. The alternative claim is for the same sum, oil the ground that the defendant “negligently, carelessly, and recklessly” advised the plaintiff to sign the two guarantees in resjtcvt ol which demand was made h.v U<e l ank and upon which the £2500 was paid. These gaultrantees are mentioned in paragraphs 8 and 9 of the of claim, and were both signed on hebmarv 15th. 192(5. Paragraph 8 alleges that the guarantee for £10.0(50 was signed by the plaintiff “at the request of and acting on the advice of” the defendant. Paragraph 0 states that the guarantee for £2, ,000 was signed in reliance on the statements and acting on the advice of the defendant. New the first thing which strikes one is that, while the plaintiff in his statement ol claim rejieats this phia.se, lie uses it in reference to the alleged fraudulent representations, and in paragraph 10 summing up the allegations of fraud he says that the “advice” given to him by the defendant was “negligently, carelessly, and recklessly” given, and then proceeds to set out in four .stih-purngraphs the grounds for this, every one of which alleges fraud .simplicitor. He thus supplies his own definition of the phrase “negligently. carelessly, and recklessly in paragraph 17 (lit, which is a proper definition of fraud and of nothing less than fraud. There is nowhere any discrimination between the alleged frauds and the alleged advice. In cases where an action will lie on the ground of negligent advice there is no need to prove fraud, which is immaterial. Nor is it in every case of negligent advice causing loss that such action will lie. If it were so., it would he exceedingly dangerous to give friendly advice to all. Where tlioie is no special duty to take care, fraud—that is dishonesty—must he alleged and Droved.

The plaintiff does not allege any circumstance- which could .'rive rise to ;mv such -iTi-ial relationship between himself and the defendant. It does not appear that lie was a customer Of the hank, or that the advice was given in answer to any enquiry. On the contrary, he says, arid his counsel insisted. that the defendant came to him and advised, him in the course of persuading him to sign the guarantee, the advice apparently being contained in the alleged misrepresentations, and some statements that the plaintiff was not incurring any financial risk In signing the guarantee for £7OOO montirniedTin paragraphs 5 and 6, and that in -signing the guarantee for £27.000 he did not incur any risk. These at the most are variants of the other ill--1 erred representations as to the comI >an y* s fiiii an ei a 1 al)i 1 i ty. ’j’iie answer to the question set down for argument is that the statement ol claim does not disclose any cause of action.

The defendant is entitled to costs, which 1 fix at £26 5s and disbursements. This is in addition to the costs allowed on the summons to which he is also entitled. At Liie hearing Air J. A. Murdoch, with him Air J. AY. Hannan, appeared for the plaintiff, and Mr Myers, K.C. with him Air AY. F. Ward, appeared for the defendant. Air A. T. Donnelly, for plaintiff, and Mr R. A. Ciitlibert apjiearotl to receive judgment. The solicitors for the plaintiff weic Messrs Hannan and Seddon, Grejmouth, and for the defendants, Afessrs Brandon. AYard. and Hislop, A*,'ellington .