COURT OF APPEAL.

New Zealand Times, Volume XXX, Issue 4424, 25 May 1875, Page 3

COURT OF APPEAL.

Friday, May 21. hesty akd othees v. holt. Mr. Justice Johnston delivered the judgment in this case : This is an appeal from a judgment of the Supreme Court allowing a demurrer to the declaration, which was heard hefore my brother Gillies and myself. -The case has been dealt with under two aspects—first, as being founded on a false and fraudulent representation, whereby the plaintiffs were induced to alter, their position, such alteration resulting in damage as a direct consequence ; and, secondly, as being ba3ed on a breach of contract. ~„,,., i it The case of Svnnfen v. Lord. Chelmsford (5 H. and N., p. 890) was relied upon for the purpose of establishing the proposition that, if the averment of falsehood and fraud, indirectly made in the declaration in this case were struck out, the declaration would still be good as showing a sufficient cause of action. But it is to be remarked that the cause3 of action, if they may be so called, in that case, were not, as they are in the present case, founded, one of them on misrepresentation, and the other upon a breach of contract, but might both have been based on a breach of a duty. The decisiont here was to the effect that, though the defendant was charged with having fraudulently agreed to a compromise on behalf of his client, and the fraud was ignored by the jury, yet the declaration might have been supported if a breach of duty only, without fraud, had been proved ; and it was expressly held that there was no contract between the plaintiff and defendant: But according to our system of pleading which recognises no technical difference'between different sorts of actions for money, whether founded on breach of contract or on tort, there seems little doubt that causes j of action, whether ex contractu or ex delicto—at all events if they arise out of the same transaction—could properly be joined in one declaration. At the same time it would seem to j be at variance with our rules of pleading to set out in a declaration a series of facts, without any indication as to whether the plantiff relied on them as constituting a charge of misrepresentation and damage accruing therefrom, or one of a breach of contract. Such a declaration would, to say the least, be ■ embarassing, and the defendant would be entitled to apply to a, Jud"e at chambers to have it amended and made more definite. Admitting, however, that a declaration maybe supported, on demurrer if it substantially avers enough to establish either a cause of fraud and damage, or one of- breach of contract, we have to consider whether the present declaration is sufficient for either purpose And it will be convenient m the nrst place to look at it from the latter point of view The appellants (the plaintiffs below) contend that the declaration contains a sufficient averment of a contract to pay the amount of the compensation agreed to ; and the respondent answers that if it does, the contract was an undertaking, to guarantee the debt of another, and-it does not appear that there was the necessary memorandum in writing under the Statute of Frauds. But we are of opinion that there is no averment of any contract at aIL The representations made by the defendant were not such as to, contain any promise or undertaking that he Wd pay the composition. Be is alleged to Sre represented, at most that the bank of which he was manager had money of the arranging debtor available, and that the comWtion would be payable by the bank at the time indicated. We think that if it can be, said that there was any contract at all, it was a contract between the plaintiffs and the bank, which is not sued. It has been suggested that, " il there was a contract with the defendant as a«ent for the bank, it does not follow that he may not have made himself personally responsible. But we are of opinion that, if it could be said that there is an allegation of contract in the declaration it must be taken that it was to the bank that the credit was Mven and not to the defendant ; and that, in the absence of an averment that he had no authority from the bank to enter into such a contract, he would not, upon the well settled Principles of the law of principal and agent, L personally responsible. But we aro of opinion, as before stated, that there is not m the declaration any allegation of a contract at all • and this will more clearly appear when the nature of the representations is fully consideml. The contention of the appellants, that there was a novation, and a substitution of a nev/ contract, whereby the defendant, instead of the arranging debtor, became jable tothe - creditors,was disposed of in the course .of the argument, by the obvious answer that there is no allegation of the exoneration or release of the original debtor ; which is essential in a case of novation. Coming to the other branch of the. case, wo have examined tno nature and quality of the

representations relied upon as being false and . fraudulent, and the source of damage. A dis- . tinction was made in the Court below, between . the statements, viz., those referring to the satisfactory arrangements made with the bank, and to the funds held by the bank, which were admitted to be statements of existing facts, and the third, which represented that the composition would be payable by the bank to each creditor on the execution of, or assent to the deed—which was treated as one of a promissory and future character, and not one of an existing fact. We are of opinion, however, that the whole of the representations taken together may well be considered as substantially amounting to a statement of an existing state of facts, namely, the existence of funds in the bank, available for the purposes of the composition deed. (See the dictum of Erie J. in the case of Gerhard v.Bates, 2 HI. and 81. 470.) But we are further of opinion that even if the last of the representations must be taken to be in the nature of a promise, or contract, or assertion of what would take place at a future time, the two former ones would be sufficient to make the defendant responsible, if false and and made fraudulently, and followed by damage to the plaintiffs. The same principle which is laid down in this respect, with regard to indictments for false pretences, seems equally applicable to actions of this kind, namely, that if there be a pretence alleged of an existing fact or facts, even although it be accompanied by statements of a promissory kind, or a contract referring to something to be done infatv.ro, the indictment can be supported, provided it be proved that the money or goods would not have been obtained but for the alleged false statements of existing fact or some one of them. See Regina v. Fry (D. and B. 449), &c. But we wish to guard -ourselves against the assumption that we consider it necessary, in order to support an action for fraudulent misrepresentation and consequent damage, that the representations must be such as' are necessary to support an indictment for false pretences. The next question raised in the' case is whether the declaration can be supported without a distinct and direct averment negativing the truth of the statements made by the defendant. Now, it is unquestionably the usual practice, and it has been held necessary, in indictments for false pretences, besides alleging that the defendant falsely pretended, &c, to aver directly the falsity of the pretences and the knowledge of the defendant that they were false ; but it is contended that, inasmuch as this declaration avers that the representations were made "falsely andfraudulently," and that by such false and fraudulent representations the plaintiffs were induced to change their position, to their actual damage, and that it would be necessary in order to prove that averment to show both that the representations were untrue, and that they were made under circumstances constituting fraud in fact or in law— i.e., either with knowledge of their falsity, or without reasonable, belief of their truth [or perhaps it might be enough to show that the party making them was ignorant whether they were true or false —See Reese Ricer Silver Mining Company v. Smith (L.E., i E. & I. Ap. 79, per Lord Cairns)], any more directly negativing averments are unnecessary. A case was relied upon in the Court below, OxcnJuim v. Smythe (31 L.J. Ex. 110), in which a declaration was ' held bad for not distinctly stating that the defendant, a solicitor, was not authorised to do that which he pretended to have authority from his client to do. But it is to be remarked that in that case there was no averment that the solicitor '" falsely and fraudulently " pretended, —which distinguishes it from the present case. It seems to have been conceded on the argument that it would not have been sufficient to allege that the defendant had " falsely " made the representations in question ; for it might have been contended that although the statements were false, in the sense of not being true, yet if the defendant believed them to be true, and had reasonable ground for believing them to be true, he would not have been responsible. In such case there would have been no actual fraud, and probably no such fraud, legal or moral, as would have supported the action. But we think, on the whole, that under the allegations of the present declaration, although the ingredients of falsehood and fraud are introduced only adverbially, as characterising the quality of the representations, they are well enough stated to put the plaintiffs upon the proof of a fraud sufficient to make the defendant liable, if they were naturally or actually followed by damage to the plaintiffs. On this part of the case it" is not unworthy of notice that one of the principal cases, upon which the doctrine is established that there must be distinct averments in indictments for false pretences, was decided mainly upon grounds which cannot be said to exist in respect of civil actions for fraudulent representation. In Rex v. Perrott (2 M. and S. 378), Lord Ellenborough held an indictment for false pretences insufficient, although it contained the allegation that the defendant " falsely pretended," &c, for not containing an express averment negativing the matters pretended, chiefly on the ground of the close analogy between indictments for false pretences and indictments for perjury, with respect to which the Legislature had, by statutory enactment, in an Act passed for the purpose of removing technical difficulties in pleading, still expressed their opinion "that the falsity of the matter sworn to be true, and relied upon to support the indictment, should be specifically and distinctly averred." If this be a sound reason for the doctrine laid down by his Lordship, it does not seem, at all events, applicable to a civil action for misrepresentation.

. And now we Come to the last point in the case. Supposing that there is a sufficient allegation of false and. fraudulent representations —inasmuch as it is-clearly stated that these representations induced the plaintiffs tq change their position in respect of their claim against Hutchinson, and, indeed, that they were made with the intention of inducing them to do so—the question is whether it sufficiently appears on the face of the declaration that damage has accrued to the plaintiff as the necessary, natural, or actual' consequence of the representations. On this point the declaration is not so clear and explicit as would be desirable. We do not think that after averments of false representations and of the plaintiffs' change of position in consequence, a mere vague general statement, to the effect that the plaintiffs were damaged, could be held sufficient. There ought to be some allegation of the nature of the damage, in order that the.Courtiriay fudge whether it could be sufficiently connected with the fraudulent; assertions as to support an action. Now, the allegations in this declaration on this head are by no moans satisfactory. The non-payment of the composition by the bank cannot be . taken to have been a consequence of the misrepresentations of the defendant, and it may be said that the forbearance by the plaintiffs to prosecute their action against Hutchinson was a voluntary act on their part ; and also that the action might not have been successful. But, inasmuch as the stopping of the legal proceedings against Hutchinson must have been contemplated by the defendant as a very probable consequence of his representations, and it_ is further averred at the end of the declaration that by reason of the defendant's false and fraudulent representations tho plaintiffs sustained great loss and damage,_ and were seriously prejudiced and injured »'»_ respect of their claim upon Hutchinson, we think, on the whole, that these allegations, though rather general and indefinite, will put the plaintiffs to tho proof of damage sustained in respect of tho enforcing of their claims, consequent upon tho fraudulent representations of the defendant, and therefore sufficient to maintain an action. ...

With respect to the point raised upon. Lord Tenterden's Act, we .agree,' with the learned Judge in tho Court below that this is not a case within the statute.' Thig point, indeed, was abandoned on tho argument before us. Tor these reasons we are of opinion that the judgment of the Court ; below, .allowing tho demurrer' with costs, must be reversed ; but inasmuch as wo consider that the declaration is framed in a very unsatisfactory and embarrassing manner, we do not think that the plaintiff ought to have his costs of appeal. Judgment reversed, without costs. Leave to defendant to plead within one month,