Leggo v Brown and Dureau Limited [1923] HCA 19

Leggo v Brown and Dureau Limited [1923] HCA 19 - HCA 1923 case summary — Zoe

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contract. No doubt, the respondent contested the authority of Senior to make that contract; but, assuming the failure of the respondent as to that, there was no circumstance deposed to that I can find to over- come the primary inference from the contract itself. Leonard's absence from the trial cannot, in the circumstances, create affirma- tive evidence of non-reliance on the warranty. If Leonard had said or done anything, or been told anything by Senior, which could weaken the primary inference, Leonard's absence might facilitate the accept- ance of Senior's testimony in that regard. But as neither Senior nor anyone else offers any substantive evidence showing such non-reliance, it seems to me inevitable, and the passages quoted from the judgment under appeal confirm it, that the conclusion as to non-reliance, is based or largely based on the finding that Leonard's mind was a blank as to belief in the existence or non-existence of the professed authority in fact. Even that finding is for the most part conjecture when the evidence is examined. But I am willing to assume it. That. the contract was honestly made is not disputable; and if honestly made, and if as found there was no actual belief that authority was wanting, it is difficult to discover any reason, other than the | absence of affirmative belief in the authority, for holding that plaintiff - did not rely on defendant's promise that the authority existed. What. did he rely on if not on the representation which is ordinarily impli from a contract so made? The learned Judge says that, if he w allowed to guess, he would say that probably Leonard, if asked as to - his belief regarding authority, would have said, " Well, now you ask me, I don't suppose they 'have,' or possibly 'I'll risk it' " His Honor. "But I am not allowed to guess." Courts cannot decide men's rights on conjecture. If that, however, be put aside, there is nothing I can see on which to rest the finding of non-reliance on the representation of authority except the mere absence of positive belief in its inherent truth. It becomes, therefore, a question of law whether such affirmative belief is neces- sary to constitute the necessary reliance on the promise, because I quite agree with the learned Judge that as a legal proposition the plaintiff cannot succeed unless he did rely on the representation. Closely related as these two considerations are, they are different, and there is a vast difference in the obligation according as it depends -

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It is not a little remarkable how often the Courts have been required to consider the true meaning and limitations of the principle of law usually called the doctrine of Collen v. Wright (1). Decisions of great authority have gradually elucidated its scope and applica- tion; and the present case calls for an examination of the doctrine from a standpoint, not directly covered by any recorded decision, but unquestionably involved in the general reasoning that has governed the judicial conclusions. The doctrine upon which Collen vy. Wright was determined by the illustrious tribunal which decided it was not novel. The Judges did not legislate. They found in the common law a special principle and applied it to the case before them, which happened to be a case where the defendant had as professing agent of another entered into a contract with the plaintiff. The principle was stated by Story J. in his book on Agency. Tn Cherry v. Colonial Bank of Australasia (2) the Judicial Committee, referring to that, say : - '' The ground therein stated is said to be, 'a plain principle of justice ; for every person, so acting for another, by a natural, if not by a necessary, implication, holds himself out, as having competent authority to do the act, and he thereby draws the other party into a reciprocal engagement, ch. X., s 264. According to the opinion of that eminent jurist, if a person repre- sents himself as having authority to do an act when he has not, and the other side is drawn into a contract with him, and the contract becomes void for want of such authority, he is liable for the damage which may result to the party who confided in the representation, whether the party making it acted with a knowledge of its falsity or not. In short, says Story J., he undertakes for the truth of his representation." (The italics are mine.) That states and inter- prets the principle enunciated by Story. The particular case in which it was applied by the Privy Council was not a contract entered into by the professing agents as such with the bank. It was an "engagement," as their Lordships termed it, into which the bank

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to be deduced is, that where a person by asserting that he has t authority of the principal induces another person to enter into any transaction which he would not have entered into but for that assertion, and the assertion turns out to be untrue, to the injury of the pers to whom it is made, it must be taken that the person making it undertook that it was true, and he is liable personally for the damage that has occurred." The essentials are (1) assertion of authority ; (2) inducement by asserting; (3) transaction which but for that assertion the other party would not have entered into. Where they coexist there isa warranty. There is no suggestion that there must be " belief" in the truth of the assertion ; there must, of course, reliance on the assertion, for that is connoted by the " inducement." The other party might well say to the professing agent: "I have no- belief about it: as to the instructions you have I am ignorant and agnostic, but I am content to rest upon and trust to your assurane . and to base my dealing upon that." That is the only operative eff of the word " warranty." The rule as stated in Firbank's Eaecut Case (1) was approved by Vaughan Williams L.J. in Oliver v. Bar of England (2), and by Stirling L.J. (3), and concurred in by Coze Hardy 1.3. (4). In the same case in the House of Lords, Starkey v. Bank of England (5), Lord Davey says: "As a separate an independent rule of law it is not confined to the bare case where the transaction is simply one of contract, but it extends to every tra tion of business into which a third party is induced to enter representation that the person with whom he is doing business the authority of some other person." Lord Davey, indeed, in judgment acknowledges the doctrine as asserted by Story. Chr. Salvesen & Co. v. Rederi Aktiebolaget Nordstjernan (6) may be considered as complementary to Dickson v. Reuter's Telegram Co. (7). The earlier case emphasized the necessity of being " dra into a reciprocal engagement"; the later case insists on necessity of the representation being an assertion of " authority character " of the representer. Up to this point it is evident t "belief" on the part of the person invited is immaterial ; (1) (1886) 18 Q.B.D., 54. (5) (1903) A.C., at pp. 118-119. (2) (1902) 1 Ch., 610, at p. 624. (6) (1905) A.C., 302.

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Court

Decision date

Before

Source

Judgment (79 paragraphs)

Cited By (2)