Banbury v Bank of Montreal

APPEAL from an order of the Court of Appeal^F1 setting aside a verdict and judgment in favour of the plaintiff, the appellant, on the trial of the action before Darling J. and a special jury, and ordering judgment to be entered for the respondents.

The main question involved in the appeal was as to the responsibility of the respondents for advice given to the appellant by one of their managers with regard to investments.

The appellant, Captain Banbury, by his statement of claim alleged, in effect, that he was a customer of the respondents, the Bank of Montreal, and in September, 1912, consulted them as to investing money in Canada; that the respondents, by their agent and manager Galletly, orally advised the appellant to invest a sum of $125,000 (25,000l.) in a loan on mortgage to the Westholme Lumber Company, which was then engaged upon a contract to construct certain waterworks for the city of Victoria, that the investment was perfectly safe, and that the money was required to enable the company to complete the contract and was amply sufficient for the purpose; that the appellant, in reliance upon the said advice, advanced the money upon the proposed security; that the advice so given by the respondents was negligent and unskilful in that the investment was highly speculative and unsafe, and that the money was wholly insufficient for the completion of the contract; that a receiver had been appointed of the company's assets; and that the appellant, by reason of the respondents' negligence, had lost his money; and he claimed damages against the respondents for negligence and breach of duty while acting as the bankers and advisers of the appellant.

The respondents by their defence denied that any advice was given by Galletly, and alleged, in the alternative, that if the advice was given, Galletly was acting outside the scope of his authority as manager of a branch bank of the respondents, and, further, that the advice was given honestly and in good faith and without negligence.

The action was originally tried before Lord Reading C.J. and a special jury, when the jury disagreed.

At the second trial the respondents, by leave of the Court, amended their defence by adding a paragraph claiming that the action was not maintainable by reason of Lord Tenterden's Act.

The facts are fully stated in the report of the case before the Court of Appeal and in the judgment of the Lord Chancellor.

At the second trial the jury, in answer to a series of questions put by the learned judge, found that Galletly had authority to advise the appellant to make the investment in question, that he gave the advice alleged in the statement of claim, that the plaintiff invested his money in reliance on that advice, and that the advice was negligently and unskilfully given; and they assessed the damages at 25,000l.; adding a rider to their verdict that all securities were to be returned to the respondent bank. Upon these findings Darling J., after holding that Lord Tenterden's Act was not a defence to the action, ordered judgment to be entered for the appellant for 25,000l.

The respondents by their notice of appeal applied for judgment or a new trial on various grounds, including the following: that there was no evidence that Galletly in advising the plaintiff as to the investment in question had authority to bind the respondents, and that there was no evidence that the advice was given negligently or unskilfully.

Neither of these points had been taken by the respondents at the trial of the action.

The Court of Appeal (Lord Cozens-Hardy M.R., Warrington L.J., and Scrutton L.J.) held that the respondents owed no duty to the appellant to advise him carefully; that there was no evidence that Galletly had authority to bind the respondents; and that the action was within s. 6 of Lord Tenterden's Act^F2 and was therefore not maintainable. They therefore allowed the appeal and ordered judgment to be entered for the respondents.