Bradford Third Equitable Benefit Building Society v Borders
| Jurisdiction | UK Non-devolved |
| Judge | Viscount Maugham,Lord Russell of Killowen,Lord Wright,Lord Romer,Lord Porter |
| Judgment Date | 09 May 1941 |
| Judgment citation (vLex) | [1941] UKHL J0509-1 |
| Date | 09 May 1941 |
| Court | House of Lords |
[1941] UKHL J0509-1
Viscount Maugham
Lord Russell of Killowen
Lord Wright
Lord Romer
Lord Porter
House of Lords
After hearing Counsel, as well on Monday, the 10th, as on Thursday the 13th, Friday the 14th, and Monday the 17th days, of February last, upon the Petition and Appeal of The Bradford Third Equitable Benefit Building Society, of 48 Market Street, Bradford, in the County of York, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 29th of January 1940, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case of Elsy Florence Eva Borders, lodged in answer to the said Appeal, and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal of the 29th day of January 1940, complained of in the said Appeal, be, and the same is hereby, Reversed: And it is further Ordered, That the Counterclaim be, and the same is hereby, Dismissed with Costs: And it is further Ordered, That the Respondent do pay, or cause to be paid, to the said Appellants, the Costs incurred by them in the Courts below, and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Chancery Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.
My Lords,
This appeal from the Court of Appeal (The Master of the Rolls, and Scott and Clauson L.JJ.) raises a question of considerable importance. By their Order of the 29th January, 1940, the Court reversed the judgment of the trial judge (Bennett J.) so far as the matter under appeal to Your Lordships is concerned, and directed a number of inquiries framed in order to determine the amount due to the Respondent Mrs. Borders by way of damages for false and fraudulent representations by the Appellants. By this fraud it is alleged that she was induced to purchase a house and premises from certain builders and to obtain the necessary funds from the Appellants by means of a loan of £693, the loan being secured by a mortgage in favour of the Appellants dated the 18th September, 1934. This matter was raised by a counterclaim by the Respondent. The learned trial Judge in a very careful judgment had held that the Respondent had failed to prove that the Appellants "were in any way responsible for the representations made to her." He had heard the witnesses and considered their evidence, and it can only be in very exceptional circumstances that the view of the trial Judge in such a case ought to be overruled.
The claim of the Respondent for damages for fraud had been amended in the course of a protracted trial; but the Court of Appeal in the course of the hearing permitted yet another amendment to be made, as will appear later. This again is very unusual in a case based on fraud. The necessity for accurate pleadings in such a case was explained in forcible terms by Lord Westbury L.C. in the case of ( New Brunswick etc. Ry. Co. v. Conybeare (1862) L.R. 9 H.L. 711, at p. 724); and it is plain that an amendment after the witnesses have given their evidence may lead to grave injustice. The Respondent, however, had not been represented by counsel at the trial, though she was in the Court of Appeal. At the trial she was no doubt allowed considerable latitude as regards the statement of her case and was not held strictly bound by her pleadings; but I doubt the wisdom of the course taken by the Court of Appeal in allowing her a further amendment of her pleadings in a case of fraud. I must make two further remarks. The first is that I do not understand the grounds for the judgment of the Court of Appeal to be those stated in the final amendment of the Respondent's claim. The second is that if, in a case based on fraud, an amendment is permitted in the Court of Appeal, the Court must be exceedingly careful not to draw inferences of dishonest conduct against a witness or a party which have not been suggested in the Court below, for they might have been capable of an explanation by witnesses in the box, if the amended charge of fraud had been distinctly made at the trial.
It should be explained that the action and the counterclaim covered several important matters which were not before Your Lordships on this appeal. I propose to confine my remarks to the case involved in the appeal as regards the counterclaim, and to state only the facts relating to it; but it will be necessary to trouble Your Lordships at some length with those facts, for the case is not free from complexity, and I am desirous of showing why it is that I feel compelled to differ from the decision of the Court of Appeal and to accept that of Bennett J.
The Appellants were established as long ago as the year 1854 and were incorporated in 1875 under the provisions of the Building Societies Act, 1874. In the year 1934 a firm of builders, who were carrying on business as Morrell (Builders) Ltd. (it will be convement to call them "Morrells") were engaged in developing a building estate known as the Coney Hall Estate, West Wickham, in Kent. The houses were to be sold at prices varying from £530 to £795, and it is plain that the great majority of them were intended to be purchased with the assistance of a building society who would advance the greater part of the money in the usual way.
Morrells in the year 1933 and the early part of 1934 were advertising the houses by means of a printed brochure and in other ways. The brochure consists of 24 large pages, the first 20 of which contain very attractive pictures of the locality and of the various types of houses erected or to be erected on the estate. There were a number of puffing statements, but nothing which is relied on as a misrepresentation till the last two pages of the brochure. On those pages there are to be found the following statements:—
"Incidentally, however, the fact that a leading Building Society makes a more generous advance over a longer period than to any other Estate in Great Britain speaks volumes for the construction of the houses."
"All building is carried out under the strictest supervision of the Local Authorities, and you will be reassured to learn that, before your home has grown even so far as the damp-course— the double-course of fine slate which ensures the dryness of the house—it has been inspected no less than four times!"
"BUILDING SOCIETY.
MORRELL (Builders), LTD., are the Only Builders in Great Britain who can offer, by special arrangement with a leading Building Society, a 95 per cent. MORTGAGE advance over a period of 24 years at 5 per cent. interest.
This proves without a shadow of doubt, the amazing value of Morrell Homes."
At the trial the claim for damages for fraudulent misrepresentation was based on parol statements made to the Respondent on the 9th February, 1934, at Morrells' Offices at Bromley. Several persons were present, and one Feldmar who was managing the business for Morrells and who was also a managing clerk of their solicitors at Bromley, Messrs. Trotter, Leaf and Pitcairn, made the misrepresentations knowing that they were false. Some of them were to the same effect as the extracts from the brochure. That brochure had been handed to the Respondent or her husband at a previous interview at the same offices on the 1st February, 1934, and was discussed at length on the 9th February. It was used apparently to support the misrepresentations then made on behalf of Morrells. The Respondent's case at the trial was that a representative of the Appellants was present on the 9th February, took part in the discussions and supported Feldmar's statements. It was, however, proved to the satisfaction of the learned Judge that no representative of the Appellants was in fact present, and the counterclaim was therefore dismissed. It may be explained that no misrepresentation by the Appellants at any time other than at the interview of the 9th February was alleged at the trial.
In the Court of Appeal the claim for damages for deceit against the Appellants was based on very different grounds. It was sought to show that the Appellants had in some way made or affirmed fraudulent misrepresentations to the Respondent in the brochure. The statements in that document above set forth no doubt amounted to an assertion, contrary to the truth, that the houses on the estate either had been or would be particularly well built, and also that a leading building society was prepared to advance no less than 95 per cent. of the contract price of houses built on the estate by Morrells because they were so well built.
It is here necessary to notice a point of some importance. The leading building society there referred to was clearly not the Appellants, but was a Huddersfield building society with whom Morrells had an agreement. The Appellants had no arrangement or agreement with Morrells till a later date. The house bought by the Respondent had been built, except perhaps as to some details of completion before the 9th February, and had been viewed by the Respondent and her husband. The statements in the brochure to the effect that the house had been well built were no doubt fraudulently untrue. The statement in that brochure as to the willingness of the leading...
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