Car and Universal Finance Company Ltd v Caldwell
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DAVIES,LORD JUSTICE SELLERS |
| Judgment Date | 19 December 1963 |
| Judgment citation (vLex) | [1963] EWCA Civ J1219-5 |
| Date | 19 December 1963 |
| Court | Court of Appeal |
[1963] EWCA Civ J1219-5
Lord Justice Sellers
Lord Justice Upjohn and
(now LORD UPJOHN)
Lord Justice Davies
In The Supreme Court of Judicature
Court of Appeal
(From: Lord Denning, Master of the Rolls - Middlesex)
Mr. LEONARD CAPLAN, Q.C., Mr. NORMAN TAPP and Mr. JOHN SPEED (instructed by Messrs. Saunders, Sobell, Leigh & Dobin) appeared on behalf of the Appellante (Plaintiffs).
Mr. MORRIS FINER, Q.C. and Mr. ANTHONY LINCOLN (instructed by Messrs. Amery-Parkes & Co.) appeared on behalf of the Respondent (Defendant).
This appeal raises a primary point in the law of contract. The question has arisen whether a contract which is voidable by one party can in any circumstances be terminated by that party without his rescission being communicated to the other party.
Lord Denning, Master of the Rolls, from whom this appeal comes from a trial in the Queen's Bench, has held in the circumstances of this case that there can be rescission without communication where the seller of a motor car who admittedly had the right to rescind the contract of sale on the ground of fraudulent misrepresentation terminated the contract by an unequivocal act of election which demonstrated clearly that he had elected to rescind it and to be no longer bound by it.
The general rule, no doubt, is that where a party is entitled to rescindes a contract and wishes to do so the contract subsists until the opposing party is informed chat the contract has been terminated. The difficulty of the seller in this esse was that, when he learnt of the fraud and therefore ascertained his right to terminate the bargain, he could not without considerable delay find either the fraudulent buyer or the car which had been sold. Such circumstances would not appear to be so rare in transactions in motor cars (or horses in earlier dsys) that they would not, it might be thought, have given rise to litigation and an authoritative decision, but it seems that over the years the point in issue has not been decided in any reported case in similar or comparable circumstances
The case was heard on an agreed statement of facts and of issues arising out of a sheriff's interpleader, and some oral evidence was called. Briefly, Mr. Caldwell, the defendant in this interpleader, owned a Jaguar motor car which was obtained from him by one Norris, who took the car away from the defendant's house on Tuesday evening, the 12th January, 1960, having induced the owner to sell it for £975, of which £10 in cash had been paid as a deposit two days before and for which a cheque for £963 washanded over. As soon as the bank in Brighton on which the cheque was drawn opened st 10 a.m. on the 13th January, Mr. Caldwell discovered that the cheque was worthless and that he had been deceived and defrauded. The car had been obtained by false pretences. A Hillman car was also left as security but the buyer had no title in it to transfer to Mr. Caldwell and it too was worthless to him. It was agreed that Norris acquired a voidable title to the car. Some time on the 13th January Norris sold and delivered the Jaguar to Motobelia Company, Limited, and it was further agreed that Motobelle had notice of the defect in title and took the vehicle with no better title than that previously vested in Norris. On the 15th January Motobella Company Ltd., sold the car to G. & C. Finance Corporation, Ltd., who purported to hire it to one Alfred. Harry Knowles, who would appear to have been a fictitious hirer. On the 13th August, 1960, the car was sold to the plaintiffs on this interpleader issue, Car & Universal Finance Company, Ltd., another company dealing in hire purchase finance. Mr. Caldwell's present claim to the car is based on what he did on the 13th January, 1960, which it is alleged terminated the contract of sale of the previous evening and restored the title in the car to him.
This is what he did. As soon as he learnt from the bank manager that the cheque in payment for the car could not be met and that there had been a similar transaction previously and that the police were looking for Norris, Mr. Caldwell went at once to the police. The police produced a photograph of Norris, whom Mr. Caldwell identified as the man to whom he had sold his car. A warrant was out for the arrest of this man in the name of Rowley. His house had been watched end endeavours had been made to find him Through the police and the organisation of the Automobile Association Mr. Caldwell made every endeavour to find and recover the car forthwith and to discover the absconding and elusive Norris. Mr. Caldwell clearly wished to terminate the contract of sale and take back the car and acted as far as he could to that end.
The Jaguar was found on the 20th January when it was beingdriven by a director of Motobella Company, Ltd., who had purported to sell it to the G. & C. Finance Corporation on the 15th January for hire to one Knowles. He claimed that his company had bought it and it was their property, but the claim was not persisted in when the matter came to trial. The Motobella Company Ltd. were sued by Mr, Caldwell for the return of the car and when the action was called on it was not defended and Mr. Caldwell obtained judgment. When he sought to take the car under the judgment the present plaintiffs on the interpleader issue claimed it as theirs. They had the car transferred to them on the 13th August, 1960, and thereafter they seem to have hired it out.
By reason of the transaction completed on the 12th January, 1960, Norris, otherwise Rowley, obtained the property in ths car in question. Another man was with Norris, but as he was apparently the servant or agent of Norris no question arises with regard to him.
The sole question on this part of the appeal is whether Mr. Caldwell avoided the contract of sale snd recovered his title to the car before the purported sale by Motobella Company Ltd. to G. & C. Finance Corpn. Ltd. on the 15th January, 1960. If Mr. Caldwell did not do so then, subject to the other contention which arises on the appeal, G. & C. Finance Corpn. Ltd. obtained a good title and were able to pass it on to the Car & Universal Finance Company Ltd. later in the same year.
The learned Master of the Rolls' decision that Mr. Caldwell had established a rescission on the 13th January, 1960, was strongly attacked before us on the ground that, though interesting, it was contrary to authority and was not supported by the various cases of election which the learned judge found comparable and where sommunlcation was, it was said, not required as an essential prerequisite - and reference was made in the judgment to termination of a lease for forfeiture and ratification, repudiation and affirmation of a contract. Much of the argument before us was an endeavour to show that these illustrations and comparisons were either fallacious or ambiguous. I do not pursue them for, withrespect, I do not find them helpful to the decision, except possibly in the case of an affirmation of a contract which is en election to the contrary effect to a disaffiliation. An affirmation of voidable contract may be established by any conduct which unequivocally manifests an intention to affirm it by the party who has the right to affirm or disaffirm. Communication of an acceptance of a contract after knowledge of a fundamental breach of it by the other party or of fraud effecting it is, of course, evidence establishing affirmation but it is not essential evidence, A party cannot reject goods sold and delivered if he uses them after knowledge of a right to reject and the judgment cites a case where an instruction to a broker to re-sell was sufficient affirmation of the contract in question even though that conduct was not communicated. It may be said that a contract may be more readily approved and accepted than it can be terminated where a unilateral light to affirm or disaffirm arises. The disaffirrmation or election to avoid a contract changes the relationship of the parties and brings their respective obligations to an end whereas an affirmation leaves the contract effective though subject to a claim for damages for its breach. Where a contracting party could be communicated with, and modern facilities make communication practically worldly wide and almost immediate, it would be unlikely that a party could be held to have disaffirmed a contract unless he went so far as to communicate his decision so to do. It would be what the other contracting party would normally require and unless communication were made the party's intention to rescind would not have been unequivocal, or clearly demonstrated or made manifest. But in circumstances such as the present case the other contracting party, a fraudulent rogue who would know that the vendor would want his car back as soon as he knew of the fraud, would not expect to be communicated with as a matter of right or requirement and would, deliberately, as here, do all he could to evade any such communication being made to him. In such exceptional contractual circumstances, it does not seem to me appropriate to hold that a party so acting can claim any right to have a decision to rescind communicatedto him before the contract is terminated. To hold that he could would involve that the defrauding party if skilful enough to keep out of the way could deprive the other party to the contract of his right to rescind, a fight to which he was entitled and which he would wish to exercise as the defrauding party would well know or at least confidently suspect. The position has to be viewed, as I see it, between the two contracting parties involved in the particular contract in question. That another innocent party or parties may suffer does not in my view of the matter Justify imposing on a defrauded seller an impossible task. He has to...
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