Contex Drouzhba Ltd v Wiseman and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Waller,Lord Justice Rix,Lord Justice Keene |
| Judgment Date | 20 November 2007 |
| Neutral Citation | [2007] EWCA Civ 1201 |
| Date | 20 November 2007 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2006/2490 |
[2007] EWCA Civ 1201
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mr Justice Irwin
Lord Justice Waller
Vice President of the Court of Appeal, Civil Division
Lord Justice Rix and
Lord Justice Keene
Case No: A2/2006/2490
Peter Knox QC (instructed by Messrs Oury Clark, Solicitors) for the Respondent
Roger Bartlett (instructed by Messrs Shah & Burke, Solicitors) for the Appellant
Hearing date: 17th October 2007
Judgement
Section 6 of Lord Tenterden's Act (the Statute of Frauds (Amendment) Act 1828) states:—
“ Action not maintainable on representations of character etc, unless they be in writing signed by the Party chargeable. No action shall be brought whereby to charge any person upon or by reason of any representation or assurance made or given concerning or relating to the character, conduct, credit, ability, trade, or dealings of any other person to the intent or purpose that such other person may obtain credit, money, or goods upon, unless such representation or assurance be made in writing, signed by the Party to be charged therewith.”
By a judgment handed down on 3rd November 2006, Irwin J found that Mr Wiseman as a director of Scott Daniel Limited (SD) signed a document dated 9 th January 1998 containing a promise by the company to pay for goods to be ordered in the future. He found that Mr Wiseman in so doing impliedly represented that the company had the capacity to meet its obligations to pay for goods to be ordered thereafter. He found that that representation was made fraudulently by Mr Wiseman who he held knew the company did not have that capacity and had no chance of gaining it. On that basis he found that Mr Wiseman was liable in damages for deceit. He found critically so far as this appeal is concerned that the representation was “made in writing, signed by the party to be charged [Mr Wiseman]” and that thus the above section of Lord Tenterden's Act provided no defence.
It was on this last point, whether he was right in his conclusion relating to Lord Tenterden's Act, on which the judge granted permission to appeal. Attempts to obtain permission to appeal any other aspects of his judgment have failed.
I have referred above to what was the primary way in which the respondents put their case by reference to a document dated 9 th January 1998, known in the court below as claim number one. There were other claims made in addition or in the alternative by reference to other documents but it was common ground before us that if the appeal was dismissed in relation to claim number one, it was unnecessary to go on and consider those other claims.
I have come to the view that the appeal should be dismissed in relation to claim number one and can thus concentrate on that claim alone.
The point is a very short one but not without some significance. Mr Bartlett, who appeared on the appeal for the appellant Mr Wiseman, suggested that, if the Judge was right, it is a matter of some surprise that there have not been many cases holding liable directors, who have signed contracts or letters on behalf of companies, when the companies were insolvent to the knowledge of those directors. To that point he added the fact that there is legislation dealing with fraudulent trading (sections 213 and 214 of the Insolvency Act 1986) by virtue of which, on the application usually of the liquidator, fraudulent directors can be made liable for the deception perpetrated on creditors but under which legislation the creditors do not get preference one over the other. That legislation requires reimbursement by the directors to the company so that creditors share equally in what is recovered.
Certainly, if the judge is right, it appears that there may be situations in which, by the signing of contracts by directors where those directors are guilty of fraudulent trading, creditors may have a direct remedy against the director in deceit, and a remedy that avoids the consequences of sections 213 and 214. Those consequences flow from the finding of an implied representation of the type found in this case (against which there is now no appeal), together with a finding that the contract satisfies the above section of Lord Tenterden's Act.
Mr Knox QC, for the respondent, rightly submitted that the existence of sections 213 and 214 cannot affect the question whether a creditor may not have a cause of action in deceit against a director.
If one were to assume a letter written by a director (assume for present purposes in a personal capacity) dishonestly assuring a creditor as to the solvency of the company of which he was a director, I cannot see that sections 213 or 214 would have any relevance. Such a letter would clearly comply with the provisions of Lord Tenterden's Act and the creditor would succeed in his claim against the director personally.
I then pose the question as to whether if such a letter by its terms made only an implied representation to the same effect, would that make any difference? Once again, without regard to Lord Tenterden's Act, the position would be the same, and it would be strange indeed if Lord Tenterden's Act was construed so as to make such a fraudulent implied representation unenforceable. One can just about understand an argument that, on a strict construction of the section, the section applies to express representations but not implied ones. This seems to have been the argument in the authority much relied on by Mr Bartlett on this appeal John Hudson& Company Limited v Oaten Transcript 19 th June 1980. But the object of such an argument was to persuade the court that the Act did not apply to implied representations i.e. there was no need for a written document signed by the maker to enforce an implied representation. That would hardly meet the mischief at which the Act was aimed, i.e. to require writing as proof of representations as to credit or solvency. The argument was unsurprisingly rejected; see Sir David Cairns 10H and following.
Thus the fact that a representation can only be implied from the terms of a written document rather than being an express term could not assist an argument that in some way the section provided a defence.
But, that said, I would also stress...
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...under section 6 of the Statute of Frauds Amendment Act 1828: the decision of the Court of Appeal in Contex Drouzhba Limited v Wiseman [2007] EWCA Civ 1201; [2008] BCC 301. Whether or not the court will imply a representation will depend upon all the circumstances and context is everything,......
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Table of Cases
...CA 74 Chaplair Ltd v Kumari [2015] EWCA Civ 798, [2015] CP Rep 46, [2015] HLR 39, [2016] L & TR 1 202 Contex Drouzhba Ltd v Wiseman [2007] EWCA Civ 1201, [2008] BCC 301, [2008] 1 BCLC 631, (2007) 157 NLJ 1695 37 Credit Agricole Indosuez v Unicof Ltd [2003] EWHC 77 (Comm), [2003] 2 WLUK 50 2......
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