Diamond v Bank of London and Montreal Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE STEPHENSON,LORD JUSTICE SHAW
Judgment Date07 Nov 1978
Judgment citation (vLex)[1978] EWCA Civ J1107-1
Docket Number1976 D. No. 1208

[1978] EWCA Civ J1107-1

In The Supreme Court of Judicature

Court of Appeal

On Appeal from the High Court of Justice

Queen's Bench Division

(Mr. Justice Donaldson)

Before:

The Master of the Rolls (Lord Denning)

Lord Justice Stephenson and

Lord Justice Shaw

1976 D. No. 1208
Hyman Richard Diamond
Plaintiff (Appellant)
and
Bank Of London & Montreal
Defendants (Respondents)

MR. C. COCHRANE (instructed by Messrs. Tatton Gaskell & Tatton, Solicitors, London) appeared on behalf of the Plaintiff (Appellant).

MR. J. LECKIE (instructed by Messrs. Bischoff & Co., Solicitors, London) appeared on behalf of the Defendants (Respondents).

1

THE MASTER OF THE ROLLS
2

At the beginning of 1974 the market in sugar was extremely volatile. Brokers were anxious to get hold of sugar and sell it on behalf of clients. This case concerns a supposed deal for a huge quantity of sugar - about one million tons of it. I say a "supposed deal" because we now know there was no sugar available at all. But two commodity brokers at that time thought there was this huge consignment of a million tons of sugar available somewhere. One of the commodity brokers was Mr. Hyman Richard Diamond in London, and the other was an American company called Niram Corporation Inc. of Nashua, New Hampshire. They did not want to disclose the names of their clients on either side: nor did they want to disclose the origin of the sugar. It might have been from Brazil or from one of the West Indian islands. Some suspicious person might think it was coming from Cuba and was being diverted to Europe instead of Russia. At all events, the brokers did not disclose their clients on either side for their own good reasons. Nevertheless the brokers wanted an assurance that the sugar was available and that there were sound people behind the deal: so that, if it went through, all would be well. For that purpose the practice of these brokers on either side was to get a prime bank to confirm the availability of the sugar and the genuineness of the supplier and of the buyer. In this case the selling broker named the Bank of London & Montreal Ltd. as the prime bank to confirm the sellers. It is based in Nassau in the Bahamas. It is wholly owned by Lloyd's Bank (International) Ltd., which in turn is a subsidiary of Lloyd's Bank Ltd. It is, of course, a very reputable bank.

3

Mr. Diamond, the London broker, got in touch with the trustee manager of that bank in Nassau, Mr. Bease. Mr. Diamondsays that, by telex and telephone messages from Nassau to London, Mr. Bease in Nassau confirmed that there was a million tons of sugar available, that the brokers for the sellers were respectable, that they had done deals of considerable magnitude, that he had seen the documents and all was genuine. Mr. Diamond in London says that he relied on those assurances and he made arrangements to sell half-a-million tons to a company called Aztecs in Liechtenstein. He put forward, as prime bank for the buyers, the Bank of Australia and New Zealand. Mr. Diamond further says that he had an offer of sugar from an alternative source of supply which he turned down in consequence of the assurances which were given to him by Mr. Bease in Nassau.

4

Mr. Diamond now alleges that the assurances given him by Mr. Bease were false. He says they were fraudulent because there was never any sugar available, and that the selling brokers were not respectable. He says that Mr. Bease knew this: but gave the assurances in the hope of getting a private commission for himself out of the deal. So Mr. Diamond alleges that it was plain fraud on the part of Mr. Bease in Nassau for which his employers the Bank of London & Montreal Ltd. are answerable. In these circumstances, Mr. Diamond has brought an action against the Bank of London & Montreal Ltd. As they are based in Nassau, he seeks leave to serve out of the jurisdiction.

5

I may say in passing that previously Mr. Diamond had issued a writ against the bank for negligent misrepresentation. Mr. Justice Parker refused leave to serve it out of the jurisdiction. Now Mr. Diamond has issued a second writ. In it he alleges fraudulent misrepresentation against the Bank of London & Montreal Ltd., and seeks leave to serve it out of the jurisdiction on this account.

6

A preliminary point arises on it. It is whether the case comes within Order 11, rule 1(h). That rule only permits service out of the jurisdiction if the action begun by the writ is "founded on a tort committed within the jurisdiction". Mr. Justice Donaldson held that this tort of fraudulent misrepresentation was not committed within the jurisdiction. It was committed in Nassau where Mr. Bease sent off the telex and from where he spoke on the telephone. Mr. Justice Donaldson was influenced by some observations made by Mr. Justice Winn in Cordova Land Co. Ltd. v. Victor Brothers Inc. (1966) 1 Weekly Law Reports 793.

7

I do not think this preliminary objection should be upheld. It seems to me that in the case of fraudulent misrepresentation, when it is made by telephone or by telex, as it was here, the tort is committed at the place where the message is received - wherever it is heard on the telephone by the receiver or tapped out by the telex machine in the receiver's office. It was so held in Canada in Original Blouse Co. Ltd. v. Bruck Mills Ltd. (1963) 42 Dominion Law Reports, 2nd series, at page 174. The judge said that, when a communication is made by telephone or by telex, it is to be regarded in the same way as a letter sent by hand or a message sent by word of mouth by a messenger to the recipient. In such a case there could be no doubt that the fraudulent misrepresentation was made at the point where it was received and where it was acted upon. It is rather similar to what we have held in regard to contracts: see Entores Ltd. v. Miles Far East Corporation (1955) 2 Queen's Bench 327 at pages 332/3.

8

The Cordova case (1966) 1 Weekly Law Reports 793 is quite distinguishable. A fraudulent misrepresentation was made inBoston U.S.A. by the master of a ship who signed bills of lading and handed them to the shipper in Boston. Later on the bills of lading were indorsed to buyers in England. It seems to me clear that the tort was committed in Boston where the bills of lading were handed over; and not in England. There were some observations made by Mr. Justice Winn but they were obiter dicta and not by any means intended to be of general application.

9

We were also referred to George Monro Ltd. v. American Cyanamid and Chemical Corporation (1944) 1 King's Bench 432, where Lord Justice Goddard made some observations obiter about the tort of negligence, but nothing to affect' the tort of fraudulent misrepresentation.

10

Much nearer to the present case are cases of the publication of a libel. When a letter or paper is sent from one country to another, the tort is committed in the place where the publication takes place. That is shown in Bata v. Bata (1943) Weekly Notes 366.

11

The truth is that each tort has to be considered on its own to see where it is committed. In many torts the place may be where the damage is done. Such as in Distillers Co. (Biochemicals) Ltd. v. Laura Anne Thompson. Distillers sent the thalidamide drug out from England to Australia. A woman took it in Australia with the result that her baby was born deformed. It was held that the tort was committed in New South Wales. Every tort must be considered separately. In the case of fraudulent misrepresentation it seems to me that the tort is committed at the place where the representation is received and acted upon; and not the place from which it was sent. Logically, it seems to me, the same applies to a negligentmisrepresentation by telephone or by telex. It is committed where it is received and acted upon.

12

In my opinion, therefore, the court has Jurisdiction to give leave to serve this writ out of the jurisdiction. It remains to be seen whether the court in its discretion should give leave.

13

To get leave Mr. Diamond must show that he has a good arguable case. Mr. Leckie, for the bank, submitted that Mr. Diamond had no case. He drew our attention to Lord Tenterden's Act of 1828. Section 6 says: "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 (sic), unless such representation or assurance be made in writing signed by the party to be charged therewith".

14

We have been shown some very interesting cases on that section. They are Swift v. Jewsbury (P.O.) and Goddard Law Reports (IX) Queen's Bench 301; Hirst v. West Riding Union Banking Company Ltd. (1901) 2 King's Bench 560; Banbury v. Bank of Montreal (1918) Appeal Cases 626; and finally ( W.B. Anderson & Sons Ltd. v. Rhodes (Liverpool) Ltd. 19671 2 Weekly Law Reports 850. Those cases show that Lord Tenterden's Act does not apply to negligent representations, but it...

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