Jimmie William Frederick Hornal v Neuberger Products Ltd
|England & Wales
|LORD JUSTICE DENNING,LORD JUSTICE HODSON,LORD JUSTICE MORRIS
|20 November 1956
|Judgment citation (vLex)
| EWCA Civ J1120-1
|20 November 1956
|Court of Appeal
 EWCA Civ J1120-1
Lord Justice Denning
Lord Justice Hodson and
Lord Justice Morris
In The Supreme Court of Judicature
Court of Appeal
MR R.B.GIBSON (instructed by Messrs Goodman, Monroe & Co.) appeared on behalf of the Appellant (Plaintiff).
MR S.A.STAMLER (instructed by Messrs C. Butcher & Simon Burns) appeared on behalf of the Respondents (Defendants).
The question in this case is whether Mr Neuberger orally represented to Mr Hornal that a certain capstan lathe had been "Soag reconditioned". I should have thought it was a simple question of fact for the Judge to decide on the evidence, but it has become so mixed up with questions of law that the case took many days in the Court below and over two days before us. To make the position clear I must give the history of the machine.
The capstan lathe was made by Alfred Herbert Limited in January, 1935, for the continental market. It was shipped toGermany In May, 1935, It was used in, Germany for many years until in 1951 Mr Neuberger, on behalf of Neuberger Products Limited, bought it in Germany from its German owner for about 5700. The German owner told him that it had been factory re-conditioned at their works in Germany, and Mr Neuberger believed him. But nevertheless, when Mr Neuberger imported the machine into England, in order to obtain it free of duty, he said it had not been reconditioned. He made a declaration that; "Ne hereby declare these goods free of duty as British returned goods, which have not undergone any process of renovation, repair, manufacture, alteration or addition whilst abroad". Mr Neuberger made that declaration regardless of the truth, but, as it suited him to make it, he did so. In 1952 the machine was imported free of duty. The transport arrangements were made by the well known toolmakers Soag Machine Tools Limited; and it appears that when it was in their hands they put a metal plate with their name "Soag Machine Tools" on it. They did it as an advertisement but not meaning to indicate that they had done any work on it. Neuberger Limited paid some £700 for the machine and took delivery. Mr Neuberger soon found out that it had not been reconditioned at all. He was very angry about it and he managed to persuade the German seller to refund him £300. He then himself did. the work necessary to put the machine in good and sound working order. He had a new bar feed put in and the gears put right; but it did not cost him nearly as much as £300.
After keeping the machine for two years, Mr Neuberger wanted to sell it. It so happened that at that time Mr Hornal wanted to buy a capstan lathe because of contracts he had to fulfil. He went along with his man Lynch to see this machine which Neuberger Limited had for sale. They inspected it and agreed to take it. Both parties were under the impression that it was fit for immediate use, though nothing was expressly said that it was. Mr Hornal signed a purchase order dated 13th October, 1954, but the transaction was eventually completed on hire-purchase terms. Neuberger Limited sold the machine to United Dominion TrustLimited for £414, who let it on hire-purchase to Mr Hornal.
After Mr Hornal had taken delivery of the machine he discovered that a part of it called the turret was defective: and in order to remedy it he got another turret fitted by Alfred Herbert Limited at a cost of £50. 14s. 3d. This took some seven weeks during which he was unable to use the lathe and suffered damage in consequence.
Mr Hornal now brings this action against Neuberger Limited claiming damages for the defective turret. He bases his claim on what Mr Neuberger said to him when he inspected the machine. He relied at the trial on several representations, but they were all rejected by the Judge except this one representation said to have been made by Neuberger "The machine has been Soag reconditioned". The Plaintiff alleged that this was a contractual warranty or, alternatively, a fraudulent misrepresentation.
The Judge seems to have found it difficult to make up his mind whether Mr Neuberger made that representation or not. The Judge said that his decision depended on the standard of proof which was to apply. If he was to apply the standard in civil cases - the balance of probability - he would hold that the representation was made by Mr Neuberger: but if he was to apply the standard in criminal cases - proof beyond reasonable doubt - he would hold that the representation was not made.
Such being the Judge's state of mind, he considered first whether there was a contractual warranty. On that issue the civil standard of proof clearly applied. He found on the balance of probabilities that Mr Neuberger did say that the machine had been Soag re-conditioned, that Mr Neuberger made it in order to persuade Mr Hornal to enter into the transaction, and that Mr Hornal relied upon it: but he found that it was not a contractual warranty because it was not so intended. I do not think we can disturb that finding. The Judge clearly htd in mind the Speech of Lord Moulton in ( ) and directed himself by it. It was said that thejudge made a mistake in that he tried to look into the minds of the parties to see if in their inmost thoughts they intended a warranty: whereas he ought only to have looked at their external behaviour to see whether it bore the reasonable inference of a warranty. Now I quite agree that if the Judge did try to look into their inmost thoughts it would be a mistake. In seeing whether there is a contract or not, the law can only look to outward appearances. If an intelligent bystander would reasonably infer that a warranty was intended that will suffice even though neither party in fact had it in mind. This is such trite law that I do not think for a moment the Judge fell into error about it. It is true that in one passage he used words which seem to suggest that he was looking into the minds of the parties: but in another passage he approached the matter in the correct way. He said that one of the matters that impressed him most was Mr Hornal's complete failure to refer in any document to this machine being Soag re-conditioned. That is a factor always considered in these cases.
Thus having disposed of the warranty the Judge turned to consider whether Mr Neuberger was guilty of fraud. If Mr Neuberger did in fact represent that the machine had been Soag re-conditioned, he was clearly guilty of fraudulent misrepresentation; because he knew it was not true. He had got £300 from his German supplier because it had not been re-conditioned. So the only question was whether Mr Neuberger made the representation or not. It was there that the Judge ran into difficulty - about the standard of proof. He said: "If I have to be satisfied beyond all reasonable doubt, I should not be so satisfied in regard to the statement that it was Soag re-conditioned. I have come to the conclusion on the preponderance of probability that the statement was made, but in my view no jury would dream of convicting a defendant of a fraud based upon that statement, and if I had to consider whether, sitting as a magistrate trying a case of false pretences, I should convict Mr Neuberger of making this statement, I have nohesitation in saying I should not dream of doing so".
In setting himself this problem the Judge showed an uncommon nicety of approach. I must say that, if I was sitting as a Judge alone, and I was satisfied that the statement was made, that would be enough for me, whether the claim was put in warranty or on fraud. I think it would bring the law into contempt if a Judge were to say that on the issue of warranty he finds the statement was made, and that on the issue of fraud he finds it was not made.
Nevertheless the Judge having set the problem to himself he answered it, I think, correctly. He reviewed all the cases and held rightly that the standard of proof depends on the nature of the issue. The more serious the allegation the higher the degree of probability that is required, but it need not, in a civil case, reach the very high standard required by the criminal law. Take this very case. If Mr Neuberger did represent that the machine was Soag re-conditioned he did very wrong because he knew it was untrue. His moral guilt is just as great whatever the form of the action, no matter whether in warranty or in fraud. He should be judged by the same standard in either case.
I have already expressed my views on this subject in ( ) and I need not repeat them here. I would only mention the insurance cases on which Mr Stamler especially relied, in which the insured person tried to defraud, the insurance company by burning down his house or scuttling his ship. In some of those cases, particularly , and . ( ) the Judges have said that the offence of arson or malicious damage must be as fully proved as a criminal charge: but the latest case in the House of Lords, ( ) shows that that is putting too high a burden on the insurance company. Lord Sumner said that "on a civil issue I do not think more is required than a correct appreciation of the incidence and the shifting of the onus ofproof and a reasonable estimate of the correct pro and con of the various parts of the evidence …. I am just as reluctant to make the underwriters pay Mr Lek many thousands of pounds if he has been guilty of making a false claim as to find him guilty of it if he has not. The whole question is whether it has been proved; and I think it has". It is apparent that Lord Sumner considered that proof was only necessary according to the...
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