Oscar Chess Ltd v Williams
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DENNING,LORD JUSTICE HODSON |
| Judgment Date | 13 November 1956 |
| Judgment citation (vLex) | [1956] EWCA Civ J1113-2 |
| Court | Court of Appeal |
| Date | 13 November 1956 |
Between:
[1956] EWCA Civ J1113-2
Lord Justice Denning
Lord Justice Hodson and
Lord Justice Morris
In The Supreme Court of Judicature
Court of Appeal
MR. BREUAN REECE, instructed by Messrs. Helder Roberts & Co., agents for Messrs. Ivor Evans & Benjamin (Swansea), appeared for the Appellant (Defendant).
MR. NORMAN FRANCIS, instructed by Messrs. A. King-Davies & Son (Maesteg), appeared for the Respondent (Plaintiff).
In March 1954, a Mrs. Williams of 13 Victoria Terrace, Port Talbot, acquired a second hand Morris car Index Number ECO 503. She acquired it on the footing that it was a 1948 model at a price of £300. The transaction was put through on hire-purchase from the British Wagon Co. The registration book showed that it was first registered on 13thApril 1948 With five changes of ownership between 1948 and 1954.
During the next fourteen months the car was used a good deal by her son Mr. W. V. R. Williams: and he often gave lifts to Mr. Ladd, a motor salesman, employed by Oscar Chess Limited. known as the Motor House, Port Talbot. Mr. Ladd lived at 18 Victoria Terrace, a few doors away from Mr. Williams. Mr. Ladd thought it looked like a 1948 model.
In May 1945, Mr. Williams, the son, told Mr. Ladd that he wanted to get a new Hillman Minx for £650 and offered the Morris in part exchange. Mr. Williams described the Morris car as a 1948 ten horse power Morris and he produced the registration book for it. Mr. Ladd checked up in it the date 1948 as the date of first registration. He looked up Glass's Guide - a book which gives current prices for second-hand cars according to the year of manufacture - and said he would make an allowance of £290 for the Morris. This allowance of £290 was the factor which made the transaction possible. If he had not got this allowance, Mr. Williams would not have gone through with the transaction at all. Oscar Chess Limited. were no doubt ready to give him this good allowance because they would get a substantial profit on the sale of the Hillman.
The transaction went through accordingly. Oscar Chess Limited., the Motor House, sold the new Hillman Minx for £650 to a finance company who let it on hire-purchase terms to Mr. Williams. Oscar Chess Limited. took the Morris in part exchange but, to do so, they had first to pay the outstanding £50 to the British Wagon Co. They charged that sum to Mr. Williams. They then took the Morris allowing £290 for it which they credited to the finance Company who bought the Hillman.
Bight months later Oscar Chess Limited. discovered that the Morris was not made in 1948 as they thought, but in 1939. They discovered this by taking the chassis number and engine number and sending those numbers to Morris Motors Limited., who looked up their card index and found that the car left thefactory on 3rd. February 1939. Strange to relate, the style and finish of Morris care had not been changed between 1939 and 1948. Outwardly a 1948 model looked the same as a 1939 model: but the price was of course very different. If Oscar Chess Limited. had known it was a 1939 model they would not have given £290 for it, but only £175. In describing it as a 1943 Morris, Mr. Williams of course was perfectly innocent. He honestly believed it res a 1948 model: and so no doubt did the previous sellers. Someone far back in 1948 must have fraudulently altered the log-cook, but he cannot he traced now.
In these circumstances Oscar Chess Limited., the Motor House, claim as damages from, Mr. Williams the sum of £115, the difference in value between a 1939 Morris and a 1948 Morris. The question depends on whether Mr. Williams gave a binding promise to Mr. Ladd that it was made in 1948. The evidence on this point was very short. Mr. Ladd said in examination in chief, "He offered me a 1948 ten horse power Morris in part exchange. He produced the registration book". Mr. Ladd said in cross-examination "I had often had lifts in the defendant's car. I thought it looked like a 1948 model. I checked up in the registration book". Mr. Ladd's evidence was accepted. Indeed Mr, Williams did not go into the witness box to contradict it. Upon these simple facts Mr. Francis, counsel for the plaintiffs, submitted to the Judge that the defendant's representation that the car was a 1948 model was an essential term of the contract, that is a condition. Alternatively he submitted that the representation was a warranty, intended as such. The Judge found that it was a condition. He said that the allowance of £290 made by Mr. Ladd "on the assumption that the Morris was a 1948 model, that this assumption was fundamental to the contract, a condition which, if not satisfied, would have caused him to rescind the contract if he had known it to be unsatisfied before the property in the Morris car passed to his principals".
Thereupon the Judge awarded £115 to the plaintiffs and did not go on to consider the alternative claim on a warranty.
Now I entirely agree with the Judge that both parties assumed that the Morris was a 1948 model and that this assumption was fundamental to the contract. But this does not prove that the representation was a term of the contract. The assumption was based by both of them on the date given in the registration book as the date of first registration. They both believed it was a 1948 model whereas it was only a 1939 one. They were both mistaken and their mistake was of fundamental importance.
The effect of such a mistake is this: It does not make the contract a nullity from the beginning, but it does in some circumstances enable the contract to be set side in equity. If the buyer had come promptly, he might have succeeded in getting the whole transaction set aside in equity on the ground of this mistake, (see Solle v. Butcher, 1950 1 King's Bench, page 671), but he did net do so and it is now too late for him to do it (see Leaf v. International Galleries, 1950 2 King's Bench page 86). His only remedy is in damages, and to recover these he must prove a warranty.
In saying that he must prove a warranty, I use the word "warranty" in its ordinary English meaning to denote a binding promise. Everyone knows what a man means when he says "I guarantee it" or "I warrant it" or "I give you my word on it". He means tint he binds himself to it. That is the meaning it has borne in English law for 300 years from the leading case of Chandelor v. Lopus (1603), Croke's Reports, James I, Volume 3, page 4, onwards. During the last fifty years, however, some lawyers have come to use the word "warranty" in another sense. They use it to denote a subsidiary term in a contract as distinct from a vital term which they call a "condition". In so doing they depart from the ordinary meaning, not only of the word "warranty", but also of the word "condition". There is no harm in their doing this, so long as they confine this technical use to its proper sphere, n:amely to distinguish between a vital term, the breach of which gives the right to treat thecontract as at an end, and a subsidiary term which does not. But the trouble comes when one person uses the word "warranty" in its ordinary meaning and another uses it in its technical meaning. When Lord Holt made his famous ruling that "an affirmation at the time of a sale is a warranty, provided it appears on evidence to be so intended", he used the word "warranty" in its ordinary English meaning of a binding promise: and when Lord Haldane and Lord Moulton in 1913 in Heilbut Symons & Co. v. Buckleton, (1913 Appeal Oases, page 30) adopted his ruling, they used it likewise in its ordinary meaning. These different uses of the word seem to have been the source of confusion in the present case. The Judge did not ask himself, "Was the representation (that it was a 1948 Morris) intended to be a warranty?" He asked himself, "Was it fundamental to the contract?" He answered it by saying that it was fundamental; and therefore it was a condition and not a warranty. By concentrating on whether it was fundamental, he seems to me to have missed the crucial point in the case which is whether it was a term of the contract at all. The crucial question is: was it a binding promise or only an innocent misrepresentation? The technical distinction between a "condition" and a "warranty" is quite immaterial in this case, because it is far too late for the buyer to reject the car. He can at beet only claim damages. The material distinction here is between a statement which is a term of the contract and statement which is only an innocent misrepresentation. This distinction is best expressed by the ruling of Lord Holt, "Was it intended as a warranty or not?", using the word warranty there in its ordinary English meaning: because it gives the exact shade of meaning that is required. It is something to which a man must be taken to bind himself.
In applying Lord Holt's test, however, some misunderstanding has arisen by the use of the word "intended". It is sometimes supposed that the tribunal must look into the minds of the parties to see what they themselves intended. That is on mistake.Lord Moulton made it quite clear that "The intention of the parties can only be deduced from the totality of the evidence". The question whether a warranty wae intended depends on the conduct of the parties, on their words and behaviour, rather than on their thoughts. If an intelligent bystander would reasonably infer that a warranty was intended, that will suffice. And this, when the facts are not in dispute, is a question of law. That is shown by Heilbut v. Buckleton itself, where the House of Lords upset the finding by a jury of a warranty.
It is instructive to take some recent instances to snow how the Courts have approached this question. When the seller states a fact which is or should be within his own Knowledge and of which...
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