R Goose (Plaintiff) v Wilson Sandford & Company (A Firm)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE MORRITT |
| Judgment Date | 14 March 2000 |
| Judgment citation (vLex) | [2000] EWCA Civ J0314-5 |
| Docket Number | Case No: CHANF 1999/1015 |
| Court | Court of Appeal (Civil Division) |
| Date | 14 March 2000 |
[2000] EWCA Civ J0314-5
Lord Justice Morritt
Lord Justice Robert Walker and
Sir Ronald Waterhouse
Case No: CHANF 1999/1015
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION (Rimer J)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Mr Richard McCombe QC and Mr Philip Marshall (instructed by Sharpe Pritchard for the Appellant, Mr Goose)
Mr Ronald Walker QC and Miss Catherine Brown (instructed by Hextall Erskine for the respondent, Wilson Sandford & Co.)
This is the judgment of the court.
Introduction
The claimant, Mr Rex Goose, farmed his own land at Hagbeach Farm, Whaplode Drove, Spalding, Lincolnshire. He wished to acquire further agricultural land in France. In March 1984 he met Mr Peter Bray who, Mr Goose thought, also wanted to buy agricultural land in France. They embarked on a joint operation to acquire such land for each of them. For that purpose Mr Bray incorporated Intag Estates Ltd ("Intag") and retained the services of the defendant firm of chartered accountants, Wilson Sandford & Co, on behalf of himself and Intag. The scheme by which the agricultural land in France was to be acquired underwent a number of modifications between May 1984 and July 1985 but common to each variant were three crucial features. First the agricultural land in France would be paid for by means of a loan denominated in Swiss Francs. Second, Mr Goose's land would be required as security for one or more of the liabilities undertaken in the implementation of the scheme. Third, a collection of semi-precious stones ("the Stones") apparently owned by Mr Bray or a Liechtenstein Anstalt established by him, called the Brent Foundation, would be available, in some form, whether as security or otherwise, as a buffer against the risks involved in the use of three currencies, namely Swiss Francs, French Francs and Sterling.
In implementation of the scheme, on 25th July 1985 Mr Goose charged Hagbeach Farm to secure to Edward Manson & Co repayment of a loan made by them to Intag of £314,000. Of that sum £130,000 was to be remitted as part payment of the price for a farm, La Devinniere, Nr Orleans, Cher, being purchased by Intag for Mr Bray. The money was not used for that purpose or for any other purpose which Mr Goose had approved. When, subsequently, Mr Goose sought to resort to the Stones he discovered that they had not at any relevant time been owned by either Mr Bray or the Brent Foundation and were in any event worth only about 3% of what he had been led to believe.
On 15th July 1991 and again on 22nd April 1994 Mr Goose issued a writ seeking damages from Wilson Sandford & Co. in respect of the part played in the deception of Mr Goose he alleged had been performed by the partner responsible, Mr Robin Wilson. Those claims were tried by Harman J between 9th June and 13th July 1994. On 1st April 1996 Harman J dismissed both actions. On 13th February 1998 this court ordered a new trial of some only of the original claims which arose in the second action. That trial took place before Rimer J between 1st October and 13th November 1998. Rimer J gave judgment on 25th January 1999. He too dismissed the second action.
Rimer J found that Mr Wilson had made representations to Mr Goose at a meeting held on 19th September 1984 and in a letter dated 9th April 1985 which he had failed to correct at a further meeting held on 18th May 1985 that (a) Mr Bray or the Brent Foundation owned the Stones and (b) the Stones were available as and capable of providing the requisite security in implementation of the scheme. He decided that the second, but not the first, was made by Mr Wilson without any honest belief in its truth. But he decided that Mr Wilson did not intend that Mr Goose should be induced to do anything in reliance thereon. He also found that Mr Goose did not in fact rely on such representations. Thus the causes of action in deceit failed. Similar claims in negligence, agency and trust failed too. The judge dealt with issues which only arose if he were wrong on the questions of liability, namely, limitation, contributory negligence and causation.
This is the appeal of Mr Goose from the order of Rimer J. His principal, though by no means only, contention is that the judge having found that representations were made by Mr Wilson to Mr Goose without an honest belief in their truth failed to recognise that they must have been made with the intention of inducing Mr Goose to act and did in fact induce Mr Goose to act by charging his farm as security for the loan of £314,000. He contends that the judge was wrong to have dismissed his claims in negligence, agency and trust. In addition he contends that the judge was wrong in the conclusions he reached in respect of limitation, contributory negligence and causation. We will consider these submissions later. First it is necessary to describe the factual background in some detail. As the issues before us are a good deal more limited than those before Rimer J it is not necessary to cover all the ground surveyed by him in his comprehensive and careful judgment.
The Factual Background
Mr Bray was a fraud. In 1984 he was about 60, some 16 years older than Mr Goose. He had been convicted of offences of dishonesty on 25th April 1975 and 1st June and 16th November 1977. He had been made bankrupt on 31st January 1975 and though discharged on 13th March 1980 such discharge had been conditional only and was revoked on 8th May 1984 for breach of condition. None of this was known to Mr Goose. To him, no doubt, Mr Bray appeared to be the experienced business man with considerable agricultural expertise and wealth that he claimed to be.
Mr Goose and Mr Bray first met on 8th March 1984 having made initial contact due to their mutual interest in buying agricultural land in France. Mr Bray told Mr Goose that he had returned from Zimbabwe and wished to invest in France. He told Mr Goose about the Brent Foundation of which he said that he was the main beneficiary. There was a second meeting on 11th March 1984. On this occasion Mr Bray told Mr Goose that he wanted to sell his farms in Zimbabwe and that Brent had a collection of semi-precious stones. At an early stage Mr Bray showed Mr Goose a list of the Stones headed "Stones delivered to Bray" containing 33 items against each of which was noted a certificate. The aggregate value, as shown, was over US$500,000.
The judge had to consider some confused and confusing evidence concerning the ownership of the Stones. But it is not necessary for us to refer to it in any detail for neither Mr Goose nor Wilson Sandford & Co seek to challenge the judge's conclusion. For present purposes it is sufficient to start with the sale of the Stones by Holford Trust Ltd ("Holford") to the Brent Foundation in August 1982 for US$725,000. Payment was to be by 10 promissory notes given by Brent Foundation. On 23rd August 1982 the Stones were transported by Brink's Air Courier Service from California to a bonded warehouse at Kloten Airport, Zurich for the account of Trinkhaus & Burkhardt ("TB"), a Swiss bank. On 26th August 1982 TB confirmed to Barclays Bank that it was instructed to remit the proceeds of sale of the Stones up to US$83,000 to cover the outstandings of Mr Bray's wife. Rimer J concluded that insofar as Barclays thereby obtained any security interest in the Stones or their proceeds of sale it was secondary to the security held by Barclays over the house in March, Cambridgeshire in which Mr and Mrs Bray lived. By the end of 1982 TB claimed to be entitled to a lien on the Stones to secure to them payment of various liabilities of Mr Bray or the Brent Foundation which, by mid-1984, amounted in Swiss Francs and US$ to the equivalent of £25,000. The promissory notes were not paid and in December 1982 Mr Bray instructed TB to hold the Stones to the order of Holford. In these circumstances the judge found that Holford sold the Stones to Mr Bray in August 1982 in exchange for the promissory notes but that, by agreement, the sale had been rescinded by January 1983 when Mr Bray relinquished any property in the Stones to which he might previously been entitled. But in the hands of TB they were also subject to the lien to secure repayment of the debts due to TB by Mr Bray or the Brent Foundation and to such secondary security in favour of Barclays as the undertaking of TB might have conferred. Thus by the time Mr Goose and Mr Bray met in March 1984 neither Mr Bray nor the Brent Foundation owned the Stones which were in any event subject to incumbrances in favour of TB and, possibly, Barclays.
On 9th May 1984, a week after the incorporation of Intag and the day following the revocation of Mr Bray's discharge from bankruptcy, Mr Bray wrote to Mr Goose setting out the scheme in the form he then proposed. Its salient, if rather muddled, features were (1) a loan in Swiss Francs equivalent in value to £700,000 on the initial security of guarantees of £350,000 from Mr Goose and Mr Bray, (2) the guarantee of Mr Goose would come via NatWest Bank on the security of Hagbeach Farm, (3) the guarantee of Mr Bray would be given by the Brent Foundation via a Swiss bank secured on the Stones, (4) the farms, when bought would be available for use as security for the loans thereby enabling the amount of the guarantees to be reduced.
Mr Bray had been in contact with financial advisers, HarvestMinster Ltd, who, in June 1984, introduced him to Mr Wilson a partner in the defendant Wilson Sandford & Co. Mr Wilson was then in his thirties having been admitted to the...
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