Robinson v National Bank of Scotland
| Jurisdiction | England & Wales |
| Judgment Date | 10 April 1916 |
| Docket Number | No. 16. |
| Date | 10 April 1916 |
| Court | House of Lords |
Earl Loreburn, Viscount Haldane, Lord Kinnear, Ld. Atkinson.
FraudBankCautionerRepresentation by bank-agent as to customer's creditRepresentation inaccurate and careless, but not dishonestAction of damages against bank by cautionerParties entitled to rely on representation.
A cautioner who had been compelled to pay the whole of a loan, which he had guaranteed along with two co-cautioners who had become bankrupt, brought an action against the bank of which the co-cautioners were customers to recover the amount of his loss. He averred that he had been induced to become a cautioner for the loan by reason of representations as to the financial position of his co-cautioners contained in a letter written by the agent of their bank to another bank in reply to inquiries as to their credit, which representations he averred were false and fraudulent and concealed material facts which ought to have been disclosed.
The Second Division having assoilzied the defenders, circumstances in which the House of Lords affirmed their judgment, holding that the representations in the letter, although careless, inaccurate, and misleading, were not dishonest, a fact which constituted a sufficient defence where, as here, the relationship of parties imposed no special duty upon the person making the representations to make sure that the information conveyed was strictly accurate.
Opinion (per Earl Loreburn) that, as the letter was intended to influence persons interested in providing the contemplated loan, the pursuer was entitled to found on it although it was not obtained for, or communicated to, him, and he had only been informed of its general effect.
ExpensesHardshipFraud.
In an action against a bank for damages for fraudulent misrepresentation, the House of Lords dismissed an appeal by the pursuer on the ground that the representations were not dishonest, and that, accordingly, he had no legal remedy. Their Lordships, however, being of opinion that the representations were careless, inaccurate, and misleading, and that the pursuer had suffered serious prejudice, allowed neither party any expenses either in the House of Lords or Court of Session.
(In the Court of Session 9th November 1915Infra, Court of Session Cases, p. 46.)
The pursuer appealed to the House of Lords.
The case was heard on 6th, 7th, and 10th April 1916.1
After the conclusion of the argument for the appellant, and after counsel for the respondents (Mr Blackburn, K.C.) had been heard for a short time, Earl Loreburn informed him that their Lordships, as at present advised, thought that there was no special duty on M'Arthur toward the pursuer; that the respondents were not liable unless
M'Arthur's representations were dishonest; and that their Lordships had not been satisfied as yet that the representations were dishonest. Earl Loreburn further said that the letters of the respondent Bank, dated 14th November and 15th December,* accurately estimated the conduct of Mr M'Arthur, and were, in the opinion of their Lordships, very honourable to the Bank; that under the circumstances the House was prepared to dismiss the appeal; but that they considered the pursuer had been badly treated, though he had not any cause of action at law, and that, therefore, their Lordships were disposed to direct that there should be no costs of...
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Table of cases
...E.R. 824 (P.C.) ......................................................................... 327 Robinson v. National Bank of Scotland, [1916] S.C. (H.L.) 154 ........................ 218 Robshaw v. Smith (1878), 38 L.T.N.S. 423 (C.P.D.) ............................................ 225 Rodaro ......