Spence v Crawford

JurisdictionUK Non-devolved
JudgeLord Thankerton,Lord Macmillan,Lord Wright
Judgment Date18 May 1939
Judgment citation (vLex)[1939] UKHL J0518-1
Docket NumberNo. 5.
CourtHouse of Lords
Date18 May 1939
Spence
and
Crawford.

[1939] UKHL J0518-1

Lord Atkin

Lord Thankerton

Lord Russell of Killowen

Lord Macmillan

Lord Wright

House of Lords

After hearing Counsel as well on Friday the 10th, as on Monday the 13th, Tuesday the 14th, Thursday the 16th, Friday the 17th, Monday the 20th and Tuesday the 21st, days of February last, upon the Petition and Appeal of John Spence, residing at Drumlea House, Blairhill, Coatbridge, praying, That the matter of the Interlocutors set forth in the Schedule thereto, namely, an Interlocutor of the Lord Ordinary in Scotland (Lord Robertson), of the 16th of December 1937, and also an Interlocutor of the Lords of Session there, of the First Division, of the 6th of May 1938, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Interlocutors might be reversed, varied, or altered, or that the Petitioner might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case of John Lees Crawford, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Interlocutors complained of in the said Appeal, be, and the same are hereby, Recalled: And it is further Ordered, That the said Cause be, and the same is hereby, remitted back to the Court of Session in Scotland, with a Direction (a) to pronounce decree of reduction in terms of the first conclusion of the summons, and (b) to pronounce in lieu of the decree asked for in the second conclusion of the summons decree (1) ordaining the Respondent, within fourteen days from the date of decree, to execute and deliver to the Appellant a transfer in his favour of two thousand, nine hundred and twenty-five (2,925) fully paid shares of £1 each in Glencairn Metals, Limited, and authorising the Clerk of Court, in the event of the Respondent failing so to execute and deliver such transfer, to execute on behalf of the Respondent and deliver to the Appellant a transfer of the said shares, and (2) of consent ordaining the Respondent to pay to the Appellant the sum of one thousand, nine hundred and thirty-six pounds six shillings and ten pence (1,9361. 6s. 10d.) sterling, and (c) to find the Appellant entitled to the costs of the action in the Court of Session other than those awarded to the Respondent by the Interlocutor of the 20th of May 1937: And it is further Ordered, That the Respondent do pay, or cause to be paid, to the said Appellant the Costs incurred by him in respect of the said Appeal to this House, the amount thereof to be certified by the Clerk of the Parliaments: And it is also further Ordered, That unless the Costs, certified as aforesaid, shall be paid to the party entitled to the same within one calendar month from the date of the certificate thereof, the Court of Session in Scotland, or the Judge acting as Vacation Judge, shall issue such summary process or diligence for the recovery of such Costs as shall be lawful and necessary.

Lord Thankerton

My Lords,

1

The Appellant is the pursuer in this action, by which he seeks reduction of the contract constituted by the Respondent's offer dated the 18th August, 1931, and the Appellant's acceptance thereof dated the 27th August, 1931, on the ground that his acceptance was induced by false and fraudulent misrepresentations by the Respondent. On this main issue of fact the Appellant has failed in both Courts below, and the decree of absolvitor pronounced by the Lord Ordinary's interlocutor dated the 16th December, 1937, was adhered to in the First Division by interlocutor dated the 6th May, 1938, against both of which interlocutors the present Appeal is taken.

2

The offer and acceptance which constituted the contract under reduction are as follows:—

"Glencairn Works, Motherwell,

18 th August, 1931.

John Spence, Esq.,

'Drumlea,' Coatbridge.

Dear Sir,

I hereby offer you the sum of £2,250 in full satisfaction of your holding in the Glencairn Metals, Limited, and of any claims or interest which you may have therein, and that on the following terms and conditions:—

1. That the purchase price shall include 2,925 shares valued at £1,350, in said Company, and a loan of £900 granted by you to the Company.

2. That said purchase price shall not bear interest.

3. The sum of £250 shall be paid within 30 days from the acceptance of this offer and a further sum of £650 shall be paid within six months thereafter. The balance of said purchase price shall thereafter be paid within two years from the date of acceptance hereof.

4. When payments amounting to £900 have been paid by me to you, you will assign to me or my nominee the said loan of £900 granted by you to the Company.

5. That so soon as the overdraft due to the Bank of Scotland, Coatbridge, and for which you are joint obligant, is paid or you are relieved of your obligation granted to the Bank, and the securities belonging to you and held by the Bank in respect of said obligation are returned to you, that you will forthwith transfer the shares presently held by or belonging to you and amounting to 2,925 shares either to me or my nominee.

6. That I hereby bind myself to relieve you of your obligations to the Bank of Scotland in respect of the Company's overdraft, and undertake that the securities belonging to you and pledged with the said Bank shall be transferred or reconveyed to you within the said period of two years from the date of acceptance hereof.

7. That at the date of the acceptance of the offer you will resign your position as Director of the Company and at said date cease to have any further interest in the profits or losses of said Company or of any dividends which may be declared on said shares.

8. Each party shall pay his own expenses.

I shall be glad to have your acceptance.

Yours truly,

Adopted as Holograph,

John L. Crawford.

———

Drumlea, Coatbridge, 27th August, 1931.—I hereby accept the foregoing offer.

John Spence,

27 th August, 1931."

3

Glencairn Metals, Limited, is a private company formed in 1919 with a capital of £6,000 in £1 shares; 5,850 of those shares were issued, and at the date of the contract in August, 1931, the holdings were as follows: —the Appellant 2,825, the Respondent 2,825, and William Thomas Richardson 200, of which 100 were held by him as nominee of the Appellant and 100 as nominee of the Respondent. The directors were the Appellant, the Respondent and Richardson.

4

The Appellant's case is that he was induced to sell his shares and to sever his connection with the company by the Respondent's fraudulent misrepresentations; he does not challenge the adequacy of the consideration, but maintains that he would not have parted with his shares or his interest in the company but for these misrepresentations. The two particular misrepresentations on which the Appellant bases his case are (1) that in February, 1931, he was shown in the office of the company by Richardson, in the presence of the Respondent, a rough statement showing a loss of £900 for the year 1930, which was prepared by Richardson on the Respondent's instruction on falsified figures for the purpose of inducing the Appellant to part with his shares, and (2) that in May, 1931, the Appellant saw in the office of the auditors of the company the draft accounts and balance sheet of the company for the year 1930, which had been prepared by them from the information supplied to them on the Respondent's instructions which included a deliberate undervaluation of stock, and which showed a profit of £134; that the undervaluation of stock, which was made by a falsification of the stock tonnage, amounted to £2,186 and was made on the Respondent's instructions.

5

The Appellant also founds on certain gloomy statements and predictions about the prospects of the company made by the Respondent to him and his wife in December, 1930, and January, 1931. It is true, as the Lord Ordinary and the Lord President state, that these incidents are of no moment by themselves; but they were clearly proved, and they have a bearing on the credibility of the Respondent, who denies them, and they seem to destroy any significance in the fact that the proposal to sell his shares first came from the Appellant.

6

The crucial facts which the Appellant requires to establish are ( a) that the valuation of stock in the 1930 balance sheet was understated by about £2,186, ( b) that that undervaluation was arrived at by a deliberate falsification of the tonnage figures made by Richardson, and is not capable of an innocent explanation, ( c) that the rough statement, showing a loss of £900, was made by Richardson on falsified figures, and ( d) that these falsifications were made by Richardson on the instructions, or with the knowledge and consent, of the Respondent.

7

If the Appellant had proved these facts, it seems clear to me that most, if not all, of the learned Judges in the Inner House would have held that the evidence further established that the Appellant was shown the rough statement by Richardson in the presence of the Respondent, that the Respondent knew that the Appellant was relying on them, and that the Appellant was induced by them to enter into the contract with the Respondent. In my opinion that is clearly established, and, if so, there would remain only the question as to whether restitutio in integrum is possible in the circumstances; the Appellant has no alternative conclusion for damages. I may at once deal with the opinion expressed by the Lord Ordinary when he said, "I think it proper to add that even if I had reached an opposite conclusion on the question whether false representations were made by the defender I should have entertained grave doubt whether the representations founded...

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2 firm's commentaries
  • Court Of Appeal Summaries (August 15 ' 19, 2022)
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    • Mondaq Canada
    • 22 August 2022
    ...C.A.), Deschenes v. Lalonde, 2020 ONCA 304, Kingu v. Walmer Ventures Ltd. (1986), 10 B.C.L.R. (2d) 15 (C.A.), Spence v. Crawford, [1939] 3 All E.R. 271, Barclays Bank v. Metcalfe & Mansfield, 2011 ONSC 5008, York University v. Markicevic and Brown, 2016, ONSC 3718, 33 C.C.E.L. (4th) 26, Moo......
  • COURT OF APPEAL SUMMARIES (AUGUST 15, 2022 – AUGUST 19, 2022)
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    • 19 August 2022
    ...C.A.), Deschenes v. Lalonde, 2020 ONCA 304, Kingu v. Walmer Ventures Ltd. (1986), 10 B.C.L.R. (2d) 15 (C.A.), Spence v. Crawford, [1939] 3 All E.R. 271, Barclays Bank v. Metcalfe & Mansfield, 2011 ONSC 5008, York University v. Markicevic and Brown, 2016, ONSC 3718, 33 C.C.E.L. (4th) 26, Moo......
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    • Melbourne University Law Review Vol. 33 No. 1, April 2009
    • 1 April 2009
    ...Dillon (1993) 176 CLR 344, 348-9 (Mason CJ); see also at 367 (Brennan J), 383 (Toohey J), 387 (Gaudron J). See also Spence v Crawford [1939] 3 All ER 271, 288 9 (Lord Wright); Adam v Newbigging (1888) 13 App Cas 308; Burrows, The Law of Restitution (2nd ed, 2002), above n 6, 539; Edelman an......
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    • Singapore Academy of Law Annual Review No. 2010, December 2010
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    ...misrepresentation, the court would endeavour to act to prevent the unjust enrichment of the representee (see, eg, Spence v Crawford [1939] 3 All ER 271 (HL) where the House of Lords affirmed the need for counter-restitution by the representee as a general rule for the rescission of a contra......
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    • Irwin Books Archive Special Lectures 2002. Real Property Law: Conquering the Complexities Part II
    • 31 August 2003
    ...which can be equated to an error in substantialibus."* 2 Although it is entirely conceivable that the parties could be led into a 26 [1939] 3 All E.R. 271. 27 Ibid, at 288. And see Kupchak v. Dayson Holdings Ltd. (1965), 53 D.L.R. (2d) 482 (B.C.C.A.). 28 See G.H.L. Fridman, "Error in Substa......

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