Bank of Ireland v Smith and Others

• Jurisdiction: Ireland
• Court: High Court
• Judgment Date: 03 October 1966
• Docket Number: [1961. No. 546.]
• Date: 03 October 1966

Bank of Ireland v. Smith.

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND, Plaintiffs and WILLIAM ANDERSON SMITH and By Order, JAMES PATRICK HERDMAN JASON BORTHWICKand ANTHONY MARRECO

Defendants.

[1961. No. 546.]

Contract for sale of land - Mortgage suit - Court sale - Advertisement - Incorrect description of lands in advertisement - Error made by auctioneer - Whether auctioneer negligent - Whether representation or warranty - Whether damages can be given for innocent misrepresentation - Whether Court sale different from sale out of Court.

An advertisement of land for sale in Court in a mortgage suit erroneously stated that portion of the lands was sown with barley and undersown with permanent pasture. This statement was made honestly but mistakenly by the auctioneers who were the agents for the vendors, the second, third and fourth-named defendants, the parties having carriage of the sale.

Held by Kenny J. 1, that the statement in the advertisement was a representation which was incorrect, although made innocently and honestly;

2, That it would be against conscience that the vendor in a Court sale should not be bound by a representation made by his agent in connection with that sale;

3, That the purchaser was entitled to recover damages for breach of warranty by reason of the fact that the relevant portion of the lands was not in fact undersown.

Hedley Byrne & Co. Ltd. v. Heller and Partners Ltd. [1964] A.C. 465 discussed.Mahomed Kala Mea v. A. V. Harperink, (1908) 25 T.L.R. 180 approved.

Quaere whether the position in a Court sale differs from that in a sale outside Court.

Notice of Motion.

On or about the 7th June, 1945, William Anderson Smith mortgaged his lands of Blackhall Big, in the County of Meath, by way of equitable mortgage by deposit of title deeds to the plaintiffs (hereinafter called "the Bank"). Subsequently, on the 25th March, 1954, the lands were registered in the Land Registry on Folio 16216 for the County of Meath. The mortgage debt not having been cleared, the Bank brought proceedings against Mr. Smith in 1961 and on the 24th July, 1961, the Court declared that the principal monies secured by the mortgage were well charged and that £58,083 was due to the Bank and the Court made the usual order for sale. On or about the 26th November, 1962, approximately 149 acres, part of the lands, were sold for the sum of £15,000 and the Bank was permitted to retain this sum in part payment of their debt. On the 1st August, 1963, Mr. Smith entered into a deed of charge of the lands in favour of the defendants, James Patrick Herdman, Jason Borthwick and Anthony Marreco (hereinafter referred to as "the defendants") which was duly registered on the folio, to secure the sum of £20,000. The amount owing to the Bank was reduced by the sale of other securities held by the Bank to the sum of £7,486 for principal and £5,206 for interest, making a total sum due of £12,692. By Order of the High Court, dated the 5th April, 1964, the defendants were added as defendants and carriage of the proceedings was, with the consent of the Bank, transferred to them. At the date of the present application there was due to the defendants the sum of £21,762. The defendants arranged for the sale of the lands by auction. The lands were inspected by an employee of the auctioneers (Messrs. Morrissey & Sons) on the 19th, 23rd and 24th August, 1965, and an advertisement was inserted in the press on the 7th October, 1965, which contained,inter alia, the following:—

"The lands are prime quality . . . . . At present they are all under grass with the exception of approximately 40 acres of barley which is undersown with permanent pasture."This was in fact inaccurate and the lands were not so undersown. The lands were not sold at the auction on the 20th October, 1965, as the reserve price was not reached, but were subsequently sold for £34,500 to a Mr. Charles Cosgrave (hereinafter called "the purchaser"), the Court making an order, dated the 1st November, 1965, that his offer of that sum be accepted. After various proceedings, the purchaser finally obtained possession of the lands on the 14th March, 1966. He had inspected the lands amongst other times on the 6th March, 1966, and he then discovered that the 40 acres described as being undersown with permanent pasture had been ploughed up. Accordingly, on the 30th March, 1966, he applied to the Court for liberty to withdraw from the purchase and for the purchase money to be returned to him. Subsequently, on the 16th May, 1966, he applied for liberty to amend his application to a claim for compensation for damage done to the land by this ploughing, and this amendment was granted. The matter was adjourned for oral evidence, it being clear to the Court that such a dispute could not be resolved upon affidavit, and on the 17th June, 1966, the motion was brought before the Court. At the hearing Mr. Smith, at his own request (conveyed through his counsel), gave evidence. His evidence was to the effect that the lands had not been undersown. Consequently, when he reaped the barley crop in October, 1965, he ploughed the land again in pursuance of proper husbandry principles. The purchaser then asked for an adjournment as the case had been conducted up to that time on the basis that the lands had been undersown when they were sold to the purchaser and that this undersown pasture had been ploughed up by Mr. Smith. The hearing was adjourned to the 11th July, 1966, and the purchaser sought liberty to amend his notice of motion to claim compensation for misdescription of the lands in the advertisement, damages for breach of warranty and for negligence by the auctioneers who were the defendants' agents, and this amendment was granted. The purchaser finally formulated his claim under two alternative headings: —(a) that he was entitled to compensation for waste if the lands were ploughed when undersown, or (b) damages for misrepresentation, breach of warranty and negligence if they were not undersown.

In evidence the representative of the auctioneers stated that he obtained the information that the lands were undersown from a Mr. Howard, an employee of Mr. Smith. Mr. Howard was also stated to have told the auctioneers that Mr. Smith had ploughed the land in January, 1966. Mr. Smith in evidence stated that he had ploughed the lands between October and December, 1965. Mr. Howard was in poor health and was accordingly not fit to give evidence.

Cur. adv. vult.

Kenny J. :—

On the 7th June, 1945, the first-named defendant, William Anderson Smith, created an equitable mortgage of the lands of Blackhall Big, containing 323 acres, in favour of the plaintiffs by a deposit of the documents of title. On the 25th March, 1954, the lands were registered under the Registration of Title Acts on Folio 16216 for the County of Meath. In 1961 the plaintiffs brought proceedings against Mr. Smith for payment of the amount due on their mortgage and on the

24th July, 1961, this Court declared that the principal monies secured by the equitable mortgage were well charged and that £58,083 was due to them: the Court also ordered that the lands were to be sold if payment was not made within three months from the date of the Order. On the 26th November, 1962, part of the lands containing 149 acres were sold for £15,000 and the plaintiffs were allowed to retain this sum in part payment of the amount due to them.

On the 1st August, 1963, Mr. Smith executed a deed by which £20,000 was charged on the lands in favour of James Patrick Herdman, Jason Borthwick and Anthony Marreco (whom I shall call "the defendants") and this was registered on the Folio. The amount due to the plaintiffs was reduced by the sale of other securites which they held and on the 5th April, 1965, the defendants were added as defendants and carriage of all further proceedings was transferred to them. There is now £7,486 for principal and £5,206 for interest due to the plaintiffs and £21,762 to the defendants.

The defendants then arranged for a sale by auction of 171 acres (the lands then comprised in Folio 16216) and Messrs. Morrissey & Sons were appointed auctioneers for the sale. The Examiner fixed the reserve price and particulars and conditions of sale were prepared by Court Counsel. The lands were inspected on the 19th, 23rd and 24th August by Mr. Mulcahy, an employee of the auctioneers, and advertisements of the auction (which was to take place on the 20th October) were published in the three Dublin daily newspapers on the 7th October. These contained this passage:—

"This most attractive residential farm has a charming period residence framed by many...