Pearson (S.) & Son Ltd v Dublin Corporation

CourtHouse of Lords (Ireland)

Contract - Action of Deceit - Fraudulent Representations - Verification of Representations by Contractor - Principal responsible for Fraud of Agent - Public Authorities Protection Act, 1893 (56 & 57 Vict. c. 61), s. 1.

A contractor having sued the other party to the contract (a public authority) in an action of deceit for damages for fraudulent representations made by the agent of the public authority as to the nature of the works to be executed, one defence was that by a provision in the contract the plaintiff must verify all representations for himself and not rely on their accuracy. Another defence was that the Action was not brought in due time within the Public Authorities Protection Act, 1893:—

Held, that the contract, truly construed, contemplated honesty on both sides, and protected only against honest mistakes; and that the Public Authorities Protection Act, 1893, did not apply, the act complained of not being done in pursuance of a public duty within the meaning of the statute.

Decision of the Court of Appeal in Ireland, [1907] 2 I. R. 27, 82, reversed, and decision of the King's Bench Division (Ireland) restored upon the ground that there was a question of fact for the jury upon the allegation of fraud. The question of the liability of a principal for the fraud of his agent discussed.

THE Dublin Corporation having by their agents furnished the appellants with plans, drawings and specifications, the appellants contracted to execute certain sewage outfall works according to the plans, &c. In the plans, &c., representations were made as to the existence and position of a certain wall. In the contract (clauses 43, 46, 47, 48) it was stipulated that the contractor should satisfy himself as to the dimensions, levels and nature of all existing works and other things connected with the contract works; that the corporation did not hold itself responsible for the accuracy of the information as to the sections or foundations of existing walls and works; and that no charges for extra work or otherwise would be allowed in consequence of incorrect information or inaccuracies in the drawings or specifications. The appellants performed the contract, and brought an action of deceit against the corporation, claiming damages for false representations as to the position, dimensions and foundations of the wall, whereby the appellants were compelled to execute more costly works than would otherwise have been required. The plans, drawings and specifications were prepared by engineers employed by the corporation.

The evidence given at the trial before Palles C.B. is stated in the judgments in this House. Palles C.B. refused to leave any question to the jury, and entered judgment for the respondents on the ground that the contractors were bound by their contract to verify for themselves all the information given in the plans, &c.

The King's Bench Division (Wright, Boyd and Gibson JJ., Lord O'Brien C.J. dissenting) reversed the decision of Palles C.B., and entered judgment for the appellants on the ground that there was a question of fact for the jury upon the allegation of fraud.

The Court of Appeal (Sir Samuel Walker L.C., Fitzgibbon and Holmes L.JJ.) reversed that decision, and restored the decision of Palles C.B. Hence this appeal.

The corporation relied on another defence, viz., that the action had not been brought within six months next after the act complained of within the meaning of the Public Authorities Protection Act, 1893. This defence was overruled by Palles C.B. and the King's Bench Division on the ground that the action was not brought “for any act done in pursuance of any public duty or authority,” the cause of action being in respect of an alleged fraud arising out of a private contract. This decision was affirmed by the King's Bench Division and in this House. The Court of Appeal expressed no opinion on this point.

April 16, 17, 18. Campbell, K.C. (of the Irish Bar), Danckwerts, K.C., and E. A. Collins (of the Irish Bar), for the appellants.

C. A. O'Connor, K.C., Ronan, K.C., Ignatius J. O'Brien, K.C., and P. A. O'C. White (all of the Irish Bar), for the respondents.

The House took time for consideration.

May 30. LORD LOREBURN L.C. My Lords, this is an action for deceit brought by Messrs. Pearson & Son, contractors, against the Dublin Corporation. Inasmuch as I am about to propose that the case be remitted for a new trial, it is desirable that I should say no more than is necessary to explain my new.

The plaintiffs' case is that they were induced to enter into a Contract for the construction of certain sewage works by statements made by and on behalf of the defendants as to the existence to a depth of nine feet below ordnance datum of an old wall. Undoubtedly evidence was adduced at the trial from which the jury might, if they thought right, conclude that the plaintiffs were so induced by statements made on behalf of the defendants. Also, there was evidence for the jury that those statements were made either with a knowledge of their falsity, or (which is the same thing) with a reckless indifference whether they were true or false, on the part of the engineers employed by the defendants to make the plans which were submitted to plaintiffs as the basis of the tender. And had the case rested there I gather that the Chief Baron would have left the case to the jury, and that the learned judges who subsequently had this litigation before them would have approved this course.

But another feature of the case was considered fatal to the plaintiffs' claim. The contract contained clauses, which I need not cite at length, to the effect that the contractors must not rely on any representation made in plans or elsewhere, but must ascertain and judge of the facts for themselves. And, therefore, the Chief Baron withdrew the case from the jury. As I understand it, the view he held, in substance confirmed by the Court of Appeal, was that the plaintiffs, so forewarned, had no right to rely on any representation, and could not be heard to say they were induced by statements on which by contract they were not to rely. Or, at all events, it was said that the defendants, being themselves innocent, are protected by such clauses against the consequence of contractors acting on false statements made by defendants' agents, however fraudulent those agents might be.

Now it seems clear that no one can escape liability for his own fraudulent statements by inserting in a contract a clause that the other party shall not rely upon them. I will not say that a man himself innocent may not under any circumstances, however peculiar, guard himself by apt and express clauses from liability for the fraud of his own agents. It suffices to say that in my opinion the clauses before us do not admit of such a construction. They contemplate honesty on both sides and protect only against honest mistakes. The principal and the agent are one, and it does not signify which of them made the incriminated statement or which of them possessed the guilty knowledge.

It is not necessary to say anything as to the Public Authorities Protection Act, for the King's Bench Division held that it did not apply to this case, and I am entirely of the same opinion.

I respectfully recommend to your Lordships that this case be sent for a new trial, and that the respondents pay the costs of this appeal and the costs in the Court of Appeal, the costs of the first trial to abide the event.

EARL OF HALSBURY. My Lords, I concur in thinking that in this case there must be a new trial, and for that reason I wish to say as little as possible on the merits of the case. The Chief Baron refused to leave the case to the jury upon grounds to be presently examined, but in the course of what I have to say I wish to point out at once that all I wish to affirm is that there was evidence produced by the plaintiff which he had a right to have submitted to the jury. I do not assume that the jury would have found that fraud had been committed by anyone. Still less do I propose myself to find fraud proved as a fact, but simply that it was a question which ought to have been submitted to the jury. The sole question here appears to me to be that question.

It was an ordinary action for fraud causing damage to the plaintiffs. Tenders were invited for a contract to execute certain work, and certain plans and specifications were held out to intending contractors as what I will at present call notices of what the work was intended to be. A contract was ultimately concluded upon the terms thus held out, and I may say at once that, apart from the question of fraud, there was nothing proved which could have called for an answer from the defendants. It is not necessary to go far in reciting the questions of fact.

The Chief Baron pointed out with great clearness how the question of fact arises, and it turns upon the existence or nonexistence of a certain wall. It is not denied that the wall was represented on the plan as going nine feet below the datum line, and the Chief Baron himself states that this statement was acted upon by the contractors so as to induce them to send in the tender at a less sum than they would otherwise have done for the execution of that contract. It is better, perhaps, to quote the Chief Baron's own words. His Lordship says: “In the result, then (and, as I have said, I have arrived at the conclusion with regret), I think that there was a statement contained in these plans...

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