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EUROPEAN AMERICAN BANKING CORP
 2 ALL E.R. 266
COURT OF APPEAL, CIVIL DIVISION
9 DECEMBER 1983
BEFORE THEIR LORDSHIPS
ACKNER AND OLIVER LJJ
COMPANY; Other Company: TORTS; Negligence
Company – Signature – Agent, officer or employee – Signature of duly authorised agent of company – Signature of officer or employee of company acting in the course of his duties – Whether signature of company.
Misrepresentation – Fraudulent misrepresentation – Company – Signature of company – Fraudulent misrepresentation made in letter signed by assistant secretary of company – Whether misrepresentation ‘signed’ by company – Statute of Frauds Amendment Act 1828, s 6.
Limitation of action – When time begins to run – Actions in tort – Accrual of cause of action – Negligent misrepresentation – Plaintiff induced to lend money by defendant’s negligent misrepresentation – Security for loan proving inadequate – Whether plaintiff suffering damage and cause of action accruing when misrepresentation made or when security becoming inadequate – Limitation Act 1980, s 2.
Limitation of action – Concealment of right of action by fraud – Continued concealment – Defendant under fiduciary duty to inform plaintiff if security for loan becoming insufficient – Whether defendant’s continuing failure to inform plaintiff a continuing breach of defendant’s fiduciary duty – Whether continuing breach of duty preventing time from running – Limitation Act 1980, s 32(1)(b).
The defendant, a New York banking corporation, invited the plaintiff, an English bank, to participate in a syndicate loan to two companies in a Panamanian shipping group, and under cover of a letter signed by the defendant’s assistant secretary supplied the plaintiff with information about the loans and a study of the shipping group. The plaintiff later made a loan of $US500,000 to each company. As a result of the deteriorating shipping market the shipping group got into financial difficulties and the two companies defaulted on the loans, leaving the sum of $US880,000 owing to the plaintiff. The plaintiff brought an action against the defendant claiming damages alleging (i) deceit in fraudulently misrepresenting that the intended loans were ‘attractive financing of two companies in a sound and profitable group’,(ii) misrepresentation under s 2(1) of the Misrepresentation Act 1967 and (iii) negligent misrepresentation in connection with the information provided to the plaintiff. The plaintiff obtained leave under RSC Ord 11, r 1 to serve the writ on the defendant outside the jurisdiction. The defendant applied to have the leave set aside, on the grounds that (i) the claim in deceit and under the 1967 Act were precluded by s 6a of the Statute of Frauds Amendment Act 1828 because the signature of the defendant’s assistant secretary could not in law be the defendant company’s signature because he could not have had the requisite authority to sign any representation, which accordingly had not, for the purposes of s 6, been ‘signed by the Party to be charged’ with making it, and (ii) the claim of negligent misrepresentation was barred by s 2b of the Limitation Act 1980 because the plaintiff’s claim that it would not have entered into the contract if it had known that the defendant’s representations were inaccurate implied that it had suffered damage when it had entered into the contract, which was when any cause of action arose and which was more than six years before the writ was issued. The defendant further contended that the plaintiff could not rely on s 32(1)(b)c of the 1980 Act to prevent time running on the ground that relevant matters were deliberately concealed, because any duty of disclosure related to the defendant’s fraudulent misrepresentations, which was a cause of action barred by s 6 of 1828 Act. The judge upheld the defendant’s contentions and set aside the leave to serve the writ on the defendant outside the jurisdiction, on the ground that the plaintiff was precluded by law from bringing its action. The plaintiff appealed.
(1) For the purposes of s 6 of the 1828 Act a representation signed on behalf of a limited company by a duly authorised agent acting within the scope of his authority or by an officer or employee of the company acting in the course of his duties in the business of the company constituted a representation made by the company and signed by it (see p 230 f g and p 234 e, post); Swift v Jewsbury (1874) LR 9 QB 301 and Hirst v West Riding Union Banking Co Ltd [1900–3] All ER Rep 782 explained.
(2) Since it was not inevitable that the plaintiff had suffered damage at the time it entered into the contract because it was possible that the chose in action which it acquired in return for the loan might at that time have equalled or exceeded the money lent, it could not be assumed that the plaintiff’s cause of action arose when it entered into the contract. The plaintiff’s claim based on negligent misrepresentation was therefore not necessarily barred by s 2 of the 1980 Act. In any event, the plaintiff’s loan was part of a syndicate loan organised by the defendant, which was under a fiduciary duty to inform all participants in the syndicate, including the plaintiff, if at any time it acquired knowledge that the security for the loan was insufficient. The defendant’s continued failure to so inform members of the syndicate would constitute a continuing breach of the defendant’s fiduciary duty which would, for the purposes of s 32(1)(b) of the 1980 Act, prevent time from running until the plaintiff discovered the concealment or could with reasonable diligence have discovered it (see p 234 j to p 235 a and p 236 j, post); Forster v Outred & Co (a firm)  2 All ER 753 distinguished.
(3) The judge had been wrong to set aside the leave given to the plaintiff to serve the writ on the defendant outside the jurisdiction, since the plaintiff was not precluded by law from bringing its action and a trial would be necessary to determine the issues (a) whether the defendant company’s assistant secretary had acted within the scope of his authority when signing the letter to the plaintiff,(b) whether, if at all, the plaintiff’s cause of action had accrued when the plaintiff advanced the loan and (c) whether, and if so when, the defendant was in breach of its fiduciary duty to the plaintiff to inform it that the security for the syndicate loan was or had become inadequate. Accordingly, the plaintiff’s appeal would be allowed (see p 230 j, p 234 g h and p 237 a b, post).
For a company’s liability in tort for its agent’s acts, see 7 Halsbury’s Laws (4th edn) para 721, and for cases on the subject, see 9 Digest (Reissue) 696–698, 4137–4145.
For time limits for actions founded on tort, see 28 Halsbury’s Laws (4th edn) paras 679, 690, and for cases on the subject, see 32 Digest (Reissue) 709–715, 5174–5200.
For the Statute of Frauds Amendment Act 1828, s 6, see 7 Halsbury’s Statutes (3rd edn) 7.
For the Limitation Act 1980, ss 2, 32, see 50(1) ibid 1255, 1285.
Cases referred to in judgment
Baker v Ollard & Bentley (a firm) (1982) 126 SJ 593, CA.
Banbury v Bank of Montreal  AC 626,[1918–19] All ER Rep 1, HL; affg  1 KB 409, CA.
Barwick v English Joint Stock Bank (1867) LR 2 Exch 259,[1861–73] All ER Rep
194, Ex Ch.
Cow v Casey  1 All ER 197, 1 KB 481, CA.
Diamond v Bank of London and Montreal Ltd  1 All ER 561, QB 333, 2 WLR 228, CA.
Forster v Outred & Co (a firm)  2 All ER 753, 1 WLR 86, CA.
Hirst v West Riding Union Banking Co Ltd  2 KB 561,[1900–3] All ER Rep 782, 70 LJKB 828, CA.
National Enterprises Ltd v Racal Communications Ltd  3 All ER 1010, Ch 397, 2 WLR 733.
Swift v Jewsbury (1874) LR 9 QB 301, Ex Ch.
Williams v Mason (1873) 28 LT 232.
Cases also cited
Dove v Banhams Patent Locks Ltd  2 All ER 833, 1 WLR 1436.
Howell v Young (1826) 5 B & C 259,[1824–34] All ER Rep 377.
Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd  AC 705,[1914–15] All ER Rep 280, HL.
Pirelli General Cable Works Ltd v Oscar Faber & Partners (a firm)  1 All ER 65, 2 AC 1, HL.
The plaintiff, UBAF Ltd, appealed against the order made by Leggatt J in chambers on 14 April 1983 whereby the judge set aside, pursuant to RSC Ord 12, r 8,(1) an order of Parker J dated 18 December 1981 giving leave to the plaintiff to issue and serve out of the jurisdiction a concurrent writ on the defendant, European American Banking Corp, a corporation organised and incorporated under the laws of the State of New York, USA, and (2) an order of Staughton J dated 8 October 1982 giving leave to the plaintiff to issue and serve a second concurrent writ on the defendant out of the jurisdiction. The grounds of Leggatt J’s decision were that the plaintiff had not shown a good arguable case against the defendant justifying service out of the jurisdiciton under RSC Ord 11, r 1 because the plaintiff’s action against the defendant in which it claimed damages for fraudulent misrepresentation and/or misrepresentation under s 2(1) of the Misrepresentation Act 1967 was by virtue of s 6 of the Statute of Frauds Amendment Act 1828 not maintainable and was time barred by s 2 of the Limitation Act 1980. The facts are set out in the judgment of the court.
Kenneth Rokison QC and Timothy Charlton for the plaintiff.
Leonard Hoffmann QC and Richard Siberry for the defendant.
Cur adv vult
9 December 1983. The following judgment was delivered.
ACKNER LJ. The plaintiff, who is the appellant, is an English banking corporation, and the defendant, the respondent, is a New York banking corporation. The defendant has had a history of dealing with the Colocotronis group of shipping companies. Apparently, in September 1974, the defendant approached the plaintiff and requested it to take a participation in two loans which the defendant was intending to make to two Panamanian corporations in the Colocotronis group, namely Marcresta Armadora SA (Marcresta) and Astrocamino Armadora SA (Astrocamino), which corporations owned respectively the mt Illustrious Colocotronis and the mt Pacific Colocotronis.
Under cover of a letter dated 12 September 1974 and signed by Francios Macheras as assistant secretary of the defendant, there was sent to the plaintiff (a) two ‘term’ sheets prepared by the defendant to give information to prospective participants about the loans to Macresta and Astrocamino,(b) a study of the Colocotronis group prepared by the defendant and dated April 1974,(c) a copy of a letter dated 20 August 1974 from H Clarkson & Co Ltd to the defendant giving valuations of the vessels Pacific Colocotronis and Illustrious Colocotronis.
In its points of claim the plaintiff alleges that, in so doing, the defendant represented to it that the intended loans to Marcresta and Astronocamino were ‘attractive financing of two companies in a sound and profitable group’. In support of this allegation the plaintiff relies, inter alia, on the following matters. First, that the purpose of the loans to the two companies was the refinancing of their tankers, to repay the defendant’s existing financing loan and to make down payments on the building of certain tankers; second, that the collateral for the loan to each of the companies would be a first preferred mortgage on their respective vessels, which had an appraised value as at 20 August 1974 of $US18m and $US20m; and that, by way of further collateral for the loans, there would be assignments of charter hire due under a transportation agreement with Petrofina SA and that the cash flow to be expected from the vessels was more than enough in each case to meet total debt service requirements of the two companies under the loans. The plaintiff also relied on representations contained in the Colocotronis group study and in the very letter of 12 September to which reference has already been made.
In reliance on these representations the plaintiff lent $US500,000 to each company.
In detailed particulars in its pleadings the plaintiff contends that a number of the representations referred to, and others, are untrue, in particular as to the purposes of the loan, the value of the vessels, the transportation agreement and the financial position of the Colocotronis group.
Following the deterioration in the shipping market in 1975–76, the Colocotronis group got into difficulties, the two companies defaulted and $US880,000 remains outstanding. The plaintiff’s claim is in the sum of $US900,000 plus interest. It pleads three separate causes of action: (1) deceit, the representations being alleged to be untrue to the knowledge of the defendant,(2) misrepresentations under s 2(1) of the Misrepresentation Act 1967, and (3) negligence in and about the presentation to the plaintiff of the transactions in which it was inviting the plaintiff to participate.
It is common ground that the representations were made in England and, accordingly, there was no objection raised to the jurisdiction of the English courts, nor was it contended that England was not the appropriate forum. The defendant, however, contended that the plaintiff does not have a good arguable case for two reasons. (1) As regards the claim in deceit, it says first that any such claim is precluded by the provisions of s 6 of the Statute of Frauds Amendment Act 1828 (Lord Tenterden’s Act), and, second, that that equally rules out any claim under s 2(1) of the Misrepresentation Act 1967. (2) As regards any claim in negligence, it says that it is statute-barred, the writ having been issued more than six years after the cause of action (if any) arose.
On this basis it sought and obtained from Leggatt J the appropriate orders to set aside the service out of the jurisdiction which had been permitted by Staughton J on 8 October 1981.
The appeal thus raises only two issues, it being well established that the court will not seek at this stage to decide disputed questions of fact, but that in relation to issues of law it will, however, refuse leave, even though the point raised may be of some difficulty, if satisfied that the plaintiff is bound to fail (see Cow v Casey  1 All ER 197, 1 KB 481, a case concerning RSC Ord 14, but where the principle is essentially the same).
Section 6 provides:
‘No Action shall be brought whereby to charge any Person upon or by reason of any Representation or Assurance made or given concerning or relating to the Character, Conduct, Credit, Ability, Trade, or Dealings of any other Person, to the Intent or Purpose that such other Person may obtain Credit, Money, or Goods upon, unless such Representation or Assurance be made in Writing, signed by the Party to be charged therewith.’
The following propositions are common ground.
(1) The section applies to fraudulent misrepresentations only (see Banbury v Bank of Montreal  AC 626,[1918–19] All ER Rep 1). Accordingly, the section has no application to the alleged innocent but negligent misrepresentations; hence the second issue referred to hereafter. However, the representations alleged to give rise to liability under s 2(1) of the Misrepresentation Act 1967 are also within Lord Tenterden’s Act, because the person making the representation is liable only if he ‘would be liable to damages in respect thereof had the misrepresentation been made fraudulently’.
(2) The word ‘person’ in the section includes a corporation (see Banbury v Bank of Montreal, approving Hirst v West Riding Union Banking Co Ltd  2 KB 561,[1900–3] All ER Rep 782).
(3) In order to be within the section the representations on which the action is based must relate in some way to the credit or creditworthiness of a person (see Diamond v Bank of London and Montreal Ltd  1 All ER 561, QB 333).
The two matters on which the parties are at issue, however, are (a) whether the signature of Mr Macheras could, as a matter of law, constitute the signature of the party to be charged within the meaning of the section, and (b) whether, even assuming against the plaintiff that it could not, the representations relied on in this case were in fact representations as to the credit or creditworthiness of a person so as to entitle the defendant to rely on the section.
The judge considered that the first of these two issues was concluded against the plaintiff by authorities which were binding on him and which counsel for the defendant submits are equally binding on this court. Essentially, the question is whether Mr Macheras, the defendant’s assistant secretary, who signed the alleged misrepresentations, either had or could have had the requisite authority from the defendant which would even render it arguable that his signature was the signature of ‘the Party to be charged’ within the meaning of the section.
The judge seems to have started from the assumption that the only case capable of being raised from the affidavits was that the document containing the representations was one which was signed by Mr Macheras in the course of his ordinary duties as an assistant secretary of the defendant and that the document was one of a type which it was within Mr Macheras’s general authority to sign. Making that assumption, he considered that he was bound by authority, albeit, as he put it, only ‘indirectly’ bound, to hold that the defendant was entitled to the protection of the 1828 Act. It does not appear that, in reaching this conclusion, he was accepting a proposition that a corporation as such cannot sign a document and is, therefore, always protected by the section, no matter who signs a representation on its behalf. Indeed, it is difficult to see how that proposition could reasonably be sustained, for a corporation cannot sign a document save by some human agency and, once it is established, as it is on the authorities referred to above, that the section applies to a corporation, the signature of some person must be sufficient for the purposes of the Act. Otherwise, one is compelled to the absurd conclusion that, although a company being a ‘person’ is entitled to claim the protection of the Act, it is never capable of losing that protection because, as a legal abstraction, it cannot literally and physically ‘sign’ anything. Counsel for the defendant did not feel able to embrace so unattractive a conclusion. He did, however, contend both before Leggatt J and before us that, in order to cause a corporate person to lose protection of the section, the signature must be that of a person who is the corporation’s ‘alter ego’, a description which, with respect, we find largely meaningless, save as an indication of some very wide but undefined authority, and he ultimately felt compelled to accept (and we think rightly) that, at least if Mr Macheras had been specifically authorised by a resolution of the board to sign the representations, then the defendant would have been bound. But we do not know whether or not the board did so resolve. The judge appears to have assumed that the fact that Mr Macheras was and signed as assistant secretary of the company necessarily indicated no specific authority, but merely the authority which might normally have been thought to be vested in an assistant secretary, which he equated with that of a branch manager of a bank. But we are not here concerned with an ostensible authority, but with an actual authority, and we do not know any detail concerning the terms of Mr Macheras’s actual authority in relation to this transaction. Nor do we know with any precision what is involved in the defendant company in the status ‘assistant secretary’. Thus, the short answer to the first question is that evidence is required to determine this issue and, accordingly, the matter must be allowed to proceed.
There is, however, a longer answer which, despite the temptation, we do not think we should avoid giving. It involves dealing with the important question raised by counsel for the plaintiff in the court below and decidedly adversely to the plaintiff, namely whether a representation signed on behalf of a limited company by a properly authorised officer or employee acting in the course of his duties in the business of the company constitutes the company’s signature for the purposes of s 6. Since an affirmative answer makes to us such obvious commercial sense, we would view with respectful surprise any authority which obliged us to take the contrary view. Leggatt J, however, concluded that Hirst v West Riding Union Banking Co Ltd  2 KB 561,[1900–3] All ER Rep 782 presented an insuperable obstacle to his accepting this proposition. With respect, we do not share that view.
The headnote to that case reads as follows ( 2 KB 561):
‘The word “person” in the 6th section of 9 Geo. 4, c. 14 [ie the 1828 Act], includes a corporation; and an incorporated company is, under the terms of that section, not liable for a false representation of the kind contemplated by the section, made in a letter written and signed by their agent.’
The action was against the defendants, a banking company incorporated under the Companies Acts, to recover damages for a statement alleged to be a misrepresentation, made by the manager of one of their branches, within the scope of his employment and in their interests, with regard to the credit and position of a certain trading company, who were customers of the defendants, acting on the faith of which misrepresentation the plaintiff had incurred loss. The representation complained of was contained in letter signed by the defendants’ before-mentioned manager, which was written by him in answer to a letter of inquiry addressed to the defendants by the plaintiff’s bankers on behalf of the plaintiff. The jury found a verdict for the plaintiff and judgment was entered accordingly.
The issue which was raised by this appeal, as appears from the reported arguments, was whether the 1828 Act extended to affording protection to a corporation and in particular whether Swift v Jewsbury (1874) LR 9 QB 301, which related not to a corporation but to a copartnership, decided this issue. The plaintiff (the respondent) took the point that the protection of the Act was not available to the defendants since a company was not a ‘person’ within s 6, basing his argument, so it appears, on the proposition that, since a corporation could not personally sign a document, it could not, as a matter of construction, be the sort of ‘person’ contemplated by the section.
In rejecting this argument, A L Smith MR and Vaughan Williams LJ were content simply to say that the provisions of the section applied to an incorporated company and that the defendants’ application succeeded. Stirling LJ, however, in delivering a concurring judgment, gave fuller reasons for his decision. The question whether the word ‘person’ in the 1828 Act included a corporation must, he said, be judged by considering the context and the object of the enactment. The meaning of s 6 had, he observed, been very clearly stated by Bramwell B in Swift v Jewsbury LR 9 QB 301 at 316 when he said:
‘In my opinion the effect of the statute is this, that a man should not be liable for a fraudulent representation as to another person’s means unless he puts it down in writing, and acknowledges his responsibility for it by his own signature. He is neither to have the words proved by word of mouth, nor the authority given to an agent for whose act it is sought to make him responsible proved by word of mouth.’
Stirling LJ continued ( 2 KB 560 at 563):
‘It is now argued that the protection given by this enactment must be taken to be limited to “persons” who are capable of signing a representation, and therefore a corporation is not within it. That argument is based on the context: but I do not think that the true construction of the enactment supports it. It could not be argued that a human being, who by reason of some disease was incapacitated from signing a document, ought to be deprived of the protection of the Act, which he might need more than other persons. Nor do I think that there is anything in the object of the Act to exclude a corporation from the benefit of it.’
He concluded that a corporation under the Companies Acts was equally entitled to the protection of the 1828 Act.
Hirst’s case thus did not purport to decide that a company cannot sign by a properly authorised officer or employee acting in the course of his duties in the business of the corporation, although it does seem to have been assumed both by counsel and by the court that that was the case. This is odd, since Lord Coleridge CJ had said in Swift’s case LR 9 QB 301 at 312–313:
‘… I apprehend that there can be no doubt that a different set of principles altogether arises where an agent of a joint stock company, in conducting the business of the joint stock company, does something of which the joint stock company take advantage, and by which they profit, or by which they may profit, and it turns out that the act which is so done by their agent is a fraudulent act. Justice points out, and authority supports justice in maintaining, that where a corporation takes advantage of the fraud of their agent, they cannot afterwards repudiate the agency and say that the act which has been done by the agent is not an act for which they are liable. If parliament should so enact, well and good, but parliament not having so enacted, the Courts have held what seems to me, if I may venture to say so, exceeding good sense as well as justice, and which in no manner conflicts with the judgment I am pronouncing to-day.’
Leggatt J, basing himself on the report of Hirst’s case referred to above, concluded that Mr Tindal Atkinson KC, for the plaintiff, had accepted as unarguable the proposition that a signature by the bank manager in that case to the representation could not be considered to be the signature of the banking company, and that he had, accordingly, confined himself to the argument that the word ‘person’ in s 6 of the 1882 Act meant a natural person and did not include an artificial person such as a corporation. Counsel for the defendant has, however, drawn our attention to the report in the Law Journal (70 LJKB 828 at 829), where Mr Tindal Atkinson’s argument is more fully reported. He contended:
‘Moreover, the present case is outside the scope of section 6 of the Act of 1828. Here the defendants’ manager, acting within the scope of his authority, has made a fraudulent representation in their interest, and they have taken benefit of it.’
He was thus, it seems, seeking to pray in aid, as demonstrating that the signature of the bank manager bound the defendants, the principle established by Barwick v English Joint Stock Bank (1867) LR 2 Exch 259,[1861–73] All ER Rep 194 and referred to by Lord Coleridge CJ in the passage above quoted. The application of that principle to the facts of Hirst’s case was thus, by necessary implication, rejected by the court in arriving at the conclusion at which it did arrive, but it does not appear to us that the point urged by counsel for the plaintiff was ever taken by Mr Tindal Atkinson, and this accounts for the absence of any reference to it in the judgment. Hirst’s case does not, therefore, involve the insuperable difficulty that the judge thought it posed, for counsel’s concession or his omission to argue a point does not constitute an authority. If the court does not address its mind to the point, or pronounce on it, it cannot constitute a binding precedent (see National Enterprises Ltd v Racal Communications Ltd  3 All ER 1010 at 1014, Ch 397 at 406). It is, perhaps, worth noting that, in the more recent case of Banbury v Bank of Montreal  1 KB 409, when the appeal was heard in the Court of Appeal, Scrutton LJ did not cite Hirst’s case as to the nature of the signature of the corporation required to satisfy the Act. He said (at 431):
‘… it has been held in Swift v. Jewsbury that where the defendant is a company, as a banking company, the signature of an agent such as a branch manager will not suffice; there must be the seal of the company.’
It is, of course, common ground that Swift’s case decided no such thing. Indeed, the seal itself is not a signature. In addition to the seal there are, of course, accompanying signatures, but their function is, generally speaking, merely to authenticate the seal.
Of course, it does not follow that, because it was assumed by the court and counsel that Swift’s case had conclusively established that the signature of a duly authorised agent does not constitute the corporation’s signature for the purpose of the section, that assumption may not have been right. It is, therefore, necessary to examine Swift’s case to see exactly what it did decide. The first point to note is that, although the facts were very similar to Hirst’s case, it did not concern a corporation at all but a partnership, which does not, as such, have any separate legal personality apart from the partners themselves. The partners were carrying on a banking business pursuant to a statutory authority which relaxed the banking monopoly of the Bank of England in relation to partnerships of more than six persons so long as they did not carry on business within 65 miles of London and which provided convenient means by which such partnerships could sue and be sued, but there was nothing otherwise extraordinary about the partnership which invested it with any legal personality apart from its constituent partners. Thus, the case was concerned with the simple question of the liability of an individual, or rather a number of individuals, for a false representation contained in a document which none of them had signed. It had already been decided in Williams v Mason (1873) 28 LT 232 that a non-signing partner, even if he had ratified the act of the signing partner, was entitled to the protection afforded by s 6, because the statute in express terms requires the signature of the party to be charged and no one else, and the signature of a copartner is not his partner’s signature. The signature of an agent who is not also a partner would, therefore, not be an a fortiori case. Moreover, quite apart from the pure question of construction, there is good reason for such a provision in the case of an individual, aptly summarised by Lord Coleridge CJ in this passage from his judgment (LR 9 QB 301 at 311–312):
‘It may be remarked further, that there is very good ground antecedently for the observation, because the subject of s. 6 is the charging of a person for an act of fraud, and it may well be—and, without diving very deep for motives, one cannot help seeing that there was an excellent motive for that enactment—that a person should not be proved fraudulent without the matter which is the evidence of his fraud resting on his own signature to a document to be produced,—that it should not rest, as before that time it might have rested, on the conflict of evidence as to oral communications. If you mean to charge a person with a fraudulent act, whereby you have been damnified in respect of the conduct of another, you shall not charge that person unless you can produce his own handwriting for the statement of fraud by which you say you have been misled.’
None of this, however, appears in the least appropriate to the case of a corporation which is incapable of signing any document at all save by some human agency, and not only does the case not purport to decide the question of corporate responsibility but, in fact, it goes on expressly, in the passage already quoted, to explain that the basis of the corporate responsibility of a joint stock company rests on a different set of principles altogether. In addition to that passage, there is a further passage in the judgment of Bramwell B, where he recognises that, even in the case of a partnership, different considerations may apply where the act of the agent relied on is one necessary for the carrying on of business. He observed (at 316):
‘It seems to me that Mr. Day’s argument [for the plaintiff] is, that there must be a sort of exception put in the statute to meet the necessity of the case. If this were a necessary thing for the purpose of the banking company carrying on their business, it might be otherwise …’
It seems to us clear from the judgments that the court in Swift’s case did not have in mind at all the question of the application of the section to a corporate entity which, indeed, they seem to have been prepared to assume, counsel having submitted that it was covered by Barwick’s case. What they were dealing with and rejecting was his submission that the same principle applied by analogy to a partnership which he submitted was a ‘quasi-corporation’(at 309).
In our judgment, therefore, Swift’s case does not, in fact, provide any support for the assumption that the court was prepared to make in Hirst’s case.
In any event, even if 80 years ago or so it was assumed that the signature of a duly authorised officer or employee, acting in the course of his duties in the business of the company, was not the signature of the company, then it must also be recalled that it was not until Barwick’s case in 1867 that it was finally decided that the doctrine of vicarious liability extended to the fraudulent act of the agent of the company committed in the course of its business and for its benefit. The law relative to corporate activities has developed considerably over the years and cannot be taken to have stood still all this time. Parliament is continually placing the obligation on corporate bodies to serve notices in writing of one kind or another and, in the case of local authorities, has expressly provided for such documents to be signed by the proper officer (see s 234(2) of the Local Government Act 1972). Since a company, not being a physical entity, can only act in relation to the outside world by its agents, no one nowadays would question that the signature of the duly authorised agent of the company, acting in the course of the company’s business, is the signature of the company. Take as a simple, yet frequent, example the statutory notice of termination of a tenancy given by a company landlord under s 25 of the Landlord and Tenant Act 1954. While there may always be questions as to the authority of the agent who purported to sign the notice, given that he had the company’s authority to give such notices and was doing so in the course of his duties in the business of the company, no one would nowadays question that his signature is to be taken as the signature of the company.
We do not, therefore, find any impediment in authority against deciding, and we think that it should now be decided, that the signature on behalf of a company of its duly authorised agent acting within the scope of his authority is, for the purpose of s 6 of the 1828 Act, the signature of the company.
Having concluded that the 1828 Act does not preclude the plaintiff from pursuing its claims in fraud, there is no need for us to consider the subsidiary points raised by the plaintiff in answer to the defence raised by the Act, namely the intent or purposes for which the representations were made or whether they or some of them did or did not relate to the creditworthiness of the borrower.
Section 2 provides: ‘An action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.’
The defendant successfully contended before Leggatt J that the accrual of the cause of action occurred when the plaintiff parted with its money and acquired instead claims for repayment of money lent against borrowers, whose ability to repay was, contrary to the alleged representations, a matter of considerable doubt. Again, there is a short answer to this question: it depends on the facts as found at the trial. The plaintiff does not assert that it is entitled to damages to be measured by the difference in the value of the chose in action which it acquired by making this loan as compared with the value it would have had if the representations had been accurate, as in a claim for breach of warranty. Its case is that, if it had known the respects in which the representations were inaccurate, it would not have entered into the contract. Accordingly, it is argued by the defendant that, at the very moment of entering into that contract, the plaintiff must have suffered damage. In our judgment, this bare proposition is not self-evident. The plaintiff is suing in tort, the tort of negligence. To establish a cause of action it must establish not only a breach of duty, but that that breach of duty occasioned it damage. This is axiomatic. It is possible, although it may be improbable, that, at the date when the plaintiff advanced its money, the value of the chose in action which it then acquired was, in fact, not less than the sum which the plaintiff lent, or indeed even exceeded it.
This must depend on the evidence. The mere fact that the innocent but negligent misrepresentations caused the plaintiff to enter into a contract which it otherwise would not have entered into does not inevitably mean that it had suffered damage by merely entering into the contract. To take and somewhat modify an example canvassed during the course of argument. A tells B that he wishes to sell his vintage Bentley which he innocently but negligently represents is a blue label long chassis. It is, in fact, a red label short chassis. If A had known, he would not have agreed to buy the Bentley, because he only collects blue label long chassis Bentleys. Assume, however, that the red label short chassis Bentleys were at all material times significantly the more valuable cars so that he was able to resell at a profit. He has then no cause of action.
Our attention was directed to the recent case of Forster v Outred & Co (a firm)  2 All ER 753, 1 WLR 86, a decision of this court. The facts are important and we take them from the headnote ( 1 WLR 86). On 8 February 1973 the plaintiff executed a mortgage in the presence of the defendants, who were acting as her solicitors. The mortgage charged her freehold property as security for a loan made by a company to her son, who subsequently went bankrupt. Following a demand under the mortgage on 21 January 1975 the plaintiff repaid the loan. By a specially indorsed writ dated 7 January 1977 the plaintiff claimed damages for negligence and/or breach of contract by the defendants in failing properly to advise her when the mortgage was executed. In February 1980 the defendants applied to dismiss the action for want of prosecution, and on 25 March 1980 the plaintiff’s solicitors, who attributed the delay to pressure of other work, issued another writ. The issue was whether or not the limitation period in relation to the plaintiff’s cause of action in negligence had expired by the date of the defendants’ summons to dismiss the action for want of prosecution and/or by the date of the plaintiff’s second writ issued on 25 March 1980. The court held that her cause of action accrued in February 1973, notwithstanding that she did not actually become liable for the repayment of the loan until the demand was made and, accordingly, the second writ was issued outside the six years’ limitation period and the action begun by the first writ was rightly dismissed.
It is clear from the judgments (see in particular  2 All ER 753 at 764, 765, 1 WLR 86 at 98, 100 per Stephenson and Dunn LJJ) that the court accepted the defendants’ contention that the plaintiff suffered actual damage when she signed the mortgage deed, thereby encumbering her freehold interest and reducing the value of her property and subjecting herself to liability to discharge her son’s debts under the mortgage deed. Such a loss was a quantifiable loss. Equally, in Baker v Ollard & Bentley (a firm) (1982) 126 SJ 593, a case in this court, damage was suffered and the cause of action accrued when the plaintiff’s solicitors negligently failed to carry out their obligations to secure for her security of tenure in her occupation of the first floor of certain premises so that she could freely dispose of her interest. By negligently advising and procuring the conveyance of the house to her and another family on the trusts for sale described in the judgment instead of as joint tenants followed by the grant of a long lease to her, the plaintiff suffered damage because she there and then received an interest of less value than that which the defendants were under a duty to procure for her.
These two cases are dealing with a different situation. In the former, it was self-evident that the plaintiff, when she signed the mortgage deed, suffered some damage. In the latter, it was pleaded that building societies would not lend on the security of a freehold of the first floor and, therefore, purchasers would not purchase at a reasonable price. If, however, the solicitors had done their duty and procured the grant of a long lease, then building societies would have been prepared to lend on the security of that long lease. The damage sustained by the plaintiff was the difference in value between the unsaleable freehold and the saleable long lease. Those allegations had to be assumed by the court to be correct when hearing the application to strike out.
Even, however, if we are wrong in concluding that evidence is required to establish whether or not the plaintiff’s alleged cause of action accrued when it advanced the loan, there is a further matter to consider. In answer to the defendant’s Limitation Act plea, the plaintiff seeks to rely on s 32(1)(b) of the Limitation Act 1980. It is necessary to set out both paras (a) and (b) of s 32(1), which provides:
‘Subject to subsection (3) below, where in the case of any action for which a period of limitation is prescribed by this Act, either—(a) the action is based upon the fraud of the defendant; or (b) any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant … the period of limitation shall not begin to run until the plaintiff has discovered the fraud [or] concealment … or could with reasonable diligence have discovered it.’
In dealing with this aspect of the case, Leggatt J said:
‘According to [counsel for the plaintiff’s] argument the affidavits show that relevant matters were deliberately concealed, with the result that the plaintiff had no inkling of any problem or, indeed, of any misrepresentation until after December 1975. He therefore contends that, even if the plaintiff was prima facie statute-barred, it would be saved by s 32 of the Limitation Act 1980. But, as [counsel for the defendant] retorts, in relation to negligent representations, with which alone this part of the argument is concerned, the representations must be assumed to have been made innocently. The allegation made is that it ought to have been known that the representations were untrue. If it was known, why then reliance, as in relation to the first two classes of misrepresentation, could be placed on Lord Tenterden’s Act. But this is not a sphere in which the allegations of deliberate concealment can live.’
In our view, this shows a confusion of thought. Section 32(1)(a) and s 32(1)(b) are alternatives and it does not at all follow that, because a representation may in fact have been made fraudulently, a plaintiff is compelled to rely on s 32(1)(a) alone in repelling a defence of limitation. In the case of a claim in negligence, it is not so much that, as the judge put it, ‘the representations must be assumed to have been made innocently’ as that whether they were made innocently or otherwise is irrelevant to the cause of action, which is based simply on the breach of a duty to take reasonable care to see that they were true. The plaintiff’s case, which is adequately supported in the affidavits for the purpose of these interlocutory proceedings, is that it will be possible to demonstrate at the trial that the falsity of the representations was, at a time between the date when they were made and the date on which a cause of action based on them might otherwise have been barred, known to the defendant and that the relevant facts were then concealed. Counsel for the defendant, in seeking to uphold the judge’s decision on this point, links the concealment of the facts with the making of the representations in this way. In order to rely on a non-disclosure, he submits that there must first be established a duty to disclose and that that duty arose and was broken when the defendant first knew of the falsity which, he submits, was when the representations were made, on the plaintiff’s own case. Thus, the fraudulent non-disclosure relied on is, in fact, the making of the representation with knowledge of its falsity, a cause of action precluded by the 1828 Act, and one cannot escape from that by dressing up what is essentially a fraudulent misrepresentation as a fraudulent non-disclosure that the misrepresentation was fraudulent. Now, we see the force of this argument if, as counsel for the defendant submits, it is right to say that there was never any independent and continuing duty of disclosure apart from that which was broken on the making of the representations themselves.
The difficulty that he has to face, however, is that the facts appear to be against him. The transaction into which the plaintiff was invited to enter, and did enter, was that of contributing to a syndicate loan where, as it seems to us, quite clearly the defendant was acting in a fiduciary capacity for all the other participants. It was the defendant who received the plaintiff’s money and it was the defendant who arranged for and held, on behalf of all the participants, the collateral security for the loan. If, therefore, it was within the defendant’s knowledge at any time while it was carrying out its fiduciary duties that the security was, as the plaintiff alleges, inadequate, it must, we think, clearly have been its duty to inform the participants of that fact and its continued failure to do so would constitute a continuing breach of its fiduciary duty. Whether the plaintiff will be able to establish such a breach of duty as a matter of fact is a question on which we express no opinion, but the material conditions in which such a breach of duty could be found clearly existed here. The validity of a claim to rely on s 32(1)(b) depends, therefore, on an analysis of the evidence and this can only be decided at trial.
For the reasons given above, this appeal should be allowed and the summons to set aside the service of the writ dismissed.
Appeal allowed. Defendant to enter a new acknowledgment of service within 28 days with liberty to apply. Leave to appeal to the House of Lords refused.
Solicitors: Clifford-Turner (for the plaintiffs); Freshfields (for the defendants).
Mary Rose Plummer Barrister.