CLAIM FOR £2500.

Press, Volume LXV, Issue 19612, 7 May 1929, Page 10

CLAIM FOR £2500.

BANK MANAGER SUED. DECISION OF APPEAL COURT. (PBES3 ASSOCIATION TSLBGEAM.) WELLINGTON, May 6. The Appeal Court has allowed the appeal of Harry Digby James, printer, of Grey mouth, in his claim for £2500 damages against Edward Ernest Bayly Mabin, bank manager, iorinerly of Greymoutk, and now of Nelson. The ease was heard on xuarch 2i!nd last. The facts stat(*d to the court were that early last year James issued a writ against Mabin, alleging that the latter, wailst orantu manager ot tlie Bank of New South Wales at Greymouth, fraudulently induced James and others to guarantee the account at that bank of &. J. Rundle and Co., Limited, timber merchants, of" Greyinoutk, to the extent of £37,000 in all, representing that Rundle and Co. was a sound and prosperous commercial firm when he actually knew it to be in a very unfavourable financial position. In due course Rundle and Co. failed and James was forced to pay £2500 before he could obtain release from his portion of the guarantee. Mabin in turn then filed a motion to set aside the statement of claim on the ground that it did not disclose any legal cause of action.

Mi" Justice Adams held, on the motion, that as the representations complained of were not made in writing as is required by Statute they could not form the subject of an action for damages for fraudulent misrepresentations, and further that there was no special relationship between respondent and appellant which threw on Mabin the duty of care in making these representations. The appeal was brought on this decision.

I Mr Justice Herdman, delivering the Court's judgment to-day, said: "In this action an order was made that the question of law. 'does the statement of claim disclose any legal cause of action against the defendant company?' be argued before the trial. The learned Judge in the Court below after hearing argument answered the question in the negative. He decided that the case relied upon by appellant consisted of a series of representations or assurances which came within the 6th section ot the Statute of Tenterden's Act —and that as in his opinion these representations or assurances were made orally no action based upon them could succeed. When the matter reached the stage of argument in this Court, counsel lor respondent did not seek to entranch himself behind that Statute, or if he did so he abstained from placing any serious dependence upon it. He preferred to submit that it was definitely established by the statement of claim as it stood that when appellant launched his action he had no case lor the following reasons: The action was one for fraud. In such action plaintiff must prove loss and can recover no more than his actual loss. In this case he claims £2500 for damafes. this amount being represented by a payment which was made by appellant to the bank in December, 1927, to secure his release from liability under the guarantees. But it is argued that appellant was aware of respondent's fraud when he made this payment. Counsel for respondent submits that if the allegations contained in the statement of claim were proved at the trial they would show that appellant paid this money with the full knowledge of the fact that the guarantees under which it was claimed had been obtained by fraud, and that therefore the payment of £2500 was no more than a gratuitous contribution to an institution, which, assuming the allegations in the statement of claim to be true, was barred by the fraud from recovering the money at law. In other words, he argues that if. appellant suffered any loss he alone was responsible for it.

"As a specimen of legal draftsmanship, the statement of claim is an embarrassing and confused production, hut reading it through with great care we have been unable to discover any admission that when the sum mentioned was paid over, appellant was aware of respondent's fraud. For the purposes of the present appeal we must consider the case as if appellant were able to give complete proof of the facts necessary to support his claim, including, in the absence of any admission to -the contrary, the fact that he discovered after he had parted with nis money that he had been defrauded. We can, however, find nothing in the statement of claim which is the equivalent of admission that he was aware of respondent's fraud when he paid the bank £2500, nor can an inference that he possessed such knowledge be drawn from the allegations contained in the claim. It follows, therefore, that the point taken by counsel for respondent fails."

After dealing with the principles upon which the case should be decided, his Honour concluded: "Without expressing any opinion one way or another on the claim for relief, we leave that phase of the litigation and content ourselves by stating in conclusion that an examination of the statement of claim has failed to satisfy us that any plain, obvious reason exists for interfering: with the litigation between the parties at this staee. The appeal is therefore allowed with costs on the highest scale as from a distance."