COURT OF APPEAL.

Otago Daily Times, Issue 20710, 7 May 1929, Page 10

COURT OF APPEAL.

JAMES v. MABIN. GUARANTEE OF AN ACCOUNT. A BANK MANAGER'S ADVICE. (Per United Press Association.) WELLLINGTON, May 0. In the case, James v. Mabin, the Appeal Court allowed the appeal. Mr Justice Herdman delivered the judgment of the court, which was that the appeal should be allowed. His Honor 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?' should be argued before 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 the appellant consisted of a series of representations or assurances which came within the sixth section of the Statute of Frauds—Lord 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 for the respondent did not seek to entrench himself behind that Statute, or if he did do 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 the appellant launched his action he had no case' for the reason that the action was one for fraud, and in such action the plaintiff must prove loss, and he can recover no more than his actjial loss. In this case he claims £2500 for damages, this amount being represented by a payment which was made by the appellant to the bank in December, 1927, to secure his release from, liability under guarantees, but it. is argued that the appellant was aware of the respondent’s fraud when he made this payment. “ Counsel for the respondent submits that if the allegations contained in the statement of claim were proved at the trial they would shqw that the appellant paid this -money with a fuli knowledge of the. fact that the guarantees under which it was claimed had been obtained by fraud, and that therefore the payment of the £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 fraud from recovering the money at law. In other words, he argues that if the 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, but reading it through with great care we have been unable to discover any admission that when the sum mentioned \yas paid over the appellant was aware of the respondent’s fraud. For the purposes of the present appeal we must consider the case as if the appellant were able to give complete proof of the tacts 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 his money, that he had been defrauded. We can, however, find nothing in the statement of claim which is the equivalent of an admission that he was aware of the respondent’s fraud when he paid the bank £2509, nor can an inference that he possessed such knowledge be drawn from ““ e , allegations contained in the claim. It follows, therefore, that the point taken by counsel for the respondent fails.” After dealing with the principles upon which the case should be decided, his Honor concluded; ‘ Without expressing any opinion one way or another on the claim tor relief, wo leave that phase of litigation, and .content ourselves by stating in conclusion that an examination of the statement of claim has failed to satisfy ,0s that any plain, obvious reason exists for interfering with the litigation beUv « e ” the Parties at this stage. Ihe appeal is therefore allowed with costs of the highest scale as from a distance. In this case the appellant was Harrv Digby James, printer, of Greymouth, and the respondent Edward Ernest Baylv Alabin, bank manager, formerly of Grevmouth and now of Nelson. The facts stated to the court were that early last year James issued a writ against Mabin. alleging that the latter, whilst branch ™ a "^ er f ° f tl,e Bank of New South Wales at Greymouth. fradulently induced •james and others to guarantee the act k an k Alessrs E. J. Rundle and Co., Ltd., timber merchants, of Grevmouth, to the extent of £37,000 in all representing that Alessrs Rundle and Co, was a sound arid prosperous commercial hrra when he actually knew it to be in a very unfavourable financial position In due course. Alessrs Rundle and Co. failed and James was forced to pay £2500 before he could obtain release from his portion of the guarantee. Alabin in turn tlien riled a motion to set aside the statement of claim on the ground that it did not disclose any legal cause of action. Mr Justice Adams held on the motion that as the representations complained of were not made m writing, as is required bv Statute. they could not form the subject of an action for damages for fraudulent misrepresentations; and. further, that there was no special relationship between trio respondent and the appellant which threw on Mabin the duty of care in “making these representations. An appeal was brought on this decision.