Scottish Court of Session Decisions

Lord Guthrie.—The question which was opened by the pursuer and appellant before us related to the merits of the judgments of the Sheriff-substitute and the Sheriff. A question subsequently arose on the suggestion of the Court as to what should be done in any case with the expenses of the action; but that was not opened upon by the appellant and does not seem to have been separately argued before the Sheriff-substitute or the Sheriff. With regard to the merits of the case I am of opinion that the Sheriff-substitute and the Sheriff have come to a right conclusion. The case may be looked at in two ways: either on the documents alone or on the documents taken along with the evidence which has been led.

If one takes the documents alone, one has to consider the original order given by Duff & Company along with the account which was subsequently rendered to them, and also along with the title by which the defenders are known, that is to say, “steamship owners and brokers.” It is said by the pursuer that he was entitled when he went to Duff & Company—and it must be observed that they did not go to him, but that he went to them—to assume that they were owners of the steamship “Silvia.” In defence of that view he does not found on any surrounding circumstances and he has to fall back on what he says is a general rule. It appears to me that we must consider what was the position of parties when the order was given. The position of parties was that Duff & Company held themselves out in two capacities—as steamship owners no doubt, but also as brokers. It is quite certain that brokers are in the habit of acting as managers for steamships belonging to others. That being so, I am of opinion that the pursuer was not entitled, simply because he found that T. L. Duff & Company were willing to give him an order, to assume that they were owners of the ship. Indeed when one looks at the proof it is fair to say that the pursuer does not take up any such position. That has been put forward by his counsel as his position now, but his true position is quite clear—namely that he proceeded on certain information which he had got from a friend, Mr Dunlop. Mr Dunlop had told him, as he says, that Duff & Company were the owners of the “Silvia.” I think the effect of Mr Duff not being examined is, not to throw discredit on Mr Armour's credibility, but to lead to the inference that he must have mistaken what Mr Dunlop said—honestly mistaken it no doubt. But that being his position he says quite frankly: “Supposing I had had no previous communication with Mr Dunlop at all, and had never heard of the ‘Silvia,’ I would have called upon Mr Duff and I would have asked who was responsible for this … I took it from Mr Dunlop that T. L. Duff & Company were the owners of the ship, and for that reason I hold them responsible.”

There is no moral blame upon Mr Armour in the matter: but it is clear that had he not had, what he supposed was, this information from Mr Dunlop he would have asked Mr Duff, and there is no reason to doubt that Mr Duff would have told him how the matter of the ownership stood, or he would have gone to the register to ascertain that for himself. It seems to me that that was his duty in any case. I do not say what might have happened if the matter had been reversed and if Duff & Company had gone to him and without telling him anything had simply given him an order. But in the circumstances of his going to Duff & Company it seems to me that it was his clear duty either to ask them how the matter stood or to ascertain for himself from the register what the position of matters was.

Now, it so happens that there would have been no difficulty in ascertaining from the register how things stood, because the excerpt which has been lodged shows that not only does the register contain full information as to the owners of the ship, but it shows that the ship was subject to a mortgage, it tells who the mortgagees were, and it shows that these mortgagees were in possession. In these circumstances I think the Sheriffs were right in holding, without in the least impugning Mr Armour's bona fides in the matter, that he had no right to raise this action against Duff & Company, either on the footing, which is now abandoned, that they were the true owners, or on the footing, which is still maintained, that although not the true owners they held themselves out as the true owners. I do not agree with the Sheriff-substitute in the statement he has made in his note, which was quite unnecessary for the decision of the case, when he says:—“I think the evidence is sufficient to show that the pursuer quite well knew that he was transacting with agents.”

If that be the sound view, the question still remains as to the conduct of the defenders in the defences which they put forward. As I read the evidence it seems quite clear that they have made several statements which are not only inaccurate in themselves, but which might quite well have misled, and probably did mislead, the pursuer. It may be that some of these statements, if the sentences are read by themselves, are on the face of them literally accurate; but the result certainly is so misleading as this, that—ordinarily read and taking the context along with the individual sentences—the statement is distinctly made that, while the defenders are not liable for the account, the people who are liable, and the owners of this vessel, are the Grahamstown Shipping Company, Limited; and further, that the pursuer knew that that was the fact.

It is common ground that that is a totally inaccurate statement, because the interest, as owners, of the Grahamstown Company, Limited, did not arise until after the contract had been entered into. It is quite true, as appears from the proof, and from the evidence of Mr Armour himself, that he came to be aware of how the register stood, and what information it contained, at a very early date, because he says that when the defences were lodged he then got the information by going to the Custom House and getting a copy of the register. And therefore I do not think that this is a case where one can say either that the pursuer would be entitled to his expenses, or that the defenders should have their expenses entirely disallowed. In such cases you cannot say absolutely whether, if the pursuer had not been misled by the defenders, he would have gone on with his action or not; but you can certainly say that under the advice of his legal advisers he might not have gone on with his action.

I should suggest for your Lordships' consideration that a just result would be to hold that down to the date of the Sheriff-substitute's interlocutor no expenses should be allowed to either party, and the defenders should get their expenses subsequent to that date. I think that result would mark the sense of the Court that when defenders are brought into Court it is their duty to make a full disclosure of their position, and that in any event it is their duty not to do as the defenders here did—to make a statement which, if they had chosen to consider the information within their own knowledge, they would have seen to be entirely misleading, and not only misleading, but calculated to induce the pursuer to go on with an action with which he might otherwise not have proceeded.

Lord Salvesen.—I am entirely of the same opinion. I think this is a very unfortunate action, because if the pursuer had acted with a little less precipitation, and the defenders had treated the case with more candour, it would have been obvious to the parties at a very early stage that there was nothing to fight about. The account was substantially admitted, and each of the three parties who might be suggested as being liable for it was perfectly solvent and able to meet it. Yet we have had a dispute going into three Courts as to whether the particular party who is sued was the person who ought to have been sued in the first instance.

On the merits of this case, such as they are, I think the Sheriffs have reached a sound conclusion. The Sheriff expresses his view in a single sentence. He says,—“The order is in these terms:—‘Please supply the s.s. “Silvia” with the following stores.’ If a firm of brokers gives an order in these terms it seems to me that they are acting on behalf of the owners of the ship, and, as these can be discovered, the principals of the broker are disclosed.” I think that is a substantially accurate statement of the law applicable to a contract of this kind, with this qualification that the owners of the ship are not bound unless the firm of brokers who gave the order had their authority to place it. In this case it is perfectly evident that the defenders had a mandate from the legal owners of the. ship for the time being—that is, the mortgagees in possession. This was disclosed upon the face of the register, and it was on the owners' behalf that they gave the order.

It is therefore very surprising that the defenders when they came to state defences did not take up the true position, but said that they ordered the goods as agents for the owners, and that the owners were the Grahams-town Shipping Company, who were in fact the owners at the date of the proof, but were not the owners of the ship at the time when the order was placed. That was a very misleading statement, and was calculated, as Lord Guthrie has indicated, to induce the pursuer to go on with his action, because he felt that he was able to refute the only defence that had been put forward. I think we ought to penalise the conduct of the defenders in the way that Lord Guthrie has suggested, by refusing them their expenses before the Sheriff-substitute. I think it would be going too far if we carried that refusal beyond the Sheriff-substitute's Court, especially as the pursuer never seems really to have ascertained what his true legal position was, and came before the Sheriff and before us maintaining that upon the proof and documents he had established personal liability against the defenders.

Lord Justice-Clerk.—I agree with what your Lordships propose. I will say for myself that if I had been deciding this case alone I should have been a little more drastic in dealing with the defenders' expenses. I think this case is—shall I call it—a model of what ought not to be. I never have seen such a defence as that stated here. It is absolutely misleading. Your Lordships have dealt with it by proposing that expenses should not be allowed up to the date of the Sheriff-substitute's interlocutor. While I concur in that, I repeat what I said at the beginning, that I would have taken a more drastic course had I been left to myself.