The

C.A.

1901.

RIDDIFORD

v.

principles, and it is doubted whether Kennedy v. Panama, &c., Mail Company(1) is now law. That case was before the fusion of law and equity, and much of it is certainly not now law. The Sale of Goods Act has not abrogated WARREN. the fusion effected by the Judicature Acts. It would be surprising to find that that had been done in an Act intended as a codification of the law as existing at the time. The words of section 61, "shall continue to apply," strongly suggest that it was not intended to make so great an alteration. "Common law" must be read common law as modi'fied by equity," or common law as distinguished from

66 statute."

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[WILLIAMS, J.-Does not the Act expressly say that a misrepresentation is to be a ground for damages, not for repudiating the contract and rejecting the goods?]

That section (section 12) deals with conditions and warranties, not with misrepresentations prior to the contract and inducing it. The reason why the rules of common law only and not those of equity are mentioned in section 61 is that the draftsman has been dealing throughout with the common law of the sale of goods, and that it was necessary to preserve that part of the common law which he had not covered. He had not been dealing with equity at all, and it was not necessary to expressly preserve the doctrines of equity. The suggested construction would have a very far-reaching effect. The whole of the doctrines of equity in regard to fraud, misrepresentation, duress, coercion, and mistake would be abrogated. In Benjamin's Sale of Personal Property(2) it is said that, as to mistake, since the Judicature Acts the equitable rules prevail. That would be abrogated.

H. D. Bell, in reply:

In Kennedy v. The Panama, &c., Mail Company(1) Blackburn, J., said that matter extrinsic is of no effect unless fraudulent. In Mackay v. Dick(3), decided after the Judicature Acts, Lord Blackburn reasserted the doctrine of Kennedy v. The Panama, &c., Mail Company(1) on this very point. The case was a Scotch one, but he spoke generally. Equity never interfered with the application of the maxim Caveat emptor in cases of sales of goods: Story's Equity Jurisprudence(4).

Cur, adv. vult.

(3) 6 App. Cas. 251, 265.

(1) L.R. 2 Q.B. 580.

(2) 4th ed. 387, 393.

(4) 13th ed. Vol. i. § 212.

C.A. 1901.

WILLIAMS, J. :—

[His Honour dealt at length with the question whether there RIDDIFORD had been a misrepresentation, concluding that there had been His Honour then proceeded as follows.]

WARREN. none.

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From the view I have taken of the case it becomes unnecessary to consider whether, so far as regards the sale of goods. the judgment of the Court of Queen's Bench in Kennedy v. The Panama, &c., Mail Company(1), as to the effect of an innocent misrepresentation, is still law. That judgment admittedly represents the common-law doctrine, and decides that an innocent misrepresentation which does not go to the root of the contract does not justify the party to whom the representation was made in not fulfilling the contract. The equitable doctrine was different, and in equity such party would have been entitled to rescind the contract. "The Law Amendment Act, 1882," which contains provisions corresponding to those in the English Judicature Act, provides that in certain specified cases the rules of equity are to prevail, and by the 11th section enacts generally that "In all matters not hereinbefore particularly mentioned in which there is any conflict between "the rules of equity and the rules of the common law with "reference to the same matter, the rules of equity shall pre"vail." Then, in 1895 the Sale of Goods Act was passed. It is entitled "An Act for codifying the Law relating to "the Sale of Goods." Section 61, subsection 2, of that Act is as follows: "The rules of the common law, including "the law merchant, save in so far as they are inconsistent "with the express provisions of this Act, and in particular "the rules relating to the law of principal and agent, "and the effect of fraud, misrepresentation, duress or coer"cion, mistake, or other invalidating cause, shall continue "to apply to contracts for the sale of goods." If in this section the words "the rules of the common law are used as they are in the Law Amendment Act-that is, in contradistinction to the rules of equity-the section can have but one meaning. So reading the section it is an implied declaration by the Legislature that up to the time of the passing of the Act the rules of the law merchant and of the common law, and not the rules of equity, applied to contracts for the sale of goods, and applied particularly with respect to the effect of the causes there mentioned by which contracts could be invalidated. The section enacts that the same rules shall continue

(1) L.R. 2 Q.B. 580.

C.A.

1901.

to apply. I do not see how else the section can be read. If "rules of the common law" meant the rules of the existing law other than statute law, but including the rules of equity, RIDDIFORD the phrase would have been the existing rules of law," or WARREN. words of that kind. The use of the term "common law' would be superfluous and misleading. If that is the true construction of the section the question of how far a contract for the sale of goods is invalidated by a misrepresentation must, by the express words of the section, be governed by the common-law rule. I should suppose that the corresponding section in the English Act was introduced for the express purpose of settling the doubt raised in Benjamin on Sales(1) as to whether the doctrine of Kennedy v. The Panama, &c., Mail Company(2) continued to apply to contracts for the sale of goods notwithstanding the provisions of the Judicature Act. The existence of this doubt can hardly have been absent from the mind of the draftsman of the Act of 1893, and the object of the Act was to define and settle the law.

I am aware that since "The Sale of Goods Act, 1893," it has been stated by a text-writer of repute that innocent misrepresentation is now a ground for setting the contract aside, and that this rule applies to contracts of every description: Anson on Contracts(3). But the attention of the learned author does not appear to have been directed to the section of the Act above referred to. Nor, so far as I can discover, has the meaning of the section been discussed by any author.

For the above reasons I think this appeal should be allowed. As to damages, I agree with the other members of the Court that £45 is the sum the appellant is entitled to

recover.

DENNISTON, J.:

[His Honour dealt with the facts, and concurred in holding that there had been no misrepresentation. His Honour proceeded as follows.]

There is still to be considered the question as to the legal effect of the representation had it been in fact untrue and had it induced the contract. The defence on the law depends, broadly, upon the proposition that a contract for the sale of goods may be rescinded, or, what is the same in effect, its non-performance justified, by proof that it was induced by an (3) 9th ed. 159.

(1) 4th ed. 394.

(2) L.R. 2 Q.B. 580.

VOL. XX.-37.

C.A.

1901.

V.

WARREN.

66

untrue representation, however innocently made. It is clear that this proposition did not in England before the JudiRIDDIFORD cature Act, and in this colony before "The Law Amendment Act, 1882," represent the rule at common law. In Redgrave v. Hurd(1), Jessel, M.R., after stating the rule in equity, says, "There were, indeed, cases in which, even at common "law, a contract could be rescinded for misrepresentation, "although it could not be shown that the person making it "knew the representation to be false. They are variously "stated, but I think, according to the later decisions, the statement must have been made recklessly, and without care "whether it was true or false, and not with the belief that "it was true." There is no suggestion of that in the present case. In Kennedy v. The Panama, &c., Mail Company(2), Blackburn, J., says, "Where there has been an innocent misrepresentation or misapprehension, it does not authorise 66 a rescission unless it is such as to show that there is a com"plete difference in substance between what was supposed Ito be and what was taken, so as to constitute a failure of "consideration." The suggested qualification admittedly does not exist here. The language does not support the contention of defendants' counsel that the rule does not apply to representations extrinsic to the actual subject-matter of the contract. In Anson on Law of Contract (3) the learned author says, speaking of Bannerman v. White(4), "The consent of "the buyer was, in fact, obtained by a misrepresentation of a material fact, and was therefore unreal; but the common-law Courts had precluded themselves from giving any effect to a representation unless it was a term in the contract, and so in order to do justice they were compelled to drag into the contract terms which it was never meant to "contain."

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The defendant must rely on the effect of section 11 of "The Law Amendment Act, 1882," which provides that, in all matters not therein before particularly mentioned in which there is any conflict or variance between the rules of equity and the rules of the common law with reference to the same matter, the rules of equity shall prevail. Is there any such conflict in respect to the proposition here in dispute? I take it that it was not intended to create any new rules, but merely to decide, as is said, in case of conflict between existing rules.

(1) 20 Ch.D. 1, 13.

(2) L.R. 2 Q.B. 580, 587.

(3) 9th ed. 157.

(4) 10 C.B. N.S. 844, 860; 31 L.J.

C.P. 28, 32.

C.A.

1901.

The rule in equity as to contracts generally is stated by Jessel, M.R., in Redgrave v. Hurd(1): "According to the decisions of Courts of equity, it was not necessary, in order RIDDIFORD "to set aside a contract obtained by material false representa

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tion, to prove that the party who obtained it knew at the "time when the representation was made that it was false." But, while this is stated as the general rule, it is not stated as being without exception. It was not necessary for the purpose of the judgment to state it other than in general terms. Was it ever the rule, in Courts of equity, in respect to mercantile contracts for the sale of goods? If not, there never was a conflict in respect of such transactions between the rules of equity (which means, of course, equity as defined and administered by Courts of equity) and the common law. In respect to the great majority of contracts, relief could be obtained either directly by a suit to rescind or indirectly by a suit to restrain the action at common law. No such direct or indirect relief has, so far as I can find, ever been granted in equity in respect of contracts for the sale of goods. If a seller unconscientiously, as equity declares, seeks to enforce in a Court of law a contract for a sale of land induced by a material misrepresentation, however inadvertently made, equity will stop such an action by an injunction, but it has never been done in the case of contracts for the sale of goods where the representation has been an innocent one. And this is not because in all cases damages at common law would be sufficient compensation. You could neither rescind nor get damages at common law on the ground of a misrepresentation innocently made. Sir William Anson (2) details a class of contracts (not including the sale of goods) in which the Courts of Chancery would refuse specific performance of a contract induced by innocent misrepresentation, and some in which it was prepared to set contracts aside on the same grounds, and adds, "The latter remedy had not by express "decision been limited" to such transactions. It has to be considered in this connection that the Judicature Act dealt mainly with procedure. Its object was the fusion of law and equity, and the abolition thereby of the anomalous procedure by which rights as to one subject-matter were determined by different but co-ordinate authorities. It was not to create new rights in respect of the incidents, interpretation, or enforcement of contracts, but only to effect a combination of (1) 20 Ch.D. 1, 12.

(2) Anson on Contracts. 9th ed. 159.

v.

WARREN.