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England and Wales Court of Appeal (Civil Division) Decisions


You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Goose v Wilson Sandford And Co (A Firm) [2000] EWCA Civ 73 (14 March 2000)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2000/73.html
Cite as: [2001] Lloyd's Rep PN 189, [2000] EWCA Civ 73

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Case No: CHANF 1999/1015

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION (Rimer J)
Royal Courts of Justice
Strand, London, WC2A 2LL
Tuesday 14 March 2000

B e f o r e :
LORD JUSTICE MORRITT
LORD JUSTICE ROBERT WALKER
and
SIR RONALD WATERHOUSE


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REX GOOSE

Plaintiff


- and -




WILSON SANDFORD & Co. (A Firm)


Defendant


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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040, Fax No: 0171 831 8838
Official Shorthand Writers to the Court)
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Mr Richard McCombe QC and Mr Philip Marshall (instructed by Sharpe Pritchard for the Appellant, Mr Goose)
Mr Ronald Walker QC and Miss Catherine Brown (instructed by Hextall Erskine for the respondent, Wilson Sandford & Co.)
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Judgment
As Approved by the Court
Crown Copyright ©


LORD JUSTICE MORRITT:
This is the judgment of the court.


Introduction


1. The claimant, Mr Rex Goose, farmed his own land at Hagbeach Farm, Whaplode Drove, Spalding, Lincolnshire. He wished to acquire further agricultural land in France. In March 1984 he met Mr Peter Bray who, Mr Goose thought, also wanted to buy agricultural land in France. They embarked on a joint operation to acquire such land for each of them. For that purpose Mr Bray incorporated Intag Estates Ltd ("Intag") and retained the services of the defendant firm of chartered accountants, Wilson Sandford & Co, on behalf of himself and Intag. The scheme by which the agricultural land in France was to be acquired underwent a number of modifications between May 1984 and July 1985 but common to each variant were three crucial features. First the agricultural land in France would be paid for by means of a loan denominated in Swiss Francs. Second, Mr Goose's land would be required as security for one or more of the liabilities undertaken in the implementation of the scheme. Third, a collection of semi-precious stones ("the Stones") apparently owned by Mr Bray or a Liechtenstein Anstalt established by him, called the Brent Foundation, would be available, in some form, whether as security or otherwise, as a buffer against the risks involved in the use of three currencies, namely Swiss Francs, French Francs and Sterling.
2. In implementation of the scheme, on 25th July 1985 Mr Goose charged Hagbeach Farm to secure to Edward Manson & Co repayment of a loan made by them to Intag of £314,000. Of that sum £130,000 was to be remitted as part payment of the price for a farm, La Devinniere, Nr Orleans, Cher, being purchased by Intag for Mr Bray. The money was not used for that purpose or for any other purpose which Mr Goose had approved. When, subsequently, Mr Goose sought to resort to the Stones he discovered that they had not at any relevant time been owned by either Mr Bray or the Brent Foundation and were in any event worth only about 3% of what he had been led to believe.
3. On 15th July 1991 and again on 22nd April 1994 Mr Goose issued a writ seeking damages from Wilson Sandford & Co. in respect of the part played in the deception of Mr Goose he alleged had been performed by the partner responsible, Mr Robin Wilson. Those claims were tried by Harman J between 9th June and 13th July 1994. On 1st April 1996 Harman J dismissed both actions. On 13th February 1998 this court ordered a new trial of some only of the original claims which arose in the second action. That trial took place before Rimer J between 1st October and 13th November 1998. Rimer J gave judgment on 25th January 1999. He too dismissed the second action.
4. Rimer J found that Mr Wilson had made representations to Mr Goose at a meeting held on 19th September 1984 and in a letter dated 9th April 1985 which he had failed to correct at a further meeting held on 18th May 1985 that (a) Mr Bray or the Brent Foundation owned the Stones and (b) the Stones were available as and capable of providing the requisite security in implementation of the scheme. He decided that the second, but not the first, was made by Mr Wilson without any honest belief in its truth. But he decided that Mr Wilson did not intend that Mr Goose should be induced to do anything in reliance thereon. He also found that Mr Goose did not in fact rely on such representations. Thus the causes of action in deceit failed. Similar claims in negligence, agency and trust failed too. The judge dealt with issues which only arose if he were wrong on the questions of liability, namely, limitation, contributory negligence and causation.
5. This is the appeal of Mr Goose from the order of Rimer J. His principal, though by no means only, contention is that the judge having found that representations were made by Mr Wilson to Mr Goose without an honest belief in their truth failed to recognise that they must have been made with the intention of inducing Mr Goose to act and did in fact induce Mr Goose to act by charging his farm as security for the loan of £314,000. He contends that the judge was wrong to have dismissed his claims in negligence, agency and trust. In addition he contends that the judge was wrong in the conclusions he reached in respect of limitation, contributory negligence and causation. We will consider these submissions later. First it is necessary to describe the factual background in some detail. As the issues before us are a good deal more limited than those before Rimer J it is not necessary to cover all the ground surveyed by him in his comprehensive and careful judgment.

The Factual Background


6. Mr Bray was a fraud. In 1984 he was about 60, some 16 years older than Mr Goose. He had been convicted of offences of dishonesty on 25th April 1975 and 1st June and 16th November 1977. He had been made bankrupt on 31st January 1975 and though discharged on 13th March 1980 such discharge had been conditional only and was revoked on 8th May 1984 for breach of condition. None of this was known to Mr Goose. To him, no doubt, Mr Bray appeared to be the experienced business man with considerable agricultural expertise and wealth that he claimed to be.
7. Mr Goose and Mr Bray first met on 8th March 1984 having made initial contact due to their mutual interest in buying agricultural land in France. Mr Bray told Mr Goose that he had returned from Zimbabwe and wished to invest in France. He told Mr Goose about the Brent Foundation of which he said that he was the main beneficiary. There was a second meeting on 11th March 1984. On this occasion Mr Bray told Mr Goose that he wanted to sell his farms in Zimbabwe and that Brent had a collection of semi-precious stones. At an early stage Mr Bray showed Mr Goose a list of the Stones headed "Stones delivered to Bray" containing 33 items against each of which was noted a certificate. The aggregate value, as shown, was over US$500,000.
8. The judge had to consider some confused and confusing evidence concerning the ownership of the Stones. But it is not necessary for us to refer to it in any detail for neither Mr Goose nor Wilson Sandford & Co seek to challenge the judge's conclusion. For present purposes it is sufficient to start with the sale of the Stones by Holford Trust Ltd ("Holford") to the Brent Foundation in August 1982 for US$725,000. Payment was to be by 10 promissory notes given by Brent Foundation. On 23rd August 1982 the Stones were transported by Brink's Air Courier Service from California to a bonded warehouse at Kloten Airport, Zurich for the account of Trinkhaus & Burkhardt ("TB"), a Swiss bank. On 26th August 1982 TB confirmed to Barclays Bank that it was instructed to remit the proceeds of sale of the Stones up to US$83,000 to cover the outstandings of Mr Bray's wife. Rimer J concluded that insofar as Barclays thereby obtained any security interest in the Stones or their proceeds of sale it was secondary to the security held by Barclays over the house in March, Cambridgeshire in which Mr and Mrs Bray lived. By the end of 1982 TB claimed to be entitled to a lien on the Stones to secure to them payment of various liabilities of Mr Bray or the Brent Foundation which, by mid-1984, amounted in Swiss Francs and US$ to the equivalent of £25,000. The promissory notes were not paid and in December 1982 Mr Bray instructed TB to hold the Stones to the order of Holford. In these circumstances the judge found that Holford sold the Stones to Mr Bray in August 1982 in exchange for the promissory notes but that, by agreement, the sale had been rescinded by January 1983 when Mr Bray relinquished any property in the Stones to which he might previously been entitled. But in the hands of TB they were also subject to the lien to secure repayment of the debts due to TB by Mr Bray or the Brent Foundation and to such secondary security in favour of Barclays as the undertaking of TB might have conferred. Thus by the time Mr Goose and Mr Bray met in March 1984 neither Mr Bray nor the Brent Foundation owned the Stones which were in any event subject to incumbrances in favour of TB and, possibly, Barclays.
9. On 9th May 1984, a week after the incorporation of Intag and the day following the revocation of Mr Bray's discharge from bankruptcy, Mr Bray wrote to Mr Goose setting out the scheme in the form he then proposed. Its salient, if rather muddled, features were (1) a loan in Swiss Francs equivalent in value to £700,000 on the initial security of guarantees of £350,000 from Mr Goose and Mr Bray, (2) the guarantee of Mr Goose would come via NatWest Bank on the security of Hagbeach Farm, (3) the guarantee of Mr Bray would be given by the Brent Foundation via a Swiss bank secured on the Stones, (4) the farms, when bought would be available for use as security for the loans thereby enabling the amount of the guarantees to be reduced.
10. Mr Bray had been in contact with financial advisers, HarvestMinster Ltd, who, in June 1984, introduced him to Mr Wilson a partner in the defendant Wilson Sandford & Co. Mr Wilson was then in his thirties having been admitted to the Institute in 1976, becoming a fellow in 1981. As we have already indicated Mr Bray, through Mr Wilson, retained the firm on behalf of both Intag and himself. Shortly thereafter Mr Bray introduced Mr Wilson to Mr Goose. On 10th July 1984, in answer to Mr Wilson's request for details of various matters including the Stones, TB sent a telex to Mr Wilson setting out the position as they understood it to be. They gave details of the liabilities of Mr Bray or the Brent Foundation, as at that date, amounting to the equivalent of £25,000, for which they claimed to exercise a lien and of 86 sapphires or topaz stones valued by others, for which they disclaimed any responsibility, at US$498,711. TB indicated that in order for the Stones to be released they would require the release by Barclays of any obligation arising from the confirmation given by TB to Barclays on 26th August 1982 referred to in paragraph 8 above.
11. In July and August 1984 Mr Wilson considered the proposed scheme and its mechanics with HarvestMinster Ltd, the advisers of a third possible participant, Mr Anthony Riby, and a firm of tax advisers, J.F.Chown & Co. He sought and obtained information as to Mr Goose's farm and other assets.
12. On 19th September 1984 there occurred in the Garden House Hotel, Cambridge the first meetings of the members and directors of Intag. It was also the time and place at which the first representations by Mr Wilson on which Mr Goose relies were made. The meeting was attended by Mr Bray, Mr Goose, Mr Riby and Mr Wilson and various other professional advisers. It lasted two hours. The only written record are the minutes of the meeting taken by Mr Wilson. According to the minutes Mr Bray, Mr Goose and two others were appointed directors, Mr Bray was appointed the Chairman. Of the authorised share capital of £100,000, 49,998 shares were issued to Mr Bray jointly with his wife and another. It was recorded that further shares would be allotted to Mr Goose "following Mr Goose's acquiring of farms via finance from Intag Estates Ltd". Under the heading "Funding of farm purchases it was recorded that
"The paper presented to the Board was adopted in principle and this paper would form the basis of agreement between P.J.Bray and R.Goose.."
The paper referred to purported to record an agreement between Mr Bray and Mr Riby. So far as material it stated
"2. It is agreed that the funding of farm purchases will be from Swiss franc borrowing supported by suitable prime bank operation to cover the requisite guarantees of interest and capital repayments under terms generally understood to be:-
a) Seven year minimum term loan of Swiss francs at LIBOR rates. Payment of interest at not less than quarterly intervals. No repayment of capital until the end of the term.
b) Support banking to add not more than 2% to the base rate for the Swiss franc loan to cover requirements as to guarantee of interest and repayment of capital.
3. From the above loan funds individuals will be permitted to borrow sufficient funds to cover all purchase costs plus a fee to cover company administrative costs not exceeding one % per annum.
4. Individual borrowers will satisfy the company auditors, financial advisors and bankers as to the security for their borrowings and this security will be made available to the company and through it to the support bankers. ...
6. Providing that the above conditions are complied with the responsibility of borrowers will be for their portion of the funds on an individual basis and not as joint and several guarantors."
13. The Stones were mentioned in the context of the value which each participant was bringing into the venture. In that context Rimer J found that Mr Wilson referred to them as "Peter's stones or in some like way" and, in that they were obviously intended to play a part in the scheme, impliedly represented that they were available for use in it. Rimer J also held that Mr Wilson did not, as Mr Goose had alleged, make any representation that they were worth approximately US$500,000.
14. Mr Riby dropped out of the scheme in early October 1984. Thereafter Mr Wilson sought further information from Mr Goose as to his assets "which can be pledged in support of the borrowing in Swiss Francs". On 11th October 1984 Mr Wilson wrote to Mr Bray recording various telephone conversations he had had with Mr Schaefer of TB. He wrote
"..Mr Schaefer states that in his opinion the stones held in Zurich are of very low value and will not cover the Swiss debts which you have. This is obviously in direct contradiction to the value shown in the Telex which I hold and I have no way of knowing the true value myself.
However, I am convinced that we will need to realise some of these stones both to pay the Swiss debts when they are finally agreed and also to inject capital into [Intag].
It would therefore be of enormous help to me if we could now sort out the Swiss situation once and for all. You were going to let me have a list of points to write to Mr Schaefer on and I would ask you to let me have these urgently. I will then send that letter and will suggest to Mr Schaefer that he attends on us in the UK at the earliest opportunity. At the same time, it is also essential that we obtain a valuation of the gems, totally independently, so that the true market value can be established; I think it is fair to say that the market in gems at the present time is weak and we will need to decide the amount which we need to raise at the present time."
At a meeting of the board of Intag held on 17th October 1984 attended by Mr Bray and Mr Goose it was reported that a compromis for La Devinniere had been signed by Mr Bray and that the purchase of the farm would be for FF.5,227,540 and that negotiations had opened to secure a lease (with an option to purchase) of land at Sainte Marie, near Montmorillon. On the following day Mr Goose advanced £50,000 by way of loan to Intag as to £25,000 for the deposit on La Devinniere and the balance for working capital. The board of Intag resolved to acquire La Devinniere on 27th November 1984. On 11th December 1984 Mr Schaefer of TB wrote a strongly worded letter to Mr Wilson confirming TB's claim and warning that if it were not met by 30th January 1985 the Stones would be sold for the best price obtainable which TB estimated was approximately Sw.F.5-10,000.
15. In addition to wishing to buy agricultural land in France Mr Goose was in the process of buying a holding of 28 acres adjacent to Hagbeach Farm for £80,000 and buying out his brother's share in a further 72 acres at a cost of £63,000. He obtained a valuation of Hagbeach Farm from Chestertons in the total sum of £585,000. On 25th January 1985 Mr Bray and Mr Goose went to International Commerce Bank in London with their proposition to buy land in France financed by a loan of Swiss Francs to be secured on the land so acquired and on the Stones. Following that meeting Mr Bray wrote to Mr Wilson setting out the revised scheme he then proposed for a three stage operation. The stages as proposed were (1) £450,000 should be borrowed in sterling on the security of Hagbeach Farm (excluding the farmhouse) with which, after settling certain liabilities of Mr Goose, would be used to complete the purchase of La Devinniere, (2) Sw.Fr. 3m should be borrowed on the security of the Stones, other properties of Mr Bray and La Devinniere from which the sterling loan raised at stage 1 would be repaid, (3) the income of Hagbeach Farm, La Devinniere and a rented farm at Gracay, Nr Vierzon, Cher estimated to amount to £190,000 per annum would be applied as to £90,000 pa in payment of the interest due on the Sw. Fr. loan leaving a balance of £100,000 pa sufficient over 7 years to repay the Sw.Fr. loan.
16. Mr Wilson relayed the details of the revised scheme to Mr Francis, a finance broker. Mr Francis then sought a loan of £400,000 from Edward Manson and Company Ltd ("Manson") to Intag by way of implementation of stage 1. Mr Goose saw a copy of the letter from Mr Francis to Manson dated 12th February 1985 and agreed with the proposal. It was no part of that proposal that the Stones should form part of the security for the Sterling loan or the Swiss Franc loan from which it was to be repaid. On 20th February 1985 Manson offered Intag an 18 month term loan of £400,000 on the security of Hagbeach Farm and the guarantees of the directors of Intag, the initial drawdown not to exceed £380,000.
17. At the end of March 1985 Mr Goose contacted the manager of the branch of NatWest in Spalding to see if that Bank might make a better offer of stage 1 finance than Manson had. He gave him some information and then contacted Mr Wilson inviting him to speak to the manager and see what terms might be available. Mr Wilson reported the outcome of his enquiries to Mr Goose in a letter dated 9th April 1985. This letter contains the second set of representations on which Mr Goose relies. The material terms are
"Mr John Wilson at [NatWest] is processing an interim finance application for £450,000. This will consist of £135,000 for yourself and £315,000 for [Intag]. Your own monies will be to replace the £60,000 advance to the Company and also will allow you sufficient money to complete the purchase of the land from Gallahers.
The [Intag] £315,000 is required to meet the payments to Societe Generale at Bourges due on 10th and 16th April.
Security: As security for these loans, the tranches 1,2 & 3 (excluding the farmhouse) of your own land will be pledged together with an undertaking to deliver P.J.Bray's gems to be held to the order of [NatWest]. The gems will rank as prior security ahead of your own land."
Rimer J concluded that the letter contained representations by Mr Wilson to Mr Goose that the Stones were (1) owned by Mr Bray or the Brent Foundation and (2) available and capable of providing security for the stage 1 loans as envisaged in the letter.
18. In the event NatWest did not come up with any offer. By a letter dated 29th April 1985 Manson revised its offer. The revised offer was for an 18 month term loan of £314,000. It was to be secured by the joint and several guarantees of Mr Bray and Mr Goose and a first legal charge on specified parts of Hagbeach Farm. The offer stipulated that the loan was to be used to assist in the purchase of La Devinniere. On 10th May 1985 Mr Bray wrote to Manson on behalf of Intag accepting the revised offer.
19. In the meantime, Mr Wilson had received a letter dated 30th April written by solicitors acting for the Royal Bank of Scotland pressing for payment by Mr Bray of a judgment debt with interest and costs of some £19,800. The solicitors made clear that in the absence of a satisfactory response to their offer to accept payment by instalments, bankruptcy proceedings would be commenced on 7th May 1985. Mr Wilson had also had a telephone conversation with Mr Goose on 30th April. On 1st May he wrote to Mr Bray stating
"Please find enclosed copy letters received today from Penningtons and you will see that we have until 7th May in order to avoid bankruptcy proceedings being commenced.
I also had a rather agitated phone call from Rex Goose last evening (Tuesday) explaining that he was now making it a prior requirement that his £50,000 loan to [Intag] be repaid before he gives a charge over his Farm. He was almost insistent that we proceed to selling some of the gems as soon as possible, and indeed I am beginning to believe that this is going to become absolutely vital in order to settle your personal debts such as Schaefer (who keeps phoning), Penningtons, probably Barclays Bank on your house and now Rex Goose. I have received another reminder from John Dewhurst for the balance of £2076.25 and obviously pressure is increasing. If we proceed to completion this week on the strength of Rex Goose's security then all will be well, but if not, I do think we should instigate the sale of some of the gems as soon as possible. Perhaps we can discuss this first thing on Thursday morning when I hope this letter will reach you."
The solicitors for Royal Bank of Scotland wrote again to Mr Wilson on 15th May 1985 confirming that bankruptcy proceedings had been commenced against Mr Bray.
20. On 18th May 1985 there was a meeting at Mr Bray's house in March between him, Mr Goose and Mr Wilson. Mr Wilson and his family were on their way from Brighton to Harrogate and had arranged to call in on Mr Bray. Mr Bray asked Mr Goose to drive down from Spalding to consider with Mr Wilson an offer of finance from Banque Populaire. Mr Goose knew nothing of Mr Bray's debts to TB and Royal Bank of Scotland or of the bankruptcy proceedings launched against Mr Bray. It is at this meeting that, as alleged by Mr Goose, Mr Wilson made the further representations on which he relies. The nature of the representation relied on is complicated by the terms of the order of the Court of Appeal directing a new trial.
21. In the trial before Harman J and in the retrial before Rimer J there was evidence as to the course of the meeting. Mr Bray, Mr Goose and Mr Wilson went through a manuscript list of points concerning finance for the scheme. In relation to point 5 the notes of the discussion prepared by Mr Wilson indicated that only £90,000 would remain from the stage 1 sterling loan from Manson for use by Intag as working capital. Thus there would be nothing for the acquisition of the land at Gracay or the outstanding amounts due for La Devinniere. As Rimer J recorded
"Under the heading "Capital a/c", Mr Wilson wrote:
La Devinniere £480,000
Gracay £200,000
--------
680,000
less 1/3 = 250,000 ex trust sales
--------
Rolling balance from Banque Populaire} 430,000
Secured on Devinniere & Gracay }"

The "ex trust sales" was a reference to the Stones. The original figure was £230,000 but, as the note shows, was altered to read £250,000. At the trial before Harman J Mr Goose contended that it was Mr Wilson who suggested that the figure should be increased to £250,000. Mr Wilson denied the allegation. Harman J accepted the evidence of Mr Wilson and held that Mr Wilson did not make any statements to Mr Goose or in Mr Goose's presence that afternoon to the effect that the Stones were available for sale or that they could produce £250,000. The Court of Appeal upheld this finding of Harman J but directed a retrial of the issues of misrepresentation at this meeting
"to the extent that the same arose out of the failure of Mr Wilson to correct the misrepresentation made by Mr Bray and/or to correct any misrepresentation found to have been made by Mr Wilson on any earlier occasion but excluding any claims based on an actual oral statement by Mr Wilson at the..meeting."
Rimer J recorded that before him
"Mr Wilson said that those figures would have come from Mr Bray, since he did not know them. However, he agreed that he had made an input here. He wanted to see a capital injection into Intag and recommended an injection of one third of the total acquisition cost. This pointed to a figure of about £230,000, which was the original "ex trust sales" figure he wrote down. Mr Bray then volunteered, as Mr Goose agreed in cross-examination, that it should be put up to £250,000. It was, and the alteration is apparent from the note. Mr Wilson agreed in evidence that the £250,000 would be raised from a sale of the stones, and that Mr Goose would have understood that, although a letter he wrote shortly afterwards suggested that he understood the money might also need to come from Zimbabwe. At this time the US$/£ exchange rate was about US$1.24, so that the sterling equivalent of the existing, but now elderly, valuations, was some £400,000. Mr Goose's evidence was that Mr Wilson said that the £250,000 would be raised from the stones."
22. On 28th May 1985 Mr Wilson wrote to Mr Bray to inform him that TB had set a deadline of 6th June by which their debt was to be satisfied failing which they would institute proceedings against Mr Bray and "the stones will be sold over your head". In June 1985 Mr Bray embarked on an acquisition of control of a confirming house called W.Allison Ltd. Originally this episode also gave rise to alleged misrepresentations made by Mr Wilson to Mr Goose. Rimer J rejected them and his conclusions in that respect are not now challenged. Accordingly we can pass on to 20th June 1985 when Mr Bray wrote to Mr Goose indicating that he was going to France to complete the documentation for a £300,000 loan from Banque Populaire to be used in the purchase of La Devinniere and suggested that if Mr Goose completed the Manson loan then Intag would repay Mr Goose's loan of £50,000 made on 18th October 1984 (see para.14) and lend him enough to clear other borrowings of his.
23. On 21st June 1985 Mr Goose went to see Mr Tongue of Roythornes, Mr Goose's family solicitors. This was not the first time that he had done so in connection with his association with Mr Bray. The first occasion was on 20th September 1984 the day after the first meeting of Intag. He telephoned him for advice on 23rd November 1984. On 6th March 1985 he consulted Mr Tongue again. On that occasion Mr Goose claimed, but Rimer J did not accept, that he had asked Mr Tongue "to check out" Mr Bray. On 22nd March 1985 Mr Goose went to Roythornes with Mr Bray. In addition Roythornes were acting on behalf of Mr Goose in deducing title to Hagbeach Farm for the purpose of the charge to be given to Mansons. On this occasion, 21st June 1985, Mr Goose showed Mr Tongue the letter from Mr Bray. Mr Tongue advised him in no uncertain terms that nothing Mr Bray had done was inconsistent with him being a con-man and that "the longer the situation continued the more likely it was that he was a con-man". Unfortunately Mr Goose did not accept this advice.
24. On 3rd July 1985 Mr Goose telephoned Mr Tongue. Mr Tongue's attendance note records
"You still did not know whether you would actually go to Manson, but the essence was that you wanted some money quickly. It seemed that you had been offered the renting of two further farms next to Devinniere, each of 500 acres, and you were going ahead with that.
Putting to you that you had not told us the full story, and you agreed that you had information that you had not passed on to us. Pointing out that on that basis we could not really advise you, and you fully accepted this. You had weighed the advice we had given you very carefully, but because of what you also knew, you had decided to proceed despite that advice. You appreciated our efforts on your behalf, and that legally our advice was entirely correct.
You had that day learned from an independent source that Bray had plenty of money. Pointing out to you that in that case the question arose as to why he didn't use that money instead of chasing round to Manson or such outfits. You said the money was all tied up, but we pointed out that if there was security a Bank would provide the bridging.
We assured you that we would do the best we could in the circumstances, and you expressed your confidence in that. We wished you well in all your ventures in France, but legally our advice would have to be to hasten slowly and with caution."
Mr Goose told Rimer J that the undisclosed information was that, as Mr Bray had told him, at some unknown time Mr Bray was to come into an unspecified sum of money by way of commission in a transaction in Zimbabwe concerning a metal wire company. On 16th July 1985 Mr Tongue wrote to Mr Goose giving him firm advice not to proceed with the Manson deal. He warned him
"... if the worst happens you will lose your English land, and if that is insufficient to meet the loan, you could lose the house and buildings and any other assets you may have, and in the last resort may even have to go bankrupt."
25. On 25th July 1985 the Manson deal was completed. Mr Goose charged Hagbeach Farm, excluding the Farmhouse, to secure £314,000 borrowed by Intag from Manson. Of this sum, £8,716 went in fees and expenses, £147,314 was remitted to Mr Goose, £26,268 was retained by Intag as working capital and £130,000 was remitted to Banque Populaire. The application of the latter sum has not been established. It is sufficient to record that it was not used in the purchase of La Devinniere, as it should have been, or otherwise for the benefit of Intag or Mr Goose. The assumption has been that it was used to pay other creditors of Mr Bray or otherwise for his personal benefit.
26. The subsequent events may, for present purposes, be shortly narrated. By October 1985 Intag had defaulted on the payment of interest on the Manson loan. Mr Goose took steps to salvage what he could from the wreck but without success. On 11th February 1986 a receiving order was made against Mr Bray. In March 1986 Mr Goose obtained from an assistant in the Official Receiver's office in Cambridge three large dustbin liners full of documents containing amongst other documents copies of Mr Wilson's letters to Mr Bray dated 11th October 1984 and 28th May 1985 (see paras 14 and 22). In April 1986 he sought to redeem the Stones from TB with money he borrowed from NatWest but withdrew at the end of that month when a Sotheby's valuer advised him that they were only worth between US$10,000 and US$15,000. On 20th May 1986 Mr Goose complained to the police about the conduct of Mr Bray who, on 1st November 1989, was convicted of various offences of dishonesty arising from his involvement in the scheme for which he was sentenced to 4 years imprisonment. On 4th June 1986 Intag was compulorily wound up. In July 1986 Mr Goose, who had been sued by Roythornes for unpaid fees, counterclaimed alleging negligence based on the allegation that on 22nd March 1985 he had instructed them "to check out" Mr Bray. On 20th October 1987, a bankruptcy order was made against Mr Goose. His counterclaim against Roythornes was stayed on 1st June 1989. On his discharge from bankruptcy on 20th October 1990 his trustee in bankruptcy assigned to Mr Goose the cause of action, if any, he had had against Wilson Sandford & Co. But on 22nd May 1991 Mr Goose's application to remove the stay on his counterclaim against Roythornes was dismissed.
The Proceedings


27. The writ in the first action was issued on 15th July 1991. No claim or allegation was made in that action relating to misrepresentations made at the meetings on 19th September 1984 and 18th May 1985 nor in the letter of 9th April 1985. Discovery in the first action took place at the end of 1993 or the beginning of 1994. It was in consequence of the documents then disclosed by Wilson Sandford & Co., which Mr Goose had not previously seen, that the second action was commenced by writ issued on 22nd April 1994. The actions were consolidated and a consolidated statement of claim was served on 25th April 1994. The terms of the scheme, defined as the Joint Venture, were set out in paragraphs 3 and 4. In paragraphs 14, 22 and 27 Mr Goose alleged that at the meeting held on 19th September 1984, in the letter to Mr Goose dated 9th April and at the meeting held on 18th May 1985 Mr Wilson represented to him that
a) that the Gemstones were owned by the Brent Foundation and/or Mr Bray;
b) that the Gemstones were available for and capable of providing security in a sufficient sum for the promotion of the Joint Venture..;
c) the Gemstones were worth approximately US$500,000 [at least £250,000 in the case of the meeting held on 18th May 1985]; and
d) the Joint Venture would not involve any real risk to Mr Goose's assets and that his interests would be safeguarded.
Mr Goose alleged that each representation was false and fraudulent, negligent or in breach of contract. In paragraphs 55 and 56 Mr Goose sought equitable compensation on the footing that Wilson Sandford had knowingly assisted Mr Bray in fraudulent and dishonest breaches of trust as set out in paragraph 5 thereof. Paragraph 5 alleged breaches of fiduciary duty on the part of Mr Bray in making fraudulent misrepresentations as to the value of the gemstones, the substance of his other assets, the involvement of Intag in the acquisition of the interest in W. Allison Ltd and failure to disclose his bankruptcy and previous convictions. In paragraph 5(6) Mr Goose claimed that Mr Bray had used the assets of Intag not for the purposes of Intag but for his own purposes. Particulars of the assets and purposes were set out in schedule 1 and included the £50,000 lent by Mr Goose on 18th October 1984 and £314,000 borrowed from Manson on 25th July 1985. The alleged acts of knowing assistance were set out in Schedule 2 and consist, in effect, of all the activities of Wilson Sandford & Co. involved in acting as auditors and accountants for Intag.
28. As we have indicated, after a trial lasting from 9th June to 13th July 1994, Harman J dismissed both actions. Mr Goose's appeal was partially successful in that on 13th February 1998 the Court of Appeal ordered a new trial of the allegations made in the second action of misrepresentation arising from what was said or written at the meeting held on 19th September 1984 and in the letter dated 9th April 1985 and, to the extent indicated in paragraph 21 above, from what was said or done at the meeting held on 18th May 1985. In addition a new trial was ordered in respect of the constructive trust and equitable claims to which we have referred and of all issues of reliance, causation, loss, contributory negligence, limitation and/or laches and the appropriate form of relief.
29. The retrial before Rimer J took place from 1st October to 13th November 1998. For the reasons he explained he did not read the judgment of Harman J. We have not read it either. The evidence in chief before Harman J was treated as the evidence in chief before him on which the witnesses were then cross-examined. Rimer J did not find either Mr Goose or Mr Wilson to be a reliable witness. In the case of Mr Goose he considered that some parts of his evidence were obviously wrong, other parts were embellished and that in at least one instance he invented an allegation to fit in with Mr Tongue's attendance note. Overall he concluded
"I therefore view Mr Goose's evidence with considerable caution. On those matters on which there are material factual conflicts, I have concluded that I cannot safely place reliance on it save where it is supported by other reliable evidence."
Rimer J described Mr Wilson as a careless and uninquiring accountant whose professionalism and integrity occasionally fell below proper standards. He issued a statement of affairs for Mr Bray which Harman J and the Court of Appeal had described as disgraceful and he wrote a letter which was untruthful. Rimer J did not accept that Mr Wilson had acted dishonestly throughout. His approach was
"..in assessing the case against him with regard to the occasions on which he is alleged to have made misrepresentations, I regard it as safer to have primary regard to what he actually knew, and was doing, by the time of each of such occasions."
30. The judge concluded that Mr Goose had not established a primary liability in respect of any of the causes of action on which he relied. Thus the claims based on misrepresentations, whether fraudulent, negligent or in breach of contract and for equitable compensation for knowing assistance in a fraudulent breach of trust all failed. The judge also considered, on the assumption that he was wrong on primary liability, the defences of limitation, contributory negligence and causation. He concluded that all the claims, if otherwise sustainable, were time barred, insofar as contributory negligence was relevant that Mr Goose was 75% at fault and that damages for many of the heads of loss for which compensation was sought were not recoverable.
31. We propose to deal with questions of primary liability first under the general headings of (1) misrepresentation and (2) knowing assistance in a dishonest breach of trust. If and insofar as any primary liability arises we will then consider the defences relied on under the headings of limitation, contributory negligence and remedy.
(1) Misrepresentation


32. In paragraph 27 above we have summarised the representations alleged by Mr Goose to have been made at the meetings held on 19th September 1984 and 18th May 1985 and in the letter dated 9th April 1985. At the retrial before Rimer J the representation we have summarised in sub-paragraph d) was not pursued, but the other three were. It is convenient to deal with the meetings and the letter in chronological order.
The Meeting held on 19th September 1984


33. Rimer J found that Mr Wilson (i) referred to the Stones as being Peter's stones; (ii) made no representations that they were worth approximately US$500,000; but (iii) insofar as they were obviously intended to play a part in the French venture, impliedly represented that they were available for use in it. Mr Goose does not appeal against the second of those findings.
34. With regard to the first of those findings Rimer J considered that the reference to the Stones as Peter's stones conveyed that the stones belonged to Mr Bray and were his to deal with. In the light of his conclusion that by 1984 the Stones did not belong to Mr Bray or the Brent Foundation he decided that the representation was false. Wilson Sandford & Co. contend that the judge was wrong because the statement the judge found that Mr Wilson had made was purely referential without any implication regarding ownership. Of course, such a statement may be purely referential or descriptive as in "Cleopatra's needle" or "Lincoln's Inn". Whether or not it is will depend on the context. In the context of the meeting held on 19th September 1984 and the discussion of the scheme and the paper to which we have referred in paragraphs 12 and 13 above we have no doubt that the conclusion to which the judge came was the correct one.
35. Wilson Sandford & Co also contend that the judge was wrong to have concluded that the representation was false in that Mr Bray had no right or title to deal with the Stones. It is contended that Mr Bray was entitled to deal with them as either the buyer or seller in possession or at least as the person in possession. We do not accept that submission either. On the judge's finding, to which we have referred in paragraph 8 above, in September 1984 Mr Bray was neither a buyer nor a seller. He had formerly been a buyer but was no longer. The discharge of the contract of purchase by mutual consent did not make him a seller. In any event Mr Bray was not in possession. The Stones were in the possession of TB. In the light of their lien Mr Bray was not entitled to possession as against TB even if, which he was not, he had been entitled to possession against Holford. Accordingly we see no reason to come to any different conclusion to that of the judge as to the making of the first implied representation and its falsity.
36. The judge also determined that there was implied in the express reference to Peter's stones the further representation that the Stones were freely available for use in the French venture and that insofar as they might be incumbered such incumbrances were capable of being discharged without recourse to the Stones themselves. The judge considered that this implied representation was also false because the Stones were subject to the lien of TB and the limited security to Barclays conferred by the confirmation TB gave in August 1992. Wilson Sandford & Co do not challenge that conclusion.
37. Thus Mr Wilson's express reference to Peter's stones gave rise to two implicit misrepresentations. Rimer J rejected the contention that they gave rise to a liability in negligence. He also considered that Mr Wilson had an honest belief in the first implied misrepresentation but not in the second. None of those findings is challenged. Thus the sole issue arising from the events of 19th September 1984 meeting is whether the implied misrepresentation that the Stones were all freely available for use in the French venture without resort either to the Swiss loan or the Stones themselves to redeem the incumbrances gave rise to a liability in deceit.
38. The judge resolved that issue in favour of Mr Wilson. He did so on two grounds. First he considered that Mr Wilson did not thereby intend to induce Mr Goose to enter into any transaction. Second he held that Mr Goose did not, in committing himself in due course to providing security for the Manson loan, rely on anything Mr Wilson said or wrote. Mr Goose challenges both those conclusions. In our view the second conclusion can only be properly reviewed in the light of the circumstances prevailing immediately before Mr Goose charged Hagbeach Farm to Manson on 25th July 1985 and therefore after the letter of 9th April 1985 and the meeting held on 18th May 1985. But we will deal with the first conclusion at this stage as 19th September 1984 is the relevant time for that purpose.
39. In considering whether the elements in the tort of deceit had been established the judge correctly directed himself as to the relevant standard of proof by reference to the statement of Lord Nicholls of Birkenhead in Re H and Others (Minors)(Sexual Abuse: Standard of Proof) [1996] AC 563, 586 that
"..the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence."
With regard to the ingredients of the tort of deceit he considered by reference to the speech of Lord Maugham in Bradford Third Equitable Benefit Building Society v Borders [1941] 2 AER 205, 211 that four things need to be established, namely,
"(i) a representation of fact; (ii) the making of it with knowledge that it is false; (iii) the making of it with the intention that it should be acted upon by the plaintiff, or by a class of persons which will include the plaintiff, in the manner which resulted in damage to him; and (iv) reliance on the representation by the plaintiff resulting in damage."
He pointed out with regard to the first requirement that the representation must be material because of its tendency or likely result to induce the representee to act on the faith of it in the kind of way in which he is proved to have acted. With regard to the third requirement Rimer J said
"Deceit is a deliberate tort by which A misleads B with the actual intention of inducing him to act in a particular way. If there is no such intention, or if B acts in claimed reliance on the misleading in a way which was not intended, there is no remedy in deceit. See Peek v. Gurney (1873) 6 L.R.H.L. 377, in particular per Lord Cairns, at 411 to 413, an authority referred to by Viscount Maugham (note Lord Cairns' example about the house sale); and see also Tackey v. McBain [1912] AC 186; Kitcher v. Fordham and Another [1955] 2 Ll.L.R. 705, at 707, 708, per Sellers J; and Clerk & Lindsell on Torts, 17th Ed., para. 14-29."
40. As we have already indicated the judge acquitted Mr Wilson of dishonesty in relation to the first but not the second implied representation. It is important to understand the basis for the distinction. It was that
"In referring to the stones as Peter Bray's stones, I find that Mr Wilson was relaying what he genuinely believed to be true and about which he had no doubt or reasonable grounds for doubt. Although, as I find, he was wrong in attributing ownership to Mr Bray rather than to Holford, there was nothing dishonest in the attribution. I reject the allegation that his misrepresentation as to title was made fraudulently so as to found a claim in deceit.
In so far, however, as Mr Wilson's reference to "Peter's stones" also implied that any incumbrances were capable of being discharged otherwise than out of the stones themselves or the proposed Swiss loan, I regard that as raising a more difficult question. Mr Wilson knew the stones were encumbered. He knew of no other assets which might be used to discharge the incumbrances; and, as I have said, he knew enough about Mr Bray to know that the probability was that there were none: either some stones would have to be sold in order to procure their release, or else part of the proposed Swiss loan would have to be applied in redeeming them. Further, although in his letter of 7 August Mr Schaefer had said that he did not regard the Barclays telex as legally binding, Mr Wilson had taken no legal advice on the point and had not obtained Barclays' view on it. Accordingly, considerations of prudence with regard to the availability of the stones pointed towards including the Barclays liability as a real rather than an imaginary fetter. However, as the stones were only secondary security for Barclays, I find that Mr Wilson could also reasonably take the view - and did - that the incumbrances were, in total, relatively immaterial compared with what he regarded as the substantial gross value of the stones. I find, however, that at the time of this meeting, he did not honestly believe that the stones could be released from the incumbrances except by a sale or by recourse to the proposed Swiss loan; and he did not disclose that to the meeting."
The judge accepted that the reason Mr Wilson did not reveal the incumbrances was because, in the absence of Mr Bray's consent, their disclosure would have involved a breach of client confidentiality. He rejected that as justification for Mr Wilson's failure to disclose the incumbrances and concluded that Mr Wilson
"..therefore joined in painting a picture as to the availability of the stones which showed only part of the truth; his implied statement as to the extent of their availability for the venture was, to his knowledge, untrue; and that was, on the face of it, dishonest."
41. We have already indicated the reasons why the judge rejected the allegation of deceit in respect of the representations made by Mr Wilson at the meeting held on 19th September 1984. They both relate to reliance. But it appears to us that there is a prior, but closely connected, question to which the judge did not expressly refer. To establish liability in deceit it is incumbent on the representee to show that the representor intended his statement to be understood by the representee in the sense in which it is false. In most cases this is not a problem because if the representor claims that he intended his words to bear a meaning they do not then he is not likely to be believed. But where a representation is ambiguous then the representee must do more than show that in its ordinary meaning the representation was false. Thus in Akerhielm v De Mare [1959] AC 789 the defendant had stated in representation (c) that "one third of the share capital had been subscribed in Denmark". In fact some of them had been allotted to persons resident in Kenya for services rendered in Denmark. The judge held that the representors honestly believed the statement in the sense in which they understood it. But the Court of Appeal took a different view. In the Privy Council, Lord Jenkins giving the advice of the Board, at page 805, said
"The Court of Appeal construed the language of representation (c) as they thought it should be construed according to the ordinary meaning of the words used, and having done so went on to hold that on the facts known to the defendants it was impossible that either of them could ever have believed the representation, as so construed, to be true. Their Lordships regard this as a wrong method of approach. The question is not whether the defendant in any given case honestly believed the representation to be true in the sense assigned to it by the court on an objective consideration of its truth or falsity, but whether he honestly believed the representation to be true in the sense in which he understood it albeit erroneously when it was made. This general proposition is no doubt subject to limitations. For instance, the meaning placed by the defendant on the representation made may be so far removed from the sense in which it would be understood by any reasonable person as to make it impossible to hold that the defendant honestly understood the representation to bear the meaning claimed by him and honestly believed it in that sense to be true. But that is not this case. It cannot be said that representation (c) could not have been understood by any reasonable person in the sense attributed to it by the Baron in his evidence, or that it was impossible that he should honestly have understood it in that sense, and honestly believed it in that sense to be true. He gave evidence to the effect that he did understand representation (c) in that sense, and did honestly understand it in that sense to be true, and was not cross-examined on either of those points, (For the general proposition that regard must be had to the sense in which a representation is understood by the person making it, see Derry v Peek (1889) 14 App Cas 337; 4 T.L.R.; Angus v Clifford [1891] 2 Ch 449; 7 TLR 447; Lees v Tod (1882) 9 Rettie 807, 854, which authorities must in their Lordships' view be preferred to Arnison v Smith (1889) 41 Ch. D. 348; 5 TLR 413 so far as inconsistent with them).
42. The same point arose in Gross v Hillman Ltd [1970] 1 Ch. 445. The judge had read the two letters relied on by the representee separately and had decided that so read the representations contained in each of them were true. The Court of Appeal considered that the letters should have been read together and that so regarded they falsely represented that the company in question was "a going concern". Cross LJ, with whom Harman and Widgery LJJ agreed, at page 459, said
"Finally, I come to the representation that the company was a "going concern", which was made if one reads the two letters together, as I think one should. If James intended the letters to convey the impression that the company was a going concern, or was willing that a recipient should get that impression, clearly he was guilty of fraud, because he knew very well that it was not a going concern. But although that is, in my view, the impression that the letters read together would naturally create, James cannot be held guilty of fraud unless he intended or was willing that they should be read in that way."
43. In argument in this court Counsel for Wilson Sandford & Co. submitted that the implication found by the judge to have been false was not shown to have been the sense in which Mr Wilson intended it to be understood. Certainly we have not been directed to any part of the comprehensive judgment of Rimer J in which he could be said to have arrived at a conclusion on this point adverse to Mr Wilson. Counsel for Mr Goose suggested that the proposition formulated in the advice of the Privy Council in Akerhielm v De Mare could not be applicable because Mr Wilson had never claimed that he did not intend his words to be understood in the sense of the implication found by the judge. In our view that is an inadequate response. The onus of proving deceit rested on Mr Goose. It was for him to demonstrate that Mr Wilson had intended the reference to "Peter's Stones" to be understood in the sense that they were available for use in the French venture because any incumbrances to which they were subject were capable of being discharged otherwise than out of the stones themselves or the proposed Swiss loan. There is no finding of the judge to that effect and, in our view, no basis on which this court could supply the omission.
44. Indeed we consider that the way the judge dealt with the issue of intention to induce Mr Goose to act on the representation indicates that he would have rejected any such contention. Having referred to the fact that he had rejected the allegation that Mr Wilson made representations as to the value of the Stones he continued
"If, however, precise values were not being discussed, and so were not material to the discussion, then it was also unnecessary to disclose relatively immaterial incumbrances. Even if Mr Wilson's omission to disclose the incumbrances can be regarded as dishonest, it was, as I find, not dishonesty which was motivated by any intention on his part to induce Mr Goose to enter into any transaction in reliance on what Mr Wilson may have been implying. It was dishonesty motivated by Mr Wilson's instinctive wish to preserve client confidentiality.
Moreover, I anyway regard as quite unreal the suggestion that anything which Mr Wilson said at this meeting was said with the intention of inducing Mr Goose to commit himself to anything. It plainly could not have been intended to induce the Manson loan or any like sterling loan: the three stage operation of which that formed stage 1 was not thought of until 1985. All that was being discussed in September 1984 was the raising of a single Swiss franc loan by Intag, followed by loans by Intag to each participant, with each participant being liable only for his own loan. The stones were, however, not intended to represent security for anything other than Mr Bray's loan; and so Mr Wilson cannot have intended Mr Goose to rely in any way on what he may have implied about the stones. Putting this part of the case against him at its highest, his representations may have gone to the extent of the net realisable value of the stones. No doubt their value, and more particularly their gross value, would be of the highest relevance when Intag's loan proposals were put to the banks. But how much the banks might be prepared to lend on them was exclusively up to them; and, if they overlent on the stones, that would and could not expose Mr Goose to a greater personal risk than he was prepared to take on, because the stones were anyway not going to be available as security for his loan. They were simply irrelevant to any liability to which he might be prepared to subject himself.
In this connection, I have not overlooked Mr Goose's evidence that the stones, or some imprecise proportion of them, were intended to represent a so-called buffer against currency fluctuations for the benefit of all participants. However, I regard this evidence as something of a red herring in the context of this particular issue. I accept that some such idea was discussed with Mr Bray. But the way in which it was intended to work, or might have worked, was never put on paper and appears never to have received any concrete consideration. Nothing that Mr Wilson may have said at the September 1984 meeting could have induced, or been intended to induce, Mr Goose to act in any foreseeable way in reliance on some belief that the stones would provide him with the benefit of some supposed buffer. He could only thereafter have so acted if some concrete buffer proposal, as part of the Swiss loan transaction, had actually been worked out and agreed - but it never was.
I find, therefore, that even if the non-disclosure of the incumbrances made Mr Wilson's unqualified references to "Peter's stones" a dishonest misrepresentation, it was not one which satisfied the third requirement listed in the Borders case. I reject the claim that it induced Mr Goose to commit himself to the Manson loan. That cannot have been actually intended by Mr Wilson, nor can he be presumed to have intended it. It was as remote an event as Lord Cairns' mortgage in the example given at p.411 in Peek v. Gurney, supra. I reject Mr Goose's claim in deceit based on the September 1984 meeting."
45. It is submitted that the judge wrongly confused motive with intention, failed to have regard to the presumption of intention arising from the making of a dishonest representation and wrongly restricted the necessary intention to inducement to act "in the manner which resulted in damage to him". We deal with each of these contentions in turn.
46. It is correct, as counsel for Mr Goose submitted, that the relevant question relates to the intention of Mr Wilson not the motive which lay behind it: Derry v Peek (1889) 14 App.Cas.337, 365. But it is not suggested that the judge is precluded from considering motive in deciding whether the representor had the necessary intention. It appears to us that in the passage from his judgment in which the judge considers the question of intention his references to motive are used in this, legitimate, sense. In the first paragraph of the passage from the judgment of Rimer J we have quoted in paragraph 44 he twice refers to the question whether the dishonesty (if any) was motivated by an intention to induce Mr Goose to enter into any transaction. But in the succeeding three paragraphs he deals with the intention of Mr Wilson without any further consideration of motive. In our view it is clear that the judge's conclusion related to the intention of Mr Wilson not his motive.
47. It is also correct, as counsel for Mr Goose submitted, that if a fraudulent misrepresentation is found to have been made it will give rise to a rebuttable presumption of fact that the representor intended the representee to act in reliance on it: Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co. Ltd [1995] 1 AC 501, 542A; Barton v County NatWest Ltd [1999] Ll.L.R.(Banking) 408, 421. There is obvious sense in such a presumption for if the representor did not intend the representee to act on the faith of his statement why did he lie. But we cannot accept the criticism of the judge's judgment that he failed to appreciate the existence and force of the presumption. It is true that he did not refer to any of the authorities which recognise its existence. But in the last paragraph of the relevant passage we have quoted in paragraph 44 the judge held that
"That (sc.the charge to secure the Manson Loan) cannot have been actually intended by Mr Wilson, nor can he be presumed to have intended it."
48. The third criticism arose from the judge's summary of the third principle he deduced from the speech of Lord Maugham in Bradford Third Equitable Benefit Building Society v Borders [1941] 2 AER 205, 211 namely that the representor should have intended that the representation "should be acted on by the plaintiff...in the manner which resulted in damage to him". It was suggested at one stage in the argument that this formulation wrongly restricted the requisite intention. We would agree if the statement was taken to require the representor to intend to induce the specific action taken by the representee in reliance on the misrepresentation. The more normal formulation is that the representor should intend to deceive the representee, with intent, that is to say, that it shall be acted upon by him. Clerk & Lindsell 17th Ed. Para 14-29. It appears to us that the additional limitation arose from observations of Lord Hatherley in Barry v Croskey (1861) 2 J & H 117, quoted by Lord Cairns in Peek v Gurney (1873) L.R. 6 E & I Appeals 377 at pp.412/3 and subsequently applied in Tackey v McBain [1912] AC 186. But in those contexts it is limited to cases in which the fraudulent misrepresentation was made to someone other than the plaintiff. In this case the representation was made directly to Mr Goose. But, in any event, there is no indication in the passage from the judgment of Rimer J that he did in applying the principle wrongly restrict it. He referred to the absence of any intention on the part of Mr Wilson to induce Mr Goose "to enter into any transaction" or "to commit himself to anything". He considered that the Stones were "simply irrelevant to any liability to which he might be prepared to subject himself". These were findings of fact open to the judge on the evidence before him.
49. For these reasons we agree with the judge's decision to reject Mr Goose's claim in deceit arising from the statements made by Mr Wilson at the meeting held on 19th September 1984. In our view it was not established that Mr Wilson intended Mr Goose to understand his references to "Peter's stones" as carrying the implication that they were available for use in the French venture because any incumbrances to which they were subject were capable of being discharged otherwise than out of the stones themselves or the proposed Swiss loan. In addition we agree with the judge that "even if Mr Wilson's omission to disclose the incumbrances can be regarded as dishonest" the statements were not made with the intention to induce Mr Goose to enter into any transaction in reliance on his statements.
The letter dated 9th April 1985


50. Rimer J found that the letter, the relevant terms of which we have quoted in paragraph 17, reflected a deal negotiated by Mr Wilson with Mr John Wilson, the Manager of the branch of NatWest Bank in Spalding. He considered that the reference to "P.J.Bray's gems" was a misrepresentation because it conveyed "that they were Mr Bray's stones" which, given his finding as to Holford's title, they were not. But, as in the case of the meeting held on 19th September 1984, he found that Mr Wilson honestly believed that Mr Bray was entitled to the Stones. He concluded that the letter contained no representation express or implied that they were worth US$500,000. Mr Goose does not appeal from any of these conclusions. Wilson Sandford & Co sought to uphold the judge's decision on the basis that the terms used were purely descriptive and were true because Mr Bray was in possession of the Stones. We reject both those points for the same reasons as in the case of the statements made at the meeting held on 19th September 1984.
51. Rimer J accepted the submission for Mr Goose that the letter represented that the Stones were available as, and capable of providing, the security therein described and that such representation was false. He did not consider that it implied that the Stones were not then subject to incumbrances rather than that such incumbrances could be redeemed otherwise than from the proceeds of sale of some of them or by raising the requisite funds from elsewhere. He held
"I accept that Mr Wilson still believed that the stones were of substantial value, although less than US$500,000. But it was by now obvious that Mr Bray was unable to find the money to discharge the incumbrances; and that the only way they could be discharged was either by selling the stones (to which no doubt Trinkhaus would have assented) or by raising money elsewhere; and the Barclays position had still not been resolved. Given these facts, the vice of the letter is that it was so drafted as to mislead Mr Goose into believing that the prior security over the stones could be given when Mr Wilson knew it could not."
The judge considered that the misrepresentation was dishonestly made by Mr Wilson in that he wrote what he did knowing that it was untrue.
52. However, as in the case of the earlier meeting, Rimer J rejected the claim in deceit on the ground that the third requirement he deduced from the speech of Lord Maugham in Bradford Third Equitable Benefit Building Society v Borders [1941] 2 AER 205, 211 had not been established. First, he found that Mr Wilson did not intend and could not be presumed to have intended that Mr Goose should rely on what he wrote in this letter in subsequently agreeing to charge Hagbeach Farm as security for the Manson loan. Second, he was not satisfied that when writing the letter Mr Wilson intended to induce Mr Goose to charge Hagbeach Farm as security for a NatWest loan on the understanding, derived from the letter, that an effective undertaking to NatWest so as to give a good prior security over the Stones could be given. He found it difficult to accept that Mr Wilson, whose role was only that of an accountant acting for Intag and Mr Bray "had any motive or intention to induce Mr Goose into acting in some way in reliance on what he was writing". In an important passage in his judgment Rimer J elaborated on these conclusions. He said
"I accept that in many cases of alleged deceit it will be possible to infer the necessary intention merely from the making of the misrepresentation: indeed, often there will be no other material from which the finding as to intention might be made. I do not, however, feel able to draw such an inference in this case. The essence of what Mr Wilson was doing was reporting as to a possible transaction, which still awaited NatWest's approval (no loan offer had yet been made, and in fact none was ever made). It might well anyway have come to nothing but, if it was to come to anything, it was obvious that it would need a good deal of further working out. It was, moreover, a transaction in which professionals for both Mr Goose and NatWest would be likely to be involved, something which Mr Wilson knew perfectly well. He knew that, had a loan been offered and proceeded with, NatWest would in the ordinary course have made its own investigations about the stones, their value and the title to them and would have unearthed the incumbrances and the need to have them discharged before the proposed security could be given. He also knew that Roythornes would probably make like investigations on Mr Goose's behalf, since Mr Goose's interest in the validity, enforceability and worth of the prior security was likely to be just as great as NatWest's: in fact, it was likely to be greater, since NatWest might perhaps have been prepared to place primary reliance on its security over Hagbeach Farm.
I accept that considerations such as these do not, by themselves, show that the representor did not have the requisite intention for deceit purposes. However, I regard them as factors which I must bear in mind in assessing whether Mr Goose has overcome the onerous evidential burden of proving the necessary intention on the part of Mr Wilson. In deciding this issue, the consideration which carries most weight with me is the lack of motive. A proposing house vendor who lies to his proposing purchaser that his house is free of subsidence may well ordinarily be presumed to have intended to induce the purchaser to buy, even though he might foresee the possibility or the likelihood that the purchaser would first have a survey done which would reveal the lie. But Mr Wilson was in a rather different class. He was not acting as a principal in the matter. He was simply a chartered accountant acting on behalf of a rather unsatisfactory client, Mr Bray. Why should he have decided to embark upon the deliberate and dishonest misleading of his client's business associate, with the intention of deceiving him into believing that an undertaking to deliver the stones to NatWest would constitute a good prior charge over them? What had he to gain? As far as I can see, he had nothing to gain: but he had a reputation and career to lose.
Having giving this issue careful consideration, I conclude that it is probable, and I find, that what motivated Mr Wilson in writing what he did was not any sort of intention to induce Mr Goose to act in some way in reliance on what he wrote; and I find that he had no such intention. I find that what did motivate him was an intention to keep Mr Bray's liabilities confidential; and I consider it probable that he also had in mind that the liabilities would in fact be discharged out of the Intag moneys which were, according to the letter, to be paid to Societe Generale.
In the event, no NatWest loan was offered. Even if the letter was calculated to induce Mr Goose to rely on it in some way in connection with such a loan, he did not do so. Nor did he rely on it in a like manner. He claims to have relied on it in a manner of a quite different character, namely in taking the Manson loan, being a transaction in which the stones played no part. I find, as I have said, that Mr Wilson did not intend that; and nor can he be presumed to have intended it. I find that the deceit claim based on this letter fails."
53. This passage is criticised by counsel for Mr Goose on the same grounds as before. It is contended that the judge failed to distinguish motive and intention, failed to pay proper regard to the presumption arising from the making of a fraudulent statement and wrongly restricted the requisite intention to inducing Mr Goose to enter into the transaction then under consideration or some other comparable transaction.
54. There can be no doubt in this case that Mr Wilson is to be taken as having intended Mr Goose to understand the representation in the sense he knew to be false for in relation to prior security it was express, not merely implied from the reference to "P.J.Bray's gems". But we still reject the criticisms made of the judgment of Rimer J.
55. First, as in the case of the earlier meeting, the judge again referred to Mr Wilson's motivation. But it is equally plain that he did so in order to arrive at a conclusion as to Mr Wilson's intention. His conclusion on this issue was, evidently, one of fact. In our view it is legitimate to consider motive or its absence in reaching a conclusion on intention. Second, though the judge did not refer to the cases in which the presumption arising from fraudulent misrepresentations is recognised he paid regard to the presumption. Twice he found that Mr Wilson did not intend and could not be presumed to have intended to induce Mr Goose to act in reliance on his misrepresentation. Third, he did not wrongly restrict the requisite intention. He rejected the contention that Mr Wilson intended "to induce Mr Goose to act in some way in reliance on what he wrote". As the judge pointed out there was no connection between the letter and the subsequent actions of Mr Goose on which he relies.
56. For all these reasons we consider that the judge was right to reject the claim of Mr Goose for deceit arising out of the terms of this letter.
The Meeting held on 18th May 1985


57. We have already explained, in paragraph 21 above, the limited nature of the issue which arose at the retrial in relation to the events of this meeting. Before Rimer J it was contended on behalf of Mr Goose that by recommending the initial one third contribution which was then increased to £250,000 by Mr Bray Mr Wilson was party to the deceit said to have been practised by Mr Bray in promising £250,000. Rimer J rejected the submission because he considered that the order of the Court of Appeal precluded him from considering it. He said
"It is not possible to advance the argument without placing reliance on Mr Wilson's oral statement at the meeting recommending that Mr Bray should put up one third of the gross cost of the two farms. But the order prohibits such reliance. It requires me to assume that Mr Wilson remained silent at the meeting and that only Mr Bray made any representations."
This is disputed by counsel for Mr Goose. They contended that the judge was not bound to ignore what Mr Wilson said at the meeting.
58. In our view it is clear that the order of the Court of Appeal excluded from consideration any claim based on any actual oral statement of Mr Wilson. The basis for the order is apparent from paragraphs 154-156 of the judgment of the Court of Appeal to which the order gave effect. The Court said
"154 The next point relates to Mr. Wilson's role at the meeting in Mr. Bray's home on 18 May 1985. We have summarised the relevant evidence at paras 59 - 62 above. Mr. Goose claims that the essence of the representation made by Mr. Wilson on this date was that the gemstones could be sold and when sold they would realise £250,000, and that there would still be sufficient stones left to provide further valuable security on the basis of which long-term borrowing could be made. It was therefore necessarily represented that the gemstones were available for use as security, and that they were worth at least £250,000 and that they were owned by Mr. Bray.
155. This was another occasion on which the judge made a mistake. The issue turned on the identity of the person responsible for the statement which is recorded in Mr. Wilson's note as "less 1/3 = 250,000 (ex trust sales)". Mr. Goose asserted that it was Mr. Wilson's statement, while the judge recorded Mr. Wilson as saying that it must have been Mr. Bray who made the statement and that he merely recorded it. In fact Mr. Wilson told the judge that the figure of one third was indeed his recommendation, which he made for the reasons we have recorded earlier in this judgment (para 63), and that he believed he wrote down `230' and that Mr. Bray said "make it `250'".
156. This small mistake on the judge's part, while contributing to our anxiety about the safety of his overall findings, does not affect our view of the safety of his finding on this particular issue. On an occasion when Mr. Bray was present, presenting new proposals following his discussions with Banque Populaire, it would have been natural for Mr. Bray to make the running, and we see no reason to doubt the soundness of the judge's findings that on this occasion Mr. Wilson did not make any relevant representations about the availability or value of the gemstones. On the other hand he did nothing to correct what Mr. Bray was now saying, a matter which might have to be borne in mind if on a retrial he was found to have made earlier positive representations on this issue."
We do not understand the order or the reasons for it to require the court to assume on the retrial, contrary to the facts, that Mr Wilson said nothing. What is precluded is a finding that he made any representation other than one arising from a failure to correct any representation made by Mr Bray at the meeting or a failure to correct any representation made by Mr Wilson on some earlier occasion.
59. The only pleaded allegation of a representation made at this meeting by Mr Bray is contained in paragraph 26 of the consolidated statement of claim to the effect that
"..Mr Bray stated that Mr Bray would contribute £250,000 to the proposed purchase of La Devinniere and Gracay farms "ex trust sales", by which was meant sales of the gemstones belonging to Mr Bray and/or the Brent Foundation."
This was rejected by the judge on the footing that it was not a representation of an existing fact. However he approached the matter on the footing that implicit in the statement was a representation that (i) Mr Bray or the Brent Foundation owned the Stones, and (ii) such stones were worth at least £250,000.
60. With regard to the representation as to ownership of the stones the judge considered that nothing new had come to the notice of Mr Wilson by 18th May so that he was under no duty to correct either anything said by Bray at the meeting held on 18th May 1985 or by Mr Wilson himself at the meeting held on 19th September 1984 or in the letter dated 9th April 1985.
61. With regard to the representation of value the judge observed that he had not found that Mr Wilson had previously made any representation as to value and so had said and done nothing in this respect requiring him to make any correction. Mr Bray had, of course, made an implied statement as to the net value of the Stones amounting to at least £250,000. This was not corrected by Mr Wilson. As to Mr Wilson's failure in that regard the judge said
"Mr Wilson was (as I find) in no position to know whether that was right or wrong. I accept his evidence that he still believed the stones to be of substantial value; and there is no evidence of their actual value at this time. I do not consider it was part of his duty to tell Mr Goose that Mr Bray might not be able to realise that much. Until Mr Bray attempted a sale, it was unknown how much they would realise. That was obvious, even to Mr Goose, and Mr Goose did not need Mr Wilson to tell him that. It was not part of Mr Wilson's function to question his client's stated intentions in front of Mr Goose. Mr Goose and Mr Bray were two businessmen negotiating a deal. Mr Wilson was Mr Bray's adviser. Mr Goose had advisers of his own: and they were giving him all the advice he needed as to the risks in the venture."
62. Rimer J also considered the representation contained in the letter of 9th April 1985 as to the Stones' freedom from incumbrances and availability as prior security for the loan then contemplated. This, he pointed out, remained uncorrected. The judge's overall conclusion was that no new representations whether orally or by silence were made by Mr Wilson at this meeting.
63. Counsel for Mr Goose contended that the judge was wrong in failing to find that Mr Wilson should have corrected Mr Bray's representation as to value. It is suggested that Mr Wilson knew that the incumbrances, the further debts by now apparent from the correspondence with the solicitors for Royal Bank of Scotland and the pending bankruptcy petition would prevent the sum of £250,000 or anything approaching that sum becoming available from the proceeds of sale of the Stones. The total known liabilities of Mr Bray are said to have amounted to £155,000 as at 1st May 1985 and are unlikely to have been reduced by 18th May. But this contention was directly addressed by the judge in the passage from his judgment we have quoted in paragraph 61 above. We do not read that passage as involving any finding that Mr Wilson did not have an honest belief in the truth of what Mr Bray said. If the Stones fetched anything like the figure which had been mentioned before then there would be sufficient to pay off the debts, thereby disposing of the bankruptcy petition, and still leave £250,000 available.
64. But we would go further. The alleged statement of Mr Bray clearly involved accepting that the Stones would be sold and that something less than the proceeds of sale of all the Stones could and would be made available. Plainly this representation differed from that found by the judge to be contained in the letter of 9th April 1985 to which we have referred in paragraph 51 above. To that extent the statement of Mr Bray corrected the statement previously made by Mr Wilson. We see no reason why Mr Wilson's acquiescence in the statement of Mr Bray should not be treated as discharging any remaining obligation of Mr Wilson to correct his previous misrepresentations.
65. For these reasons we agree with Rimer J that no new representations were made by Mr Wilson at the meeting held on 18th May 1985. In addition we consider that the statement of Mr Bray was sufficient correction of the previous statement made by Mr Wilson as to the availability of the Stones to provide the security referred to in the letter dated 9th April 1985.
Inducement and Reliance


66. In paragraph 38 above we indicated that having considered the prior questions arising in respect of the two meetings and the letter we would return to the fourth requirement of a liability in deceit that the representee should have been induced to act in some way to his detriment by reliance on the representation. In view of our conclusions thus far the point does not arise for we have decided that in respect of each of the representations relied on one or more of the first three requirements, as described in paragraph 39 above, have not been established. Nevertheless as this was one of the two grounds on which the judge dismissed the claims in deceit we should deal with it. In addition closely related issues, to which we will refer separately and later, arise in respect of Mr Goose's alternative claims in negligence and breach of fiduciary duty founded on the representations contained in the letter dated 9th April 1985.
67. Rimer J approached this issue on the assumption that he was wrong on all the prior issues so that he had to consider whether or not Mr Goose was in fact induced to enter into the Manson loan by anything Mr Wilson said or wrote. The judge rejected the submission that the Stones were at all times irrelevant to any security Mr Goose might give. He pointed out that though, apart from the personal guarantees, Hagbeach Farm was the only security for the loan from Mansons the Stones were relevant to it as providing security for the Swiss Franc loan with which the Manson loan was to be repaid.
68. But the judge also decided that Mr Goose had convinced himself that the Stones were worth US$500,000, but had done so by relying on sources other than Mr Wilson. Rimer J considered that Mr Goose saw his only prospect of being repaid the £60,000 he had lent to Mr Bray or Intag to lie in proceeding with the transaction. The judge also pointed out that Mr Goose could not be certain as to the value of the Stones but was not prepared to go to the expense or trouble of having them valued or checked. Rimer J thought that Mr Goose was impressed by Mr Bray and had confidence in him notwithstanding the advice of Roythornes.
69. The conclusion of Rimer J was
"I do not accept Mr Goose's case that, in committing himself to the Manson loan, he relied on anything that Mr Wilson ever said or wrote. I do not believe him. I find it remarkable that it was not until 1994 that he remembered that he had, as he now claims, been misled by the meetings of 19 September and 18 May and by the letter of 9 April. Those meetings were within his knowledge from the moments they respectively happened; and the letter was in his possession from 10 April. If anything Mr Wilson had said at those meetings or in that letter had any material impact on him, then I would have expected him to raise it with Mr Wilson by no later than 1986, by when the balloon had gone up. I find that the reason he raised no complaint until 1994 that Mr Wilson had misled him, even if only innocently, about any of the matters of which he now complains is because he did not consider that Mr Wilson had misled him.
I have found that, in so far as Mr Wilson's letter of 9 April made a misrepresentation as to the stones' freedom from incumbrances, it was not one which was intended to or can even be presumed to have intended to induce the Manson loan, which was a transaction of a character materially different from that contemplated by the letter. If that conclusion is wrong, I find that, anyway, by 9 April 1985 Mr Goose had already convinced himself that the stones were worth US$500,000, or some £415,000; and by the time of the Manson loan he anyway only expected Mr Bray to bring £250,000 into the venture from the stones. The letter of 9 April said nothing about value, and could not have led Mr Goose to believe that the stones were worth even as much as £250,000. It did not, strictly speaking, even imply that they were free from incumbrances: it at most implied that any incumbrances could be discharged without recourse to the stones or the proposed loan. I find that the letter of 9 April 1985 had no effect in inducing Mr Goose to enter into the Manson transaction and that he placed no reliance on it in doing so. It follows, in my judgment, that Mr Wilson's misrepresentation in that letter (whether characterised as deceit, negligence or breach of fiduciary duty) was not causative of any of the loss which Mr Goose claims to have suffered in consequence of the Manson transaction.
I also find that, such was Mr Goose's determination to proceed with the French venture, a disclosure to him of the Trinkhaus and Barclays incumbrances would not have deterred him from going ahead. He would not have regarded them as material in the light of the value he attached to the stones. He did not turn a hair when, in November 1985, he learnt of the Trinkhaus charges: he did not rush to Mr Wilson and complain he had earlier misled him. Nor did he so complain in the 1991 action, although his case in it was that Mr Wilson was his own accountant. Mr Goose was convinced the stones were very valuable, any such charges would have been relatively immaterial, and they would not have stood in the way of the raising by Mr Bray of the promised £250,000. He said in cross-examination that knowledge of a prior charge of £25,000 would not have worried him in the context of stones worth £400,000. It was Mr Goose's firm belief that Mr Bray could and would, one way or another, raise £250,000 which was the motivating factor in his taking on the Manson loan.
In summary, I find that, from the start, Mr Goose was determined to proceed with the Intag venture, his enthusiasm to do so never faltered and there came a point when he considered he could not pull out of it. He was given sound advice by his solicitors that he would be unwise to do so, but he thought he knew better. I find he was not induced to enter into the Manson loan by anything Mr Wilson said, wrote or implied; and that nor did he place reliance on anything Mr Wilson said, wrote or implied in his decision to do so. I reject all Mr Goose's claims based on the meetings of 19 September 1984 and 18 May 1985 and the letter of 9 April 1985."
70. Counsel for Mr Goose submitted that the factors relied on by the judge did not warrant his conclusion. They identified five such factors, namely (1) the value of the Stones, (2) the recovery of £60,000, (3) the desire for quick repayment, (4) Mr Goose's opinion of Mr Bray and (5) the rejection of the evidence of Mr Goose. We will consider each in turn. But first it is necessary to reiterate the assumption on which the point is to be considered. The question of inducement arises from the misrepresentations relied on. Though initially they were many and of widely varying effect, on this appeal they were limited to (a) the representation made at the meeting held on 19th September 1984 that the Stones were all freely available for use in the French venture without resort either to the Stones or the Swiss Loan to redeem the incumbrances, (b) the representation contained in the letter dated 9th April 1985 that Mr Bray could redeem the Stones otherwise than from their sale or from other borrowings, and (c) the representation made by Mr Bray and uncorrected by Mr Wilson at the meeting held on 18th May 1985 that £250,000 could and would be contributed to the proposed purchases of land in France from the proceeds of sale of the Stones. It is to be assumed that each of those representations continued up to 25th July 1985 when Mr Goose executed the charge over Hagbeach Farm in favour of Manson. But it is obvious that representation (c) necessarily qualified and to that extent superseded representations (a) and (b).
71. In challenging the five factors to which the judge referred counsel for Mr Goose asked rhetorically whether it could be assumed that Mr Goose would have proceeded with the transaction had he known the truth. He emphasised the relevance of the further debts due by Mr Bray to Royal Bank of Scotland and the bankruptcy petition presented against him. Thus the value of the Stones was tied up with the amounts secured on them and Mr Bray's ability to sell them. Quick recovery of the £60,000 previously lent could not be facilitated by charging Hagbeach Farm with a further loan. If Mr Goose had known the truth his opinion of Mr Bray must have changed for the worse.
72. But, in our view, these points go well beyond the much narrower issue before the court. There was no obligation on Mr Wilson, indeed quite the opposite, to disclose the general financial state of Mr Bray. The proper question is would Mr Goose have acted differently if the three misrepresentations relied on had never been made. In this connection it is necessary to have regard to the circumstances prevailing in July 1985. With regard to the value of the Stones Mr Goose's opinion was derived from sources other than Mr Wilson and therefore wholly unaffected by any of the misrepresentations relied on. The desire for a speedy recovery of the £60,000 previously lent would not have been tempered if the representations had not been made. Nor would Mr Goose's opinion of Mr Bray have been coloured by the omission of any of the misrepresentations. Likewise the rejection of the evidence of Mr Goose was a matter for the judge. He did not regard Mr Goose as reliable and was, in our view, fully justified in rejecting his contention that he had been induced to enter into the charge of Hagbeach Farm to secure the Manson loan by anything said or written by Mr Wilson.
73. In our view the conclusion of Rimer J was a decision on a question of fact to be determined in the light of all the evidence before him, including the oral evidence of Mr Goose. We see no reason to disagree with his conclusion. It follows that on this ground also we would dismiss all the claims based on deceit arising from representations made by Mr Wilson at the meetings held on 19th September 1984 and 18th May 1985 and in the letter dated 9th April 1985.
Negligence/Agency


74. Originally Mr Goose claimed that the representations on which he relied had, if not made fraudulently, been made negligently. Rimer J rejected the claim in respect of the representations made at the meeting held on 19th September 1984 on the ground that Wilson Sandford & Co. or Mr Wilson owed no duty of care to Mr Goose. There is no appeal from that decision. It is not suggested that a claim in negligence arising from the events of the meeting held on 18th May 1985 is open to Mr Goose in the light of the terms of the order for the retrial quoted in paragraph 21 above. Accordingly the question of negligence arises only in relation to the letter of 9th April 1985. Rimer J considered that issue in conjunction with another arising from Mr Goose's claim that in negotiating with NatWest Mr Wilson had acted as his agent.
75. In relation to negligence Rimer J found that
"Mr Wilson wrote a letter [9th April 1985] which concealed this problem [redemption of the prior incumbrances]. I find that, in failing to do so and in implying what he did about the availability of the stones as security, Mr Wilson committed a breach of the duty of care in tort which he owed Mr Goose in reporting to him on the proposed NatWest transaction."
Wilson Sandford & Co. do not challenge this conclusion. Rimer J then pointed out that the proposed transaction on which Mr Wilson was reporting went no further; instead the Manson loan was taken up, but on different terms. The judge found that when Mr Wilson wrote the letter dated 9th April 1985 he did not and could not reasonably foresee that Mr Goose would rely on what it implied about the Stones when subsequently deciding whether to commit himself to the Manson loan. This finding is not appealed either. Accordingly it would appear to us that the claim in negligence necessarily fails.
76. In relation to agency Rimer J held that
"Mr Wilson also committed a breach of a duty which can, I consider, properly be regarded as a fiduciary duty. When he wrote his letter of 9 April, Mr Wilson was acting for three principals, including Mr Goose and Mr Bray. That did not put him in breach of the "double employment" rule referred to by Millett L.J. at p. 19 of the Mothew case, because Mr Goose knew that he was so acting. But he did commit a breach of "the duty of good faith" also referred to by Millett L.J. because, as I find, he intentionally preferred Mr Bray's interests by concealing the incumbrances from Mr Goose, whereas the due discharge of that duty to Mr Goose at least required the disclosure of those matters. I find, therefore, that the misleading in the letter of 9 April 1985 also constituted a breach of a fiduciary duty owed by Mr Wilson to Mr Goose. I do not, however, consider that the breach of that duty went any wider than that."
Wilson Sandford & Co. do not challenge that conclusion either.
77. When the judge came to deal with the issue of reliance he found, in the passage from his judgment we have quoted in paragraph 69 above, that the letter of 9th April had no effect in inducing Mr Goose to enter into the Manson transaction and that he placed no reliance on it in doing so. The judge therefore concluded that Mr Wilson's misrepresentation in that letter "(whether characterised as...negligence or breach of fiduciary duty) was not causative of any of the loss which Mr Goose claims to have suffered in consequence of the Manson transaction". These conclusions are challenged by Mr Goose for much the same reasons as those advanced in relation to his deceit claims.
78. It was submitted that it was foreseeable that if the NatWest loan did not proceed then the failure accurately to report the negotiations with NatWest might have continuing effect. But if a representation is to have continuing effect it must be reconsidered in the light of the intervening subsequent events. In this case the misrepresentation contained in the letter was substantially qualified and superseded by the events of the meeting held on 18th May 1985. And with regard to the breach of fiduciary duty there was no duty on Mr Wilson to reveal all he knew about Mr Bray's financial affairs. As the judge found it was no part of Mr Wilson's role to make any wider disclosure about what he knew about the Stones.
79. We see no reason to come to any different conclusion from that of the judge. As counsel for Mr Goose recognised the issue of inducement and the outcome of the appeal in that respect is to a substantial degree the same for negligence and breach of fiduciary duty as in deceit.
(2) Dishonest Assistance by Mr Wilson in the breach of fiduciary duty by Mr Bray


80. Such a claim is founded on the statement of principle by Lord Selborne LC in Barnes v Addy (1874) LR 9 Ch.App. 244 at 251 that
"strangers are not to be made constructive trustees merely because they act as agents of trustees in transactions within their legal powers, transactions, perhaps of which a Court of Equity may disapprove, unless those agents receive and become chargeable with some part of the trust property, or unless they assist with knowledge in a dishonest and fraudulent design on the part of the trustees."
It is now clear from the advice of the Privy Council in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 that the stranger assisting with knowledge must himself be dishonest. As Lord Nicholls of Birkenhead said (p.392F)
"Drawing the threads together, their Lordships' overall conclusion is that dishonesty is a necessary ingredient of accessory liability. It is also a sufficient ingredient. A liability in equity to make good resulting loss attaches to a person who dishonestly procures or assists in a breach of trust or fiduciary obligation. It is not necessary that, in addition, the trustee or fiduciary was acting dishonestly, although this will usually be so where the third party who is assisting him is acting dishonestly. 'Knowingly' is better avoided as a defining ingredient of the principle, and in the context of this principle the Baden [1993] 1 W.L.R. 509 scale of knowledge is best forgotten."
81. Rimer J decided that there was no fiduciary duty owed by Mr Bray to Mr Goose in the first place. That was sufficient reason to reject Mr Goose's claim. He referred to the decision of La Forest J in Lac Minerals v International Corona Resources Ltd [1990] FSR 441 and the passage from the judgment of Wilson J in Frame v Smith (1987) 42 DLR 81 to which he referred in which the common features of a relationship giving rise to fiduciary duties were identified. They were (1) the fiduciary has scope for the exercise of some discretion or power, (2) the fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary's legal or practical interests and (3) the beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power. Rimer J considered that none of these features existed in the relationship between Mr Bray and Mr Goose. The judge also quoted with approval from Professor Finn's The Fiduciary Principle 1988 p.64 that
"The critical matter in the end is the role that the alleged fiduciary has, or should be taken to have, in the relationship. It must so implicate that party in the other's affairs or so align him with the protection or advancement of that other's interests that foundation exists for the `fiduciary expectation'."
Rimer J considered that there was no foundation for any such expectation in this case.
82. Counsel for Mr Goose contend that the judge took too narrow a view of what is required and what the duties of Mr Bray were. They pointed out that Wilson J in Frame v Smith referred to the three features as those possessed by the relationships by then found. She did not suggest that the categories were closed. They also pointed out that La Forest J himself recognised that the existence of a fiduciary relationship was a question to be determined in the light of the specific facts and circumstances surrounding the relationship. They rely on the judgment of Millett LJ in Bristol and West Building Society v Mothew [1998] Ch 1. At page 18A Millett LJ described a fiduciary as
"..someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he must not act for his own benefit or for the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations."
83. Counsel for Mr Goose illustrate their submission by relying on United Dominions Corporation Ltd v Brian Pty Ltd (1985) 60 ALR 741. In that case SPL charged the intended joint venture property to secure its own debts as well as the joint venture debts. The fact that the joint venture agreement had not by then been concluded did not preclude a fiduciary relationship because the prospective joint venturers had embarked upon the joint venture business (per Mason, Brennan and Deane JJ at page 747) and acted upon the proposed agreement (per Dawson J at page 751). The majority held that by the time SPL gave the charge there was a relationship giving rise to fiduciary obligations. It is suggested that in this case too the relationship between Mr Bray and Mr Goose was a fiduciary one. They embarked on a joint venture together. Mr Bray set up the vehicle, Intag, through which it was to be carried on. Intag and Mr Bray himself had been funded by Mr Goose's loans aggregating £60,000. At the time of the Manson loan Intag or Mr Bray was actually in possession of La Devinniere.
84. We have no difficulty in recognising a fiduciary relationship to have arisen at the time when Mr Goose executed the legal charge over Hagbeach Farm to secure the Manson loan. £130,00 of the loan thereby obtained was to be transmitted to Banque Populaire where, it would appear, it was under the control of Mr Bray. We have no doubt that Mr Bray was under a fiduciary duty to Mr Goose to ensure its proper application for the purposes of the joint venture. Likewise due to the link between this loan and the proposed Swiss Loan (for which the Stones were to be used as security and from which the Manson loan was to be repaid) we consider that Mr Bray was under a fiduciary duty to ensure the due application of the Stones for the purposes of the joint venture. But this conclusion is of no avail to Mr Goose because it was neither alleged nor established that Mr Wilson played any part in the misapplication of either the sum transmitted to Banque Populaire or the Stones.
85. Thus Mr Goose alleged in paragraph 3 of the consolidated statement of claim that the joint venture and associated fiduciary duties arose in March and April 1984. But at that stage there was no concluded agreement, there was no embarkation upon the joint venture itself as envisaged in United Dominions Corporation Ltd v Brian Pty Ltd (1985) 60 ALR 741, 747 and 751 and Mr Goose was not at the mercy or under the control of Mr Bray so as to give rise to a fiduciary duty owed by the latter to protect the former such as was envisaged by La Forest J in Lac Minerals v International Corona Resources Ltd [1990] FSR 441, Wilson J in Frame v Smith (1987) 42 DLR 81 or Millett LJ in Bristol and West Building Society v Mothew [1998] Ch 1. Thereafter Mr Goose lent £60,000 to Mr Bray or Intag. But this was not by way of implementation of or embarkation on the joint venture but a loan preparatory to it. In any event it was repaid from that part of the Manson loan as was paid to Mr Goose. In our view it is not possible to identify any fiduciary relationship between Mr Bray and Mr Goose before the Manson loan was drawn down and secured on Hagbeach Farm. Equally it is clear that Mr Wilson played no part in the breach of the duty which then arose.
86. Before the judge and before us there was some debate whether such a claim lies for breach of fiduciary duty generally or only those which also involve the misapplication of property. Counsel for Mr Goose relied on the reference in the advice of the Privy Council in Royal Brunei Airlines Sdn Bhd v Tan [1995] AC 378, which we have quoted in paragraph 81 above, to `fiduciary obligation' generally. Rimer J recognised the logic of the submission but did not find it necessary to decide whether to make the extension of the accessory liability he considered that it would involve. Counsel also relied on the view of Morritt LJ in Brown v Bennett [1999] BCLC 525 that there was force in the argument.
87. Since then the Court of Appeal has given further consideration to the point in Satnam Investments Ltd v Dunlop Heywood & Co. Ltd [1999] 3 AER 652. In that case a firm of surveyors which had acted for the claimant and had in that capacity obtained confidential information of commercial importance disclosed such information to a competitor of the claimant which used it to its own advantage. One of the claims made by the claimant was to the effect that the competitor had dishonestly assisted the surveyors to break their fiduciary duty of confidence owed to the claimant. On this basis the judge held that the competitor held the property it had bought because of the information it had obtained from the surveyor on a constructive trust for the claimant. In the judgment of the Court delivered by Nourse LJ the judge's conclusion was described as surprising, unprecedented and contrary to commercial good sense. After referring to Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 and Barnes v Addy (1874) LR 9 Ch.App. 244 the court stated that "Before a case can fall into either category [knowing receipt or knowing assistance] there must be trust property or traceable proceeds of trust property". The Court was prepared to assume that confidential information may be treated as property yet, as it could not be traced into the property bought because of the disclosure of the confidential information, there could be no constructive trust of the property so bought. However the Court went on to say (p.671)
"As for knowing assistance, of which dishonesty on the part of the accessory is a necessary ingredient..we would not have wanted to shut out the possibility of such a claim's being successful if the judge had made a finding of dishonesty against [the competitor].."
For Mr Goose it was submitted that, in the circumstances, the requirement for trust property or traceable proceeds of trust property was no more than a passing reference and did not reflect a decision of the Court binding on us.
88. We agree that the statement that "there must be trust property or traceable proceeds of trust property" is not a decision binding on us. Moreover in view of our conclusion on when the fiduciary duty of Mr Bray arose we do not have to decide the question whether trust property or traceable proceeds thereof are essential ingredients of liability under this head. The sum of £130,000 transmitted to Banque Populaire and the Stones themselves would have been sufficient for that purpose. However we feel that the statement quoted above may be so compressed as to admit of misunderstanding. It applies to both the alternatives recognised by Lord Selborne in Barnes v Addy. In the case of the first, "knowing receipt" there must, by definition, be or have been trust property or its traceable proceeds of sale. But it is not a prerequisite of liability that it is still in existence at the time the claim form is issued. In the case of the second, "knowing assistance", it is not a requirement of liability that any property should have been received or handled by the defendant. The issue is whether the dishonest breach of trust in which the defendant assisted must have involved the misapplication of trust property or its proceeds of sale. The formulation of the principle by Lord Nicholls of Birkenhead (paragraph 80 above) does not embrace such a requirement. Whether or not such a requirement is an essential feature of this head of liability is not a point we have to decide and, like the Court of Appeal in that case, we would not like to shut out the possibility of such a claim in its absence.
89. The judge followed his consideration of this topic with the conclusion, on the assumption that Mr Bray's fiduciary duty arose in April 1984, that
"In any event, I find that the case is not established on the facts. Certain of the breaches of duty alleged against Mr Bray are that he did not disclose matters he should have done. I can understand how A can assist B in the misapplication of a trust fund. I do not understand how A can assist B not to disclose something (particularly something, such as B's prior bankruptcy and convictions, of which A is ignorant). Wilson Sandford did nothing to prevent Mr Bray from telling Mr Goose whatever he liked nor did they assist him in declining to do so. Other breaches alleged against Mr Bray are that he made fraudulent misrepresentations. Again, I do not understand how anything Wilson Sandford said or did can have assisted Mr Bray to make those representations. Mr Bray made them and that was that: he did not need or receive any assistance from Wilson Sandford in doing so. The suggestion that the assistance derived from like representations made by Mr Wilson appears to me to take Mr Goose nowhere. All that means is that Wilson Sandford may themselves have been guilty of deceit; and, in so far as there might also be any suggestion that Wilson Sandford and Mr Bray were conspiring in the matter, then there might perhaps be a claim in conspiracy: but no such claim is made.
It appears to me that the complaint against Wilson Sandford really has nothing to do with accessory liability of the Royal Brunei Airlines type. Allegations of deceit are made against them. That case is either well founded or it is not. Having held that it is not, I find that there is nothing left on the facts of this case on which a case of accessory liability can be founded. I decline to find that any of Wilson Sandford's activities on behalf of Intag (set out in Schedule 2 to the consolidated statement of claim) was performed dishonestly so as to assist Mr Bray to work a fraud on Mr Goose. I reject this claim."
90. Counsel for Mr Goose criticise this conclusion too. We do not find it necessary to go into the details of the criticisms. None of the matters referred to in paragraph 55 or itemised in Schedule 2 to the consolidated statement of claim touch on a breach by Mr Bray of the only fiduciary obligations to Mr Goose we consider ever arose.
91. For all these reasons, which differ somewhat from those of the judge, we would dismiss the claim based on dishonest assistance by Mr Wilson in the breach by Mr Bray of fiduciary obligations owed by him to Mr Goose.
Conclusions


92. It follows that we would dismiss the appeal of Mr Goose from the order of Rimer J dismissing Mr Goose's action against Wilson Sandford & Co. The judge dealt also with a number of issues which arose if liability had been established, such as limitation, contributory negligence and causation. As he explained, it was appropriate that he should do so in order that any appellate court which took a different view on liability should have the benefit of his findings of fact relevant to these secondary issues.
93. We heard argument on the issues of limitation and contributory negligence but not on causation. We are not the primary fact-finding tribunal. Accordingly the reasons why Rimer J dealt with these issues do not apply. It is, in any event, a difficult task to perform when there are several inter-related prior issues. If the consideration of the subsequent issues proceeds, as it must, on the assumption that the prior conclusions are wrong there can be, as in this case, a large number of possible assumptions depending on the number of permutations of the inter-related conclusions. The expression of alternative findings on such a range of alternative, presently hypothetical, assumptions is not a profitable use of the time of this court and would infringe the overriding objective contained in CPR 1.1(1)(e). Accordingly we express no view on any of the subsequent issues determined by Rimer J.
94. For all these reasons we dismiss this appeal.
Order:- Appeal dismissed with Costs.


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