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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1 (31 March 1971)
URL: http://www.bailii.org/uk/cases/UKHL/1971/1.html
Cite as: 69 LGR 403, [1971] UKHL 1, [1972] AC 153, [1971] 2 All ER 127, [1971] 2 WLR 1166

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JISCBAILII_CASE_CRIME

    Die Mercurii, 31° Martii 1971

    Parliamentary Archives,
    HL/PO/JU/4/3/1215


    HOUSE OF LORDS

    TESCO SUPERMARKETS LIMITED

    v.

    NATTRASS
    (on appeal from a Divisional Court of the Queen's Bench Division)



    Lord Reid
    Lord Morris of Borth-y-Gest
    Viscount Dilhorne
    Lord Pearson
    Lord Diplock


    Lord Reid

    my lords,

    The Appellants own a large number of supermarkets in which they sell
    a wide variety of goods. The goods are put out for sale on shelves or
    stands each article being marked with the price at which it is offered for
    sale. The customer selects the articles he wants, takes them to the cashier,
    and pays the price. From time to time the Appellants, apparently by way
    of advertisement, sell " flash packs " at prices lower than the normal price.
    In September 1969 they were selling Radiant washing powder in this way.
    The normal price was 3s. 11d. but these packs were marked and sold at
    2s. 11d. Posters were displayed in the shops drawing attention to this
    reduction in price.

    These prices were displayed in the Appellants' shop at Northwich on
    26th September. Mr. Coane, an old age pensioner, saw this and went to
    buy a pack. He could only find packs marked 3s. 11d. He took one to
    the cashier who told him that there were none in stock for sale at 2s. 11d.
    He paid 3s. 11d. and complained to an Inspector of Weights and Measures.
    This resulted in a prosecution under the Trade Descriptions Act 1968 and
    the Appellants were fined £25 and costs.

    Section 11 (2) provides:

    " If any person offering to supply any goods gives, by whatever
    " means, any indication likely to be taken as an indication that the
    " goods are being offered at a price less than that at which they are
    " in fact being offered he shall, subject to the provisions of this Act,
    " be guilty of an offence."

    It is not disputed that that section applies to this case. The Appellants
    relied on section 24(1) which provides:

    " In any proceedings for an offence under this Act it shall, subject
    " to subsection (2) of this section, be a defence for the person charged
    " to prove—

    " (a) that the commission of the offence was due to a mistake or to
    " reliance on information supplied to him or to the act or default
    " of another person, an accident or some other cause beyond his
    " control; and

    " (b) that he took all reasonable precautions and exercised all due
    " diligence to avoid the commission of such an offence by himself
    " or any person under his control."

    The relevant facts as found by the Magistrates were that on the previous
    evening a shop assistant Miss Rogers whose duty it was to put out fresh
    stock found that there were no more of the specially marked packs in stock.
    There were a number of packs marked with the ordinary price so she put
    them out. She ought to have told the shop manager Mr. Clement about this
    but she failed to do so. Mr. Clement was responsible for seeing that the
    proper packs were on sale, but he failed to see to this although he marked
    his daily return " all special offers O.K." The Magistrates found that if
    he had known about this he would either have removed the poster advertis-
    ing the reduced price or given instructions that only 2s. 11d. was to be
    charged for the packs marked 3s. 11d.

    Section 24(2) requires notice to be given to the prosecutor if the accused
    is blaming another person and such notice was duly given naming Mr.
    Clement.

    2

    In order to avoid conviction the Appellants had to prove facts sufficient
    to satisfy both parts of section 24(1) of the 1968 Act. The Magistrates held
    that they " had exercised all due diligence in devising a proper system for
    " the operation of the said store and by securing so far as was reasonably
    " practicable that it was fully implemented and thus had fulfilled the
    " requirements of section 24(l)(b)". But they convicted the Appellants
    because in their view the requirements of section 24(l)(a) had not been
    fulfilled: they held that Clement was not " another person " within the
    meaning of that provision.

    The Divisional Court held that the Magistrates were wrong in holding
    that Clement was not " another person ". The Respondent did not challenge
    this finding of the Divisional Court so I need say no more about it than
    that I think that on this matter the Divisional Court was plainly right. But
    that Court sustained the conviction on the ground that the Magistrates had
    applied the wrong test in deciding that the requirements of section 24 (1) (b)
    had been fulfilled. In effect that Court held that the words "he took all
    " reasonable precautions . . ." do not mean what they say: " he " does not
    mean the accused, it means the accused and all his servants who were acting
    in a managerial or supervisory capacity. I think that earlier authorities
    virtually compelled the Divisional Court to reach this strange construction.
    So the real question in this appeal is whether these earlier authorities were
    rightly decided.

    But before examining those earlier cases I think it necessary to make some
    general observations.

    Over a century ago the Courts invented the idea of an absolute offence.
    The accepted doctrines of the Common Law put them in a difficulty. There
    was a presumption that when Parliament makes the commission of certain
    acts an offence it intends that mens rea shall be a constituent of that offence
    whether or not there is any reference to the knowledge or state of mind of
    the accused. And it was and is held to be an invariable rule that where
    mens rea is a constituent of any offence the burden of proving mens rea is on
    the prosecution. Some day this House may have to re-examine that rule, but
    that is another matter. For the protection of purchasers or consumers
    Parliament in many cases made it an offence for a trader to do certain things.
    Normally those things were done on his behalf by his servants and cases
    arose where the doing of the forbidden thing was solely the fault of a
    servant, the master having done all he could to prevent it and being entirely
    ignorant of its having been done. The just course would have been to hold
    that, once the facts constituting the offence had been proved, mens rea would
    be presumed unless the accused proved that he was blameless. The Courts
    could not, or thought they could not, take that course. But they could
    and did hold in many such cases on a construction of the statutory provision
    that Parliament must be deemed to have intended to depart from the general
    rule and to make the offence absolute in the sense that mens rea was not to
    be a constituent of the offence.

    This has led to great difficulties. If the offence is not held to be absolute
    the requirement that the prosecutor must prove mens rea makes it impossible
    to enforce the enactment in very many cases. If the offence is held to be
    absolute that leads to the conviction of persons who are entirely blameless:
    an injustice which brings the law into disrepute. So Parliament has found it
    necessary to devise a method of avoiding this difficulty. But instead of
    passing a general enactment that it shall always be a defence for the accused
    to prove that he was no party to the offence and had done all he could
    to prevent it, Parliament has chosen to deal with the problem piecemeal,
    and has in an increasing number of cases enacted in various forms with
    regard to particular offences that it shall be a defence to prove various
    exculpatory circumstances.

    In my judgment the main object of these provisions must have been to
    distinguish between those who are in some degree blameworthy and those
    who are not, and to enable the latter to escape from conviction if they can
    show that they were in no way to blame. I find it almost impossible to
    suppose that Parliament or any reasonable body of men would as a matter


    3

    of policy think it right to make employers criminally liable for the acts of,
    some of their servants but not for those of others and I find it incredible
    that a draftsman, aware of that intention, would fail to insert any words
    to express it. But in several cases the Courts, for reasons which it is not
    easy to discover, have given a restricted meaning to such provisions. It has
    been held that such provisions afford a defence if the master proves that the
    servant at fault was the person who himself did the prohibited act, but that
    they afford no defence if the servant at fault was one who failed in his duty
    of supervision to see that his subordinates did not commit the prohibited act.
    Why Parliament should be thought to have intended this distinction or
    how as a matter of construction these provisions can reasonably be held
    to have that meaning is not apparent.

    In some of these cases the employer charged with the offence was a limited
    company. But in others the employer was an individual and still it was
    held that he, though personally entirely blameless, could not rely on these
    provisions if the fault which led to the commission of the offence was the
    fault of a servant in failing to carry out his duty to instruct or supervise
    his subordinates.

    Where a limited company is the employer difficult questions do arise in
    a wide variety of circumstances in deciding which of its officers or servants
    is to be identified with the company so that his guilt is the guilt of the
    company.

    I must start by considering the nature of the personality which by a
    fiction the law attributes to a corporation. A living person has a mind
    which can have knowledge or intention or be negligent and he has hands
    to carry out his intentions. A corporation has none of these: it must act
    through living persons, though not always one or the same person. Then
    the person who acts is not speaking or acting for the company. He is
    acting as the company and his mind which directs his acts is the mind of
    the company. There is no question of the company being vicariously
    liable. He is not acting as a servant, representative, agent or delegate. He
    is an embodiment of the company or, one could say, he hears and speaks
    through the persona of the company, within his appropriate sphere, and his
    mind is the mind of the company. If it is a guilty mind then that guilt is
    the guilt of the company. It must be a question of law whether, once the
    facts have been ascertained, a person in doing particular things is to be
    regarded as the company or merely as the company's servant or agent. In
    that case any liability of the company can only be a statutory or vicarious
    liability.

    In Lennard's Carrying Co. v. Asiatic Petroleum Co. [1915] A.C. 705 the
    question was whether damage had occurred without the " actual fault or
    " privity " of the owner of a ship. The owners were a company. The
    fault was that of the registered managing owner who managed the ship on
    behalf of the owners and it was held that the company could not dissociate
    itself from him so as to say that there was no actual fault or privity on
    the part of the company. Lord Haldane L.C. said at page 713: "For if
    " Mr. Leonard was the directing mind of the company, then his action must,
    " unless a corporation is not to be liable at all, have been an action which
    " was the action of the company itself within the meaning of section 502
    "... It must be upon the true construction of that section in such a case
    " as the present one that the fault or privity is the fault or privity of some-
    " body who is not merely a servant or agent for whom the company is
    " liable upon the footing respondent superior, but somebody for whom the
    " company is liable because his action is the very action of the company
    " itself." '

    Reference is frequently made to the judgment of Lord Denning in Bolton
    (Engineering) Co.
    v. Graham [1957] 1 Q-B. 159. He said (at page 172):
    " A company may in many ways be likened to a human body. It has a
    " brain and nerve centre which controls what it does. It also has hands
    " which hold the tools and act in accordance with directions from the centre.
    " Some of the people in the company are mere servants and agents who are


    4

    " nothing more than hands to do the work and cannot be said to represent
    " the mind or will. Others are directors and managers who represent the
    " directing mind and will of the company, and control what it does. The
    " state of mind of these managers is the state of mind of the company and
    " is treated by the law as such."

    In that case the directors of the company only met once a year: they left
    the management of the business to others, and it was the intention of those
    managers which was imputed to the company. I think that was right.
    There have been attempts to apply Lord Denning's words to all servants of
    a company whose work is brain work, or who exercise some managerial
    discretion under the direction of superior officers of the company. I do
    not think that Lord Denning intended to refer to them. He only referred
    to those who " represent the directing mind and will of the company, and
    " control what it does."

    I think that is right for this reason. Normally the Board of Directors, the
    Managing Director and perhaps other superior officers of a company carry
    out the functions of management and speak and act as the company.
    Their subordinates do not. They carry out orders from above and it can
    make no difference that they arc given some measure of discretion. But the
    Board of Directors may delegate sonic part of their functions of manage-
    ment giving to their delegate full discretion to act independently of instruc-
    tions from them. I see no difficulty in holding that they have thereby put
    such a delegate in their place so that within the scope of the delegation he
    can act as the company. It may not always be easy to draw the line but
    there are cases in which the line must be drawn. Lennard's case was one of
    them.

    In some cases the phrase alter ego has been used. I think it is misleading.
    When dealing with a company the word alter is I think misleading. The
    person who speaks and acts as the company is not alter. He is identified
    with the company. And when dealing with an individual no other indivi-
    dual can be his alter ego. The other individual can be a servant, agent,
    delegate or representative but I know of neither principle nor authority
    which warrants the confusion tin the literal or original sense) of two
    separate individuals.

    The earliest cases dealing with this matter \\hich were cited were R. C.
    Hammett Ltd. v. Crabb
    (1931) 95 J.P. 180 and R. C. Hammett Ltd. v.
    London County Council
    (1933) 97 J.P. 105. In both a servant of the
    accused company had infringed the provisions of section 5 (2) of the Sale
    of Food (Weights and Measures) Act 1926. Section 12 (5) exempted the
    employer from penalty if he charged another person as the actual offender
    and could " prove to the satisfaction of the Court that he had used due
    diligence to enforce the execution of this Act and that the said other
    " person had committed the offence in question without his consent
    " connivance or wilful default."

    In the earlier case the offence was committed by the shop manager
    personally and he knew that he was committing an offence. A conviction
    was quashed on the ground that the magistrate had treated the question
    whether the employer had used due diligence as one of law, that it was
    really one of fact and that there was no evidence on which the magistrate
    could reach his decision.

    In the second case the offence was committed by a subordinate: the shop
    manager had warned him but had not exercised due diligence to see that
    his instructions were obeyed. Again the magistrates convicted on the ground
    that the owners were responsible for lack of due diligence in their manager.
    This time the conviction was upheld by the same court. It was argued for
    the Respondents that the employer is responsible for the acts or omissions
    of all persons above the actual offender. It seems to me obvious that that
    is a matter of law depending on the proper construction of the statutory
    provision. But Lord Hewart, L.C.J., did not so regard it. He said that
    there was evidence on which Quarter Sessions could arrive at their opinion
    and that they were entitled to come to the conclusion that the appellants
    were responsible for the manager's lack of due diligence.


    5

    I find these cases most unsatisfactory. There is no explanation of how
    it could be a question of fact whether the provisions of section 12(5) meant
    that what the employer had to prove was that he personally had used due
    diligence, or that he also had to prove that some or all of his servants had
    also done so. But the Court did not deal with that. Nevertheless because
    the only difference between the two cases appears to have been that in the
    first the shop manager was himself the offender whereas in the second the
    fault was lack of supervision, these cases have been thought to afford
    authority for the proposition that an employer has a defence if the only
    fault was in the actual offender but not if there was fault of any of his
    servants superior to the actual offender. I can find no warrant for that
    proposition in the terms of section 12(5). Both parts of the provision—
    that the employer had used due diligence and that the offence had been
    committed without his consent, connivance or wilful default—appear to me
    plainly to refer to the employer personally and to no one else.

    I agree with the view of Lord Justice-General Cooper in a case dealing
    with the same Act Dumfries and Maxwelltown Co-Operative Society v.
    Williamson [1950] J.C. 76 that "The underlying idea manifestly is that there
    " should not be vicarious responsibility for an infringement of the Act
    " committed without the consent or connivance of an employer . . ."

    In the next two cases a company was accused and it was held liable for
    the fault of a superior officer. In D.P.P. v. Kent and Sussex Contractors
    [1944] K.B. 146 he was the transport manager. In R. v. I.C.R. Haulage
    [19441 K.B. 551 it was held that a company can be guilty of common law
    conspiracy. The act of the managing director was held to be the act of
    the company. I think that a passage in the judgment is too widely stated:
    " Where in any particular case there is evidence to go to a jury that the
    " criminal act of an agent, including his state of mind, intention, knowledge
    " or belief is the act of the company, and, in cases where the presiding judge
    " so rules, whether the jury are satisfied that it has been proved, must
    " depend on the nature of the charge, the relative position of the officer or
    " agent, and the other relevant facts and circumstances of the case." This
    may have been influenced by the erroneous views expressed in the two
    Hammett cases. I think that the true view is that the judge must direct the
    jury that if they find certain facts proved then as a matter of law they must
    find that the criminal act of the officer, servant or agent including his state of
    mind, intention, knowledge or belief is the act of the company. I have
    already dealt with the considerations to be applied in deciding when such
    a person can and when he cannot be identified with the company. I do not
    see how the nature of the charge can make any difference. If the guilty
    man was in law identifiable with the company then whether his offence was
    serious or venial his act was the act of the company but if he was not so
    identifiable then no act of his, serious or otherwise, was the act of the
    company itself.

    In Henshall v. Harvey [1965] 2 Q.B. 233 a company was held not criminally
    responsible for the negligence of a servant in charge of a weighbridge. In
    Magna Plant v. Mithell (unreported) 27th April 1966 the fault was that of
    a depot engineer and again the company was held not criminally responsible.
    I think these decisions were right. In the Magna Plant case Lord Parker,
    L.C.J., said: ". . . knowledge of a servant cannot be imputed to the
    "Company unless he is a servant for whose actions the Company are
    " criminally responsible, and as the cases show, that only arises in the case
    " of a company where one is considering the acts of responsible officers
    " forming the brain, or in the case of an individual, a person to whom
    " delegation in the true sense of the delegation of management has been
    " passed."

    1 agree with what he said with regard to a company. But delegation by
    an individual is another matter. It has been recognised in licensing cases
    but that is in my view anomalous (see Vane- v. Yanopoulus [1965] A.C. 486).

    The latest important authority is Series v. Poole [11969] 1 Q.B. 676. That
    was an appeal against the dismissal of an information that the holder of a
    carriers licence had failed to keep or cause to be kept records required by the
    Road Traffic Act 1960 with regard to the driver of a vehicle. That was


    6

    an absolute offence but that was amended by the Road Traffic Act 1962
    which provided by section 20 that it should "be a defence to prove that
    "he used all due diligence to secure compliance with those provisions".
    The Respondent proved that he had given proper instructions to the driver,
    that he employed a secretary to check the driver's records and had to
    begin with supervised her work, but that thereafter she failed to make
    proper checks. The justices held, possibly wrongly that the accused had
    used all due diligence as required by the Act. The Court accepted that
    finding but nevertheless sent the case back with a direction to convict.

    Lord Parker L.C.J. dealt with the case on the basis that the accused had
    done everything that was reasonable. He said " He may acting perfectly
    " reasonably appoint somebody else to perform his duty, his alter ego, and in
    " that case it seems to me if the alter ego fails in his duty the employer is
    " liable. Equally, if the employer seeks to rely on the defence under
    " section 20, he must show that the alter ego has observed due diligence ".

    I have already said that the phrase alter ego is misleading. In my
    judgment this case was wrongly decided and should be over-ruled. When
    the second statute introduced a defence if the accused proved that " he used
    " all due diligence " I think that it meant what it said. As a matter of
    construction I can see no ground for reading in " he and all persons to
    " whom he has delegated responsibility ". And if I look to the purpose
    and apparent intention of Parliament in enacting this defence I think that
    it was plainly intended to make a just and reasonable distinction between
    the employer who is wholly blameless and ought to be acquitted and the
    employer who was in some way at fault, leaving it to the employer to
    prove that he was in no way to blame.

    What good purpose could be served by making an employer criminally
    responsible for the misdeeds of some of his servants but not for those of
    others? It is sometimes argued—it was argued in the present case—that
    making an employer criminally responsible, even when he has done all
    that he could to prevent an offence, affords some additional protection to
    the public because this will induce him to do more. But if he has done
    all he can how can he do more? I think that what lies behind this
    argument is a suspicion that magistrates too readily accept evidence that an
    employer has done all he can to prevent offences. But if magistrates were
    to accept as sufficient a paper scheme and perfunctory efforts to enforce
    it they would not be doing their duty—that would not be " due diligence "
    on the part of the employer.

    Then it is said that this would involve discrimination in favour of a
    large employer like the Appellants against a small shopkeeper. But that
    is not so. Mr. Clement was the " opposite number " of the small shopkeeper
    and he was liable to prosecution in this case. The purpose of this Act
    must have been to penalise those at fault, not those who were in no way
    to blame.

    The Divisional Court decided this case on a theory of delegation. In that
    they were following some earlier authorities. But they gave far too wide
    a meaning to delegation. I have said that a Board of Directors can delegate
    part of their functions of management so as to make their delegate an
    embodiment of the company within the sphere of the delegation. But here
    the Board never delegated any part of their functions. They set up a chain
    of command through regional and district supervisors, but they remained
    in control. The shop managers had to obey their general directions and
    also to take orders from their superiors. The acts or omissions of shop
    managers were not acts of the company itself.

    In my judgment the Appellants established the statutory defence. I would
    therefore allow this appeal.


    Lord Morris of Borth-y-Gest

    my lords.

    The main question which is raised in this appeal is whether, on the
    findings of fact of the magistrates, the company, Tesco Supermarket Limited
    (Tesco) established a defence under the provisions of section 24(1) of the
    Trade Descriptions Act, 1968,

    The terms of section 24(1) are as follows: —

    " 24.—(1) In any proceedings for an offence under this Act it shall,
    " subject to subsection (2) of this section, be a defence for the person
    " charged to prove—

    " (a) that the commission of the offence was due to a mistake or to
    " reliance on information supplied to him or to the act or default
    " of another person, an accident or some other cause beyond his
    " control; and

    " (b) that he took all reasonable precautions and exercised all due
    " diligence to avoid the commission of such an offence by himself
    " or any person under his control."

    There were " proceedings for an offence under " the Act. The Company
    (Tesco) was the " person charged ". The Case Stated finds that Tesco is
    " a nationally known public Company who own many hundred stores".
    There are at least 230 such stores in the north. In one of these on the
    26th September, 1969, there was in the window (and there had been for
    some days previously) a poster which proclaimed that a customer could
    purchase a certain package for 1s. less than its normal price of 3s. 11d.
    An advertisement so stating had appeared in local and national newspapers.
    For a number of days prior to the 26th September there had been displayed
    in the particular store and upon a separate fixture a number of the packages
    upon each of which was the legend " Is. off recommended price". But at
    10 a.m. on the 26th September there were no packages so marked. Packages
    of that variety were displayed for sale—but each had a price marking of
    3s. 11d.: they were on a shelf which had a price marking of 3s. 11d. It was
    at 10 a.m. that a customer searched the store for one of the packages at
    the price of 2s.11d. He had expected to find one at that reduced price.
    He could not. He could only find those at the marked price of 3s. 11d.
    He took one of those and asked its price of the cashier. Being informed
    that there were none of the packages in stock for sale at 2s. 11d. he was
    charged and paid the higher price.

    A breakdown in the system had occurred. During the period of a special
    offer all packages marked with the normal price should have been removed
    from display. If any special offer stock was sold out the manager should
    have been so informed in order that he could remove any display notice
    that would be misleading. Actually on the evening of the 25th September an
    assistant had noticed that none of the special offer packages remained on
    display: she had thereupon filled the appropriate fixture with packages having
    the marked price of 3s. 11d.: she had not reported to the manager either the
    dearth of packages marked 2s. 11d. or her action in placing in the fixture
    those marked 3s. 11d. The manager had over-estimated his stock of pack-
    ages at the reduced price: he thought that four cases were full which were
    in fact empty. Furthermore, the manager did not check the fixture on the
    26th September though in his Weights and Measures Book for that morning
    there was an entry " All special offers O.K.". Had he realised that the
    store had sold out of the reduced price packages he would either have
    removed that part of the poster which related to them or he would have
    reduced the price of the packages in the store to 2s. 11d. The store was,
    on the date in question, displaying for sale many thousands of different
    lines including many which were offered at reduced prices (referred to as
    " flash " offers).

    On the facts as found it appeared, therefore, that an offence had been
    committed. There had been a misleading indication as to price. It is
    provided by section 11 (2) of the Act as follows: —

    " 11.—(2) If any person offering to supply any goods gives, by what-
    " ever means, any indication likely to be taken as an indication that


    8

    " the goods are being offered at a price less than that at which they
    " are in fact being offered he shall, subject to the provisions of this
    " Act, be guilty of an offence."

    There was an indication which was likely to be taken as an indication that
    the packages in question were being offered at 2s. 11d. whereas the customer
    in the shop found that they were being offered at 3s. 11d. So the question
    arises as to who was guilty of an offence. An information was preferred
    against Tesco (i.e. the Limited Company) for that they in offering to supply
    the package gave an idication by means of a notice bearing a statement
    that the goods were being offered at a price less than that at which they
    were in fact being offered (i.e. 3s. 11d.).

    It has not been suggested that Tesco (i.e. the Limited Company) could
    not be held to have committed the offence. In this connection reference
    may be made to a passage in the judgment of Viscount Reading C.J. in
    Mousell Brothers v. London and North-Western Railway [1917] 2 K.B.836.
    At page 844 he said: —

    " Prima facie, then, a master is not to be made criminally responsible
    " for the acts of his servant to which the master is not a party. But it
    " may be the intention of the Legislature, in order to guard against
    " the happening of the forbidden thing, to impose a liability upon a
    " principal even though he does not know of, and is not a party to,
    " the forbidden act done by his servant. Many statutes are passed with
    " this object. Acts done by the servant of the licensed holder of licensed
    " premises render the licensed holder in some instances liable, even
    " though the act was done by his servant without the knowledge of
    " the master. Under the Food and Drugs Acts there are again instances
    " well known in these Courts where the master is made responsible,
    " even though he knows nothing of the act done by his servant, and he
    " may be fined or rendered amenable to the penalty enjoined by the law.
    " In those cases the Legislature absolutely forbids the act and makes
    " the principal liable without a mens rea."

    It will have been seen, however, that under section 11(2) it is only " subject
    " to the provisions of " the Act that a person is guilty of an offence. The
    Act provides for certain defences which the person charged may prove:
    if he proves one of them then he is not guilty. The terms of section 24(1)
    of the Act have been set out above. Subsection (2) imposes a requirement
    of serving a notice in cases where the defence involves attributing the offence
    to the act or default of another person or to reliance on information supplied
    by another person: the notice is to the prosecutor and it must give informa-
    tion identifying (or assisting to identify) that other person. Tesco gave the
    requisite notice. It was to the effect that the contravention of section 11(1)
    was due to the act or default of the manager of the store in question.

    But for one point the magistrates would have found that the defence was
    proved: but for that one point they would have acquitted Tesco. They
    found (1) that Tesco had established that the commission of the offence was
    due to the act or default of the manager of the store by his failure to see that
    the company's policy was correctly carried out and/or to correct the errors
    of the staff under him, and (2) that Tesco had proved that they had taken
    all reasonable precautions and had exercised all due diligence to avoid the
    commission of the offence under section 11(2) either by themselves or by
    any person under their control. They had exercised all due diligence in
    devising a proper system for the operation of the store and by securing as
    far as was reasonably practicable that it was fully implemented. In the
    careful and ample statement of case the magistrates set out in much detail
    their reasons for arriving at these conclusions. They need not be here
    repeated. Suffice it to say that the case describes the system of administration
    and the various steps taken by Tesco to ensure that the manager was instructed
    and continuously and fully instructed in regard to the proper management of
    the store. There was a careful and reasonable system of selection of managers.
    Furthermore, the case describes in detail the various steps taken by Tesco
    in the exercise of supervision over the manager and the proper running
    of the store. The manager of the store had under him an assistant manager


    9

    and there were various section heads: the total number of the staff in the
    store was 60. It was found that the company had provided adequate staff
    and equipment for the running of the store. Then there was a " ladder of
    " responsibility " of those whose work was that of supervision. Thus there
    were branch inspectors whose duties (involving regular attendance) were solely
    those of supervision in regard to some 6 or 8 stores. There were Area
    Controllers who in regard to some 24 stores supervised the branch inspectors
    as well as the managers and the operation of such stores: their duties also
    involved regular attendance at stores. There was a Regional Director
    who was responsible for a number of stores and the supervision of the area
    controllers, branch inspectors and managers for them.

    The one point which resulted in the conviction rather than the acquittal
    of Tesco was that the magistrates were not satisfied that the manager was
    " another person " within the meaning of section 24(l)(a). They considered
    that the manager represented the company in his supervisory capacity and
    that the company were responsible for his lack of due diligence in that
    capacity with the result that he was not " another person ". They considered
    that the " original act or default" had been that of a lady on the staff at
    the store and that the " act or default" of the manager lay in his failure to
    instruct her or supervise her.

    A point had been argued before the magistrates whether an offence under
    section 11 (2) had been made out. They considered that it had. They stated
    two questions for the opinion of the High Court, viz. (1) whether they were
    correct in concluding that an offence under section 11(2) had been made
    out and (2) whether they were correct in concluding that the manager
    was not "another person" within the meaning of section 24(l)(a). The
    Divisional Court held that they were correct in regard to (1) and that matter
    was not pursued before your Lordships. In regard to (2) it was accepted
    by the Respondent in the Divisional Court, and it was common ground, that
    the manager was "another person " within the meaning of section 24(1)(a).
    It was said that where a defendant is an individual then any other individual
    could be " another person " and that where a defendant is a company or
    corporate body then any individual could be " another person " provided
    that he is not a person within section 20 carrying out functions as such
    person. Section 20 is in the following terms: —

    "20.—(1) Where an offence under this Act which has been com-
    " mitted by a body corporate is proved to have been committed with
    " the consent and connivance of, or to be attributable to any neglect
    " on the part of, any director, manager, secretary or other similar
    " officer of the body corporate, or any person who was purporting to
    " act in any such capacity, he as well as the body corporate shall be
    " guilty of that offence and shall be liable to be proceeded against and
    " punished accordingly.

    " (2) In this section ' director ', in relation to any body corporate
    " established by or under any enactment for the purpose of carrying
    " on under national ownership any industry or part of an industry
    " or undertaking, being a body corporate whose affairs are managed by
    " the members thereof, means a member of that body corporate."

    It was held that the word " manager " in that section denoted someone
    managing the affairs of the company rather than someone in the position of
    the manager of a store as in the present case.

    On those conclusions it would have followed that on the case as stated
    the appeal would have been allowed. The Divisional Court, however, took
    the view and they were invited to take the view that the magistrates had not
    applied their minds to the " real question " which arose. The Divisional
    Court considered that that question was whether the defence under section
    24(1) was open to the company in view of the finding of the magistrates
    that the manager had been guilty of a failure in his duty of supervision of
    the staff under him in the store. On the assumption that the company
    had set up an efficient system, or one that could not be criticised, the
    Divisional Court considered that the question arose whether the company
    was deprived of a defence under section 24(1) if it was shown that there


    10

    was a failure by someone to whom the duty of carrying out the system
    was "delegated" properly to carry out that function. As the Divisional
    Court considered that all the facts were sufficiently found so that the " real
    " question " could be answered even though it was not a question raised,
    and as they considered that the manager of the store was a person to whom
    the company had, in respect of that particular store, " delegated " their duty
    to take all reasonable precautions and to exercise all due diligence to avoid
    the commission of an offence, they concluded that it was impossible for the
    magistrates to find that the company had satisfied the requirements of
    section 24(l)(b). Accordingly, they dismissed the appeal. In granting leave
    to appeal the court certified the point of law of public general importance
    in the following terms: —

    "Whether a person charged with an offence under Section 11(2) of
    " the Trade Descriptions Act 1968 in a retail shop owned by him would
    " have a defence under Section 24(1) of the said Act if: —

    " (a) he instituted an efficient system to avoid the commission of
    " offences under the Act by any person under his control

    " (b) he reasonably delegated to the manager of the shop the duty
    " of operating the said system in that shop

    " (c) the manager failed to perform such duty efficiently

    " (d) the offence charged was committed by reason of such failure

    " (e) such failure by the said manager is the ' act or default of another
    "'person' relied on under Section 24(1 )(a)."

    My Lords, we are here only concerned with the question whether the
    company committed an offence. If the nature of the offence under section
    11 (2) was such that, under the perhaps rather exceptional principle already
    referred to, the company could be held to be guilty of it—it would only be
    guilty if it failed to prove one of the defences available under section 24(1).
    If it is accepted that " the commission of the offence " was due to " the act
    " or default of another person " then the company would have a defence
    (and so be entitled to be acquitted) if it further proved that it (i.e. the
    company) " took all reasonable precautions and exercised all due diligence
    " to avoid the commission " of the offence either by itself or by any person
    under its control. It is here that it is important to remember that it is the
    criminal liability of the company itself that is being considered. In general
    criminal liability only results from personal fault. We do not punish people
    in criminal courts for the misdeeds of others. The principle of respondant
    superior
    is applicable in our civil courts but not generally in our criminal
    courts. So the sole issue in the present case is whether " the company "
    took all reasonable precautions and exercised all due diligence. We are
    not concerned to express any opinion as to whether some other or which
    other person was by reason of the terms of section 11 and of section 23
    guilty of an offence.

    How, then, does a company take all reasonable precautions and exercise
    all due diligence? The very basis of section 24 involves that some contra-
    ventions of the Act may take place and may be contraventions by persons
    under the control of the company even though the company itself has
    taken all reasonable precautions and exercised all due diligence and that the
    company will not be criminally answerable for such contraventions. How,
    then, does a company act? When is some act the act of the company as
    opposed to the act of a servant or agent of the company (for which, if done
    within the scope of employment, the company will be civilly answerable)? In
    Lennard's Carrying Company Limited v. Asiatic Petroleum Company Limited
    [1915] A.C.705 Viscount Haldane L.C. said (at page 713): "My Lords, a
    " corporation is an abstraction. It has no mind of its own any more than it
    " has a body of its own; its active and directing will must consequently be
    " sought in the person of somebody who for some purposes may be called an
    " agent, but who is really the directing mind and will of the corporation, the
    " very ego and centre of the personality of the corporation. That person may
    " be under the direction of the shareholders in general meeting; that person
    " may be the board of directors itself, or it may be, and in some companies
    " it is so, that that person has an authority co-ordinate with the board of


    11

    " directors given to him under the articles of association, and is appointed
    " by the general meeting of the company, and can only be removed by the
    " general meeting of the company." Within the scheme of the Act now
    being considered an indication is given (which need not necessarily be an all-
    embracing indication) of those who may personify " the directing mind and
    " will " of the company. The question in the present case becomes a question
    whether the company as a company took all reasonable precautions and
    exercised all due diligence. The magistrates so found and so held. The
    magistrates found and held that " they " (i.e. the company) had satisfied the
    provisions of section 24(l)(b). The reason why the Divisional Court felt that
    they could not accept that finding was that they considered that the company
    had delegated its duty to the manager of the shop. The manager was, they
    thought, " a person to whom the Appellants had delegated in respect of that
    " particular shop their duty to take all reasonable precautions and exercise
    " all due diligence to avoid the commission " of an offence. Though the
    magistrates were satisfied that the company had set up an efficient system
    there had been " a failure by someone to whom the duty of carrying out
    " the system was delegated properly to carry out that function."

    My Lords, with respect I do not think that there was any feature of
    delegation in the present case. The company had its responsibilities in regard
    to taking all reasonable precautions and exercising all due diligence. The
    careful and effective discharge of those responsibilities required the directing
    mind and will of the company. A system had to be created which could
    rationally be said to be so designed that the commission of offences would
    be avoided. There was no delegation of the duty of taking precautions
    and exercising diligence. There was no such delegation to the manager of a
    particular store. He did not function as the directing mind or will of the
    company. His duties as the manager of one store did not involve managing
    the company. He was one who was being directed. He was one who was
    employed but he was not a delegate to whom the company passed on its
    responsibilities. He had certain duties which were the result of the taking
    by the company of all reasonable precautions and of the exercising by the
    company of all due diligence. He was a person under the control of the
    company and on the assumption that there could be proceedings against him,
    the company would by section 24(1)(b) be absolved if the company had taken
    all proper steps to avoid the commission of an offence by him. To make
    the company automatically liable for an offence committed by him would be
    to ignore the subsection. He was, so to speak, a cog in the machine which
    was devised: it was not left to him to devise it. Nor was he within what
    has been called the " brain area " of the company. If the company had
    taken all reasonable precautions and exercised all due diligence to ensure
    that the machine could and should run effectively then some breakdown due
    to some action or failure on the part of " another person " ought not to be
    attributed to the company or to be regarded as the action or failure of the
    company itself for which the company was to be criminally responsible. The
    defence provided by section 24(1) would otherwise be illusory.

    In reaching their conclusion, the Divisional Court placed reliance on and
    followed the decision in Series v. Poole [1969] 1 Q.B. 676. In that case
    the holder of a carrier's licence was charged with failing, contrary to section
    186 of the Road Traffic Act, 1960, properly to keep current records. The
    records were in fact defective but the licence holder had employed someone
    to check the records. He had instructed such employee as to the method
    of checking the records: he had supervised the work of such employee
    until he was satisfied that the system was working well. The justices found
    that he had used all due diligence to secure compliance with the relevant
    statutory provisions. Provided that this finding could on the facts be sup-
    ported I see no reason why the Divisional Court should have denied to him
    the defence which by section 20 of the Road Traffic Act, 1962, was made
    available. On the justices' finding I consider that the acquittal should have
    been allowed to stand. The licence holder had not washed his hands of his
    responsibilities: he had used all due diligence to see that they were discharged
    so that there should be compliance with the provisions of the statute.


    12

    In R. C. Hammett Limited v. London County Council Vol. 97 J.P. 105,
    employers were denied the defence available under section 12(5) of the Sale
    of Food (Weights and Measures) Act, 1926, on the ground that the manager
    of a shop had not shown due diligence though the employers themselves had
    in all other respects used due diligence. I do not think that that case was
    rightly decided.

    On the facts as found and by the application of section 24(1) I consider
    that the company should have been absolved from criminal liability.

    Accordingly, I would allow the appeal.

    Viscount Dilhorne

    my lords,

    On the 3rd February.,1970, the Appellants were convicted at the Magi-
    strates Court at Northwich of an offence under section 11(2) of the Trades
    Descriptions Act, 1968, which read-, as follows:

    " If any person offering to supply goods gives, by whatever means,
    " any indication likely to be taken as an indication that the goods are
    " being offered at a price less than that at which they are in fact being
    " offered he shall, subject to the provisions of this Act, be guilty of an
    " offence."

    On the 26th September, 1970, the Appellants had a poster attached to the
    window of their supermarket in Northwich bearing the words " Radiant
    " 1s, off.,Giant Size 2s. 11d.". This meant, and could only have been
    taken to mean, that Giant Size packs of Radiant Washing Powder were
    being offered for sale at that price. The Appellants had also advertised
    that these packs were being offered for sale at this price in local and national
    newspapers.

    An old age pensioner sought to purchase one of these packs, but he was
    only able to find displayed in the supermarket packs marked with the
    price of 3s. 11d. He took one of these to the cashier who told him that
    there was no packs for sale at 2s. 11d. and he was charged 3s. 11d. He
    immediately complained to the Inspector of Weights and Measures.

    On proof of these facts, the magistrates were right to convict the Appellants
    if they had not succeeded in establishing one of the defences open to them
    under section 24 of the Trades Descriptions Act.

    Section 24(1) is in the following terms:-

    " In any proceedings for an offence under this Act it shall, subject
    " to subsection (2) of this section. be a defence for the person charged
    " to prove—

    " (a) that the commission of the offence was due to a mistake or to
    " reliance on information supplied to him or to the act or default
    " of another person, an accident or some other cause beyond his
    " control ; and

    " (b)that he took all reasonable precautions and exercised all due
    " diligence to avoid the commission of such an offence by himself
    " or any person under his control."

    Section 24(2) reads as follows:

    " If in any case the defence provided by the last foregoing subsection
    " involves the allegation that the commission of the offence was due to
    " the act or default of another person or to reliance on information
    " supplied by another person, the person charged shall not, without
    " the leave of the court, be entitled to rely on that defence unless,
    " within a period ending seven clear days before the hearing, he has
    " served on the prosecutor a notice in writing giving such information
    " identifying or assisting in the identification of that other person as
    " was then in his possession."


    13

    The Appellants gave notice as required by this subsection, alleging that
    the commission of the offence was due to the act or default of a Mr. Clement,
    the manager of their supermarket at Northwich. They were consequently
    entitled to an acquittal if they proved that, and also that they had taken all
    reasonable precautions and had exercised all due diligence to avoid the
    commission of the offence by Clement.

    What had happened was that the evening before the commission of the
    offence Miss Rogers, a shop assistant, whose duty it was to put the packs
    on display for sale, had discovered that there were no packs displayed for
    sale at 2s. 11d. and no packs marked with that price available for display.
    She had, therefore, put out packs marked with the price of 3s. 11d. She
    had not reported to Clement that there were no 2s. 11d. packs to display.
    It was his duty to check the display of the special offers and to enter in a
    book that he had done so. In the entry for the 26th September he had
    written " All special offers O.K." when in fact the special offer of Radiant
    Giant Size packs was not, as no such packs were being offered for sale at
    2s. 11d. a pack.

    The magistrates found that " the original act or default was that of
    " Miss Rogers and the act or default of the said Clement was in his failure
    " to instruct or supervise her " and that " the commission of the offence
    " was due to the act or default of the said Clement by his failure to see
    " that the Appellants' policy was correctly carried out and/or to correct
    " the errors of the staff under him."

    The magistrates held that the Appellants had exercised all due diligence
    in devising a proper system for the operation of the store and by securing,
    so far as was reasonably practicable, that it was fully implemented and
    thus had fulfilled the requirements of section 24(l)(b). Although they did
    not in terms say so, they clearly meant that the Appellants had, as well as
    exercising all due diligence, taken all reasonable precautions to avoid the
    commission of the offence.

    They, however, held that Clement was not " another person " within the
    meaning of section 24(1) (a) and so that the statutory defence failed. The
    Divisional Court held that they were right to convict but wrong to conclude
    that Clement was not " another person ". In their view, the Appellants had
    delegated to Clement "their duly of taking all reasonable precautions and
    "exercising all due diligence" and consequently his failure to do so was
    failure by the Appellants.

    Section 23 of the Act is in the following terms:

    " Where the commission by any person of an offence under this Act
    " is due to the act or default of some other person that other person
    " shall be guilty of the offence, and a person may be charged with and
    " convicted of the offence by virtue of this section whether or not
    " proceedings are taken against the first-mentioned person ".

    These provisions in the Act make its policy clear. To secure a conviction
    for an offence under section 11 (2), the prosecutor is relieved of the burden
    of proving any intent on the part of any person. If that burden rested
    on him, it might often prove very difficult to discharge. It suffices to prove
    (a) that the accused was offering the goods and (b) that, at the time he did
    so, an indication had been given that the goods were being offered at a
    price less than in fact was the case.

    That could happen without the person offering the goods being in any
    way to blame. Parliament, therefore, provided the accused person with
    a number of defences and cast upon him the burden of establishing his
    innocence. If he was going to allege that the events which took place and
    amounted to the commission of the offence were due to the act or default
    of another or in consequence of information supplied by another person,
    he had to comply with section 24(2) and then it would be open to the
    authorities to charge that other person, if they thought fit, but, whether
    or not another person is charged, the accused is entitled to be acquitted if he
    proves that he took all reasonable precautions and exercised all due
    diligence to prevent the commission of the offence and that it was due to the


    14

    act or default of another or, if that is the defence put forward, in consequence
    of information supplied by another.

    Difficulties may arise with regard to the interpretation of section 23. The
    offence may have been committed as the result of the act or default of
    another without that other person having done the acts which constitute
    the offence. Here the magistrates found, as I have said, that the original
    act or default was that of Miss Rogers, but she does not appear to have
    had any responsibility for the poster in the window indicating that the packs
    were for sale at less than 3s. 11d. Clement, on the other hand, was respon-
    sible for the poster in the window but he had not displayed or authorised
    the display of the packs for sale at the price of 3s. 11d.; and if, despite
    the notice, no such packs had been displayed for sale, no offence under
    section 11 (2) would have been committed.

    In this case the magistrates found not that Clement had committed or
    had been a party to the offence but that it had occurred through his failure
    to carry out the Appellants' policy and/or to correct the errors of his staff.

    The language of the first part of section 23 might be understood to mean
    that on the facts of this case if Miss Rogers or Mr. Clement had been
    prosecuted, they would have been convicted though neither of them had done
    the acts which constitute the offence. In this case one has not to decide
    that question, and section 23 is only relevant with regard to the meaning
    to be given to the words " act or default of another person " in section
    24(1)(a). In that subsection, whatever they may mean in section 23, they
    must be given their literal meaning. To succeed on this defence it is not
    necessary to show that some other person did the acts which constitute
    the offence. It will suffice to show that the acts were done as a result of
    an act or default of another person.

    If the chain of supermarkets owned and run by the Appellants, some
    eight hundred we were told, were owned and run by an individual or partner-
    ship, then it could not be disputed that Mr. Clement was of another person
    within the meaning of the subsection. Does he cease to be " another person "
    because the stores are owned by a limited company?

    Further, if the stores were owned and run by an individual or partnership
    and that individual or the partners had themselves exercised all due diligence,
    is it right that they should be held not to have done so because a shop
    manager of theirs has not done so? And has the statute here to be inter-
    preted differently where a company is accused than where the accused is an
    individual?

    Prima facie one would have thought it unlikely that Parliament intended
    " another person " to have a different meaning in relation to a company
    from that in relation to an individual or that the ambit of section 24(1)(b)
    should differ depending on whether the owner of the shop was a company
    or individual.

    In Hammett Ltd. v. Crabb (1931) 95 J.P. & L.G.R. 182 Lord Hewart and
    Avory J. held, in relation to the Sale of Food (Weights and Measures) Act,
    1926, that whether or not the principal charged had exercised due diligence
    was a question of fact in every case. In that case as in this the accused
    company was seeking as a matter of defence to prove due diligence.

    In this case as in that, in my opinion, the questions whether there was
    due diligence and whether all reasonable precautions were taken are questions
    of fact.

    Hammett Ltd. v. London County Council (1933) 97 J.P. R. 105
    appears to be the first reported case where the extent of a statutory defence
    similar in many respects to that in this case was considered. There the
    prosecution was under the Sale of Food (Weights and Measures) Act, 1926.
    There the Divisional Court (Lord Newart L.C.J., Avory and Acton J.J.'s)
    dismissed the appeal against conviction on the ground that there was evidence
    on which Quarter Sessions could arrive at the opinion that due diligence
    was not used by the shop manager, an assistant at the shop being the


    15

    actual offender, and that for the purpose of the Act the company was
    responsible for the absence of due diligence on his part though in all other
    respects the company had exercised due diligence.

    Lord Hewart distinguished this case from the earlier Hammett case on the
    ground that in that case the evidence was clear that there was due diligence
    on the part of everybody down to the very person who had committed the
    act. He held that the justices were entitled to come to the conclusion that
    for that lack of due diligence the Appellants were responsible.

    I do not myself regard this as a satisfactory decision. No authorities were
    cited for the proposition that the company could not establish that they
    had acted with due diligence if a shop manager of theirs had not exercised
    due diligence and, in relation to this defence, the question is not, was the
    company responsible for the act of its servant and for his omissions but
    whether due diligence had been exercised by the company.

    In the course of the argument a great many cases were cited with regard
    to the criminal liability of a company. A company can only act through
    individuals, and it is well established that a company can be criminally
    liable even if the offence involves proof of an intent (Mousell Bros. Ltd. v.
    L. & N.W.R. Ry.
    [1917] 2 K.B. 836: Director of Public Prosecutions v.
    Kent & Sussex Contractors Ltd. [1944] K.B. 146).

    If an offence under section 11(2) is committed by a company, the acts
    necessary to constitute the offence must have been done by individuals in
    their employ. Here the question is not whether the Company is criminally
    liable and responsible for the act of a particular servant but whether it
    can escape from that liability by proving that it exercised all due diligence
    and took all reasonable precautions and that the commission of the offence
    was due to the act or omission of another person. That, in my view, is
    a very different question from that of a company's criminal responsibility for
    its servants' acts.

    The Act does not exclude a person in the employ of a company from
    being " another person ". In Beckett v. Kingston Bros. Ltd. [1970] 1 Q.B.D.
    606 it was argued that it did. That argument was rejected by Bridge J.,
    and rightly, in my opinion. If it had prevailed, the statutory defence would
    seldom avail an accused company for seldom would it be possible to prove
    that the act or default was that of someone not employed by the company.

    In Series v. Poole [1969] 1 Q.B. 676, a case decided in 1967 and which
    does not appear lo have been cited to the Court in Beckett v. Kingston Bros.
    Ltd.,
    the appeal to the Divisional Court was from the dismissal of an informa-
    tion for an offence under Regulations made under the Road Traffic Act,
    I960, alleging that the accused unlawfully failed to cause to be kept a current
    record of the driving periods of his driver.

    The Road Traffic Act, 1962, by section 20 provided that it should be a
    defence to prove in such proceedings that the accused had used all due
    diligence to secure compliance with the regulation.

    While I think that on the facts it would be difficult to say that the accused
    had exercised all due diligence, that was not the ground on which the appeal
    by the prosecutor was allowed. Lord Parker L.C.J., with whose judgment
    Salmon L.J. and Widgery L.J. agreed, regarded the "absolute obligation
    under section 186 of the Act of 1960" as a personal obligation which an
    individual could not evade by delegating it to someone else.

    I do not in the least wish to criticise this. Section 186 of the 1960 Act
    under which the prosecution was brought created an absolute obligation
    and as the law stood prior to 1962 what he said was clearly right. By the
    Road Traffic Act, 1962, Parliament qualified that absolute obligation and
    for the first time provided a defence dependant on proof of the exercise
    of due diligence by the accused.

    That could not be established merely by showing that a good system had
    been devised and a person thought to be competent put in charge of it. It
    would still be necessary to show due diligence on the part of the accused
    in seeing that the system was in fact operated and the person put in charge
    of it doing what he was supposed to do. From May to September, 1966,


    16

    the accused does not appear to have taken any steps to ascertain whether
    the person he had put in charge was doing what she had been instructed to do.
    If he had taken any steps, he would have found that she was not, and that
    is why I have said that on the facts in that case it would be difficult to say

    that the exercise of due diligence had been proved.

    Lord Parker said that a man under the duty imposed by section 186 might
    reasonably appoint someone else to perform his duty " his alter ego " and
    in that case it seemed to him that if the alter ego failed in his duty the
    employer is liable. He went on to say that to rely on a defence under section
    20 of the 1962 Act an employer must show that the alter ego has observed
    due diligence.

    That an employer, whether a company or an individual, may reasonably
    appoint someone to secure that the obligations imposed by the Act are
    observed cannot be doubted. Only by doing so can an employer who owns
    and runs a number of shops or a big store hope to secure that the Act
    is complied with, but the appointment by him of someone to discharge the
    duties imposed by the Act in no way relieves him from having to show
    that he has taken all reasonable precautions and had exercised all due
    diligence if he seeks to establish the statutory defence.

    He cannot excuse himself if the person appointed fails to do what he is
    supposed to do unless he can show that he himself has taken such precautions
    and exercised such diligence. Whether or not he has done so is a question
    of fact and while it may be that the appointment of a competent person
    amounts in the circumstances of a particular case to the taking of all
    reasonable precautions, if he does nothing after making the appointment to
    see that proper steps are in fact being taken to comply with the Act, it
    cannot be said that he has exercised all due diligence.

    I do not think that the Act is so narrowly drawn that to rely on the
    defence under section 24 an employer must show that the alter ego has
    observed due diligence. That is not, in my opinion, what the Act provides,
    He has, to show, that he used due diligence, and it does not suffice for him
    to show that others did so.

    Lord Parker's reference to an alter ego may have had its origin in the
    statements made by Lord Haldane in Lennard's Carrying Co. I.td. v. Asiatic
    Petroleum Co. Ltd.
    [1915] A.C. 705. He said at p. 713 :

    " My Lords, a corporation is an abstraction. It has no mind of its
    " own any more than it has a body of its own ; its active and directing
    " will must consequently he sought in the person of somebody who for
    " some purpose, may be called an agent, but who is really the directing
    " mind and will of the corporation, the very ego and centre of the
    " personality of the corporation. That person may be under the direc-
    " tion of the shareholders in general meeting; that person may be the
    " board of directors itself, or it may be, and in some companies it is so,
    " that that person has an authority co-ordinate with the board of directors
    " given to him under the articles of association, and is appointed by
    " the general meeting of the company and can only be removed by the
    " general meeting of the company ".

    Following this, Lord Denning in Bolton (Engineering) Co. Ltd. v. Graham
    & Sons Ltd.
    [1957] I Q.B. 159 said:

    " A company may in many ways be likened to a human body. It has
    " a brain and nerve centre which controls what it does. It also has hands

    " which hold the tools and act in accordance with directions from the
    " centre. Some of the people in the company are mere servants and
    " agents who are nothing more than hands to do the work and cannot
    " be said to represent the mind or will. Others are directors and
    " managers who represent the directing mind and will of the company,
    " and control what it does. The state of mind of these managers is the
    " state of mind of the company and is treated by the law as such."

    If when Lord Denning referred to directors and managers representing
    the directing mind and will of the company he meant, as I think he did, those
    who constitute the directing mind and will, I agree with his approach.


    17

    These passages, I think, clearly indicate that one has in relation to a
    company to determine who is or who are, for it may be more than one, in
    actual control of the operations of the company, and the answer to be given
    to that question may vary from company to company depending on its
    organisation. In my view, a person who is in actual control of the operations
    of a company or of part of them and who is not responsible to another
    person in the company for the manner in which he discharges his duties in
    the sense of being under his orders, cannot be regarded as " another person "
    within the meaning of sections 23 and 24(1)(a).

    Section 20 provides that where an offence under the Act has been com-
    mitted by a body corporate and is proved to have been committed with the
    consent or connivance or to be attributable to any neglect on the part of
    any director, manager, secretary or other similar officer of the body corporate
    or any person who was purporting to act in any such capacity, he, as well
    as the company, is to be guilty of the offence. Parliament by this section
    may have attempted to identify those who normally constitute the directing
    mind and will of a company and by this section have sought to make clear
    that although they are not other persons coming within sections 23 and
    24(1)(a), they may still be convicted.

    However this may be, shop managers in a business such as that conducted
    by the Appellants—and their number may be of the order of eight hundred
    if the Appellants have that number of shops—cannot properly be regarded
    as part of the Appellants' directing mind and will and so can come within
    the reference to "another person" in sections 23 and 24(l)(a).

    In my opinion, the ratio decidendi in Hammett Ltd. v. London County
    Council
    (supra) and in Series v. Poole (supra) was wrong.

    For the reasons I have stated in my view this appeal should be allowed.

    Lord Pearson

    MY LORDS,

    In September, 1969, the Company (Tesco Supermarkets Limited) was
    selling Giant Size packets of Radiant washing powder at a price of 2s. l1d.,
    being a reduced price 1s. below the price of 3s.11d. which was the ordinary
    price normally recommended by the manufacturers. Affixed to the window
    of the company's shop at Northwich in Cheshire was a large poster, of which
    the upper part bore the legend "Radiant 1s. off Giant Size 2s. 11d."
    Advertisements to the same effect had been inserted in local and national
    newspapers. Initially there was at the shop a stock of " flash packs ", that
    is to say Giant Size packets of the washing powder bearing the legend
    " 1s. off recommended price".

    Things went wrong on the 25th and 26th September, 1969. The stock of
    such " flash packs " was exhausted. On the evening of the 25th September
    Miss Rogers, an assistant at the shop, discovered that no such " Hash packs "
    remained on display, and she filled up the " fixture " with ordinary packets
    of the washing powder marked with the ordinary price of 3s. 11d. and she
    failed to inform the shop manager, Mr. Clements, of the dearth of flash
    packs or the action which she had taken. Mr. Clements failed to check
    the washing powder " fixture " on the 26th September, notwithstanding his
    entry in his Weights and Measures Book for that morning " All special offers
    " O.K." On the morning of the 26th September a customer entered the shop
    expecting to find a " flash pack " at 2s. 11d. but was able to find only a packet
    offered at the ordinary price of 3s. 11d. and he had to buy it at that price.
    The relevant provisions of the Trade Descriptions Act, 1968, are as
    follows:

    Section 11 (2). "If any person offering to supply any goods gives, by
    " whatever means, any indication likely to be taken as an indication
    " that the goods are being offered at a price less than that at which
    " they are in fact being offered he shall, subject to the provisions of
    " this Act, be guilty of an offence."


    18

    Section 20(1). "Where an offence under this Act which has been
    " committed by a body corporate is proved to have been committed with
    " the consent and connivance of, or to be attributable to any neglect
    " on the part of, any director, manager, secretary or other similar officer
    " of the body corporate, or any person who was purporting to act in
    " any such capacity, he as well as the body corporate shall be guilty
    " of that offence and shall be liable to be proceeded against and
    " punished accordingly."

    Section 23. " Where the commission by any person of an offence
    " under this Act is due to the act or default of some other person that
    " other person shall be guilty of the offence, and a person may be
    " charged with and convicted of the offence by virtue of this section
    " whether or not proceedings are taken against the first-mentioned
    " person."

    Section 24(1). " In any proceedings for an offence under this Act
    " it shall, subject to subsection (2) of this section, be a defence for the
    " person charged to prove—

    " (a) that the commission of the offence was due to a mistake or to
    " reliance on information supplied to him or to the act or default
    " of another person, an accident or some other cause beyond his
    " control: and

    " (b) that he took all reasonable precautions and exercised all due
    " diligence to avoid the commission of such an offence by himself
    " or any person under his control."

    In my opinion, the first conclusions to be drawn from the application of
    these provisions to the facts of the present case are as follows : —

    1. An offence was committed under section 11(2).

    2. Prima facie the company has committed and is liable for the
      offence, because the company through its servants offered to supply
      the goods and gave the indication of the reduced price. The case
      is similar to Coppen v. Moore (No. 2) [1898] 2 Q.B. 306, decided
      under the Merchandise Marks Act, 1887, section 2, where Lord
      Russell C.J. said at pages 312-3: "The question, then, in this case.
      " comes to be narrowed to the simple point, whether upon the true
      " construction of the statute here in question the master was intended
      " to be made criminally responsible for acts done by his servants
      " in contravention of the Act. where such acts were done, as in
      " this case, within the scope or in the course of their employment.
      " In our judgment it was clearly the intention of the Legislature to
      " make the master criminally liable for such acts, unless he was
      " able to rebut the prima facie presumption of guilt by one or other of
      " the methods pointed out in the Act." Also relevant is the judgment
      of Lord Goddard C.J. in Melias Ltd. v. Preston [1957] 2 Q.B. 380.

    3. In the present case the company was the master of the persons who
      committed the acts or defaults whereby the offence was committed,
      and as in Coppen v. Moore (supra) the company may rebut the pre-
      sumption of guilt in one or other of the methods pointed out by
      the Act. Section 11(2) is expressly made "subject to the provisions
      " of this Act " and therefore is subject to section 24(1). The company
      has sought to prove under section 24(1)(a) that "the commission of
      " the offence was due ... to the act or default of another person ",
      naming Mr. Clement as the other person. In order to complete its
      defence the company must also prove that the company took all
      reasonable precautions and exercised all due diligence to avoid the
      commission of such an offence by itself or any person under its
      control. The question in this appeal is whether the company has
      proved those two points.

    Your Lordships are not concerned in this appeal with the questions
    whether Miss Rogers and Mr. Clement or either of them could be held
    liable under section 23 for the commission of the offence, and whether they


    19

    or either of them would have a defence under section 24. I express no
    opinion on those questions.

    The magistrates have said in paragraph 7 of the Case Stated that they
    were of opinion that ....

    " (ii) the commission of the offence was due to the act or default of
    " the said Clement by his failure to see that the Appellants' policy
    " was correctly carried out and/or to correct the errors of the staff
    " under him;

    " (iii) the Appellants had exercised all due diligence in devising a
    " proper system for the operation of the said store and by securing
    " so far as was reasonably practicable that it was fully implemented
    " and thus had fulfilled the requirements of section 24(1)(b);

    " (iv) the Appellants could not rely upon the act or default of the
    " said Clement as he was not ' another person' within the meaning
    "of section 24(l)(a)."

    In giving their reasons for the opinion in (iv) they said that they reached
    the conclusion that the original act or default was that of Miss Rogers
    and the act or default of Mr. Clement was in his failure to instruct or
    supervise her; Mr. Clement represented the company in his supervisory
    capacity and for his lack of due diligence the company was responsible on
    the principle laid down in R. C. Hammett Ltd. v. London County Council
    (1933) 97 J.P. and L.G.R. 105 ; accordingly, Mr. Clement was not "another
    " person " for the purposes of section 24(1)(a) of the Act.

    The magistrates' opinion that Mr. Clement was not " another person "—
    a person other than the company—seems to me to be clearly unsustainable.
    It would be immediately obvious in the case of an individual proprietor
    of a business and the manager of one of his shops. It is less obvious in the
    case of a company which can only act through servants or agents and has
    generally in the law of tort and sometimes in criminal law vicarious respon-
    sibility for what they do on its behalf. But vicarious responsibility is very
    different from identification. There are some officers of a company who
    may for some purposes be identified with it, as being or having its directing
    mind and will, its centre and ego, and its brains. Lennard's Carrying Co. v.
    Asiatic Petroleum Co. Ltd.
    [1915] A.C. 705, 713 ; H. L. Bolton (Engineering)
    Co. Ltd.
    v. T. J. Graham & Sons Ltd. [1957] 1 Q.B., 159, 171-3 ; The Lady
    Gwendolen
    [1965] P. 294, 343. The reference in section 20 of the Trade
    Descriptions Act, 1968, to " any director, manager, secretary or other similar
    " officer of the body corporate " affords a useful indication of the grades
    of officers who may for some purposes be identifiable with the company,
    although in any particular case the constitution of the company concerned
    should be taken into account. With regard to the word " manager " I agree
    with Fisher J. who said, in his judgment in the present case, that the word
    refers to someone in the position of managing the affairs of the company,
    and would not extend to include a person in the position of Mr. Clement.
    In the present case the company has some hundreds of retail shops, and
    it would be far from reasonable to say that every one of its shop managers
    is the same person as the company.

    The Divisional Court, although they affirmed the conviction and dismissed
    the company's appeal, took a view that was different from that of the
    magistrates. They held that Mr. Clement was " another person " distinct
    from the company, so that the company proved its point under paragraph (a)
    of section 24(1). But they held that the company failed under paragraph (b).
    Their reasoning was that, although the company had devised a proper system
    for taking precautions and exercising due diligence to avoid the commission
    of an offence, the company had delegated the function of operating the
    system to employees, of whom Mr. Clement was one ; that Mr. Clement
    had operated the system negligently ; the company was responsible for the
    negligent operation of the system by one of its delegates ; and so the company
    failed to prove that it had taken all reasonable precautions and exercised
    all due diligence to prevent the commission of the offence. Some extracts
    from the judgment of Fisher J. will show clearly how the Divisional Court
    reached their conclusion. He said: " The taking of such precautions and


    20

    " the exercise of such diligence involves, or may involve, two things. First
    " of all it involves the setting up of an efficient system for the avoidance of
    " offences under the Act. Secondly it involves the proper operation of
    " that system. Inevitably the second part, the operation of the system,
    " will in most cases have to be delegated by the Company to employees
    " falling outside those mentioned in section 20. The question which this
    " court has to consider is whether a company can be said t6 have satisfied
    " the requirements of paragraph (b) if it satisfies the justices that it has set
    " up an efficient system, or a system which cannot be criticised, or whether
    " it is deprived of the defence under that section if it is shown that there
    " has been a failure by someone to whom the duty of carrying out the system
    " was delegated properly to carry out that function." Later he said: " If it
    " be the case that Mr. Clement was a person to whom the Appellants had
    " delegated in respect of that particular shop their duty to take all reasonable
    " precautions and exercise all due diligence to avoid the commission of such
    " an offence, and if Mr. Clement had failed properly to carry out that duty,
    " then the Appellants are unable to show that they have satisfied paragraph (b)
    " of section 24 subsection (1)." The conclusion was: "It seems clear to
    " me that a person in the position of Mr. Clement, the manager of a shop,
    " a supermarket, is properly to be considered as being a person to whom
    " the Appellants had, so far as concerned that shop, delegated their duty
    " of taking all reasonable precautions and exercising all due diligence to
    " avoid the commission of an offence; and it seems to me that in the light
    " of the findings which I have just read, it was impossible for the magistrates
    " to find that the Appellants had satisfied the requirements of paragraph (b)."
    Fisher J. also cited the case of Series v. Poole [1969] 1 Q.B. 676, in which
    it was held that the defendant was liable under section 186 of the Road
    Traffic Act, 1960, and had failed to prove a defence under section 20 of
    the Road Traffic Act, 1962, when he had " delegated " the checking of certain
    records to a lady secretary and she had been negligent in the performance
    of that task. In his judgment in that case Lord Parker C.J. had said at
    pages 683-4—" If I can go by stages, the absolute obligation under section 186
    "of the Act of 1960 is a personal obligation, personal in this sense, that
    " if an employer, acting perfectly reasonably, puts some competent person
    " in charge to perform his, the employer's, duty, the employer remains liable
    " if the servant fails in his duty. ... He may, as I have said, acting
    " perfectly reasonably appoint somebody else to perform his duty, his alter
    " ego, and in that case, as it seems to me, if the alter ego fails in his duty
    " the employer is liable. Equally, if the employer seeks to rely on the
    " defence under section 20, he must show that the alter ego has used due
    " diligence."

    Clearly the Divisional Court's decision was based on the theory of " dele-
    " gation ". One has to examine the meaning of the word " delegation " in
    relation to the facts of this case and the provisions of the Trade Descriptions
    Act, 1960, sections 11(2) and 24. In one sense the meaning is as wide as
    the principle of the master's vicarious liability for the acts and omissions of
    his servants acting within the scope of their employment. In this sense
    the master can be said to " delegate " to every servant acting on his behalf
    all the duties which the servant has to perform. But that cannot be the proper
    meaning here. If the company " delegated " to Miss Rogers the duty of
    filling the fixture with appropriate packets of washing powder, and " dele-
    " gated " to Mr. Clement the duty of supervising the proper filling of fixtures
    and the proper exhibition or withdrawal of posters proclaiming reduced
    prices, then any master, whether a company or an individual, must be
    vicariously liable for all the acts and omissions of all its or his servants acting
    on its or his behalf. That conclusion would defeat the manifest object of
    section 24 which is to enable defendants to avoid vicarious liability where
    they were not personally at fault.

    Section 24 requires a dividing line to be drawn between the master and any
    other person. The defendant cannot disclaim liability for an act or omission
    of his ego or his alter ego. In the case of an individual defendant, his ego
    is simply himself, but he may have an alter ego. For instance, if he has
    only one shop and he appoints a manager of that shop with full discretion


    21

    to manage it as he thinks fit. the manager is doing what the employer would
    normally do and may be held to be the employer's alter ego. But if the
    defendant has hundreds of shops, he could not be expected personally to
    manage each one of them and the manager of one of his shops cannot in the
    absence of exceptional circumstances be considered his alter ego. In the
    case of a company, the ego is located in several persons, for example, those
    mentioned in section 20 of the Act or other persons in a similar position
    of direction or general management. A company may have an alter ego, if
    those persons who are or have its ego delegate to some other person the
    control and management, with full discretionary powers, of some section of
    the company's business. In the case of a company, it may be difficult, and
    in most cases for practical purposes unnecessary, to draw the distinction
    between its ego and its alter ego, but theoretically there is that distinction.

    Mr. Clement, being the manager of one of the company's several hundreds
    of shops, could not be identified with the company's ego nor was he an
    alter ego of the company. He was an employee in a relatively subordinate
    post. In the company's hierarchy there were a branch inspector and an area
    controller and a regional director interposed between him and the Board of
    Directors.

    It was suggested in the argument of this appeal that in exercising super-
    vision over the operations in the shop Mr. Clement was performing functions
    of management and acting as a delegate and alter ego of the company. But
    supervision of the details of operations is not normally a function of higher
    management: it is normally carried out by employees at the level of foremen,
    chargehands, overlookers, floor managers and " shop" managers (in the
    factory sense of " shop "). Also reference was made to the case of R. C.
    Hammett Ltd.
    v. The London County Council [1933] 97 J.P. and L.G.R. 105,
    in which, when the reported arguments are taken into account, the ground
    of decision appears to have been that, for the purposes of the Sale of Food
    (Weights and Measures) Act, 1926, sections 5(2) and 12(5), the employer had
    to show due diligence on behalf of all the employees concerned except the
    actual offender. In my opinion, there was no justification for drawing the
    line of division between the company and its employees at that point, and
    the case was wrongly decided. As to the case of Series v. Poole (supra),
    the decision of the Divisional Court seems to have been in accordance with
    the general merits of the case, but the treatment of the secretary as an
    alter ego of the employer is difficult to uphold, when she had merely been
    instructed by him to check the records and had failed to do so diligently.

    I would allow the appeal.

    Lord Diplock

    MY LORDS,

    This appeal turns on the meaning to be given to penal provisions contained
    in the Trade Descriptions Act, 1968. The Act, which replaces the
    Merchandise Marks Acts, 1887 to 1953, is concerned with consumer protec-
    tion. It is a criminal statute and creates a number of offences of giving
    inaccurate or inadequate information to customers in the course of business
    transactions relating to the supply of goods or services. Offenders are liable
    to a fine or to imprisonment for not more than two years or to both.

    Nowadays most business transactions for the supply of goods or services
    are not actually conducted by the person who in civil law is regarded as the
    party to any contracts made in the course of the business, but by servants
    or agents acting on his behalf. Thus, in the majority of cases the physical
    acts or omissions which constitute or result in an offence under the statute
    will be those of servants or agents of an employer or principal on whose
    behalf the business is carried on. That employer or principal is likely to
    be very often a corporate person, as in the instant appeal.

    Consumer protection, which is the purpose of statutes of this kind, is
    achieved only if the occurrence of the prohibited acts or omissions is
    prevented. It is the deterrent effect of penal provisions which protects the


    22

    consumer from the loss he would sustain if the offence were committed. If
    it is committed he does not receive the amount of any fine. As a taxpayer
    he will bear part of the expense of maintaining a convicted offender in
    prison.

    The loss to the consumer is the same whether the acts or omissions which
    result in his being given inaccurate or inadequate information are intended
    to mislead him, or are due to carelessness or inadvertence. So is the
    corresponding gain to the other party to the business transaction with the
    consumer in the course of which those acts or omissions occur. Where, in
    the way that business is now conducted, they are likely to be acts or omissions
    of employees of that party and subject to his orders, the most effective
    method of deterrence is to place upon the employer the responsibility of
    doing everything which lies within his power to prevent his employees from
    doing anything which will result in the commission of an offence.

    This, I apprehend, is the rational and moral justification for creating in the
    field of consumer protection, as also in the field of public health and safety,
    offences of " strict liability " for which an employer or principal, in the
    course of whose business the offences were committed, is criminally liable,
    notwithstanding that they are due to acts or omissions of his servants or agents
    which were done without his knowledge or consent or even were contrary
    to his orders. But this rational and moral justification does not extend to
    penalizing an employer or principal who has done everything that he can
    reasonably be expected to do by supervision or inspection, by improvement
    of his business methods or by exhorting those whom he may be expected
    to control or influence, to prevent the commission of the offence (see Lim
    Chin Aik
    v. The Queen [1963] A.C. 160, 174; Sweet v. Parsley [1970] A.C.
    132, 163). What the employer or principal can reasonably be expected to
    do to prevent the commission of an offence will depend upon the gravity
    of the injury which it is sought to prevent and the nature of the business
    in the course of which such offences are committed. The Trade Descriptions
    Act, 1968, applies to all businesses engaged in the supply of goods and
    services. If considerations of cost and business practicability did not play
    a part in determining what employers carrying on such businesses could
    reasonably be expected to do to prevent the commission of an offence under
    the Act, the price to the public of the protection afforded to a minority
    of consumers might well be an increase in the cost of goods and services to
    consumers generally.

    My Lords, I approach the question of construction of the Trade Descrip-
    tions Act, 1968, in the expectation that Parliament intended it to give effect
    to a policy of consumer protection which does have a rational and moral
    justification.

    The offence with which the instant appeal is concerned is one created
    by section 11 (2) of the Act:

    " If any person offering to supply any goods gives, by whatever means,
    " any indication likely to be taken as an indication that the goods are
    " being offered at a price less than that at which they are in fact being
    " offered he shall, subject to the provisions of this Act, be guilty of an
    " offence."

    The section is dealing with offers to enter into contracts for the sale of
    goods. Prima facie, the offence is committed by the person who would be
    a party to the contract of sale resulting from acceptance of the offer, not-
    withstanding that the actual offer was made and the prohibited indication
    given by a servant or agent acting within the scope of his actual or ostensible
    authority on his employer's or principal's behalf. So construed the sub-
    section creates an offence of " strict liability " on the part of the employer
    or principal. But this strict liability is expressed to be " subject to the
    " provisions of this Act ".

    This construction is, in my view, confirmed by sections 23 and 24 of the
    Act. It is convenient to deal with these sections in reverse order and in their
    application to an employer or principal who is a natural person before
    considering the position of an employer or principal who is a corporation.


    23

    Section 24(1) provides: —

    " In any proceedings for an offence under this Act it shall, subject
    " to subsection (2) of this section, be a defence for the person charged to
    " prove—(a) that the commission of the offence was due to a mistake
    " or to reliance on information supplied to him or to the act or default
    " of another person, an accident or some other cause beyond his control;
    " and (b) that he took all reasonable precautions and exercised all due
    " diligence to avoid the commission of such an offence by himself or any
    " person under his control."

    The section speaks of " the commission of the offence " notwithstanding
    that the person charged may have a defence to the charge under subsection (1).
    This language refers to a stage in the proceedings at which the prosecution
    have proved facts necessary to constitute an offence of strict liability on the
    part of a principal. This is all that it is incumbent upon the prosecution to
    prove. The onus then lies upon the principal to prove facts which establish
    a defence under the subsection. The " strict liability " of the principal is
    thus qualified; but the onus of proving that he was not to blame lies upon
    him. It is reasonable that this should be so since the facts which can constitute
    the defence lie within his knowledge and not within that of the prosecution.

    There are two limbs to the defence. Under paragraph (a) the person
    charged must prove that the commission of the offence was due to one of
    the causes specified in that paragraph. They have the common characteristic
    that the offence must have been committed without his knowledge or
    acquiescence. The particular cause which is relevant to the instant appeal
    is " the act or default of another person ". But the person charged must
    also prove under paragraph (b) that he did all that could reasonably be
    expected of him to prevent offences of that kind being committed by himself
    or by any person under his control—a class of persons which would include
    his servants or agents.

    Where the employer or principal is a natural person I can see no reason
    in linguistics or justice for construing the expression " another person " in
    paragraph (a) as excluding a servant or agent of the employer or principal,
    however exalted his grade, whose actual physical act or omission resulted
    in the commission of the offence. They all fall within the expression " any
    " person under his control " and his duty in respect of their acts and omissions
    is dealt with in paragraph (b).

    Where the cause of the commission of the offence by him which is relied
    upon by the person charged is the act or default of another person, sub-
    section (2) requires him, as a condition of relying on the defence, to provide
    the prosecution, not less than seven days before the hearing, with such
    information as he possesses which may lead to the identification of that
    other person. This procedure is calculated to serve two purposes. One
    obvious purpose is to give to the prosecution in advance of the hearing
    an opportunity to investigate the validity of the defence. The clue to the
    other purpose, which is important to the deterrent policy of the Act, is to
    be found in section 23. It provides:

    " Where the commission by any person of an offence under this Act
    " is due to the act or default of some other person that other person
    " shall be guilty of the offence, and a person may be charged with
    " and convicted of the offence by virtue of this section whether or not
    " proceedings are taken against the first-mentioned person."

    It is important to observe that this section makes guilty of the offence
    created by some other section of the Act, such as section 11(2), persons,
    such as servants or agents, who do not fall within the description contained
    in that other section of the person by whom the offence can be committed.
    They can nevertheless be charged and convicted of that offence by virtue of
    section 23 if the commission of the offence by a person who does fall within
    the description contained in that other section, was due to any act or default
    by them.

    In the expression " act or default" in section 23 and in paragraph (a) of
    section 24(1) the word " act" is wide enough to include any physical act of
    the other person which is causative of the offence. But the use of the


    24

    word "default" instead of the neutral expression "omission" connotes a
    failure to act which constitutes a breach of a legal duty to act. A legal duty
    to act may arise independently of any contract or it may be a duty owed
    to another person arising out of a contract with him. That in paragraph (a)
    the word "default" embraces a failure to act which is in breach by a
    servant of his contract of employment, is, in my view, made apparent by
    paragraph (b) which requires that a person who relies on this defence must
    show " that he took all reasonable precautions and exercised all due diligence
    " to avoid the commission of such an offence by ... any person
    " under his control". This contemplates that the person charged has the
    power to control the acts or defaults of the other person. The only legal
    source of such power to control is contractual.

    But even where the power to control is derived from a contract, the
    contract need not necessarily be made directly between the person who
    has the power to control and the " person under his control ". In the context
    of offences committed in the course of business transactions, a superior
    servant may owe a duty to his employer under his contract of employment
    to supervise the work of an inferior fellow servant in the same employment
    and to give him orders as to how he should do his work; while the inferior
    servant may owe a corresponding duty to the same employer under his own
    contract of employment to accept the supervision and to comply with the
    orders of the superior servant. A failure to supervise, or an omission to
    give orders to, an inferior servant if it constitutes a breach by the superior
    servant of his contract of employment with his employer, may be a " default
    " of another person " upon which the employer can rely as a defence under
    paragraph (a).

    So construed these sections provide for a rational and just system of
    enforcement of the penal provisions of the Act which is calculated to deter
    anyone engaged in the business of supplying goods or services, whether as
    principal or as a servant, from conduct, whether careless or intentional,
    which would result in the commission of an offence, and, where it fails to deter
    to impose a criminal sanction upon those who are really to blame and not
    upon those who are innocent of any carelessness or wrongful intent.

    The enforcing authority is the local weights and measures authority (sec-
    tion 26). The powers conferred upon its authorised officers to make test
    purchases, etc., (section 27) and to enter premises and inspect and seize goods
    and documents (section 28) are calculated to enable these officers to obtain
    evidence of the commission of an offence by the principal by whom or on
    whose behalf the business of supplying goods or services is carried on.
    It is then for the principal to identify the other person or persons (if any)
    to whose act or default the offence was actually due and to pass to the
    prosecutor the available identificatory information. If the principal is not
    able to do this, it shows a defect in the system which he has laid down for
    allocating among his servants the duty of taking precautions to avoid the
    commision of offences under the Act. There is no injustice in requiring
    him to lay down a reasonably effective system and in treating any failure
    to do so as a criminal offence. If, on the other hand, the principal is able
    to identify a person to whose act or default the offence was actually due,
    he still has to show that he himself exercised due diligence to devise an
    effective system to avoid such acts or defaults on the part of his servants
    and to satisfy himself that such system was being observed.

    What amounts to the taking of all reasonable precautions and the exercise
    of all due diligence by a principal in order to satisfy the requirements of
    paragraph (b) of section 24(1) of the Act depends upon all the circumstances
    of the business carried on by the principal. It is a question of fact for the
    magistrates in summary proceedings or for the jury in proceedings on indict-
    ment. However large the business, the principal cannot avoid a personal
    responsibility for laying down the system for avoiding the commission of
    offences by his servants. It is he alone who is party to their contracts of
    employment through which this can be done. But in a large business, such
    as that conducted by the Appellants in the instant appeal, it may be quite
    impracticable for the principal personally to undertake the detailed super-
    vision of the work of inferior servants. It may be reasonable for him to


    25

    allocate these supervisory duties to some superior servant or hierarchy
    of supervisory grades of superior servants, under their respective
    contracts of employment with him. If the principal has taken all reasonable
    precautions hi the selection and training of servants to perform supervisory
    duties and has laid down an effective system of supervision and used due
    diligence to see that it is observed, he is entitled to rely upon a default by a
    superior servant in his supervisory duties as a defence under section 24(1),
    as well as, or instead of, upon an act or default of an inferior servant who has
    no supervisory duties under his contract of employment.

    Thus, the supervisory servant may have failed to give adequate instruc-
    tions to the inferior servant or may have failed to take reasonable steps to
    see that his instructions were obeyed. In the former case the supervisory
    servant may alone be to blame. In the latter both may be to blame. Or it
    may be, as might have been the case in the instant appeal, the commission of
    the offence is due to a combination of separate acts or omissions by two more
    inferior servants none of which taken by itself would have resulted in the
    commission of an offence.

    In the instant case there were findings of fact by the magistrates that the
    commission of the offence was due to the act or default of the Appellant's
    servant Clement in his duties as branch manager to supervise the work of
    the staff under him, and that the Appellants had fulfilled the requirements of
    paragraph (b) of section 24(1). They had also fulfilled the requirements of
    section 24(2) by serving a notice on the prosecutor identifying Clement as
    the other person to whose act or default the commission of the offence was
    due.

    On these findings the Appellants were, in my view, entitled to succeed in
    their defence under section 24. The magistrates, however, were of opinion
    that Clement was not in law " another person " within the meaning of
    paragraph (a) of section 24(1) and, accordingly, convicted the Appellants.

    The magistrates, however, were of opinion that Clement was not in law
    " another person " within the meaning of paragraph (a) of section 24(1) and,
    accordingly, convicted the Appellants.

    The Divisional Court were of opinion that Clement was " another person "
    but achieved the same result by dismissing the appeal upon the ground that
    under the Act a principal was personally responsible criminally for any failure
    by any of his servants or agents to exercise diligence in supervisory functions
    which he had required them to undertake.

    The Divisional Court in reaching this conclusion did not rely upon the fact
    that the Appellants are not a natural person but a corporation. But, before
    turning to the previous authorities which the Divisional Court felt bound to
    follow, it is convenient to deal with the legal consequences of the corporate
    character of the Appellants, for this has been relied upon by the Respondent
    in your Lordships' House as an alternative ground for dismissing the appeal.

    To establish a defence under section 24 a principal who is a corporation
    must show that it " took all reasonable precautions and exercised all due
    " diligence." A corporation is an abstraction. It is incapable itself of
    doing any physical act or being in any state of mind. Yet in law it is a
    person capable of exercising legal rights and of being subject to legal
    liabilities which may involve ascribing to it not only physical acts which are
    in reality done by a natural person on its behalf but also the mental state
    in which that person did them. In civil law, apart from certain statutory
    duties, this presents no conceptual difficulties. Under the law of agency
    the physical acts and state of mind of the agent are in law ascribed to the
    principal, and if the agent is a natural person it matters not whether the
    principal is also a natural person or a mere legal abstraction.
    Qui facit per
    alium facit per se: qui cogitat per alium cogitat per se.

    But there are some civil liabilities imposed by statute which, exceptionally,
    exclude the concept of vicarious liability of a principal for the physical acts
    and state of mind of his agent; and the concept has no general application
    in the field of criminal law. To constitute a criminal offence, a physical
    act done by any person must generally be done by him in some reprehensible
    state of mind. Save in cases of strict liability where a criminal statute.


    26

    exceptionally, makes the doing of an act a crime irrespective of the state
    of mind in which it is done, criminal law regards a person as responsible
    for his own crimes only. It does not recognise the liability of a principal
    for the criminal acts of his agent: because it does not ascribe to him his
    agent's state of mind. Qui peccat per alium peccat per se is not a maxim
    of criminal law.

    Due diligence is in law the converse of negligence and negligence con-
    notes a reprehensible state of mind—a lack of care for the consequences
    of his physical acts on the part of the person doing them. To establish a
    defence under section 24 (1) (b) of the Act, a principal need only show that
    he personally acted without negligence. Accordingly, where the principal
    who relies on this defence is a corporation a question to be answered is:
    What natural person or persons are to be treated as being the corporation
    itself, and not merely its agents, for the purpose of taking precautions and
    exercising diligence?

    My Lords, a corporation incorporated under the Companies Act, 1948,
    owes its corporate personality and its powers to its constitution, the Memo-
    randum and Articles of Association. The obvious and the only place to
    look, to discover by what natural persons its powers are exercisable, is in
    its constitution. The Articles of Association, if they follow Table A,
    provide that the business of the company shall be managed by the directors
    and that they may " exercise all such powers of the company " as are not
    required by the Act to be exercised in general meeting. Table A also vests
    in the directors the right to entrust and confer upon a managing director any
    of the powers of the company which are exercisable by them. So it may
    also be necessary to ascertain whether the directors have taken any action
    under this provision or any other similar provision providing for the co-
    ordinate exercise of the powers of the company by executive directors or
    by committees of directors and other persons, such as are frequently in-
    clouded in the Articles of Association of companies in which the regulations
    contained in Table A are modified or excluded in whole or in part.

    In my view, therefore, the question: what natural persons are to be
    treated in law as being the company for the purpose of acts done in the
    course of its business, including the taking of precautions and the exercise
    or due diligence to avoid the commission of a criminal offence, is to be
    found by identifying those natural persons who by the Memorandum and
    Articles of Association or as a result of action taken by the directors, or
    by the company in general meeting pursuant to the Articles, are entrusted
    with the exercise of the powers of the company.

    This test is in conformity with the classic statement of Lord Haldane in
    Lennard's Carrying Company Ltd. v. Asiatic Petroleum Co. Ltd. ([1915]
    A.C. 705). The relevant statute in that case, although not a criminal
    statute, was in pari materia, for it provided for a defence to a civil liability
    which excluded the concept, the vicarious liability, of a principal for the
    physical acts and state of mind of his agent.

    There has been in recent years a tendency to extract from Denning J.'s
    judgment in H. L. Bolton (Engineering) Company Ltd. v. T. J. Graham &
    Sons Ltd.
    ([1957] 1 Q.B. 159, 172, 173) his vivid metaphor about the " brains
    " and nerve centre " of a company as contrasted with its hands, and to
    treat this dichotomy, and not the Articles of Association, as laying down
    the test of whether or not a particular person is to be regarded in law
    as being the company itself when performing duties which a statute imposes
    on the company.

    In the case in which this metaphor was first used Denning L.J. was dealing
    with acts and intentions of directors of the company in whom the powers
    of the company were vested under its Articles of Association. The decision
    in that case is not authority for extending the class of persons whose acts
    are to be regarded in law as the personal acts of the company itself, beyond
    those who by, or by action taken under, its Articles of Association are
    entitled to exercise the powers of the company. In so far as there are dicta


    27

    to the contrary in The Lady Gwendolen ([1965] P. 294) they were not
    necessary to the decision and, in my view, they were wrong.

    But the only relevance of this to the Appellants' defence under section
    24(1) of the Trade Descriptions Act, 1968, was, as the magistrates rightly
    appreciated, whether the act or default of Clement was that of " another
    " person " than the Appellant Company itself within the meaning of para-
    graph (a). The fact that the principal in the business transaction in the
    course of which an offence under section 11(2) was committed was a
    corporation and not a natural person cannot affect the principal's duty to
    take all reasonable precautions and to exercise all due diligence under
    paragraph (6).

    The Articles of Association of the Appellants were not produced in
    evidence. Strictly speaking it may be that they should have been. But it is
    sufficiently evident from the findings of the magistrates as to the position
    held by Clement in the Appellants' organisation that it was too lowly for
    him to have had confided in him by the board of directors the co-ordinate
    exercise of any of the powers of the company itself.

    My Lords, there may be criminal statutes which upon their true con-
    struction ascribe to a corporation criminal responsibility for the acts of
    servants and agents who would be excluded by the test that I have stated
    to be appropriate in determining whether a corporation has itself committed
    a criminal offence. The Trade Descriptions Act, 1968, however, so far from
    containing anything which compels one to reject that test, recognises, by
    section 20, the distinction between " any director, manager, secretary or
    " other similar officer of a body corporate" and other persons who are
    merely its servants or agents.

    Section 20(1) provides as follows: —

    " Where an offence under this Act which has been committed by a
    " body corporate is proved to have been committed with the consent
    " and connivance of, or to be attributable to any neglect on the part
    " of, any director, manager, secretary or other similar officer of the
    " body corporate, or any person who was purporting to act in any such
    " capacity, he as well as the body corporate shall be guilty of that
    " offence and shall be liable to be proceeded against and punished
    " accordingly ".

    The natural persons described in this subsection correspond with those
    who under the Memorandum and Articles of Association of a company
    exercise the powers of the company itself. From this it follows that if
    any of them is guilty of neglect in the exercise of those powers such neglect
    is that of the company itself. That it cannot be relied upon as " the act or
    " default of another person ", so as to entitle the company to a defence under
    section 24(1), is implicit in the provision in section 20(1) that a person in the
    described category shall be guilty of an offence " as well as the body
    " corporate ". Without section 20 it would have been open to doubt whether
    persons whose acts were in law the acts of the company itself would have
    been guilty in their personal capacity also of the offence committed by the
    company.

    For these reasons I agree with the Divisional Court that Clement was
    " another person " within the meaning of section 24(l)(o). So all that now
    remains is to deal with the authorities which that court followed in holding
    that the Appellant's defence nevertheless failed.

    Those authorities start with the contrasting cases of Hammett Ltd. v. Crabb
    ([1931] 29 Cox C.C. 364) and Hammett Ltd. v. L.C.C. ([1933] 97 L.G.R. 105).
    Both were prosecutions under the Sale of Goods (Weights and Measures)
    Act, 1926. The relevant provisions of that Act exempted the employer
    from any penalty, though not from conviction, if he proved that he had
    used "due diligence to enforce the execution of this Act". But his right
    to exemption was conditional upon his laying an information against the
    person whom he charged as " the actual offender " and proving that that
    person had committed the offence in question. In Hammett Ltd. v. Crabb
    the employer charged as the actual offender his servant who had done the

    28

    physical act which constituted the offence and that servant had been duly
    convicted. The Divisional Court held that the employer was entitled to rely
    upon his having used due diligence. In Hammett Ltd. v. L.C.C. the
    employer again charged as " the actual offender " his servant who had done
    the physical act which constituted the offence. But the servant charged was
    acquitted by the magistrates—which would seem to dispose of any claim
    by the employer to be exempt from the penalty, as the Divisional Court had
    itself previously decided in Wakling v. Robinson (1930 46 T.L.R. 151). The
    employer, nevertheless, appealed to Quarter Sessions. Quarter Sessions found
    as a fact that a servant of the employer who was manager of the shop had
    not used due diligence in supervising the servant who had been charged
    (and acquitted) as the actual offender, though in all other respects the
    employer had exercised due diligence. The case stated by Quarter Sessions
    for the opinion of the Divisional Court appears to have been treated as
    raising the question of law as to whether, in order to avail himself of the
    exemption from penalty, the employer had to prove that due diligence had
    been used not only by himself but also by all of his servants who exercised
    supervisory functions " down to the very person who had committed the act".
    The Divisional Court apparently thought that the employer had to do so
    and that this distinguished the case from Hammett Ltd. v. Crabb. But the
    language of the judgment is far from clear and affords no clue to the reasons
    which led the court to this conclusion.

    This obscure and unsatisfactory judgment appears to have now passed into
    legal folk lore as authority for a general proposition that where a statute
    creates a criminal offence in relation to a business transaction which is
    prima facie one of strict liability on the part of the principal who is the
    party to the business transaction in the course of which the offence is com-
    mitted, but provides the principal with a defence if he proves that he has
    exercised due diligence, he cannot avail himself that defence unless he proves
    that due diligence was also exercised by all of his servants whom he
    employed in any supervisory capacity however humble. See Beckett v.
    Kingston Bros Ltd. ([1970) 1 Q.B. 606) a case under the Trade Descriptions
    Act, 1968.

    The proposition assumed to have been established in Hammett Ltd. v.
    L.C.C. has not been followed consistently. In Mellas Ltd. v. Preston ([1957]
    2 Q.B. 380) which was also a case under the Sale of Food (Weights and
    Measures) Act, 1926, there were three separate summons against the employer,
    in respect of each of which he charged the manager of one of his shops as
    the actual offender. In two of the summonses the manager had himself
    done the physical act which constituted the offence (as in Hammett Ltd. v.
    Crabb). In the third his default was his failure in supervising an inferior
    servant who had done the physical act which constituted the offence (as in
    Hammett Ltd. v. L.C.C.). The Divisional Court drew no distinction between
    the three offences and upheld in each of them the employer's defence " that he
    " had used due diligence " to enforce the execution of the Act.

    In Series v. Poole ([1969] 1 Q.B. 676), the case principally relied upon the
    Divisional Court in the instant appeal, was a case under the Road Traffic
    Acts, 1960 and 1962, which contained provisions in relation to the offence
    by a holder of a carrier's licence in failing to cause records to be kept by
    his drivers which are in pari materia to those of the Trade Descriptions
    Act, 1968. It is a defence to him to prove " that he used all due diligence
    " to secure compliance with those provisions ". The holder of the carrier's
    licence who was a natural person, not a corporation, had instructed his
    secretary to supervise the keeping of the records by the drivers. The
    magistrates found that he himself had exercised all due diligence, but that
    his secretary had not.

    ^ Although Hammett Ltd. v. L.C.C. was cited in argument in the Divisional
    Court, Lord Parker C.J. preferred to decide the case as " purely one of
    " principle." That principle he stated as being: " if Parliament has put an
    " absolute duty on some individual, he cannot evade that duty by delegating
    "it to someone else". So far the principle is unexceptional. Any legal
    duty, whether arising at common law or imposed by statute, may generally
    be performed by the person upon whom it is imposed through the agency


    29

    of some other person. But if it is not performed, the person upon whom
    the duty is imposed is liable for its non-performance. It is irrelevant that he
    instructed a servant or agent to perform it on his behalf, if that servant
    or agent failed to do so. All that is relevant is that the duty was not per-
    formed. When the duty is imposed upon a person by statute and non-
    performance is made a criminal offence without any requirement of mens rea
    this is what is meant by an offence of " strict liability ".

    The fallacy lies in the next step of the argument. Where Parliament hi
    creating an offence of " strict liability " has also provided that it shall be a
    defence if the person upon whom the duty is imposed proves that he exercised
    all due diligence to avoid a breach of the duty, the clear intention of Parlia-
    ment is to mitigate the injustice, which may be involved in an offence of
    strict liability, of subjecting to punishment a careful and conscientious person
    who is in no way morally to blame. To exercise due diligence to prevent
    something being done is to take all reasonable steps to prevent it. It may
    be a reasonable step for an employer to instruct a superior servant to
    supervise the activities of inferior servants whose physical acts may in the
    absence of supervision result in that being done which it is sought to prevent.
    This is not to delegate the employer's duty to exercise all due diligence;
    it is to perform it. To treat the duty of an employer to exercise due diligence
    as unperformed unless due diligence was also exercised by all his servants
    to whom he had reasonably given all proper instructions and upon whom
    he could reasonably rely to carry them out, would be to render the defence
    of due diligence nugatory and so thwart the clear intention of parliament
    in providing it. For, pace Hammett Ltd. v. L.C.C., there is no logical
    distinction to be drawn between diligence in supervising and diligence in
    acting, if the defaults of servants are to be treated in law as the defaults of
    their employer.

    My Lords, the Divisional Court was, I think, right in treating the instant
    case as governed by the decision in Series v. Poole. But that case was, in
    my view, wrongly decided and the proposition of law for which Hammett
    Ltd.
    v. L.C.C. has been treated as an authority is also erroneous, although
    the actual decision in that case to dismiss the appeal could have been justified
    on quite different grounds.

    I would allow this appeal.

    (314455) Dd. 197055 100 3/71 St. S.


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