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Cite as: [1932] AC 161, [1931] UKHL 2

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JISCBAILII_CASE_CONTRACT

    Die Martis, 15° Decembris, 1931,

    Parliamentary Archives,
    HL/PO/JU/4/3/858

    BELL AND ANOTHER

    v.
    LEVER BROTHERS, LTD., AND OTHERS.

    Viscount
    Hailsham

    Lord

    Blanes-

    burgh.

    Lord
    Warring-
    ton of

    Clyffe.

    Lord

    Atkin.

    Lord

    Thanker-

    ton.

    Lord Blanesburgh.

    MY LORDS,

    I understand that my noble and learned friend Viscount Hail-
    sham has read the judgment about to be delivered by my noble and
    learned friend Lord Warrington of Clyffe and agrees with it. This
    is my own opinion which I now proceed to express.

    This is an Appeal by the Defendants from an order of the
    Court of Appeal of the 17th of November, 1930, which affirmed
    a judgment of Mr. Justice Wright of the previous 5th of June
    pronounced after the trial of the action before himself and a
    City of London Special Jury. By his judgment the learned
    Judge, amongst other things, ordered that two several agreements
    —I propose to refer to them as the agreements of settlement—
    made on the 19th March, 1929, with each of the Appellants by
    the Respondents Lever Brothers, Ltd., should be set aside and
    that the moneys received under them should be repaid to Levers.
    The sum which the Appellant Mr. Bell had thus to repay included
    premiums amounting to £1,224 2s. 3d. on an endowment policy,
    later to be mentioned, which under the agreement of settlement with
    him had been paid by Levers on his behalf.

    The facts of the case and the course of the litigation make a
    long story, even if, in detail, those incidents only are dwelt upon
    which have a bearing upon the issues remaining to be dealt with
    on the Appeal.

    In Niger Co., Ltd., a company of large resources, with a paid-up
    capital of £4,750,000 and issues of debenture stock aggregating
    £5,500,000, Levers had as shareholders a controlling interest. They
    held in and after 1925 99.5 per cent, of the issued share capital.
    The business of Niger was to deal in West African products,
    including cocoa. It is with its cocoa business alone, exten-
    sive enough in itself, but only a portion of its total activities, that
    this case is immediately concerned. For several years before
    1923 Niger had been meeting with heavy losses, and Levers, for
    the protection of their then large investment in it, had themselves
    been financing or bearing these losses. Confronted in 1923 with
    the urgent problem of securing less unfavourable results, Levers
    approached the Appellants with an invitation to undertake between
    them the reorganisation and management of Niger.

    At that time Mr. Bell was joint manager of one of the great
    London banks. He had had a long experience of banking, with
    some knowledge of trade on the West Coast. Mr. Snelling's
    selection was due to the fact that he was an accountant of excep-
    tional ability who had just rendered notable service to Levers in
    bringing about a favourable adjustment of Inland Revenue demands
    upon them.

    Under Mr. Bell's engagement with his bank he was entitled
    on retirement after a few further years' service to substantial pen-
    sion rights. As he would forfeit these if he were to leave the bank

    13105 A

    2 [2]

    to take up other work, some substituted provision on this head,
    operative without reference to the duration of the new service,
    was for him of essential importance. It does not appear that any
    similar sacrifice was involved in Mr. Snelling's acceptance of the
    offer made him, and this difference of circumstance in the two cases
    is reflected in the final agreements reached. In the result Levers'
    invitation was favourably entertained by both Appellants, and in
    due course the conditions of their employment were embodied in
    letters passing between Levers, or the late Lord Leverhulme on
    Levers' behalf, and the Appellants respectively. These letters and
    the formal agreements referentially embodying their terms—separ-
    ate agreements with each Appellant—were to the following effect.
    For Mr. Bell, Levers were to take out and pay all premiums upon
    an endowment policy on his life, but maturing at sixty or previous
    death for an amount which on death before maturity would provide
    £16,200, and on maturity would provide £1,500 per annum or
    £16,200 at his option. The policy was to belong to Mr. Bell and
    the premiums were to be paid by Levers, notwithstanding the ter-
    mination of his engagement, unless it was terminated by himself. To
    this obligation on Levers' part, I must return later. I pause now
    only to observe that Mr. Bell's secession from the service of his
    bank to undertake his new employment—an act at once complete—
    was the entire consideration for this particular promise on Levers'
    part and stands out separate from the other provisions of the
    agreement.

    For the rest Mr. Bell was to be appointed and maintained by
    Levers as Chairman of Niger for five years from the 1st of Novem-
    ber, 1923, at a salary of £8,000 a year, during which time he was
    to devote the whole of his time and attention during business hours
    " to the business " of Levers. Thus was it expressed in the formal
    agreement of 9th August, 1923. As to Mr. Snelling he was to
    serve " in regard to the West African interests " of Levers (note
    the phrase) for five years from the 1st October, 1923, at a salary of
    £10,000 per annum to the 31st March, 1925, and of £6,000 per
    annum for the rest of the term. There was in the formal agree-
    ment with him the same provision as to his time and attention
    that was contained in the agreement with Mr. Bell.

    In July, 1926, by further agreements then entered into the
    service of the Appellants was continued. The earlier contract with
    Mr. Bell was replaced by a fresh agreement for five years from
    the 1st of July, 1926, at the same salary and insurance premium
    with the addition of a commission in certain events which never
    in fact became either actual or prospective. Mr. Bell was to be
    Chairman of Niger for the whole term.

    The new agreement with Mr. Snelling was for the same
    extended period, at his same salary of £6,000 per annum, with
    the same commission as in Mr. Bell's case. Mr. Snelling was to
    be Vice-Chairman of Niger for the whole term.

    On the 14th September, 1923, Niger formally appointed both
    Appellants to be Directors of the Company and the Appellant
    Bell to be its Chairman. On the 8th of April, 1924, Mr. Snelling
    was formally by Niger appointed Vice-Chairman of the Company.
    From the autumn of 1923 until the end of April, 1929, when their
    service ceased under the agreements of settlement now in question
    the joint management of the Appellants continued through the
    exercise by them of the duties attached to these two offices and to
    the Directorate of Niger's Associated Companies, to which also
    they were appointed. With reference to that joint management,
    it is convenient at once to observe that although in the letters of
    appointment it was to the " business " or to " the West African
    interests ' of Levers that the Appellants were respectively
    apparently to attend yet from the beginning to the end of their


    [3] 3

    engagement as probably always intended, it was in the business of
    Niger that they were exclusively employed. It was by their appoint-
    ment to the Chairmanship and Vice-Chairmanship of Niger and
    to the directorate of its many associated companies with all
    attendant responsibilities as such that they were clothed with the
    necessary and only powers of management and control which they
    ever exercised or possessed.

    The consequences flowing from all this are important. As
    will appear later these were never fully appreciated at the Trial
    and the resultant confusion is only now clearly revealed before your
    Lordships' House. Although Lord Leverhulme in one of his letters
    to Mr. Bell did point out to him that he would be responsible for
    his actions to the shareholders of Niger it is not plain that by
    that expression Lord Leverhulme meant more than Lever Brothers,
    Limited, and it is sufficiently clear from other indications that to
    his business mind Lever's West African Interests, Lever's West
    African business, and the Niger Company Limited, were practically
    convertible terms, notwithstanding the fact that the .5 per cent.
    outstanding shares in Niger represented 23,750 shares of £1 each
    held by 300 shareholders, and that £5,500,000 Debenture Stock was
    outstanding in the hands of the public. And this view, natural
    enough perhaps to a layman of Lord Leverhulme's realism, re-
    mained persistent up to the close of the Plaintiffs' case at
    the first hearing of this action. Until then Levers were
    the only Plaintiffs: the theory still apparently being that
    Niger was so subordinate to Levers that to a suit which in
    large measure was for the vindication of its own proprietary rights
    it was not even necessary to make it party. The addition of Niger
    as Plaintiff after the first hearing corrected, formally, this miscon-
    ception, but it never entirely disappeared. Lever's West African
    Interests although there were none in question which were not the
    property of Niger was a description that survived even at your
    Lordships' Bar while the Appellants both in the summing up and in
    the questions put to the Jury were represented as servants, serving
    two masters, Lever's and Niger, each of whom had separate rights
    of dismissal depending upon identical considerations.

    How serious in its present consequences that confusion may
    prove to be will emerge in the sequel. At this stage it suffices to
    observe that if regard is had, as it must necessarily be, to the
    essential separation in personality between Levers and Niger, to
    say nothing of their possible divergence in interest, the relation in
    which the appellants ultimately stood to Levers and Niger
    respectively is not, as I think, in any way doubtful. By Levers'
    agreements with them, Levers were bound to maintain the
    Appellants in their respective offices in Niger for the prescribed
    term at the prescribed remuneration. The Appellants in return
    agreed with Levers, but with Levers only, to devote the whole of
    their business hours and abilities to the discharge of their duties.
    As between the Appellants and Niger it was in that Company's
    Articles of Association that their terms of service were to be found
    (Swabey v. Port Darwen Company 1 Meg. 38), and it was by the
    general law as modified by any provisions of these articles that their
    responsibilities and liabilities to Niger in respect of any actions of
    their own would fall to be ascertained. Costa Rica Railway Com-
    pany v. Forwood,
    1901, 1 Ch. 746,757.

    As a result there remained no contract by the Appellants to
    serve Levers in a post from which Levers could " dismiss " them.
    Nor is " dismissal " the term by which their expulsion from office
    by, or their cessation of office in Niger would properly be described.
    So far as Levers were concerned they were as the result of their
    agreement bound to maintain the Appellants in office so long only as
    they fulfilled their prescribed duties as officers of Niger, devoting the

    13106 A 2

    4 [4]

    whole of their business hours to the discharge of these duties. So
    soon as they defaulted in these respects Levers would be justified in
    stopping any further payments to them, and would be relieved from
    the obligation of further maintaining them in their offices. But
    that would be all. For the rest Levers had to rely only on their
    voting power as shareholders of Niger. Again, so far as Niger was
    concerned its powers, never powers of " dismissal " were in no way
    dependent upon any breach of duty by the Appellants. The Niger
    shareholders as such could at any time effectively remove the Appel-
    lants by special resolution (see Article 46 (2) ), even if, in the dis-
    charge of every duty they owed to the Company, their actions had
    been beyond reproach or even criticism.

    And now to proceed again with the narrative. From July, 1925,
    the Appellants' remuneration, fixed by their agreements with Levers
    was paid to them by Niger direct, and such was the success of their
    management that the unsatisfactory position of Niger to which
    they had succeeded in 1923 was transformed into a state of great
    prosperity. " Every one agrees," said Mr. Justice Wright
    speaking of the Appellants in his summing up the case to the
    Jury at the Trial, " that their conduct and their work for their
    " Company [was] most efficient devoted strenuous and successful."

    And here reference must be made to a matter which, although
    only incidental, will be found finally to colour the whole case of the
    Appellants. On the Coast, during the Appellants' management of
    Niger, there were three other concerns trading in cocoa—the African
    and Eastern Trade Corporation, Limited, the Anglo-Guinea
    Produce Company, Limited, and Frame and Company, Limited.
    In 1925 and 1926 two agreements were come to between these four
    companies. They are referred to in the proceedings as the Pool
    Agreements and they were entered into for the purpose of pro-
    tecting the trade of the companies in buying and selling cocoa.
    By them provision was made for fixing by a Committee a Pool buying
    price and a Pool selling price of cocoa, and each company was
    required timeously to notify to the others and to the Pool Committee
    the quantities and prices of cocoa purchased or sold by it, while,
    for subsequent division amongst the four constituents according to
    prescribed percentages, payment was to be made, first of a " Pool
    " Tax " on all purchases of cocoa by each of them, and secondly of
    any excess sum over a prescribed amount received on sales by any
    of them. It is not however the precise terms of these agreements
    which are now directly relevant: their immediate bearing upon the
    case arises from a clause contained in each agreement which seeks
    to associate the directors of every constituent company in the
    obligations thereby undertaken by that company. The clause in the
    earlier pool agreement is not a little confused. The clause in the
    later agreement is however free from ambiguity and it provides
    that any reference to any company party thereto shall where the
    context so admits include its directors for the time being . . .
    and that each party undertakes that its directors . . . shall
    be bound by the terms of the agreement so far as respects their
    respective dealings in cocoa (if any) and that all such dealings shall
    for all purposes be deemed to be acts of such party thereto done
    under the terms of the agreement and to be accounted for
    accordingly.

    These pool agreements were, of course, well known to the
    Appellants. Indeed, they were the result of negotiations in which
    one or both of them took part. The first agreement was signed on
    behalf of Niger by Mr. Snelling : the second by Mr. Bell. Mr.
    Snelling was a member of the Pool Committee and from time to
    time attended its meetings. But both Appellants said quite
    definitely and positively that actual knowledge of the existence of

    [5] 5

    what may be called the directors' clause they never had, and that
    until shortly before the institution of this action and some months
    after the execution of the agreements of settlement they had no
    idea that, as a result of any operations of their own, Niger could be
    involved in any liability to the Pool. And I can myself have no
    doubt that the Jury accepted as reliable the evidence of the
    Appellants on this point. It is clear from the answers given by them
    to the series of questions addressed to them by the learned Judge at
    the Trial that the Jury regarded the Appellants as witnesses of
    truth. A perusal of the record shows how invariably in
    these answers the Jury had accepted the Appellants' recollection
    when it was in conflict with that of other witnesses. On
    this present point there was no conflict. From its very nature
    it was a subject upon which the Appellants alone could depose.
    And their statements are not difficult of acceptance when the agree-
    ments themselves and the situation therein of the clauses in question
    are examined.

    And the acceptance of this statement made by both Appellants
    becomes of importance at different stages in the case, and not least
    when your Lordships approach, as now you must, the task of
    ascertaining precisely the nature and implications of the
    transactions of the Appellants which lie at the root of the orders
    under appeal. It will be convenient to refer to these as the
    offending transactions. Four in number they all took place in the
    short interval between the 4th November, 1927, and the 14th
    December following. They were transactions in cocoa differences
    on the Appellants' behalf. They were carried through on the
    market by Niger's usual brokers on the instructions of
    the Appellants or one of them and, as the Jury must
    clearly be taken to have found, to the knowledge of these
    brokers that they were the Appellants' own transactions. Three
    of them were more or less unprofitable. One only was successful
    and the net result of the four was a profit of £1,360. In
    January, 1928, the transactions were closed and the profit was
    received from the brokers. And that was the end. Nothing else of
    the kind happened before or afterwards. None of the transactions
    in fact caused any damage to Niger, still less to Levers. No use
    was made by the Appellants in the course of them either of Niger's
    property or of any information obtained by them as Directors of
    Niger. Such must be the description of the offending transactions
    according to the findings of the Jury who, on this subject also,
    clearly accepted the evidence of the Appellants as the evidence of
    truth.

    To this description, however, two things must be added. The
    first, that these transactions, although the Appellants were ignorant
    of the fact, involved a breach of the directors' clause of the Pool
    Agreement for which—if these agreements were not invalid as being
    in restraint of trade—Niger might be made responsible for the other
    companies parties thereto. Apparently, however, no attempt to
    ascertain the existence or the extent of such responsibility has yet
    been made.

    And the second, that, although in the end regarded by the
    Jury in the light most favourable to the Appellants, these
    transactions remained at the best most ill-advised. They had
    to be executed secretly, described by separate letters lest in the
    market they should be supposed to be the transactions of Niger.
    And they were conducted with further secrecy so that they might
    not be generally known in the office of Niger itself. Such a pro-
    cedure when it is discovered inevitably arouses suspicion. No
    transaction of a director open to the least suggestion of association
    with his company can ever hope to escape censure or even condemna-
    tion if it has been carried out in secret. In this instance once again,

    13105 A 3

    6 [6]

    as so often before, it was the secrecy from Levers practised by the
    Appellants that brought down upon them the charges of dishonesty
    from which they have only escaped after a sixteen days' hearing
    before a Judge and Jury.

    For of course the allegations put forward by the Respondents
    with reference to these transactions made of them something very
    different. Most grave were the charges of fraud levelled against the
    Appellants in respect of them. That however is another story which
    will find its place at a later stage of the narrative.

    As has been said the cocoa business of Niger was little more than a
    minor part of its total activities, and in amount the offending trans-
    actions were a mere fraction of Niger's current cocoa business. To
    these considerations, coupled with the view of the transactions taken
    by the Jury may be attributable the conclusion also reached by them
    that these transactions did not even remain in the minds of the
    Appellants when the agreements of settlement were made. They
    were, it must be emphasised, not known in any way to Levers until
    after these agreements had been completed.

    The actual retirement of the Appellants from the Niger service
    had no connection with the offending transactions. The neces-
    sity for it came about in quite a different way. Niger's principal
    competitor on the coast had always been the African and
    Eastern Trade Corporation already mentioned. Amalgamation
    of the two concerns had in the years prior to 1929 been the
    subject of negotiation on a basis of Niger having one fourth
    or at best one third interest in the combine. But by 1929 the
    position of Niger had so greatly improved both absolutely and
    relatively that in that year the amalgamation negotiations were
    revived on what has been called a fifty-fifty basis. And it is
    apparent on the record that the higher participation meant for
    Niger an increase of many hundreds of thousands of pounds in
    money's worth, the credit for which is not denied to the Appellants.
    The negotiations for this amalgamation were long and delicate.
    Mr. Snelling was on the coast while they were proceeding but Mr.
    Bell rendered valuable services in bringing them to a successful
    conclusion—services handsomely acknowledged at the time by Mr.
    D'Arcy Cooper of Levers who explained to Mr. Bell that the way
    he had put his personal position aside throughout the negotiation
    had relieved him of a great deal of difficulty. (Record p. 383.)
    What Mr. Cooper meant was that Mr. Bell had not stood out for
    any position in the new Company for himself, although he knew
    full well that if neither he nor Mr. Snelling were to join that Com-
    pany, the scheme of amalgamation must necessarily involve
    their retirement altogether from Niger, For by the scheme
    the assets of both amalgamating Companies were with certain
    reservations to be transferred to the new Company, each of the
    old Companies receiving in return equal holdings of fully paid
    shares in that Company. And the transfer actually took effect on
    the 1st May, 1929; and as from its completion Niger became a mere
    holding Company influencing by means of its voting power the
    policy and administration of United Africa Limited, the new
    Company, but with no outlet within its own constitution for the
    undivided energies of the Appellants as its Chairman and Vice-
    Chairman, respectively. All this was realised while the negotia-
    tions for amalgamation were still only in progress and during that
    interval steps were taken by Mr. Cooper acting on behalf of Levers
    to bring about, after everything had been completed, the termina-
    tion of the Appellants' employment on some agreed terms of pay-
    ment. And the ensuing negotiation conducted with the Appellants
    separately resulted in the two agreements of settlement with which
    this litigation has been mainly concerned.

    [7] 7

    The agreement of settlement come to with Mr. Bell is embodied
    in a letter from Mr. Cooper to him of the 19th March, 1929, in the
    following terms :

    dear bell,

    As promised at our interview to-day I write to record the
    agreement then arrived at between us, viz., that on the pro-
    visional agreement for the amalgamation of the African and
    Eastern Trading Corporation and the Niger Company
    becoming effective as from the 1st May next you will on that
    date retire from the Boards of the Niger Company and its sub-
    sidiaries, including H.C.B. and its subsidiaries and in con-
    sideration of your so doing Lever Brothers, Limited, will pay
    you as compensation for the termination of your agreement(s)
    and the consequent loss of office the sum of £30,000 in full
    satisfaction and discharge of all claims and demands by you
    of every nature and kind and howsoever arising against Lever
    Brothers, Limited, the Niger Company, the H.C.B. and any
    company, person or firm associated with them or any of them
    either directly or indirectly.

    With regard to the insurance premium payable on the
    policy on your life with the Yorkshire Insurance Company it
    was agreed that Lever Brothers will continue to pay such
    premium until the policy matures.

    Will you please let me have your reply confirming the above
    arrangement.

    I should like to be allowed to say how deeply the Board
    of Messrs. Lever Brothers appreciate the work that you have
    done for the Niger Company during the period that you have
    been in control.

    Yours sincerely,

    F. D'arcy cooper.

    The agreement of settlement come to with Mr. Snelling was on
    lines similar to that reached with Mr. Bell. Mr. Cooper's letter
    to him of even date recording its terms is, however, as interesting
    for its variations from that addressed to Mr. Bell, as it is for its
    similarity thereto. It is as follows :—

    March 19th, 1929.
    Dear snelling,

    As promised at our interview to-day I write to record the
    agreement then arrived at between us, viz., that on the pro-
    visional agreement for the amalgamation of the African and
    Eastern Trade Corporation and the Niger Company becoming
    effective as from 1st May next you will on that date retire from
    the Boards of the Niger Company and its subsidiaries including
    the H.C.B. and its subsidiaries and in consideration of your
    so doing Lever Brothers Limited will pay you the sum of
    £20,000 in full satisfaction and discharge of all claims and
    demands by you under your agreement of employment or in
    any other capacity whatsoever and whether in respect of salary,
    commission, bonus, expenses, compensation for loss of office
    or otherwise.

    Will you please let me have your reply confirming the
    above arrangement.

    I should like to be allowed to say how deeply the Board
    appreciate the work that you have done for the Niger Company
    during the period that you have been in control.

    Yours sincerely,

    F. D'arcy cooper

    13105 A 4

    8 [8]

    In due course confirmatory letters were written and the agree-
    ments were duly carried out. The Appellants received their re-
    muneration and continued in active discharge of their duties until
    the 30th of April following. They then formally resigned all their
    directorships as required by the agreements and received from
    Levers the compensation arranged.

    My Lords, while it is fully accepted that the offending transac-
    tions were entirely unknown to and unsuspected by Mr. Cooper
    when the negotiations were proceeding, there was a serious differ-
    ence of recollection between Mr. Cooper and Mr. Bell on the ques-
    tion whether Mr. Bell did not, in order to justify a large payment
    to himself, expressly say in the course of the negotiations that he
    had faithfully and honestly served Niger during his association
    with that Company. Mr. Bell was certain that he made no such
    statement in any such connection and the Jury it is clear accepted
    his recollection and, as will be seen later, exonerated him from the
    charge of fraudulent misrepresentation based upon the allegation
    that the statement was his.

    With regard to these agreements of settlement there is one matter
    which may be conveniently dealt with while the agreements them-
    selves are immediately in mind. It is affirmed by the Respondents,
    with reference to them, and the acceptance of the allegation is
    implicit in the Judgments appealed from, that the sole considera-
    tion moving from Levers for their agreement to pay Mr. Bell
    £30,000 and Mr. Snelling £20,000 was the satisfaction of what
    Lever's, still in ignorance of the offending transactions, supposed
    were their respective salary rights under enforceable agreements of
    service with 2 years and 2 mouths of the term in each case unex-
    pired. The suggestion touches an issue of primary importance in
    the final decision of this appeal. It is, I think, demonstrably
    incorrect. Although it is true that in the letter to Mr. Snelling
    commission is actually mentioned, I do not find on. an examination
    of the record that the prospect of any commission being receivable
    by either Appellant was ever of substance and I feel satisfied that
    it in no way entered into the adjustment of figures. On the basis
    of salary to be lost, therefore, the maximum figure in prospect for
    Mr. Bell was £17,333 6s. 8d. and for Mr. Snelling £13,000. But
    these sums could not have been recovered even in actions for wrong-
    ful dismissal, because allowance must in each case have been made
    for the fact that the whole sum was being immediately paid and for
    the further fact that each Appellant was being released from his
    obligation of continued service and was being left free to seek other
    remunerative employment. And this employment in the case of
    Mr. Snelling at all events—Mr. Bell it seems proposed to return
    to his farm—was likely to be immediate and on terms perhaps little
    less favourable than those attached to the post of which he was
    being deprived. Accordingly even these maxima must on this basis
    have been subject to serious reduction. Moreover that this sole
    consideration did not instruct the amounts paid is confirmed when
    it is found that these sums were not on that footing proportionate
    (as seems erroneously to have been supposed in the course of the
    Trial. See Record, p. 437). If £20,000 was on this footing the
    sum claimable by Mr. Snelling £26,666 13s. 4d. only should have
    been awarded to Mr. Bell. If Mr. Bell's payment of £30,000 was
    the standard, Mr. Snelling should have received not £20,000 but
    £22,500.

    And this line of reasoning might easily be further pursued, with
    the result of making it, as I think, clear that while undoubtedly
    the claim for unearned salary amounting at the remote outside in
    one case to over £17,000 and in the other to £13,000 was a material
    consideration for the payments agreed to, it was neither on the terms
    of either letter nor in fact the sole inducing cause. Into that induce-
    ment there undoubtedly entered the desire tangibly to recognise the

    [9] 9

    exceptional services rendered to Niger by each Appellant acknow-
    ledged in each letter and even now affirmed : still more perhaps to
    enlist their support of the amalgamation and to have their assist-
    ance in carrying it through in all its details to completion : above
    all to secure on the 1st of May following the voluntary resignation
    by each Appellant of all his offices, results of value, it may have
    been of' infinite value, to the prospects of a delicate negotiation in
    the success of which millions of pounds were involved. And these
    last two results could not have been secured if Levers, instead of
    writing through Mr. Cooper the letters of the 19th March.
    1929, had, with the real offending transactions then disclosed to
    them, repudiated all further obligations under their agreements
    with the Appellants, and as shareholders in Niger had sought, in
    spite of the Appellants' opposition—quite effective for a sufficiently
    long period—to remove them from office. The vital significance of
    this conclusion, even so far as it can be reached on existing materials
    and apart from amplification resulting from further investigation,
    will later appear.

    Some two months later, as a result of inquiries made of the
    Appellants with reference to certain cocoa transactions of Niger
    of which complaint in arbitration proceedings was being made by
    other members of the pool, the offending transactions were brought
    back to the minds of the Appellants, and for the first time, as they
    asserted, they became aware of the Directors' Clause in the pool
    agreements. Mr. Bell thereupon informed Mr. Cooper of the facts
    relating to the offending transactions in terms which in effect were
    those finally found by the Jury as above stated. There was immense
    controversy at the Trial as to the details of this conversation with
    Mr. Cooper, but it does not seem necessary to go more deeply into
    that matter now, for Levers did not and would not accept from
    Mr. Bell any innocent explanation of transactions in their view
    highly improper which, until that moment, had been completely con-
    cealed from them, and on the 7th August, 1929. they issued their
    writ in this action with themselves alone as Plaintiffs, and the
    Appellants as Defendants. The allegations made by the points of
    claim were to the effect that the Appellants were the servants of
    Levers; that it was their duty to serve Levers faithfully and honestly
    and not to act in any way prejudicial to the interests of Levers;
    that the offending transactions constituted such misconduct on the
    part of the Appellants as to entitle Levers instantly to terminate
    the service agreements with them and to dismiss them without
    notice, and that had Levers known of the offending transactions
    they would have in fact dismissed the Appellants; alternatively it
    was alleged that the Appellants had wrongfully conspired to make
    secret profits for themselves and that the agreements of settlement
    were obtained by them respectively " falsely and fraudulently con-
    ' cealing from [Levers] that they and each of them had [entered
    ' into the offending transactions] and also by falsely and
    ' fraudulently verbally representing to [Levers] that they had
    ' faithfully and honestly served Levers and /or Niger."

    The 26th paragraph of the Points of Claim was as follows :—

    " Alternatively the said agreements (i.e., the agreements
    of settlement) and each of them were made and the moneys
    " paid thereunder were paid under a mistake of fact."

    Particulars being asked for of the " mistake " it was stated to
    be " that the defendants and each of them had acted honestly in
    " their conduct of the affairs of the Niger Co. Ltd. and had not
    " dealt in cocoa on their own account and/or in so dealing on their
    " own account had not acted contrary to their duty and / or the
    " terms of their respective contracts."

    The relief claimed was damages for conspiracy and / or
    fraudulent concealment, breach of duty and breach of contract;

    10 [10]

    rescission of the agreements of settlement; an account of all
    transactions and dealings in cocoa entered into by the Appellants
    and payment by them of the amounts found due on the taking of
    such account.

    Objections on lines already indicated might very effectively have
    been taken to the whole scheme of the action and in particular to
    the relief claimed by Levers for themselves in respect of the offending
    transactions in a suit to which Niger was not a party. But
    none such were in terms taken. Indeed from the moment when
    the Directors' Clause of the pooling agreement was brought to the
    notice of the Appellants they refrained from any justification of
    the offending transactions as such and were ready to account for
    all the profit they had made by them. ' If I had known that [the
    " Directors' Clause] existed I would not have defended even at the
    " time any of the transactions that I did," was one of Mr.
    Snelling's answers in cross-examination; and in accord with this
    attitude the £1,360 profit from these transactions had, in January,
    1930, been duly tendered to Niger by the Appellants, and had been
    refused.

    The action came on for trial before Mr. Justice Wright and a
    Special Jury on the 26th March, 1930, and it was opened, and
    evidence was called to prove a case of fraudulent misrepresenta-
    tion and concealment only. Nothing at all was said about such
    things as mistake, or duty to disclose or fiduciary relation or
    uberrima fides. On the 4th day of the hearing, Levers closed their
    evidence, and following, as they stated, information derived from
    an examination of the brokers' books, they applied for leave to
    amend their points of claim in order to raise against the Appel-
    lants further charges of fraud, the nature of which they fore-
    shadowed. The trial had become one of wide public interest, and
    so soon as these new charges—all of them of the gravest descrip-
    tion—were stated in open Court, the Appellants, in the interests of
    their own reputations felt, as they said, that they must be met.
    Accordingly with no discussion except as to terms, leave to amend,
    on stringent conditions, was given to Levers and the hearing, on the
    amended pleadings, was adjourned until the 13th of May to be
    then heard with a new Jury. During the interval the opportunity
    was taken to add Niger as a co-plaintiff, with the appropriation to
    Niger of the relief appertaining to the offending transactions. It
    was apparently taken for granted when Niger was added as
    co-plaintiff that its rights in the matter had not as a part of its
    undertaking passed to United Africa on the amalgamation. Per-
    haps they did not. Niger's title to sue has not been challenged
    any more than has Lever's; although if Lever's did quite justifiably
    charge against Niger the compensation paid under the agreements of
    settlement as they were charging against Niger the remuneration of
    the Appellants represented by a part of it, even the right to claim
    rescission of the agreements, of settlement may also have passed to
    United Africa as part of Niger's undertaking. But this objection
    has not been taken. Levers, who made the compensation payments
    in the first instance may have been content as between themselves and
    Niger to bear them finally, and for other reasons there may be
    nothing in the point. Accordingly I pass on.

    A perusal of the other voluminous amendments shows that the
    sting of them lay in the new allegation that the offending trans-
    actions were all of them in their origin the transactions of Niger,
    subsequently appropriated to themselves by the Appellants through
    the innocent agency of the company's brokers after it had become
    clear to them that the transactions would be profitable. Para-
    graph 26 of the original points of claim remains unaltered. But
    still no case of duty to disclose, or of fiduciary relation or of
    uberrima fides was made by the amended pleading.

    [11] 11

    My Lords, the Respondents took upon themselves a very grave
    responsibility in launching at that stage against men who in all
    others respects had deserved well of them these charges so grave
    as to be almost criminal in character. I do not doubt that the
    Respondents acted in good faith in making them. But, although
    persisted in to the end of the long hearing the charges entirely
    failed; and the Appellants are entitled at the least to have that
    failure remembered on any application by the Respondents for
    further indulgence in this action whether by way of amendment of
    pleadings or otherwise. .

    The matters dealt with in the evidence will in the main be found
    reproduced in the questions left by the learned Judge to the Jury
    at its close. To these questions reference has already been made.
    With the answers given by the Jury to each, I now record them :—

    1. Did the Defendant Bell and/or the Defendant Snelling
    fraudulently misrepresent to the Plaintiffs Levers that they had
    faithfully and honestly served Levers and / or Niger with the object
    and effect of inducing Levers to make the agreements or either of
    them of the 19th March, 1929?

    Jury's answer : No.

    2. Did the Defendant Bell and / or the Defendant Snelling
    fraudulently conceal from Levers and / or Niger that they or either
    of them had had the dealings complained of with the object and
    effect of inducing Levers to make such agreements or either of them ?

    Jury's answer : No.

    3. Did the Defendants or either of them commit breaches of
    contract or duty towards the Plaintiffs in

    (A.) wrongfully appropriating as their own the contracts
    referred to as C.T.C., R.T.D., G-S.2 [the " offending transac-
    tions "] or any of them being contracts of the Niger Company
    and appropriating to themselves the profits on such contracts?

    Jury's answer : No.

    (B.) entering into the contracts referred to a C.T.C.,
    R.T.D. and G.S.2 or any of them as private transactions on
    their own account and for their own benefit.

    Jury's answer: Yes.

    (C.) in wrongfully appropriating to their own use and
    benefit the sum of £1,000 being monies of the Niger Company.

    Jury's answer: No.

    (D.) If so, what damages, if any, under (A.) or (B.) or
    (C.)?

    Jury's answer : (B.) £1,360. £5 nominal damages.

    4. (a) Were the Plaintiffs Levers entitled to terminate the
    contract of service with the Defendants or either of them

    (1) in January, 1928 ?
    Jury's answer: Yes.
    and (2) in March, 1929?
    Jury's answer : Yes.

    If so, would the Plaintiffs Levers have elected to exercise
    such right at either of such dates?

    Jury's answer: Yes. .

    (b) Were the Plaintiffs the Niger Company entitled to dismiss
    the Defendants or either of them from their positions as chairman
    and vice-chairman respectively :

    1. in January, 1928?
      Jury's answer: Yes.

    2. in March, 1929 ?
      Jury's answer: Yes.

    12 [12]

    If so, would tine Plaintiffs the Niger Company have elected to
    exercise such right at either of such dates ?
    Jury's answer : Yes.

    5. When Levers entered into the agreements of the 19th March,
    1929, did they know of the actings of either of the Defendants in
    regard to the dealings C.T.C., R.T.D., G.S.2?

    Jury's answer : No.

    If Levers had so known would they have made these agreements
    or either of them ?

    Jury's answer : No.

    At the date of the respective interviews prior to these agree-
    ments, had the Defendant Bell or the Defendant Snelling in mind
    their actings in respect of these transactions ?

    Jury's answer : No.

    If these questions are carefully scrutinized it will be found that
    they are based on an acceptance of Lever's view as to the
    legal position of the parties towards each other under the service
    agreements. The undue prominence thus conceded to Levers served
    further to divert attention from the true position, never at any
    time accentuated, that the claims against the Appellants in relation
    to the offending transactions were claims of Niger only and that
    the validity and extent of these claims depended mainly if not
    exclusively upon the regulations of Niger. It is remarkable
    that so far as appears on the 'Record these regulations were
    only once mentioned—and then in the most casual way—during
    the whole of the proceedings. In the summing up they were never
    referred to at all. It will be noted also that no question was asked
    upon the issue of conspiracy—that because the learned Judge held
    that there was no evidence to support it. Lastly, with regard to
    the allegation that the Appellants (had in carrying out the offending
    transactions used the property of Niger or utilised information
    obtained by them as its Directors, the question 3 (c) was directed
    to the only matter relevant thereto, which, as a result of the evidence,
    remained in doubt and in respect of that remaining matter also the
    Jury as will be seen exonerated the Appellants.

    The fifth of the questions was drawn up by the learned Judge
    after Counsel had addressed the Jury but before the summing up.
    It was in the Court of Appeal suggested that the question was
    directed to an issue of mutual mistake and that the Appellants'
    Counsel should have thus regarded it. 1 confess that I cannot
    blame him if he did not. Put at the end of a long hearing dealing
    only with grave charges of fraud and in the course of which no
    such issue had been even remotely hinted at, I should myself have
    thought, as I gather the Appellants' Counsel did think, that it was
    directed to the issue of fraudulent concealment, an issue which had
    throughout bulked prominently in the proceedings.

    It was agreed that the learned Judge was to be entitled to draw
    necessary inferences of fact upon, any question that might arise
    which had not been put to the Jury, and in the discussion upon the
    findings and the pleaded case which took place on a later day,
    Counsel for the Respondents, after claiming that Levers were en-
    titled to recession of the agreements of settlement on the ground of
    unilateral mistake, ended by propounding the view that they were
    so entitled also on the ground of mutual mistake, that issue as they
    contended having been raised by paragraph 26 of the Points of
    Claim, and found in their favour by the Jury in their answers to
    questions 4 (a) and 5. The learned Judge after argument, and hold-
    ing, as it seems, that the issue was sufficiently raised by para-
    graph 26—for he had previously intimated (Record, p. 1437) that
    he would allow no question to be put to the Jury which involved
    any amendment of the pleadings—finally held that the agreements

    [13] 13

    of settlement must be set aside on the ground of mutual mistake,
    and he ordered the moneys paid thereunder, including the premiums
    on Mr. Bell's policy paid by Levers on his behalf to be repaid. The
    learned Judge held that all the parties to the agreements of settle-
    ment entered into them under the common mistake that the contracts
    of service were binding, in the sense that they could not at that
    moment have been got rid of without the Appellants' consent.

    It is, I believe, the view of all your Lordships that the order
    of the learned Judge in so far as it directed the repayment by Mr.
    Bell of the premiums referred to cannot stand. Wright J. over-
    looked the fact that, even with the agreements for settlement set
    aside, the liability for payment of these premiums would still re-
    main on Levers under the original agreement of 1923 because, apart
    from Mr. Bell's agreement so to do in the rescinded agreement of
    settlement there had been no termination of his engagement by him-
    self. This point was discussed at your Lordships' Bar and the
    Respondents offered no objection to its being taken into consideration
    by the House. Accordingly, in that respect at least, the order of the
    learned Judge must now be corrected. But that is relatively a small
    matter. The greater questions involved remain in issue.

    The Appellants appealed to the Court of Appeal. On the 17th
    November, 1930, their appeal was dismissed. The Lords Justices
    took the same view on mutual mistake as the learned Judge had
    done. They also held that, although in no way pleaded, his Judg-
    ment could be supported on the ground that the Appellants during
    the negotiation with Levers for the agreements for settlement were
    under a duty to disclose their offending transactions of 15 months
    before: and that they were not excused from disclosure by reason
    of the fact that, as the Jury had found, these transactions had
    passed from their minds. Upon the question of amendment Lord
    Justice Scrutton and Lord Justice Lawrence were of opinion that
    the issue of mutual mistake had not been pleaded, but, differing
    in that respect from the learned Judge's view, they saw no sufficient
    reason why the pleadings should not be treated as amended so that
    the issue might be decided on existing materials. In Lord Justice
    Lawrence's view the objection of the Appellants' Counsel to that
    course being taken was " technical " and " devoid of merit." Lord
    Justice Greer held that the issue of mutual mistake was sufficiently
    raised by paragraph 26 of the Points of Claim.

    From this, the Appellants appeal again to Your Lordships'
    House, and upon that appeal, and for the purpose as I assume of
    obtaining a decision upon any issue open upon the pleadings,
    both parties accepted the Jury's findings as correct. Upon this
    three questions at once arise. 1st, Is this issue of mutual mistake
    open to the Respondents upon the pleadings; 2. If not, is this
    action one in which without injustice to the Appellants the neces-
    sary amendments to raise it could after verdict and on the
    application of the Respondents have been allowed by the learned
    Judge? May these even now on a like application be allowed by
    this House; and 3. If such amendments be allowed, are the Re-
    spondents entitled to judgment upon the issue raised by them. I
    propose to deal with each of these questions in their order.

    As to the first, I believe that all of your Lordships are of opinion
    that this case of mistake is not open to the Respondents on the
    pleadings as they stand. I think no other view is tenable. In
    its setting, as well as according to its terms, paragraph 26 to me
    seems quite unambiguous. The case pleaded by the Respondents
    was on the face of it, and from beginning to end a case of deliberate
    fraud on the part of the Appellants. The points of claim at great
    risk to the Respondents in the matter of costs, were amended once
    only that the fraud charged might be more flagrant in character.
    Paragraph 26 remained unaltered. Even without the particulars

    13105 A 7

    14 [14]

    of the mistake alleged I should not have thought that its meaning or
    intent was doubtful. With the assistance of the particulars its
    meaning becomes I think abundantly clear. That it is the state of
    mind of Levers which is alone being therein described is, surely,
    shown by the fact that the moneys are only alleged to have been
    " paid " under mistake. There is no allegation at all that the
    moneys were " received " under the same mistake. And the par-
    ticulars appear to me conclusively to show that no such allegation
    was intended to be made. Further paragraph 26 if limited to
    unilateral mistake induced by the Appellants' fraud is, even although
    alternative, consistent with all that precedes, but mutual mistake,
    innocent on the part of the Appellants, is so entirely destructive
    of everything previously alleged against them, that no interpreta-
    tion of paragraph 26 involving an assumption of honesty on their
    part could in the absence of the clearest words properly be placed
    upon it. Finally the claim made by the Heads of Claim is for
    rescission of the agreements of settlement, relief properly conse-
    quent upon a case of voidability either for fraud or unilateral mis-
    take induced by fraud. But if the allegation, even alternative,
    was that the agreements were entered into under mutual mistake
    of fact, then these were not voidable but void ab initio, and
    no order on that footing is even hinted at in the relief sought.
    The truth is that the Respondents having decided to charge fraud
    against the Appellants did so, up to the hilt. There is no weakening
    in this respect in paragraph 26. Accordingly I am of opinion that
    the case on which the Respondents have succeeded in the Courts
    below was not open to them on the pleadings as they stand. It
    is clear also as I have said that the learned Judge only entertained
    that case, because of his view which all your Lordships consider
    erroneous that no amendment was called for.

    2. This circumstance makes the second of the above questions
    of the gravest importance. Are your Lordships in the Court of
    last resort to grant an amendment which the learned Trial Judge
    himself would have refused? It is convenient to set forth here the
    amendment which the Respondents formulated and asked for, if
    amendment was held to be required.

    It was as follows :
    Paragraph 26 A.

    Further and in the alternative the said agreements and
    each of them were made under a mutual mistake of fact and
    the moneys paid and received thereunder were paid and received
    under a mistake of fact.

    Particulars.

    The Plaintiffs Levers and the Defendants and each
    of them were under a mutual mistake fundamental to the
    said agreements that the said contracts of service and each
    of them existed as binding obligations upon the said Plain-
    tiffs and the Defendants respectively and that the said
    contracts respectively could not be terminated without the
    assent of the Defendants respectively.

    Further or in the alternative the Plaintiffs Levers
    will rely upon the particulars set out under paragraph 26
    hereof.

    Now there are of course no limits to the power of your Lordships'
    House to permit, in proper circumstances, almost any amendment.
    Nevertheless the power is not one for arbitrary exercise and I pro-
    pose in dealing with the propriety or otherwise of its exercise now
    to govern myself by two authoritative statements of relevant prin-
    ciple, one by Lord Watson, and the other by Lord Lindley, when
    Master of the Rolls. My first and second reasons for concluding

    [15] 15

    that leave to amend should in this case be refused are based upon
    Lord Watson's judgment in the Connecticut Fire Insurance Com-
    pany v. Kavanagh
    1892 A.C. 473—where the Respondent had
    complained that the case which was being maintained against
    him before the Judicial Committee was not within the Appellants'
    declaration : that the evidence led at the Trial had not been directed
    to that new case, which ought not to be entertained. Upon that
    contention, Lord Watson delivering the Judgment of the Board
    said :

    " When a question of law is raised for the first time in a Court

    " of last resort, upon the instruction of a document or upon facts

    " either admitted or proved beyond controversy it is not only com-

    " petent but expedient in the interests of justice to entertain the

    " plea. The expediency of adopting that course may be doubted

    " when the plea cannot be disposed of without deriding nice ques-

    " tions of fact, in considering which the Court of ultimate review

    " is placed in a much less advantageous position than the Courts

    " below. But their Lordships have no hesitation in holding that

    " the course ought not, in any case, to be followed unless the Court

    " is satisfied that the evidence upon which they are asked to decide

    " establishes beyond doubt that the facts, if fully investigated would

    " have supported the new plea. To accept, the proof adduced by

    " a defendant in order to clear himself of a charge of fraud as

    " representing all the evidence which he could have brought forward

    " in order to rebut a charge of negligence might be attended with

    " the risk of doing injustice."

    Except, that in that instance, the new case was one of negli-
    gence, whereas here the new case is one of innocent mistake, Lord
    Watson's observations seem to me to be entirely in point, and I
    base myself upon them as I proceed.

    And my first reason for the conclusion that this amendment
    should not be allowed is this. It raises, as something quite new,
    and in an action hitherto based on fraud alone, an issue with all
    fraud eliminated. If the amendment were allowed, the Appellants
    in the discussion of that new issue would find themselves faced with
    and bound by the answers of the Jury to the 4th question. But, on
    examination of the learned Judge's summing up, it appears, as I
    think, quite clearly that these answers were given by the Jury under
    a direction which, although it might have been allowed to pass as
    relatively harmless in a case based upon fraud, was one, which as
    applied to a case from which all fraud has been eliminated, cannot
    in point of law, as I think, be supported. It is not necessary to
    suggest—it may not be permissible for me even to speculate upon—
    what, under a proper direction, as applied to the new case, the
    answers of the Jury to the questions would, or should, have been.
    It is enough, for present purposes, to say, as I do. that to allow the
    Respondents to make this new case, with the Appellants bound to
    accept these answers to the 4th question as they stand, would in my
    judgment expose the Appellants to a risk of injustice from which
    they are entitled to claim protection.

    My Lords, the answers to that fourth question, of course,
    depend upon what was the true nature of the liability of the
    Appellants to Niger resulting from the offending transactions as
    found by the Jury and as already described. Did these transactions

    as thus ascertained involve on the part of the Appellants a breach
    of their duty to Niger so serious as on their discovery by Levers
    fifteen months later to be sufficient to justify an immediate dis-
    claimer of all further responsibility under the Appellants' agree-
    ments of service ? That is the question.

    My Lords, I have already given my reasons for the view that in
    the fourth question the real relation between the parties is not pro-
    perly appreciated. I have also explained why I think it so un-


    16 [16]

    fortunate that the learned Judge should have directed the Jury, as
    he did, that the answers to Question 4 (a) and Question 4 (b) should
    be based upon the same considerations. All this, however, is
    relatively unimportant here. Even the further direction, to which
    I am now about to refer, might have been allowed to pass, had the
    fraud referred to in Question 3 (c) been found, for with that fraud
    brought home to the Appellants the action would have really been
    undefended. But that charge, like all the other charges of fraud,
    failed and has disappeared, and the precise character in legal
    responsibility of the offending transactions stripped of fraud
    becomes of essential importance. And here the point to be noted is
    that these transactions involved no contract or engagement in
    which, either for profit or loss, Niger was at all concerned. The
    contracts involved were all contracts by which the Appellants alone
    were bound for their own benefit or burden to some outside party
    exclusive of Niger altogether. And this distinction is vital:
    because the liability of a Director in respect of profits made by him
    from a contract in which his company also is concerned is quite
    different from his liability, if any there be, in respect of his profits
    from a contract in which the company has no interest at all. In the
    first case, unless by the company's regulations the Director is per-
    mitted, subject to or without conditions, to retain his profit, he must
    account for it to the company. In the second case, the company has
    no concern in his profit and cannot make him accountable for it
    unless it appears—this is the essential qualification—that in earning
    that profit he has made use either of the property of the company
    or of some confidential information which has come to him as a
    Director of the company.

    Now, unfortunately, the learned Judge here so far as his
    observations had precision directed the Jury as if the offending
    transactions were, in the first class, and not, as was the fact, in the
    second, and he gave his direction without any reference at all to the
    regulations of Niger.

    The relevant duties of a director were laid down by him in terms
    of the following quotation which he read to the Jury. Their duties
    were:—

    " So to act as to promote the best interests of the Company.
    " No one having such duties to perform can be allowed to
    " enter into engagements in which he has or can have a per-
    " sonal interest which conflicts or may possibly conflict with the
    " interests of those whom he is bound to protect. No question
    " is liable on such occasion to be raised as to the fairness or
    " unfairness of the dealing. It may be impossible to demon -
    " strate how far the interest of the Company is affected. No
    " inquiry on that subject is permitted."

    The learned Judge did not give the source of his quotation,
    and I have not succeeded in tracing it. But both from its wording,
    and also from its close similarity to Lord Cranworth's locus
    classicus
    on the subject printed in the head note to Aberdeen
    Railway Coy.
    v. Blaikie, 1 Macq. 461, I can have little doubt that
    like Lord Cranworth's statement, the quotation is concerned with
    a company's contracts in which, on the other side of the table, a
    director is interested, and with reference to which the company's
    regulations are silent. The quotation is not addressed to a
    director's own contracts in which the company has no financial
    interest at all.

    The regulations of Niger are illuminating with reference to both
    classes of contracts. Article 47 concedes to its Directors in very
    wide terms, and subject to exceptionally easy conditions the
    privilege of being concerned in contracts with the Company. And
    the Article also clearly contemplates that a Director may be a
    Director of another company and entitled to his privileges as such
    .

    [17] 17

    And this brings me to the position of a Director in relation to
    contracts of the second class, with which we are here alone con-
    cerned. The principle will be found in the case usually cited
    in relation to it, although reported only in the Weekly Notes, of The
    London and Mashonaland Exploration Company
    v. New Mashona-
    land Exploration Company,
    1891, W. N. 165, where it was held,
    that it not appearing from the regulations of the Company that a
    Director's services must be rendered to that Company and to no
    other Company he was at liberty to become a Director even of a
    rival Company, and it not being established that he was making to
    the second Company any disclosure of information obtained con-
    fidentially by him as a Director of the first Company he could not
    at the instance of that Company be restrained in his rival
    directorate. And in the present case that principle is not affected
    by the agreements of each Appellant with Levers to devote all his
    time during business hours to the Niger service. There is no
    corresponding provision in the regulations of Niger, and it was not
    because the offending instructions were instructed during the day
    and not in the evening that they are impugned. It was not sug-
    gested that the Appellants were in any way precluded by virtue of
    their engagement from at any time entering into private speculations
    of their own in outside things as e.g. stocks and shares. Indeed
    any such suggestion was expressly disclaimed by the Respondents.
    Moreover my Lords, the Respondents did endeavour to establish that
    in relation to these transactions the Appellants did make use of
    Niger's property and information, and question 3 (c) is directed to
    the only instance alleged which after the evidence remained open.
    and it was answered in the negative. Accordingly I reach the con-
    clusion that, so far, the Appellants in relation to the offending trans-
    actions were under no liability whatever to Niger.

    But all this is apart from the Pool Agreement. There remains
    the question of the liability of the Appellants to Niger by reason of
    the Directors' clause in that agreement, and as to this, the Appel-
    lants in my judgment were quite right in recognising so soon as that
    clause was brought to their notice that they should not retain the
    profit they bad made from these transactions.

    Instead, therefore, of the direction to the Jury on this matter
    being what it was, that direction, on the supposition that the facts
    would be found as they have been, should, I think, have been to the
    effect that in the absence of any proof that the Appellants in carry-
    ing out the offending transactions had utilized for their own pur-
    poses any property of Niger or any confidential information obtained
    by them as its Directors, they were not, apart from the Pool Agree-
    ment, under liability to account in respect of these offending
    transactions to Niger, or to Levers, or at all. It was the Directors'
    clause in the Pool Agreement alone which left the Appellants under
    any liability in the matter, and it must lie taken that the existence
    of that clause was unknown to them until some months after the
    agreements of settlement, and many months after the offending
    transactions. Nor should the renunciation of their profit by the
    Appellants after 'knowledge of the clause be overlooked in the con-
    sideration of the question whether the offending transactions of the
    Appellants would have justified more than a year after the event
    a repudiation by Levers of further liability under the contracts of
    service.

    Upon the actual direction given to the Jury it is not surprising
    that they found in reply to question 4 (a) that Levers, and in answer
    to 4 (b) that Niger were respectively entitled to terminate the
    Appellants' contracts of service not only in January, 1928, but also
    in March, 1929. What would be the answer to the proper questions
    of a Jury directed on the lines just indicated ? I give no answer.
    save this, that it would in my judgment be unjust to the Appellants
    to expose them to the hazard of this amendment bound by the

    13105

    A 9

    18 [18]

    answers to question (4) as they stand, for it cannot be affirmed
    that under a proper direction, applicable to the facts as found that
    answer would be forthcoming. And it will not be forgotten that in
    its absence the whole issue of mutual mistake remains, as an issue,
    stillborn. Such, then, is my first reason for disallowing this
    amendment.

    My second reason is that the Appellants have not had the oppor-
    tunity of showing by evidence the extent to which Levers received
    consideration for the settlement agreements over and above their
    release from liability for the further payments for which, on the
    hypothesis, it was by all parties assumed that they remained liable.
    I have already indicated the general nature of the advantages
    derived by Levers from the settlement agreements, as these appear
    on the record, but this aspect of the case has not been developed
    in evidence because in the action as fought it was not either relevant
    or necessary so to do. It may be, indeed I am far from saying
    that, even on, the existing record, the Appellants have not sufficient
    evidence on this point to displace the new plea altogether. But
    here again it would, I think, be unfair to leave them exposed to the
    hazard of the amendment with that answer to it quite undeveloped.

    My third reason for disallowing the amendment is based on
    the principle enunciated by Lindley, M.R., which I nave already
    foreshadowed. It would be wrong, Lord Lindley said, in Nocton
    v. Ashburton
    (see 1914, A.C. 963), " to allow a case based on serious
    '' charges of fraud to be turned into a comparatively harmless case
    " based " in that instance also upon negligence. The qualification
    of his statement made in this House, in the special circumstances
    of that case, in no way questioned its essential soundness, and
    further illustrations of its application will be found in Halsey v.
    Brotherhood, 43 L.T. 466, 470, and Noad v. Murrow, 40 L.T. 100.

    In my judgment it applies here with compelling force. The
    first amendment made by the Respondents charging further frauds
    against the Appellants with their failure after a prolonged hearing
    to make any of them good, as I think furnishes, when the services
    of the Appellants to Niger are remembered, a convincing reason why
    this complete change of front after all else has failed should not be
    permitted to the Respondents.

    I cannot therefore hold with the view that the Appellants'
    objections to this amendment are either technical or destitute of
    merit. On the contrary, the objection seems to me to be funda-
    mental, and in the interests of fairness in litigation it is, I think,
    optimi exempli, that in such a case as this they should be sustained.

    I am prepared, therefore, to allow this appeal on this head solely
    on the ground that no case other than their pleaded case is open to
    the Respondents in this House and mutual mistake has not been
    pleaded.

    But, my Lords, if, contrary to my own notions of the fitness of
    things, the Appellants, bound by the Jury's answers to question 4,
    were to be put at risk by having this question of mutual mistake
    determined on existing materials, I should not wish it to be sup-
    posed that in my judgment the Appellants would fail. On the
    contrary, they would, I think, even so handicapped, still succeed
    on that question. There I find myself in entire accord with the
    conclusions of my noble and learned friends Lord Atkin and
    Lord Thankerton, whose judgments I have had the advantage
    of reading. I refrain from adding to a deliverance already too
    long any further observations on the case so regarded. My noble
    friends begin where I am content to end. But I follow them also
    to their goal.

    But I would add a word on the second ground relied upon by
    the Lords Justices in support of the learned Judge's order namely

    [19] 19

    that it could be upheld for the reason that Levers' unilateral mistake
    which was certainly pleaded resulted from a neglect on the part of
    the Appellants of their duty when negotiating the agreements of
    settlement to disclose to Levers their offending transactions.

    My Lords I am in entire agreement with the answer given to
    this suggestion by my two noble friends opposite made on the
    assumption, that Levers were the employers of the Appellants and
    that the " offence in their transactions had only temporarily passed
    from their minds.

    But if the true position be, as I have tried to show, that the
    Appellants were not in any relevant sense the servants of Levers and
    that the only reason why their transactions were " offending " was
    that they involved Niger in a breach of the Directors Clause of the
    Pool agreement of the existence of which the Appellants were not
    merely forgetful but were in complete ignorance, what then I would
    ask remains of any duty on their part to disclose? My Lords, in
    that view of the situation the duty was I suggest plainly non-
    existent. The action therefore, in my judgment, so far as it was
    contested, entirely fails.

    My Lords, I confess that I arrive without reluctance at this
    conclusion of the whole matter. It appears to me to accord with
    a sound view both of justice and of fairness. I should have
    deemed it unfortunate if the Appellants had been left in enjoy-
    ment of the profit accruing from the offending transactions and if
    they had not been required to pay the nominal damage which the
    Jury considered these transactions occasioned to Niger. But that
    result has not followed. For both the profit and the damage they
    remain accountable, as is wholesome.

    Acceptance, however, by your Lordships' House of the orders
    appealed from would have meant that after the complete failure
    of the grave charges of fraud preferred against officials whose
    ability and services had brought to Niger advantages of untold
    value these officials, the Appellants, would have been left exposed
    to the same consequences as if the charges had all been true. Speak-
    ing only for myself I feel relieved to be able to take a view of equity
    and procedure which shields the Appellants from such a consequence.

    Nor is it to my mind unjust that, their profit accounted for,
    the Appellants should be left in possession by way of remuneration
    for their services of sums which, while they may seem bountiful to
    minds disciplined in a school of progressive austerity, would doubt-
    less, by those engaged in great business, be regarded as no more
    than adequate to the occasion.

    In the result it will be right that the order of the Court of
    Appeal should be discharged, with further consequential directions
    which will be given later.

    Viscount
    Hailsham.

    Lord

    Blanes-

    burgh.

    Lord
    Warring-
    ton of
    Clyffe.

    Lord

    Atkin.

    Lord
    Thank-

    erton.

    [20]

    BELL and ANOTHER

    v.
    LEVER BROTHERS, LTD., AND ANOTHER.

    Lord Warrington of Clyffe.

    MY LORDS,

    This is an appeal by the Appellants Ernest Hyslop Bell and
    Walter Edward Snelling (the Defendants in the action) from a
    unanimous judgment of the Court of Appeal (Scrutton Lawrence
    and Greer L.JJ.) dated the 17th November, 1930, affirming a
    judgment of Mr. Justice Wright (dated the 5th June, 1930) pro-
    nounced upon the trial of the action before himself and a special
    jury of the City of London. By that judgment certain agreements
    made between the Respondents (Lever Brothers, Ltd., and the two
    Appellants respectively) were declared void and were set aside and
    the Appellants respectively were ordered to repay to the Respondents
    (Lever Brothers, Ltd.) the sums of money paid to them thereunder.

    The. substantial question raised by the Appeal is whether in
    point of law upon certain findings of the jury, and upon such
    inferences of fact as could properly be drawn from those findings
    and the evidence, the two agreements were liable to be set aside on
    the ground of mutual mistake of fact affecting what is alleged by
    the Respondents to be a fundamental assumption accepted on both
    sides as the basis on which the agreements were made.

    A minor point of procedure was raised and decided against the
    Appellants in both Courts, viz., whether having regard to the
    pleadings and the conduct of the trial it was open to the learned
    judge to decide the case on the point referred to above.

    It is unnecessary for me to repeat the detailed statement of the
    facts already made; it is quite enough to give a short summary of
    them in order to explain the conclusions at which I have arrived.

    In 1923 Lever Brothers, Ltd., having very large interests in the
    Niger Company, Ltd. (the Respondents of that name), a Company
    trading in cocoa and other produce on the West Coast of Africa,
    were desirous of obtaining the services of persons of experience
    and repute in the financial and commercial world to undertake and
    improve in their interests as shareholders the conduct of the affairs
    of the Niger Company, and with this object approached the two Ap-
    pellants. The result was the making of a service agreement with each
    of the Appellants, that with the Appellant Bell being dated the 9th
    August, 1923, at a salary of £8,000 per annum, and that with the
    Appellant Snelling being dated the 9th October, 1923, at a salary
    of £6,000 per annum. Mr. Bell's agreement was for five years
    from the 1st October, and Mr. Snelling's was for five years
    from the 1st November, 1923. Each period was subsequently
    extended to five years from the 1st July, 1926. By each agreement
    the Appellant concerned agreed to serve the Lever Company and
    to devote the whole of his time and attention during business hours
    to the business of the Lever Company. The sphere of his service
    was so far defined that in Mr. Bell's case he was to be appointed
    and maintained as Chairman of the Niger Company during his
    service with the Lever Company. In Mr. Snelling's case no such
    specific agreement was made, but he as well as Mr. Bell was
    appointed a director of the Niger Company, and while Mr. Bell
    was appointed Chairman of the Board Mr. Snelling was appointed

    [21] 2

    a Vice-chairman. Each of them thus undertook direct obligations
    towards the Niger Company as well as those obligations towards
    the Lever Company which resulted from his service agreement.
    The salary of each was borne and paid by the Lever Company.

    By two letters dated the 1st July, 1926, signed by Mr. D'Arcy
    Cooper on behalf of the Lever Company and addressed in the one
    case to Mr. Bell and in the other to Mr. Snelling, the then existing
    service agreements were varied, first by extending the period of
    service as above mentioned, and secondly by giving to each of the
    two gentlemen a commission on the profits of the Niger Company
    as thereby defined in addition to his salary, which continued as

    before.

    It is not disputed that the services of the two Appellants in
    their several capacities were of great value to the Lever Company
    and to the Niger Company.

    Early in the year 1929 certain arrangements for the amalga-
    mation of the Niger Company and another company called the
    African and Eastern Trading Company were made, which on their
    becoming effective on the 1st May in that year would involve the
    termination of the two service agreements before the period fixed
    for their continuance, viz., the 1st July, 1931.

    Under these circumstances Mr. D'Arcy Cooper entered into
    negotiation with each of the two Appellants for fixing the amount
    of compensation to be paid to them respectively for the premature
    termination of their employment by the Lever Company. These
    resulted in the two agreements the subject of this Appeal.

    By each of these agreements the Appellant concerned agreed
    that on the 1st May, 1929, he would retire from the Boards of the
    Niger Company and its subsidiaries and in consideration of his so
    doing the Lever Company would pay him as compensation for the
    termination of his agreement and the consequent loss of office in
    the case of Mr. Bell the sum of £30,000 and in that of Mr. Snelling
    £20,000 in full satisfaction and discharge of all claims and
    demands by him of every nature and kind and howsoever arising
    against the Lever Company, the Niger Company and other com-
    panies and persons therein mentioned. In Mr. Bell's case pro-
    vision was made for the continued payment by the Lever Company
    of an insurance premium therein mentioned which will be referred
    to later on.

    These agreements were duly carried into effect by the resigna-
    tion by Mr. Bell and Mr. Snelling of their several offices and by
    payment to them respectively of the agreed compensation.

    I now come to the circumstances giving rise to the present
    litigation.

    Between the 4th November and the 14th December, 1927, the two
    Appellants entered on their own behalf into certain speculative
    transactions in cocoa referred to in the proceedings at the trial as
    contracts C.T.C., R.T.D., and G.S.2. These transactions resulted
    in a net profit to the Appellants of £l,360. The fact that these
    transactions had taken place was not disclosed to and was not
    known by any of the Directors or officials of either the Niger Com-
    pany or the Lever Company, except, of course, the Appellants
    themselves, until after the conclusion of the agreements now in
    question, and the payment of the compensation payable thereunder.

    In or about June, 1929, in the course of certain arbitration pro-
    ceedings, the particulars of which it is unnecessary to state, the
    Appellants, in answer to enquiries made on behalf of the Niger
    Company, disclosed the transactions above referred to and their
    result.

    In answer to questions put to them by the learned judge the
    jury found that the Appellants committed breaches of contract or
    duty towards the Respondents by entering into the contracts above
    referred to as private transactions of their own and for their own
    benefit. The correctness of this finding is not disputed.

    8 [22]

    The present action was commenced by the Lever Company alone
    on the 9th August, 1929. By an amendment made on the 2nd April,
    1930, the Niger Company were added as Co-Plaintiffs.

    As ultimately submitted for decision the case of the Respon-
    dents contained charges of fraudulent misrepresentation and con-
    cealment by both Appellants with the object and effect of inducing
    the Lever Company to make the agreements of the 19th March,1929, charges of wrongfully appropriating as their