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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Lever Bros Ltd v Bell [1931] UKHL 2 (15 December 1931)
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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 AC 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 own the con-
    tracts above mentioned being as alleged contracts of the Niger Com-
    pany, and appropriating to themselves the profits on such contracts
    and a charge of appropriating to their own use and benefit £1,000
    the monies of the Niger Company. All these charges were nega-
    tived by the jury and their findings in this respect are accepted.

    The points of claim after the allegations of fraudulent mis-
    representation and concealment above mentioned contained the
    following clause :—

    " 26. Alternatively the said agreements and each of them
    " were made and the moneys paid thereunder were paid under
    " a mistake of fact."

    and the Plaintiffs claimed rescission of the two agreements of the
    19th March, 1929, and repayment of the moneys paid thereunder,
    and a declaration that previously to the making of such agree-
    ments the Plaintiffs were entitled to terminate the contracts of
    service and to dismiss the Defendants without notice by reason of
    their alleged conduct.

    The Appellants admitted their liability to account to the Niger
    Company for the £1,360 the profits on the transactions above men-
    tioned, and this sum was duly paid into Court.

    Ultimately the case was decided against the Appellants on the
    alternative point above referred to, the mistake there mentioned
    being treated as a mutual and not as a unilateral mistake.

    The questions material to the issue of mistake as put to the
    jury and their answers thereto were as follows:—

    ' 3 (B). Did the Defendants or either of them commit
    ' breaches of contract or duty towards the Plaintiffs in
    ' entering into the contracts referred to as 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? "
    Answer: " Yes."

    " 4 (a). Were the Plaintiffs (Levers) entitled to deter-
    " mine the contracts of service with the Defendants or either
    "of them? '

    Answer : " Yes."

    " (1.) In January, 1928."
    Answer : " Yes."

    " And (2) in March, 1929. If so would the Plaintiffs
    "(
    Levers) have elected to exercise such right at either of such
    "dates?"

    Answer : " Yes."

    " (b) Similar questions and answers as to the position
    " of the Niger Company in reference to the offices therein held
    " by the Defendants respectively.

    "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?"

    Answer : " No."

    " If Levers had so known would they have made these
    " agreements or either of them? "
    Answer: "No."

    " At the date of the respective interviews prior to these
    " agreements had the Defendant Bell or the Defendant

    [23] 4

    " Snelling in mind their actings in respect of these
    " transactions? '
    Answer: " No."

    The final question was put to the jury at the suggestion of the
    learned judge, and obviously is only relevant to the issue whether
    there was a mutual mistake. No objection to it was taken on the
    part of the Appellants. Moreover, it is quite obvious that an
    argument founded on unilateral mistake had not the slightest
    chance of success, and it must have been clear to both parties that
    the learned judge was going to deal with the case as one of mutual
    as distinguished from unilateral mistake. I will assume for the
    present that either on the pleadings as rightly understood, or on
    the manner in which the case was conducted, or on the assumption
    that all the evidence reasonably likely to be forthcoming on the
    point was before the Court the learned judge was entitled to deal
    with the matter on the footing of mutual mistake, and will consider
    the case on that footing.

    The learned judge thus describes the mistake invoked in this
    case as sufficient to justify a Court in saying that there was no
    true consent,
    viz., " Some mistake or misapprehension as to some
    " facts . . . which by the common intention of the parties, whether
    " expressed or more generally implied, constitute the underlying
    " assumption without which the parties would not have made the
    " contract they did." That a mistake of this nature common to
    both parties is, if proved, sufficient to render a contract void is, I
    think, established law.

    I will refer to two cases only amongst several in which the
    principle was acted on. The first is one at Common Law, viz.,
    Strickland
    v. Turner, 7 Exch. 208. In that case a contract for
    sale of an annuity, under which the purchase money had been paid,
    was held to be void at law and the money was ordered to be repaid,
    on its being discovered that the person on whose life the annuity
    depended had without the knowledge of either party died before the
    date of the contract of sale. The parties were treated as having
    intended to contract on the basis of something of value actually
    existing, and as this proved not to have been the case the contract
    failed to be binding.

    The other case (Scott v. Coulson, 1903, 2 Ch. 249) is an example
    of the application of the same principle in a Court of Equity. A
    contract for the sale of a policy was set aside on its being dis-
    covered that the assured was dead at its date, both parties being
    in ignorance of that fact. I cite this case for the sake of a passage
    in the judgment of Vaughan Williams, L.J. He says: " If we
    ' are to take it that it was common ground that at the date of the
    ' contract for the sale of their policy both the parties to the con-
    ' tract assumed the assured to be alive, it is true that both parties
    ' entered into the contract on the basis of a common affirmative
    ' belief that the assured was alive; but as it turned out that there
    ' was a common mistake the contract was one which cannot be
    ' enforced. This is so at law and the Plaintiffs do not require to
    ' have recourse to equity to rescind the contract if the basis which
    ' both parties recognised as the basis is not true."

    This principle, however, is confined to cases in which " the
    " mistake is as to the substance of the whole consideration going
    " as it were to the root of the matter " (Kennedy
    v. Panama Mail
    Company,
    L.R., 2 Q.B., 580, p. 588), and does not apply where
    the mistake is only as to some point, a material point it may be,
    and even one which may have been the actuating motive of one of
    the parties, an error as to which does not affect the substance of
    the whole consideration.

    Kennedy v. The Panama Mail Company is a case in which it
    was held that the error relied on did not affect the substance of the
    consideration and the contract in question was accordingly

    5 [24]

    enforced. The contract was one to take shares in a company. The
    prospectus on the faith of which the Plaintiff had applied for
    shares contained a representation made in good faith that the
    company had obtained a valuable contract for the carriage of
    mails. The representation was intended to, and did in fact, in-
    duce the Plaintiff to apply for shares. It was untrue, for though
    at the time the application for shares was made and accepted
    there were reasonable grounds for expecting that such a contract
    would be obtained, it was never in fact concluded. It is to be
    observed that the error did not affect the shares themselves the
    subject of the contract impeached; they were, notwithstanding the
    error, the very thing about which the parties were contracting. All
    that was affected were the prospects of the company earning profits
    available for payment of dividends. Accordingly the Plaintiff's
    action brought for the purpose of setting aside the contract and
    obtaining repayment of his subscription was dismissed.

    In Smith v. Hughes, L.R., 6 Q.B. 597, the result was the same,
    but for a different reason, viz., that there was no sufficient finding
    that the mistake was mutual. It was alleged that the vendor was
    intending to sell and the purchaser intending to buy and believed
    he was buying old oats whereas the actual parcel of oats, the sub-
    ject of the contract, consisted of new oats. The purchaser's claim
    to be relieved of the contract failed because the learned Judge at
    the trial did not point out the necessity of finding not only that
    the purchaser believed the oats were old but that he also believed
    that the vendor was selling them as old.

    This kind of difficulty does not arise in the present case. It is
    in my opinion clear that each party believed that the remunerative
    offices compensation for the loss of which was the subject of the
    negotiations were offices which could not be determined except by
    the consent of the holder thereof, and further believed that the
    other party was under the same belief and was treating on that
    footing.

    The real question therefore is whether the erroneous assump-
    tion on the part of both parties to the agreements that the service
    contracts were undeterminable except by agreement was of such a
    fundamental character as to constitute an underlying assumption
    without which the parties would not have made the contract they
    in fact made, or whether it was only a common error as to a material
    element but one not going to the root of the matter and not affecting
    the substance of the consideration.

    With the knowledge that I am differing from the majority of
    your Lordships I am unable to arrive at any conclusion except that
    in this case the erroneous assumption was essential to the contract
    which without it would not have been made.

    It is true that the error was not one as to the terms of the
    service agreements, but it was one which, having regard to the
    matter on which the parties were negotiating,
    viz., the terms on
    which the service agreements were to be prematurely determined
    and the compensation to be paid therefor, was in my opinion as
    fundamental to the bargain as any error one can imagine.

    The compensation agreed to be paid was in each case the amount
    c>f the full salary for the two years and a half unexpired with the
    addition in Mr.
    Bell's case of £10,000 and in Mr. Snelling's of
    £5,000. It is difficult to believe that the jury were otherwise than
    correct in their answer to the second branch of the group of ques-
    tions numbered 5, viz., that had Levers known of the actings of the
    Appellants in regard to the dealings in question they would net
    have made the agreements now impeached or either of them. It is
    true that such a finding is not in the strict sense one of fact, but it
    is an inference which the jury were entitled to draw from the
    evidence and from all the circumstances of the case, it is one which
    the learned judge and the Court of Appeal have also drawn, and
    if, I may say so with respect, it is one I should draw myself. I

    [25] 6

    also agree with the learned judge that looking at the matter from
    the side of the Appellants the existence of an agreement giving them
    rights which could only be compromised by compensation was in the
    same way the root and basis of the cancellation agreements.

    In my opinion therefore, assuming that the point was open, the
    appeal on the main question ought to be dismissed.

    As to the question whether the point was open I agree that it is
    at least doubtful whether mutual mistake as to a fundamental fact
    was sufficiently pleaded either in the pleading itself or by the par-
    ticulars subsequently given, but I have no hesitation in coming to
    the same conclusion as that arrived at by Scrutton and Lawrence
    L. J.J.,
    viz., that having regard to the proceedings at the trial effect
    ought not to be given to a technical objection such as that in ques-
    tion—no further evidence was in my opinion needed or could
    reasonably be expected to be forthcoming on the question and no
    substantial prejudice has been sustained by the Defendants.

    But while I think the appeal ought to be dismissed, there is one
    point which appears to have been overlooked at the trial and in
    reference to which in my judgment there should if the appeal were
    dismissed be a
    variation in the order.

    The service agreement with Mr. Bell provided that Lord Lever-
    hulme
    was to take out in the Atlas Assurance Company and Lever
    Brothers
    to pay all premiums on an Endowment Policy on Mr. Bell's
    life
    maturing at the age of 60 or previous death for an amount
    which would provide £1,500 per annum or £16,200 at his option.
    This policy was to belong to him, the premiums being paid by Lever
    Brothers,
    notwithstanding the termination of his engagement unless
    the same should be terminated by him. The cancellation agreement
    preserved this obligation on the part of Lever Brothers, and if this
    is set aside the original agreement stands. I cannot think that
    the conduct of Mr. Bell amounts to a termination by him of the
    engagement within the meaning of the provision above-mentioned,
    and if the judgment appealed From were to stand provision should
    be made for the continued payment by Lever Brothers of the pre-
    miums, and the repayment to Mr. Bell of any premiums paid by
    him.

    I have purposely avoided dealing with the question whether the
    Appellants were under an obligation as servants to disclose to Lever
    Brothers
    their breaches of the service agreements. In the view I
    take the question is immaterial. If such an obligation existed it
    would merely afford a further ground for the termination by Lever
    Brothers
    of the service agreements, for which such breaches them-
    selves afforded a sufficient ground.

    This case seems to me to raise a question as to the application
    of certain doctrines of common law, and I have therefore not
    thought it necessary to discuss or explain the special doctrines and
    practice of Courts of Equity in reference to the rescission on the
    ground of mistake of contracts, conveyances and assignments of
    property and so forth or to the refusal on the same ground to decree
    specific performance, though I think in accordance with such
    doctrines and practice the same result would follow.

    [16]

    BELL AND ANOTHER

    v.
    LEVER BROTHERS LIMITED AND OTHERS

    Viscount
    Hailsham.

    Lord

    Blanes

    burgh.

    Lord
    Warring-
    ton of
    Clyffe.

    Lord
    Atkin.

    Lord

    Thanker-

    ton.

    Lord Atkin.

    my lords.

    This case involves a question of much importance in the forma-
    tion and dissolution of contracts. The facts are not
    very com-
    plicated, though in the course of eliciting them the legal proceedings
    have undergone vicissitudes which have made the task of deter
    mining the issues more difficult than need be. In 1923 The Niger
    Co. Ld. was controlled by Lever Brothers Ld. whom I shall call
    Levers, who held over 99 per cent, of its shares. The Niger Co.
    dealt in West African produce including cocoa and at this time
    appears to have been making trading losses. To restore the position
    Levers approached the appellant Bell who had banking experience
    and the appellant Snelling, a chartered accountant, with a view to
    their taking part in the management of the Niger Co.'s affairs. In
    August, 1923. an agreement was made between Levers and Bell,
    under
    which Bell entered the service of Levers for a term of five
    years from 1st November. 1923, on the terms of letters of 8th
    August, 1923, which provided that Bell's salary was to be £8.000
    a year. Levers were to pay the premiums on an endowment policy
    maturing at the age of 60 for a sum of £16.200. Levers were to
    appoint and maintain Bell as Chairman of the Niger Co. during
    his service. Bell was only to be responsible to the Committee of
    Control of Lever Bros, and to the shareholders of the Niger Co.
    In October an agreement was made between Snelling and Levers
    whereby
    Snelling was to be in the service of the company for five
    years from 1st October. 1923, on the terms of a letter of 12th
    September, which provided that Snelling was to serve Levers in
    regard to its West African interests at a salary of £10.000 per
    annum to 31st March, 1925, and £6,000 for the remainder of the
    five years. On 14th September both Bell and Snelling were
    appointed by the Niger Co. directors of the company, and
    Bell was appointed chairman of the Board. In April, 1924,
    Snelling was appointed a vice-chairman. The result of the appoint-
    ments1 was a success. The Niger Co. began to prosper and in July,
    1926, the agreements of both Bell and Snelling with Levers were
    cancelled and new agreements substituted for a further period of
    five years from 1st July, 1926, at the same salaries but with a com-
    mission on the profits of the Niger Co. The Niger Co. continued
    to prosper, and in March, 1929. arrangements were concluded
    for an amalgamation between the Niger Co. and its principal trade
    competitor, the African and Eastern Trading Corporation. The
    terms of the amalgamation appear to have left no room for Bell or
    Snelling. It was necessary, therefore, to dispose of the agreements
    between them and Levers. Mr. D'Arcy Cooper, the chairman of
    Levers, saw both gentlemen and arranged terms with them which
    are recorded in two letters of 19th March, 1929. The letter to Bell
    is
    as follows. [Set out letter at p. 210.] The letter to Snelling
    is in similar terms except that the compensation given was £20,000.
    Both sums were only paid on 1st May, 1929, on which date the
    two appellants retired from their service with Levers and from the
    Boards of the Niger Co. and various subsidiary companies to which
    they had been appointed. Very little attention appears to have
    been paid at the trial to these subsidiary companies, and there is

    [27] 2

    a scarcity of evidence about them. The position in regard to them
    may demand further consideration; at present I leave them on one
    side. The position then is that in March, 1929, the two appellants
    left the service of Levers with substantial compensation in their
    pockets and mutual expressions of respect and esteem.

    In July, 1929, Levers discovered facts which indicated that their
    expenditure of £50,000 and their expressions of regard had been
    misplaced, for the years October-October, 1926-7, 1927-8, and
    1928-9, the .Niger Co., together with three of its trading com-
    petitors, including the African and Eastern Trade Corporation,
    had been parties to what were called "Pooling Agreements," under
    which the parties undertook to disclose to one another their dealings
    in Gold Coast cocoa; not to buy cocoa produced elsewhere without
    the consent of the Pool Committee; agreed to fix from time to time
    buying and selling prices and not to sell without consent below the
    agreed selling price; and made provision for distributing in agreed
    proportions the proceeds of the pool. It appears to have been con-
    sidered necessary that the operations of the Niger Co. under the
    pool should be carried out without excessive publicity; and the
    brokers' contracts for the Niger Co. were recorded under initials.
    In November and December, 1927, the two appellants, at a time
    when the Pool Committee were lowering the pool purchase price of
    cocoa, on several occasions sold cocoa short; and closing in a few
    days at the reduced price made profits. A few days later they
    bought for the rise and made a small profit. Altogether the
    dealings resulted in a profit of £1,360. The transaction was of
    course conducted without the knowledge of Levers or any responsible
    official of the Niger Co. It was carried out in secrecy; and pay-
    ment of the profit was made by the brokers at the appellants'
    request in a draft for American dollars. No defence can be offered
    for this piece of misconduct. The appellants were acting in a
    business in which their employers were concerned; their interests
    and their employers conflicted; they were taking a secret advantage
    out of their employment; and committing a grave breach of duty
    both to Levers and to the Niger Co. The jury have found that
    had the facts been discovered during the service, Levers could and
    would have dismissed them, and no objection can be taken to this
    finding.

    Having made this discovery it naturally occurred to Levers that
    instead of spending £50,000 to cancel the two service agreements
    they might, if they had known the facts, have got rid of them
    for nothing. They therefore claimed the return of the money from
    the appellants, as well as the amount of the profits made; and on
    7th August, 1929, issued the writ in the present action, claiming
    damages for fraudulent misrepresentation and concealment; an
    account of the defendants' dealings in cocoa; and repayment of
    money paid under a mistake of fact.

    The pleadings were in conformity with the endorsement on the
    writ. The defendants admitted the dealings in cocoa, alleging that
    they were speculative dealings in differences. They denied that
    they were wrongful but pleaded tender of the profit of £1,360
    which sum by an amended defence they paid into Court. It was
    not disputed in the Court of Appeal or before this House that the
    dealings were wrongful; and no question remains on this issue or
    as to the remedy ordered in respect of it.

    The trial began on 24th March, 1930, before Wright J. and
    a City of London Special Jury. On the fourth day on the con-
    clusion of their evidence the plaintiffs sought and obtained
    permission to amend their pleadings by alleging a series of
    fraudulent dealings in cocoa by the defendants involving misappro-
    priation of the Niger Co.'s funds. At the same time for the
    first time the Niger Co. were added as plaintiffs. The

    3 [28]

    defendants were eventually acquitted of all the new charges. On
    5th May, 1930, the trial commenced anew before the same Judge
    and a new Jury. At the conclusion of the evidence there was some
    discussion as to the questions to be put to the Jury. The Court
    adjourned for a day or two before the summing up of the Judge.
    There had been some discussion as to the issue raised by the plea
    of mistake, and when the case was resumed counsel for the
    plaintiffs suggested an additional question : " Did the plaintiffs

    " in entering into the said agreements for the payment of and in
    " paying the £30,000 and £20,000 respectively act in ignorance of
    " the defendants' conduct (my Lord that avoids the word
    " ' mistake ' to which Your Lordship took objection) and was such

    " ignorance due to non-disclosure by the defendants of such
    '' conduct ? ' So far this seems to have been the only reference to
    the matter of mistake in the proposed questions. The learned
    Judge said : " I have been thinking about that matter; probably
    " yours is better; but what I thought of asking was this: ' When
    " '
    Levers entered into the agreement of 19th March, 1929, did
    " ' they know of the actings of the defendants or either of them
    " ' in regard to the dealings C.T.C., R.T.D. and G.S.2? If Levers
    '
    had known would they have made these agreements or either of
    " ' them? At the date of the respective interviews prior to these
    " ' agreements had the defendants or either of them in mind their
    " ' actings in respect of these transactions?

    To the last question Mr. Pritt for the defendants objected
    that there was no evidence that they had. Whereupon the Judge
    said: " The point must really arise; that issue of fact will have •
    " to be dealt with by the Jury when they are considering the ques-

    " tion of fraudulent misrepresentation or fraudulent concealment.
    " On the other hand the
    verdict of the Jury on this point may
    " have some bearing hereafter on the question of mistake."

    The circumstances under which this last question was admitted
    are relevant to the complaint of the appellants as to the subsequent
    admission of any issue as to mutual mistake. They say that the
    only issue raised by the pleadings was as to a unilateral mistake
    by the plaintiffs; that the question propounded by the plaintiffs
    shows this; and that it cannot be assumed that the Judge, while
    stating that the plaintiffs' questions might be better, but he pre-
    ferred his own, should have asked a question for the purpose of
    solving an issue as to mutual mistake which was not upon the plead-
    ings and upon which no witness had been examined or cross-
    examined and on which no word bad been said to the jury by counsel
    on either side. At present it is unnecessary to say more on the
    topic.

    The questions as finally left to the jury and their answers have
    been stated to the House and I need not repeat them. The Judge
    heard argument as to how judgment should be entered. At some
    stage of the proceedings the parties had agreed that rescission of
    the agreements must be left to the Judge and that on any point left
    to him he must have leave to draw inferences of fact. Eventually
    the Judge gave judgment for apparently both plaintiffs for £31,224
    against the defendant
    Bell and £20,000 against the defendant
    Snelling, on the ground that " there was a total failure of considera-
    tion such as to vitiate the bargain " because " the parties dealt
    ' with one another under a mutual mistake as to their respective
    ' rights." On appeal this judgment was affirmed. The three
    Lords Justices accepted the view of Mr. Justice Wright that there
    was a mutual mistake which entitled the plaintiffs to recover. They
    were also agreed that there was a duty upon the defendants to
    disclose to the plaintiffs their misconduct as to the cocoa dealings
    and that the contracts under which the money was paid were in
    consequence voidable.

    [29] 4

    Before the Court of Appeal and before this House the appellants
    contended that no issue as to mutual mistake had been raised by the
    pleadings, and that it was not open to the learned Judge or to the
    Court of Appeal to determine the case without an amendment of
    the pleadings and upon an issue of fact which was not submitted to
    the jury. The Lords Justices appear to have held
    varying
    views
    on this point. Lord Justice Scrutton thought that the point
    was not pleaded, but that it was the practice of the Courts to deal
    with the legal result of pleaded facts, though the particular legal
    result is not pleaded except where to ascertain the validity of the
    legal result would require the investigation of new and disputed
    facts which had not been investigated at the trial. Here he thought
    that there were no such disputed facts, and the question could be
    dealt with without amendment. Lord Justice Lawrence on the
    assumption that mutual mistake was not pleaded thought that all
    the facts relevant to mutual mistake had been fully investigated
    and ascertained at the trial: and that the objection was a mere
    technical objection without merits. Lord Justice Greer thought
    that mutual mistake was sufficiently pleaded.

    I think it is sufficient to say for present purposes that it seems
    to me clear when the pleadings and particulars are examined that
    the pleading was confined to unilateral mistake. In these circum-
    stances the Judge on a trial with a jury has without consent of the
    parties no jurisdiction to determine issues of fact not raised by the
    pleadings: nor in my opinion would a general consent to determine
    issues not decided by the jury include a power without express
    further consent after the jury had been discharged to amend plead-
    ings so as to raise further issues of fact. Similarly the powers of
    the Court of Appeal, which under 0. 58 r. 4 are wider than those
    of the Judge, are limited in the case of trials by jury to determine
    issues of fact in cases where only one finding by a jury could be
    allowed to stand. Further, I think that the Court of Appeal
    cannot without amendment decide a case upon an unpleaded issue
    of Law which depends upon an unpleaded issue of fact. If the issue
    of fact can be fairly determined upon the existing evidence they
    may of course amend : but in any such case amendment appears to
    me to be necessary. In this House in the course of the hearing
    an amendment was tendered by the plaintiffs which did aver a
    mutual mistake. In the view that I take of the whole case it
    becomes unnecessary to deal finally with the appellants' complaint
    that the points upon which the plaintiffs succeeded were not
    open to them. 1 content myself with saying that much may be said
    for that contention.

    Two points present themselves for decision. Was the agree-
    ment of March 19, 1929,
    void by reason of a mutual mistake of Mr.
    D'Arcy Cooper and Mr. Bell ?

    Could the agreement of March 19, 1929, be avoided by reason
    of the failure of Mr.
    Bell to disclose his misconduct in regard to the
    cocoa dealings ?

    My Lords, the rules of law dealing with the effect of mistake on
    contract appear to be established with reasonable clearness. If
    mistake operates at. all it operates so as to negative or in some cases
    to nullify consent. The parties may be mistaken in the identity of
    the contracting parties, or in the existence of the subject matter of
    the contract at the date of the contract, or in the quality of the
    subject matter of the contract. These mistakes may be by one party,
    or by both, and the legal effect may depend upon the class of mistake
    above mentioned. Thus a mistaken belief by A that he is contract-
    ing with B, whereas in fact he is contracting with C, will negative
    consent where it is clear that the intention of A was to contract only
    with B. So the agreement of A and B to purchase a specific article

    5 [30]

    is void if in fact the article had perished before the date of sale. In
    this case, though the parties in fact were agreed about the subject
    matter, yet a consent to transfer or take delivery of something not
    existent is deemed useless; the consent is nullified. As codified in.
    the Sale of Goods Act the contract is expressed to be void if the
    seller was in ignorance of the destruction of the specific chattel. I
    apprehend that if the seller with knowledge that a chattel was
    destroyed purported to sell it to a purchaser, the latter might sue
    for damages for non-delivery though the former could not sue for
    non-acceptance, but I know of no case where a seller has so com-
    mitted himself. This is a case where mutual mistake certainly and
    unilateral mistake by the seller of goods will prevent a contract
    from arising. Corresponding to mistake as to the existence of the
    subject matter is mistake as to title in cases where unknown to the
    parties the buyer is already the owner of that which the seller
    purports to sell to him. The parties intended to effectuate a transfer
    of ownership : such a transfer is impossible : the stipulation is
    naturali ratione inutilis. This is the case of Cooper v. Phibbs,
    L.R. 2 H.L. 149 (1867), where A agreed to take a lease of a fishery
    from B. though contrary to the belief of both parties at the time A
    was tenant for life of the fishery and B appears to have had no
    title at all. To such a case Lord Westbury applied the principle
    that if parties contract under a mutual mistake and misapprehen-
    sion as to their relative and respective rights the result is that the
    agreement is liable to be set aside as having proceeded upon a
    common mistake. Applied to the context the statement is only
    subject to the criticism that the agreement would appear to be void
    rather
    than voidable. Applied to mistake as to rights generally it
    would appear to be too wide. Even where the vendor has no title
    though both parties think he has, the correct view would appear to
    be that there is a contract, but that the vendor has either com-
    mitted a breach of a stipulation as to title, or is not able to perform
    his contract. The contract is unenforceable by him but is not void.

    Mistake as to quality of the thing contracted for raises more
    difficult questions. In such a case a mistake will not affect assent
    unless it is the mistake of both parties and is as to the existence of
    some quality which makes the thing without the quality essentially
    different from the thing as it was believed to be. Of course it may
    appear that the parties contracted that the article should possess
    the quality which one or other or both mistakenly believed it to
    possess. But in such a case there is a contract and the inquiry is a
    different one. being whether the contract as to quality amounts to a
    condition or a warranty, a different branch of the law. The
    principles to be applied are to be found in two cases which as far
    as my knowledge goes (have always been treated as authoritative
    expositions of the law.

    The first is Kennedy v. Panama Royal Mail Co., L.R. 2 Q.B.
    580 (1867). In that case the plaintiff had applied for shares in the
    defendant company on the faith of a prospectus which stated falsely
    but innocently that the company had a binding contract with the
    Government of New Zealand for the carriage of mails. On dis-
    covering the true facts the plaintiff brought an action for the
    recovery of the sums he had paid on calls. The defendants brought
    a cross action for further calls. Blackburn J. in delivering the
    judgment of the Court (Cockburn C.J., Blackburn, Mellor and
    Shee J.J.) said at p. 586 : ' The only remaining question is one of
    ' much greater difficulty. It was contended by Mr. Mellish on
    ' behalf of Lord Gilbert Kennedy that the effect of the prospectus
    ' was to warrant to the intended shareholders that there really was
    ' such a contract as is there represented, and not merely to represent
    ' that the company bona fide believed it; and that the difference in
    ' substance between shares in a. company with such a contract and

    [31] 6

    " shares in a company whose supposed contract was not binding,
    '' was a difference in substance in the nature of the thing; and that
    " the shareholder was entitled to return the shares as soon as he
    '' discovered this quite independently of fraud on the ground that
    " he had applied for one thing and got another. And if the
    " invalidity of the contract really made the shares he obtained
    " different things in substance from those which he applied for
    " this would we think be good law. The case would then resemble
    " Gompertz v. Bartlelt and Gurney v. Womersley where the person
    '' who had honestly sold what he thought a bill without recourse to
    "him, was nevertheless held bound to return the price on its
    " turning out that the supposed bill was a forgery in the one case
    " and void under the stamp laws in the other; in both cases the
    " ground of this decision being that the thing handed over was
    " not the thing paid for. A similar principle was acted on in
    " Ship's case. There is, however, a very important difference
    " between oases where a contract may be rescinded on account
    " of fraud, and those in which it may be rescinded on the ground
    '' that there is a difference in substance between the thing bargained
    " for and that obtained. It is enough to show that there was a
    " fraudulent representation as to any part of that which induced
    '' the party to enter into the contract which he seeks to rescind;
    " but where there has been an innocent misrepresentation or mis-
    " apprehension it does not authorise a rescission unless it is such
    " as to show that there is a complete difference in substance between
    " what was supposed to be and what was taken so as to con-
    " stitute a failure of consideration. For example, where a horse
    " is bought under a belief that it is sound, if the purchaser was
    " induced to buy by a fraudulent representation as to the horse's
    " soundness the contract may be rescinded. If it was indirectly an
    " honest misrepresentation as to its soundness, though it may be
    " clear that both vendor and purchaser thought that they were
    " dealing about a sound horse and were in error, yet the purchaser
    " must pay the whole price unless there was a warranty, and even
    " if there was a warranty he cannot return the horse and claim
    " back the whole price unless there was a condition to that effect
    " in the contract—Street v. Blay."

    The Court came to the conclusion in that case that though there
    was a misapprehension as to that which was a material part of the
    motive inducing the applicant to ask for the shares, it did not
    prevent the shares from being in substance those he applied for.

    The next case is Smith v. Hughes, L.R. 6 Q.B. 597 (1871), the
    well-known case as to new and old oats. The action was in the
    County Court, and was for the price of oats sold and delivered and
    damages for not accepting oats bargained and sold. Cockburn C. J.
    at p. 604 cites Story on contracts as follows : " Mr. Justice Story
    " in his work on Contracts (Vol. 1, s. 516) states the law as to con-
    " cealment as follows : ' The general rule, both of law and equity,
    " in respect to concealment is that mere silence with regard to a
    " material fact which there is no legal obligation to divulge will not
    " avoid a contract although it operate as an injury to the party
    " from whom it is concealed. Thus,' he goes on (s. 517),
    " although a vendor is bound to employ no artifice or disguise for
    " the purpose of concealing defects in the article sold since that
    " would amount to a positive fraud on the vendee, yet under this
    " general doctrine of caveat emptor he is not ordinarily bound to
    " disclose any defect of which he may be cognisant, although his
    " silence may operate virtually to deceive the vendee. But,' he
    continues (s. 518), ' an improper concealment or suppression of a
    " material fact which the party concealing is legally bound to dis-
    " close and of which the other party has a legal right to insist
    " that he shall be informed is fraudulent and will invalidate a
    " contract.' Further distinguishing between extrinsic circum-

    7 [32]

    " stances affecting the value of the subject-matter of a sale and the
    " concealment of intrinsic circumstances appertaining to its nature,
    " character and condition, he points out (s. 519) that with reference
    " to the latter the rule is ' that mere silence as to anything which
    " 'the other party might by proper diligence have discovered and
    " ' which is open to his examination is not fraudulent unless a
    " ' special trust or confidence exist between the parties or be
    " ' implied from the circumstances of the case.' In the doctrine
    " thus laid down I entirely agree."

    In a further passage he says : " It only remains to deal with an
    " argument which was pressed upon us that the defendant in the
    " present case intended to buy old oats and the plaintiffs to sell
    " new, so that the two minds were not ad idem and that conse-
    " quently there was no contract. This argument proceeds on the
    " fallacy of confounding what was merely a motive operating on
    " the buyer to induce him to buy with one of the essential condi-
    " tions of the contract. Both parties were agreed as to the sale
    " and purchase of this particular parcel of oats. The defendant
    " believed the oats to be old and was thus induced to agree to buy
    " them, but he omitted to make their age a condition of the con-
    " tract. All that can be said is that the two minds were not
    " ad idem as to the age of the oats; they certainly were ad idem
    " as to the sale and purchase of them. Suppose a person to buy
    " a horse without a warranty believing him to be sound and the
    " horse turns out unsound, could it be contended that it would be
    " open to him to say that as he had intended to buy a sound horse
    '' and the seller to sell an unsound one the contract was
    void because
    " the seller must have known from the price the buyer was willing
    " to give or from his general habits as a buyer of horses that he
    " thought the horse was sound. The cases are exactly parallel."

    Blackburn J. said, p. 606 : " In this case I agree that on the

    " sale of a specific article unless there be a warranty making it

    " part of the bargain that it possesses some particular quality the

    " purchaser must take the article he has bought though it does not

    " possess that quality. And I agree that even if the vendor was

    " aware that the purchaser thought that the article possessed that

    " quality, and would not have entered into the contract unless he

    " had so thought, still the purchaser is bound unless the vendor

    " was guilty of some fraud or deceit upon him, and that a mere

    " abstinence from disabusing the purchaser of that impression is

    " not fraud or deceit; for whatever may be the case in a court of

    " morals, there is no legal obligation on the vendor to inform the

    " purchaser that he is under a mistake not induced by the act of

    " the vendor."

    The Court ordered a new trial. It is not quite clear whether
    they considered that if the defendants' contention was correct the
    parties were not ad idem or there was a contractual condition that
    the oats sold were old oats. In either case the defendant would
    succeed in defeating the claim.

    In these cases I am inclined to think that the true analysis is
    that there is a contract, but that the one party is not able to supply
    the
    very thing, whether goods or services, that the other party con-
    tracted to take : and therefore the contract is unenforceable by
    the one if executory, while if executed the other can recover back
    money paid on the ground of failure of the consideration.

    We are now in a position to apply to the facts of this
    case the law as to mistake so far as it has been stated. It is essential
    in this part of the discussion to keep in mind the finding of the
    jury acquitting the defendants of fraudulent misrepresentation or
    concealment in procuring the agreements in question. Grave
    injustice may be done to the defendants : and confusion introduced
    into the legal conclusion unless it is quite clear that in considering

    [33] 8

    mistake in this case no suggestion of fraud is admissible and must
    sternly be rejected by the Judge who has to determine the legal
    issues raised. The agreement which is said to be
    void is the agree-
    ment contained in the letter of 19th March, 1929, that Bell would
    retire from the Board of the Niger Co. and its sub-
    sidiaries and that in consideration of his doing so Levers
    would
    pay him as compensation for the termination of his agree-
    ments and consequent loss of office the sum of £30,000 in full satis-
    faction and discharge of all claims and demands of any kind against
    Lever Bros., the Niger Co. or its subsidiaries. The agreement
    which as part of the contract was terminated had been broken so
    that it could be repudiated. Is an agreement to terminate a
    broken contract different in kind from an agreement to terminate
    an unbroken contract assuming that the breach has given the one
    party the right to declare the contract at an end ? I feel the weight
    of the Plaintiffs' contention that a contract immediately determin-
    able is a different thing from a contract for an unexpired term
    and that the difference in kind can be illustrated by the immense
    price of release from the longer contract as compared with the
    shorter. And I agree that an agreement to take an assignment of
    a lease for five years is not the same thing as to take an assignment
    of a lease for three years, still less a term for a few months. But
    on the whole I have come to the conclusion that it would be wrong
    to decide that an agreement to terminate a definite specified con-
    tract is void if it turns out that the agreement had already been
    broken and could have been terminated otherwise. The contract
    released is the identical contract in both cases : and the party
    paying for release gets exactly what he bargains for. It seems
    immaterial that he could have got the same result in another way :
    or that if he had known the true facts he would not have entered
    into the bargain. A. buys B.'s horse : he thinks the horse is sound
    and he pays the price of a sound horse : he would certainly not
    have bought the horse if he had known, as the fact is, that the horse
    is unsound. If B. has made no representation as to soundness and
    has not contracted that the horse is sound, A. is bound, and cannot
    recover back the price. A. buys a picture from B. : both A. and B.
    believe it to be the work of an old master and a high price is paid.
    It turns out to be a modern copy. A. has no remedy in the absence
    of representation or warranty. A. agrees to take on lease or to
    buy from B. an unfurnished dwelling house. The house is in fact
    uninhabitable. A. would never have entered into the bargain if
    he had known the fact. A. has no remedy: and the position is the
    same whether B. knew the facts or not, so long as he made no
    representation or gave no warranty. A. buys a roadside garage
    business from B. abutting on a public thoroughfare : unknown to
    A. but known to B. it has already been decided to construct a bye-
    pass road which will divert substantially the whole of the traffic
    from passing A.'s garage. Again A. has no remedy. All these
    cases involve hardship on A. and benefit B. as most people would
    say unjustly. They can be supported on the ground that it is of
    paramount importance that contracts should be observed : and that
    if parties honestly comply with the essentials of the formation of
    contracts, i.e., agree in the same terms oil the same subject matter,
    they are bound : and must rely on the stipulations of the contract
    for protection from the effect of facts unknown to them.

    This brings the discussion to the alternative mode of expressing
    the result of a mutual mistake. It is said that in such a case as
    the present there is to be implied a stipulation in the contract that
    a condition of its efficacy is that the facts should be as understood
    by both parties,
    viz., that the contract could not be terminated
    till the end of the current term. The question of the existence of
    conditions express or implied is obviously one that affects not the
    formation of contract, but the investigation of the terms of the

    9 [34]

    contract when made. A condition derives its efficacy from the con-
    sent of the parties express or implied. They have agreed, but on
    what terms. One term may be that unless the facts are or are
    not of a particular nature, or unless an event has or has not
    happened, the contract is not to take effect. With regard to future
    facts such a condition is obviously contractual. Till the event
    occurs the parties are bound. Thus the condition (the exact terms
    of which need not here be investigated), that is generally accepted
    as underlying the principle of the frustration cases is contractual:
    an implied condition. Sir John Simon formulated for the
    assistance of your Lordships a proposition which should be recorded
    " Whenever it is to be inferred from the terms of a contract or
    " its surrounding circumstances that the consensus has been reached
    " upon the basis of a particular contractual assumption, and that
    " assumption is not true the contract is avoided, i.e., it is void
    "
    ab initio if the assumption is of present fact and it ceases to
    " bind if the assumption is of future fact."

    I think few would demur to this statement but its value depends
    upon the meaning of " a contractual assumption " and also upon
    the true meaning to be attached to " basis," a metaphor which may
    mislead. When used expressly in contracts for instance in policies
    of insurance which state that the truth of the statements in the pro-
    posal is to be the basis of the contract of insurance, the meaning
    is clear. The truth of the statements is made a condition of the
    contract, which failing the contract is void unless the condition is
    waived. The proposition does not amount to more than this that
    if the contract expressly or impliedly contains a term that a par-
    ticular assumption is a condition of the contract the contract is
    avoided if the assumption is not true. But we have not advanced
    far on the inquiry how to ascertain whether the contract does con-
    tain such a condition. Various words are to be found to define
    the state of things which makes a condition. " In the contemplation
    " of both parties fundamental to the continued validity of the
    " contract," " a foundation essential to its existence," ' a funda-
    " mental reason for making it " are phrases found in the
    important judgment of Scrutton L.J. in the present case. The
    first two phrases appear to me to be unexceptionable. They
    cover the case of a contract to serve in a particular place, the
    existence of which is fundamental to the service, or to procure the
    services of a professional vocalist whose continued health is essen-
    tial to performance. But " a fundamental reason for making a
    " contract " may with respect be misleading. The reason of one
    party only is presumedly not intended, but in the cases I have
    suggested above of the sale of a horse or of a picture,
    it might be said that the fundamental reason for making the con-
    tract was the belief of both parties that the horse was sound or
    the picture an old master, yet in neither case would the condition
    as I think exist. Nothing is more dangerous than to allow oneself
    liberty to construct for the parties contracts which they have not
    in terms made by importing implications which would appear to
    make the contract more businesslike or more just. The implica-
    tions to be made are to be no more than are '' necessary '' for giving
    business efficacy to the transaction : and it appears to me that both
    as to existing facts or future facts a condition should not be implied
    unless the new state of facts makes the contract something different
    in kind from the contract in the original state of facts. Thus in
    Krell v. Henry 1903 : 2 K.B. at p. 754 Vaughan Williams L.J.
    finds that the subject of the contract was " rooms to
    "view the procession": the postponement therefore made
    the rooms not rooms to view the procession. This also
    is the test finally chosen by Lord Sumner in Bank Line
    v. Capel 1919 A.C. 436 agreeing with Lord Dunedin in Metro-

    [35] 10

    politan Water Board v. Dick Kerr 1918 A.C. at p. 128 where deal-
    ing with the criterion for determining the effect of interruption in
    " frustrating " a contract he says, " an interruption so long as to
    " destroy the identity of the work or service with the work or
    " service when interrupted." We therefore get a common
    standard for mutual mistakes and implied conditions whether as
    to existing or as to future facts. Does the state of the new facts
    destroy the identity of the subject matter as it was in the original
    state of facts ? To apply the principle to the infinite combinations
    of facts that arise in actual experience will continue to be difficult:
    but if this case results in establishing order into what has been
    a somewhat confused and difficult branch of the law it will have
    served a useful purpose.

    I have already stated my reasons for deciding that in the present
    case the identity of the subject matter was not destroyed by the
    mutual mistake, if any, and need not repeat them.

    It now becomes necessary to deal with the second point of the
    plaintiffs,
    viz., that the contract of 19th March, 1929, could be
    avoided by them in consequence of the non-disclosure by Bell of his
    misconduct as to the cocoa dealings. Fraudulent concealment has
    been negatived by the jury; this claim is based upon the contention
    that Bell owed a duty to Levers to disclose his misconduct, and that
    in default of disclosure the contract was voidable. Ordinarily the
    failure to disclose a material fact which might influence the mind
    of a prudent contractor does not give the right to avoid the contract.
    The principle of caveat emptor applies outside contracts of sale.
    There are certain contracts expressed by the law to be contracts of
    the utmost good faith where material facts must be disclosed; if not
    the contract is voidable. Apart from special fiduciary relation-
    ships contracts for partnership and contracts of insurance are the
    leading instances. In such cases the duty does not arise out of con-
    tract; the duty of a person proposing an insurance arises before a
    contract is made; so of an intending partner. Unless this contract
    can be brought within this limited category of contracts uberrimae
    fidei
    it appears to me that this ground of defence must fail. I see
    nothing to differentiate this agreement from the ordinary contract
    of service; and I am aware of no authority which places contracts
    of service within the limited category I have mentioned. It seems
    to me clear that master and man negotiating for an agreement of
    service are as unfettered as in any other negotiation. Nor can I
    find anything in the relation of master and servant when estab-
    lished that places agreements between them within the protected
    category. It is said that there is a contractual duty of the servant
    to disclose his past faults. I agree that the duty in the servant to
    protect his master's property may involve the duty to report a
    fellow servant whom he knows to be wrongfully dealing with that
    property. The servant owes a duty not to steal, but having stolen
    is there superadded a duty to confess that he has stolen? I am
    satisfied that to imply such a duty would be a departure from the
    well-established usage of mankind and would be to create obliga-
    tions entirely outside the normal contemplation of the parties con-
    cerned. If a man agrees to raise his butler's wages, must the butler
    disclose that two years ago he received a secret commission from the
    wine merchant; and if the master discovers it, can he without
    dismissal or after the servant has left avoid the agreement for the
    increase in salary and recover back the extra wages paid? If he
    gives his cook a month's wages in lieu of notice can he on discovering
    that the cook has been pilfering the tea and sugar claim the return
    of the month's wages ? 1 think not. He takes the risk; if he wishes
    to protect himself he can question his servant, and will then be
    protected by the truth or otherwise of the answers.

    I agree with the view expressed by Avory J. in Healey v. Societe
    Anonyme Francaise,
    1917, 1 K.B. 946, on this point. It will be

    11 [36]

    noticed that Bell was not a director of Levers, and with respect I
    cannot accept the view of Greer L.J. that if he was in a fiduciary
    relationship to the Niger Co. he was in a similar fiduciary relation-
    ship to the shareholders, or to the particular shareholders (Levers)
    who
    held 99 per cent, of the shares. Nor do I think that it is
    alleged or proved that in making the agreement of 19th March,
    1929, Levers were acting as agents for the Niger Co. In the matter
    of the release of the service contract and the payment of £30,000
    they were acting quite plainly for themselves as principals. It
    follows that on this ground also the claim fails.

    The result is that in the present case servants unfaithful in some
    of their work retain large compensation which some will think they
    do not deserve. Nevertheless it is of greater importance that well
    established principles of contract should be maintained than that a
    particular hardship should be redressed; and I see no way of giving
    relief to the plaintiffs in the present circumstances except by con-
    fiding to the Courts loose powers of introducing terms into contracts
    which would only serve to introduce doubt and confusion where
    certainty is essential.

    I think therefore that this appeal should be allowed; and I agree
    with the order to be proposed by my noble and learned friend Lord
    Blanesburgh.

    [37]

    Viscount
    Hailsham.

    Lord
    Blanes-

    burgh.

    Lord
    Warring-
    ton of
    Clyffe.

    Lord
    Atkin.

    Lord
    Thanker-

    ton.

    ERNEST HYSLOP BELL and WALTER EDWARD
    SNELLING (Appellants)

    v.

    LEVER BROTHERS LIMITED and NIGER COMPANY
    LIMITED (Respondents).

    Lord Thankerton.

    MY LORDS,

    The detailed facts of this case have been sufficiently stated
    already by your Lordships. The findings of the jury were accepted
    by all parties, who were also agreed that the Court should have
    leave to draw inferences of fact generally.

    The two main contentions between the parties are whether the
    agreements of March, 1929, are liable to be set aside (a) on the
    ground of mutual mistake or error, or (b) by reason of the non-
    disclosure of material facts by the Appellants, whereby
    Lever
    Brothers
    were induced to enter into these agreements.

    The judgment of both Courts below was unanimously against
    the Appellants on the first point, and, while Wright J. expressed
    no opinion, the Court of Appeal was also unanimously against the
    Appellants on the second point, though the first point was sufficient
    for their disposal of the case. The Appellants, however, must
    succeed on both points in order to succeed in their appeal.

    Both these points raise important questions of principle and I
    regret to find myself unable to agree with the conclusions of the
    Courts below on either point. In this
    view, it is unnecessary for
    me to deal with the two further questions, namely, whether the
    first point is open to the Respondents on the pleadings and the
    course of procedure, and whether the obligation in Mr. Bell's ser-
    vice agreement as to payment by Lever Brothers of the premiums
    on an endowment policy remains binding, despite the setting aside
    of the agreement of March, 1929.

    The findings of the jury establish that the Appellants' four
    cocoa transactions in November and December, 1927, constituted
    a breach of contract or duty towards the Respondents, which would
    have entitled
    Lever Brothers to terminate the Appellants' contracts
    of service either in January, 1928, or March, 1929, and that Lever
    Brothers
    would have exercised such right at either of these dates.
    The jury also found that the Niger Company would have been
    entitled to dismiss the Appellants from their positions as chairman
    and vice-chairman respectively on either of these dates and would
    have done so. The jury further found that Lever Brothers entered
    into the agreements of March, 1929, in ignorance of these trans-
    actions of the Appellants and that, if Lever Brothers had known
    of them, they would not have entered into these agreements. As
    regards the state of the Appellants' mind, the question and answer
    was as follows :- 'At the date of the respective interviews prior
    ' to these agreements, had the Defendant Bell or the Defendant
    ' Snelling in mind their actings in respect of these transactions?",
    to which the jury's answer was " No." By their earlier answers
    the jury had acquitted the Appellants of inducing Lever Brothers
    to
    enter into the agreements of March, 1929, by fraudulent mis-
    representation of faithful and honest service or by fraudulent
    concealment of their cocoa transactions.

    13105 A 11

    [38]

    2

    It will be convenient to deal first with the question whether
    the Appellants had a duty to disclose their cocoa transactions to
    Lever Brothers when negotiating the agreements of March, 1929.
    If there was such a duty, there is no doubt that the failure to dis-
    close—though innocent—amounted to a misrepresentation as to
    material facts which induced Lever Brothers to enter into these
    agreements, and which would entitle the latter to rescind them.
    The learned Judges of the Court of Appeal appear to regard the
    duty to disclose as arising at the time of negotiating the contract,
    but I am unable to see that any such duty could arise out of the
    circumstances of these agreements; in my opinion, the first ques-
    tion must be whether the Appellants incurred a duty to disclose
    these transactions at the time that they were completed. The
    failure to account for the profits to the Niger Company on which
    some of the learned Judges lay stress, was an integral part of the
    breach of duty to that Company. The Appellants had just as
    much—or just as little—right to continue drawing their salaries
    without disclosure as they had to negotiate two years later for the
    commutation of these same salaries. In truth, the negotiations in
    March, 1929, were at arm's length, and not on the footing of the
    relationship of master and servant, but for the termination
    of that relationship, and, if there was not an already existing
    breach of an obligation to disclose, I am unable to see how the
    circumstances of the agreements of March, 1929, could be held to
    create such an obligation.

    In the absence of fraud, which the jury has negatived, I am of
    opinion that neither a servant nor a director of a company is legally
    bound forthwith to disclose any breach of the obligations arising
    out of the relationship, so as to give the master or the company
    the opportunity of dismissal; on subsequent discovery, the master
    or company will not be entitled to hold the dismissal as operating
    from the date of the breach, but will be liable for wages or salary
    earned by the servant during the intervening period. In my
    opinion Healey
    v. Societe Anonyme Francaise Rubastic, (1917)
    1 K.B. 946, which was the case of the managing director of a
    company, was rightly decided. There may well be cases in which
    the concealment of the misconduct amounts to a fraud on the master
    or company, but the jury have excluded that view in the present
    case. The other cases to which we were referred relate to a duty
    to disclose all material facts on formation of a contract, and form
    exceptions to the general rule, which does not impose such a duty.
    The most familiar of these exceptions is found in the case of policies
    of insurance, as to which Blackburn J. says in Fletcher v. Krell,
    (1873) 28 L.T. 105, " mercantile custom has established the rule
    ' with regard to concealment of material facts in policies of
    ' insurance, but in other cases there must be an allegation of moral
    ' guilt or fraud." Other exceptions are found in cases of trustee
    and cestui qui trust and of a company issuing a prospectus and an
    applicant for shares, but the number of exceptions is limited, and
    no authority has been cited which extends the exceptions to cover
    a case such as the present.

    Accordingly, I am of opinion that the Appellants had no legal
    duty to disclose their cocoa transactions either at the time of their
    commission or in negotiation for the agreements of March, 1929.

    Turning next to the question of mutual error or mistake, I
    think that the Respondents' contention may be fairly stated as
    follows,
    vizt., that in concluding the agreements of March, 1929,
    all parties proceeded on the mistaken assumption that the
    Appellants' service agreements were not liable to immediate ter-
    mination by Lever Brothers by reason of the Appellants' miscon-

    [39] 3

    duct, and that such common mistake involved the actual subject
    matter of the agreements, and did not merely relate to a quality
    of the subject matter.

    The cases on this branch of the law are numerous, and in seek-
    ing the principle on which they rest, I will at first confine my
    attention to those which relate to innocent mutual mistake on
    formation of the contract, as it appears to me that the cases relat-
    ing to facts arising subsequently to the formation of the contract
    may be found to rest on a somewhat different principle.

    But first let me define the exact position as at the date of the
    agreements of March, 1929. The service agreements of both
    Appellants were then existing as binding legal contracts, although
    it was in the power of
    Lever Brothers, had they then known of
    the Appellants' breach of contract, to have terminated the con-
    tracts; but, until the exercise of such power, the contracts remained
    binding. It is also clear that an essential purpose of the agree-
    ments of March, 1929, was to secure the termination of these service
    agreements. The mistake was not as to the existence of agreements
    which required termination—for such did exist—but as to the
    possibility of terminating them by other means.

    A clear exposition of the principles to be applied in such a case
    as the present is to be found in the judgment of the Court of
    Queen's Bench (Cockburn C.J., Blackburn, Mellor and Shee J.J.),
    in Kennedy v. Panama &c. Co., (1867) L.R. 2 Q.B. 580, delivered
    by Blackburn J., who, as Lord Blackburn, reaffirmed this opinion
    in 1881 in Mackay v. Dick, 6 App Cas 251, at 265. In Kennedy's
    case the Plaintiff had taken shares in a further issue of capital
    by the Panama Company, being induced by a statement in the
    prospectus that the purpose of the issue was to enable the company
    to carry out a contract recently entered into with the Government
    of New Zealand for the carriage of mails. That contract had been
    made with the agent of the New Zealand Government, both parties
    believing that he had authority to make it; but it turned out that
    he had no such authority and the Government refused to ratify it.
    Having failed on. the charge of fraud and deceit against the
    directors of the company for making the statements in the
    prospectus, the Plaintiff submitted a second contention, which is
    stated in the judgment as follows (at p. 586 foot), " It was contended
    " that the effect of the prospectus was to warrant to the intended
    " shareholders that there really was such a contract as is there
    " represented, and not merely to represent that the company bona
    " fide believed it; and that the difference in substance between
    " shares in a company with such a contract and shares in a com-
    " pany whose supposed contract was not binding, was a difference
    " in substance in the nature of the thing; and that the shareholder
    " was entitled to return the shares as soon as he discovered this,
    " quite independently of fraud, on the ground that he applied for
    " one thing and got another. And, if the invalidity of the con-
    " tract really made the shares he obtained different things in sub-
    " stance from those which he applied for, this would, we think,
    " be good law. The case would then resemble Gompertz v.
    "
    Bartlett " (2 E. & B. 849; 23 L.J. (Q.B.) 65) "and Gurney v.
    "
    Womersley " (4 E. & B. 133; 24 L.J. (Q.B.) 46) " where the
    " person, who had honestly sold what he thought a bill without
    " recourse to him, was nevertheless held bound to return the price
    " on its turning out that the supposed bill was a forgery in the
    " one case, and void under the stamp laws in the other; in both
    " cases the ground of decision being that the thing handed over
    " was not the thing paid for."

    4 [40]

    The Respondents' contention in the present appeal is
    in effect the same as the above contention; they maintain that
    the service agreements surrendered to them are not the service
    agreements paid for, in respect that they were immediately
    defeasible by them. Blackburn J. proceeds (at p. 587) : " There
    " is, however, a
    very important difference between cases where a
    " contract may be rescinded on account of fraud, and those in
    " which it may be rescinded on the ground that there is a difference
    " in substance between the thing bargained for and that obtained.
    " It is enough to show that there was a fraudulent representation
    " as to any part of that which induced the party to enter into
    " the contract which he seeks to rescind; but where there has been
    " an innocent misrepresentation or misapprehension, it does not
    " authorise a rescission unless it is such as to show that there is
    " a complete difference in substance between what was supposed to
    " be and what was taken, so as to constitute a failure of considera-
    " tion. For example, where a horse is bought under a belief that
    " it is sound, if the purchaser was induced to buy by a fraudulent
    " representation as to the horse's soundness, the contract may be
    " rescinded. If it was induced by an honest misrepresentation as
    " to its soundness, though it may be clear that both vendor and
    " purchaser thought that they were dealing about a sound horse
    ' and were in error, yet the purchaser must pay the whole price,
    ' unless there was a warranty." After referring to the passages
    in the Digest of Civil Law and the way the question is there mooted,
    Blackburn J. says (at p. 588) " the answers given by the great
    ' jurists quoted are to the effect that, if there be misapprehension
    ' as to the substance of the thing, there is no contract; but if it
    ' be only a difference in some quality or accident, even though
    ' the misapprehension may have been the actuating motive to the
    ' purchaser, yet the contract remains binding." And he adds
    ' And, as we apprehend, the principle of our law is the same as
    ' that of the civil law." This passage makes clear that it is not
    enough for the purchaser to prove that the misapprehension was
    the inducing cause to him and that, if he had known, he would
    not have entered into the contract. The earlier passage as to the
    sale of an unsound horse also shows that it is not enough that a
    grossly excessive price has been paid for a bad article. In that
    case it was held that the shares obtained by Kennedy in the com-
    pany were not substantially different things but that the case was
    analogous to that of the horse supposed to be sound.

    It is pointed out in Kennedy's case that, if the directors had
    known that the contract was not
    valid, the contract might have
    been avoided on the ground of a fraudulent misrepresentation. In
    the present case, there being no obligation to disclose, the
    Appellants, if they had had their misconduct in mind, would have
    been entitled to say nothing about it, and the Respondents, in the
    absence of fraud, would have been bound by the contracts, even
    though, if they had known, they would not have entered into the
    contracts, but would have terminated the service agreements. I
    have difficulty in seeing how the fact that the Appellants did not
    remember at the time is to put the Respondents in a better position.

    The phrase '' underlying assumption by the parties," as applied
    to the subject matter of a contract, may be too widely interpreted
    so as to include something which one of the parties had not neces-
    sarily in his mind at the time of the contract; in my opinion it
    can only properly relate to something which both must necessarily
    have accepted in their minds as an essential and integral element of
    the subject matter. In the present case, however probable it may
    be, we are not necessarily forced to that assumption. Cooper
    v.
    Phibbs,
    (1867) LR 2 HL 149, is a good illustration, for both

    [41]

    parties must necessarily have proceeded on the mistaken assump-
    tion that the lessor had the right to grant the lease and that the
    lessee required a lease. Lord Westbury says (at p. 170) " the
    " Respondents believed themselves to be entitled to the property,
    " the petitioner believed that he was a stranger to it, the mistake
    " is discovered, and the agreement cannot stand."

    In Scott v. Coulson, (1903) 1 Ch 453. affirmed (1903) 2 Ch 249,
    it was common ground that at the date of the contract for sale of
    the life policy both parties supposed the assured to be alive, the
    result being that the Plaintiffs were willing to accept as the best
    price they could get for the policy a sum slightly in advance of
    its surrender value and very much below the sum due on the death
    of the assured. As a matter of fact the assured was dead. It
    was therefore clear that the subject matter of the contract was a
    policy still current with a surrender value and that accordingly
    the subject matter did not exist at the date of the contract.
    Couturier v. Hastie, (1856) 5 H.L. 673, where the cargo sold was
    held not to have existed at the date of sale, and Strickland v.
    Turner,
    (1852) 7 Exch. Cas. 208, where the annuitant was in fact
    dead at the date of sale of the annuity, were cases where the subject
    matter was not in existence at the date of the contract. There
    are many other cases to the same effect, but I think that it is true
    to say that in all of them it either appeared on the face of the
    contract that the matter as to which the mistake existed was an
    essential and integral element of the subject matter of the contract
    or it was an inevitable inference from the nature of the contract
    that all the parties so regarded it.

    In the present case the terms of the contracts throw no light
    on the question, and, as already indicated, I do not find sufficient
    material to compel the inference that the Appellants, at the time
    of the contracts, regarded the indefeasibility of the service agree-
    ments as an essential and integral element in the subject matter
    of the bargain.

    The range of authorities relating to some alteration in circum-
    stances subsequent to the date of the contract do not, in my opinion,
    raise a question of mutual error or mistake; in them the formation
    of the contract is complete and binding, but subsequent events arise
    which critically affect the contract, but whose occurrence has not
    been provided for in the contract. However it may be stated,
    when relief from the contract is given, the Court, as it appears
    to me, rests such relief on an implied condition which forms part
    of a complete and binding contract, but which, on the happen-
    ing of certain events, terminates the contract. These authorities
    appear to me, therefore, to have no bearing on the question of error
    or mistake as rendering a contract
    void owing to failure of
    consideration.

    Accordingly, I am of opinion that the Appellants are entitled
    to succeed in their appeal and that the judgments of the Courts
    below so far as appealed against by them, should be reversed. I
    therefore concur in the motion to be proposed by my noble and
    learned friend Lord Blanesburgh.

    (13105-50) Wt.55-11 14 12/31 P. St. G.311


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