1906. W. SCOTT, LTD. č. LLOYD. Barton J. own sense and knowledge. But a very little is sufficient to affect H. C. OF A. the application of that principle. If a word, if a single word be dropped which tends to mislead the vendor, that principle will not be allowed to operate." (There is no suggestion of any actual FELL & Co. misleading in the present case). "There have been cases upon contracts made by trustees to sell, which is the situation of assignees, where the Court has said, not that it will order the contracts to be cancelled, but that if the trustee has been negligent, not taking that care to preserve the interest of cestui que trusts which he ought to have done, it will not permit the party dealing with him to take advantage of that negligence: if he was dealing with one whom he knew to have a duty, and if that duty was plainly neglected, the contract will not be enforced." And that is the effect of the judgment of the law Lords in the case in question, because the assignees had a duty to the creditors as the other party well knew, and he also knew that the sale at an undervalue was a violation by the assignees of their duty to the creditors. In the case of Coaks v. Boswell (1), Lord Selborne, speaking of the obligation of a purchaser standing in no special fiduciary relation to his vendor, said that as he is "(generally speaking) under no antecedent obligation to communicate to his vendor facts which may influence his own conduct or judgment when bargaining for his own interest, no deceit can be implied from his mere silence as to such facts, unless he undertakes or professes to communicate them." That is the situation of the parties here. I would like to mention, also, some expressions of Lord Blackburn L.J. in Brownlie v. Campbell (2), where he said:" I quite agree in this, that whenever a man in order to induce a contract says that which is in his knowledge untrue with the intention to mislead the other side, and induce them to enter into the contract, that is downright fraud; in plain English, and Scotch also, it is a downright lie told to induce the other party to act upon it, and it should of course be treated as such And I go on further still to say, what is perhaps not quite so clear, 1906. FELL & CO. LTD. V. LLOYD. Burton J. H. C. OF A. bound to say, if that was done with the intention of inducing the other party to act upon the belief that the reason why he did not W. Scorr, speak was because he had nothing to say, I should be inclined myself to hold that that was fraud also." There, of course, Lord Blackburn insists upon the necessity for there being an obligation to speak in order that silence may become fraudulent concealment. That was in 1880, and was an affirmative expression of what he said in 1871 in Smith v. Hughes (1):— "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.” I remark here that there can be no difference between the obligations of a vendor to the purchaser and those of a purchaser to the vendor. [His Honor then read the rest of the passage already set out in the judgment of Griffith C.J. and continued.] This passage exactly describes the real relations between the parties under this contract. There is no pretence that there is any relation between them such as in equity-and this is a plea upon equitable grounds-would raise a duty of disclosure. There is no pretence that there was anything more than the relation of intending buyer and seller between them, which entitled each party prima facie to refrain from disclosing to the other any fact which he with his superior skill or knowledge had discovered, and which might make the contract more advantageous to him as buyer or as seller. If there is nothing more than that then the mere non-disclosure is within the rights of the plaintiffs; and it does not become anything more than non-disclosure, by the fact that in the plea you have the epithet "fraudulent." And as this arose between parties between whom there did not exist any such relation as raised a legal or equitable duty to make a disclosure, it cannot affect the validity of the contract. This appearing by the plea itself, the result is that it does not disclose a defence to the action. ISAACS J. The declaration in this case sets up an agreement to sell five thousand tons of Abermain best screened coal which (1) L.R., 6 Q.B., 597, at pp. 606, 607. for 1906. W. SCOTT, FELL & Co. LTD. V. LLOYD. Isaacs J. had been purchased by the defendant from the Abermain Colliery H. C. OF A. Company, at the price of seven shillings and sixpence per ton. The plea which has been demurred to sets up the defence of fraudulent concealment. There is a series of facts relied upon that purpose. Placing them in inverse order, first there was a colliery company agreement called a colliery contract with the defendant for the supply of coal to them. Next there was a colliery agreement with other persons not to supply coal for shipment to South Australia to anyone but those persons, and thirdly there was the plaintiffs' application to the defendant to be supplied with the coal and the refusal of the Abermain colliery to supply it. Fourthly there is the contract with the defendant that is now sued upon. Reading the plea as it ought to be read, not at all events in favour of the vendor, and I think not unreasonably in any case, the alleged agreement with other persons not to supply coal for shipment to South Australia must mean an agreement not to enter into new agreements of that kind. That is the only honest meaning one can give to it. It cannot mean an agreement to break existing contracts. Unless there is in the plea a distinct allegation of an engagement to break existing agreements it is not to be inferred. The plaintiffs' application to be supplied with coal must be taken to mean an application to enter into a new contract express or implied. Then the plea states that there was fraudulent concealment of certain facts which are three in number, first that the Abermain Colliery Company Limited had entered into certain agreements with certain persons other than the plaintiffs and defendant not to supply coal for shipment to South Australia except to those persons, and, if that is taken as I think it ought to be taken, that they had agreed not to make new agreements for that purpose, I do not see how it affects the case. The next fact that was fraudulently suppressed according to the allegation in the plea was that the plaintiffs had applied to the Abermain Colliery Company to be supplied with coal under a new agreement and the company had declined to supply them. It was further alleged that it was the intention of the plaintiffs to ship whatever coal they got under the contract to South Australia. No prior relationship between the parties is alleged. There was no position of 1906. W. Scorr, FELL & Co. LTD. v. LLOYD. Isaacs J. H. C. OF A. trust or confidence making it the duty of the plaintiffs to disclose to the defendant what they knew of the matter or what they intended to do with the coal. No such position had been created between them either by words or conduct. No false impression had been created, and there was no active deception, nothing in short raising an obligation on the plaintiffs' part to disclose those facts which were known to them, and nothing which would allow it to be fairly inferred that the colliery company had ever said or led the plaintiffs to believe that the colliery company was going to break its contract with the defendant, and, that being so, there is nothing in the plea. The utmost that can be alleged is that there was silence in respect of certain matters which if the defendant had known he would not have agreed to supply the coal. But that is not sufficient to invalidate this contract, and the passage quoted from Story, read by my learned brother the Chief Justice from Smith v. Hughes (1), I think, embodies the law on this subject:-" 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 operates as an injury to the party from whom it is concealed." That principle was applied in the case of Ward v. Hobbs (2), a very strong case where a Statute prohibited persons from sending animals infected with contagious disease to market and inflicted penalties on any person so sending them; it was held that the act of sending them if known to be so infected was a public offence, but did not amount by implication to a representation that they were sound, and did not of itself raise any right on the part of the purchaser to obtain damages from the vendor in respect of injury he may have suffered in consequence of their purchase. It was argued there very strongly that, there being a Statute which made it a penal act to send such cattle to market, any person would be entitled to treat the fact of their being sent to market as a representation that they were sound, but the House of Lords held that mere silence on the part of the vendor of cattle was not a representation, on the authority of the principle stated in Story in the passage already quoted. 1906. Under these circumstances it seems to me that the case cannot H. C. of A. be put higher for the defendant than that he was ignorant of these facts at the time when he entered into the contract. But W. SCOTT, LTD. v. he does not show any obligation by contract, conduct or otherwise FELL & Co. imposed upon the plaintiffs to set him right. Under these circumstances I agree that the demurrer should be allowed. Appeal allowed. Order appealed from dis- Solicitor, for appellants, Baxter Bruce & Co. Solicitor, for respondent, J. McLaughlin. LLOYD. Isaacs J. SYDNEY, Dec. 17, 18. Husband and wife-Leaving without means of support-Child taken by wife from custody of husband against his will-Refusal by Supreme Court to enforce father's right to custody-Infants' Custody and Settlements Act (N.S. W.) (No. 39 of 1899), secs. 5, 6-Deserted Wives and Children's Act (N.S. W.) (No. 17 of Griffith C.J., 1901), secs. 4, 7. Barton and O'Connor JJ. |