ESSO PETROLEUM v MARDON

Prior to the Misrepresentation Act 1967 ,many cases involving mistruths and false inducements relied upon rules of collateral warranty and negligent misrepresentation to establish liability; however, on this occasion an international oil company was betrayed by their own haste when attempting to victimise a willing, but inexperienced employee.

In 1961, the cross-appellants looked to construct a new filling station within the busy streets of Southport; and so, having established the location and calculated the potential value of business, it was agreed that once opened, the station could very well expect to turnover around 200,000 gallons of petrol per year within its first three years of trading. 

With such positive projections, the cross-appellants purchased the site and began work; however, during the planning permission stage they were delivered an unexpected blow when the local authority expressed that the petrol pumps were not permitted to face the road, but were instead to be positioned at the rear of the building.

This unexpected design change heavily reduced their previous calculations; however, undeterred they sought to recruit a leaseholder for the site; and so, after a successful interview, the appellant was conditionally offered the post, while subject to rents based upon the now unrealistic sales volumes.

However, during his interview the appellant queried the figures presented, while the cross-appellants argued there was no cause for concern and that the original projections remained reliable.

Despite his concerns, the appellant accepted the position, before working tirelessly for two years, until faced with financial ruin after losing money from the severely reduced sales, considerable personal investment and a sizeable overdraft no longer repayable, he approached the cross-appellants with every intention to quit; whereupon, they agreed to reduce the rent and offer bonus payments from the sale of petrol in order to offset his losses. 

As an act of continued faith, the appellant agreed to honour a twelve-month contract; however, his circumstances continued to deteriorate; and despite the cross-appellants offering him a more profitable station, their support diminished until the arrangement became unsustainable; and yet, in 1966, the cross-appellants issued a writ for non-payment of petrol supplied during their working relationship.

Naturally shocked and angered, the appellant counter-claimed for damages caused through the loss of earnings, damage to his health, lost opportunities through his efforts to make the site a success, breach of warranty through the misleading statements made in relation to sales turnover, negligent misrepresentation and the inducement to take employment where the outcome was never going to be the one presented during his interview.

In the first instance, the Court of the Queen’s Bench held that the cross-appellants comments were tantamount to opinions and not warranties, but that the claim for negligent misrepresentation was enforceable until the date of the revised employment contract in 1964.

In the Court of Appeal, the appellant relied upon Hedley Byrne & Co Ltd v Heller & Partners Ltd; in which, the House of Lords held that:

“[I]f someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference.”

Hedley Byrne & Co Ltd v Heller & Partners Ltd

And so, having examined the finer points of collateral warranty and the limitations of contractual breaches, the Court unanimously upheld the appeal, on grounds that the flow of damages were unmistakably linked to the claims made; and that remoteness could not stand when factoring in the sources of revenue used by the appellant when trying so hard to keep the station afloat, while finally clarifying that:

“[I]f a man, who has or professes to have special knowledge or skill, makes a representation by virtue thereof to another be it advice, information or opinion with the intention of inducing him to enter into a contract with him, he is under a duty to use reasonable care to see that the representation is correct, and that the advice, information or opinion is reliable.”

DEFRENNE v SABENA

The effects of article 119 EC and the stark inequality between men and women in the workplace, were brought together in a case that illustrated the power of law and the equitability of the European Community.

Employed as an air hostess in 1963 by Belgian Société Anonyme Belge de Navigation Aérienne (SABENA), the appellant was re-contracted as a cabin steward and air hostess under the title of cabin attendant; however, the contractual caveat was that unlike her male counterparts, she was expected to retire from her duties at the age of forty, while termination of her employment entitled her to twelve months severance pay without pension rights.

Having been forced to retire as per the contract, the appellant initiated discrimination proceedings on a number of grounds, including the assertion of her right to equal pay under the terms of article 119 EC, which explains that:

“1. Each Member State shall ensure that the principle of equal pay for male and female workers for equal work or work of equal value is applied.”

And yet, despite her contentions the Tribunal du Travail of Brussels dismissed her claims outright, before her appeal to the Cour du Travail of Brussels was further dismissed with the exception of inequality of salary.

However, despite the court’s ability to overrule its own legislation in favour of the Treaty article, it chose instead to seek a preliminary ruling from the European Court of Justice.

For clarity, in 1957 the Treaty of Rome included the express requirement that every Member State would ensure and maintain the application of the principle that men and women should receive equal pay for equal work, and while the initial adoption period was set at two years, Belgium never amended its own legislation to reflect the values of the Treaty Article until 1967; in which, section 14 of Royal Decree 40 enabled women in such situations the rights to seek remedy within the national courts.

On this occasion, the Belgian government’s defence was that while article 119 conferred powers to those women paid less than men in similar roles, the effect of that principle  fell solely within the limitations of public office and not private contracts.

However, the claimant countered that by all accounts the direct effect of article 119 EC had existed since 1957; and so, provided her with retrospective rights of recovery. 

Once before the European Court of Justice, the Advocate General clarified that direct effect relied upon the clarity of the regulation; and so, when addressing sexual inequality, it was clear how the principle’s purpose relied upon the differences cited.

Hence, the Court held that going forward, the national courts were to refrain from reference to article 177 EC in order to seek preliminary rulings when there was sufficient cause within art.119 EC to overrule domestic legislation under the rule of Community law, while reminding the parties that:

“Article 119, despite the fact that it is restricted to imposing an obligation on the States, is primarily concerned with the relationship between individuals. The discrimination which the provision sets out to prohibit will, in the majority of cases, consist of discriminatory action by a private undertaking against women workers.”

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