Esso Petroleum Co. Ltd v Mardon [1976]

English Contract Law

Esso Petroleum Co. Ltd v Mardon [1976]
‘Gas’ by Edward Hopper

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, while in the Court of Appeal the appellant relied upon Hedley Byrne & Co Ltd v Heller & Partners Ltd, in which the House of Lords had 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.”

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.”

Attorney-General v Jonathan Cape Ltd [1976]

English Constitutional Law

Attorney-General v Jonathan Cape Ltd  [1976]
‘An Interesting Book’ by Claude Raguet Hirst

Public interest, national security and the freedom of speech are key ingredients to a ‘united kingdom’, therefore should any one of those elements become endangered any true sense of democracy would be diminished in favour of state control, and so when a Cabinet Minister chose to keep an open diary of his time in government, he did so on the pretence that it would one day become a published series for public reading. 

Upon retirement the now deceased author had endowed his executors the rights to attain full publication with the support of the Treasury solicitors, whereupon they did so in the hope of releasing sections of the first volume through a leading national newspaper, and while there was an initial collaboration between the executors and the Secretary of the Cabinet, numerous demands to remove what was considered critical text dissolved the partnership into legal argument and subsequent litigation. 

In the first instance the Attorney-General issued a writ preventing publication on grounds of conventional breach of confidence and national safety, while in a second writ the newspapers were subjected to the same restrictive terms in order to cease printing and publishing the planned articles.

In the lower courts the claimants argued that history demonstrated how current and former Ministers served the country in the knowledge that any official discourse was considered secret, and that where permitted for public release such information was typically held to a thirty-year restraining period, while the respondents countered that any information contained within the compiled material was now over a decade old and so posed no real threat to either national stability or the ongoing operational integrity of the Cabinet.

When submitted before the Court of the Queen’s Bench, the court held that the burden of proof rested upon the claimants, and so held that it must be proven beyond any reasonable doubt that: 

1. A breach of confidence had occurred.

2. Public interest required the repression of information.

3. Any need for public disclosure was insufficient to stand against non-publication. 

And so given time to consider the arguments presented it was agreed that despite strong supposition on the part of the Attorney-General, there had been sufficient examination of the final and edited source material to prevent any interference by the court, and that with an appreciation of free speech and the transparency of the author’s intentions, the respondents were free to both publish the first volume and release the preceding articles as and when time permitted, while clarifying to the court that:

“[T]here may be no objection to a Minister disclosing (or leaking, as it was called) the fact that a Cabinet meeting has taken place, or, indeed, the decision taken, so long as the individual views of Ministers are not identified.” 

Gulf Oil Corp. v. Gilbert (1947)

US Civil Procedure

Gulf Oil Corporation v Gilbert
Image: ‘Leyland Octopus Gulf Oil’ by Mike Jeffries

Choice of venue within a civil action, while enjoyed by claimants for honourable reasons, can sometimes prove destructive to the roots of a claim when the right is abused or exercised in error. In this instance, the want of policy ran risk of disrupting and possibly destroying, the need for redress through the use of established legal doctrine.

In 1944, the appellants supplied a delivery of gasoline to the respondent in Lynchburg, Virginia, whereupon an explosion caused significant damage to the establishment, customers property and pecuniary standing of the proprietor. Upon litigation, the respondent sought damages of around $365,000, and when exercising his civil rights, elected to issue proceedings in the state of New York, as explained under 28 § 1391(b)  U.S.C., which reads:

“A civil action may be brought in (1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located.”

And yet with appreciation that the appellants were based in New York, the court elected to challenge the choice of venue on grounds of ‘forum non conveniens’, which translated that although the claimant had a right to choose the venue best suited to their needs, the location of the actual event, the relevant evidence, potential expedience, lower legal costs and optimal attendance of both jurors and witnesses, demonstrated that the hearing was best heard in Virginia, as opposed to a courtroom almost four-hundred miles away.

Taken to the district appeal court, the decision was reversed back in favour of the claimant, whereupon the matter was further escalated to the U.S. Supreme Court under writ of certiorari. Here, it was noted that it was not unusual for claimants to abuse § 1391 by choosing inconvenient forums as a means of vexing and oppressing the defendant, thereby reducing the opportunity of a fair trial, while it also became apparent that on this occasion, the lawyer acting under instruction for the claimant resided in New York, and was retained by the insurance firm for reasons benefiting their own interests, hence arguing strongly in favour of one venue over the other, despite the obvious inconvenience to the claimant.

In light of this glaring disparity, the Court held that there were simply too many reasons for a trial to be held in Virginia, and that despite any contention that the district court had acted ultra vires, the judgment of the appeal court was too narrow an interpretation of the doctrine, and so the decision was reversed with a view to proceedings in Lynchburg on the principle that:

“[T]he doctrine of forum non conveniens can never apply if there is absence of jurisdiction or mistake of venue.”

Harris v. Balk (1905)

US Civil Procedure

Harris v Balk
‘Strong Arm’ by Kevin LePrince

Debt priority through attachment is not something familiar to English law, however in America the facts are quite different, and in this instance the indebtedness of a lender became primary to the borrower’s failure to repay, after a third party attached the sum outstanding through applicable State law.

In 1896, two men residing in North Carolina entered into a verbal agreement concerning the lending of $180, during which time the lender and now claimant, had an outstanding debt of $344 with a lender in Maryland. While visiting Baltimore, the now defendant was approached by the Maryland lender, who issued a writ of attachment for $180 under the powers of §§ 8 and 10 of art. IX of the Code of Public General Laws of Maryland, both of which read:

“8. Upon making the affidavit and producing the proofs before the clerk of the court from which such attachment is to issue…he shall issue an attachment against the lands, tenements, goods, chattels and credits of said debtor.

10. Any kind of property or credits belonging to the defendant, in the plaintiff’s own hands, or in the hands of any one else, may be attached; and credits may be attached which shall not then be due.”

Having failed to attend the hearing, the defendant admitted later acquiesced to the attachment and entered payment for the sum owed to the Maryland claimant in accordance with both the statute and decision of the court.

Upon this, the claimant sought remedy on grounds that the Maryland court lacked sufficient jurisdiction to apply such an attachment, whereupon the defendant claimed under art.IV of the U.S. Constitution that:

“Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.”

Therefore the judgment against the defendant to the claimant’s creditor was equally valid in North Carolina as it was in Maryland. However, the Supreme Court of North Carolina awarded in favour of the claimant on grounds that the defendant was in Maryland for but a brief time, and that the debt was initiated and so grounded in North Carolina.

Heard before the U.S. Supreme Court, it was explained through Chicago, R. I. & P. Co. v. Sturm that:

“All debts are payable everywhere unless there be some special limitation or provision in respect to the payment; the rule being that debts, as such, have no locus or situs, but accompany the creditor everywhere, and authorize a demand upon the debtor everywhere.”

While § 35 of art. IX of the Code of Public General Laws of Maryland provides that:

“Any judgment of condemnation against a garnishee ad execution thereon, or payment by such garnishee, shall be sufficient and pleadable in bar in any action brought against him by the defendant in the attachment for or concerning the property or credits so condemned…”

Which translated that the claimant had equal opportunity to sue the defendant for his debt while in Maryland, but failed to do so, while it was also held that upon litigation, the defendant was under a legal duty to notify the claimant that a third party had issued an attachment for the $180, whereupon the claimant is afforded opportunity to defend the debt, as had been held in Morgan v. Neville.

This caveat left the Court with no option other than to reverse the previous decision for further discussion, so as to avoid duplication of a debt recently paid in full, while further holding that:

“Power over the person of the garnishee confers jurisdiction on the courts of the State where the writ issues…”

British Chiropractic Association v Singh (2011)

English Tort Law

Chiropractic Association v Singh
‘Leaning Right’ by Steve Mills

Damages for libel and the freedom of expression, rely upon distinct terms of meaning for their preservation or application. And so on this occasion, the subjective opinion of an industry insider becomes the target of a writ that while not uncommon, does little to protect the reputation of those evaluated.

Whilst writing a tabloid article, the appellant doctor wrote of the respondents:

“The British Chiropractic Association claims that their members can help treat children with colic, sleeping and feeding problems, frequent ear infections, asthma and prolonged crying, even though there is not a jot of evidence.”

In retaliation, the respondents issued a writ for defamation on grounds that when publishing the article, the appellant had implied on the basis of fact, that the respondents lacked any credible evidence with which to support its claims. During the trial, the judge elected to apply a ‘fact’ based test, as opposed to one of subjective opinion, whereupon the jury found against the appellant and damages were set, along with injunctive remedy.

During the appeal, the Court reexamined the actions of the judge when choosing to adopt a factual premise upon which to rest the defence, while exploring the meaning of art.10 of the European Convention on Human Rights (Freedom of expression), with particular reference to De Haes and Gijsels v Belgium, in which the Court found that a journalist accused of libellous commentary was ultimately found to have merely expressed a ‘value judgment’ based upon collective facts relating to the field under discussion.

Here, the appellant had recently co-authored a book with an established authority on the history of chiropractic medicine, who had found through direct application of the methods common to chiropractic, that despite seventy experimental trials, there was no evidence to support the claims forwarded by the respondents, hence the commentary made within the article.

With these ‘facts’ in hand, the Court held that while honest in his intentions, the trial judge had erred in treating subjective opinion and reasoned commentary as statements of fact, and that by doing so had in essence contravened the rights contained under art.10, and reinforced the notion that challenges of those in authority were subject to punishment or forfeiture.

It was for this reason that the Court reversed the previous decision, while citing the words of Judge Easterbrook in Underwager v Salter, who had clarified how:

“[Plaintiffs] cannot, by simply filing suit and crying ‘character assassination!’, silence those who hold divergent views, no matter how adverse those views may be to plaintiffs’ interests. Scientific controversies must be settled by the methods of science rather than by the methods of litigation . . . more papers, more discussion, better data, and more satisfactory models – not larger awards of images – mark the path towards superior understanding of the world around us.”

While reminding the Court that language should not be used to distort, dilute or obscure the purpose of clarity when establishing liability for defamation or libel.