Grace Brothers Ltd v Lawson [1922] HCA 46; (1922) 31 CLR 130 (1 December 1922)

HIGH COURT OF AUSTRALIA

Grace Brothers Limited Plaintiff, Appellant; and Lawson Defendant, Respondent.

H C of A

On appeal from the Supreme Court of New South Wales.

1 December 1922

Knox C.J., Isaacs and Gavan Duffy JJ.

Alec Thomson K.C. and Sheridan, for the appellant.

Leverrier K.C. and Collins, for the respondent, were not called upon.

Knox C.J.

In my opinion this appeal must be dismissed. The position between the plaintiff and the defendant appears to be that the plaintiff, no doubt on a mistaken view as to the identity of a certain person or by reason of some fraud practised on it, delivered to the defendant a quantity of furniture without in fact giving him any instructions as to it. The previous course of dealing between the parties raised an implication that as far as the plaintiff was concerned it had no interest in the furniture or concern as to what was done with it. That would not, of course, be any protection to the defendant as against the true owner of the furniture in respect of any dealing with it by the defendant; but that is a matter which does not arise in the present case. The furniture having been sold by the defendant on the instructions, presumably, of the person who committed the fraud, the true owner made a claim upon the plaintiff which it could not resist. Having satisfied that claim, the plaintiff endeavoured in this action to recoup its loss from the defendant. The case is put in two ways: The plaintiff says that the defendant was guilty of conversion of the furniture, and it also sues for the proceeds of the sale of the furniture as money had and rereceived. The question upon the first count must depend upon whether as against the plaintiff the defendant did wrongfully convert the goods. In my opinion the plaintiff cannot succeed on the count for conversion because when the plaintiff handed the furniture to the defendant it in effect told him that it was no concern of the plaintiff what he did with it. The intention of the plaintiff no doubt was that the defendant should deal with the furniture in accordance with the instructions of the person whom the plaintiff believed to be the true owner. However that may be, the plaintiff voluntarily handed over the furniture to the defendant and in effect intimated to the defendant that it had no further interest in it. In these circumstances, nothing having intervened, the mistake not having been discovered and no demand having been made by the plaintiff before the sale for the return of the furniture, I do not see how any claim can be maintained against the defendant on the ground of conversion.

The alternative claim for money had and received, in my opinion, also fails. The plaintiff did not intend to and did not in fact either authorize the defendant to sell the furniture or enter into any contractual relation whatever with him. The defendant sold the furniture and received the proceeds of sale, not on behalf of the plaintiff, but on behalf of the person who gave him instructions and was believed by him to be the true owner of the furniture. What rights the plaintiff might have had if demand had been made on the defendant for the furniture before he sold it or for the proceeds of sale before he parted with them, it is not necessary to consider, for no such demand was made.

In my opinion the Supreme Court was right in entering a nonsuit, and the appeal should be dismissed.

Isaacs J.

I agree that this appeal ought to be dismissed. This case does not depend upon whether the respondent had mediately or immediately authority of the true owner of the goods to sell them or of the true owner of the money to dispose of it. The goods belonged to Dodds, and, if he had sued Lawson for their conversion, there would have been no answer. Similarly, if he had waived the tort and claimed the proceeds from Lawson, there would have been no answer. Dodds, however, sues Grace Bros. for conversion and recovered damages, not recognizing either the delivery to Lawson or the sale by Lawson. The rights of the present parties then must depend entirely on their mutual relations. Admittedly those relations did not constitute a lawful authority to sell or otherwise dispose of the goods or their proceeds. But they did constitute a representation of such lawful authority. The representation, on the uncontroverted facts, was that Grace Bros., having in their possession certain goods belonging to one S. Dodds, had been directed by him to end their possession of the goods by handing them over to Lawson at his auction rooms, and that Lawson was to account to Dodds only for them, Grace Bros.' connection having terminated. If Lawson had retained the goods or if having sold them he had retained the money, then, if Grace Bros. on discovering their error had redemanded the goods or their proceeds, I entertain no doubt Lawson would have been bound to restore what he had, less any expense he had incurred in the meantime. But Lawson having bonâ fide acted on the representation, while it was a live representation unwithdrawn and unqualified, that Grace Bros. had no further connection with the goods and that therefore Lawson must take the risk of ascertaining and dealing with the true owner, he is not to be prejudiced by their tardy discovery of the mistake they had led him into. The whole point of the case is that they had represented to him, not that unless he dealt with the true owner he was to account to them, but that, they having in fact the full authority of the true owner to hand him the goods, it was the true owner and not they in any circumstances to whom Lawson was to be accountable, he being left to find the true owner.

The case falls directly within the words of Lord Shand, speaking for the Privy Council in Sarat Chunder Dey v. Gopal Chunder Laha[1]: "The law of this country gives no countenance to the doctrine that in order to create estoppel the person whose acts or declarations induced another to act in a particular way must have been under no mistake himself, or must have acted with an intention to mislead or deceive." His Lordship then states that what the law mainly regards is "the position of the person who was induced to act; and the principle on which the law" rests "is, that it would be most inequitable and unjust to him that if another, by a representation made, or by conduct amounting to a representation, has induced him to act as he would not otherwise have done, the person who made the representation should be allowed to deny or repudiate the effect of his former statement, to the loss and injury of the person who acted on it."

Now, when Lawson was in effect left to take the risk of finding the true owner, and he bonâ fide and without negligence did so, how can Grace Bros. go back on that? In my opinion they are precluded from denying the truth of the representation, completely and bonâ fide acted on while it lasted, that the true owner had authorized the transfer of the possession of the goods from them to Lawson to be accounted for to the true owner.

Gavan Duffy J.

I agree that the appeal should be dismissed.

Appeal dismissed with costs.

Solicitors for the appellant, Laurence & Laurence.

Solicitor for the respondent, S. M. Stephens.

[1] (1892) L.R. 19 Ind. App., 203, at pp. 215-216.