January case reading tutorial - answer PDF

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JANUARY CASE READING TUTORIAL LEWIS V AVERAY ANSWERS

a)

Lewis v Averay [1971] 3 All ER 907; [1972] 1 QB 198. Note the spelling of the case names!! The second citation will be the most authoritative as it is later, and so the judges will have had time to confirm their judgements as correct. Where there is a choice of citations, only one should be provided – the most authoritative, which is usually the latter.

b)

The Appellant is Anthony John Averay, the defendant at first instance.

c)

The Respondent is Mr Lewis, the plaintiff at first instance.

d)

Court of Appeal, Civil Division

e)

22nd July 1971

f)

Lord Denning MR; Megaw, Phillimore LJJ. The judgments are reported in order of the seniority of the judges.

g)

Three judges sat. This is an appeal and an uneven number of judges always sits to ensure a clear verdict.

h)

The Appellant was represented by both RN Titheridge and ACBM David of Counsel, and Amery- Parker & Co, solicitors. The Respondent was represented by DL Prebble of Counsel and Adams, Brown & Co , Bristol, solicitors.

i)

Mr Lewis’ car was for sale. A rogue, who represented himself as the famous actor Richard Greene, offered to buy the car for the agreed price of $450. He proffered a cheque for this amount but Mr Lewis was reluctant to hand over the car until the cheque cleared. The rogue purported to establish his identity by

showing a special admission pass to Pinewood Studios. This satisfied Mr Lewis who handed over the car and log books in return for the cheque. The cheque was worthless. The rogue sold the car to Mr Averay, an innocent purchaser. The rogue could not be found. j)

The remedy sought on this appeal was to have the decision of the County Court judge overturned. (The remedy sought at first instance was damages for conversion of the car).

k)

The issue of law is (per Lord Denning at 205): Was there a valid contract of sale between Mr Lewis and the rogue? To decide this, the following issue needs to be decided (per Lord Denning, at 206): What is the effect on the contract of a mistake by one party as to the identity of the other?

l)

There are no issues of fact. This is an appeal. Any issues of fact would have been decided at first instance.

m)

Ratio: Per Lord Denning (at 207) and Phillimore LJ ( at 208) mistake as to the identity of the rogue did not prevent the formation of a valid contract. But it did render it voidable, “that is liable to be set aside at the instance of the mistaken person, so long as he does so before third parties have in good faith acquired rights”. The reasoning of Megaw LJ: mistake as to the identity of the rogue did not prevent the formation of a valid contract because it was a mistake as to attributes (creditworthiness), not identity. Be aware of the very different reasons for the judges’ decisions. Even though the decision was unanimous, the reasons for the decision are not consistent and each reason does not constitute a

separate ratio. There can only be one ratio for a case and unless this is found in unanimity or a clear majority it does not exist. Here, the judgments of Denning MR and Phillimore LJ constitute the ratio, whereas the different reasoning of Megaw LJ does not. (n) Obiter Per Lord Denning: 206 Unilateral mistake as to identity does not render a contract void. 206 Fine distinctions between mistake as to identity and its attributes ‘do no good to the law’. ”This is a distinction without a difference”. 207 It is wrong that the rights of an innocent purchaser should depend on whether the original seller was mistaken as to identity or attribute. 207 When a contract is made between parties in person then the contract is made between the parties physically present ( even though it may be avoided for fraud) Per Megaw LJ 209 discussion of the value of Mrs Lewis’ evidence. (o)

Cases followed: Phillips v Brooks, and King’s Norton Metal v Eldridge Merrett& Co Cases distinguished: Lake v Simmons, Sowler v Potter, (Ingram v Little was overturned rather than distinguished)

(p)

Look at the answer to (m) above. The reasoning of the majority (though Phillimore LJ’s reasons are not very detailed) is quite different from the reasoning of Megaw LJ. This is very important to note when the decision of the judges is the same but the rationale for those decisions is quite different. Depending on the extent of the difference between the judges this may mean that there is no true ratio in the case and each of the judgments is merely persuasive. If a subsequent set of facts is before the courts which are indistinguishable from the facts in the original case then there is a precedent for the outcome even if the reasoning is not consistent. But if the subsequent case draws on similar principles but with different facts then the original case is not a binding precedent. In this case, with the 2:1 reasoning, the reasoning of Lord Denning is the ratio that is followed by the courts in later decisions.

(q)

The Court held that the appeal be allowed. The contract between Mr Lewis and the rogue was voidable, but could not be avoided once the car had been on sold to a bona fide purchaser for value without notice.

(r) Regardless of the difficulty arising from there being conflicting reasons given by the judges, as an English decision, this case is not a binding precedent in NSW. It is, however of great persuasive value and in the absence of any cases considering the same issue, it can be considered the law in NSW. However, it is not only necessary to look at what Australian cases have considered this issue but it is necessary to look also at its development in the English Courts. A more recent decision is Shogun Finance v Hudson [2003] UKHL 62 in which many of these issues were considered in great detail. So in considering the law in NSW you must look at the different reasons in the Lewis case as well as the more recent English decisions that consider Lewis. Then look at the comments that have been made by the Australian Courts about this line of cases....