Appeal by estate agent from decision of county court judge holding him liable for breach of duty in dealing with references given by tenant on letting of furnished house — Reference in form of letter from alleged uncle describing himself (it turned out falsely) as ambassador of Uruguay, accompanied by a cheque for £1,046.40 (which was honoured, but not followed by any later payments) on account of rent — Estate agent did not receive replies to inquiries about two other references (which were in any case inconclusive) until after tenant had been let into possession — Eventually proceedings for recovery of possession had to be taken and estate agent’s clients suffered substantial loss — County court judge took a critical view of estate agent’s failure to check and follow up references and found negligence established — Court of Appeal held that judge had put the duty of agent too high, was too much influenced by after-knowledge and erred in his views on causation — There was nothing in the bogus reference which at the time should have put a reasonably careful estate agent on inquiry — The clients (the male client being a banker) had been kept continuously well informed about the position — Both had been impressed by the tenant, the female client having indeed become on friendly terms with her, and neither client had wished to pursue the other references further — In the circumstances the estate agent had not been guilty of any breach of duty and in any case his action or inaction had not been the cause of the tenant’s having been let into possession — That was the decision of the clients themselves — Appeal allowed — Some observations and evidence on the duty of an estate agent in regard to references
This was an
appeal by D Perry Press (trading as Pereds, a firm) of Portland Road, Holland
Park, London W11, from a decision of Judge Stucley at Westminster County Court
in favour of the respondents (plaintiffs in the action), John Robin Whittington
Bradshaw and his wife, Beatrice Louanne Bradshaw.
R A M Doggett
(instructed by George Carter & Co, of Kingston-upon-Thames) appeared on
behalf of the appellant; Michael F Harris (instructed by Baldocks, of
Guildford) represented the respondents.
Giving
judgment, CUMMING-BRUCE LJ said: This is an appeal against the judgment and
order of His Honour Judge Stucley, when he ordered that the defendant pay the
plaintiff the £2,000 claimed. The grounds of appeal are uninformative, but
confine themselves to alleging that the learned judge misdirected himself in
concluding that the defendant was negligent or in breach of the contractual
duty of care, that the finding to that effect was against the weight of the
evidence, and that he failed to consider contributory negligence pleaded in the
defence. By the amended grounds of appeal, the appellant lays the foundation
for the argument that he presented in this court, of which the most important
paragraph is that the learned judge should have found that the plaintiffs’ own
lack of care caused the damage. The substantial submission presented on behalf
of the appellant by Mr Doggett is a submission upon causation. The paragraph
that I have referred to is supplemented by another paragraph in which it is
pleaded: ‘The learned judge’s finding that . . . failure to obtain proper references
caused the plaintiffs any damage was against the weight of the evidence.’ There is a further contention that: ‘The
learned judge’s finding that the defendant had a duty to warn the plaintiffs
not to proceed or his finding that the defendant failed to perform that duty
was against the weight of the evidence.’
In the summer
of 1977 Mr and Mrs Bradshaw were living at their house, the letting of which is
the subject of these proceedings, and were contemplating a move for two years
to the United States, to where Mr Bradshaw was going in the autumn to be
followed after Christmas by Mrs Bradshaw. They contemplated letting their
furnished house for two years, and on September 22 Mr Bradshaw wrote to the
defendant and said that he was ‘now leaving for New York on November 5, though
the rest of the family will stay on until after Christmas — from when I wish to
let the house’. He gave some details and photographs of the house and said: ‘I
should also like your guidance as to an appropriate rent. I should also of
course like to learn how you would handle the letting, procedures etc. I look
forward to hearing from you.’
The reply to
that on November 9 is addressed to Mrs Bradshaw, who had stayed in England as
contemplated after Mr Bradshaw went to New York. The defendant then said:
‘Thank you for your instructions concerning the above mentioned furnished
house.’ They say that they have put the
property on their books for ‘offer to all suitable applicants’. ‘We would confirm
that should we be successful in introducing an acceptable tenant we will look
to you for our commission at 10 per cent of the rental received for the period
of the tenancy. We shall be grateful if you will advise us immediately if you
should find a tenant yourself or if . . . you wish to amend the particulars.’
Meanwhile, a
Miss* Vicens was telephoning from Spain. Her situation was that she was going
to have a baby and intended to have it in London in the autumn, and was
telephoning with a view to finding a house which she could let and occupy after
she emerged from her nursing home. She got in touch with the defendants and
there were evidently communications on the telephone between Miss Eden, of the
defendants’ office in Sloane Street, and Miss Vicens, and between Miss Eden and
Mrs Bradshaw. As a consequence of telephonic communications, it appears, though
the dates are obscure, that Miss Vicens went to have a look at the house and
also that Mrs Bradshaw went to visit Miss Vicens in her nursing home and had at
least one conversation with her. It is apparent from the evidence and the
judge’s findings that when Mrs Bradshaw met the prospective tenant she took a
liking to her and evidently took the view that, as a personality, she was the
kind of lady whom Mrs Bradshaw would welcome as a tenant of her home for two
years. In the conversations between Mrs Bradshaw and Miss Vicens, it appears,
though the details are not at all particular, that Miss Vicens gave the
impression to Mrs Bradshaw that she was a business lady, though a business lady
who was expecting at any moment to be giving birth to an infant.
So one comes
to November 28 when the defendants, through Miss Eden, wrote to Mr Bradshaw in
America in the following terms:
Further to
our recent telephone conversations with Mrs Bradshaw, we are pleased to confirm
that our applicant, Mrs M Vicens, has made an acceptable offer, subject to
contract, to rent this furnished house for an initial period of one year with
an option for a further year, at a rental of £120.00 inclusive of rates.
There is then
something about the cleaner and the gardener, and enclosed for Mr Bradshaw’s
signature is a draft tenancy agreement. The last paragraph is important. Miss
Eden says to Mr Bradshaw:
References on
Mrs Vicens are being forwarded to us and we will be in touch with Mrs Bradshaw
as soon as they are received to confirm acceptance.
The draft
agreement enclosed recites the agreement in the following terms: ‘The Landlord
shall let and the Tenant shall take’ the ‘house . . . together with the use of
the fixtures furniture and effects . . . from the Sixteenth day of December
1977 until the Fourteenth day of December 1978.’ The rent was to be in the sum of £520, one
calendar month’s rental, payable in advance from December 16 1977. That date
was evidently fixed as a consequence of communications between Mrs Bradshaw and
Miss Vicens, with the effect that the earlier intention to begin the letting
after Christmas had been varied so that the commencement of the tenancy was to
be as early as December 16 1977.
On the same day,
November 28, Miss Eden wrote to Miss Vicens and stated that they are pleased to
confirm that she had ‘made an acceptable offer, subject to contract, to rent
this furnished house for an initial term of one year . . . at a rental of
£120.00’. They enclose the tenancy agreement for ‘signature and return . . .
together with a cheque in settlement of the enclosed account’, which was an
account for £1,046.40.
On December 6
Miss Vicens wrote to the defendants an important letter:
I am hereby
enclosing the letter of reference from my uncle and a cheque for the amount of
£1,046.40 stated in your invoice as guarantee and first month’s rental from
December 16 1977. Payments of rentals will be forwarded to you by the Bank,
Pars, 14th Cavendish Square, W1, every 16th of each month.
There is then
a reference to an oil-heating invoice and she then adds: ‘If you wish to have
further references, please contact Mr Leatheren from the Spanish Embassy’ with
the telephone number thereof, 24 Belgrave Square. She added in a postscript:
‘Actual address of my uncle’, and she gives an address, which I have some
difficulty in reading, in Barcelona. ‘He is staying for the present time with
his daughter and will come shortly to England.’
Enclosed with the letter was the reference from Miss Vicens’ alleged
uncle, a document of some importance in this case. It purported to be upon the
stamped writing paper of the Embassy of Uruguay, written in Spanish. It does
not describe which embassy. It is dated November 27 and was sent to the defendants
for Miss Eden’s attention. It reads:
Dear Miss
Eden; May I ask of you to lend a helping hand and simplify any procedures that
migth be needed for the renting of a House by my niece Mrs Vicens and, or by my
daugther Mrs Pomes. Please accept my personal warrant on any deal or
transaction that migth be signed between PEREDS and Mrs Monica Vicens and or
Mrs Delia Pomes. Best regards,
and then there
is a signature — not readily legible. Underneath it there is written: VICTOR
POMES Embaiador del Uruguay. It is to be observed in connection with the
spelling of the letter, that the word ‘might’ is spelt wrongly in two places,
and the word ‘daughter’ is also spelt wrongly. Accompanying the letter was a
cheque for £1,040.
On receipt of
that letter on December 9 Miss Eden for the defendants wrote to Mrs Bradshaw.
Further to
our recent telephone conversation, I am pleased to confirm that we have now
received the signed Tenancy Agreement from Mrs Vicens. I enclose herewith for
your perusal a reference and guarantee from her uncle and would be obliged if
you will return same for our files. Enclosed also is the Tenancy Agreement for
you to add your signature and return to us. I am taking up a personal reference
on Mrs Vicens and will forward this to you as soon as it is received.
On December 13
Miss Eden was communicating with the electricity people and asking them to take
a meter reading on December 16.
On December 9
Miss Eden had written a letter addressed to Mr Leatheren of the Spanish Embassy
at 24 Belgrave Square and asked for a reference:
We shall be
pleased if you will kindly confirm that to the best of your knowledge Mrs
Vicens is a responsible person who should prove to be a reliable tenant. It
will also be valuable if you will confirm that her financial standing is good.
As late as
December 13, that is to say, only three days before the proposed commencement
of the tenancy, Miss Eden wrote to the manager of Coutts Bank and asked him to
provide what she described as ‘the customary formal reference . . . and reply
direct to our bankers, Barclays Bank Ltd’. As the judge observed in his
judgment, Miss Eden, though she had told Mrs Bradshaw that she was getting
further references and would send them along for consideration, she never took
the trouble, although the date of the commencement of the tenancy was getting so
close, to telephone either to Mr Leatheren or to the named bankers in order to
expedite the receipt of references from those persons.
On December 1
the plaintiffs’ solicitors wrote to the defendants about the terms of the
agreement on which they had been consulted, and they said in their letter that
they assumed that their clients had seen references and were satisfied with
them.
So on December
16 Miss Vicens entered into possession and at the time that she entered into
possession, thanks to the dilatory procedures of Miss Eden, the only reference
that had been furnished was the reference of Mr Pomes, describing himself as an
ambassador of Uruguay, dated November 27, being a document which the tenant had
herself forwarded to Miss Eden as a reference for approval, which document had
been sent on by Miss Eden to Mrs Bradshaw. It is clear from the evidence that,
though Mr Bradshaw was in New York, Mrs Bradshaw was communicating with him on
the telephone and communicating the progress of the proposed letting. It is
also clear from the evidence and the judge’s findings that in the course of
such telephonic communication Mrs Bradshaw had discussed with her husband the
reference that Miss Eden had forwarded as the purported reference of the
ambassador Pomes.
The cheque for
£1,040 had been honoured and collected, but after that first cheque the
financial fragility of the tenant gradually became more and more apparent and
the upshot was that she never paid any more and proceedings eventually had to
be taken to recover possession of the house, with the result that the
plaintiffs lost a great deal of money and there was ample evidence to support
the finding that their loss, limited to the £2,000 claimed in the county court,
was a genuine loss.
After December
16, as the date had come and gone, and after Miss Vicens had entered into
possession, Messrs Pereds, through Miss Eden, did eventually receive a personal
reference from Mr Leatheren of a singularly uncommunicative kind and also
received a banker’s reference, as I take it, from Coutts to Barclays Bank,
being the defendants’ bankers, which again revealed nothing about the financial
standing of the then tenant, who was described by Barclays as: ‘Respectable and
trustworthy. As account has only recently been opened we regret we cannot speak
for your figures.’
The only other
letter which I feel it useful to refer to is the letter addressed by Mr
Bradshaw from America to Senor Pomes, asking for his aid in recovering some
money from his niece. In the first paragraph Mr Bradshaw said this, and he
addressed it properly, in the belief that he entertained, to His Excellency
Victor Pomes, Ambassador, Embassy of Uruguay, Lennox Gardens.
Your
Excellency, I write to ask for your help with regard to the rent for my house
which I have rented to your niece, Mrs Vicens. I am writing to you in the light
of your letter dated November 27 1977 to Pereds who are my agents. In your
letter, you asked for Pereds’ help in finding a house for Mrs Vicens and Mrs
Pomes, and also said you would warrant personally any deal or transaction
entered into with Pereds. It was on the basis of this undertaking that I agreed
to rent my house.
Lastly, the
reply read as follows:
With
reference to your letter dated April 13 1978 and addressed ‘Mr Victor Pomes,
Ambassador, Embassy of Uruguay, London, etc’, we feel we should inform you that
Mr Pomes is not Ambassador of Uruguay and occupies no functions whatsoever in
this mission. Indeed he has been retired from the Uruguayan Diplomatic Service
many years ago. Embassy of Uruguay in London.
So I come to
the learned judge’s judgment. The first question which fell for decision was
the nature and extent of the contractual obligations undertaken by the agents,
the defendants, pursuant to their contract with the plaintiffs. On that the
learned judge made this finding: ‘I feel sure that when explaining her function
Mrs Cohen’, which is now the name of the former Miss Eden, ‘must have made it
clear to the first plaintiff that references would be sought and that the
function of her firm was to collect references for his consideration.’ And that indeed is well-founded and
consistent with the correspondence to which I have already referred, for
example, in Miss Eden’s letter to Mr Bradshaw dated November 28 when she said:
‘References on Mrs Vicens are being forwarded to us and we will be in touch
with Mrs Bradshaw as soon as they are received to confirm acceptance.’
When Mr
Bradshaw gave evidence at the hearing some years after the events that I have
described, he forcibly expressed the view that he did not regard himself as
having any obligation to consider, approve or check any references sent to him
or, on his behalf, to his wife. He said in-chief: ‘If the question of approving
references was put on me I would have checked’, and he protested that it was
nonsense to suppose that he could check references on the other side of the
world. He added: ‘My solicitors took it that Pereds had taken steps to have
references properly checked’, but when that evidence is considered in the light
of the contractual correspondence and in the light of the observation made by
the plaintiffs’ solicitors in their letter to Pereds, it is perfectly clear
that Mr Bradshaw by the time that he was giving evidence had got a quite
mistaken impression in his head about what the obligation was which the
defendants had accepted in relation to references. He was perfectly certain
that the estate agents had accepted the obligation to satisfy themselves about
the references and to take such action as they might think necessary to check
the references, but the earlier contractual correspondence does not sustain Mr
Bradshaw’s obviously quite honest belief, and the judge’s finding that the
obligation of the defendants was much more limited is clearly one that the
learned judge was well justified in making, that is to say, that the function
of the estate agents was to collect references for the plaintiffs’
consideration.
So one comes
to the judge’s conclusion on the facts about the references that were given or
were not given, the behaviour of the defendants and the causative effect of the
defendants’ acts and omissions upon the creation of the tenancy. I begin by
referring to that part of the judgment in which the learned judge dealt with
the reference dated November 27 from Ambassador Pomes. The judge said this:
A reference
of a sort was indeed produced. It is a very strange document indeed. It is
dated November 27 and purports to come from an Uruguayan Embassy, but there is
no mention of which country: addressed to ‘Dear Miss Eden’ (as Mrs Cohen was
then called) the spelling is quite inconsistent with the letter of any
ambassador of any country: the signature is peculiar, and purports to be that
of the Ambassador of Uruguay. We now know the signer was not the Ambassador of
Uruguay, if the gentleman whose name appears on the letter did indeed sign it.
The learned
judge deals with the description of the Pomes document given in the letter from
Miss Eden to Mrs Bradshaw when she forwarded to Mrs Bradshaw the Pomes
document. Miss Eden had written this on December 9:
Further to
our recent telephone conversation, I am pleased to confirm that we have now
received the signed Tenancy Agreement from Mrs Vicens. I enclose herewith for
your perusal a reference and guarantee from her uncle and would be obliged if
you will return same for our files. Enclosed also is the Tenancy Agreement for
you to add your signature
and she added
I am taking
up a personal reference on Mrs Vicens and will forward this to you as soon as
it is received.
The learned
judge castigates Miss Eden and the defendants for the description given in that
letter of the Pomes document. The learned judge said this:
The
defendants’ description of the Pomes document was highly misleading. I blame
Mrs Cohen, for describing it as a document on which anyone could rely for
payment of rent from a proposed tenant. A guarantee, that letter, and the fact
that the cheque was received and duly met and the description, in the letter of
November 27 persuaded the second plaintiff that all was well in the best of all
possible worlds. She rang her husband delighted with the news. The first
plaintiff was no doubt enchanted to hear that Mrs Vicens moved in the highest
diplomatic circles and there was an ambassador to back any non-payment of rent.
Then there is
this important finding:
No thought
was given to any further references by either plaintiff.
Evidence about
the Pomes letter was given at the hearing by a gentleman employed in
Chestertons who was called on behalf of the plaintiffs — Mr Michael Bussey. He
gave this evidence:
Assuming
estate agent has assumed responsibility for obtaining references. Not good
practice to part with possession before they had been received; if not received
by date for occupation — we would try and get them or advise client not to
proceed with letting. References as to financial standing are the most
important. Normally a major London clearing bank.
He says that
he would not have regarded the Coutts’ reference as an acceptable financial
reference. He said: ‘I would ask client whether to allow letting continue in
view of unsatisfactory references.’ As
to the Pomes document, Mr Bussey said, when he had read it:
I would have
regarded it with suspicion, it purporting to come from referees’ family. I
could see no point in sending such a letter of introduction to a client. I
would not have considered it a guarantee of any sort that could be relied upon,
nor would I have advised my client to rely on it . . . I would have regarded it
as unhelpful as a personal reference — The 3 documents
that is to
say, the Coutts, the Leatheren and the Pomes references.
amount to
nothing and I would have advised client not to proceed on the basis of them.
In
cross-examination Mr Bussey added that he accepted that estate agents ‘have no
duty to look behind a reference’, and said: ‘It is the landlord’s final
responsibility to reject references or house agents’ advice.’ He then said this at the end of his evidence:
‘Bogus references are not sufficiently frequent to put an agent on his
guard.’ So when considering the
criticisms of the learned judge of Miss Eden, in regarding it as a genuine
document which could properly be sent on for the consideration of Mrs Bradshaw
so that Mrs Bradshaw could discuss it if she wished with Mr Bradshaw in New York,
the learned judge expressed two views: first, he criticised Miss Eden’s
description of the document as a reference and a guarantee as highly
misleading. Also, he evidently, and in terms, blamed Mrs Cohen ‘for describing
it as a document on which anyone could rely for payment of rent’.
With respect
to the learned judge, there is ground for concern as to whether the view that
the judge was expressing about the Pomes document and his criticisms of Miss
Eden’s conduct in relation to it, was affected by the after-knowledge which
existed at the date of the hearing by which time it had emerged that the
document was either a forgery which did not bear Mr Pomes’ signature at all, or
alternatively, if it was signed by Pomes, carried with it and in conjunction with
the covering letter of Miss Vicens in which she forwarded it to Miss Eden, a
misrepresentation as to the status of Mr Pomes.
Once it had
become clear, as it did in the winter or spring months after the receipt of the
telex from the London Uruguayan Embassy, that Mr Pomes was not an ambassador
there, was not on the staff there, and anyway had retired from the Uruguayan
diplomatic service, nothing is easier than to approach this document in a mood
of extreme suspicion, but the question is whether at the time the document was
tendered under the covering letter of Miss Vicens to Miss Eden there was any
obligation on Miss Eden, in the exercise of reasonable skill and care, to treat
the document with suspicion, as compared to accepting it at its apparent face value
and sending it on to Mrs Bradshaw in order that she might decide whether she
wished to check it (eg by communication with the Uruguayan Embassy in London)
or whether she wished, after discussing it with her husband, to leave it to Mr
Bradshaw to institute such inquiries from New York as he might be minded to
make. I am naturally very reluctant to criticise the finding of an experienced
learned judge in connection with the appropriate reaction of an estate agent to
this document, and I bear in mind that the judge had received the evidence of
Mr Bussey in which he, Mr Bussey, had expressed the strong view that he would
have regarded the document with suspicion, but the ground of suspicion stated
in the judge’s note of Mr Bussey’s evidence was because it purported to come
from the referee’s family, so that Mr Bussey would not even have thought it
useful to send the document on for the consideration of the client. The
suspicious and indeed deceitful character of the letter is of course perfectly
plain once the Uruguayan Embassy in London had disclosed that Pomes was not
either an ambassador or on the diplomatic staff there, and indeed that he had
at that date retired from the diplomatic service altogether — facts which
immediately disclose the apparently deceitful character of the information
given by Miss Vicens in the covering letter with which she enclosed the Pomes
document.
For myself, I
have come to the conclusion that the judge’s criticism of Miss Eden in relation
to that document cannot be sustained; at any rate it cannot be sustained to
this degree. I am not satisfied that Miss Eden, on reading this purported
reference, was acting otherwise than properly in sending the document on for
the consideration of Mrs Bradshaw, and for Mr Bradshaw, if he wished,
after discussion on the telephone with his wife, to take steps to check the
credentials of the purported signatory of the letter. In the event it is quite
plain, as the judge found, that, having received Miss Vicens’ cheque for £1,040
which was honoured and this document purporting to be the letter of an
ambassador vouching for his niece and daughter who were going to be living in
the house, Mrs Bradshaw and Mr Bradshaw were so confident that they had the
tenant of their choice that, as the judge found, thereafter neither of them
gave any thought to any further references. The judge criticised the
description of the document as a guarantee in the covering letter that Miss
Eden had written to Mrs Bradshaw, when she described the document as a
reference and guarantee. Fortified, as he naturally was, by the evidence of Mr
Bussey, the judge found that the defendants’ description of the document was
highly misleading.
Once more I am
afraid I am compelled to differ from the learned judge about that. Of course
the terms of the letter — ‘Please accept my personal warrant on any deal or
transaction that migth be signed between PEREDS and Mrs Monica Vicens and, Mrs
Delia Pomes’ — do not constitute a legally enforceable guarantee of any kind at
all. On the other hand, what did the document purport to be? It purported to be the letter of an
ambassador vouching for the business reliability of his niece and his daughter.
If it had been in the form of a guarantee, as any experienced man would know,
however reliable as a matter of probability the guarantee of an ambassador may
be, it cannot claim legal efficacy because an ambassadorial communication is
always subject to the claim of sovereign immunity, if the ambassador sees fit
to exercise that right. What the letter does on its face is state that the
ambassador does give a personal warranty about Mrs Vicens, his niece, and Mrs
Pomes, his daughter, as persons with whom Pereds could confidently do business
in the letting transaction under consideration. I find it difficult, if I
disregard the after-knowledge later obtained, to see why Miss Eden, on
receiving this letter, was in any breach of professional standards when she
decided to send the document on to Mrs Bradshaw for her consideration. It may
be said that Mrs Bradshaw is a lady who probably leaves to her husband this
sort of business transaction, and Mr Bradshaw himself described himself as a
banker of some years’ experience, a businessman eminently qualified to judge
whether to act on a reference or not. Mrs Bradshaw may not have read to him
word for word the Pomes document, but she clearly had the opportunity, which
she probably exercised, of summarising it and discussing it with her husband.
On the
evidence it appears to me established beyond peradventure that both Mr and Mrs
Bradshaw were perfectly satisfied and put their trust in the reference
purporting to have been given by this supposed ambassador without making any
inquiry of any sort in order to check the credentials of the author of the
letter.
There is one
other matter. The judge’s finding is that no thought was given to any further
references by either plaintiff. That is not explicable only by reference to the
ambassadorial document. It is clearly related also to the personal view, and
the personal relationship, already established between Mrs Bradshaw and Miss
Vicens. Those two ladies were by then on Christian name terms, and it is quite
plain that Mrs Bradshaw when she met Miss Vicens liked her and was greatly
attracted by the prospect of having Miss Vicens as the custodian of the family
house for the two years that the family were in America. The fact that both
plaintiffs never gave a thought to any further references after considering the
Pomes document and cashing the cheque for £1,040 is, in my view of the evidence,
clearly due to a combination of the very favourable personal impression that
Miss Vicens had made on Mrs Bradshaw, together with the apparent confirmation
that she was a lady who came from a family and was connected with circles of
diplomatic reputation.
For those
reasons, I am unable to agree with the judge that Miss Eden was to be
criticised or castigated, or regarded as having been in breach of contract by
failing to exercise proper skill and care, when she decided to send the Pomes
document on to Mrs Bradshaw without uttering any word of warning. I should say,
in view of Mr Bussey’s evidence, that in the light of Mr Bussey’s evidence at
the end of the note of his cross-examination — ‘Bogus references are not
sufficiently frequent to put an agent on his guard’ — the view that I have
formed about the duty of Miss Eden in relation to the Pomes document is
influenced by the fact that apparently Mr Bussey himself, though he would not
think much of the letter because it came from a relative, does not suggest
that, on reading the letter, it would have struck him that there was such a
risk that the whole exercise was bogus as to put Miss Eden on her guard at the
time when she received it under cover of Miss Vicens’ covering letter.
So at that
point I would say that, as a matter of causation, on the evidence, it was
proved that when the plaintiffs decided to allow Miss Vicens into possession on
December 16 they did so because (a) Mrs Bradshaw liked Miss Vicens and trusted
her, and (b) they both took the view that the Pomes document was a document
that should give them complete confidence in Miss Vicens as their tenant.
Mr Harris has
submitted with force that all the observations that I have lately made miss the
point, because Miss Eden, by her dilatory behaviour, had rendered it
impracticable to obtain either a trustworthy personal reference from Mr
Leatheren, whoever he may have been, or proper financial advice from the banker
whom Miss Vicens had given as a reference. Having left everything so late that
it had become impracticable to get either of those references before December
16, Mr Harris submits that, as a matter of contractual obligation, there was a
clear duty on Miss Eden to bring home to Mrs Bradshaw that the important
financial reference did not exist because it had not yet been received, and
therefore that there was a grave risk in allowing the tenant into possession on
December 16. Though December 16 had been agreed between prospective landlord
and prospective tenant as the date for the commencement of the tenancy, that
agreement was subject to contract. There was nothing at all to stop the
plaintiffs from telling the prospective tenant that the date of the 16th had to
be postponed because personal reference, and in particular financial reference,
had not yet been received, considered or approved, and that the landlords were
not prepared to allow Miss Vicens to enter into possession on the 16th until
the landlords had had the opportunity to consider the necessary further
references which the agents had belatedly sought. Had that warning been given,
it may very well be, submits Mr Harris — and that is enough for his purpose —
that the plaintiffs would have appreciated the danger and would have insisted
that the tenancy should not begin, and no contract should be entered into,
until they had had the opportunity of approving a sufficient banker’s reference
establishing Miss Vicens’ financial standing for rent amounting over the year
to £6,000 and over two years to £12,000.
There is great
force in that submission and it seems to me clear, on the scrutiny of the
judgment, that the judge was impressed by it. He went on, after dealing with
the Pomes document, to say: ‘The duty to provide references remained, and in
purported endeavour to carry out that contract Mrs Cohen did write to the Bank
and on December 9 to a gentleman . . . at the Spanish Embassy.’ The learned judge dwells on the fact that
Miss Eden had been unable to give any explanation for her belated behaviour in
seeking a reference from the bank before December 16.
The judge goes
on: ‘So far as the actual mechanics of the surrender are concerned I find that,
lulled into confidence by the defendant’s letter enclosing the so-called
ambassadorial missive, the second plaintiff arranged for Miss Vicens to gain
entry into her house.’ There again, in
relating to the failure of Miss Eden to get the financial reference in time,
the judge goes on to say that the actual surrender of possession occurred
because the plaintiffs had been lulled into confidence by the Pomes letter. The
learned judge, after negativing a ‘Hedley Byrne’ obligation, went on: ‘In
breach of the initial contract between the parties the defendants failed to
obtain any proper references and the only document they did obtain they
misinterpreted. It was negligent and in breach of contract not to sound a note
of warning.’
I cannot agree
with the view of the judge in so far as it is implicit in his judgment that
there was a causal relationship between Miss Eden’s failure to get a financial
reference for the consideration of the plaintiffs before Miss Vicens entered
into possession and the fact that the plaintiffs did allow Miss Vicens into
possession without such a reference. It appears to me, not only from a
consideration of the background, but also from the express finding of the
judge, that, by the 16th or the day before, the plaintiffs had decided that
they were satisfied with the tenant for the reasons I have stated, namely, Mrs
Bradshaw’s view of her and the plaintiffs’ reaction to the Pomes letter, and
that led them to dispense, for all practical purposes, with the need for
consideration of any further reference; otherwise it appears to me obvious
that, if Mr Bradshaw had thought that he should give any consideration to the
situation at all, he as an experienced banker would have insisted upon a
financial reference. He did not do so, both because he was satisfied by what
his wife had told him about the prospective tenant and the Pomes letter and
because he wrongly formed the view that there was a contractual obligation on
the defendants to check the references for themselves and satisfy themselves
that they were appropriate. For those reasons I would allow the appeal.
Agreeing, DUNN
LJ said: Only because we are differing from the view of the learned judge do I
say a few words of my own.
The basis of
his judgment was that he first of all held that there was a duty on the
defendants, through their agent, to warn the plaintiffs that the Pomes
reference was unsatisfactory and that they should not give possession of their
house to the prospective tenant until further references, especially financial
references, had been obtained. Having found implicitly at any rate that they
were under that duty the learned judge then went on to find that they gave the
plaintiffs a misleading description of the Pomes document, that they failed to
give the warning which he held that they should have given, and that
accordingly they were in breach of contract, and were liable to compensate the
plaintiffs for the loss they had sustained as a result of the tenant turning
out not to have been able to pay the rent.
In the
circumstances of this case I agree with my Lord that the defendants were not
under the duty to warn which the learned judge held that they were. I also agree
that, with all respect to him, the learned judge seems to have been much
affected by hindsight in considering the Pomes letter of November 27 1977.
Putting oneself as far as one can in the position of a reasonably careful
estate agent as at that date, it seems to me that there was really nothing in
the letter to have put Miss Eden on inquiry. It was on printed notepaper headed
‘Embassy of Uruguay’, with what appears to be a coat of arms of some kind above
it, and it was signed Victor Pomes, Ambassador of Uruguay. Of course, in the
light of what happened afterwards, it is easy to look at the document and to
say that there is something suspicious about it, but in my view, in holding
that the letter on its face should have put Miss Eden on inquiry, the judge was
putting the duty which rested upon her to collect references much too high;
especially in view of the evidence of Mr Bussey, a very experienced estate
agent, who said that the number of bogus or forged references are so small in
practice that they can be disregarded. But in my view a more serious omission
in the learned judge’s judgment is what appears to be his total failure to have
regard to the question of causation. It is true that in one sentence of his
judgment he said: ‘No thought was given to any further references by either
plaintiff’ — that was in the context of Miss Eden’s letter of November 28,
describing the Pomes letter as a reference and a guarantee.
A
consideration of the evidence, to my mind, brings one to the same conclusion as
the learned judge, namely, that no thought was given thereafter to any further
reference, but not because of the description that Miss Eden gave of the letter
of November 27 as a guarantee and reference. It seems to me that the evidence,
when one looks at it, is really all one way; that, after the Pomes letter and
after receipt of the cheque for £1,040 from the prospective tenant, the
plaintiffs would have gone ahead with this letting in any event without regard
to any further references. They would have done that, on the evidence, for two
main reasons: firstly, because Mrs Bradshaw had seen Miss Vicens, had liked
Miss Vicens, had been impressed by Miss Vicens and by what Miss Vicens told her
of her own financial and other circumstances; and, secondly, because of the
Pomes letter, which neither Mrs Bradshaw nor her husband saw any reason to
question. Mr Bradshaw in his evidence spoke of the description that Mrs
Bradshaw had given him of Miss Vicens — how she was staying in an expensive
clinic, how she was working for a big company on a commercial basis, giving the
impression of having a lot of money and talking of being allowed to build a
swimming pool at the house. Mrs Bradshaw in her evidence made it perfectly
plain that she formed a good opinion of Miss Vicens and looked forward to
having her as a tenant, especially as they had made all arrangements to go to
join Mr Bradshaw in the United States immediately after Christmas, and this
lady had offered a figure for the rent at the top end of the bracket which Miss
Eden had suggested would be an appropriate rent.
Miss Eden’s
evidence about this was very strong. She said:
I think from
the outset they were keen to have Miss Vicens for tenant. Mrs Bradshaw was
friendly with her. Not inclined to ask my advice. I did not know if it would
have been accepted if it had been given. They were anxious to have property
let; money in, and liked Miss Vicens . . . I felt that they were happy with the
situation as it was, one reference having been received.
In
cross-examination she reaffirmed that it was up to them to decide whether the
references were adequate, and whether they wanted to accept the tenant on the
information that they had at the time.
The judge did
not deal with any of that evidence at all, and it shows in my view that the
plaintiffs were quite satisfied to go ahead with the one reference. It was a
decision that they were perfectly capable of taking for themselves. Mr Bradshaw
was an experienced banker. He must have known that the document of November 27
1977 was not a legally enforceable guarantee. If he did not know it, he only
had to ask his wife to read it out to him on the telephone, because she was
apparently in frequent communication with him, and neither he nor Mrs Bradshaw
needed Miss Eden to tell them the desirability of a financial reference before
letting a tenant into possession of the property. So even assuming, contrary to
my Lord’s view and my own view, that there was a breach of duty here, it was
not in my judgment causative of the loss. On that ground, I would allow this
appeal.
OLIVER LJ also
agreed that the appeal should be allowed for the reasons given by Cumming-Bruce
and Dunn LJJ.
The appeal
was allowed with costs in the Court of Appeal and costs below on the ‘old’
Scale 4.
