Esso realized this and renegotiated the contract, but even that did not properly assess how much could be sold. ____________________MR R. MUNRO Q.C., MR. P. CRESSWELL and MR J. PEPPITT (instructed by Messrs. Durrant Piesse, Solicitors, London) appeared on behalf of the Plaintiffs (Respondents). This brought results. Within the first year of operation it was apparent that the sales of petrol at the Eastbank Service Station were far below the e.a.c. In the first place, he relied on the views of the majority of the Privy Council in the case of Mutual Life and Citizens Assurance Ltd. v. Evatt 1971 Appeal Cases 793, that the duty of care is limited to persons who carry on or hold themselves out as carrying on the business or profession of giving advice, and urged this court to adopt the same view. When they purchased it they estimated that it could sell 200,000 gallons of petrol a year. As Lord Reid once said: “The life of the common law is not logic but common sense” (R. v. Haughton and Smith) (1974) 2 Weekly Law Reports 1. However, Bisset has been distinguished by the Court of Appeal in Esso Petroleum v Mardon where Esso’s statement was held to be actionable. On this basis, no question of a guaranteed throughput arises; had it failed to reach the estimate owing to a cause or causes outside the plaintiffs’ control, for example, an unforeseen traffic diversion scheme, greatly reducing the traffic flow in Eastbank Street, or the appearance across the street of a rival filling station, there would have been no breach of warranty on the part of the plaintiffs. If you will make such and such a contract I will give you one hundred pounds’, is in every sense of the word a complete legal contract. He might have offered to surrender his tenancy and cease to trade, taking the risk that it would be argued that had he carried on for another year sales would have improved. But it must be done in assessing the loss. Halsey v Esso Petroleum  2 All ER 145 < Back Facts Halsey lives down the road from an Esso Petroleum oil factory. Esso Petroleum Co Ltd v Mardon  QB 801 is an English contract law case, concerning misrepresentation.It holds that the divide between a statement of opinion and fact becomes more factual if one holds herself out has having Mr. Mardon’s first obligation was to mitigate his damage thereafter. This considerably lowered the amount that could be sold, but no change was made to the estimate. It was on that estimate that Esso developed the site at a cost of £40,000: and that the tenant agreed to pay a rent of £2,500, rising to £3,000. and MR A RAWLEY (instructed by Messrs. Batchelor, Fry, Coulson & Barden, Solicitors, London, agents for Messrs. Bellis, Kennan, Gibble & Co., Solicitors, Southport) appeared on behalf of the Defendant (Appellant). Although counsel for Esso submitted that the guarantee was not a warranty as it was only a future estimate, Denning states that the facts that it was made by a party with special knowledge in an attempt to induce the other party to enter into a contract, and that it was relied upon, makes it a warranty. Dennis v. London Passenger Transport Board (1948) 1 All England Reports 319. Quite the contrary. Mr. Justice Lawson did, however, decide that Esso owed Mr. Mardon a duty to take care in relation to the statement made to him as to the potential of the filling station and that they were in breach of that duty. Similarly, where statements of future fact or forecasts are under consideration, it will require much more cogent evidence to justify the conclusion that such statements were intended to be contractual in character. The figures of £6,270 and £4,000, representing the capital loss up to September, 1964 are undoubtedly recoverable. If a restrictive view is taken there will be room for this cause of action, but, if not, most, if not all, mis-statements which fall within the Hedley Byrne principle are likely to be regarded as warranties. I will give what took place in the words of the Judge: “Mr. They insisted that the station should be built “back to front”. It cannot, therefore, be said that Mr. Mardon failed to mitigate his loss. They must be proved strictly. The representations which were admittedly made to Mr. Mardon conveyed and in my view were intended to convey that Esso warranted that information which they had available to them and on which the representations were founded, established the Eastbank filling station in the category of stations with a potential 200,000 gallons throughput attainable in two years or thereabouts. The plaintiffs did not reject this and discussions took place over a period of time but came to nothing and the end came in April 1967. So the claim is put in two ways: First, that the representation was a collateral warranty. It is not suggested and has never been suggested that Mr. Mardon is to be held responsible for any part of this loss. In the present case it seems to me that there was a warranty that the forecast was sound, that is, Esso made it with reasonable care and skill. LORD JUSTICE SHAW: This appeal discloses a sorry history. But, as I have indicated in my judgment, we feel that those are matters which probably counsel would like to consider and perhaps be able to agree between themselves; but, if they cannot, they can mention it to us again with any figures they would like to put forward on it. I would therefore allow this appeal with costs. The question then was what could be done about it. The plaintiff, Mr Mardon, entered into a tenancy agreement with the defendant, Esso Petroleum, in respect of a petrol station owned by the latter. If the majority view were to be accepted the effect of Hedley Byrne would be so radically curtailed as to be virtually eliminated. Negligent misrepresentation: Assuming that there was no warranty, the question arises whether Esso are liable for negligent mis-statement under the doctrine of Hedley Byrne v. Heller & Partners Ltd.(1964) Appeal Gases 465. Esso Petroleum Company Ltd v Mardon: CA 6 Feb 1976 Statements had been made by employees of Esso in the course of pre-contractual negotiations with Mr Mardon, the prospective tenant of a petrol station. Mr. Mardon, having indicated that he thought that a lower figure would be a more realistic estimate, had his doubts quelled by the experience and the estimate furnished by Mr. Leitch; and it was for that reason, I am satisfied, because of what he was told about the estimated throughput in the third year that he proceeded to negotiate for, and to obtain the grant of, a three-year tenancy at a rent of £2,500 a year for the first two years, rising to £3,000 yearly in the last year”. On 1st September, 1964, an new tenancy agreement was made in writing. That seems to me too remote and should be compensated for by interest on the overdraft. University of Virginia School of Law 76,873 views 45:34 MOOT LIKE A MO FO! (Q) You would be able to command a higher rent if the throughput was 200,000 than if it was 100,000? this figure must have been fairly closely related to it. The plaintiffs’ internal memoranda make this absolutely clear. They had no other suitable tenant to replace him. Conclusion: I would like to express my appreciation of the full and careful way in which the learned Judge found the facts and analysed the law. Respondent Esso Petroleum Co Ltd v Mardon  EWCA Civ 4 is an English contract law case, concerning misrepresentation. In addition, they would get a sub3tantial rental from a tenant. We recommend strongly that he be granted tenancy”. The one proposition which seems to have survived unscathed is Chief Justice Holts dictum, quoted with approval by Lord Haldane and others in Heilbut Symons & Co. v. Buckleton (supra), that “an affirmation can only be a warranty provided it appears on the evidence to have been so intended”. (Q) The rent would be substantially higher if your estimate was one of 200,000 gallons than if your estimate was one of 100,000? The defendant claims to have suffered damage far in excess of this sum. IN THE SUPREME COURT OF JUDICATURE So I must go further. Such being the facts, I turn to consider the law. In my view, following Lord Moulton in the Heilbut Symons case, at page 50, the test is whether on the totality of the evidence the parties intended or must be taken to have intended that the representation was to form part of the basis of the contractual relations between them. THE MASTER OF THE ROLLS: Very well; then we will not make any final order today. So the loss of earnings could only be for a limited number of years. On the evidence they clearly assumed responsibility for the reliability of their own e.a.c. in Nocton v. Lord Ashburton (1914) Appeal cases 932 at page 950: “… The solicitor contracts with his client to be skilful and careful. That organisation stood in a very different position from Mr. Mardon in regard to the information available to them for the purpose of assessing the potential capacity of the filling station. Eventually on 1st January, 1966, he wrote to Esso appealing to them to find a solution. Hew were they then related respectively to the subject matter? Mr. Mardon complained that “he had been sold a pup”. It was, said Mr. Ross-Munro, the money of a company in which Mr. Mardon and his wife were the only shareholders. I need in truth do no more than say that I respectfully agree with the conclusions which he has stated in regard to the issues raised on this appeal. QUEEN’S BENCH DIVISION The income losses present greater difficulties. I would therefore allow this appeal and dismiss the cross-appeal. THE MASTER OF THE ROLLS: If you cannot agree, you may be able to give us some figures that we could work upon. Clydesdale Bank Plc v. Davidson and Others (Scotland)  UKHL 55 (16th December, 1997). In fact, since this Act was passed there may be virtually no room for an action in negligence in such cases. 3 Red Eagle Corporation Ltd v Ellis  NZSC 20 at . It does not appear to have had any creditors either. Mardon was interested in leasing a petrol station. I agree with the formulation proposed by the Master of the Rolls. The new agreement was an attempt to mitigate the effect. Future predictions can be warranties if they are given with the intent to induce another party to enter into a contract, and they are relied upon in the decision to enter into the contract (these are called collateral warranties). I agree entirely with the reasons and conclusions of the learned judge upon this part of the case. Denning, writing for a unanimous court, says that this case can proceed in two ways. It is, therefore, not unreasonable that they should be liable for the interest on the overdraft, and on his capital investment. It was finished early in 1963. Another relevant factor was that the vendor scarcely had a better basis for any opinion that he might form than the purchasers had. Mr. Justice Lawson, after a long and careful enquiry, finally awarded him the sum of £9,007, with interest at 7½% for five years, which represents damages assessed at £10,270, less £1,103 admittedly due by way of rent and mesne profits to the plaintiffs, and £159 for which credit had also to be given to the plaintiffs. Accordingly, so the Judge held, any loss suffered by Mr. Mardon while the second agreement was in operation and thereafter was unrelated to the negligent misrepresentation and to the breach of any warranty. None of the material facts is in issue, although the learned judge preferred the evidence of the plaintiffs’ witnesses, namely Mr. Leitch and Mr. Allen, to Mr. Mardon’s where they differed. Now for the measure of damages. For example, it is said that to constitute a warranty a representation must be of fact and not of opinion; or a statement about existing facts as opposed to future facts such as a forecast. Owing to it, I have lost all the capital I put into it. It was a financial disaster. The estimated throughput in this case was as much part of the description of the property which was to be let as the number of pumps or the area of the site. One of the more important was that the vendor’s assertion, whether it was fact or opinion or both, was not falsified by the evidence. Thus in Hedley Byrne itself Lord Reid said (at page 483): “… Where there is a contract there is no difficulty as regards the contracting parties: the question is whether there is a warranty”. But I venture to suggest that those cases are in conflict with other decisions of high authority which were not cited in them.. ON APPEAL FROM THE HIGH COURT OF JUSTICE It was suggested that this, in some way, prevented Mr. Mardon from claiming for the loss of it. Esso freely acknowledge this. He relied particularly on Clark v. Kirby Smith (1964) Chancery 507 where Mr. Justice Plowman held that the liability of a solicitor for negligence was a liability in contract and not in tort, following the observations of Sir Wilfred Greene, the Master of the Rolls, in Groom v. Crocker (1939) 1 King’s Bench 206. The claim for loss of profits is, in my opinion, virtually incapable of proof, and I will not deal with that. You can rely upon it as being a sound forecast of what the service station should do. It holds that a statement of opinion can represent that one knows certain facts, and therefore one may have still made a misrepresentation. They knew the facts. Lord Denning distinguished it … It bears no better appearance in a Court of Law despite Mr. Ross-Munro’ s able and urbane presentation of the case for Esso. They called it the “e.a.c.”. The Judge’s conclusion that they could so claim erred in law. misrepresentation false statement bisset wilkinson  ac 177 privy council the claimant purchased piece of farm land to use as sheep farm. Mardon was told that Esso estimated that the throughput of the Eastbank Street site, in its third year of operation, would amount to 200,000 gallons a year. Mr. Mardon also claimed damages for having to sell his house to pay off the overdraft. Esso Petroleum Co. Ltd. v Mardon: When is a misstatement not a misrepresentation? With great respect, I think that in formulating the first of these reasons the learned judge misled himself. It is a reasonable inference that Esso would never have proceeded with the purchase and development of this site if the e.a.c. They knew the throughput of comparable stations. He contended that where the negotiations between the parties concerned actually culminate in a contract between them they cannot look outside that contract in the assertion of any claim by one against the other which is founded on the subject matter of the negotiations and of the contract. There was, therefore, no place in their relationship for Hedley Byrne, which was solely a liability in tort. Another form of it which appears in the judgment of Mr. Justice Wills in Best v. Edwards ( 1895) 60 J.P., 9. which was cited with approval by A.L. Where the contract is entirely oral, the difficulties are less, but where it has been reduced to writing the common law’s mistrust of oral evidence, particularly of the parties themselves, and its reluctance to impugn the certainty of the written word, comes into conflict with the principle that the law should so far as possible give effect to the presumed intention of the parties. So the damages in either case are to be measured by the loss he suffered. The present case is exceptional in that the evidence clearly demonstrates that the e.a.c. Court The result is that Mr. Mardon is entitled to substantial damages on his counterclaim. It seems to me that the losses after 1st September 1964, can be attributed to the original mis-statement, just as those before. ____________________. The fact was that this assessment of 200,000 gallons was reasonable when it was made; unfortunately, the plaintiffs never revised it in the light of subsequent developments which made it quite unrealistic. It was the yardstick (the e.a.c.) Mardon Denning MR and Ormrod and Shaw LJJ By that time his overdraft stood at £7,774 and his creditors stood at £2,716 as set out in Schedule 1 of the Defence and Counterclaim. It is very different from the Hew Zealand case where the land had never been used as a sheep-farm and both parties were equally able to form an opinion as to its carrying capacity – see particularly 1927 Appeal Cases at pages 183-4. See Hedley Byrne v Heller as an example of this. Davidson v Scottish Ministers (No.2)  April 17, 2020 Williams v Roffey Bros & Nicholls (Contractors) Ltd  April 16, 2020 Holwell Securities Ltd v Hughes  April 14, 2020 Esso Petroleum Co. Ltd v Mardon  However, building regulations made them put the pumps on the back of the property. Esso Petroleum v Mardon QB 801 Court of Appeal Mr Mardon entered a tenancy agreement with Esso Petroleum in respect of a new Petrol station. They found a vacant site which was very suitable. The award rests on three basic conclusions, all of which have been challenged by Mr. Hall, Q.C., on behalf of the appellant in an able and most helpful argument. He, therefore, took September, 1964 as the “cut-off point”. He lost more and more money over it. It would take him some time to do this. 4 sections attracts criminal liability, therefore a higher burden of proof rests on the prosecuting party. It would follow that, notwithstanding the fact that one party to the negotiations induced the other by a negligent misrepresentation to enter into the contract, the other would have no remedy unless one were available under the Misrepresentation Act, 1967. They also had a wealth of experience from which it was to be expected they could evolve a sound and trustworthy estimate of the potential of a given filling station. The rent proposed was £1,231, exclusive of the proposed showroom. It is true that by this time the truth was known – that the throughput was very far short of 200,000 gallons – but nevertheless, the effect of the original mis-statement was still there. His case was that the plaintiffs, through Mr. Leitch and Mr. Allen, had, by implication warranted that on a careful assessment they, that is Esso Petroleum Co. Ltd., had estimated the throughput of this service station at 200,000 gallons in the third year. Mr. Allen telexed to his superiors on several occasions pressing for a decision. Esso Petroleum Co Ltd v Mardon  EWCA Civ 4 is an English contract law case, concerning misrepresentation. In this case they estimated that the throughput of petrol would reach 200,000 gallons a year by the second year after development. There can be no doubt about it. Esso Petroleum Co Ltd v Mardon EWCA Civ 4 is an English contract law case, concerning misrepresentation. Now for the new agreement of 1st September, 1964. (Transcript of the Shorthand Notes of the Association of Official : 10 Law School Mooting Tips - … In order to escape from that rule, the pleader used to allege -I often did it myself – that the misrepresentation was fraudulent, or alternatively a collateral warranty. Do parties with special knowledge have to take care when giving “guarantees” in contract? In the three years from April, 1963 to April, 1966 they amounted to 58,375 gallons, 83,306 gallons and 86,502 gallons respectively. By September 1964, the breach of contract or of duty was clear to all concerned. That put him out of business as a petrol station. By September, 1964 all the capital which had gone into the business had been lost. They were in a much better position than Mr. Mardon to make a forecast. The essential issue was whether or not the representations which at the trial it was admitted had been made gave rise to a warranty as to the capacity of the filling station. In this regard I would differ from the finding of the learned judge below in holding as he did that no warranty was given by Esso. The new arrangement so far from being unrelated to the original agreement, offered a reasonable means of mitigating the damage and loss which Mr. Mardon had sustained through Esso’s default in regard to the first contract. I remember scores of cases of that kind, especially on the sale of a business. LORD JUSTICE ORMROD: I agree. On the loss of capital and overdraft, we think he ought to be able to recover that. What was the purpose of making the representation and might it influence the outcome of what was in negotiation between the parties? It was to all intents and purposes his and his wife’s money. The effect on Mr. Mardon was catastrophic. Breach of warranty: The warranty relied upon as pleaded in paragraph 6 of the Defence and Counterclaim was that Mr. Leitch and later Mr. Allen on behalf of Esso, had informed Mr. Mardon that this service station “had a potential throughput of about 200,000 to 250,000 gallons per annum after a couple of years”. His drawings from the business were only £159 because he lived on other resources. A representation of fact is much more likely to be intended to have contractual effect than a statement of opinion; so it is much easier to infer that in the former case it was so intended, and more difficult in the latter. Yet, when the accounts were taken for the first fifteen months, the throughput was only 78,000 gallons. He also suffered in health by reason of all the worry over this disaster, and was off work. There has been serious delay in bringing this action to trial which has made matters worse than they might have been. of 200,000 gallons. Esso was successful at trial which Mardon appealed. Moreover it was a warranted pup so that Esso are in breach of warranty and liable in damages accordingly. Had I taken the same view as Mr, Justice Lawson on the warranty point I would certainly have held, with him, that Mr. Mardon had proved his case in negligence. They built the station “back to front”. They recognised, too late, that the prospects of this service station had been ruined by compliance with the planning requirements of the Southport Corporation which prevented them from placing the pumps on the street frontage to Eastbank Street, and required them to be sited behind the showrooms and, therefore, largely out of sight of the heavy traffic using Bastbank Street. Lord Denning, Master of the Rolls, in Dick Bentley Productions Ltd., v. 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