Morin v Bonhams & Brooks Ltd & Anor

On 21 May 2001 the Claimant, Thierry Morin, attended an auction of historic motor cars and collectors’ watches held in Monaco at the Exposition de la Collection de Voitures Anciennes de S.A.S. le Prince de Monaco, and organised by the Second Defendant, Bonhams & Brooks S.A.M. (“B&B Monaco”). M Morin successfully bid FF4,888,200 (equivalent to about £480,000), including buyer’s commission, for Lot 245, a 1959 Ferrari 410 Superamerica Series III coupe with coachwork by Pinin Farina (“The Ferrari”). This was a record sale price. After he had got the car back to England, he was advised by Paul Grist, an expert in the restoration of historic motor cars, that the odometer reading of 16,000 kms was false and that the car had probably covered nearer 200,000 kms. In short, it appeared that the car had been “clocked”.

On 19 March 2002, Mr Justice David Steel gave M Morin permission to issue a claim form against Bonhams & Brooks Limited (“B&B London”) and B&B Monaco, and to serve B&B Monaco by personal service on B&B London at their Knightsbridge office. The Claim Form sought the following substantive relief against both defendants.

“rescission of the contract by reason of a misrepresentation made by the First Defendant and/or the Second Defendant alternatively damages in lieu of rescission and an indemnity for costs and expenses and/or damages under s.2(1) of the Misrepresentation Act 1967 and/or at common law.”

Mr Justice Steel has since clarified that the Order he granted did not constitute permission to serve out of the jurisdiction, as this did not appear to be sought. The Defendants had in the meantime applied to the Court, inter alia, to set aside service on B&B Monaco and to stay the proceedings against B&B London. As a result of the clarification of the Order, the parties are agreed that service on B&B Monaco cannot stand unless permission is given to serve B&B Monaco out of the jurisdiction. I therefore have before me (effectively) two applications:

I must now explain more about the background to this case and the facts which are agreed or clearly proved at this interim stage.

B&B London and B&B Monaco are both members of the Bonhams & Brooks group of companies, the well known auctioneers. B&B London is an English company and the parent company within the Bonhams group. B&B Monaco is the Monegasque subsidiary of B&B London formed in 1992 to allow the Bonhams group to conduct auctions in Monaco. It was a condition imposed by the Monegasque authorities that auctions in Monaco were conducted by a Monegasque company. All motor car auctions, including those held in Monaco, are organised under the supervision of Bonhams & Brooks Europe SA (“B&B Europe”), a Swiss subsidiary of B&B London.

Each year, B& B Monaco and B&B Europe organise a “Les Grands Marques” sale in Monaco coinciding with the Monaco F1 Grand Prix. In 2001 the auction took place on 21 May. Among the lots submitted was the Ferrari by Herr Mayerhoffer, an Austrian citizen who had owned it since 1960. B&B Monaco agreed to include the car in the auction as lot 245. A key selling point was the low mileage which, it was represented, the Ferrari had covered.

A catalogue was prepared by B&B Europe in Geneva and printed in London. The printers distributed the catalogue world-wide; they sent copies to the various B&B Group offices, including B&B London. The glossy Catalogue had the B&B Group logo on the front cover. The opening text was as follows:

“A SALE OF IMPORTANT HISTORIC MOTOR CARS, FINE AUTOMOBILIA AND COLLECTORS’ WATCHES 3.00PM AND 6.00PM

Under the jurisdiction of Maître Marie-Thérèse Escaut-Marquet Huissier in Monaco to be sold at auction by Bonhams & Brooks S.A.M., Monaco. Simon Kidston, Robert Brooks, Anthony Maclean.

There followed “Important Information for Buyers and Sellers”, which included the following information:

“General Information.

Bonhams & Brooks’ bank details are as follows:

Crédit du Nord, 27, Avenue de la Costa, Park Palace MC-98000, Monaco.

..

Bidder registration.

Ti recognise bidders during the Sale all intending buyers are required to complete and sign a Bidder Registration Form giving full identification and appropriate references before the sale which will enable them to bid by means of a number allocated to them. Bidders are only permitted to bid when they have been allocated an identification number and are in possession of a sale catalogue which contains the conditions of this sale. Bidders should note that this sale is expressly held on, and subject, to, the Conditions of the Sale in the auction catalogue which each bidder, by making a bid, automatically acknowledges that he or she has read, understood and accepted.”

The conditions of sale were printed in the catalogue. They included the following terms:

“Notice and conditions of Sale

GENERAL CONDITIONS

These conditions apply to all Sales by Bonhams & Brooks in Monaco and shall apply mutatis mutandis to any sale by private treaty.

1.

In these Conditions to following words and expressions shall have the following meanings:

1.1

“Bonhams & Brooks” means Bonhams & Brooks SAM.

…

2.

Bonhams & Brooks sells as agent for the Seller and is not responsible for any act of default by the Sellor or Buyer.

3.

Whilst every effort has been made to ensure the accuracy of the description of each Lot in any Catalogue, Bonhams & Brooks does not warrant that such description is accurate. All statements whether printed in the Catalogue or made orally as to without limitation, the authenticity, provenance, origin, age, date, condition, estimated selling price, or quality of any Lot are statements of opinion only and neither Bonhams & Brooks nor its employees or agents will be responsible for the accuracy of any opinion given.

…

9.9.1

All transactions to which these Conditions apply and all matters conect6ed therewith shall be governed by Monegasque law and all parties concerned submit to the non-exclusive jurisdiction of the Monegasque courts.

…

BUYERS’ CONDITIONS

20.

Bidder Registration.

20.1

Any person wishing to bid shall prior to the Sale, obtain from Bonhams & Brooks a “Bidder Registration Form”. Such person shall also give to Bonhams & Brooks all relevant details regarding his identity together with his banking details and shall hand to Bonhams & Brooks a formal document of identity. The form must be completed, signed and dated and handed to Bonhams & Brooks prior to the sale and a registration number will be given to each potential bidder. Bidders are only permitted to bid when they have been allocated an identification number and are in possession of a sale catalogue which contains the condition of this sale. Bidders should note that this sale is expressly held on, and subject to, the Conditions of sale in the sales catalogue which each bidder, by making a bid, automatically, acknowledges that he or she has read, understood and accepted. [emphasis as in original]

21.

The Huissier

21.1

The Sale shall be conducted by the Huissier in Monaco, who will accept the successful bids, ensure that the bids are properly made and generally maintain order at the sale.

…

27.

Catalogue Descriptions

The description and the information contained in the catalogue are given for guidance only and neither Bonhams & Brooks nor the Huissier guarantee their accuracy. Lots are sold at the Buyer’s risk and no warranty is given as to the description, the origin, the date, the age, the provenance, the genuineness or the hidden defects of any Lot. The Lots are sold in the state in which they are at the time of the sale and no claim may be brought against the Huissier or Bonhams & Brooks in respect of any undisclosed fault or defect whatsoever affecting the purchased Lot. Prospective bidders must be responsible for checking, prior to the auction and during the public examination of the Lots to be sold, the state, the quality and the genuineness of such Lots.

…

29.

Bonhams & Brooks as Principal

Bonhams & Brooks act as agent for its principal who has authorised it to sell one or more Lots. In such capacity neither Bonhams & Brooks nor the Huissier will be party to any contract which binds their principal, the Seller, to the Buyer. Bonhams & Brooks and the Huissier do not accept any liability if one of the parties to the contract fails to fulfil any of the obligations.”

M Morin, a French national resident in London is an antique furniture dealer, with a private interest in historic cars. In 2001 he was already the owner of a 1960 Maserati Tipo. Having learned of the auction, M Morin contacted B&B London in April 2001 and requested a copy of the catalogue which was duly posted to him, arriving at his London home on about 6 May. Lot 245 was described as follows:

“One Owner since 1960

1959 FERRARI 410 SUPERAMERICA

SERIES III COUPE

COACHWORK BY PININ FARINA

Chassis No. 1265 SA

Engine No. 1265 SA

The mighty Ferrari 410 Superamerica was in its day one of the fastest and most potent of all contemporary supercars. Its performance remains stunning even today; when tested by the American motoring journal Road & Track in 1962, it recorded a maximum speed of 165mph, 0-60mph in 6.6 seconds and 0-100mph in 14.5 seconds.

…

Second of the twelve 410 Series III Superamerica built, chassis number ‘1265SA’ was clothed with elegant, covered headlamp coachwork by Pinin Farina and was exhibited by the factory at the 19^th annual Geneva Salon in March 1959. The car was then delivered to official importer Auto Becker, of Düsseldorf, Germany, being intended for VIP client Helmut Horten, owner of the Kauthof department store chain. It appears that, Horten never took delivery of the car and it remained at Auto Becker for sale until 1960 when Auto Becker sold ‘1265 SA’ to its current owner, who has cherished it for the past 41 years.

The car was first registered on 23^rd December 1960. Later that decade saw it at Maranello for an engine overhaul no further major work being necessary until 1989 when Denzel in Vienna carried out another overhaul. Use has always been sparing, and total mileage covered from new by this ultra-rare, virtually one owner Ferrari is a mere 16.626 km.

Its condition reflects the mileage and sympathetic maintenance –not over-restoration. The coachwork is finished in the original Grigio Platinato (platinum grey) with Marrone Colorado (tan) leather upholstery, and the car has Austrian papers. We doubt there is another with a similar provenance and mileage in existence.”

Having read the catalogue, M Morin telephoned B&B London and asked about the estimated sale price of the Ferrari. He was told that the estimate was US$400-500,000. He decided to attend the auction.

He travelled to Monaco on 19 May and on that day and the next he was able to inspect the Ferrari. He was not allowed to start the engine or to drive the car. He had no qualified mechanic or restoration expert with him. On 20 May he was provided with a short condition report about the Ferrari. This did not mention the kilometerage. It stated that, from an overall impression, the car was extremely well presented and very good looking. Overall the car was extremely sound. The report concluded:

“Please note that this condition report is given in our opinion, representing our views only. Any bid made is not reliant on any description given in the catalogue or elsewhere.”

The next day, M Morin attended the auction with a copy of the catalogue. He would not have gained access to the auction unless he either had a catalogue with him, or he had purchased one on arrival. As indicated in the General Information about bidder registrant and clause 20 of the conditions of sale, he was also required to sign a bidder registration form. On this form he gave information about his name and address, and confirmation of his identity by reference to his Visa card. He confirmed that he was buying as a private individual, and he signed the form immediately below the following printed statement:

“I UNDERSTAND THAT PREMIUM PLUS VAT AS LAID OUT IN THE TERMS AND CONDITIONS OF SALE WILL BE CHARGED ON THE HAMMER PRICE. I CONFIRM THAT I HAVE READ, FULLY UNDERSTAND AND AGREE TO BE BOUND BY THE CONDITIONS OF SALE PRINTED IN THE CATALOGUE AND THE SECTION “GENERAL INFORMATION”. I FURTHER CONFIRM THAT I HAVE MYSELF INSPECTED OR HAD INSPECTED FOR ME BY MY REPRESENTATIVE ALL LOTS FOR WHICH I WILL BID AND THAT I WILL BE MAKING ANY BID ON THE BASIS OF SUCH INSPECTION AND NOT ON THE BASIS OF ANY DESCRIPTION, WARRANTY OR REPRESENTATION IN THE CATALOGUE OR ELSEWHERE MADE OR GIVEN BY BONHAMS & BROOKS SAM OR THE SELLER OR ANY LOT OR BY THEIR RESPECTIVE AGENTS OR EMPLOYEES.”

M Morin was then provided with a bidding paddle no. 706 and permitted to join the auction, which was supervised by a Monegasque Huissier, an official whose role might be translated as that of a public bailiff. When lot 245 was reached, a fierce bidding battle took place between M Morin and a telephone bidder from the United States. In the event, as I have recorded the Ferrari was knocked down to M Morin at a price, including buyer’s commission, of FF4,888,200. After the auction “B&B” – the group company was not identified as such – issued a press release in London boasting of the success of the sale and recording as the most remarkable result the price achieved for the Ferrari “with only 16,000 kms covered from new”.

M Morin arranged for payment to be effected to B&B Monaco’s account at Credit du Nord in Monaco. He was then provided with a document headed “Bill of Sale” issued by B&B Monaco; it was really an invoice. M Morin made arrangements for the car to be transported back to England. It was sent to Traction Seabert & Co Ltd, where it was examined by Mr Grist. He reported that at first glance the Ferrari was in extremely good condition and would justify the kilometre reading of 16,000 kms. However, the mechanical wear and the problems apparent once the car was driven led Mr Grist to state that he was certain that the kilometres the card had run were much higher. He has since estimated 200,000 kilometres.

M Morin took this up with B&B London. The vendor, Herr Mayerhoffer was approached by Mr Kidston a director of B&B London, B&B Europe and B&B Monaco. Herr Mayerhoffer replied “The mileage refers to the period after the complete engine overhaul, which was carried out in Maranello in 1969” the letter did not attempt to explain why the odometer reading had been changed in 1969, or how it was that the car came to be described in the auction catalogue as having “a total mileage covered from new .. [of] a mere 16,626 km”.

In the Particulars of Claim, M Morin contends that the brochure misrepresented the kilometerage of the car and he contends that this misrepresentation was made by B&B London and/or B&B Monaco, that he relied upon it and was induced by it to purchase the car. He alleges that B&B London and/or B&B Monaco assumed responsibility towards him and that each owed him a duty of care to ensure the accuracy of statements as to the car’s description, including the representation about kilometerage. As already recorded, he seeks rescission of “the Contract” (defined as the contract for the sale of the car), alternatively damages in lieu of rescission under s.2(2) of the Misrepresentation Act 1967. In the alternative he claims damages under s.2(1) of the 1967 Act and/or for breach of the common law duty of care. He complains that B&B London and/or B&B Monaco failed to make adequate inquiry into the accuracy of the representation or to take any adequate steps to verify the representation, including seeking supporting evidence. The main claims for damages is equivalent to the purchase price of the car. Additionally, he claims some costs and expenses, such as transport and insurance - all those claimed were incurred after the purchase of the car.

M Morin was of course entitled as of right to serve B&B London with the proceedings in London, as he did. In order to justify service on B&B Monaco out of the jurisdiction, he invoked CPR Part 6.20 and relied on:

The debate before me was wide-ranging but the main issues which I have to resolve are as follows:

However, before I consider these issues, I must first deal with several important preliminary points raised by counsel.

First, the argument was advanced by Mr Houseman that the conditions of sale set out in the catalogue were not incorporated into any agreement between M Morin and B&B Monaco. He relies on M Morin’s evidence given through his solicitor, Mr Adshead, that, although M Morin now accepts that he must have signed the bidder registration form, he has no recollection of it. His recollection was that when he got to the auction, time was short. There was a queue and when he reached the front, he quickly signed the form he was required to sign and entered the auction. The reference to the conditions was in small print and he does not recall seeing it at the time. Mr Houseman’s submission was that M Morin did not agree to the conditions of sale “in any meaningful sense”.

In my judgment, it is quite clear that M Morin did agree to the conditions of sale and any argument to the contrary stands no reasonable prospects of success. M Morin as an antique dealer was, I am sure, very familiar with the fact that auctioneers’ catalogues invariably set out conditions of sale. He had plenty of time to look at them. That would be enough in English law for the sale conditions to apply as between the vendor, the buyer and the auction house: see Parker v South Eastern Railway Co. (1877) 2 CPD 416, 423. But his signature of the bidder registration form puts the matter beyond doubt. The signature appears immediately below the passage I have quoted above. The typeface is not that small, it is in capital letters and (even in the rather poor photocopy provided to me) it is perfectly legible. M Morin cannot have been in any doubt that he was being asked to agree to something. Even if he did not trouble to read the agreement, he is bound by its terms: Parker at p.421 and the cases cited by Chitty at para. 12-002.

Given that the putative law of the contract is Monegasque, it would be a matter for that law whether the contract was concluded on the terms of the conditions: Article 8.1 of the Rome Convention. In unchallenged evidence, Jean-Charles Gardetto, a member of the Monaco Bar, expresses the view that by singing the bidder registration form, M Morin could be considered as having implicitly accepted the terms set out in the catalogue. I accept that evidence.

M Morin is habitually resident in London, so he could invoke Art 8.2 of the Rome Convention to rely on English law to establish that he did not consent, if it appeared from the circumstances that it would not be reasonable to determine the effect of his conduct in accordance with Monegasque law. I cannot see why it is unreasonable to determine the effect of M Morin’s conduct in Monaco in accordance with Monegasque law (and Mr Houseman did not so submit), and in any event for the reason I have given, English law would also determine that M Morin had agreed to the conditions.

It follows in my judgment that M Morin agreed to the sale conditions, which included a choice of Monegasque law. That choice of law is effective under Article 3.1 of the Rome Convention.

Second Mr Houseman argued that B&B London and B&B Monaco represented themselves as part of one and the same entity, for the purpose of making the representations which led to M Morin’s loss. He described them as a “homogeneous” entity. Of course, B&B London and B&B Monaco are members of the same group of companies and were held out as such. I cannot see any basis for an argument that they were held out as the same legal entity or that the Court should in some way pierce the corporate veil. Mr Adshead claimed that no dividing line was ever pointed out to M Morin between the two companies. I accept that there may have been occasions when there was a failure to separate B&B Monaco from B&B London, perhaps most strikingly in the press release issued after the auction, but in my judgment, it was made perfectly plain in the auction catalogue and in the sale conditions that it was B&B Monaco that was conducing the auction. It does not matter why they were conducting the auction – e.g. because the Monegasque authorities required it. The simple fact is that B&B Monaco was the auctioneer and this was made quite clear to M Morin. In my judgment, M Morin cannot seriously content that B&B London and B&B Monaco should be treated as one entity. There is no suggestion that B&B Monaco should be treated as conducting the auction as agent for B&B London and there is no evidential basis for any such suggestion.

I therefore conclude that B&B London and B&B Monaco must be treated as different legal entities and that the claims against each of them must be separately analysed in their own right.

Third, Mr Matthew Parker, who appeared for both Defendants, argues that B&B London were also entitled to rely on the sale conditions in the auction catalogue. I disagree. They are separate from B&B Monaco and they were not a party to that contract which was a tripartite contract between B&B Monaco, M Morin and Herr Mayerhoffer.

The Claims against both Defendants are tortuous in character, although the claims under the Misrepresentation Act 1967 clearly have close contractual connections, especially insofar as rescission of the contract is sought. Part III of the Private International Law (Miscellaneous Provisions) Act 1995 abolished the old double actionability rule and applied new rules to be used for determining issues relating to tort. Sections 11 and 12 provide as follows:

As regards B&B Monaco, the parties agreed that the events constituting the alleged torts occurred in different countries, so that s. 11(2)(c) applies, but they differed as to the country in which the most significant elements of those events occurred.

Mr Houseman, relying on Diamond v Bank of London [1979] QB 333 and Ennstone Building Products Ltd v Stanger Ltd [2002] EWCA Civ 916; [2002] 1 WLR 3059, 3070-72 argued that the misrepresentation occurred in London where it was received and acted upon. Significant loss was caused in England. It was irrelevant in considering the law of the tort that the related contract was governed by Monegasque law: see Base Metal Trading Ltd v Shamurin (Unrep Moore-Bick J 21 Nov 2001). The most significant elements of the tort occurred in England.

Mr Parker submitted on the contrary the most significant elements of the alleged torts occurred in Monaco. The representation was a continuing one up until the contract was concluded. The principal act of reliance occurred in Monaco when M Morin made his successful bid for the car. All or almost all the damage occurred in Monaco. The torts were closely connected with a contract concluded in and subject to Monegasque law. By that contract the parties had agreed that “all transactions to which these Conditions apply and all matters connected therewith shall be governed by Monegasque law”.

The first question is whether, under section 11 of the 1995 Act, it is possible for the parties to make a choice of applicable law. If it were possible, I would conclude that representations made which induced the making of the contract were matters connected with the contract and that the parties had chosen to apply Monegasque law. However in my judgment the general rule requires the Court to look to the country where the most significant element of the events constituting the tort occurred. A choice of law clause has nothing to do with the events constituting a tort. It may be that at the section 12 stage a choice of law by the parties might make it substantially more appropriate for the applicable law to be that chosen by the parties, but in my judgment, the Court must first apply the general rule, before deciding whether it would be appropriate to depart from it.

Diamond and Ennstone were both cases decided in relation to the law as it was prior to the 1995 Act. In Protea Leasing Ltd v Royal Air Cambridge Ltd [2002] EWHC 2731 (Comm); The Times 13 Jan 2003 at §78, Moore-Bick J said:

“For my own part I would be cautious about turning too readily to the earlier authorities for assistance with this problem. The 1995 Act establishes a new set of principles which makes it unnecessary for the Court to identify a single country in which the tort was “in substance” committed. Section 11(2)(c) only requires the court to identify the country in which the most significant element of the events constituting the tort occurred. That seems to me to be a much more flexible principle and one which might yield different answers in different cases even in relation to the same kind of tort.”

In my judgment this note of caution is well sounded. The issue under the 1995 Act is not the same as that, for instances, in Diamond where the question under RSC Order 11 r.1(1)(h) was whether the claim was founded on a tort committed within the jurisdiction. I would add that the facts in that case were significantly different from this case. As Lord Denning stated at p.346A-C of his judgment, the misrepresentations were received by telex in London and acted upon there.

In this case, the representation was first made in London when B&B London sent the catalogue prepared for B&B Monaco to M Morin at his London home, but it was a continuing representation which operated right up to the moment when the contract was made in Monaco on the fall of the hammer. Although M Morin may have relied on the representation when he decided to travel to Monaco, that was a relatively minor act of reliance involving modest expenditure, which does not even feature in the claim for damages. The crucial act of reliance occurred when M Morin decided to make his successful bid at the auction in Monaco. It was there that M Morin sustained the vast bulk of his damage by purchasing a car for a price that was excessive, and probably very excessive, given its true kilometerage. The incidental expenses sustained later in England and claimed in the Schedules to the Particulars of Claim amount to a few thousand pounds and are trivial by comparison.

In my judgment by far and away the most significant elements of the events constituting the torts occurred in Monaco and I conclude that applying the general rule, the applicable law of the alleged torts committed by B&B Monaco is Monegasque law.

Mr Parker submitted that, if I decided that the general rule would apply English law, nevertheless applying section 12 the general rule was displaced because it was substantially more appropriate for Monegasque law to determine the issues in the case in the light of the choice of law clause. In view of my findings, that issue does not arise. I have not heard full argument on what is a novel and difficult point and I prefer to express no views on it.

Neither party suggested that the pleaded torts (misrepresentation and breach of duty of care) committed by B&B London were governed by any system of law other than English law, and I think that must be right. B&B London’s acts all took place in London and the essential communication to M Morin occurred in London. Although almost all the loss allege to have been sustained occurred in Monaco, applying section 11(2) of the 1995 Act I would hold that, as between M Morin and B&B London, the most significant elements of the events constituting these torts occurred in England and that English law applies.

In his skeleton argument, Mr Houseman introduced a further case that B&B London and B&B Monaco were joint tortfeasors in furtherance of a common design, which he defined as the promotion of the auction with a view to generating income for the Group. In considering which law is the applicable law and applying the general rule, where claims are made against joint tortfeasors the court must look at the events concerning both alleged tortfeasors. It must be inevitable that the same law applies to both tortfeasors. For the same reasons as I have adumbrated in §§35-36 above, I conclude that, applying the general rule, the applicable law of the joint torts allegedly committed by B&B Monaco and B&B London is Monegasque.

I first consider the claims under the Misrepresentation Act 1967. Mr Parker submitted that these claims had no prospect of success. Claims could only be made under the Act against the other contracting party. Although M Morin sought as against B&B London rescission of “the Contract”, B&B London was not party to any contract with M Morin. Mr Houseman did not really seek to challenge this argument.

M Morin seeks to rescind the sale of contract with a view to getting the return of the purchase price. B&B London were not a party to the sale contract and I do not see how a rescission of the sale contract made between Herr Mayerhoffer and M Morin on the fall of the hammer could be ordered in proceedings against B&B London.

Section 2(1) applies where a person has entered into a contract after a misrepresentation has been made by another party thereto and it enables the contracting party to recover damages from the person making the representation. Section 2(2) applies where a person has entered into a contract after a misrepresentation has been made, and it enables the Court to declare a contract subsisting despite the misrepresentation and to award damages in lieu, if it is equitable to do so. In Resolute Maritime Inc v Nippon Kaiji Kyokai [1983] 1 WLR 857, Mustill J (as he then was) held that the remedies under the Act applied only against the other contracting party. His reasoning (at pp. 860-1) was as follows:

“The key is, in my view, to be found by looking at the position of the principal, in a case where he has authorised his agent to make the representation, and had no reasonable grounds to believe that the representation was true. Common sense suggests that if anyone is liable under a statute concerned with representations inducing a contract, it ought to be a principal as party to the contract. That this is, indeed, the case is shown by section 2(3), which contemplates that credit will be given as between the recoveries under subsections (1) and (2): and these relate to liabilities of the same person, as witness the words “he” and “His”. The liabilities under section “(2) must attach to the principal, for they are conferred as an alternative to rescission, a remedy which is available only against a party to the contract. It follows, therefore, and the word “person” in section 2(1) must be read as including the principal.

It may, however, be objected that even if this is so, there is still room to read section 2(1) as creating an additional liability in the agent. I do not agree. The Act is concerned with representations made in the particular context of a contract, and it seems to me that it was aimed at the position of the parties to the contract. It was therefore natural that there should be created under subsections (1) and (2) rights which are prima facie absolute, and independent of any general duty of care, a concept which plays no part in the law of contract. The purpose of the Act was to fill a gap which existed, or was believed to exist, in the remedies of one contracting party for an innocent representation by the other. But there was no such gap in the case of the agent; he was already subject to the ordinary liabilities in fraud and negligence, the doctrine of Hedley Byrne & Co Ltd v Heller & Partners Ltd. [1964] AC 465 having been recognised before the Act was passed. What purpose would there be in creating an entirely new absolute liability, independent of proof that the representee fell within the scope of a duty of care, simply because the representor happened to be an agent, concerned in the making of a contract, but not himself a party to it? I can see none; and, since, as I have suggested, the words of section 2(1) must be read as extending to the principal, I consider that their operation should be confined to him alone.

In arriving at this conclusion, I recognised that the opposite view has been expressed in the current editions of Chitty on Contracts, 25^th ed, (1983). Para. 379, and Spencer Bower & Turner, Actionable Misrepresentations 3^rd ed. (1974), p. 178. I can only say that this is the kind of short point on which opinions may very well differ, and having reached my own I must put in into effect by answering the issue: “No, the thirteenth and fourteenth defendants cannot in law be liable to the first or second plaintiffs hereto, by reason of section 2(1) of the Misrepresentation Act 1967.”

Chitty (28^th ed at para 6-076) has long since recanted and I respectfully agree with Mustill J. It follows that in my judgment the claims to rescind the contract and for damages under s.2 of the 1967 Act have no reasonable prospect of success against B&B London. That leaves open the claim for common law damages to which I now turn.

The question is whether B&B London owed any duty to M Morin to exercise reasonable skill and care in the description of the Ferrari. This depends on whether objectively there was a special relationship between M Morin and B&B London, whereby B&B London assumed responsibility to M Morin – see Lord Reid in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465:

“So it seems to me that there is good sense behind our present law that in general an innocent but negligent misrepresentation gives no cause of action. There must be something more than the m ere misstatement. I therefore turn to the authorities to see what more is required. The mot natural requirement would be that expressly or by implication from the circumstances the speaker or writer has undertaken some responsibility …[Lord Reid at p.483]

[Lord Haldane] speaks of other general relationships, and I can see no logical stopping place short of all those relationships where it is plain tat the party seeking information or advice was trusting the other to exercise such a degree of care as the circumstances required, where it was reasonable for him to do that, and where the other gave the information or advice when he knew or ought to have known that the inquirer was relying on him. I say “ought to have known” because in questions of negligence we now apply the objective standard of what the reasonable man would have done.

A reasonable man, knowing that he was being trusted or that his skill and judgment were being relied on, would, I think, have three courses open to him. He could keep silent or decline to give the information or advice sought: or he could give an answer with a clear qualification that he accepted no responsibility for it or that it was given without that reflection or inquiry which a careful answer would require: or he could simply answer without any such qualification. If he chooses to adopt the last course he must, I think, be held to have accepted some responsibility for his answer being given carefully, or to have accepted a relationship with the inquirer which requires him to exercise such care as the circumstances require. “[ibid at p.486]

and also Lord Morris at p.502, Lord Hodson at p.511, Lord Devlin at pp.528-529, Lord Pearce at p.53, and Lord Steyn in Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830, 834-835.

Here the assumption of responsibility by B&B London is said to flow from the fact that, at M Morin’s request, they sent him a copy of the catalogue and later told him the estimated sale price of the Ferrari. This seems to me to be a very frail foundation indeed for an argument that B&B London entered into a special relationship with M Morin and assumed responsibility to him for the description of the Ferrari. It was made quite clear by the catalogue itself that it had been prepared by B&B Monaco who were named as the auctioneers. As was discussed in argument, it is common practice for local offices of the international auctioneers to stock catalogues for the various forthcoming auctions being organised by members of the group taking place throughout the world. I cannot accept that, without more, this amounts to an assumption of responsibility by the local office or member of the group. On the contrary, in my judgment the local office/member of the group is undertaking a merely ministerial role in distributing catalogues to those who ask for them. It is not thereby adding its imprimatur to the catalogue description. Put another way, I do not consider that it could be reasonably supposed that the local office/member had undertaken any role in the description of the lots in the catalogue or that it could have formed any view whether those descriptions were correct. There would need to be more before it could be said that there was a special relationship from which a duty of care flowed. A request for a confirmation of a particular description in the catalogue followed by a confirmation would suffice; a request for the sale price estimate does not.

It follows in my judgment that although it is a low threshold test – De Molestina v Panton [2002] 1 Lloyd’s Reps 271, 281 – M Morin does not have a reasonably arguable case against B&B London that they owed him a duty of care.

I shall consider the joint tortfeasor case after I have considered the case against B&B Monaco.

In his first opinion, M Jean-Charles Gardetto states that if an agent has duly informed the contractor that it only acted in its capacity as an agent, it could not be held to be contractually liable, although it could be held liable based on torts. In his second opinion, given after the nature of M Morin’s case had become clearer, he said the alleged misrepresentations made by B&B Monaco could give rise to an action based on breach of contract in Monegasque law but, if that were not so, the Court “would simply imply that the cause of action would be torts” on the basis of article 1229 et seq of the Civil Code. His opinion was that the alleged misrepresentations made by B&B Monaco were likely to give rise to an action based on contract rather than tort, but there would definitely exist a cause of action in case of a misrepresentation either in contract or in tort, but not both because in Monegasque law (unlike English law) there cannot be concurrent liability in contract and tort. The Court would have the power to exclude or not enforce contractual terms if a contractual provision grants to one party an excessive advantage which badly upsets the balance of mutual obligations.

So the position is that M Morin certainly has an arguable cause of action against B&B Monaco in Monesgaque law if he can establish a misrepresentation as I am satisfied he can. Because Monaco, with many Civil law jurisdictions, does not recognise concurrent liability in contract and tort, that liability will arise either in contract or in tort, but more likely in this case in contract. The provisions in the conditions of sale excluding responsibility on the part of B&B Monaco for mis-description may be struck down. The exact scope of the cause of action and the circumstances in which the Monegasque court would refuse to enforce exclusion clauses in the conditions of sale are not clear.

Given my view that the applicable law of any tort committed by B&B Monaco is Monegasque, it is academic whether he would have a claim in English law. Nevertheless, since I heard argument on this question, it is right that I summarise my view.

Mr Houseman sought to distinguish Resolute Maritime Inc v Mippon Kaiji Kyokai (supra) on the basis that B&B Monaco were, as he put it, wearing two hats: that of principal and that of agent. I accept this was so, but the relevant contract for this part of the argument is the sale contract which B&B Monaco concluded as agent on behalf of the vendor, and not as principal – on this contract it was not the other contracting party: Benton v Campbell, Parker & Co [1925] 2 KB 410, 415-416; Chelmsford Motor Auctions v Poole [1973] QB 542, 548. I am therefore satisfied that M Morin has no reasonably arguable case against B&B Monaco under the Misrepresentation Act 1967.

Mr Parker argued that in the light of the terms of the conditions of sale, B&B Monaco owed no duty of care to M Morin. Given the buyer’s premium paid by M Morin of FF 538.200 (including TVA/VAT) that is a very unattractive submission. The catalogue was prepared by B&B Monaco and gave a detailed description of the Ferrari. But for the conditions of sale, it would be a clear case for holding that there was a special relationship between B&B Monaco and M Morin whereby B&B Monaco accepted responsibility for the description in the catalogue, and for holding that B&B Monaco owed M Morin a duty of care. Mr Parker relied on the decision of Morison J in Maria Zelinger de Balkany v Christie Manson & Woods Ltd [1995] Trading Law Reports 1863. In that case the Plaintiff was held to be entitled to set aside the sale under Christie’s conditions of sale, on the basis that the picture sold in auction was forgery. The learned judge went on to consider “the very difficult question” as to whether Christie’s had any liability in tort. He concluded with obvious reluctance that Christie’s owed the Plaintiff no duty of care because they had made it reasonably clear in their conditions of sale that they had not assumed any responsibility to the buyer for the way in which the statements in the catalogue had been prepared. He concluded (on this point):

“I do not regard this conclusion as satisfactory because it means that a buyer has got nothing of substance for his premium”

Plainly this authority provides substantial ammunition for B&B Monaco to contend that they owed no duty of care to M Morin but, if English law applied, I would hold that he had surmounted the fairly low threshold of showing a reasonable prospect of success on this point for the following reasons:

For this latter reason, I would also conclude that M Morin had a reasonable prospect of showing that B&B Monaco was in breach of any duty of care.

However, these findings are only set out for the sale of completeness; they are academic in the light of my main findings.

There is no evidence before me as to how Monegasque law would approach the case advanced by M Morin that B&B Monaco and B&B London are to be treated as joint tortfeasors acting in furtherance of a common design, namely the promotion of the auction with a view to generating income for the Group. The absence of any evidence about this is due to the fat that, as I see it, this point was not pleaded but raised for the first time in Mr Houseman’s skeleton argument. It is right however that I should deal with the point and I invited supplemental written argument on the point.

The absence of any pleading also has the disadvantage that M Morin’s case is vague on this point. However on the facts pleaded, this case has no reasonable prospect of success in my judgment. The fact that B&B London agreed to distribute the auction catalogue falls far short of establishing the existence of a common design between B&B London and B&B Monaco. I accept, following Evans-Lombe J in ICS v West Bromwich Building Society [1999] Lloyd’s Rep PN 496, 538 col.2, that

“a joint enterprise, which carries with it liability to the parties to the enterprise for torts actually committed by one of their number in pursuance of it, does not have to be constituted by any sort of formal, enforceable, agreement. There need only be a “meeting of minds” to carry on the enterprise for the joint benefit of each enterprise, see Brooke v Bool and Unilever plc v Gillette per Lord Justice Mustill ibid. In particular, any such joint enterprise or “meeting of minds” need not have the effect of constituting parties to the joint enterprise agents for each other in all actions which they take for the furtherance of that enterprise”. A “secondary” party can be liable where his control over the primary actor is only the threat to withdraw from the enterprise. It is not necessary to establish that the joint enterprise included a common design to commit the tort in question. “It is enough if the parties combine to secure the doing of acts which in the event prove to be … “torts”.”

However, I do not accept that the mere distribution of the catalogue by B&B London, coupled with the fact that B&B London is B&B Monaco’s parent company, can lead to a conclusion that there was a joint enterprise between the two group companies. On the facts alleged, B&B London’s role was a merely ministerial one. The car auction enterprise was B&B Monaco’s and the distribution of the auction catalogue by B&B London does not make them party to a common design. The facts in ICS v West Bromwich Building Society which led the learned judge to conclude there was a joint enterprise were very different from these – they showed a much closer and wider joint involvement in the promotion of the home income plans between FPS, the independent financial advisers, and West Bromwich BS who were to lend the money under the plans – see p.538. The facts alleged here do not point to any meeting of minds” or joint benefit. I would add that if the facts alleged in this case were enough to create a joint enterprise, it would seem to create an easy route round Hedley Byrne and Williams line of authority.

There is a further difficulty in the way of the joint fortfeasor case. It is likely that Monegasque law will consider B&B Monaco’s liability on the basis of contract rather than tort. If that is so, there can be no prospect of treating B&B London as a joint tortfeasor.

Overall, I would hold that M Morin has no reasonable prospect of establishing that B&B London was to be treated as liable on the basis that it was a joint tortfeasor liable with B&B Monaco.

For the reasons I have already expressed, M Morin has failed to establish a good arguable case that there is a real issue between B&B London and M Morin which it is reasonable for the Court to try. He cannot invoke paragraph (3).

M Morin’s tort claim however does come with paragraphs (8)(b) on the basis that the damage sustained resulted (in part) from an act committed within the jurisdiction, that is the delivery of the catalogue. It may also be the case that some, albeit not much, of the damage sustained by M Morin was sustained within the jurisdiction, so as to fall within (8)(a).

M Morin has to establish that England is clearly the appropriate forum for the trial of the action against B&B Monaco: Spiliada Maritime Corp v Cansulex [1987] AC 460, 480-481.

In my judgment, England is not the appropriate forum for the action against B&B Monaco for the following reasons:

For these reasons I refuse permission to serve these proceedings on B&B Monaco in Monaco. Mr Parker advanced a further reason why I should decline to give permission. He drew my attention to the fact that the affidavit sworn by Mr Adshead in support of the application made without notice to David Steel J was misleading. He made 2 major criticisms of the affidavit:

Mr Adshead accepted that the Court had been misled but said in his later witness statement that there had been some unfortunate errors and he apologised to the Court. I accept that apology. I am satisfied that there was no intention to mislead the Court. Nevertheless, the witness statement was seriously misleading and, had an order been made permitting service out of the jurisdiction, I would have set it aside on the ground alone. However, as it turned out, no such order was made. M Morin has gained no substantial advantage by misleading the Court. This is not comparable to a case where a freezing order or a search order has been granted on the basis of misleading evidence. I would not have declined to permit service out because the affidavit was misleading. I prefer to reflect the Court’s strong disapproval of what has occurred in dealing with the costs of these applications.

In the light of my findings, it may be more appropriate to strike out the claim against B&B London in exercise of the Court’s inherent powers – see White Book Vol. 1 para 3.4.5 – but I will hear counsel on this. If it is not appropriate to strike out those proceedings, I will stay them under CPR Part 11. In my judgment, the claim against B&B London is very much the subsidiary claim. The forum conveniens for the claim against B&B Monaco is clearly Monaco. The claims against both companies should be heard together and at the same time, and not in separate jurisdictions. This is a much weightier factor than the fact that it may be necessary to call expert evidence before a Monegasque court about English law. The forum conveniens for the joint trial is in Monaco. It follows that, if there were an arguable claim against B&B London, the forum conveniens of that claim would be Monaco, and in my view it would be clearly and distinctly more appropriate that the claim should be tried here.