House Of Lords Before LOIRD h,LILSIIAMr, LO}D BLNESBURHt, LORD WV1RRINGTON of CLYFrE, LORID ATKIN, and JoltD TmixxmRTON. The HOUSE by a majority (Lord Hailsham and Lord Warrington dissenting) allowed this appeal from an order of the Court of Appeal (47 The Tipnes L.R., 47) affirming a judg- ment of 'Mr. Justice Wright (46 The Times L.R., 489). At all material times the appellants, Mr. Ernest Hyslop Bell and Mr. Walter Edward Snelling, were in the service of the respondents, Niger Companiy, Limited, as chairman and vice-chairmnan respectively, having accepted those positions in pursuance of two agreements made between the appellants and the respon- dents, Lever Brothers, Limited, who held a controlling interest in the Niger Company. In the spring of 1929 an amalgamation was arranged of the business of the Niger Company with the African and Eastern Trade Corpora- tion, Limited, and as the amalgamation offered no scope for the appellants, Alr. D'Arcy Cooper, who was the chairman of Lever Brothers, Limited, approached the appellants on behalf of Lever Brothers and negotiated with each of them severally to give up his position for monetary compensation. As the result of these negotiations fhe agreements of settlement were duly arrived at, the compensation agreed thereunder amounting respectively to ?30,000 and ?20,000, and the positions were given up. Lever Brothers claimed repayment of those moneys on the ground that the contracts of March, 1929, for the terminatioi of the employment of the appellants were made under a mistake of fact. Tho respondents' case was that those con- tracts were made in the belief, which was com- mnon to both parties, that the contracts of employment could not be terminated by the respondents save with the consent of the appellants and on payment of compensation; that they were made by the respondents in ignorance of the fact that the anDellants had been guilty of such breaches of contract and duty as would have given the respondents the right, w^hi,,the respondents would have exer- cised if they had known the true facts, to dis- UliSS the apuellants summarily and to termi- nate the appellants' contracts of employment without nlotice and withlout any compensation; and that the breaches of contracts aUleged were not discosed to the respondents by the appellants. The appellants denied the allegations made by the respondents except in so far as they admitted that while occupying their positions in the Niger Company, which dealt largely in cocoa, they had entered into four transactions on their own behalf. At the trial of the action before Mr. Justice Wright and a special jury the jury found that there had been no misrepresentation or con- cealment; no appropriation of contracts or of money. They found that the defendants' admitted dealings would have justified their dismissal and would have led to their dismissal. The jury also found that when Lever Brothers entered into the agreements of MIarch, 1929, they did not know of the actions of the defendants wvith regard to the four admitted transactions, and that, if they had done so, they would not have made those agreements. They further found that at interviews before the agreements were made the defendants did not have in mind their actions in respect of the four transactions. On those findings Mr. Justice Wright gsve judgment for the respondents, and his judg- ment was affirmed by the Court of Appeal (Lord Juastice Scrutton, Lord Justice Lawrence, and Lord Justice Greer). The plaintiffs appealed. Ml. Schiller, K.C., Mr. D. N. Pritt, .C., and MIr. Philip Vos appeared for the appellants; Sir J]ohn Simon. K.O., MiIr. Stuart Bevan, X.C., and M%rr. Wilfrid Lewis for the respondents. JUDGMENT LORD BLANESBuEGHt, after discussinig the facts in great detail, said that it was by the appointment of the appellants to the chairman- ship and vice-chairmanship of the Niger Com- pany that they were clothed with the necessary and only powers of management and control which they ever exercised or possessed. By Lever Brothers' agreements with them Lever Brothers were bound to maintain the appel- lants in their respective offices in the Niger Company for the prescribed term at the pre- scribed remuneraticn. The appellants in return agreed with Lever Brothers to devote the wvhole of their business hotirs and abilities to the discharge of their duties. As between the appellants and the Niger Company it was in that company's articles that their terms of service were to be found. As a result there remained nio contract by the appellants to serve Lever Brothers in a post from which Lever Brothers could dismiss tlhem. He thought that the questions sub- mitted to the jury were founded on an accept- ance of the view of Lever Brothers as to the legal position of the parties towards each other under the service agreements, and that that served to divert attention from the true posi- tion that the c!aims against the appellants in relation to the offending transactions were claims of the Niger Company only, and that the validity and extent of those claims de- pended mainly, if not exclusively, on the regulations of the Niger Company. Three questions arose on the scone of the action: (1) Was the issue of mutual mistake open to the respondents on the pleadings ? (2) If not, oujght the necessary amendments to raise it be allowed ? (3) If such amUendnments were allowed, were the respondents entitled to judgment on the issue raised bv them ? As to (1), he thought that all their Lordships were of opinion that this case of mutual mistake was not onen to the respondents on thc pleadings as they stood. The case pleaded by the respondents was on' the face of: it and froin beginnig to end a case of deliberate fraud on tle part of the appellants. In those Oircunistances, he was prepared to allow the apl)eal sclely on the ground that no case other than tleir pleaded case was open to the respondents in that House, 'and that mutual mistake had niot been pleaded. But if, con- trary to his own notions of the fitness of things, the appellants were to be put at risk by hav- ing that ouestion of mutual mistake deter- miined on existing materials, he would not Wish it to be supposed that on those materials the appellants would fail. There he found himiself in entire agreement with Lord Atkin and Lord Thankerton, whose judgments he had had the advantage of reading. They began where he was content to end, but he !ollowed them also to their goal. LORD WARRINGTON'S VIEW LORD WARRINGTON of CLYFFE (in whose judgiment LORD HAILSMAI concurred) differed. He said that in his opinion it wVas clear that each party believed that the remunerative offices, compensation for the loss of which was the subject of the negotiations, were offices which could not be determined except by the consent of the holder thereof, and further believed that the othcr party was under the same belief and was treating on that footing. :The real question, therefore, was whether thle erroneous assumption on the part of both parties to the agreements that the service con- tracts5 were undeterminable except by agree- ment was of such a. ftndamental character as to constitute an underlying assumption xvithout which the parties wvould not have m:de the coutmact they iri fact made, or whether it was only a conumon error as to a material element but one not going to the root of the matter and not affecting the substance of the consideration. With the knowledge that he vas differing from tho majority of their lordships he was unable to arrive at any conclusion except that in this case the erroneous assumption was essential to the contract which without it would not have been made. *It was true that the error was not one as to the ternms of the service agreements, but it was one vhich, having regard to the matter on which the parties were negotiating- namely, the terms on which the service agree- ments were to be prematurely determined and the compensation to be paid therefor, was in his opinion as fundamental to the bargain as any error one could imagine. He therefore thought that the appeal should be dismissed. "Two PoiNTs FOR DECISION" LORD ATICIN, in the course of his judg- ment, said that twvo points presented them- selves for decision. WVas the agreement of March 19, 1929, void by reason of a mutual mistake of Mr. D'Arcy Cooper and Mr. Bell ? ,Could the agreement of MIarch 19, 1929, be avoided by reason of the failure of Mr. Bell to disclose his misconduct in regard to the cocoa dealings ? After an exhaustive review of the authori- ties on the first point, his Lordship came to the conclusion that the identity of the subject matter was not destroyed by the mutual mis- take, if any, of the parties. Is to the second point of the plaintiffs- namely, that the contract of MIarch 19, 1929. could be avoided by them in consequence of the non-disclosure by Mr. Bell of his mis- conduct as to the cocoa dealings. Fraudulent conccalm ent had been negatived by the jury; that claim was based on the contention that Mr. Bell owed a duty to Levers to disclose his misconduct, and that in default of dis- closure the contract was voidable. Ordinarily the failure to disclose a material fact wvhich might influence.the mind of a prudent con- tractor did not give the right to avoid the contract. The principle of caveat emptor applied outside Contracts of sale. There wero certain contracts expressed by the law to be contracts of the utmost good faith where material facts must bo disclosed; if not the contract wvas voidable. Apart from special fiduciary reiationships, contracts for partner- ship and contracts of insurance were the lead- ing instances. In such cases the duty did not arise out of contract; the duty of a person proposing an insurance arose before a contract was made, so of an intending partner. UJnless that contract could bo brought within this limited category of contracts ubcrrimae fidci it appeared to his Lordship that this ground of defence must fail. He saw nothing to differentiate this agreement from the ordinary contract of service; and he was aware of no authority which placed contracts of service within the limited category he had mentioned. It seemed to him clear that master and man negotiating for an agreement of service were as unfettered as in any other negotiation. Nor could he flnd anythifig in the relation of master and servant when esta- blished that placed agreements between them within the protected category. It was said that there was a contractual duty of the servant to disclose his past faults. He agreed that the duty in the servant to protect his master's property might involve the duty to report a fellow-servant whom he knew to be wrongfully dealing with that property. The servant owed a duty not to steal, but having stolen was there superadded a duty to confess that he had stolen i He was satisfied that to imply such a duty would be a departure from the well-established usage of mankind and would be to create obligations entirely out- side the normal contemplation of the parties concerned. If a man agreed to raise his butler's wages, must the butler disclose that two years ago he received a secret commission from the wine merchant; and if the master discovered it could he without dismissal or after the servant had left avoid the agreement for the increase in salary and recover back the extra wages paid.? If he gave his cook a month's wages in lieu of notice could he, on discover- ing that the cook had been pilfering the tea and sugar, claim the return of the month's wages. He thought not. The employer took the risk; if he wished to protect himself he could question 'his servant, and would then be protected by the truth or otherwise of the answers. He agreed with the view expressed by Mlr. Juistice Avory in Healey v. Societ6 Anonyme Frangaise (33 The Times L.R., 300; [1917] I K.B. 946) on this point. It would be noticed that Mlr. Bell was not a director of Levers, and with respect he could not accept the view of Lord Tustice Greer, that if he was in a fiduciarv relationship to the Ntiger Company he was in a similar fiduciary relationship to the shareholders, or to the par- ticular shareolders (Levers), wvho held 99 per cent. of the shares. Nor did he think that it was alleged or proved that in making the agreement of March 19. 1929, Levers were act- ing as agents for the Niger Company. In the matter of the release of the service contract and the payment of ?30,000 they were acting quite plainly for themselves as principals. It followed that on this ground also the claim failed. The result was that in the present case servants unfaithful in some of their work re- tained large compensation which some would think they did not deserve. Nevertheless it was of greater importance that well-established principles of contract should be maintained than that a particular hardship should be re- dressed; and he saw no way of giving relief to the plaintiffs in the present circumstances except by confiding to the Courts loose powers of introducing terms into contracts whiich would only serve to introduce doubt and con- fusion where certainty was essential. He thought therefore that the appeal should be allowed. L ORD THANKERTON gave judgment to the same effect as LORD ATKIN. Solicitors.-MIessrs. Birkbeck. Julius, Edwards and Co.; AMessrs. Pritchard, Englefield and Co., for Messrs. Simpson, North, Harley and Co., Liverpool. HOUSE OF LORDS THE CLAIMI AGAINwST FORMER OFFICERS OF THE NIGER COMPANY BELL AND AXNOTHER v. LEVER BROTHERS, LIMITED. A-ND OTHERS.