JAMES EGGAY TAYLOR Vs. UNITED AFRICA CO LTD

JUDGEMENT

(1.) Consequent upon the preliminary judgment of their Lordships, .it now becomes necessary to decide upon the evidence properly called or put in before the trial Judge whether the respondents are entitled to judgment against the appellant for the sum of ?7,816 or for some smaller sum as damages for breach of contract by the appellant of his agency agreement with the respondents dated 28 February, 1933. By the agreement, the appellant agreed to serve the respondents, a limited company registered in England, as their agent in Cape Coast Castle or elsewhere in the Gold Coast Colony or Ashanti as they might require as from 1 March 1930, until the employment should be terminated by three months' notice in writing. Among the usual clauses in such an agreement the most important for the present purpose are Cls. 2 and 3, which (so far as material) are in the following terms : [See AIR 1937 PC 10]. 2. The agent shall keep proper books of account containing entries of all moneys received and paid and of all goods received or sold or delivered out by him on account of the company .... 3. The agent shall be responsible for all goods and moneys which shall be received at the factory or factories of which he shall be in charge from time to time and in case of any deficiency which may be due directly or indirectly to his act, neglect, or default shall forthwith pay to the company the selling prices of the goods and/or the amount of the moneys constituting the deficiency.

(2.) It may be added that the remuneration of the appellant was to be ?500 per annum and a commission. At all material times it has been admitted by the appellant that as the result of the frauds of Acquah, the former cashier and Carr, the former book-keeper, at the branch under the management of the appellant (commonly called "Swanzys") the respondents had been defrauded of moneys to the amount of ?7,816. The question to be determined may be stated as the question whether this loss can be shown to be due directly or indirectly to the appellant's negligence, meaning by that word his breach of duty under the clauses above set forth. Those duties certainly involved some supervision and checking of the acts of the cashier and book-keeper and some examination of the books and papers which they kept or with which they were concerned. In this connexion it is desirable to point out that the first fraud was committed on 3 November 1930, some eight months after the appellant took over the branch, and that the defalcations went on till 3 March 1932, without apparently arousing any feeling of suspicion in the mind of the appellant. The frauds were eventually discovered, not by the diligence of the appellant, but as the result of the head office in London requiring explanations of discrepancies in the accounts sent by the appellant to London. The fact of these discrepancies, as will be explained later, ought certainly to have been observed by the appellant and when he was urgently and repeatedly required to explain them, he discovered the frauds without difficulty by an examination of the books and the procuring of an inter-branch statement from the office of the African and Eastern Trade Corporation, a company which was in effect controlled by the respondents : (see the appellant's letter of 21st March, 1932 to the respondents).

(3.) Their Lordships in the first place will state some of their general conclusions in relation to the charge of negligence, prefacing them with the remark that they have seen no reason for doubting the evidence given by Alexander Frederick Bray as to the ordinary duties of the agent in charge of a station like Swanzys in the Cape Coast. Mr. Bray was an independent witness who was at the material time the general manager of the respondents in that part of Africa and he was a person of large experience. The first point relates to the trial balances sent to London. The appellant admitted in cross-examination at the trial that he signed every month these trial balances and certified them in the following words: I have checked the balances on the trial balances as they appear in the ledger and have found them in accord. I have also checked and found correct the additions of the trial balances.