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(1949) JELR 87090 (KB)

King's Bench  •  11 Jul 1949  •  United Kingdom

Slade, J.


SLADE, J. stated the facts, found for the plaintiffs on their claim for $150, and continued with regard to the counterclaim: A large number of authorities have been cited. Sometimes the words “secret commission” are used, sometimes “surreptitious payment”, and sometimes “bribe”. For the purposes of the civil law a bribe means the payment of a secret commission, which only means (i) that the person making the payment makes it to the agent of the other person with whom he is dealing ; (ii) that he makes it to that person knowing that that person is acting as the agent of the other person with whom he is dealing; and (iii) that he fails to disclose to the other person with whom he is dealing that he has made that payment to the person whom he knows to be the other person’s agent. Those three are the only elements necessary to constitute the payment of a secret commission or bribe for civil purposes. I emphasise “civil purpose” because the Prevention of Corruption Act, 1906, s. 1 (1), introduces the adverb “corruptly”, and, except in the cases provided for in s. 2 of the amending Act of 1916, the onus is put on the prosecution of showing that the payment has been made corruptly. I hold that proof of corruptness or corrupt motive is unnecessary in a civil action, and my authority is the decision of the Court of Appeal in Hovenden and Sons v. Millhoff (1) where the plaintiffs carried on business as hairdressers sundeyman and the defendant was a member of a firm of wholesale tobacconists. That firm was dissolved and the defendant carried on the business thereafter alone. For the purpose of purchasing cigars and cigarettes the plaintiffs employed buyers on whose judgment they relied and to whom they paid salaries and bonuses in proportion to their profits, and it was the duty of these buyers to order and to obtain for the plaintiffs the necessary supply of cigars and cigarettes for use in their business on the best trade terms. From 1880 to1889 the defendant had supplied the plaintiffs with large quantities of cigars and cigarettes for which the plaintiffs had paid upwards of $28,000. In 1889 the plaintiffs discovered that regularly, both at Christmas and Midsummer, during the whole period of their connection with the defendant, he or his firm had made gifts of money in the nature of bribes to the buyers employed by the plaintiffs which were calculated as amounting in all to about 21/2 per cent, on the invoice price of the goods sold and delivered. On making this discovery, the plaintiffs commenced an action alleging conspiracy between the defendant and the plaintiffs’ buyers to defraud the plaintiffs and they also claimed the money which the plaintiffs’ buyers had received from the defendant as money had and received to the plaintiffs’ use. The jury negative the allegation of conspiracy, and CRANTHAM, J., gave judgment for the plaintiffs for one farthing damages. The third answer of the jury was that the payments made to the plaintiffs’ buyers by the defendant or his firm had an effect on the minds of the buyers in favour of the defendant. Although the learned judge assessed the damages at one farthing, he formed the conclusion that the action had been substantially one of conspiracy and as that had been disproved he gave judgment for the defendant and the plaintiffs appealed. The appeal proceeded solely on the cause of action for money had and received. I emphasise that because, conspiracy having been negative by the jury, the arguments and the ratio decidendi of the judgments in the Court of Appeal could have proceeded only on the footing that no charge of fraud had been sustained. ROMEN, L.J., in his judgment, said (83 L.T. 43):

“It may, therefore, be well to point out what is a bribe in the eyes of the law. Without attempting an exhaustive definition I may say that the following is one statement of what constitutes a bribe. If a gift be made to a confidential agent with the view of inducing the agent to act in favour of the donor in relation to transactions between the donor and the agent’s principal and that gift is secret as between the donor and the agent-that is to say, without the knowledge and consent of the principal-then the gift is a bribe in the view of the law”,

I emphasise the learned judge’s words: if a gift be made to a confidential agent with the view of inducing the agent” because counsel for the plaintiffs rightly emphasised those words. ROMER L.J., proceeds (ibid):

“If a bribe be once established to the court’s satisfaction, then certain rules apply. Amongst them the following are now established, and, in my opinion, rightly established, in the interests of morality with the view of discouraging the practice of bribery. First, the court will not inquire into the donor’s motive in giving the bribe, nor allow evidence to be gone into as to the motive”.

In other words, the learned judge is saying that once the bribe is established, there is a an irrebuttable presumption that it was given with an intention to induce the agent to act favourably to the payer and, therefore, unfovourably to the principal. ROMER L.J., continues:

“secondly, the court will presume in favour of the principal, and as against the bribe and the agent bribe, that the agent was influenced by the bribe; and this presumption in irrebuttable”.

That means that the motive of the donor in making the payment to the agent or doneo is conclusively presumed against the person who makes the payment, and, secondly, it is conclusively proved against the person making the payment that the donce is affected and influenced by the payment. The lord justice goes on:

“Thirdly, if the agent be a confidential buyer of goods for his principal from the bribe, the court will assume as against the briber that the true price of the goods as between him and the purchaser must be taken to be less than the price paid to, or charged by, the vendor by, at any rate, the amount or value of the bribe”.

That is to say, it must be presumed that the price is loaded as against the purchaser at least by the amount of the bribe. Counsel for the plaintiffs says: “Yes, but earlier the learned judge has said that if a gift be mad to a confidential agent with a view to inducing him, it is a bribe, and, therefore, in using the later language and referring to bribes the learned judge is in effect saying: ‘I am using the later presumptions in cases where a bribe has been established and I have already defined a bribe as being only something which has been established as being paid with a certain motive” That, of course, would tear up the whole of the learned judge’s observations because he says lower down that the courts will not receive evidence as to what is the motive of the person making the payment. The motive will be conclusively inferred against him. The Court of Appeal allowed the appeal and for the verdict of one farthing they substituted the amount of the bribe.

In the only other authority to which I desire to refer, Re A Debtor (2) (No 229 of 1927), the appellant employed a moneylender’s tout to put him in touch with a moneylender who was prepared to advance money on the security only of a promissory note. The borrower paid the tout a small sum for his services. The tout took the borrower to the moneylender who advanced a sum of $60 on a promissory note for a much large sum, and the moneylender, without disclosing the fact to the borrower, also handed to the tout a percentage of the amount of cash actually advanced, so that the moneylender’s tout had accepted payment both from the borrower and from the lender. The borrower failed to repay the promissory note in accordance with its terms and the moneylender obtained judgment in default of either appearance or defence, served a bankruptcy notice, and after the appropriate period of seven days had elapsed presented a bankruptcy petition on which the registrar mad a receiving order. It then came to the knowledge of the borrower that the moneylender’s tout had received this payment from the moneylender. He appealed to the Court of Appeal, alleging that the contract was at least voidable, if not void, and that, as it was a bankruptcy matter, the judgment was one which the Court of Appeal was entitled to go behind. The court discharged the receiving order and dismissed the petition. Dealing with the finding of fact of the learned registrar, SCRUTTON, L.J., said ([1927] 2 ch. 376):

“The registrar said that though Latter was no doubt the agent of the debtor he was not satisfied that he was acting in the transaction solely as the debtor’s agent. Nor was he satisfied that in the circumstances Latter acted corruptly in accepting the commission of 71/2 per cent. from the petitioning creditor [the moneylender]. That conclusion of the registrar is a very dangerous one to the commercial world and to commercial morality. A man who is the agent of A in a transaction between A and b, and who also acts secretly for B in the same transaction, is presumed to act corruptly. Common law authorities require the court to hold that that is a corrupt practice, and, in my opinion, the court ought to presume fraud in such circumstances. It seems to me a dangerous thing to allow a man to say: ‘Although you did not know it, I was also agent for the other party’,”

I most respectfully concur in that portion of the judgment of that very learned judge and for the purpose of a civil action, where you have two parties to a contract introduced by an agent of one of them, once it is established that one of the parties to a contract makes a secret payment to the person whom he knows to be the agent of the other, the law will presume against him that he has acted corruptly, that the agent has been influenced by the payment to the detriment of his principal, and that the principal, the defendant in this case, has suffered damages to at least the amount of the bribe.

Judgment for the defendant on the claim with costs and on the counterclaim for $75 as damages or as money had and received with costs.

[Reported by F.A. AMIES, ESQ., Barrister-at-law.)

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