[HOUSE OF LORDS]

AND

Trade Description - "Act or default of another person" - Manager of supermarket - Offence at store due to manager's failure to supervise properly - System of supervision set up - Manager instructed on operation of system - Ladder of responsibility to ensure carrying out of system - Whether store manager "another person" - Whether "all reasonable precautions and ... due diligence" exercised by company - e Descriptions Act 1968 (c. 29), ss. 20 (1), 24 (1) (a) (b)

Company - Psyche - Intention - "Brains of company" - Responsible officer test - Criteria for determining responsibility of company for act or default of its servants

The defendants, a body corporate owning supermarket stores, were charged with an offence under the Trade Descriptions Act 1968.¹ They sought to raise a defence under section 24 (1) on the grounds that the commission of the offence was due to the act or default of another person, namely, the manager of the store at which it was committed, and that they had taken all reasonable precautions and exercised all due diligence to avoid the commission of such an offence. The manager was not a person within section 20 carrying out functions as a director, manager, secretary or other similar

1 Trade Descriptions Act 1968, s. 20 (1): "Where an offence under this Act which has been committed by a body corporate is proved to have been committed' with the consent and connivance of, ... any director, manager, secretary or other similar officer of the body corporate, ... he as well as the body corporate shall be guilty of that offence ..."

S. 24 (1): "In any proceedings for an offence under this Act it shall, ... be a defence for the person charged to prove - (a) that the commission of the offence was due to ... the act or default of another person, ... and (b) that he took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence. ..."

officer of the defendants, and they had properly instructed him in the operation at the store of a system for the avoidance of offences under the Act and had provided adequate and proper supervision to see that the system was followed and their instructions observed. The justices found that the defendants had set up a proper system so that they had complied with section 24 (1) (b), and that the manager had failed properly to carry out his part in the operation of eke system, the commission of the offence being due to his act or default in failing in his duty of supervision. However, the justices were of the opinion that the defence failed because the manager could not be "another person" within section 24 (1) (a), and they convicted the defendants.

On appeal, the Divisional Court dismissed the appeal on the grounds that although the manager was "another person" within section 24 (1) (a) the defendants had not complied in the circumstances with the requirements of section 24 (1) (b).

The defendants appealed:-

Held, (1) that the manager was "another person" within section 24 (1) (a) since any person could come within that description in paragraph (a) provided that, where the defendant was an individual, the other person was someone apart from the defendant, and, where the defendant was a body corporate, he was not a person within section 20 carrying out functions as such a person.

(2) That the taking of precautions and exercise of due diligence by the defendants under section 24 (1) (b) involved the duty of setting up an efficient system for the avoidance of offences under the Act, and a proper operation of the system; that the defendants had adequately performed that duty and had not delegated to their store managers the functions of ensuring that the system was carried out, and that accordingly the defendants in the circumstances had satisfied the requirements of section 24 (1) (b) and the appeal would be allowed.

Observations of Viscount Haldane L.C. in Lennard's Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd. [1915] A.C. 705, 713, 714, H.L.(E.) and of Denning L.J. in H. L. Bolton (Engineering) Co. Ltd. v. T. J. Graham & Sons Ltd. [1957] 1 Q.B. 159, 172, C.A. considered.

R. C. Hammett Ltd. v. London County Council (1933) 49 T.L.R. 209; 97 J.P. 105, D.C. and Series v. Poole [1969] 1 Q.B. 676, D.C. overruled.

Decision of the Divisional Court [1971] 1 Q.B. 133; [1970] 3 W.L.R. 572; [1970] 3 All E.R. 357 reversed.

The following cases are referred to in their Lordships' opinions:

Beckett v. Kingston Bros. (Butchers) Ltd. [1970] 1 Q.B. 606; [1970] 2 W.L.R. 558; [1970] 1 All E.R. 715, D.C.

Bolton (H. L.) (Engineering) Co. Ltd. v. T. J. Graham & Sons Ltd. [1957] 1 Q.B. 159; [1956] 3 W.L.R. 804; [1956] 3 All E.R. 624, C.A.

Coppen v. Moore (No. 2) [1898] 2 Q.B. 306, D.C.

Director of Public Prosecutions v. Kent and Sussex Contractors Ltd. [1944] K.B. 146; [1944] 1 All E.R. 119, D.C.

Dumfries and Maxwelltown Co-operative Society v. Williamson, 1950 S.C.(J.) 76.

Hammett (R. C.) Ltd. v. Crabb (1931) 47 T.L.R. 623; 95 J.P. 180, D.C.

Hammett (R. C.) Ltd. v. London County Council (1933) 49 T.L.R. 209; 97 J.P. 105, D.C.

Henshall (John) (Quarries) Ltd. v. Harvey [1965] 2 Q.B. 233; [1965] 2 W.L.R. 758; [1965] 1 All E.R. 725, D.C.

Lady Gwendolen, The [1965] P. 294; [1965] 3 W.L.R. 91; [1965] 2 All E.R. 283, C.A.

Lanyards Carryifg Co. Ltd. v. Asiatic Petroleum Co. Ltd. [1915] A.C. 705, H.L.(E.).

Lim Chin Aik v. The Queen [1963] A.C. 160; [1963] 2 W.L.R. 42; [1963] 1 All E.R. 223, P.C.

Magna Plant v. Mitchell (unreported), April 27, 1966, D.C.

Melias Ltd. v. Preston [1957] 2 Q.B. 380; [1957] 3 W.L.R. 42; [1957] 2 All E.R. 449, D.C.

Mousell Brothers Ltd. v. London and North-Western Railway Co. [1917] 2 K.B. 836, D.C.

Rex v. I. C. R. Haulage Ltd. [1944] K.B. 551; [1944] 1 All E.R. 691, C.C.A.

Series v. Poole [1969] 1 Q.B. 676; [1968] 2 W.L.R. 261; [1967] 3 All E.R. 849, D.C.

Sweet v. Parsley [1970] A.C. 132; [1969] 2 W.L.R. 470; [1969] 1 All E.R. 347, H.L.(E.).

Vane v. Yiannopoullos [1965] A.C. 486; [1964] 3 W.L.R. 1218; [1964] 3 All E.R. 820, H.L.(E.).

Weakling (A.) Ltd. v. Robinson (1929) 46 T.L.R. 151; (1930) 99 L.J.K.B. 171, D.C.

The following additional cases were cited in argument:

Birkenhead and District Co-operative Society Ltd. v. Roberts [1970] 1 W.L.R. 1497; [1970] 3 All E.R. 391, D.C.

British Fermentation Products Ltd. v. British Italian Trading Co. Ltd. [1942] 2 K.B. 145; [1942] 2 All E.R. 256, D.C.

Dobell (G. E.) & Co. v. Steamship Rossmore Co. Ltd. [1895] 2 Q.B. 408, C.A.

Freeman v. C. T. Warne Pty. Ltd. [1947] V.L.R. 279 (Australia).

Moore v. Bristlier (I.) Ltd. [1944] 2 All E.R. 515, D.C.

Reg. v. Stanley Haulage Ltd. (1963) 114 L.J. 25.

Sherras v. De Rutzen [1895] 1 Q.B. 918, D.C.

APPEAL from the Divisional Court of the Queen's Bench Division (Lord Parker C.J., Cooke and Fisher JJ.).

On November 5, 1969, the prosecutor, William Kenneth Nattrass, preferred an information against the defendants, Tesco Supermarkets Ltd., for that they, on September 26, 1969, at Northwich in the county of Chester, in offering to supply goods, namely, a packet of Radiant washing powder, gave an indication by means of a notice bearing the statement "Radiant 1s. off Giant Size 2s. 11d." that the goods were offered at a price less than that at which they were in fact being offered, namely, 3s. 11d., contrary to section 11 (2) of the Trade Descriptions Act 1968.

On January 23, 1970, the defendants gave notice pursuant to section 24 (2) of the Act of 1968 to both the prosecutor and one John Reginald Clement ("the manager") of Tesco Supermarkets Ltd., 42 Witton Street, Northwich, that at the hearing of the summons against them they intended to rely on the contention that the contravention in question was due to the act or default of the manager and that they had used all due diligence to secure compliance with the provisions in question.

The justices heard the information on February 3, 1970, and found the following facts. At about 10.00 a.m. on September 26, 1969, and for a number of days prior thereto the defendants were displaying affixed to the window of their store in Witton Street, Northwich, a large poster divided by a horizontal line into two. The upper part bore the legend "Radiant 1s. off Giant Size 2s. 11d." The lower part bore another legend referable to another product. The defendants had caused an advertisement to the same effect to be included in local and national newspapers. Prior to that time on that date at that store, and for a number of days prior thereto the defendants displayed for sale on a separate fixture a number of giant size packets of Radiant each bearing on it the legend in prominent lettering "1s. off recommended price." Such packets were known in the trade as flash packs, and one was produced in evidence. The recommended retail price of giant size packets of Radiant during the week in question was 3s. 11d. At that time on that date at that store the defendants had no flash packs of Radiant on display. At that time on that date at that store the defendants were displaying for sale a number of giant size packets of Radiant washing powder each bearing on it a single price marking of 3s. 11d. but no other marking referable to its price, and each standing on a shelf which itself bore a price marking of 3s. 11d. The defendants intended the relevant part of the poster to apply only to the flash packs of giant size Radiant. At that time on that date at that store Thomas Coane, an old age pensioner, searched the store for a giant size packet of Radiant priced at 2s. 11d. expecting to find a packet at a reduced price such as the flash pack produced in evidence, but was able to find only the packets marked with the price of 3s. 11d. He selected one of those and, on inquiring the price of the cashier, was informed that there were no giant size packets of Radiant in stock for sale at the price of 2s. 11d. He was accordingly charged the price of 3s. 11d. Mr. Coane immediately complained to David John Sprake Hughes, inspector of weights and measures and an officer authorised by the weights and measures authority under the Trade Descriptions Act 1968. The inspector visited the store at 10.20 a.m. on that date and interviewed the manager and Miss Winifred Rogers, an assistant in the store ("the assistant"), whose duty it was to replenish the soap powder fixtures. The manager explained to the inspector that all packs marked with the normal price were removed from display during the period of a special offer and that his assistants were required to inform him if any special offer stock were sold out so that he could remove any display notices. The assistant told the inspector that, on the evening prior to that date, she had discovered that no flash packs of Radiant remained on display and she had thereupon filled the soap fixture with giant size packets of Radiant, each marked with a price of 3s. 11d. but had not reported the dearth of flash packs or her action to the manager. The manager also informed the inspector that although at that time on that date there was no flash pack of Radiant on display, he was expecting a further 50 cases from the manufacturer during that day. He added that if Mr. Coane had questioned him about the display notice, he would have allowed him to purchase a giant size packet of Radiant marked at 3s. 11d. for 2s. 11d. The store was managed by the manager who was responsible for the manner and extent of the display of the

poster and the manner and extent of the display of items including packets of Radiant within the store and for the marking of prices on goods and display equipment therein. The defendants were a nationally known public company who owned many hundred stores including at least 250 in the North, each of which was under the control of a separate manager. The system of selection of managers was careful and reasonable. The manager had long experience in the food trade. The selection of him as manager of the store was reasonable. The defendants provided adequate staff and equipment for the running of the store.

The manager received instruction from the defendants in the running of the store: (a) by attending a comprehensive six-day management course three and a half years previously on his appointment as manager and a further half-day course devoted to the Trade Descriptions Act 1968, provided by the defendants for managers; (b) orally from a branch inspector employed by the defendants who attended at the store every week for the purposes of ensuring that it was properly managed; (c) orally from an area controller employed by the defendants who attended at the store regularly, although less frequently than the branch inspector; (d) from a regional director employed by the defendants who attended at the store occasionally; (e) from up-to-date and regular price lists and amendments thereto issued by the defendants specifying the price at which each item for sale was to be sold; copies of the relevant price lists for giant size Radiant obtaining for the hub of the week including September 26, 1969, were produced in evidence; (f) from literature relevant to particular promotions including the promotion of the flash packs of giant size Radiant, a copy of the literature relevant to which promotion was produced in evidence; (g) from sundry notices issued by the defendants including four notices under the heading "Trade Descriptions Act" which notices, issued respectively March, April, July and August 1969, were produced in evidence; (h) from a manual entitled Store Operating Manual delivered to the manager at least a week before September 26, 1969, which included a section entitled "Bulletin 20" containing detailed provisions particularly relevant to securing compliance with the provisions of the Act of 1968; a copy of that manual was produced in evidence; (i) orally from the defendants' highly qualified hygiene executive on the subject of hygienic requirements and steps necessary to secure compliance with all relevant statutory requirements. The executive last attended at the store on July 29, 1969.

The defendants exercised supervision over the manager and proper running of the store: (a) by the regular attendance of the branch inspector who was responsible only for some six to eight stores and whose duties were solely those of supervision; (b) by the regular attendance of the area controller who was responsible for some three or four branch inspectors and some 24 stores and whose duties were those of supervising the branch inspectors as well as the managers and the operation of those stores; (c) by the appointment of a regional director responsible for a number of stores and the supervision of the area controllers, branch inspectors and managers of them; (d) by visits from the hygiene executive; (e) by requiring the manager himself to carry out regular checks oh certain aspects of the operation of the store including the display of special offers and to record

such, checks in a book entitled "Weights and Measures Book" which was inspected by the branch inspector and the area controller, and which book was produced in evidence; the entry therein for September 26, 1969, "All special offers O.K." was made before 10.00 a.m. on that day; the entries to the same effect in respect of earlier days that week were made after 10.00 a.m. on September 26, 1969, after complaint had been made by the weights and measures inspector.

The store on that date was displaying for sale many thousands of different lines including many containing flash offers. The manager overestimated his stock of flash packs of giant size Radiant in that he thought four empty cases were, in fact, full. The flash packs of giant size Radiant had sold at a rate much higher than the defendants had, or could reasonably have, foreseen. The manager did not realise that the store had sold out of flash packs of giant size Radiant; had he so realised he would either have cut the poster in half and removed that portion relevant to Radiant or have reduced the price of the standard packets of giant size Radiant to 2s. 11d. The manager had not checked the soap powder fixture on that date notwithstanding the entry in his "Weights and Measures Book" for that morning, "All special offers O.K." The manager had under him an assistant manager, various section heads and other staff totalling in all some 60 persons. The ladder of responsibility from the manager upwards was: the manager - the branch inspector - the area controller - the regional director - the board of directors. It was the practice in the grocery trade for all stores whether large or small to be under the immediate direction of a shop manager.

In order to assist the parties the justices indicated that, subject to argument, it appeared to them that the defendants had established that the commission of the offence was due to the act of the manager and that they had satisfied the provisions of section 24 (1) (b), but that the justices were not satisfied that the manager was "another person" within the meaning of section 24 (1) (a).

It was contended on behalf of the prosecutor, that the poster displayed in the window of the store was, in the words of section 11 (2), likely to be taken as an indication that all giant size packets of Radiant were being offered for supply at a price of 2s. 11d. each. Mr. Coane had interpreted the poster in that way. Members of the public could not reasonably be expected to assume that the poster referred only to the flash packs of Radiant. The facts disclosed that the offence was due primarily to the act or default of the assistant in stocking her soap powder fixture with nonflash packs of Radiant and failing to inform the manager that the special offer was exhausted. While the manager might have been at fault in not checking the soap powder fixture on that morning, it was unreasonable of the defendants to expect him to have time himself to comply with all the instructions issued to him, and check all the shelves of goods and flash offers each morning. The principle underlying Beckett v. Kingston Bros. (Butchers) Ltd. [1970] 1 Q.B. 606 was distinguishable from the present case. In Beckett's case a special instruction had been given to a shop manager in relation to one commodity. The defendant company in that case clearly contemplated that the action specified in the instruction would be carried out by the manager personally. Bridge J. distinguished the

facts of Beckett's case from those in R. C. Hammett Ltd. v. London County Council (1933) 97 J.P. 105 in that in Beckett's case the act or default was that of the manager himself, whereas in Hammett's case it was that of a junior employee whom the manager had failed to supervise. In the present case, the manager had failed to supervise the action of the assistant and, following Hammett's case, the failure to exercise due diligence by the manager was the responsibility of the defendants; in short the manager was the alter ego of the company in relation to the act of default of junior employees. The decision in Beckett's case took no account of the principle laid down in A. Weakling Ltd. v. Robinson (1930) 99 L.J.K.B. 171 which did not appear to have been cited in argument in Beckett's case. Although the wording of section 24 (1) of the Act of 1968 differed somewhat from section 12 of the Sale of Food (Weights and Measures) Act 1926, and section 26 (1) of the Weights and Measures Act 1963, Walkling's case laid it down that the statutory defence that the offence was due to the default of a person under the defendant's control had no application where that person was in the defendant's employment. Section 24 (1) of the Act of 1968 might have been intended to compress into one subsection the two defences afforded by section 12 (2) and (5) of the Act of 1926 and sections 26 (1) and 27 (1) of the Act of 1963, but the reference to the default of a defendant's employee in the judgment of Lord Hewart C.J. in Walkling's case (1930) 99 L.J.K.B. 171, 177 suggested that the decision in that case would have been the same if the two defences in the Act of 1926 had been included in one subsection, and, referring to section 12 (2), he stated "those words seem to me to have no relation to the case where it is a defect of the machinery or a default of the persons under the defendant's control which is responsible for the mischief."

The decision in Hall v. Farmer [1970] 1 W.L.R. 366 in following Walkling's case indicated that the principle of that case still applied to the statutory defence in section 26 (1) of the Weights and Measures Act 1963, and, by implication, section 24 (1) of the Act of 1968, notwithstanding the different wording. The reference in section 24 (1) to "or to the act or default of another person, an accident or some other cause beyond his control" suggested that each of those alternatives was to be interpreted ejusdem generis and related to a situation beyond the defendant's control. Offences under section 11 (2) of the Act of 1968 were absolute as had been conceded by the defendants. Traders had an implied absolute duty under section 11 (2) to ensure that indications as to the prices of goods were not in contravention of the subsection, and on the authority of Series v. Poole [1969] 1 Q.B. 676 if a trader delegated the fulfillment of his absolute duty to an employee he remained liable for his employee's failure to fulfil that duty if it were due to the employee's own failure to exercise due diligence.

It was contended on behalf of the defendants that the poster displayed was intended to and would only be taken as an indication that there were certain identifiable packets, namely, the flash packs of giant size Radiant offered for sale at 2s. 11d. The poster was not likely to be taken as an indication that standard packets, i.e., non-flash packs of giant size Radiant were being offered for sale at 2s. 11d. So long as some identifiable packets of giant size Radiant, i.e., flash packs, were offered for sale at 2s. 11d. it did not constitute an offence if different packets, even if containing the

identical commodity and so described, were offered for sale at a higher price than the poster indicated so long as that higher price was clearly marked on those other packets. If the foregoing contention was correct no offence would be committed simply because the defendants had sold out of stock of the packets selling at 2s. 11d. but continued to sell packets at 3s. 11d. if such selling out had occurred sooner than they could reasonably have foreseen. In the premises no offence under section 11 had been proved. If an offence under section 11 had been proved, then the defendants had proved that the commission of the offence had been due to the act of default of the manager: in miscalculating the quantity of flash packs of giant size Radiant available in the store on that morning; in allowing, contrary to the defendants' instructions, flash packs and standard packets of the same article to be on sale at the same time; in failing to remove that part of the poster relevant to Radiant when the stock of flash packs was sold out; in failing to exercise proper supervision. They had taken all reasonable precautions and exercised all due diligence: in providing a properly equipped store; by properly selecting the manager to manage it; by providing a proper detailed and adequate system and instruction as to how such system and the store were to be operated; by providing adequate and proper supervision to see that the defendants' system was followed and their instructions observed. The manager was "another person" within the meaning of section 24 (1) (a). Beckett v. Kingston Bros. (Butchers) Ltd. [1970] 1 Q.B. 606 was authority for the proposition that in general an employee and in particular a manager could be another person within the meaning of section 2 (1) (a). R. C. Hammett Ltd. v. London County Council (1933) 97 J.P. 105 could be reconciled with Beckett's case in that the result in Hammett's case might have been different if the manager and not a more junior employee had been blamed. Even if the immediate act or default was that of one or more junior employees, a more senior employee only could be blamed under section 24 (1) (a) and the defence yet succeed if the act or default of that senior employee was either coextensive with that of the junior employee or was comprised in the failure to correct that of the junior employee. Where the defendant was a limited company any employee who was not the alter ego of the company could be another person within section 24 (1) (a). Generally only the directors and perhaps the secretary could be the alter ego of a company although particular facts in a particular case might show another person so to be. The manager in this case could in no circumstances be said to be the alter ego of the defendants. The defendants adopted in argument the whole of the comment to Beckett's case in [1970] Crim.L.R. 119, 120. Hall v. Farmer [1970] 1 W.L.R. 366 on its proper meaning supported the contention that an employee could be another person within the meaning of the Weights and Measures Act 1963. Series v. Poole [1969] 1 Q.B. 676 had no relevance as it turned on the question whether a person, upon whom there lay a statutory duty to do an act, could show that he exercised due diligence to secure that the duty was performed simply by reasonably delegating its fulfillment to a third person; A. Weakling Ltd. v. Robinson (1930) 99 L.J.K.B. 171 could be distinguished in that it was not there considered whether an employee could be "another person" as the defence was

based on different grounds. In the premises the defendants had proved that the manager was another person within the meaning of section 24 (1) (a).

The justices were of the opinion that the poster was likely to be taken as an indication that the standard packets of giant size Radiant were being offered for sale at 2s. 11d., being a price less than they were in fact being offered for sale, namely, 3s. 11d. and that, in consequence, an offence under section 11 (2) had been made out; that the commission of the offence was due to the act or default of the manager by his failure to see that the defendants' policy was correctly carried out and/or to correct the errors of the staff under him; that the defendants had exercised all due diligence in devising a proper system for the operation of the store and by securing so far as was reasonably practicable that it was fully implemented and thus had fulfilled the requirements of section 24 (1) (b); and that the defendants could not rely upon the act or default of the manager as he was not "another person" within the meaning of section 24 (1) (a), for the following reasons: Beckett v. Kingston Bros. (Butchers) Ltd. [1970] 1 Q.B. 606 was distinguished on the ground that there a single definite instruction was given to each shop manager calling upon him to take specific action on a specific occasion whereas the defendants were relying on general instructions; that there only the act or default of the manager was proved, whereas in this case the justices were satisfied that the assistant and the manager were both at fault. As compared with Beckett's case the manager had a larger staff working under him whereas in Beckett's case it was otherwise and indeed suggested that the manager might have had no staff at all. In the result the justices reached the conclusion that the original act or default was that of the assistant and that the act or default of the manager was in his failure to instruct or supervise her. The manager represented the defendants in his supervisory capacity, and for his lack of due diligence the defendants were responsible on the principle laid down in Hammett's case. Accordingly the manager was not "another person" for the purposes of section 24 (1) (a). The defendants had failed to establish the defence provided by section 24 and, accordingly, the justices convicted them and fined them £25, and ordered them to pay an advocate's fee of 15 guineas.

The defendants appealed and the questions for the opinion of the High Court were whether the justices came to a correct determination in point of law in concluding that (a) an offence under section 11 (2) had been made out; and (b) the manager was not another person within the meaning of section 24 (1) (a).

The Divisional Court dismissed the appeal, holding that albeit the justices were wrong in concluding that the defence failed on the ground that the manager could not be another person within section 24 (1) (a), nevertheless the defendants had failed in the circumstances to satisfy the requirements of section 24 (1) (b).

The defendants appealed.

Andrew Rankin Q.C. and Patrick Phillips for the defendants. The effect of the decision of the Divisional Court is that a retail company could never rely on section 24 of the Trade Descriptions Act 1968 if there was an offence committed by one of its shop managers under the Act. The

legal position is precisely the same between an individual owner and a company, save where that "other person" is within the brain area of the company. Thus, given an owner who has set up a reasonable system for supervising his retail activities and has delegated the duties responsibly and has not been negligent, then the owner has a defence under section 24 if one of his employees at shop level has committed an offence under the Act.

Section 20 of the Act of 1968 defines and limits the brain area of the company to officers of the company. The so-called alter ego principle is not applicable in the present case. There is a presumption, in the absence of express statutory provision, that where a company or its officers have not been negligent that Parliament does not intend such classes of person to be guilty of an offence. It is a defence to section 11 that what was done was outside the scope of the servant's employment by virtue of section 24. Section 11 imposes a strict liability. If no diligence can prevent an offence being committed, then if an activity is carried on which leads to an offence being committed, there is no defence under section 24. The scope and limit of the defence are more restricted than under the Food and Drugs Act 1955 and the Weights and Measures Act 1963.

If necessary, it will be contended that Series v. Poole [1969] 1 Q.B. 676 was wrongly decided. Alternatively, it is plainly distinguishable. On the facts in that case there was plainly no due diligence. Further, if Beckett v. Kingston Bros. (Butchers) Ltd. [1970] 1 Q.B. 606 was correctly decided, the present case was wrongly decided. Beckett's case was correct in law.

Hammett (R. C.) Ltd. v. Crabb (1931) 95 J.P. 180 is frequently cited as authority for the proposition that employers are liable for the acts or defaults of their shop managers, but on analysis it is seen that it is not authority for any such proposition. On the facts found by the Divisional Court, it was held there that the employers had shown due diligence and that therefore the justices should not have imposed any penalty on them. Hammett (R. C.) Ltd. v. London County Council (1933) 97 J.P. 105 was wrongly decided for it holds that the act of the servant is the act of the master.

As to what is to be imputed to a company, see Magna Plant v. Mitchell (unreported), April 27, 1966, D.C.; Reg. v. Stanley Haulage Ltd. (1963) 114 L.J. 25; Lanyards Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd. [1915] A.C. 705, 713, and Bolton (H. L.) (Engineering) Co. Ltd. v. T. J. Graham & Sons Ltd. [1957] 1 Q.B. 159.

A corporation is liable just as a natural person, if the corporation has delegated its authority. Further, a corporation can be liable at common law where the act of the servant is to be imputed. Further cases which exemplify the "identification" principle are Director of Public Prosecutions v. Kent & Sussex Contractors Ltd. [1944] K.B. 146 and Rex v. I. C. R. Haulage Ltd. [1944] K.B. 551. The authorities show that there is a line above which the servant's acts are the acts of the company and below which they are not.

To bring section 24 into operation, it is necessary to identify "another person." So far as a natural person is concerned, he can identify any other person be he servant or third party. Why should it be different for a corporation? It can identify any of its servants as "another person"

provided such person is not an "officer" or delegate of the company. "Another person" in section 24 is any person apart from delegates and those specified in section 20. Moore v. Bristlier (I.) Ltd. [1944] 2 All E.R. 515 is the high-water mark of those cases which identify servants as an alter ego of the company.

The Lady Gwendolen [1965] P. 294 is useful as showing how far down the chain of responsibility it is possible to go in relation to imputing the fault of the servant as the fault of the company. Willmer and Winn L.JJ. applied the alter ego principle. See also Henshall (John) (Quarries) Ltd. v. Harvey [1965] 2 Q.B. 233.

The alter ego principle is said to be a means whereby one can identify those persons in a company who can in law be identified as the company. On the facts here, a shop manager of a supermarket being merely a cog in a vast machine is not the alter ego of the company and, therefore, he is "another person" within the meaning of section 24 (1) (a).

In considering the application of the Act of 1968, is there any test whereby one can determine if a person is the alter ego? In the three consumer protection statutes there is a provision which covers this question - in this Act it is section 20. Alternatively, there is no such touchstone but the facts of each particular case have to be examined.

It emerges from the cases that there are three types of person who have been held to be the alter ego of the company. These are, the managing director, assistant managing director and a road traffic manager. In the case of a natural person, every person is "another person" for the purposes of section 24 (1) (a). In the case of a company, every person is "another person" save those persons who are the officers or delegates of the company.

The decision of the Divisional Court is wrong for it is based on the proposition that the defendants delegated their duty of taking reasonable precautions to the shop manager. But in the defendants' organisation, there is no such delegation. Employees of Tesco were entrusted with their duties but there was no delegation so as to impute criminal responsibility to the company. Series v. Poole [1969] 1 Q.B. 676 was wrongly decided. The defence afforded by section 20 of the Road Traffic Act 1962 was not in the Road Traffic Act 1960. Therefore, Parliament must have added the provision in 1962 to alleviate cases of hardship. But by the decision of the Divisional Court this defence was rendered nugatory. Reliance is placed on the observations of Lord Justice-General Cooper in Dumfries and Maxwelltown Co-operative Society v. Williamson, 1950 S.C.(J.) 76, 80, that "the underlying idea manifestly is that there should not be vicarious responsibility for an infringement of the Act committed without the consent or connivance of an employer." [Reference was also made to Freeman v. C. T. Warne Pty. Ltd. [1947] V.L.R. 279.]

Phillips following. Strict liability is an animal on its own. It is a creature of statute. It is not a principle of the law of master and servant or of that of principal and agent. What makes a master liable for the act of his servant or the principal for that of his agent in those circumstances where strict liability arises? The criterion for answering this question is whether the act is within the scope of the servant or agent's authority. There are two anomalies in this branch of the criminal law: the abolition

of the need for mens rea - a guilty mind; and the fact that a man is liable albeit I he has expressly forbidden an act by his servant if that act is within the scope of the servant's ostensible authority.

As to the expression "another person" in section 24, the purpose of this Act is that the guilty person should be convicted. Parliament only contemplated two categories of persons who would be prosecuted: those referred to in sections 20 and 23. To extend the scope of the persons who are the company is to go contrary to the intention of the Act for it means that there are persons who can be prosecuted who do not fall within those specified in sections 20 and 23.

As to Hammett (R. C.) Ltd. v. London County Council, 97 J.P. 105, the argument appears to be based on causation.

Edgar Fay Q.C., Richard Yorke and Caroline Alton for the respondent prosecutor. This case is almost entirely concerned with the proper construction of section 24 (1) (a) of the Act of 1968. The expression "the commission of the offence" in contrast to the alleged commission of the offence points to the offence being an offence of strict liability. Paragraph (b) of section 24 (1) requires proof that all reasonable precautions and all due diligence have been taken. In interpreting subsection (1) the question is, where the person charged is the employer: is it confined to his personal precautions and personal diligence, or does it embrace his servants where they are entrusted with control? "He" in paragraph (b) embraces those servants who are in a supervisory Capacity. The section draws a distinction between the act or default which causes the offence and the defence of having taken all reasonable precautions and exercised all due diligence which should have prevented the offence. First it is necessary to discover the actual offender and then ascertain whether the employer has exercised all reasonable precautions and exercised all due diligence.

In section 24 (1) (b) "another person" cannot include here Miss Rogers, for so to do is to make the provision meaningless. Even if Clement had directed the cashier to take 2s. 11d. for these goods, there would still have been an offence committed under the Act. It is nihil ad rem that in the circumstances it is unlikely that there would have been an information laid. The distinction drawn in paragraphs (a) and (b) is between the act and default of the actual servant and the servant whose duty it is to exercise all due diligence. The majority of the authorities support the above contention: see Series v. Poole [1969] 1 Q.B. 676, 683.

The respondent draws a distinction between the doing of the act and those persons who are responsible for taking supervisory acts. Diligence and precautions relate to the acts of a master to enforce discipline in his organisation; see per Lord Parker C.J. in Series v. Poole.

Beckett v. Kingston Bros. (Butchers) Ltd. [1970] 1 Q.B. 606 turned on the question whether it was the manager's hand which committed the offence. In Hammett v. London County Council, 97 J.P. 105, 109, the question was put succinctly in argument which must be asked in the present case, namely, was the manager's failure to use due diligence the failure of the employer or principal - the appellant company? That question was answered there as the respondent answers it here. The argument for the respondents in that case is also that of the respondent here. The Act distinguishes between the actual offender on the one hand and the employer

or principal on the other. It says nothing of intermediate stages, and the employer is responsible for the acts or omissions of all persons above the actual offender. The onus is on the employer to show that due diligence has been used; and the chain of diligence must be complete until it is broken by the actual offender brought before the court. If the defendants are to succeed, Hammett v. London County Council must be overruled. It is to be observed that Hammett has been followed ever since it was decided in 1933 and was cited in Series v. Poole [1969] 1 Q.B. 676. The defendants' argument entails overruling the decisions in Hammett and Series v. Poole and disapproving the reasoning in Beckett v. Kingston Bros. (Butchers) Ltd. [1970] 1 Q.B. 606. This line of authority has hitherto always been considered as applying to the range of consumer protection legislation, it being analogous legislation.

Reliance is placed on the dictum of Wright J. in Sherras v. De Rutzen [1895] 1 Q.B. 918, 922: "there must be guilty knowledge on the part of the defendant or of someone who has been put in his place to act for him." This dictum applies a fortiori in the present case.

The fact that section 24 affords a defence does not deprive the offence of which the defendants are being charged of being an offence of strict liability.

As to the distinction between the commission of an offence and the act in default, the cases repeatedly emphasise the distinction between the company and its employees; see Melias Ltd. v. Preston [1957] 2 Q.B. 380, which emphasises the distinction between the supervising servant and the last servant in the chain. For an illustration of strict liability in this type of case, see Birkenhead and District Co-operative Society Ltd. v. Roberts [1970] 1 W.L.R. 1497 where the structure of section 24 was examined. The question is: is the act of the servant the act of the master? What is aimed at in the case of employers in section 24 (1) (b) is supervision - supervision not in theory, but in execution. The offence is one of strict liability. This is important in considering the nature of the defence afforded. British Fermentation Products Ltd. v. British Italian Trading Co. Ltd. [1942] 2 K.B. 145 is distinguishable for that was a case of vendor and purchaser and not a case of control of a servant in the exercise of due diligence.

Reliance is placed on Lim Chin Aik v. The Queen [1963] A.C. 160 for the test to be applied in determining whether the liability imposed by the statute is strict. In that case the Privy Council attached importance to the public utility of the provision in question. If strict liability is attached to the offence, then strict canons of construction should be applied to the defence. In section 24 (1) (b) the words relate to actions and not to a mental state. If a company is to be made liable despite having produced a proper system of supervision, then the company upon being convicted would in future take care to overhaul its system.

In passing this type of legislation, Parliament is, in effect, taking the view that although the offences if committed give the individual consumer a civil cause of action, such a right is quite artificial in the circumstances and, therefore, a public right is given to remedy these injustices. The intention of Parliament must be ascertained from the field in which the

statute is to operate. Here, it is (i) in respect of retail business and (ii) it is for the purposes of consumer protection.

If it he said that when the section refers to taking all reasonable precautions that means it is only necessary to devise a reasonable system, the answer is that the system must be seen to be carried out.

Another reason for construing section 24 strictly is that these are offences in relation to sale of goods and the contracting party is the employer and it follows that if any person is benefited by a contravention of the provisions of the Act, it is not the servant in default, but the person who owns the company.

Use of due diligence and the taking of all reasonable precautions are not limited to employers, but to all members of the organisation who are concerned with supervisory activities. The devising of a system is not confined to the board room, but will often be in the hands of a servant in a supervisory capacity. The present case concerns a corporation and the manager was within the brain area of the company. This was a very large store. The object of supermarkets is to do away with counter hands. Clement had under him a staff of no less than 60 persons.

In Director of Public Prosecutions v. Kent & Sussex Contractors Ltd. [1944] K.B. 146, 158, Hallett J. draws an analogy between a natural person and a corporate person. This comparison is accepted, provided that it is remembered that the mind of a company is diffused amongst many persons. The brain of a company is spread over many persons. But the comparison here in respect of amount and an individual owner is not between an owner who has several shops, but with a small company or individual who has only one shop. Clement is part of the brain of Tesco for there devolved upon him part of the company's managerial functions. A portion of the company's brain had devolved upon him and therefore negligence on his part is the company's negligence.

Suppose there are three supermarkets, each with 60 employees in contiguous towns, one managed by the individual owner, the second owned by a company, whose managing director manages the shop, and the third owned by Tesco. On the defendants' argument, the first two defendants would be liable for a breach of the provisions of the Act like those alleged here and Tesco would escape. It cannot be the law that the large organisation should escape. It would mean that there was one law for the rich and another for the poor. It is pertinent to consider the facts found by the justices here in their conclusion. It will be seen that Clement failed to give proper instructions or to exercise proper supervision.

Yorke following. The Act of 1968 is dealing with civil transactions almost exclusively. If it is dealing with civil transactions, then the expressions in the Act fall to be construed in the civil sense, for it would be absurd to look at the transactions with two pairs of spectacles. Compare the Factories Acts. It has never been suggested that the Factories Acts and the regulations made thereunder are to he construed differently according to whether there is a civil claim or a prosecution is brought in respect of a breach of one of the Acts or regulations. The expression to be considered here in its civil sense is "due diligence." It is the obverse of absence of negligence. It imports the maxim "Facit per alium facit per se."

In the context here of an offer the test of due diligence stops at the end of the chain of those exercising supervisory functions and therefore the default of Clement is the lack of due diligence on the part of the company. The most helpful case as to what is implied by the expression "due diligence" is Dobell (G. E.) & Co. v. Steamship Rossmore Co. Ltd. [1895] 2 Q.B. 408.

If the criminal test is to be applied to this Act, it will erode the purpose of large parts of the statute. The purpose of the Act is to prevent articles being offered for sale at one price and sold at another. The individual customer is entitled to the same standard of care whether the shop be large or small or part of a small or large chain of shops. If the criminal test be applied, then the more remote the owner, the less likely is he to be convicted.

No system of care can amount to the taking of due diligence unless it reaches down to those acts of offering to supply and of selling with which section 11 is concerned and it is those acts which must be supervised. If those acts are not supervised, then there is no nexus between the duty of care and the system of supervision.

Clement is exercising here the totality of the company's managerial functions. Tesco are retail sellers and in respect of this shop Clement is king, albeit the empire extends beyond this one shop. The managing director of Tesco must have been at one time in the position of Clement, that is, managing one shop. Each manager of Tesco shops is standing in the shoes of the managing director in that shop. In that shop he still carries on the obligations of the owner. It makes no difference that eventually the owner forms a company. On the defendants' argument, the standard of care will be less in Piccadilly and Oxford Street than at the village shop. The public is entitled to the same duty of care whatever be the nature of the control of the shop in question. As a matter of law, an employer is liable in respect of his employee where he has delegated the whole responsibility for the running of the premises: Vane v. Yiannopoullos [1965] A.C. 486, 499, 500, 503, 507, 510, 511, per Lord Evershed, Lord Morris, Lord Hodgson and Lord Donovan. Clement was responsible for the whole running of this shop in Northwich. Dicta in Coppen v. Moore (No. 2) [1898] 2 Q.B. 306 support the respondent's contention on the policy of the Act of 1968.

Rankin Q.C. was not called upon to reply.

Their Lordships took time for consideration.

March 31, 1971. LORD REID. My Lords, the appellants own a large number of supermarkets in which they sell a wide variety of goods. The goods are put out for sale on shelves or stands, each article being marked with the price at which it is offered for sale. The customer selects the articles he wants, takes them to the cashier, and pays the price. From time to time the appellants, apparently by way of advertisement, sell "flash packs" at prices lower than the normal price. In September 1969 they were selling Radiant washing powder in this way. The normal price was 3s. 11d. but these packs were marked and sold at 2s. 11d. Posters were displayed in the shops drawing attention to this reduction in price.

These prices were displayed in the appellants' shop at Northwich on September 26. Mr. Coane, an old age pensioner, saw this and went to buy a pack. He could only find packs marked 3s. 11d. He took one to the cashier who told him that there were none in stock for sale at 2s. 11d. He paid 3s. 11d. and complained to an inspector of weights and measures. This resulted in a prosecution under the Trade Descriptions Act 1968 and the appellants were fined £25 and costs.

Section 11 (2) provides:

"If any person offering to supply any goods gives, by whatever means, any indication likely to be taken as an indication that the goods are being offered at a price less than that at which they are in fact being offered he shall, subject to the provisions of this Act, be guilty of an offence."

It is not disputed that that section applies to this case. The appellants relied on section 24 (1) which provides:

"In any proceedings for an offence under this Act it shall, subject to subsection (2) of this section, be a defence for the person charged to prove - (a) that the commission of the offence was due to a mistake or to reliance on information supplied to him or to the act or default of another person, an accident or some other cause beyond his control; and (b) that he took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by himself or any person under his control."

The relevant facts as found by the magistrates were that on the previous evening a shop assistant, Miss Rogers, whose duty it was to put out fresh stock found that there were no more of the specially marked packs in stock. There were a number of packs marked with the ordinary price so she put them out. She ought to have told the shop manager, Mr. Clement, about this, but she failed to do so. Mr. Clement was responsible for seeing that the proper packs were on sale, but he failed to see to this although he marked his daily return "all special offers O.K." The magistrates found that if he had known about this he would either have removed the poster advertising the reduced price or given instructions that only 2s. 11d. was to be charged for the packs marked 3s. 11d.

Section 24 (2) requires notice to be given to the prosecutor if the accused is blaming another person and such notice was duly given naming Mr. Clement.

In order to avoid conviction the appellants had to prove facts sufficient to satisfy both parts of section 24 (1) of the Act of 1968. The magistrates held that they

"had exercised all due diligence in devising a proper system for the operation of the said store and by securing so far as was reasonably practicable that it was fully implemented and thus had fulfilled the requirements of section 24 (1) (b)."

But they convicted the appellants because in their view the requirements of section 24 (1) (a) had not been fulfilled: they held that Clement was not "another person" within the meaning of that provision.

The Divisional Court held that the magistrates were wrong in holding that Clement was not "another person." The respondent did not challenge this finding of the Divisional Court so I need say no more about it than that I think that on this matter the Divisional Court was plainly right. But that court sustained the conviction on the ground that the magistrates had applied the wrong test in deciding that the requirements of section 24 (1) (b) had been fulfilled. In effect that court held that the words "he took all reasonable precautions ..." do not mean what they say: "he" does not mean the accused, it means the accused and all his servants who were acting in a managerial or supervisory capacity. I think that earlier authorities virtually compelled the Divisional Court to reach this strange construction. So the real question in this appeal is whether these earlier authorities were rightly decided.

But before examining those earlier cases I think it necessary to make some general observations.

Over a century ago the courts invented the idea of an absolute offence. The accepted doctrines of the common law put them in a difficulty. There was a presumption that when Parliament makes the commission of certain acts an offence it intends that mens rea shall be a constituent of that offence whether or not there is any reference to the knowledge or state of mind of the accused. And it was and is held to be an invariable rule that where mens rea is a constituent of any offence the burden of proving mens rea is on the prosecution. Some day this House may have to re-examine that rule, but that is another matter. For the protection of purchasers or consumers Parliament in many cases made it an offence for a trader to do certain things. Normally those things were done on his behalf by his servants and cases arose where the doing of the forbidden thing was solely the fault of a servant, the master having done all he could to prevent it and being entirely ignorant of its having been done. The just course would have been to hold that, once the facts constituting the offence had been proved, mens rea would be presumed unless the accused proved that he was blameless. The courts could not, or thought they could not, take that course. But they could and did hold in many such cases on a construction of the statutory provision that Parliament must be deemed to have intended to depart from the general rule and to make the offence absolute in the sense that mens rea was not to be a constituent of the offence.

This has led to great difficulties. If the offence is not held to be absolute the requirement that the prosecutor must prove mens rea makes it impossible to enforce the enactment in very many cases. If the offence is held to be absolute that leads to the conviction of persons who are entirely blameless: an injustice which brings the law into disrepute. So Parliament has found it necessary to devise a method of avoiding this difficulty. But instead of passing a general enactment that it shall always be a defence for the accused to prove that he was no party to the offence and had done all he could to prevent it, Parliament has chosen to deal with the problem piecemeal, and has in an increasing number of cases enacted in various forms with regard to particular offences that it shall be a defence to prove various exculpatory circumstances.

In my judgment the main object of these provisions must have been to distinguish between those who are in some degree blameworthy and those

who are not, and to enable the latter to escape from conviction if they can show that they were in no way to blame. I find it almost impossible to suppose that Parliament or any reasonable body of men would as a matter of policy think it right to make employers criminally liable for the acts of some of their servants but not for those of others and I find it incredible that a draftsman, aware of that intention, would fail to insert any words to express it. But in several cases the courts, for reasons which it is not easy to discover, have given a restricted meaning to such provisions. It has been held that such provisions afford a defence if the master proves that the servant at fault was the person who himself did the prohibited act, but that they afford no defence if the servant at fault was one who failed in his duty of supervision to see that his subordinates did not commit the prohibited act. Why Parliament should be thought to have intended this distinction or how as a matter of construction these provisions can reasonably be held to have that meaning is not apparent.

In some of these cases the employer charged with the offence was a limited company. But in others the employer was an individual and still it was held that he, though personally entirely blameless, could not rely on these provisions if the fault which led to the commission of the offence was the fault of a servant in failing to carry out his duty to instruct or supervise his subordinates.

Where a limited company is the employer difficult questions do arise in a wide variety of circumstances in deciding which of its officers or servants is to be identified with the company so that his guilt is the guilt of the company.

I must start by considering the nature of the personality which by a fiction the law attributes to a corporation. A living person has a mind which can have knowledge or intention or be negligent and he has hands to carry out his intentions. A corporation has none of these: it must act through living persons, though not always one or the same person. Then the person who acts is not speaking or acting for the company. He is acting as the company and his mind which directs his acts is the mind of the company. There is no question of the company being vicariously liable. He is not acting as a servant, representative, agent or delegate. He is an embodiment of the company or, one could say, he hears and speaks through the persona of the company, within his appropriate sphere, and his mind is the mind of the company. If it is a guilty mind then that guilt is the guilt of the company. It must be a question of law whether, once the facts have been ascertained, a person in doing particular things is to be regarded as the company or merely as the company's servant or agent. In that case any liability of the company can only be a statutory or vicarious liability.

In Lennard's Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd. [1915] A.C. 705 the question was whether damage had occurred without the "actual fault or privity" of the owner of a ship. The owners were a company. The fault was that of the registered managing owner who managed the ship on behalf of the owners and it was held that the company could not dissociate itself from him so as to say that there was no actual fault or privity on the part of the company. Viscount Haldane L.C. said, at pp. 713, 714:

"For if Mr. Lennard was the directing mind of the company, then his action must, unless a corporation is not to be liable at all, have been an action which was the action of the company itself within the meaning of section 502 ... It must be upon the true construction of that section in such a case as the present one that the fault or privity is the fault or privity of somebody who is not merely a servant or agent for whom the company is liable upon the footing respond eat superior, but somebody for whom the company is liable because his action is the very action of the company itself."

Reference is frequently made to the judgment of Denning L.J. in H. L. Bolton (Engineering) Co. Ltd. v. T. J. Graham & Sons Ltd. [1957] 1 Q.B. 159. He said, at p. 172:

"A company may in many ways be likened to a human body. It has a brain and nerve centre which controls what it does. It also has hands which hold the tools and act in accordance with directions from the centre. Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind or will. Others are directors and managers who represent the directing mind and will of the company, and control what it does. The state of mind of these managers is the state of mind of the company and is treated by the law as such."

In that case the directors of the company only met once a year: they left the management of the business to others, and it was the intention of those managers which was imputed to the company. I think that was right. There have been attempts to apply Lord Denning's words to all servants of a company whose work is brain work, or who exercise some managerial discretion under the direction of superior officers of the company. I do not think that Lord Denning intended to refer to them. He only referred to those who "represent the directing mind and will of the company, and control what it does."

I think that is right for this reason. Normally the board of directors, the managing director and perhaps other superior officers of a company carry out the functions of management and speak and act as the company. Their subordinates do not. They carry out orders from above and it can make no difference that they are given some measure of discretion. But the board of directors may delegate some part of their functions of management giving to their delegate full discretion to act independently of instructions from them. I see no difficulty in holding that they have thereby put such a delegate in their place so that within the scope of the delegation he can act as the company. It may not always be easy to draw the line but there are cases in which the line must be drawn. Lennard's case [1915] A.C. 705 was one of them.

In some cases the phrase alter ego has been used. I think it is misleading. When dealing with a company the word alter is I think misleading. The person who speaks and acts as the company is not alter. He is identified with the company. And when dealing with an individual no other individual can be his alter ego. The other individual can be a servant, agent, delegate or representative but I know of neither principle

nor authority which warrants the confusion (in the literal or original sense) of two separate individuals.

The earliest cases dealing with this matter which were cited were R. C. Hammett Ltd. v. Crabb (1931) 95 J.P. 180 and R. C. Hammett Ltd. v. London County Council (1933) 97 J.P. 105. In both a servant of the accused company had infringed the provisions of section 5 (2) of the Sale of Food (Weights and Measures) Act 1926. Section 12 (5) exempted the employer from penalty if he charged another person as the actual offender and could prove

"to the satisfaction of the court that he had used due diligence to enforce the execution of this Act, and that the said other person had committed the offence in question without his consent, connivance or wilful default, ..."

In the earlier case the offence was committed by the shop manager personally and he knew that he was committing an offence. A conviction was quashed on the ground that the magistrate had treated the question whether the employer had used due diligence as one of law, that it was really one of fact and that there was no evidence on which the magistrate could reach his decision.

In the second case the offence was committed by a subordinate: the shop manager had warned him but had not exercised due diligence to see that his instructions were obeyed. Again the magistrates convicted on the ground that the owners were responsible for lack of due diligence in their manager. This time the conviction was upheld by the same court. It was argued for the respondents that the employer is responsible for the acts or omissions of all persons above the actual offender. It seems to me obvious that that is a matter of law depending on the proper construction of the statutory provision. But Lord Hewart C.J. did not so regard it. He said that there was evidence on which quarter sessions could arrive at their opinion and that they were entitled to come to the conclusion that the appellants were responsible for the manager's lack of due diligence.

I find these cases most unsatisfactory. There is no explanation of how it could be a question of fact whether the provisions of section 12 (5) meant that what the employer had to prove was that he personally had used due diligence, or that he also had to prove that some or all of his servants had also done so. But the court did not deal with that. Nevertheless because the only difference between the two cases appears to have been that in the first the shop manager was himself the offender whereas in the second the fault was lack of supervision, these cases have been thought to afford authority for the proposition that an employer has a defence if the only fault was in the actual offender but not if there was fault of any of his servants superior to the actual offender. I can find no warrant for that proposition in the terms of section 12 (5). Both parts of the provision - that the employer had used due diligence and that the offence had been committed without his consent, connivance or wilful default - appear to me plainly to refer to the employer personally and to no one else.

I agree with the view of Lord Justice-General Cooper in a case dealing with the same Act Dumfries and Maxwelltown Co-operative Society v. Williamson, 1950 S.C.(J.) 76, 80 that "The underlying idea manifestly is

that there should not be vicarious responsibility for an infringement of the Act committed without the consent or connivance of an employer ..."

In the next two cases a company was accused and it was held liable for the fault of a superior officer. In Director of Public Prosecutions v. Kent and Sussex Contractors Ltd. [1944] K.B. 146 he was the transport manager. In Rex v. I. C. R. Haulage Ltd. [1944] K.B. 551 it was held that a company can be guilty of common law conspiracy. The act of the managing director was held to be the act of the company. I think that a passage in the judgment is too widely stated, at p. 559:

"Where in any particular case there is evidence to go to a jury that the criminal act of an agent, including his state of mind, intention, knowledge or belief is the act of the company, and, in cases where the presiding Judge so rules, whether the jury are satisfied that it has been proved, must depend on the nature of the charge, the relative position of the officer or agent, and the other relevant facts and circumstances of the case."

This may have been influenced by the erroneous views expressed in the two Hammett cases. I think that the true view is that the judge must direct the jury that if they find certain facts proved then as a matter of law they must find that the criminal act of the officer, servant or agent including his state of mind, intention, knowledge or belief is the act of the company. I have already dealt with the considerations to be applied in deciding when such a person can and when he cannot be identified with the company. I do not see how the nature of the charge can make any difference. If the guilty man was in law identifiable with the company then whether his offence was serious or venial his act was the act of the company but if he was not so identifiable then no act of his, serious or otherwise, was the act of the company itself.

In John Henshall (Quarries) Ltd. v. Harvey [1965] 2 Q.B. 233 a company was held not criminally responsible for the negligence of a servant in charge of a weigh bridge. In Magna Plant v. Mitchell (unreported) April 27, 1966, the fault was that of a depot engineer and again the company was held not criminally responsible. I think these decisions were right. In the Magna Plant case Lord Parker C.J. said:

"... knowledge of a servant cannot be imputed to the company unless he is a servant for whose actions the company are criminally responsible, and as the cases show, that only arises in the case of a company where one is considering the acts of responsible officers forming the brain, or in the case of an individual, a person to whom delegation in the true sense of the delegation of management has been passed."

I agree with what he saw with regard to a company. But delegation by an individual is another matter. It has been recognised in licensing cases but that is in my view anomalous (see Vane v. Yiannopoullos [1965] A.C. 486).

The latest important authority is Series v. Poole [1969] 1 Q.B. 676. That was an appeal against the dismissal of an information that the holder of a carrier's licence had failed to keep or cause to be kept records required by the Road Traffic Act 1960 with regard to the driver of a vehicle. That was

an absolute offence but that was amended by the Road Traffic Act 1962 which provided by section 20 that it should "be a defence to prove that he used all due diligence to secure compliance with those provisions." The respondent proved that he had given proper instructions to the driver, that he employed a secretary to check the driver's records and had to begin with supervised her work, but that thereafter she failed to make proper checks. The justices held, possibly wrongly, that the accused had used all due diligence as required by the Act. The court accepted that finding but nevertheless sent the case back with a direction to convict.

Lord Parker C.J. dealt with the case on the basis that the accused had done everything that was reasonable. He said, at p, 684:

"He may ... acting perfectly reasonably appoint somebody else to perform his duty, his alter ego, and in that case it seems to me if the alter ego fails in his duty the employer is liable. Equally, if the employer seeks to rely on the defence under section 20, he must show that the alter ego has observed due diligence."

I have already said that the phrase alter ego is misleading. In my judgment this case was wrongly decided and should be overruled. When the second statute introduced a defence if the accused proved that "he used all due diligence" I think that it meant what it said. As a matter of construction I can see no ground for reading in "he and all persons to whom he has delegated responsibility." And if I look to the purpose and apparent intention of Parliament in enacting this defence I think that it was plainly intended to make a just and reasonable distinction between the employer who is wholly blameless and ought to be acquitted and the employer who was in some way at fault, leaving it to the employer to prove that he was in no way to blame.

What good purpose could be served by making an employer criminally responsible for the misdeeds of some of his servants but not for those of others? It is sometimes argued - it was argued in the present case - that making an employer criminally responsible, even when he has done all that he could to prevent an offence, affords some additional protection to the public because this will induce him to do more. But if he has done all he can how can he do more? I think that what lies behind this argument is a suspicion that magistrates too readily accept evidence that an employer has done all he can to prevent offences. But if magistrates were to accept as sufficient a paper scheme and perfunctory efforts to enforce it they would not be doing their duty - that would not be "due diligence" on the part of the employer.

Then it is said that this would involve discrimination in favour of a large employer like the appellants against a small shopkeeper. But that is not so. Mr. Clement was the "opposite number" of the small shopkeeper and he was liable to prosecution in this case. The purpose of this Act must have been to penalise those at fault, not those who were in no way to blame.

The Divisional Court decided this case on a theory of delegation. In that they were following some earlier authorities. But they gave far too wide a meaning to delegation. I have said that a board of directors can delegate part of their functions of management so as to make their delegate an

embodiment of the company within the sphere of the delegation. But here the board never delegated any part of their functions. They set up a chain of command through regional and district supervisors, but they remained in control. The shop managers had to obey their general directions and also take orders from their superiors. The acts or omissions of shop managers were not acts of the company itself.

In my judgment the appellants established the statutory defence. I would therefore allow this appeal.

LORD MORRIS OF BORTH-Y-GEST. My Lords, the main question which is raised in this appeal is whether, on the findings of fact of the magistrates, the company Tesco Supermarkets Ltd. (Tesco) established a defence under the provisions of section 24 (1) of the Trade Descriptions Act 1968.

The terms of section 24 (1) are as follows:

"24. - (1) In any proceedings for an offence under this Act it shall, subject to subsection (2) of this section, be a defence for the person charged to prove - (a) that the commission of the offence was due to a mistake or to reliance on information supplied to him or to the act or default of another person, an accident or some other cause beyond his control; and (b) that he took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by himself or any person under his control."

There were "proceedings for an offence under" the Act. The company (Tesco) was the "person charged." The case stated finds that Tesco is "a nationally known public company who own many hundred stores." There are at least 230 such stores in the north. In one of these on September 26, 1969, there was in the window (and there had been for some days previously) a poster which proclaimed that a customer could purchase a certain package for 1s. less than its normal price of 3s. 11d. An advertisement so stating had appeared in local and national newspapers. For a number of days prior to September 26 there had been displayed in the particular store and upon a separate fixture a number of the packages upon each of which was the legend "1s. off recommended price." But at 10 a.m. on September 26 there were no packages so marked. Packages of that variety were displayed for sale - but each had a price marking of 3s. 11d.: they were on a shelf which had a price marking of 3s. 11d. It was at 10 a.m that a customer searched the store for one of the packages at the price of 2s. 11d. He had expected to find one at that reduced price. He could not. He could only find those at the marked price of 3s. 11d. He took one of those and asked its price of the cashier. Being informed that there were none of the packages in stock for sale at 2s. 11d. he was charged and paid the higher price.

A breakdown in the system had occurred. During the period of a special offer all packages marked with the normal price should have been removed from display. If any special offer stock was sold out the manager should have been so informed in order that he could remove any display notice that would be misleading. Actually on the evening of September 26 an assistant had noticed that none of the special offer packages remained on display: she had thereupon filled the appropriate fixture with packages

having the marked price of 3s. 11d.: she had not reported to the manager either the dearth of packages marked 2s. 11d. or her action in placing in the fixture those marked 3s. 11d. The manager had over-estimated his stock of packages at the reduced price: he thought that four cases were full which were in fact empty. Furthermore, the manager did not check the fixture on September 26, though in his weights and measures book for that morning there was an entry "All special offers O.K." Had he realised that the store had sold out of reduced price packages he would either have removed that part of the poster which related to them or he would have reduced the price of the packages in the store to 2s. 11d. The store was, on the date in question, displaying for sale many thousands of different lines including many which were offered at reduced prices (referred to as "flash" offers).

On the facts as found it appeared, therefore, that an offence had been committed. There had been a misleading indication as to price. It is provided by section 11 (2) of the Act as follows:

"If any person offering to supply any goods gives, by whatever means, any indication likely to be taken as an indication that the goods are being offered at a price less than that at which they are in fact being offered he shall, subject to the provisions of this Act, be guilty of an offence."

There was an indication which was likely to be taken as an indication that the packages in question were being offered at 2s. 11d. whereas the customer in the shop found that they were being offered at 3s. 11d. So the question arises as to who was guilty of an offence. An information was preferred against Tesco (i.e. the limited company) for that they in offering to supply the package gave an indication by means of a notice bearing a statement that the goods were being offered at a price less than that at which they were in fact being offered (i.e. 3s. 11d.).

It has not been suggested that Tesco (i.e. the limited company) could not be held to have committed the offence. In this connection reference may be made to a passage in the judgment of Viscount Reading C.J. in Mousell Brothers Ltd. v. London and North-Western Railway Co. [1917] 2 K.B. 836. He said, at p. 844:

"Prima facie, then, a master is not to be made criminally responsible for the acts of his servant to which the master is not a party. But it may be the intention of the legislature, in order to guard against the happening of the forbidden thing, to impose a liability upon a principal even though he does not know of, and is not a party to, the forbidden act done by his servant. Many statutes are passed with this object. Acts done by the servant of the licensed holder of licensed premises render the licensed holder in some instances liable, even though the act was done by his servant without the knowledge of the master. Under the Food and Drugs Acts there are again instances well known in these courts where the master is made responsible, even though he knows nothing of the act done by his servant, and he may be fined or rendered amenable to the penalty enjoined by the law. In those cases the legislature absolutely forbids the act and makes the principal liable without a mens rea."

It will have been seen, however, that under section 11 (2) it is only "subject to the provisions of" the Act that a person is guilty of an offence. The Act provides for certain defences which the person charged may prove: if he proves one of them then he is not guilty. The terms of section 24 (1) of the Act have been set out above. Subsection (2) imposes a requirement of serving a notice in cases where the defence involves attributing the offence to the act or default of another person or to reliance on information supplied by another person: the notice is to the prosecutor and it must give information identifying (or assisting to identify) that other person. Tesco gave the requisite notice. It was to the effect that the contravention of section 11 (1) was due to the act or default of the manager of the store in question.

But for one point the magistrates would have found that the defence was proved: but for that one point they would have acquitted Tesco. They found (1) that Tesco had established that the commission of the offence was due to the act or default of the manager of the store by his failure to see that the company's policy was correctly carried out and/or to correct the errors of the staff under him, and (2) that Tesco had proved that they had taken all reasonable precautions and had exercised all due diligence to avoid the commission of the offence under section 11 (2) either by themselves or by any person under their control. They had exercised all due diligence in devising a proper system for the operation of the store and by securing as far as was reasonably practicable that it was fully implemented. In the careful and ample statement of case the magistrates set out in much detail their reasons for arriving at these conclusions. They need not be here repeated. Suffice it to say that the case describes the system of administration and the various steps taken by Tesco to ensure that the manager was instructed and continuously and fully instructed in regard to the proper management of the store. There was a careful and reasonable system of selection of managers. Furthermore, the case describes in detail the various steps taken by Tesco in the exercise of supervision over the manager and the proper running of the store. The manager of the store had under him an assistant manager and there were various section heads: the total number of the staff in the store was 60. It was found that the company had provided adequate staff and equipment for the running of the store. Then there was a "ladder of responsibility" of those whose work was that of supervision. Thus there were branch inspectors whose duties (involving regular attendance) were solely those of supervision in regard to some six or eight stores. There were area controllers who in regard to some 24 stores supervised the branch inspectors as well as the managers and the operation of such stores: their duties also involved regular attendance at stores. There was a regional director who was responsible for a number of stores and the supervision of the area controllers, branch inspectors and managers for them.

The one point which resulted in the conviction rather than the acquittal of Tesco was that the magistrates were not satisfied that the manager was "another person" within the meaning of section 24 (1) (a). They considered that the manager represented the company in his supervisory capacity and that the company were responsible for his lack of due diligence in that capacity with the result that he was not "another

person." They considered that the "original act or default" had been that of a lady on the staff at the store and that the "act or default" of the manager lay in his failure to instruct her or supervise her.

A point had been argued before the magistrates whether an offence under section 11 (2) had been made out. They considered that it had. They stated two questions for the opinion of the High Court, viz. (1) whether they were correct in concluding that an offence under section 11 (2) had been made out and (2) whether they were correct in concluding that the manager was not "another person" within the meaning of section 24 (1) (a). The Divisional Court held that they were correct in regard to (1) and that matter was not pursued before your Lordships. In regard to (2) it was accepted by the respondent in the Divisional Court, and it was common ground, that the manager was "another person" within the meaning of section 24 (1) (a). It was said that where a defendant is an individual then any other individual could be "another person" and that where a defendant is a company or corporate body then any individual could be "another person" provided that he is not a person within section 20 carrying out functions as such person. Section 20 is in the following terms:

"20. - (1) Where an offence under this Act which has been committed by a body corporate is proved to have been committed with the consent and connivance of, or to be attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the body corporate, or any person who was purporting to act in any such capacity, he as well as the body corporate shall be guilty of that offence and shall be liable to be proceeded against and punished accordingly. (2) In this section 'director,' in relation to any body corporate established by or under any enactment for the purpose of carrying on under national ownership any industry or part of an industry or undertaking, being a body corporate whose affairs are managed by the members thereof, means a member of that body corporate."

It was held that the word "manager" in that section denoted someone managing the affairs of the company rather than someone in the position of the manager of a store as in the present case.

On those conclusions it would have followed that on the case as stated the appeal would have been allowed. The Divisional Court, however, took the view and they were invited to take the view that the magistrates had not applied their minds to the "real question" which arose. The Divisional Court considered that that question was whether the defence under section 24 (1) was open to the company in view of the finding of the magistrates that the manager had been guilty of a failure in his duty of supervision of the staff under him in the store. On the assumption that the company had set up an efficient system, or one that could not be criticised, the Divisional Court considered that the question arose whether the company was deprived of a defence under section 24 (1) if it was shown that there was a failure by someone to whom the duty of carrying out the system was "delegated" properly to carry out that function. As the Divisional Court considered that all the facts were sufficiently found so

that the "real question" could be answered even though it was not a question raised, and as they considered that the manager of the store was a person to whom the company had, in respect of that particular store, "delegated" their duty to take all reasonable precautions and to exercise all due diligence to avoid the commission of an offence, they concluded that it was impossible for the magistrates to find that the company had satisfied the requirements of section 24 (1) (b). Accordingly, they dismissed the appeal. In granting leave to appeal the court certified the point of law of public general importance in the following terms:

"Whether a person charged with an offence under section 11 (2) of the Trade Descriptions Act 1968 in a retail shop owned by him would have a defence under section 24 (1) of the said Act if:- (a) he instituted an efficient system to avoid the commission of offences under the Act by any person under his control; (b) he reasonably delegated to the manager of the shop the duty of operating the said system in that shop; (c) the manager failed to perform such duty efficiently; (d) the offence charged was committed by reason of such failure; (e) such failure by the said manager is the 'act or default of another person' relied on under section 24 (1) (a)."

My Lords, we are here only concerned with the question whether the company committed an offence. If the nature of the offence under section 11 (2) was such that, under the perhaps rather exceptional principle already referred to, the company could be held to be guilty of it - it would only be guilty if it failed to prove one of the defences available under section 24 (1). If it is accepted that "the commission of the offence" was due to "the act or default of another person" then the company would have a defence (and so be entitled to be acquitted) if it further proved that it (i.e. the company) "took all reasonable precautions and exercised all due diligence to avoid the commission" of the offence either by itself or by any person under its control. It is here that it is important to remember that it is the criminal liability of the company itself that is being considered. In general criminal liability only results from personal fault. We do not punish people in criminal courts for the misdeeds of others. The principle of respond eat superior is applicable in our civil courts but not generally in our criminal courts. So the sole issue in the present case is whether "the company" took all reasonable precautions and exercised all due diligence. We are not concerned to express any opinion as to whether some other or which other person was by reason of the terms of section 11 and of section 23 guilty of an offence.

How, then, does a company take all reasonable precautions and exercise all due diligence? The very basis of section 24 involves that some contraventions of the Act may take place and may be contraventions by persons under the control of the company even though the company itself has taken all reasonable precautions and exercised all due diligence and that the company will not be criminally answerable for such contraventions. How, then, does a company act? When is some act the act of the company as opposed to the act of a servant or agent of the company (for which, if done within the scope of employment, the company will be civilly answerable)?

In Lennard's Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd. [1915] A.C. 705 Viscount Haldane L.C. said, at p. 713:

"My Lords, a corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation. That person may be under the direction of the shareholders in general meeting; that person may be the board of directors itself, or it may be, and in some companies it is so, that that person has an authority co-ordinate with the board of directors given to him under the articles of association, and is appointed by the general meeting of the company, and can only be removed by the general meeting of the company."

Within the scheme of the Act now being considered an indication is given (which need not necessarily be an all-embracing indication) of those who may personify "the directing mind and will" of the company. The question in the present case becomes a question whether the company as a company took all reasonable precautions and exercised all due diligence. The magistrates so found and so held. The magistrates found and held that "they" (i.e. the company) had satisfied the provisions of section 24 (1) (b). The reason why the Divisional Court felt that they could not accept that finding was that they considered that the company had delegated its duty to the manager of the shop. The manager was, they thought, "a person whom the appellants had delegated in respect of that particular shop their duty to take all reasonable precautions and exercise all due diligence to avoid the commission" of an offence. Though the magistrates were satisfied that the company had set up an efficient system there had been "a failure by someone to whom the duty of carrying out the system was delegated properly to carry out that function."

My Lords, with respect I do not think that there was any feature of delegation in the present case. The company had its responsibilities in regard to taking all reasonable precautions and exercising all due diligence. The careful and effective discharge of those responsibilities required the directing mind and will of the company. A system had to be created which could rationally be said to be so designed that the commission of offences would be avoided. There was no delegation of the duty of taking precautions and exercising diligence. There was no such delegation to the manager of a particular store. He did not function as the directing mind or will of the company. His duties as the manager of one store did not involve managing the company. He was one who was being directed. He was one who was employed but he was not a delegate to whom the company passed on its responsibilities. He had certain duties which were the result of the taking by the company of all reasonable precautions and of the exercising by the company of all due diligence. He was a person under the control of the company and on the assumption that there could be proceedings against him, the company would by section 24 (1) (b) be absolved if the company had taken all proper steps to avoid the commission of an offence by him. To make the company automatically liable

for an offence committed by him would be to ignore the subsection. He was, so to speak, a cog in the machine which was devised: it was not left to him to devise it. Nor was he within what has been called the "brain area" of the company. If the company had taken all reasonable precautions and exercised all due diligence to ensure that the machine could and should run effectively then some breakdown due to some action or failure on the part of "another person" ought not to be attributed to the company or to be regarded as the action or failure of the company itself for which the company was to be criminally responsible. The defence provided by section 24 (1) would otherwise be illusory.

In reaching their conclusion, the Divisional Court placed reliance on and followed the decision in Series v. Poole [1969] 1 Q.B. 676. In that case the holder of a carrier's licence was charged with failing, contrary to section 186 of the Road Traffic Act 1960, properly to keep current records. The records were in fact defective but the licence holder had employed someone to check the records. He had instructed such employee as to the method of checking the records: he had supervised the work of such employee until he was satisfied that the system was working well. The justices found that he had used all due diligence to secure compliance with the relevant statutory provisions. Provided that this finding could on the facts be supported I see no reason why the Divisional Court should have denied to him the defence which by section 20 of the Road Traffic Act 1962 was made available. On the justices' finding I consider that the acquittal should have been allowed to stand. The licence holder had not washed his hands of his responsibilities: he had used all due diligence to see that they were discharged so that there should be compliance with the provisions of the statute.

In R. C. Hammett Ltd. v. London County Council, 97 J.P. 105, employers were denied the defence available under section 12 (5) of the Sale of Food (Weights and Measures) Act 1926 on the ground that the manager of a shop had not shown due diligence though the employers themselves had in all other respects used due diligence. I do not think that that case was rightly decided.

On the facts as found and by the application of section 24 (1) I consider that the company should have been absolved from criminal liability.

Accordingly, I would allow the appeal.

VISCOUNT DILHORNE. My Lords, on February 3, 1970, the appellants were convicted at the magistrates' court at Northwich of an offence under section 11 (2) of the Trade Descriptions Act 1968, which reads as follows:

"If any person offering to supply goods gives, by whatever means, any indication likely to be taken as an indication that the goods are being offered at a price less than that at which they are in fact being offered he shall, subject to the provisions of this Act, be guilty of an offence."

On September 26, 1969, the appellants had a poster attached to the window of their supermarket in Northwich bearing the words "Radiant 1s. off Giant Size 2s. 11d." This meant, and could only have been

taken to mean, that Giant Size packs of Radiant washing powder were being offered for sale at that price. The appellants had also advertised that these packs were being offered for sale at this price in local and national newspapers.

An old age pensioner sought to purchase one of these packs, but he was only able to find displayed in the supermarket packs marked with the price of 3s. 11d. He took one of these to the cashier who told him that there were no packs for sale at 2s. 11d. and he was charged 3s. 11d. He immediately complained to the inspector of weights and measures.

On proof of these facts the magistrates were right to convict the appellants if they had not succeeded in establishing one of the defences open to them under section 24 of the Trade Descriptions Act 1968.

Section 24 (1) is in the following terms:

"In any proceedings for an offence under this Act it shall, subject to subsection (2) of this section, be a defence for the person charged to prove (a) that the commission of the offence was due to a mistake or to reliance on information supplied to him or to the act or default of another person, an accident or some other cause beyond his control; and (b) that he took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by himself or any person under his control."

Section 24 (2) reads as follows:

"If in any case the defence provided by the last foregoing subsection involves the allegation that the commission of the offence was due to the act or default of another person or to reliance on information supplied by another person, the person charged shall not, without leave of the court, be entitled to rely on that defence unless, within a period ending seven clear days before the hearing, he has served on the prosecutor a notice in writing giving such information identifying or assisting in the identification of that other person as was then in his possession."

The appellants gave notice as required by this subsection, alleging that the commission of the offence was due to the act or default of a Mr. Clement, the manager of their supermarket at Northwich. They were consequently entitled to an acquittal if they proved that, and also that they had taken all reasonable precautions and had exercised all due diligence to avoid the commission of the offence by Clement.

What had happened was that the evening before the commission of the offence Miss Rogers, a shop assistant, whose duty it was to put the packs on display for sale, had discovered that there were no packs displayed for sale at 2s. 11d. and no packs marked with that price available for display. She had, therefore, put out packs marked with the price of 3s. 11d. She had not reported to Clement that there were no 2s. 11d. packs to display. It was his duty to check the display of the special offers and to enter in a book that he had done so. In the entry for September 26, he had written "All special offers O.K." when in fact the special offer of Radiant Giant Size packs was not, as no such packs were being offered for sale at 2s. 11d. a pack.

The magistrates found that "the original act or default was that of Miss Rogers and the act or default of the said Clement was in his failure to instruct or supervise her" and that "the commission of the offence was due to the act or default of the said Clement by his failure to see that the appellants' policy was correctly carried out and/or to correct the errors of the staff under him."

The magistrates held that the appellants had exercised all due diligence in devising a proper system for the operation of the store and by securing, so far as was reasonably practicable, that it was fully implemented and thus had fulfilled the requirements of section 24 (1) (b). Although they did not in terms say so, they clearly meant that the appellants had, as well as exercising all due diligence, taken all reasonable precautions to avoid the commission of the offence.

They, however, held that Clement was not "another person" within the meaning of section 24 (1) (a) and so that the statutory defence failed. The Divisional Court held that they were right to convict but wrong to conclude that Clement was not "another person." In their view, the appellants had delegated to Clement "their duty of taking all reasonable precautions and exercising all due diligence" and consequently his failure to do so was failure by the appellants.

Section 23 of the Act is in the following terms:

"Where the commission by any person of an offence under this Act is due to the act or default of some other person that other person shall be guilty of the offence, and a person may be charged with and convicted of the offence by virtue of this section whether or not proceedings are taken against the first mentioned person."

These provisions in the Act make its policy clear. To secure a conviction for an offence under section 11 (2), the prosecutor is relieved of the burden of proving any intent on the part of any person. If that burden rested on him, it might often prove very difficult to discharge. It suffices to prove (a) that the accused was offering the goods and (b) that, at the time he did so, an indication had been given that the goods were being offered at a price less than in fact was the case.

That could happen without the person offering the goods being in any way to blame. Parliament, therefore, provided the accused person with a number of defences and cast upon him the burden of establishing his innocence. If he was going to allege that the events which took place and amounted to the commission of the offence were due to the act or default of another or in consequence of information supplied by another person, he had to comply with section 24 (2) and then it would be open to the authorities to charge that other person, if they thought fit, but, whether or not another person is charged, the accused is entitled to be acquitted if he proves that he took all reasonable precautions and exercised all due diligence to prevent the commission of the offence and that it was due to the act or default of another or, if that is the defence put forward, in consequence of information supplied by another.

Difficulties may arise with regard to the interpretation of section 23. The offence may have been committed as the result of the act or default of another without that other person having done the acts which constitute

the offence. Here the magistrates found, as I have said, that the original act or default was that of Miss Rogers, but she does not appear to have had any responsibility for the poster in the window indicating that the packs were for sale at less than 3s. 11d. Clement, on the other hand, was responsible for the poster in the window but he had not displayed or authorised the display of the packs for sale at the price of 3s. 11d.; and if, despite the notice, no such packs had been displayed for sale, no offence under section 11 (2) would have been committed.

In this case the magistrates found not that Clement had committed or had been a party to the offence but that it had occurred through his failure to carry out the appellants' policy and/or to correct the errors of his staff.

The language of the first part of section 23 might be understood to mean that on the facts of this case if Miss Rogers or Mr. Clement had been prosecuted, they would have been convicted though neither of them had done the acts which constitute the offence. In this case one has not to decide that question, and section 23 is only relevant with regard to the meaning to be given to the words "act or default of another person" in section 24 (1) (a). In that subsection, whatever they may mean in section 23, they must be given their literal meaning. To succeed on this defence it is not necessary to show that some other person did the acts which constitute the offence. It will suffice to show that the acts were done as a result of an act or default of another person.

If the chain of supermarkets owned and run by the appellants, some eight hundred we were told, were owned and run by an individual or partnership, then it could not be disputed that Mr. Clement was another person within the meaning of the subsection. Does he cease to be "another person" because the stores are owned by a limited company?

Further, if the stores were owned and run by an individual or partnership and that individual or the partners had themselves exercised all due diligence, is it right that they should be held not to have done so because a shop manager of theirs has not done so? And has the statute here to be interpreted differently where a company is accused than where the accused is an individual?

Prima facie one would have thought it unlikely that Parliament intended "another person" to have a different meaning in relation to a company from that in relation to an individual or that the ambit of section 24 (1) (b) should differ depending on whether the owner of the shop was a company or individual.

In R. C. Hammett Ltd. v. Crabb (1931) 95 J.P. 182 Lord Hewart C.J. and Avory J. held, in relation to the Sale of Food (Weights and Measures) Act 1926, that whether or not the principle charged had exercised due diligence was a question of fact in every case. In that case as in this the accused company was seeking as a matter of defence to prove due diligence.

In this case as in that, in my opinion, the questions whether there was due diligence and whether all reasonable precautions were taken are questions of fact.

R. C. Hammett Ltd. v. London County Council (1933) 97 J.P. 105 appears to be the first reported case where the extent of a statutory defence similar in many respects to that in this case was considered. There

the prosecution was under the Sale of Food (Weights and Measures) Act 1926. There the Divisional Court (Lord Hewart C.J., Avory and Acton JJ.) dismissed the appeal against conviction on the ground that there was evidence on which quarter sessions could arrive at the opinion that due diligence was not used by the shop manager, an assistant at the shop being the actual offender, and that for the purpose of the Act the company was responsible for the absence of due diligence on his part though in all other respects the company had exercised due diligence.

Lord Hewart distinguished this case from the earlier Hammett case on the ground that in that case the evidence was clear that there was due diligence on the part of everybody down to the very person who had committed the act. He held that the justices were entitled to come to the conclusion that for that lack of due diligence the appellants were responsible.

I do not myself regard this as a satisfactory decision. No authorities were cited for the proposition that the company could not establish that they had acted with due diligence if a shop manager of theirs had not exercised due diligence and, in relation to this defence, the question is not was the company responsible for the act of its servant and for his omissions but whether due diligence had been exercised by the company.

In the course of the argument a great many cases were cited with regard to the criminal liability of a company. A company can only act through individuals, and it is well established that a company can be criminally liable even if the offence involves proof of an intent (Mousell Brothers Ltd. v. London and North-Western Railway Co. [1917] 2 K.B. 836: Director of Public Prosecutions v. Kent and Sussex Contractors Ltd. [1944] K.B. 146).

If an offence under section 11 (2) is committed by a company, the acts necessary to constitute the offence must have been done by individuals in their employ. Here the question is not whether the company is criminally liable and responsible for the act of a particular servant but whether it can escape from that liability by proving that it exercised all due diligence and took all reasonable precautions and that the commission of the offence was due to the act or omission of another person. That, in my view, is a very different question from that of a company's criminal responsibility for its servants' acts.

The Act does not exclude a person in the employ of a company from being "another person." In Beckett v. Kingston Bros. (Butchers) Ltd. [1970] 1 Q.B. 606, it was argued that it did. That argument was rejected by Bridge J., and rightly, in my opinion. If it had prevailed, the statutory defence would seldom avail an accused company for seldom would it be possible to prove that the act or default was that of someone not employed by the company.

In Series v. Poole [1969] 1 Q.B. 676, a case decided in 1967 and which does not appear to have been cited to the Court in Beckett v. Kingston Bros. (Butchers) Ltd., the appeal to the Divisional Court was from the dismissal of an information for an offence under regulations made under the Road Traffic Act 1960 alleging that the accused unlawfully failed to cause to be kept a current record of the driving periods of his driver.

The Road Traffic Act 1962 by section 20 provided that it should be a

defence to prove in such proceedings that the accused had used all due diligence to secure compliance with the regulation.

While I think that on the facts it would be difficult to say that the accused had exercised all due diligence, that was not the ground on which the appeal by the prosecutor was allowed. Lord Parker C.J., with whose judgment Salmon L.J. and Widgery L.J. agreed, regarded the "absolute obligation under section 186 of the Act of 1960" as a personal obligation which an individual could not evade by delegating it to someone else.

I do not in the least wish to criticise this. Section 186 of the Act of 1960 under which the prosecution was brought created an absolute obligation and as the law stood prior to 1962 what he said was clearly right. By the Road Traffic Act 1962 Parliament qualified that absolute obligation and for the first time provided a defence dependent on proof of the exercise of due diligence by the accused.

That could not be established merely by showing that a good system had been devised and a person thought to be competent put in charge of it. It would still be necessary to show due diligence on the part of the accused in seeing that the system was in fact operated and the person put in charge of it doing what he was supposed to do. From May to September 1966, the accused does not appear to have taken any steps to ascertain whether the person he had put in charge was doing what she had been instructed to do. If he had taken any steps, he would have found that she was not, and that is why I have said that on the facts in that case it would be difficult to say that the exercise of due diligence had been proved.

Lord Parker C.J. said that a man under the duty imposed by section 186 might reasonably appoint someone else to perform his duty "his alter ego" and in that case it seemed to him that if the alter ego failed in his duty the employer is liable. He went on to say that to rely on a defence under section 20 of the Act of 1962 an employer must show that the alter ego has observed due diligence.

That an employer, whether a company or an individual, may reasonably appoint someone to secure that the obligations imposed by the Act are observed cannot be doubted. Only by doing so can an employer who owns and runs a number of shops or a big store hope to secure that the Act is complied with, but the appointment by him of someone to discharge the duties imposed by the Act in no way relieves him from having to show that he has taken all reasonable precautions and had exercised all due diligence if he seeks to establish the statutory defence.

He cannot excuse himself if the person appointed fails to do what he is supposed to do unless he can show that he himself has taken such precautions and exercised such diligence. Whether or not he has done so is a question of fact and while it may be that the appointment of a competent person amounts in the circumstances of a particular case to the taking of all reasonable precautions, if he does nothing after making the appointment to see that proper steps are in fact being taken to comply with the Act, it cannot be said that he has exercised all due diligence.

I do not think that the Act is so narrowly drawn that to rely on the defence under section 24 an employer must show that the alter ego has

observed due diligence. That is not, in my opinion, what the Act provides. He has to show that he used due diligence, and it does not suffice for him to show that others did so.

Lord Parker's reference to an alter ego may have had its origin in the statements made by Viscount Haldane L.C. in Lennard's Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd. [1915] A.C. 705. He said, at p. 713:

"My Lords, a corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation. That person may be under the direction of the shareholders in general meeting; that person may be the board of directors itself, or it may be, and in some companies it is so, that that person has an authority co-ordinate with the board of directors given to him under the articles of association, and is appointed by the general meeting of the company, and can only be removed by the general meeting of the company."

Following this, Denning L.J. in H. L. Bolton (Engineering) Co. Ltd. v. T. J. Graham & Sons Ltd. [1957] 1 Q.B. 159, 172 said:

"A company may in many ways be likened to a human body. It has a brain and nerve centre which controls what it does. It also has hands which hold the tools and act in accordance with directions from the centre. Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind or will. Others are directors and managers who represent the directing mind and will of the company, and control what it does. The state of mind of these managers is the state of mind of the company and is treated by the law as such."

If, when Denning L.J. referred to directors and managers representing the directing mind and will of the company, he meant, as I think he did, those who constitute the directing mind and will, I agree with his approach.

These passages, I think, clearly indicate that one has in relation to a company to determine who is or who are, for it may be more than one, in actual control of the operations of the company, and the answer to be given to that question may vary from company to company depending on its organisation. In my view, a person who is in actual control of the operations of a company or of part of them and who is not responsible to another person in the company for the manner in which he discharges his duties in the sense of being under his orders, cannot be regarded as "another person" within the meaning of sections 23 and 24 (1) (a).

Section 20 provides that where an offence under the Act has been committed by a body corporate and is proved to have been committed with the consent or connivance or to be attributable to any neglect on the part of any director, manager, secretary or other similar officer of the

body corporate or any person who was purporting to act in any such capacity, he, as well as the company, is to be guilty of the offence. Parliament by this section may have attempted to identify those who normally constitute the directing mind and will of a company and by this section have sought to make clear that although they are not other persons coming within sections 23 and 24 (1) (a), they may still be convicted.

However this may be, shop managers in a business such as that conducted by the appellants - and their number may be of the order of eight hundred if the appellants have that number of shops - cannot properly be regarded as part of the appellants' directing mind and will and so can come within the reference to "another person" in sections 23 and 24 (1) (a).

In my opinion, the ratio decidendi in Hammett Ltd. v. London County Council, 97 J.P. 105 and in Series v. Poole [1969] 1 Q.B. 676 was wrong.

For the reasons I have stated, in my view this appeal should be allowed.

LORD PEARSON. My Lords, in September 1969, the company (Tesco Supermarkets Ltd.) was selling Giant Size packets of Radiant washing powder at a price of 2s. 11d., being a reduced price 1s. below the price of 3s. 11d. which was the ordinary price normally recommended by the manufacturers. Affixed to the window of the company's shop at Northwich in Cheshire was a large poster, of which the upper part bore the legend "Radiant 1s. off Giant Size 2s. 11d." Advertisements to the same effect had been inserted in local and national newspapers. Initially there was at the shop a stock of "flash packs," that is to say, Giant Size packets of the washing powder bearing the legend "1s. off recommended price."

Things went wrong on September 25 and 26, 1969. The stock of such "flash packs" was exhausted. On the evening of September 25 Miss Rogers, an assistant at the shop, discovered that no such "flash packs" remained on display, and she filled up the "fixture" with ordinary packets of the washing powder marked with the ordinary price of 3s. 11d. and she failed to inform the shop manager, Mr Clement, of the dearth of "flash packs" or the action which she had taken. Mr. Clement failed to check the washing powder "fixture" on September 26, notwithstanding his entry in his weights and measures book for that morning "All special offers O.K." On the morning of September 26, a customer entered the shop expecting to find a "flash pack" at 2s. 11d. but was able to find only a packet offered at the ordinary price of 3s. 11d. and he had to buy it at that price.

The relevant provisions of the Trade Descriptions Act 1968 are as follows:

Section 11 (2):

"If any person offering to supply any goods gives, by whatever means, any indication likely to be taken as an indication that the goods are being offered at a price less than that at which they are in fact being offered he shall, subject to the provisions of this Act, be guilty of an offence."

Section 20 (1):

"Where an offence under this Act which has been committed by a body corporate is proved to have been committed with the consent and connivance of, or to be attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the body corporate, or any person who was purporting to act in any such capacity, he as well as the body corporate shall be guilty of that offence and shall be liable to be proceeded against and punished accordingly."

Section 23:

"Where the commission by any person of an offence under this Act is due to the act or default of some other person that other person shall be guilty of the offence, and a person may be charged with and convicted of the offence by virtue of this section whether or not proceedings are taken against the first mentioned person."

Section 24 (1): "In any proceedings for an offence under this Act it shall,

subject to subsection (2) of this section, be a defence for the person charged to prove - (a) that the commission of the offence was due to a mistake or to reliance on information supplied to him or to the act or default of another person, an accident or some other cause beyond his control; and (b) that he took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by himself or any person under his control."

In my opinion, the first conclusions to be drawn from the application of these provisions to the facts of the present case are as follows:

(1) An offence was committed under section 11 (2).

(2) Prima facie the company has committed and is liable for the offence, because the company through its servants offered to supply the goods and eve the indication of the reduced price. The case is similar to Coppen v. Moore (No. 2) [1898] 2 Q.B. 306, decided under the Merchandise Marks Act 1887, s. 2, where Lord Russell C.J. said, at pp. 312-313:

"The question, then, in this case, comes to be narrowed to the simply point, whether upon the true construction of the statute here in question the master was intended to be made criminally responsible for acts done by his servants in contravention of the Act, where such acts were done, as in this case, within the scope or in the course of their employment. In our judgment it was clearly the intention of the legislature to make the master criminally liable for such acts, unless he was able to rebut the prima facie presumption of guilt by one or other of the methods pointed out in the Act."

Also relevant is the judgment of Lord Goddard C.J. in Melias Ltd. v. Preston [1957] 2 Q.B. 380.

(3) In the present case the company was the master of the persons who committed the acts or defaults whereby the offence was committed, and as in Coppen v. Moore (No. 2) [1898] 2 Q.B. 306 the company may rebut the presumption of guilt in one or other of the methods pointed out by

the Act. Section 11 (2) is expressly made "subject to the provisions of this Act" and therefore is subject to section 24 (1). The company has sought to prove under section 24 (1) (a) that "the commission of the offence was due ... to the act or default of another person," naming Mr. Clement as the other person. In order to complete its defence the company must also prove that the company took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by itself or any person under its control. The question in this appeal is whether the company has proved those two points.

Your Lordships are not concerned in this appeal with the questions whether Miss Rogers and Mr. Clement or either of them could be held liable under section 23 for the commission of the offence, and whether they or either of them would have a defence under section 24. I express no opinion on those questions.

The magistrates have said in paragraph 7 of the case stated that they were of opinion that

"(ii) the commission of the offence was due to the act or default of the said Clement by his failure to see that the appellants' policy was correctly carried out and/or to correct the errors of the staff under him; (iii) the appellants had exercised all due diligence in devising a proper system for the operation of the said store and by securing so far as was reasonably practicable that it was fully implemented and thus had fulfilled the requirements of section 24 (1) (b); (iv) the appellants could not rely upon the act or default of the said Clement as he was not 'another person' within the meaning of section 24 (1) (a); ..."

In giving their reasons for the opinion in (iv) they said that they reached the conclusion that the original act or default was that of Miss Rogers and the act or default of Mr. Clement was in his failure to instruct or supervise her; Mr. Clement represented the company in his supervisory capacity and for his lack of due diligence the company was responsible on the principle laid down in R. C. Hammett Ltd. v. London County Council (1933) 97 J.P. 105; accordingly, Mr. Clement was not "another person" for the purposes of section 24 (1) (a) of the Act.

The magistrates' opinion that Mr. Clement was not "another person" - a person other than the company - seems to me to be clearly unsustainable. It would be immediately obvious in the case of an individual proprietor of a business and the manager of one of his shops. It is less obvious in the case of a company which can only act through servants or agents and has generally in the law of tort and sometimes in criminal law vicarious responsibility for what they do on its behalf. But vicarious responsibility is very different from identification. There are some officers of a company who may for some purposes be identified with it, as being or having its directing mind and will, its centre and ego, and its brains. Lennard's Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd. [1915] A.C. 705, 713; H. L. Bolton (Engineering) Co. Ltd. v. T. J. Graham & Sons Ltd. [1957] 1 Q.B. 159, 171-173; The Lady Gwendolen [1965] P. 294, 343. The reference in section 20 of the Trade Descriptions Act 1968 to "any director, manager, secretary or other similar officer of the body corporate" affords

a useful indication of the grades of officers who may for some purposes be identifiable with the company, although in any particular case the constitution of the company concerned should be taken into account. With regard to the word "manager" I agree with Fisher J. [1971] 1 Q.B. 133 who said, in his judgment in the present case, at p. 142, that the word refers to someone in the position of managing the affairs of the company, and would not extend to include a person in the position of Mr. Clement. In the present case the company has some hundreds of retail shops, and it would be far from reasonable to say that every one of its shop managers is the same person as the company.

The Divisional Court, although they affirmed the conviction and dismissed the company's appeal, took a view that was different from that of the magistrates. They held that Mr. Clement was "another person" distinct from the company, so that the company proved its point under paragraph (a) of section 24 (1). But they held that the company failed under paragraph (b). Their reasoning was that, although the company had devised a proper system for taking precautions and exercising due diligence to avoid the commission of an offence, the company had delegated the function of operating the system to employees, of whom Mr. Clement was one; that Mr. Clement had operated the system negligently; the company was responsible for the negligent operation of the system by one of its delegates; and so the company failed to prove that it had taken all reasonable precautions and exercised all due diligence to prevent the commission of the offence. Some extracts from the judgment of Fisher J. [1971] 1 Q.B. 133 will show clearly how the Divisional Court reached their conclusion. He said, at p. 143:

"The taking of such precautions and the exercise of such diligence involves, or may involve, two things. First the setting up of an efficient system for the avoidance of offences under the Act. Secondly the proper operation of that system. Inevitably the second part, the operation of the system, will in most cases have to be delegated by the company to employees falling outside those mentioned in section 20. The question which this court has to consider is whether a company can be said to have satisfied the requirements of paragraph (b) if it satisfies the justices that it has set up an efficient system, or a system which cannot be criticised, or whether it is deprived of the defence under that section if it is shown that there has been a failure by someone to whom the duty of carrying out the system was delegated properly to carry out that function."

Later he said, at p. 145:

"if it be the case that the manager was a person to whom [the appellants] had delegated in respect of that particular shop their duty to take all reasonable precautions and exercise all due diligence to avoid the commission of such an offence, and if the manager had failed properly to carry out that duty, then [the appellants] are unable to show that they have satisfied paragraph (b) of section 24 (1)."

The conclusion was, at p. 146:

"It seems clear to me that a person in the position of the manager of a shop, a supermarket, is properly to be considered as being a person

to whom [the appellants] had, so far as concerned that shop, delegated their duty of taking all reasonable precautions and exercising all due diligence to avoid the commission of an offence; and it seems to me that in the light of the findings which I have just read, it was impossible for the justices to find that [the appellants] had satisfied the requirements of section 24 (1) (b)."

Fisher J. also cited the case of Series v. Poole [1969] 1 Q.B. 676, in which it was held that the defendant was liable under section 186 of the Road Traffic Act 1960, and had failed to prove a defence under section 20 of the Road Traffic Act 1962, when he had "delegated" the checking of certain records to a lady secretary and she had been negligent in the performance of that task. In his judgment in that case Lord Parker C.J. had said, at pp. 683-684:

"If I can go by stages, the absolute obligation under section 186 of the Act of 1960 is a personal obligation, personal in this sense, that if an employer, acting perfectly reasonably, puts some competent person in charge to perform his, the employer's, duty, the employer remains liable if the servant fails in his duty. ... He may, as I have said, acting perfectly reasonably appoint somebody else to perform his duty, his alter ego, and in that case, as it seems to me, if the alter ego fails in his duty the employer is liable. Equally, if the employer seeks to rely on the defence under section 20, he must show that the alter ego has observed due diligence."

Clearly the Divisional Court's decision was based on the theory of "delegation." One has to examine the meaning of the word "delegation" in relation to the facts of this case and the provisions of the Trade Descriptions Act 1968, ss. 11 (2) and 24. In one sense the meaning is as wide as the principle of the master's vicarious liability for the acts and omissions of his servants acting within the scope of their employment. In this sense the master can be said to "delegate" to every servant acting on his behalf all the duties which the servant has to perform. But that cannot be the proper meaning here. If the company "delegated" to Miss Rogers the duty of filling the fixture with appropriate packets of washing powder, and "delegated" to Mr. Clement the duty of supervising the proper filling of fixtures and the proper exhibition or withdrawal of posters proclaiming reduced prices, then any master, whether a company or an individual, must be vicariously liable for all the acts and omissions of all its or his servants acting on its or his behalf. That conclusion would defeat the manifest object of section 24 which is to enable defendants to avoid vicarious liability where they were not personally at fault.

Section 24 requires a dividing line to be drawn between the master and any other person. The defendant cannot disclaim liability for an act or omission of his ego or his alter ego. In the case of an individual defendant, his ego is simply himself, but he may have an alter ego. For instance, if he has only one shop and he appoints a manager of that shop with full discretion to manage it as he thinks fit, the manager is doing what the employer would normally do and may be held to be the employer's alter ego. But if the defendant has hundreds of shops, he could not be expected personally to manage each one of them and the manager of one of his

shops cannot in the absence of exceptional circumstances be considered his alter ego. In the case of a company, the ego is located in several persons, for example, those mentioned in section 20 of the Act or other persons in a similar position of direction or general management. A company may have an alter ego, if those persons who are or have its ego delegate to some other person the control and management, with full discretionary powers, of some section of the company's business. In the case of a company, it may be difficult, and in most cases for practical purposes unnecessary, to draw the distinction between its ego and its alter ego, but theoretically there is that distinction.

Mr. Clement, being the manager of one of the company's several hundreds of shops, could not be identified with the company's ego nor was he an alter ego of the company. He was an employee in a relatively subordinate post. In the company's hierarchy there were a branch inspector and an area controller and a regional director interposed between him and the board of directors.

It was suggested in the argument of this appeal that in exercising supervision over the operations in the shop Mr. Clement was performing functions of management and acting as a delegate and alter ego of the company. But supervision of the details of operations is not normally a function of higher management: it is normally carried out by employees at the level of foremen, charge hands, over lookers, floor managers and "shop" managers (in the factory sense of "shop"). Also reference was made to the case of R. C. Hammett Ltd. v. London County Council (1933) 97 J.P. 105, in which, when the reported arguments are taken into account the ground of decision appears to have been that, for the purposes of the Sale of Food (Weights and Measures) Act 1926, ss. 5 (2) and 12 (5), the employer had to show due diligence on behalf of all the employees concerned except the actual offender. In my opinion, there was no justify cation for drawing the line of division between the company and its employees at that point, and the case was wrongly decided. As to the case of Series v. Poole [1969] 1 Q.B. 676, the decision of the Divisional Court seems to have been in accordance with the general merits of the case, but the treatment of the secretary as an alter ego of the employer is difficult to uphold, when she had merely been instructed by him to check the records and had failed to do so diligently.

I would allow the appeal.

LORD DIPLOCK. My Lords, this appeal turns on the meaning to be given to penal provisions contained in the Trade Descriptions Act 1968. The Act, which replaces the Merchandise Marks Acts 1887 to 1953, is concerned with consumer protection. It is a criminal statute and creates a number of offences of giving inaccurate or inadequate information to customers in the course of business transactions relating to the supply of goods or services. Offenders are liable to a fine or to imprisonment for not more than two years or to both.

Nowadays most business transactions for the supply of goods or services are not actually conducted by the person who in civil law is regarded as the party to any contracts made in the course of the business, but by servants or agents acting on his behalf. Thus, in the majority of

cases the physical acts or omissions which constitute or result in an offence under the statute will be those of servants or agents of an employer or principal on whose behalf the business is carried on. That employer or principal is likely to be very often a corporate person, as in the instant appeal.

Consumer protection, which is the purpose of statutes of this kind, is achieved only if the occurrence of the prohibited acts or omissions is prevented. It is the deterrent effect of penal provisions which protects the consumer from the loss he would sustain if the offence were committed. If it is committed he does not receive the amount of any fine. As a taxpayer he will bear part of the expense of maintaining a convicted offender in prison.

The loss to the consumer is the same whether the acts or omissions which result in his being given inaccurate or inadequate information are intended to mislead him, or are due to carelessness or inadvertence. So is the corresponding gain to the other party to the business transaction with the consumer in the course of which those acts or omissions occur. Where, in the way that business is now conducted, they are likely to be acts or omissions of employees of that party and subject to his orders, the most effective method of deterrence is to place upon the employer the responsibility of doing everything which lies within his power to prevent his employees from doing anything which will result in the commission of an offence.

This, I apprehend, is the rational and moral justification for creating in the field of consumer protection, as also in the field of public health and safety, offences of "strict liability" for which an employer or principal, in the course of whose business the offences were committed, is criminally liable, notwithstanding that they are due to acts or omissions of his servants or agents which were done without his knowledge or consent or even were contrary to his orders. But this rational and moral justification does not extend to penalising an employer or principal who has done everything that he can reasonably be expected to do by supervision or inspection, by improvement of his business methods or by exhorting those whom he may be expected to control or influence to prevent the commission of the offence (see Lim Chin Aik v. The Queen [1963] A.C. 160, 174; Sweet v. Parsley [1970] A.C. 132, 163). What the employer or principal can reasonably be expected to do to prevent the commission of an offence will depend upon the gravity of the injury which it is sought to prevent and the nature of the business in the course of which such offences are committed. The Trade Descriptions Act 1968 applies to all businesses engaged in the supply of goods and services. If considerations of cost and business practicability did not play a part in determining what employers carrying on such business could reasonably be expected to do to prevent the commission of an offence under the Act, the price to the public of the protection afforded to a minority of consumers might well be an increase in the cost of goods and services to consumers generally.

My Lords, I approach the question of construction of the Trade Descriptions Act 1968 in the expectation that Parliament intended it to

give effect to a policy of consumer protection which does have a rational and moral justification.

The offence with which the instant appeal is concerned is one created by section 11 (2) of the Act:

"If any person offering to supply any goods gives, by whatever means, any indication likely to be taken as an indication that the goods are being offered at a price less than that at which they are in fact being offered he shall, subject to the provisions of this Act, be guilty of an offence."

The section is dealing with offers to enter into contracts for the sale of goods. Prima facie, the offence is committed by the person who would be a party to the contract of sale resulting from acceptance of the offer, notwithstanding that the actual offer was made and the prohibited indication given by a servant or agent acting within the scope of his actual or ostensible authority on his employer's or principal's behalf. So construed the subsection creates an offence of "strict liability" on the part of the employer or principal. But this strict liability is expressed to be "subject to the provisions of this Act."

This construction is, in my view, confirmed by sections 23 and 24 of the Act. It is convenient to deal with these sections in reverse order and in their application to an employer or principal who is a natural person before considering the position of an employer or principal who is a corporation.

Section 24 (1) provides:

"In any proceedings for an offence under this Act it shall, subject to subsection (2) of this section, be a defence for the person charged to prove - (a) that the commission of the offence was due to a mistake or to reliance on information supplied to him or to the act or default of another person, an accident or some other cause beyond his control; and (b) that he took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by himself or any person under his control."

The section speaks of "the commission of the offence" notwithstanding that the person charged may have a defence to the charge under subsection (1). This language refers to a stage in the proceedings at which the prosecution have proved facts necessary to constitute an offence of strict liability on the part of a principal. This is all that it is incumbent upon the prosecution to prove. The onus then lies upon the principal to prove facts which establish a defence under the subsection. The "strict liability" of the principal is thus qualified; but the onus of proving that he was not to blame lies upon him. It is reasonable that this should be so since the facts which can constitute the defence lie within his knowledge and not within that of the prosecution.

There are two limbs to the defence. Under paragraph (a) the person charged must prove that the commission of the offence was due to one of the causes specified in that paragraph. They have the common characteristic that the offence must have been committed without his knowledge or acquiescence. The particular cause which is relevant to the

instant appeal is "the act or default of another person." But the person charged must also prove under paragraph (b) that he did all that could reasonably be expected of him to prevent offences of that kind being committed by himself or by any person under his control - a class of persons which would include his servants or agents.

Where the employer or principal is a natural person I can see no reason in linguistics or justice for construing the expression "another person" in paragraph (a) as excluding a servant or agent of the employer or principals however exalted his grade, whose actual physical act or omission resulted in a commission of the offence. They all fall within the expression "any person under his control" and his duty in respect of their acts and omissions is dealt with in paragraph (b).

Where the cause of the commission of the offence by him which is relied upon by the person charged is the act or default of another person, subsection (2) requires him, as a condition of relying on the defence, to provide the prosecution, not less than seven days before the hearing, with such information as he possesses which may lead to the identification of that other person. This procedure is calculated to serve two purposes. One obvious purpose is to give to the prosecution in advance of the hearing an opportunity to investigate the validity of the defence. The clue to the other purpose, which is important to the deterrent policy of the Act, is to be found in section 23. It provides:

"Where the commission by any person of an offence under this Act is due to the act or default of some other person that other person shall be guilty of the offence, and a person may be charged with and convicted of the offence by virtue of this section whether or not proceedings are taken against the first mentioned person."

It is important to observe that this section makes guilty of the offence created by some other section of the Act, such as section 11 (2), persons, such as servants or agents, who do not fall within the description contained in that other section of the person by whom the offence can be committed. They can nevertheless be charged and convicted of that offence by virtue of section 23 if the commission of the offence by a person who does fall within the description contained in that other section was due to any act or default by them.

In the expression "act or default" in section 23 and in paragraph (a) of section 24 (1) the word "act" is wide enough to include any physical act of the other person which is causative of the offence. But the use of the word "default" instead of the neutral expression "omission" connotes a failure to act which constitutes a breach of a legal duty to act. A legal duty to act may arise independently of any contract or it may be a duty owed to another person arising out of a contract with him. That in paragraph (a) the word "default" embraces a failure to act which is in breach by a servant of his contract of employment, is, in my view, made apparent by paragraph (b) which requires that a person who relies on this defence must show "that he took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by ... any person under his control." This contemplates that the person charged has the

power to control the acts or defaults of the other person. The only legal source of such power to control is contractual.

But even where the power to control is derived from a contract, the contract need not necessarily be made directly between the person who has the power to control and the "person under his control." In the context of offences committed in the course of business transactions, a superior servant may owe a duty to his employer under his contract of employment to supervise the work of an inferior fellow servant in the same employment and to give him orders as to how he should do his work; while the inferior servant may owe a corresponding duty to the same employer under his own contract of employment to accept the supervision and to comply with the orders of the superior servant. A failure to supervise, or an omission to give orders to, an inferior servant if it constitutes a breach by the superior servant of his contract of employment with his employer, may be a "default of another person" upon which the employer can rely as a defence under paragraph (a).

So construed these sections provide for a rational and just system of enforcement of the penal provisions of the Act which is calculated to deter anyone engaged in the business of supplying goods or services, whether as principal or as a servant, from conduct, whether careless or intentional, which would result in the commission of an offence, and, where it fails to deter, to impose a criminal sanction upon those who are really to blame and not upon those who are innocent of any carelessness or wrongful intent.

The enforcing authority is the local weights and measures authority (section 26). The powers conferred upon its authorised officers to make test purchases, etc. (section 27), and to enter premises and inspect and seize goods and documents (section 28) are calculated to enable these officers to obtain evidence of the commission of an offence by the principal by whom or on whose behalf the business of supplying goods or services is carried on. It is then for the principal to identify the other person or persons (if any) to whose act or default the offence was actually due and to pass to the prosecutor the available identificatory information. If the principal is not able to do this, it shows a defect in the system which he has laid down for allocating among his servants the duty of taking precautions to avoid the commission of offences under the Act. There is no injustice in requiring him to lay down a reasonably effective system and in treating any failure to do so as a criminal offence. If, on the other hand, the principal is able to identify a person to whose act or default the offence was actually due, he still has to show that he himself exercised due diligence to devise an effective system to avoid such acts or defaults on the part of his servants and to satisfy himself that such system was being observed.

What amounts to the taking of all reasonable precautions and the exercise of all due diligence by a principal in order to satisfy the requirements of paragraph (b) of section 24 (1) of the Act depends upon all the circumstances of the business carried on by the principal. It is a question of fact for the magistrates in summary proceedings or for the jury in proceedings on indictment. However large the business, the principal cannot avoid a personal responsibility for laying down the system for avoiding the commission of offences by his servants. It is he alone who is party to their contracts of employment through which this can be done. But in

a large business, such as that conducted by the appellants in the instant appeal, it may be quite impracticable for the principal personally to undertake the detailed supervision of the work of inferior servants. It may be reasonable for him to allocate these supervisory duties to some superior servant or hierarchy of supervisory grades of superior servants, under their respective contracts of employment with him. If the principal has taken all reasonable precautions in the selection and training of servants to perform supervisory duties and has laid down an effective system of supervision and used due diligence to see that it is observed, he is entitled to rely upon a default by a superior servant in his supervisory duties as a defence under section 24 (1), as well as, or instead of, upon an act or default of an inferior servant who has no supervisory duties under his contract of employment.

Thus, the supervisory servant may have failed to give adequate instructions to the inferior servant or may have failed to take reasonable steps to see that his instructions were obeyed. In the former case the supervisory servant may alone be to blame. In the latter both may be to blame. Or it may be, as might have been the case in the instant appeal, the commission of the offence is due to a combination of separate acts or omissions by two more inferior servants none of which taken by itself would have resulted in the commission of an offence.

In the instant case there were findings of fact by the magistrates that the commission of the offence was due to the act or default of the appellants' servant Clement in his duties as branch manager to supervise the work of the staff under him, and that the appellants had fulfilled the requirements of paragraph (b) of section 24 (1). They had also fulfilled the requirements of section 24 (2) by serving a notice on the prosecutor identifying Clement as the other person to whose act or default the commission of the offence was due.

On these findings the appellants were, in my view, entitled to succeed in their defence under section 24. The magistrates, however, were of opinion that Clement was not in law "another person" within the meaning of paragraph (a) of section 24 (1) and, accordingly, convicted the appellants.

The Divisional Court were of opinion that Clement was "another person" but achieved the same result by dismissing the appeal upon the ground that under the Act a principal was personally responsible criminally for any failure by any of his servants or agents to exercise diligence in supervisory functions which he had required them to undertake.

The Divisional Court in reaching this conclusion did not rely upon the fact that the appellants are not a natural person but a corporation. But, before turning to the previous authorities which the Divisional Court felt bound to follow, it is convenient to deal with the legal consequences of the corporate character of the appellants, for this has been relied upon by the respondent in your Lordships' House as an alternative ground for dismissing the appeal.

To establish a defence under section 24 a principal who is a corporation must show that it "took all reasonable precautions and exercised all due diligence." A corporation is an abstraction. It is incapable itself of doing any physical act or being in any state of mind. Yet in law it is a person

capable of exercising legal rights and of being subject to legal liabilities which may involve ascribing to it not only physical acts which are in reality done by a natural person on its behalf but also the mental state in which that person did them. In civil law, apart from certain statutory duties, this presents no conceptual difficulties. Under the law of agency the physical acts and state of mind of the agent are in law ascribed to the principal, and if the agent is a natural person it matters not whether the principal is also a natural person or a mere legal abstraction. Qui facit per alium facit per se: qui cogitate per alium cogitate per se.

But there are some civil liabilities imposed by statute which, exceptionally, exclude the concept of vicarious liability of a principal for the physical acts and state of mind of his agent; and the concept has no general application in the field of criminal law. To constitute a criminal offence, a physical act done by any person must generally be done by him in some reprehensible state of mind. Save in cases of strict liability where a criminal statute, exceptionally, makes the doing of an act a crime irrespective of the state of mind in which it is done, criminal law regards a person as responsible for his own crimes only. It does not recognise the liability of a principal for the criminal acts of his agent: because it does not ascribe to him his agent's state of mind. Qui peccat per alium peccat per se is not a maxim of criminal law.

Due diligence is in law the converse of negligence and negligence connotes a reprehensible state of mind - a lack of care for the consequences of his physical acts on the part of the person doing them. To establish a defence under section 24 (1) (b) of the Act, a principal need only show that he personally acted without negligence. Accordingly, where the principal who relies on this defence is a corporation a question to be answered is: What natural person or persons are to be treated as being the corporation itself, and not merely its agents, for the purpose of taking precautions and exercising diligence?

My Lords, a corporation incorporated under the Companies Act 1948 owes its corporate personality and its powers to its constitution, the memorandum and articles of association. The obvious and the only place to look to discover by what natural persons its powers are exercisable, is in its constitution. The articles of association, if they follow Table A, provide that the business of the company shall be managed by the directors and that they may "exercise all such powers of the company" as are not required by the Act to be exercised in general meeting. Table A also vests in the directors the right to entrust and confer upon a managing director any of the powers of the company which are exercisable by them. So it may also be necessary to ascertain whether the directors have taken any action under this provision or any other similar provision providing for the coordinate exercise of the powers of the company by executive directors or by committees of directors and other persons, such as are frequently included in the articles of association of companies in which the regulations contained in Table A are modified or excluded in whole or in part.

In my view, therefore, the question: what natural persons are to be treated in law as being the company for the purpose of acts done in the course of its business, including the taking of precautions and the exercise or due diligence to avoid the commission of a criminal offence, is to be

found by identifying those natural persons who by the memorandum and articles of association or as a result of action taken by the directors, or by the company in general meeting pursuant to the articles, are entrusted with the exercise of the powers of the company.

This test is in conformity with the classic statement of Viscount Haldane L.C. in Lennard's Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd. [1915] A.C. 705. The relevant statute in that case, although not a criminal statute, was in pari materia, for it provided for a defence to a civil liability which excluded the concept of vicarious liability of a principal for the physical acts and state of mind of his agent.

There has been in recent years a tendency to extract from Denning L.J.'s judgment in H. L. Bolton (Engineering) Co. Ltd. v. T. J. Graham & Sons Ltd. [1957] 1 Q.B. 159, 172, 173 his vivid metaphor about the "brains and nerve centre" of a company as contrasted with its hands, and to treat this dichotomy, and not the articles of association, as laying down the test of whether or not a particular person is to be regarded in law as being the company itself when performing duties which a statute imposes on the company.

In the case in which this metaphor was first used Denning L.J. was dealing with acts and intentions of directors of the company in whom the powers of the company were vested under its articles of association. The decision in that case is not authority for extending the class of persons whose acts are to be regarded in law as the personal acts of the company itself, beyond those who by, or by action taken under, its articles of association are entitled to exercise the powers of the company. In so far as there are dicta to the contrary in The Lady Gwendolen [1965] P. 294 they were not necessary to the decision and, in my view, they were wrong.

But the only relevance of this to the appellants' defence under section 24 (1) of the Trade Descriptions Act 1968 was, as the magistrates rightly appreciated, whether the act or default of Clement was that of "another person" than the appellant company itself within the meaning of paragraph (a). The fact that the principal in the business transaction in the course of which an offence under section 11 (2) was committed was a corporation and not a natural person cannot affect the principal's duty to take all reasonable precautions and to exercise all due diligence under paragraph (b).

The articles of association of the appellants were not produced in evidence. Strictly speaking it may be that they should have been. But it is sufficiently evident from the findings of the magistrates as to the position held by Clement in the appellants' organisation that it was too lowly for him to have had confided in him by the board of directors the co-ordinate exercise of any of the powers of the company itself.

My Lords, there may be criminal statutes which upon their true construction ascribe to a corporation criminal responsibility for the acts of servants and agents who would be excluded by the test that I have stated to be appropriate in determining whether a corporation has itself committed a criminal offence. The Trade Descriptions Act 1968, however, so far from containing anything which compels one to reject that test, recognises, by section 20, the distinction between "any director, manager,

secretary or other similar officer of a body corporate" and other persons who are merely its servants or agents.

Section 20 (1) provides as follows:

"Where an offence under this Act which has been committed by a body corporate is proved to have been committed with the consent and connivance of, or to be attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the body corporate, or any person who was purporting to act in any such capacity, he as well as the body corporate shall be guilty of that offence and shall be liable to be proceeded against and punished accordingly."

The natural persons described in this subsection correspond with those who under the memorandum and articles of association of a company exercise the powers of the company itself. From this it follows that if any of them is guilty of neglect in the exercise of those powers such neglect is that of the company itself. That it cannot be relied upon as "the act or default of another person," so as to entitle the company to a defence under section 24 (1), is implicit in the provision in section 20 (1) that a person in the described category shall be guilty of an offence "as well as the body corporate." Without section 20 it would have been open to doubt whether persons whose acts were in law the acts of the company itself would have been guilty in their personal capacity also of the offence committed by the company.

For these reasons I agree with the Divisional Court that Clement was "another person" within the meaning of section 24 (1) (a). So all that now remains is to deal with the authorities which that court followed in holding that the appellants' defence nevertheless failed.

Those authorities start with the contrasting cases of R. C. Hammett Ltd. v. Crabb (1931) 95 J.P. 180 and R. C. Hammett Ltd. v. London County Council (1933) 97 J.P. 105. Both were prosecutions under the Sale of Goods (Weights and Measures) Act 1926. The relevant provisions of that Act exempted the employer from any penalty, though not from conviction, if he proved that he had used "due diligence to enforce the execution of this Act." But his right to exemption was conditional upon his laying an information against the person whom he charged as "the actual offender" and proving that that person had committed the offence in question. In R. C. Hammett Ltd. v. Crabb the employer charged as the actual offender his servant who had done the physical act which constituted the offence and that servant had been duly convicted. The Divisional Court held that the employer was entitled to rely upon his having used due diligence. In R. C. Hammett Ltd. v. London County Council the employer again charged as "the actual offender" his servant who had done the physical act which constituted the offence. But the servant charged was acquitted by the magistrates - which would seem to dispose of any claim by the employer to be exempt from the penalty, as the Divisional Court had itself previously decided in A. Walkling Ltd. v. Robinson (1929) 46 T.L.R. 151. The employer, nevertheless, appealed to quarter sessions. Quarter sessions found as a fact that a servant of the employer who was manager of the shop had not used due diligence in

supervising the servant who had been charged (and acquitted) as the actual offender, though in all other respects the employer had exercised due diligence. The case stated by quarter sessions for the opinion of the Divisional Court appears to have been treated as raising the question of law as to whether, in order to avail himself of the exemption from penalty, the employer had to prove that due diligence had been used not only by himself but also by all of his servants who exercised supervisory functions "down to the very person who had committed the act." The Divisional Court apparently thought that the employer had to do so and that this distinguished the case from R. C. Hammett Ltd. v. Crabb. But the language of the judgment is far from clear and affords no clue to the reasons which led the court to this conclusion.

This obscure and unsatisfactory judgment appears to have now passed into legal folklore as authority for a general proposition that where a statute creates a criminal offence in relation to a business transaction which is prima facie one of strict liability on the part of the principal who is the party to the business transaction in the course of which the offence is committed, but provides the principal with a defence if he proves that he has exercised due diligence, he cannot avail himself of that defence unless he proves that due diligence was also exercised by all of his servants whom he employed in any supervisory capacity however humble: see Beckett v. Kingston Bros. (Butchers) Ltd. [1970] 1 Q.B. 606 a case under the Trade Descriptions Act 1968.

The proposition assumed to have been established in R. C. Hammett Ltd. v. London County Council, 97 J.P. 105 has not been followed consistently. In Melias Ltd. v. Preston [1957] 2 Q.B. 380, which was also a case under the Sale of Food (Weights and Measures) Act 1926, there were three separate summonses against the employer, in respect of each of which he charged the manager of one of his shops as the actual offender. In two of the summonses the manager had himself done the physical act which constituted the offence (as in R. C. Hammett Ltd. v. Crabb, 95 J.P. 180). In the third his default was his failure in supervising an inferior servant who had done the physical act which constituted the offence (as in R. C. Hammett Ltd. v. London County Council). The Divisional Court drew no distinction between the three offences and upheld in each of them the employer's defence "that he had used due diligence" to enforce the execution of the Act.

In Series v. Poole [1969] 1 Q.B. 676 the case principally relied on by the Divisional Court in the instant appeal was a case under the Road Traffic Acts 1960 and 1962, which contained provisions in relation to the offence by a holder of a carrier's licence in failing to cause records to be kept by his drivers which are in pari materia to those of the Trade Descriptions Act 1968. It is a defence to him to prove "that he used all due diligence to secure compliance with those provisions." The holder of the carrier's licence who was a natural person, not a corporation, had instructed his secretary to supervise the keeping of the records by the drivers. The magistrates found that he himself had exercised all due diligence, but that his secretary had not.

Although R. C. Hammett Ltd. v. London County Council was cited in argument in the Divisional Court, Lord Parker C.J. preferred to decide the

case as "purely one of principle." That principle he stated, at p. 683, as being "if Parliament has put an absolute duty on some individual, he cannot evade that duty by delegating it to somebody else." So far the principle is unexceptionable. Any legal duty, whether arising at common law or imposed by statute, may generally be performed by the person upon whom it is imposed through the agency of some other person. But if it is not performed, the person upon whom the duty is imposed is liable for its non-performance. It is irrelevant that he instructed a servant or agent to perform it on his behalf, if that servant or agent failed to do so. All that is relevant is that the duty was not performed. When the duty is imposed upon a person by statute and non-performance is made a criminal offence without any requirement of mens rea this is what is meant by an offence of "strict liability."

The fallacy lies in the next step of the argument. Where Parliament in creating an offence of "strict liability" has also provided that it shall be a defence if the person upon whom the duty is imposed proves that heexercised all due diligence to avoid a breach of the duty, the clear intention of Parliament is to mitigate the injustice, which may be involved in an offence of strict liability, of subjecting to punishment a careful and conscientious person who is in no way morally to blame. To exercise due diligence to prevent something being done is to take all reasonable steps to prevent it. It may be a reasonable step for an employer to instruct a superior servant to supervise the activities of inferior servants whose physical acts may in the absence of supervision result in that being done which it is sought to prevent. This is not to delegate the employer's duty to exercise all due diligence; it is to perform it. To treat the duty of an employer to exercise due diligence as unperformed unless due diligence was also exercised by all his servants to whom he had reasonably given an proper instructions and upon whom he could reasonably rely to carry them out, would be to render the defence of due diligence nugatory and so thwart the clear intention of Parliament in providing it. For, pace R. C. Hammett Ltd. v. London County Council, 97 J.P. 105, there is no logical distinction to be drawn between diligence in supervising and diligence in acting, if the defaults of servants are to be treated in law as the defaults of their employer.

My Lords, the Divisional Court was, I think, right in treating the instant case as governed by the decision in Series v. Poole [1969] 1 Q.B. 676. But that case was, in my view, wrongly decided and the proposition of law for which R. C. Hammett Ltd. v. London County Council has been treated as an authority is also erroneous, although the actual decision in that case to dismiss the appeal could have been justified on quite different grounds.

I would allow this appeal.

Solicitors: Alsop, Stevens, Batesons & Co.; Gregory, Rowcliffe & Co.

J. A. G.