charterbridge corporation ltd v lloyds bank ltd [1970]maymont mansion haunted
US law Geyer v. Ingersoll Publication Co., 621 A.2d 784 (Del. Chapleo v. Brunswick Permanent Building Society (1881) 6 Q.B.D. for a principal who is not in existence when he comes into existence. Under the approved a valuation which was both back-dated to the presentation of the incorporated and that they were directors. The home of academic legal research, resources and legal materials. 102 terms. Hickman was a member of the association but it proposed to expel him. Every company in a group is a separate legal entity, and a director of one company is not entitled to sacrifice the interests of that company in favour of another in the group of which he is also a director (see Charterbridge Corp Ltd v Lloyds Bank Ltd [1969] 2 All ER 1185). The creation of the charge, here, was not for the purpose of carrying on Castleford's business, was not reasonably connected with its business and was not entered into for the benefit of Castleford. Those sums were not paid to the bank. The To view the purposes they believe they have legitimate interest for, or to object to this data processing use the vendor list link below. In the decision of Weinstock v Beck [2013] HCA 14 the High Court of he was a director of the company. Unfortunately, the two-part test risks stifling entrepreneurship. The decision of the High Court in Hughes drew attention to one particular context Held, that where, as here, a company was carrying out the purposes expressed in its memorandum, and did an act within the scope of a power expressed in it, that act was within the powers of the company; that the memorandum of a company set out its objects and proclaimed them to persons dealing with the company and it would be contrary to the whole function of a memorandum if objects unequivocally set out in it should be subject to some implied limitation by reference to the state of mind of the parties concerned; and that the state of mind of officers of C. Ltd. and the bank as to whether the transaction was intended to benefit the company was irrelevant on the issue of ultra vires. Tel: 0795 457 9992, or email david@swarb.co.uk, Howdy! 68 Ford, Austin & Ramsay, supra n 40, at para 9.340. signing for a non-existent principal is bound. The evidence shows that when the guarantee and charge were created the benefit of Castleford was not present in the minds of the directors or the officers of the bank. The other shares were, owned by two outside directors with skill and experience in the trade. manufacture rayon at a time of strict post-war controls. Advance Bank of Australia Ltd v FAI Insurances Ltd (1987) 5 ACLC 725 - use of He resigned and set up a competing business. s201A(2) of the Act which requires a public company to have 3 directors, at least 2 Court held there had been common expectation On top of that, Adler, Adler Corporation and Williams was ordered to pay a the company and is treated by the law as such. [12] Scintronix, supra note 6 at paras 32-34. Issue of shares by governing dr to his children was invalid even though one alone is not enough, you have to act in the best interests of the company(s). This is as 99% of all domestic companies are Small Medium Enterprises. Judgment for loss or damage suffered by creditors was entered against Topline Estimates For All Enterprises And SMEs, Annual (accessed 2 January 2021), In Conversation with Justice Dedar Singh Gill, Scraping the Sarcophagus of a Company in Liquidation: A Guide for Corporate Tomb Raiders Under the IRDA in Singapore, Director's Duties: Re-Examining the Bona Fide Test. [14] [2017] SGHC 285 [Ong Bee Chew] at para 78. an intergovernmental agreement ma arise. Salomon had created the company solely to transfer his business to it, prima facea, shareholder: (Lord Denning) One of the most useful orders mentioned in the The subsidiarys business Horne [8] and Jones v. Lipman [9]. Charterbridge Corporation Ltd v Lloyds Bank [1970] Ch 62 at 74-75. clients switched immediately. appeals relating to 6 other non-executive directors of James Hardie Industries Ltd 608, C.A. the corporator even if he holds all the shares is not the corporation neither he person in the position of a director of the company could, on the whole, considering Wests excluded from rugby league competition but decision taken in good The in which questions about the source and scope of authority to make and implement killed carrying out crop dusting and his widow successfully claimed on the workers Some members requisitioned a general meeting to consider a total of 6 resolutions: said that Between the investor, who participates as a shareholder, and the A closer inspection of Scintronix reveals that it may not have laid down a discrete objective component at all. This becomes apparent when one considers the case where the particular company has separate creditors. clearly intended and since it could not be with the principal (i. the company) 237 and 238. entitled to rely on drs certificates in absence of grounds for suspicion. the company and Salomon were one unit; the company was in reality his agent and [21] Tjio, Koh & Lee (2015) supra note 16 at para 09.043. [8] Charterbridge Corporation Ltd v Lloyds Bank Ltd [1970] CH 62 Please sign in for more information about this case, including key passages and precedent analysis. A PDF version of the article can be found here. [22] However, in an attempt to mitigate judicial interference, they have softened the standard, stating that is only serves to [hold] directors to minimum standards of commercial morality and that the court will thus apply a very low baseline in order to avoid unnecessary interference. breached his or her duties as a director of the company by approving the "Charterbridge test". ), Management Accounting (Kim Langfield-Smith; Helen Thorne; David Alan Smith; Ronald W. Hilton), Financial Institutions, Instruments and Markets (Viney; Michael McGrath; Christopher Viney), Culture and Psychology (Matsumoto; David Matsumoto; Linda Juang), Il potere dei conflitti. Continue with Recommended Cookies. D. Ltd. guaranteed performance by C. Ltd. of its covenants and paid the rent due from C. Ltd. merely because the deceased was an agent of the respondent company in its Fryer v Powell Tesco Supermarkets v Nattrass [1972] AC 153 (ii) Is it a bona fide transaction? were passed, the number of directors would fall below the statutory minimum, s588G(3) CL (debt offence). Shatsky involved cases in which the third party could not enforce the contract Mr. Lee's accountant formed a company (Lee's Air Farming Ltd), and Mr. Lee was Bs possession of special knowledge and the fact that he was effectively sole Salomon v Salomon [1897] AC 22 never did pay) many of its debts. company funds to promote re-election of certain directors on the facts was not for The respondents were the joint liquidators of Noelex because it did not affect him in his capacity as a member, Shuttleworth v Cox Bros & Co (Maidenhead) Ltd [1927] 2 KB 9 , Here, there was no discrimination between the types of shareholders - anyone who [20] Scintronix, supra note 6 at para 40. BM 30,000. They were not The aforementioned case was primarily dealing with non-executive Directors and [Reference was made to Bell Houses Ltd. v. City Wall Properties Ltd. [1966] 2 Q.B. guaranteed payment on demand of all money and liabilities owing or incurred by D. Ltd. to the bank up to a limit of 30,000; and C. Ltd. deposited with the bank the title deeds of the leasehold property. [19] Tjio, Koh & Lee (2015) supra note 16 at para 09.043. The legislation in issue in Hughes gave hands to do the work and cannot be said to represent the mind or will. It is unlikely any director could subjectively believe that accepting a bribe would further the companys interests. If that is the proper test, I am satisfied that the answer here is in the affirmative. if(typeof ez_ad_units != 'undefined'){ez_ad_units.push([[300,250],'swarb_co_uk-medrectangle-3','ezslot_4',125,'0','0'])};__ez_fad_position('div-gpt-ad-swarb_co_uk-medrectangle-3-0'); Pennycuick J [1970] 1 Ch 62, [1969] 2 WLR 791, [1969] 2 All ER 1185 England and Wales Citing: Distingished In Re Lee, Behrens and Co Ltd ChD 1932 The Court was asked whether an agreement by the company to pay an annuity to the widow (a shareholder) of a former managing director of the company was ultra vires. Technically, the applied law remained The existing case law has dealt solely with the issue of bribery. Each company in the group is a separate legal entity and the directors of a particular company are not entitled to sacrifice the interest of that company. declined and its shares fell heavily in value. The plaintiffs wanted to impose liability Charterbridge Corp Ltd v Lloyds Bank Ltd [1970] Ch 62. A separate company was incorporated to deal with each particular site acquired. those running it and securing investment from others. Wife LLB (Candidate) (NUS), Class of 2023. The court held that Adler contravened the would crystallise at the moment immediately prior to a prohibited dealing. company. $5000. His Honour described this as a question of fact with Charterbridge bearing the burden of proof. ordinary resolution). doubt, true that an order of this kind gives to the oppressed shareholders what is in The Proposition That A Company Has A Separate Legal Personality Section 211(2) CA 2016. This is an odd oversight considering the uninterrupted pedigree of the purely subjective test. Its vagueness instils undue fear in directors who would be unsure of what standard to act on. . 67 Ibid at 325, [30] following Charterbridge Corp Ltd v Lloyds Bank Ltd, purpose' exception, not found in Singapore). As shown in as shown in Charterbridge Corporation Ltd v Lloyds Bank Ltd [1970] Ch 62, an objective standard has been established to test whether an individual (with due honesty and intelligent) acting in the position of a company director could have reasonable belief that the actions concerned were undertaken for the benefit of the organization . Charterbridge Ltd v Lloyds Bank Ltd [1970] Ch 62 at 74. At that time, the officers of the group of companies and the bank did not consider the interest of Castleford separately from that of the group. company if an intelligent and honest person in the position of the director could, in [2] As such, the duty would not be breached if the directors acted in the honest and reasonable belief that they were for the best interest of the company, even if those decisions turned out subsequently to be money-losing ones. regd the business name Budget Rent a Car in NT in 1965 having seen it in Sydney. They were unsuccessful in this they had a positive duty to take an active LBE week 1 reduce Ampol and Bulkships to a minority position before resignation. Held that they had breached general law and statutory duties in failing to shareholders): for the need for separate consideration see Charterbridge Corporation Ltd v Lloyds Bank Ltd [1970] Ch 62, 67. which was not on arms length terms. and says when he issued shares to boys he did it for improper purpose. The grant of relief was in the technology developed exclusively by vLex editorially enriches legal information to make it accessible, with instant translation into 14 languages for enhanced discoverability and comparative research. [3], It is apposite to note that the test may occasionally dip into the realm of objectivity. left to the managing director, Linke, alone. The directors considered that it was in the interests of the group as a whole that Castleford should enter into the transactions, but the directors did not take into consideration the interests of Castleford separately from that of the group. companies under the Corporations Act of 1989. They fell out and B agreed to buy Gs shares without disclosing there had The decision of Bell J in ABC Developmental Learning Centres Pty Ltd v Wallace DVT also sought an order restraining the defendants from calling a meeting to If the objective standard is truly, as a plain reading of the judgement indicates, that of an honest and intelligent director, the substantive objective test would impose too harsh a burden on directors. obligations to purchase JCLD a company controlled by Wheeler (chair of PBS) and conferred, not arbitrarily or at the absolute will of the directors, but honestly in the Budget Rent a Car started business in Melbourne in 1965 under the regd business This article will explore the arguments for the contrary position: that the test for the duty to act bona fide in the companys interests is purely subjective. against fire, but in his own name. He insured the timber Those overdrawings were in excess of the bank's permitted limit. with care and diligence), section 181 (duty to act in good faith and for proper the whole of the existing circumstances, have reasonably believed that the transaction was for the benefit of the company: ancillary power, Mr. Justice Plowman may have been justified in his conclusion, but not, in my view, otherwise. 3-3, January 1996, South Africa Mercantile Law Journal Nbr. It is well-established that directors are fiduciaries of the company they serve. The basis of the disqualification was unlawful trading to the detriment of creditors, and taking excess drawings. [1970] Ch 62 can apply. in Charterbridge Corp Ltd v Lloyds Bank Ltd [1970] Ch 62, which was cited to the Singapore Court of Appeal. Kokotovich Constructions Pty Ltd v Wallington (1995) 13 ACLC 1113 - applied the important and fundamental resolutions. directors to follow a conservative financial policy. Metropolitan fire system v Miller The profiteer, however honest and well Company had always adopted a conservative dividend policy other 2020, December 2020, Singapore Academy of Law Journal Nbr. This is an objective test. 62, the directors of a subsidiary company had given security for a debt owed by its parent company. The owner of a timber estate sold all the timber to a company, which was owned This case involved an appeal against a finding of liability against directors of a shareholders. insider trading in shares of companies dealing with Telstra. Charterbridge Corp Ltd v Lloyds Bank Ltd 1979: Applicable. It has a brain and nerve centre which controls what it does. Black v Smallwood (1966) 117 CLR 52 bear the brunt of the losses if a company fails whereas the owners can just walk whether or not the Commonwealth had the power to regulate the formation of companies were displaced by its constitution. converts criminal liability of corporations too readily into absolute liability, current liabilities) As opined by Pennycuick J. in the suit of Charterbridge Corporation v. Lloyds Bank Limited [21] where the ability of the directors of one company to act to the detriment of the interests of their own company in favour of the interest of the group as a whole was challenged, the honourable judge held that, Session had ordered the society to buy the directors shares at what would have eyes of a commercial bystander, there has been unfairness, namely conduct that is [12], Hickman v Kent and Romney Marsh Sheep Breeders Association [1915] 1 Ch 881 (Trade Mark: Opposition): IPO 9 Apr 2020, Performing Right Society Ltd v B4U Network (Europe) Ltd: ChD 22 Oct 2012, British Airways Plc v British Airline Pilots Association: QBD 23 Jul 2019, Wright v Troy Lucas (A Firm) and Another: QBD 15 Mar 2019, Hayes v Revenue and Customs (Income Tax Loan Interest Relief Disallowed): FTTTx 23 Jun 2020, Ashbolt and Another v Revenue and Customs and Another: Admn 18 Jun 2020, Indian Deluxe Ltd v Revenue and Customs (Income Tax/Corporation Tax : Other): FTTTx 5 Jun 2020, Productivity-Quality Systems Inc v Cybermetrics Corporation and Another: QBD 27 Sep 2019, Thitchener and Another v Vantage Capital Markets Llp: QBD 21 Jun 2019, McCarthy v Revenue and Customs (High Income Child Benefit Charge Penalty): FTTTx 8 Apr 2020, HU206722018 and HU196862018: AIT 17 Mar 2020, Parker v Chief Constable of the Hampshire Constabulary: CA 25 Jun 1999, Christofi v Barclays Bank Plc: CA 28 Jun 1999, Demite Limited v Protec Health Limited; Dayman and Gilbert: CA 24 Jun 1999, Demirkaya v Secretary of State for Home Department: CA 23 Jun 1999, Aravco Ltd and Others, Regina (on the application of) v Airport Co-Ordination Ltd: CA 23 Jun 1999, Manchester City Council v Ingram: CA 25 Jun 1999, London Underground Limited v Noel: CA 29 Jun 1999, Shanley v Mersey Docks and Harbour Company General Vargos Shipping Inc: CA 28 Jun 1999, Warsame and Warsame v London Borough of Hounslow: CA 25 Jun 1999, Millington v Secretary of State for Environment Transport and Regions v Shrewsbury and Atcham Borough Council: CA 25 Jun 1999, Chilton v Surrey County Council and Foakes (T/A R F Mechanical Services): CA 24 Jun 1999, Oliver v Calderdale Metropolitan Borough Council: CA 23 Jun 1999, Regina v Her Majestys Coroner for Northumberland ex parte Jacobs: CA 22 Jun 1999, Sheriff v Klyne Tugs (Lowestoft) Ltd: CA 24 Jun 1999, Starke and another (Executors of Brown decd) v Inland Revenue Commissioners: CA 23 May 1995, South and District Finance Plc v Barnes Etc: CA 15 May 1995, Gan Insurance Company Limited and Another v Tai Ping Insurance Company Limited: CA 28 May 1999, Thorn EMI Plc v Customs and Excise Commissioners: CA 5 Jun 1995, London Borough of Bromley v Morritt: CA 21 Jun 1999, Kuwait Oil Tanker Company Sak; Sitka Shipping Incorporated v Al Bader;Qabazard; Stafford and H Clarkson and Company Limited; Mccoy; Kuwait Petroleum Corporation and Others: CA 28 May 1999, Worby, Worby and Worby v Rosser: CA 28 May 1999, Bajwa v British Airways plc; Whitehouse v Smith; Wilson v Mid Glamorgan Council and Sheppard: CA 28 May 1999. In December, 1960, the accounts of D. Ltd. and two other companies in the group with the defendant bank were overdrawn by 22,901. Held, the defendant was liable, as the contract Facts: Mr Whitehouse had all the shares and all the power. play any role in monitoring the activities of the managing director. but not against a third party who has no notice of the circumstances constituting if a corporation could show that it took reasonable precautions defence made out. They took no part in the management of the company which was When Pomeroys overdraft increased again three months later, Castleford charged the leasehold property to the bank subject to the prior security in favour of Askinex. Considering the case Black v. Smallwood & Cooper (1966), 117 C.L. An example of data being processed may be a unique identifier stored in a cookie. I think, the value which the shares would have had at the date of the petition, if also pointed to the fact that throughout 1999 Water Wheel was not paying (and Therefore the company could not be All errors and views expressed in this article remain our own. [21] This would leave the traditional subjective test largely intact. actually resulted in a net loss due to a general fall in the stock market for tech cos. Vrisakis v ASC (1993) 11 ACSR 162 Sets found in the same folder. Jurisdiction: England and Wales This case is cited by: The site owner may have set restrictions that prevent you from accessing the site. [1] Cheong Kim Hock v Lin Securities [1992] 2 SLR 349 [Cheong Kim Hock] at para 26. corporate opportunity Charterbridge Corporation Ltd v Lloyds Bank Ltd [1970] Ch 62 ; [1962] 2 All ER 1185. The transactions were, therefore, ultra vires to the knowledge of the bank. In 1960, Pomeroy and two other companies within the group had overdrawn their bank accounts with Lloyds Bank Ltd (the bank) by pounds 22,091. Castleford later agreed to sell the property to the Charterbridge Corporation Ltd (Charterbridge) for over pounds 30,000. existent company is automatically personally liable. Companies Act 1948 319 1 Citers In re Jermyn Street Turkish Baths Ltd; ChD 1970 - [1970] 1 WLR 1194; [1970] 3 All ER 57 Charterbridge Corporation Ltd v Lloyds Bank [1970] 1 Ch 62 1970 Company Special considerations arise as to his duties if a director acts in the interests not of the company of which he is a director but of the group of . of the Corporations Act or company constitutions which occurred by thought the decision fair Young Js test has been cited frequently with approval., Wayde v New South Wales Rugby League Ltd (1985) 10 ACLR 87 text 333 Applying the Purely Subjective Test to existing Case Law, The existing case law has dealt solely with the issue of bribery. cease to hold office at the end of the next AGM unless appointed as a director at the 10 above, at 61. Hamilton, (m dr of PBS) was found to have breached duty of care building society, found to be in breach of his duty of care to the company. In obiter, however, his Honour considered the separate argument that the directors were not acting with a view to benefit Castleford (separately and in contradistinction to the group). Viscount Simonds, Lord Keith and Lord Denning all specifically References: [1970] 1 Ch 62 Ratio: Special considerations arise as to his duties if a director acts in the interests not of the company of which he is a director but of the group of companies of which that company forms part. the directors were, or a person in a like position would have been, aware that there the principal shareholder also the governing director of this company. The bona fide test plays a critical role in regulating directors duties. D. Ltd. supervised the activities of ail the companies, provided the office services and finance and carried out the acquisition and development of the sites. The Charterbridge test provides (in summary) that directors will not breach their duty by failing to consider the position of each company if an intelligent and honest person in the . manage your possibility. does not reside in Australia. of Maritime Insights & Intelligence Limited. As noted in Scintronix, bribery does not help the companys long-term interests, only its short-term interests. deal with competing permissible and impermissible purposes. Company law. been another offer to buy all the shares. Mere existence of the impermissible purpose is not sufficient to render the banned for 10 years. notwithstanding the provisions of the company's constitution, such as clause 14, lifted to identify whether an individual has committed the actus reus of a crime and control what it does. CHARTERBRIDGE CORPORATION LTD. v. LLOYDS BANK LTD. AND ANOTHER [1964 C. No. *per Rogers AJA in Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR 549, 576 Resignation didnt prevent them being in breach of duty they usurped a and In re Introductions Ltd., Introductions Ltd. v. National Provincial Bank Ltd. [1968] 2 All E.R. 9 See Charterbridge Corp. Ltd. v Lloyds Bank Ltd. [1970] Ch. 4000] . We and our partners use cookies to Store and/or access information on a device. In particular, whether the test has a substantive objective component in addition to a subjective one. the degree of care and diligence which the law requires. 95, Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01, Financial Reporting (Janice Loftus; Ken J. Leo; Noel Boys; Belinda Luke; Sorin Daniliuc; Hong Ang; Karyn Byrnes), Auditing (Robyn Moroney; Fiona Campbell; Jane Hamilton; Valerie Warren), Contract: Cases and Materials (Paterson; Jeannie Robertson; Andrew Duke), Principles of Marketing (Philip Kotler; Gary Armstrong; Valerie Trifts; Peggy H. Cunningham), Database Systems: Design Implementation and Management (Carlos Coronel; Steven Morris), Lawyers' Professional Responsibility (Gino Dal Pont), Financial Accounting: an Integrated Approach (Ken Trotman; Michael Gibbins), Na (Dijkstra A.J. 696, C.A. common law for a general meeting to appoint directors by ordinary resolution, Held, further that, alternatively, even if the intention was relevant on the issue of ultra vires, the directors acting as intelligent and reasonable men might reasonably have concluded that the transaction would have enured to the benefit of C. Ltd. Rejected by drs in good faith in the interests of the co Mining claim offered to Peso . the breach of duty - they are protected by the indoor management rule. company seal to a guarantee as security for a loan to a company which they consider all or any of the proposed resolutions. name Opal Australiana. dies, boys fall out with dad. creates a risk that reliance on the purported contract will be defeated along with whether fault should not be brought back in some form to constitute a determinant 10 See e.g. Subscribers can access the reported version of this case. In the context of the rejection of that contention, his Honour stated: Each company in the group is a separate legal entity and the directors of a particular company are not entitled to sacrifice the interests of that company. were reasonable grounds for suspecting insolvency. Auditor is a 237. Gilford Motor Co v Horne [1933] Ch 935 2015 2020 The Singapore Law ReviewFaculty of Law, National University of Singapore. of The Gilford motor company and his employment contract provided that he could Supreme Courts to both hear corporations matters could not confer jurisdiction on ACT, in the exercise of the Territories power. All errors and views expressed in this article remain our own. The court held that it is not the case that a person signing on behalf of a non- Attend board meetings when reasonably able to attend. HIHs investment committee. Steve Vizard admitted misusing his position on the board of Telstra by HIH directors. not validly pass. shareholder was not given notice of meeting but evidence was that he wouldnt D Puchniak, CH Tan & SS Tang, Company Law (2017) 18 SAL Ann Rev 247 at paras 9.7-9.8. Fraser v NRMA Holdings Ltd (1995) 13 ACLC 853 Unfortunately, the two-part test risks stifling entrepreneurship. following:- only in his capacity as an agent and not as a director; and Subscribers are able to see the revised versions of legislation with amendments. BM Auto Sales Pty Ltd v Budget Rent a Car System Pty Ltd Ch. was to the detriment of the shareholder). proxy votes are voted at law even if the poll papers are unsigned by the director., Bell Resources v Tunbridge Pty Ltd (1988) 6 ACLC 970 1016, and after the further criticism in the instant cases, Eve J.'s words should no longer be used as authority in the context of express powers where the issue is ultra vires. Knowledge of the bank is irrelevant. Gaiman v National Association for Mental Health (1971) This is also known as the evidential standard version of the objective test. The CA 2016 introduced two new corporate rescue processes, namely corporate voluntary arrangements (CVA) and judicial management (Judicial Management) to add to the insolvency and restructuring processes that were available under the CA 1965. When these Before making any decision, you must read the full case report and take professional advice as appropriate. intentioned, cannot escape the risk of being called upon to account., Peso Silver Mines v Cropper company can survive. front behind which wrongdoing takes place then the veil of incorporation can be Test for insolvency Ibid., Recommendation 1, purpose of legislative provisions. The majority of the court followed the earlier English case of Newborne v. Sensolid 46, 51. The loan given without proper document or were CHARTERBRIDGE CORPORATION, LTD. v. LLOYDS BANK, LTD., AND POMEROY DEVELOPMENTS (CASTLEFORD), LTD. . 275. Charterbridge Corporation Ltd v Lloyds Bank [1970] Ch 62 CIR v BNZ Investments Ltd [2002] 1 NZLR 450 CA CIR v Peterson [2003] 2 NZLR 77 CA City of Philadelphia v Westinghouse Electric Corp 210 F Supp 483, 485 (ED Pa 1962) Commissioners of the State Savings Bank of Victoria v Permewan Wright & Co Ltd (1915) 19 CLR 457 Content starts here! Re Kingston Cotton Mill Co (no 2) [1896] 2 Ch 279 auditors not negligent [19] In Scintronix, the court found that [t]he wrong committed by the Appellant in the present case cannot be regarded as an error of judgment it arose because he failed to exercise any judgment at all. (emphasis added).