Application by the Public Guardian to revoke and cancel the registration of an Enduring Power of Attorney.
Judges: Lush SJ
References:  EWCOP 10,
Application by the Public Guardian to revoke and cancel the registration of an Enduring Power of Attorney.
The Directive’s substantive provisions were modelled primarily on the provisions of German domestic law.Court: ChD
The Board was asked what was necessary to establish the raltionship of principal and agent.
Held: In the essence of agency is the element of consent.
Lord Pearson said: ‘The relationship of principal and agent can only be established by the consent of the principal and agent. They will be held to have consented if they have agreed to what amounts in law to such a relationship even if they do not recognise it themselves and even if they have professed to disclaim it . . The consent however must be given by each of them either expressly or by words and conduct.’
The plaintiff was the owner of horses the subject of a bill of sale. The grantor of the bill sold the horses privately in the defendant’s auction yard and following the sale, on the grantor’s instructions, the auctioneer delivered the horses to the buyer. It was held that there had been no conversion.
Held: The auctioneer did not claim to transfer the title and did not purport to sell; all the dominion he exercised over the chattels was to redeliver them to the person to whom the man from whom he had received them had told him to redeliver them. On the evidence there had been no sale by the auctioneer. A bailee escapes liability for conversion, not only where he merely redelivers to his bailor, but where he delivers at the bailor’s directions to a third party without knowledge of any adverse claim, though with knowledge that such delivery is in pursuance of a sale or other disposition.
The plaintiff owned horses subject to a bill of sale. The grantor of the bill sold the horses privately in the defendant’s auction yard and following the sale, on the grantor’s instructions, the auctioneer delivered the horses to the buyer.
Held: There had been no conversion. Bramwell LJ: [the auctioneer:] ‘has not claimed to transfer the title and he has not purported to sell; all the dominion he exercised over the chattels was to redeliver them to the person to whom the man from whom he had received them had told him to redeliver them.’ Brett and Cotton LJJ agreed that on the evidence there had been no sale by the auctioneer. This case has been criticised, mainly for the conclusion that there had been no sale by the auctioneer.
The rule that a company director may not have an interest in a contract with the company applies even if if he is only acting as an agent for another.Date: 01-Jan-1881
Application by the Public Guardian to revoke a Lasting Power of Attorney for property and financial affairs (‘LPA’) because the attorneys have behaved in a way that contravenes their authority and is not in the donor’s best interests.Court: CoP
Application to revoke a Lasting Power of Attorney for property and financial affairs (‘LPA’) because the attorneys have behaved in a way that contravenes their authority and is not in the donor’s best interests.Court: CoP
Application for the court to reconsider an order made on the papers, partially revoking an enduring power of attorneyCourt: CoP
A writ had been served on the lunatic defendant’s business manager. The Court Rules provided: ‘When a lunatic or person of unsound mind not so found by inquisition is a defendant to the action, service on the committee of the lunatic, or on the person with whom the person of unsound mind resides or under whose care he or she is, shall unless the Court or Judge otherwise orders, be deemed good service on such defendant.’
Held: Judgment was set aside because the writ had been served at a time when the defendant was of unsound mind.
Grove J said: ‘I think the principle of this rule is that the service should be on some person qualified to act for the lunatic or most likely to know to whom the fact of service ought to be communicated. The manager of the lunatic’s business might be ignorant of these matters. Where the writ is served in such a manner that it may probably never reach the lunatic, I do not think it can be valid and proper service. The plaintiffs may reasonably be required to go through the formalities which may give the friends of the lunatic a proper opportunity of appearing.’
He also considered the actions of the defendant’s solicitors, saying: ‘As for the objection that the solicitors are not qualified to appear for the lunatic, there is no doubt that they were authorized to act when she was first taken ill, and I think that the retainer would extend to enable them to take such steps as became necessary in consequence of her lunacy.’
The supervening mental incapacity of a principal has the effect of terminating the actual authority of his agent: ‘The actual authority of an agent whether conferred by deed or not and whether expressed to be irrevocable or not, is determined by the death or supervening mental incapacity of either the principal or the agent’. However, he may have continuing ostensible authority to bind the principal
Bramwell LJ expressed the view that only insanity amounting to dementia would suffice to annul the authority of an agent.
A bank manager employed by the respondents had advised one customer to invest in a project of another. The bank could not advise on investments.
Held: The fact that the second customer owed money to the ban under an overdraft did not make the bank his agent so as to make it responsible to the first as the second’s agent,
Commission was allowed for an agent despite an alleged breach of duty. Neville J discussed Andrews v Ramsay saying its doctrine: ‘does not apply to the case of an agency where the transactions in question are separable’Date: 01-Jan-1906
Mrs F had given an enduring power to her son, but then became incapable and the power was registered. Her daughter had in the meantime applied to be appointed as her receiver. There was particular bitterness between the brother and sister. F called in the Lord Chancellor’s medical visitor and asked that her children settle their differences, and if they could not, then an independent receiver should be appointed.
Held: The issue was not whether the attorney appointed was suitable, but whether he was unsuitable. The master had held that the enduring power would continue to be a stumbling block to any reconciliation, however the only proper question was whether the mother’s more recently expressed view made him unsuitable. In a complex administration, co-operation between siblings might be necessary, but in simpler cases it might not. This was a simple case, and there was no evidence that the appointment of an independent receiver would do anything to reduce the hostility. Without clear evidence that the hostility would adversely affect the administration under the power, the power should be registered.
The effect of the delegation of a power is that the power in question is exercisable by the delegate and no longer by the pricipal delegator.
Scott LJ discussed the rule that ignorance of the law is no excuse: The maxim that ignorance of the law does not excuse any subject represents the working hypothesis on which the rule of law rests in British democracy. That maxim applies in legal theory just as much to written as to unwritten law, i.e., to statute law as much as to common law or equity. But the very justification for that basic maxim is that the whole of our law, written or unwritten, is accessible to the public – in the sense, of course, that, at any rate, its legal advisers have access to it, at any moment, as of right’ . . ‘John Citizen’ should not be ‘in complete ignorance of what rights over him and his property have been secretly conferred by the minister’ as otherwise ‘For practical purposes, the rule of law . . breaks down because the aggrieved subject’s remedy is gravely impaired’.’
The agent claimed a second commission when his principal, who had already paid a commission for the procuring of a tenant, was asked to pay a second commission on the purchase of the property by the tenant at a later date.
Held: Where there has been indubitably established a causal relationship between the introduction of the purchaser and the ultimate transaction of the sale, and that is sufficient to found the plaintiff’s legal claim for commission.
Lord Watson said: ‘It is impossible to affirm, in general terms, that A. is entitled to a commission if he can prove that he introduced to B. the person who afterwards purchased B.’s estate, and that his introduction became the cause of the sale. In order to found a legal claim for commission, there must not only be a causal, there must also be a contractual relation between the introduction and the ultimate transaction of sale. If A. had no employment to sell, express or implied, he could have no claim to be remunerated.’
The claimant hired out recycling plant and equipment and the defendant had been a customer. A local agent of the defendant had properly entered into certain contracts with the claimant acting as the company’s agent, but then created three long term contracts which the defendant then said were beyond his capacity. The defendant ceased trading at the site and the claimant then sought to enforce the contracts. The defendant denied liability under the contracts. The claimant now sought to enforce the order in its favour at the ensuing adjudication.
Held: The adjudication should be enforced. The defendant had entered into contracts through the agent, and had conceded that he had certain authorities. It had no prosepect of succesfully denying that agency now. The adjudicator’s reference to the contents of a statement of the challenged agent but mistakenly not served was insufficient to establish a breach of natural justice.
S Ltd was a member of an oil and gas exploration syndicate, the agreement relating to which provided that the exploration work was to be carried out by one member of the syndicate (the operator) on behalf of the other members. The costs, expenses, rewards and benefits accruing from the exploration operations were to be shared by the syndicate members in proportion to their participating interests. The taxpayer company was a member of the same group as S Ltd and entered into an ‘illustrative agreement’ with S Ltd. whereby it was to bear the share of the costs of the expenditure incurred by the operator for which S Ltd was responsible in return for taking the benefit of all S Ltd’s share of any petroleum won from the exploration. The issue in the case was whether the taxpayer company was entitled to capital allowances in respect of the part of the expenses which it paid pursuant to the illustrative agreement which represented research costs.
Held: Peter Gibson J said: ‘A capital allowance authorised under the Capital Allowances Act 1968 is treated as a trading expense deductible from profits for corporation tax purposes: section 73 of the Act of 1968. Section 91(1) of that Act governs the right to a capital allowance in respect of expenditure on scientific research and the material part of that subsection is as follows: ‘where a person – (a) while carrying on a trade, incurs expenditure of a capital nature on scientific research related to that trade and directly undertaken by him or on his behalf’ ‘ and ‘The phrase, ‘by him or on his behalf’ is to my mind one very familiar in ordinary language . . I would venture to say that its ordinary and natural connotation is that the act must be done by the claimant or his agent . . I am satisfied that [counsel for the Revenue] is correct in his submission that there must be a contractual link between the claimant and the person by whom the research is directly undertaken and the contractual link is one of agency or something akin thereto . .’
S Ltd. a member of an oil and gas exploration syndicate, agreeing that the exploration work was to be carried out by one member of the syndicate on behalf of the other members. The costs, expenses, rewards and benefits accruing from the exploration operations were to be shared by the syndicate members in proportion to their participating interests. Gaspet Ltd as a member of the group entered into an ‘illustrative agreement’ with S Ltd agreeing to bear the share of the costs of the expenditure incurred by the operator for which S Ltd was responsible in return for taking the benefit of all S Ltd’s share of any petroleum won from the exploration. The court was asked whether the taxpayer company was entitled to capital allowances in respect of the part of the expenses which it paid pursuant to the illustrative agreement which represented research costs.
Held: The appeal failed. Kerr LJ said: ‘In the present case it is clear that the research was not directly undertaken by the taxpayer company. Was it, then, directly undertaken by someone else on behalf of the taxpayer company? As the judge said, the phrase ‘on behalf of,’ in particular in the context of the phrase ‘by or on behalf of,’ denotes the concept of agency. This is a perfectly straightforward concept, even if in a context such as the present it may require a wider interpretation than agency resulting from a direct contractual relationship. Where, as here, the taxpayer company did not directly undertake the work itself, I therefore ask myself whether the work was undertaken by anyone as its agent, allowing for this wider sense in favour of the taxpayer company.’
and ‘It is true, as Mr. Park reminded us, that the words ‘on behalf of’ can have a more extended meaning than agency, in the sense of ‘for the benefit of’ or ‘in the interests of.’ But I do not think that this is the sense in the present context. It would introduce a great deal of uncertainty into the effect of the section. A close relationship between the claimant and the undertaking of the research is inherent in the language. The concept is that the research is being undertaken directly, either personally or through an agent.’
Nicholls LJ said: ‘I agree with the judge that to be within the phrase ‘on behalf of’ the relationship must be one of agency, or akin thereto, although I think that there need not necessarily be a direct contractual link between the claimant and the person by whom the research is directly undertaken.’
Sub-bailees had lost Spanish tax seals which vouched for the respective tax having been paid whilst whisky was being transported from Scotland to Spain. The seals themselves were made of paper and had no intrinsic value. The importers claimed for the tax which would have to be paid again. The carriers appealed.
Held: No carrier could anticipate the losses without specific knowledge of the nature and purpose of the seals. This was a consequential loss, and was too remote to be claimed. The liability under the guarantees was not recoverable either by describing the it as a ‘charge incurred in respect of the carriage of goods’. The Babco case could be distinguished, and should not be applied where it was not absolutely binding.
Frederick and Edgar Oliver jointly owned Consols and bank stock. Frederick instructed Starkey a stockbroker to sell them. Frederick signed the necessary powers of attorney in his own name and forged Edgar’s signature. Starkey presented the powers of attorney to the Bank of England, who duly affected the transfer. Once the forgery was established the Bank was liable to replace the Consols and the stock, and sued Starkey for breach of warranty of authority.
Held: Starkey was liable. The Earl of Halsbury LC set out the notion that it was necessary to establish a contract between the purported principal and the plaintiff as illogical, and confusing the question whether the facts established a contractual warranty between plaintiff and defendant, with the question as to whether a contract follows in consequence of a representation. He said: ‘that which does enforce the liability is this – that under the circumstances of this document being presented to the Bank for the purpose of being acted upon, and being acted upon on the representation that the agent had the authority of the principal, which he had not, that does import an obligation – the contract being for good consideration – an undertaking on the part of the agent that the thing he represented to be genuine was genuine.’
The law allows those with capacity to take treatment decisions which on any objective view are reasonable. A power of an attorney to make gifts of the donor’s property is extremely limited and without the authorisation of the court does not extend to the making of gifts as part of inheritance tax planning.
The onus of establishing incapacity lies on the party who seeks to rebut the presumption.
Jules Sher QC said: ‘she ought to have known the law if she was to take on the responsibility of such an important fiduciary position, particularly as one of the few things expressly stated in part of the power itself is the following sentence: ‘I also understand my limited power to use the donor’s property to benefit persons other than the donor.”
The court discussed difficulties in defining what is a bribe, Slade J said: ‘For the purposes of the civil law a bribe means the payment of a secret commission, which only means (i) that the person making the payment makes it to the agent of the other person with whom he is dealing; (ii) that he makes it to that person knowing that that person is acting as the agent of the other person with whom he is dealing; and (iii) that he fails to disclose to the other person with whom he is dealing that he has made that payment to the person whom he know to be the other person’s agent. Those three are the only elements necessary to constitute the payment of a secret commission or bribe for civil purposes.’ and ‘Yes, but earlier the learned judge has said that if a gift be made to a confidential agent with a view to inducing him, it is a bribe, and, therefore, in using the later language and referring to the bribes the learned judge is in effect saying: ‘I am using these later presumptions in cases where a bribe has been established and I have already defined a bribe as being only something which has been established as being paid with a certain motive.’ That, of course, would tear up the whole of the learned judge’s observation because he says lower down that the courts will not receive evidence as to what is the motive of the person making the payment. The motive will be conclusively inferred against him.’Date: 01-Jan-1949
The plaintiffs sought recovery of moneys paid by the defendants to one George Thomas Richardson Campbell, a distinguished naval architect on the ground that such payments has been made secretly while Mr Campbell has been acting for the plaintiffs in the negotiation of shipbuilding contracts with the defendants.
Held: Leggatt J said: ‘For the purposes of the civil law a bribe means the payment of a secret commission, which only means (i) that the person making the payment makes it to the agent of the other person with whom he is dealing; (ii) that he makes it to that person knowing that that person is acting as the agent of the other person with whom he is dealing; and (iii) that he fails to disclose to the other person with whom he is dealing that he has made the payment to the person whom he knows to be the other person’s agent.’
The claimants had engage dthe defendant insurance brokers to secure fire insurance. Their property was badly damaged by fire. The insurers had successfully repudiated liability for non-disclosure, but the judge had also found that the fault arose through the negligence of the defendants.Court: ComC
the court was asked as to the future of a twenty five year old man, WMA, and where he should live plus what help should be given to him. It raises complex issues about best interests and deprivation of liberty.Court: CoP
The court considered the extent of a duty of care which might be owed by an agent.
Bosanquet J. said: ‘The jury were warranted in concluding, that if the Defendants were to effect an insurance upon the terms in question, they undertook to give notice in case of failure: that undertaking arises out of the nature of the case, and the relation in which the parties stood to each other: and according to the principle laid down in Smith v. Lascelles if a merchant is led, from previous transactions, to expect that his correspondent will effect an insurance, he has a right to rely on his discharging that duty, unless he receives a letter to the contrary.
Whether that expectation arises from previous dealings, or from an undertaking to insure in the particular instance, can make no difference; and Buller J. says, ‘Where the merchant abroad has no effects in the hands of his correspondent, yet, if the course of dealing between them be such that the one has been used to send orders for insurance, and the other to comply with them, the former has a right to expect that his orders for insurance will be obeyed, unless the latter give him notice to discontinue that course of dealing.”
Application by the Public Guardian to revoke and cancel the registration of a Lasting Power of Attorney for property and financial affairs.Court: CoP
The trust sought a declaration as regards its treatment of Dr A, a resident patient who had begun a hunger strike. The trust sought a declaration as to his capacity and possible compulsory feeding.Court: CoP
Application for the court to revoke an Enduring Power of Attorney (‘EPA’) on the ground that, having regard to all the circumstances, the attorneys are unsuitable to be the donor’s attorneys.Court: CoP
The claimant sought compensation after his commercial agency was terminated. The court had found that the agency was declining in turnover, and reduced the compensation accordingly. There had been no written agreement for the agency, and six months’ notice was given.
Held: The agent’s appeal failed. The UK had chosen to implement both the allowed systems for calculating compensation, providing an indemnity if agreed by the parties, but otherwise as calculated under regulation 17. The system was derived from French law, and the court was entitled to look to that law for assistance. That did not mean that the British Court should follow French practice, based on commercial practice in France, and award two years’ commission; the article was not an endorsement of French practice, but left the calculation within the discretion of member states. This was not a business fro which anyone would pay the sum sought. Reference to eth ECJ refused.
Lord Hoffmann: ‘the courts of the United Kingdom would not be acting inconsistently with the directive if they were to calculate the compensation payable under article 17(3) by reference to the value of the agency on the assumption that it continued: the amount which the agent could reasonably expect to receive for the right to stand in his shoes, continue to perform the duties of the agency and receive the commission which he would have received.’
A renewed application for leave to appeal and for an application for leave to serve and set down out of time a notice of appeal in respect of which leave was given.Court: CA
The claimant sought to add a claim under the regulations for compensation after termination of his agency for the defendants. The lower court had rejected his claim saying that the petrol products he sold were at a price fixed by Esso, and that since he did not negotiate the price he fell outside the regulations.
Held: The word ‘negotiate’ need not include the bargaining of price, but did require more than a collection of funds after a self-service sale: ‘he took no part in the customer’s choice and self-service.’
The court considered the method of calculation of compensation payable to a commercial agent on termination of the agency. The directive provided that the agent should be compensated, not indemnified, and the way an English court calculated compensation need not follow other European jurisdictions. A tariff system would be unfair, and the court must make allowance for the amounts expended by the agent. Accordingly it would be unjust to base the compensation on the gross return, but it should rather be based upon the net income of the agency.Court: QBD
Application by the Public Guardian to revoke and cancel the registration of a Lasting Power of Attorney.Court: CoP
The House was asked whether a power of attorney included a power to draw cheques on the principal’s bank account in order to pay his own debts. The Court of Appeal by a majority, Russell J dissenting, had held that it did having regard to the terms of a letter written by the principal to his bankers.
Held: The decision was reversed. A power of attorney is to be construed strictly. The House adopted the statement of Russell LJ: ‘the primary object of a power of attorney is to enable the attorney to act in the management of his principal’s affairs. An attorney cannot in the absence of a clear power to do so, make presents to himself or to others of his principal’s property ‘
E had executed a Lasting Power of Attorney. There had been a dispute leading to the revocation of the appointment. The court now considered in particular the appropriate order for costs.Court: CoP
Appointment of deputy – objectionCourt: CoP
The parties were involved in a boundary dispute. One granted an enduring power of attorney, and sought to appear as a litigant in person through the power.
Held: The right of a litigant in person to represent himself was a personal right, and as such was not capable of being delegated. The Act created a complete code setting out those with rights of audience. The 1995 Act did not change the underlying position, and the 1990 Act preserved exising rights. Those did not give a right for a non-qualified agent to act. However, a litigation friend does not have to act by a solicitor and can conduct the litigation on behalf of P, though a litigation friend who does not otherwise have a right of audience requires the permission of the court to act as an advocate on behalf of P.
An estate agent with sole selling rights was not entitled to claim commission on a sale where he had contributed no act to the sale, even though his terms were specific enough to deal with the particular circumstances which had arisen here. Such a clause should be interpreted tightly against those seeking to place reliance upon it. On a sensible reading of the whole statement, the liability to pay remuneration in a case such as this must, therefore, be limited to the purchaser who was introduced to the client by that estate agent during the period. If the purchaser is introduced to the client in any other way, the estate agent can only claim remuneration if he has conducted negotiations with the purchaser about the property during that period. Hobhouse LJ: ‘The purpose of section 18 and of the regulations is to attempt to ensure that the person instructing the estate agent shall know precisely what his liabilities to the estate agent are. Part of the mischief to which the Act and regulations were directed was the use by estate agents of expressions such as ‘Sole Agency’ or ‘Sole Selling Rights’, which had no clearly defined meaning and the implications of which would not be fully understood by the client.’Court: CA
The claimant sought a sum being its losts costs in connection with a proposed development scheme, being agreed to be paid by the defendants through their agents.Court: ChD
One who deals with goods at the request of the person who has the actual custody of them, in the bona fide belief that the custodier is the true owner, or has the authority of the true owner, should be excused for what he does if the act is of such a nature as would be excused if done by the authority of the person in possession if he was a finder of the goods or intrusted with their custody. Thus a warehouseman with whom goods had been deposited is guilty of no conversion by keeping them or restoring them to the person who deposited them with him, though that person turns out to have had no authority from the true owner. The same principle applies to persons ‘acting in a subsidiary character, like that of a person who has the goods of a person employing him to carry them, or a caretaker, such as a wharfinger’. Blackburn J (Advising the House): ‘If, as is quite possible, the changes in the course of business since the principles of law were established make them cause great hardships or inconvenience, it is the province of the Legislature to alter the law.’Court: HL
The claimant said that he had been an agent of the defendant within the 1993 Regulations, and entitled to compensation on termination of that contract.Court: CA
ComC Admiralty action in rem – dishonest withholding of freight paid – meaning of dishonesty – objective and subjective considerations – reimbursement of commission – Admiralty action in rem – entitlement to commission – collateral secret profit – secret profit – distinction.
David Steel QC said of the Hippisley case: ‘this decision of the Court of Appeal admirably demonstrates the difference between a collateral secret profit which preserves the right to commission and a secret profit (albeit honest) directly impacting on the moneys payable to the principal which may destroy the entitlement.’
The Court was asked whether a bribe or secret commission received by an agent is held by the agent on trust for his principal, or whether the principal merely has a claim for equitable compensation in a sum equal to the value of the bribe or commission.Court: SC
The court had made an order transferring responsibility for MRJ’s affairs from the appointed attorney to the local authority. The order had been made on the papers, and the court now heard an application for it to be reconsidered.
Held: The orders made were confirmed. The court recognised that the interference in a person’s choice of attorney was an interference in their right to private and family life under article 8 of the Convention, and must only be allowed where fully warranted. The evidence now before the court established even more clearly the mismanagement of the patient’s affairs by the agent.
Unless warranted under Article 8.2, the revocation by the Court of Protection an LPA, which a donor executed when they had capacity and in which they chose a family member to be their attorney, would be a violation of their Article 8.1 right to respect for their private and family lifeCourt: CoP
The defendant had been employed as agent by the plaintiff to sell property belonging to the plaintiff. The defendant achieved this and was paid his commission, but had also taken a secret commission from the buyer. The plaintiff sought repayment of the commission.
Held: The action succeeded. Where an agent takes a commission secret from his principal, the principal may refuse to pay or recover any commission under the main agency contract. The action for and recovery of the secret commission had not operated as a ratification of the sale.
The claimant sought repayment of sums loaned to eth football club. The defendant replied saying that the loans were ineffective since the claimant had known that they were being entered into by an officer of the club without authority and contrary to the club’s interests.Court: ComC
The parties were neighbouring householders with a party wall. A builder working in the defendant’s house negligently cut into the party wall, causing the partial collapse of both the defendant’s house and the Plaintiff’s house next-door.
Held: Lord Blackburn said: ‘The first point to be considered is what was the relation in which the defendant stood to the plaintiff. It was admitted that they were owners of adjoining houses between which was a party-wall the property of both. The defendant pulled down his house and had it rebuilt on a plan which involved in it the tying together of the new building and the party-wall which was between the plaintiff’s house and the defendant’s, so that if one fell the other would be damaged. The defendant had a right so to utilize the party-wall, for it was his property as well as the plaintiff’s; a stranger would not have had such a right. But I think the law cast upon the defendant, when exercising this right, a duty towards the plaintiff. I do not think that duty went so far as to require him absolutely to provide that no damage should come to the plaintiff’s wall from the use he thus made of it, but I think that the duty went as far as to require him to see that reasonable skill and care were exercised in those operations which involved a use of the party-wall, exposing it to this risk. If such a duty was cast upon the defendant he could not get rid of responsibility by delegating the performance of it to a third person. He was at liberty to employ such a third person to fulfil the duty which the law cast on himself, and, if they so agreed together, to take an indemnity to himself in case mischief came from that person not fulfilling the duty which the law cast upon the defendant; but the defendant still remained subject to that duty, and liable for the consequences if it was not fulfilled. This is the law I think clearly laid down in Pickard v Smith 10 CB (NS) 470, and finally in (1881) Dalton v Angus 6 App Cas 740. But in all the cases on the subject there was a duty cast by law on the party who was held liable.’
ECJ Rome Convention on the law applicable to contractual obligations – Articles 3 and 7(2) – Freedom of choice of the parties – Limits – Mandatory rules – Directive 86/653/EEC – Self-employed commercial agents – Contracts for sale or purchase of goods – Termination of the agency contract by the principal – National implementing legislation providing for protection going beyond the minimum requirements of the directive and providing also for protection for commercial agents in the context of contracts for the supply of servicesCourt: ECJ
The claimant asserted breach of fiduciary duties by the respondent.Court: ChD
The court was asked as to ownership of documents coming into existence in the course of a receivership. The plaintiff companies had argued that all documents belonged to them because the receivers were their agents and the documents were created in the course of that agency.
Held: As between a principal and its agent, all documents prepared or received by agent belong to principal, and were to be delivered up on termination of agency on basis of ownership of them.
However, whilst the receivers were technically agents of the companies, the agency of a receiver is not an ordinary agency because it involves a tri-partite relationship in which the receiver owed duties to both the mortgagor company and the debenture holder. It determined the dispute over ownership by assessing the purpose for which the documents were created – whether as performance of one of the duties (in which case the companies could only claim ownership when the documents were created in the course of performing the duty to them to manage their affairs) or to enable them to carry out their professional duties as distinct from performance of a duty (in which case the documents were the property of the receivers).
Hoffmann LJ said that a receiver and manager ‘is no ordinary agent’ and continued: “Although nominally the agent of the company, his primary duty is to realise the assets in the interests of the debenture holder and his powers of management are really ancillary to that duty.”
Fox LJ discussed the nature of a receiver’s agency, saying: “The agency of a receiver is not an ordinary agency. It is primarily a device to protect the mortgagee or debenture holder. Thus, the receiver acts as agent for the mortgagor in that he has power to affect the mortgagor’s position by acts which, though done for the benefit of the debenture holder, are treated as if they were the acts of the mortgagor. The relationship set up by the debenture, and the appointment of the receiver, however, is not simply between the mortgagor and the receiver. It is tripartite and involves the mortgagor, the receiver and the debenture holder. The receiver is appointed by the debenture holder, upon the happening of specified events, and becomes the mortgagor’s agent whether the mortgagor likes it or not. And, as a matter of contract between the mortgagor and the debenture holder, the mortgagor will have to pay the receiver’s fees. Further, the mortgagor cannot dismiss the receiver since that power is reserved to the debenture holder as another of the contractual terms of the loan. It is to be noted also that the mortgagor cannot instruct the receiver how to act in the conduct of the receivership.”
The court was asked whether the appellant company was entitled to an order requiring its former Chief Executive Officer, after the termination of his appointment, to give it access to the content of emails relating to its business affairs, and stored on his personal computer in England, were sent or received by him on behalf of the company. The claimant asserted an enforceable proprietory claim in those rent or received on their behalf. At first instance the court had found that there existed no property in information.
Held: In effect Fairstar claimed a right which it descibed as ‘proprietory’ to the content of the emails, entitling it to inspect and make copies of the content of the emails, either directly or through an independent person instructed for that purpose. The assertion of such a right failed.
However, the claimant was able to achieve its aims through the law of agency.
The chancellor gave reasons for refusing to strike out the claim. The claimant had alleged dishonest assistance in a breach of an agent’s duty by the defendants in two land transactions.Court: ChD
An application was made to set aside a preliminary determination by an arbitrator. The parties disputed the compensation payable by the respondent for the acquisition of land owned by Smith Stone and held by Birmingham Waste as its tenant on a yearly tenancy. Birmingham Waste was a wholly owned subsidiary of Smith Stone and was said in the Smith Stone claim to carry on business as a separate department and agent for Smith Stone. As a yearly tenant, Birmingham Waste, however, had no status to claim compensation. The question was whether, as a matter of law, the parent company could claim compensation for disturbance to the business carried on at the acquired premises. The arbitrator’s award answered this in the negative. Smith Stone applied to set the award aside on the ground of technical misconduct.
Held: An implied agency existed between the parent and subsidiary companies so that the parent was considered to own the business carried on by the subsidiary and could claim compensation for disturbance caused to the subsidiary’s business by the local council. In determining whether a subsidiary was an implied agent of the parent, Atkinson J examined whether, on the facts as found by the arbitrator and after rejecting certain conclusions of fact which were unsupported by evidence, Smith Stone was in fact the real owner of the business and was therefore entitled to compensation for its disturbance.
The rule to protect the fact of separate corporate identities was circumvented because the subsidiary was the agent, employee or tool of the parent. The subsidiary company was operating a business on behalf of its parent company because its profits were treated entirely as those of the parent company’s; it had no staff and the persons conducting the business were appointed by the parent company, and it did not govern the business or decide how much capital should be embarked on it. In those circumstances, the court was able to infer that the company was merely the agent or nominee of the parent company.
Atkinson J formulated six relevant criteria, namely:
“(a) Were the profits treated as profits of the parent?
(b) Were the persons conducting the business appointed by the parent?
(c) Was the parent the head and brain of the trading venture?
(d) Did the parent govern the venture, decide what should be done and what capital should be embarked on the venture?
(e) Did the parent make the profits by its skill and direction?
(f) Was the parent in effectual and constant control?”
The plaintiff went to eat in the defendant’s restaurant. He gave over his coat to the waiter, who hung it on a hook. It was stolen.
Held: The defendant was liable as a bailee for reward. He was guilty of negligence in the care of the coat.
The plaintiff sought damages after the motorcycle he had parked in the defendant hotelier’s closed car park was stolen.
Held: An occupier is under no duty to protect goods from the risk of theft by third parties. The publican was not a bailee of the motorcycle in that there had been no transfer of possession to the publican.
Jenkins LJ remarked on the complete absence of any authority suggesting liability for the loss of a vistor’s property. He said that such a principle would produce: ‘a liability of a most comprehensive and sweeping character, and would have entered into a very great number of cases if it existed.’
The claimant owned a very vauable vintage Porsche racing car. It was hired to the defendant. The car suffered severe mechanical damage whilst being driven, and the insurers declined liability.
Held: The Defendant as hirer was under an obligation to: ‘take reasonable care of the chattel and . . use reasonable skill in its management and use reasonable skill in its management and use’. The defendant claimed a custom that a driver should not beliable for mechanical failure. The court found no sufficiently clear custom.
The evidence overwhelmingly pointed to the cause of the engine damage being the Defendant’s failure to properly engage gear and over run the engine.
Mr Swaffield sent his horse by railway to a station at Sandy. The horse arrived late at night, and the railway company lodged the horse overnight for their own account at a livery stable. Mr Swaffield failed to collect it on the following morning. The only basis on which he was prepared to give any instructions about the fate of his horse was that the railway company assumed all responsibility for storing and delivering it to him from the time of its arrival at Sandy. After four months of this, the railway company lost patience. They unilaterally delivered the horse to Mr Swaffield’s farm and then sued him for the livery charges to date.
Held: The contract of carriage had come to an end on the day after the arrival of the horse at Sandy, when the performance required of them as carriers was completed. Baron Pollock drew attention to Cargo ex Argos in the course of argument and based his judgment upon it. Having referred to previous authority to the effect that the railway company was bound to take reasonable care of the horse notwithstanding the termination of the contract of carriage, he observed that “if there were that duty without the correlative right, it would be a manifest injustice.”
Non-delivery for causes arising subsequent to the consignee’s mora is more easily excusable than before.
Kelly CB, concurring treated the principle as applying because it was necessary for the railway company to incur the expenditure. “They had no choice unless they would leave the horse at the station or in the high road to his own danger and the danger of other people.”
A cargo of wheat was loaded in the US for delivery to Bombay. The ship was stranded on a reef in the South China Sea. Salvors entered into a salvage agreement with the shipowners and cargo owners on Lloyds open form. In performance of that contract the salvors lightened the vessel by offloading part of the cargo into barges and carrying it to Manila as a place of safety. There the salvors arranged for it to be stored under cover, in part on a vessel in the harbour and in part in a bonded warehouse ashore. The salvors sought to recover the costs of such storage from the cargo owners, being the stevedoring and charter costs of arranging storage on the vessel in the harbour, and the warehouse charges they had to pay for the warehousing ashore. The storage was both reasonable and necessary for the preservation of the cargo and to prevent its deterioration. The claim had succeeded before Lloyd J, but overturned at the Court of Appeal.
Held: The decision was re-instated. The case turned on the application of “well known and basic principles of the common law of salvage, of bailment and of lien.” The bailee was left in possession of the goods after the termination of the contract under which the bailment had originally been made, and in the absence of any contrary instructions from the cargo-owner, the warehousing of the goods was necessary for their preservation.
Lord Diplock noted that the case had been argued throughout on the basis that the salvage contract had come to an end at the time the cargo arrived in Manila, whilst leaving open whether that assumption was correct. The salvors were entitled to recover the storage costs from cargo owners because as bailees they: “the bailment which up to the conclusion of the salvage services had been a bailment for valuable consideration became a gratuitous bailment; and so long as that relationship of bailor and bailee continued to subsist the salvors, under the ordinary principles of the law of bailment too well known and too well-established to call for any citation of authority, “owed a duty of care to the cargo owner to take such measures to preserve the salved wheat from deterioration by exposure to the elements as a man of ordinary prudence would take for the preservation of his own property . . and if he fulfils that duty he has, in my view, a correlative right to charge the owner of the goods with the expenses reasonably incurred in doing so.”
and “It is, of course, true that in English law a mere stranger cannot compel an owner of goods to pay for a benefit bestowed upon him against his will; but this latter principle does not apply where there is a pre-existing legal relationship between the owner of the goods and the bestower of the benefit, such as that of bailor and bailee, which imposes upon the bestower of the benefit a legal duty of care in respect of the preservation of the goods that is owed by him to their owner.”
Lord Simon of Glaisdale, concurring, thought that to confine agency of necessity to cases where the issue was the bailee’s authority to bind the bailor to contracts with third parties was “justified by the fact that the law of bailment will often resolve any issue between alleged principal and agent of necessity, as it has done here.”
The claimants sought return of what it said were secret commissions earned by the defendants when working as their agents, and the defendants countrclaimed saying that the commissions had been known to the claimants and that additional sums were due. The claimants had employed the defendants as their agents in the acquisition of an interest in a very substantial hotel. The defendants had aslo taken a commission of 10m euros from the sellers.Court: ChD
The parties disputed the appropriate method of valuing a pearl lost while in the custody of the defendant.Court: CA
An agent may not put himself in a position or enter into a transaction in which his personal interest, or his duty to another principal may conflict with his duty to his principal, unless his principal, with full knowledge of all the material circumstances and of the nature and extent of the agent’s interest, consents.Date: 01-Jan-1943
The claimants sought compensation under the 1993 Rules. The defendants denied that the claimants were agents within the rules, since they also acted as agents for other furniture makers.
Held: Whether a party is a commercial agent within the meaning of the Directive or the Regulations is a straightforward matter, to be determined by reference to the terms and the context of the agreement at the date it is concluded. The Regulations envisaged two types of Agent, but ‘None of this means that the non-derogable obligations of the commercial agent under article 3.1 and regulation 3(1), to look after the interests of the principal, and to act dutifully and in good faith, are to be imported into the definition of a commercial agent so that an agent acting for multiple principals does not fall within it.’ The correspondence indicated an implied term allowing the claimants to conduct additional competing agencies. The agreement was subject to the 1993 Regulations.
The court heard an appeal objecting to the appointment of a sibling as Deputy for the parents now lacking capacity. Both daughters had at one time been appointed under Enduring Powers of Attorney, acting jointly, but the daughters became estranged. V who had charge of the bookkeeping came to want to register the power, but C objected. After conflicting expert reports, the Court considered that something needed to be done and appointed V deputy (on her application), rather than an independent person, using his powers under the 2005 Act.
Held: The appeal succeeded. The decision had failed to take proper account of the parents’ expressed wishes: ‘the learned judge was wrong to dismiss as non-existent the implications from the EPAs’ having been joint appointments of the two daughters and not joint and several appointments. The difference between those two regimes is clearly spelled out in the notes on the form itself, and it must be assumed was appreciated and intended by Mr and Mrs S. On that basis, it was an almost inescapable inference that they, as donors of the powers, wanted relevant decisions either to be joint, or to be made by neither appointee, and did not want their affairs to be dealt with by the sole decision of one appointee alone.’
Both experts had recommended an independent professional as deputy, and ‘the possible disadvantages of having an impersonal Deputy managing their affairs at a formal level rather than V have been sufficiently conveyed to Mr and Mrs S as to mean that even the later expressions of their preferences are not invalidated, and should not be downgraded in weight on that account.’ As occasion allowed in due course the parents should be consulted as to whether this was working.
Marshall QC described the situation under the new Act: ‘there has been a whole sea change in the attitude of the law to persons whose mental capacity is impaired’ and ‘Two major changes are therefore embodied in the statute. The first is official recognition that capacity is not a blunt ‘all or nothing’ condition, but is more complex, and is to be treated as being issue specific. A person may not have sufficient capacity to be able to make complex, refined or major decisions but may still have the capacity to make simpler or less momentous ones, or to hold genuine views as to what he wants to be the outcome of more complex decisions or situations.
The second change is the emphasis throughout the Act on the ascertainment of the actual or likely wishes, views and preferences of the person lacking full capacity, and on involving him in the decision making process. This approach underlies s.1(2) (presumption of capacity), s 1(3) (duty to help P to make his own decision if he can), 1(4) (recognition that a person’s capacity, and therefore right, to make decisions does not depend on how objectively ‘wise’ those decisions are), s1(6) (P’s rights and freedom of action should be restricted as little as practicable), and s 4(4) (duty on decision maker to involve P in decisions), and it is the only conceivable reason for imposing the duty to consider P’s wishes or likely wishes (s 4.(6)) and to take trouble to ascertain them s (4 (7)).’
The defendants sought to set aside orders allowing the claimants to serve proceedings alleging repudiation of a charterparty in turn allowing a claim against the defendants under a guarantee. The defendant said the guarantee was unenforceable under the 1677 Act not being in writing and signed.
Held: There was no limit to the number of documents to which reference is made to establish the agreement. The guidance in Timmins was not strictly applicable in construing an agreement as such rather than a memorandum of agreement. There was an arguable case since the documents might be read together.
Where a document is executed by an agent which records the terms of the sale, it is not necessary, in order to satisfy the Statute, that the agent should have been authorised to execute the document as a record of the transaction; but it is necessary that the document, which is a record of the transaction, is one that he is authorised to execute by the person sought to be charged. The e-mails which constitute the contract were sufficiently signed by the electronically printed signature of the persons who sent them. It was argued the document itended to be signed by both parties had not been so signed, and “The question is whether the charterparty was drawn up with the authority of SMI and records the terms of the guarantee; not whether Howe Robinson was authorised to draw it up as a record of the guarantee, nor whether Howe Robinson was authorised to sign it as a contract. In fact, however, it was drawn up and signed on behalf of the Owners.” The claimant had an arguable claim that valid contracts existed, that the charter had been repudiated, and that the agreement did not fall foul of the 1677 Act. The claim being governed by English law, the English court could exercise jurisdiction.
The claimant estate agents claimed commission on property sales. The defendant said that the agreement to pay commission had been waived.
Held: The sale triggered the commission. However the later agreement did work to vary the original agreement. The words ‘on the basis that one of you introduces an applicant who subsequently purchases the property’ placed on the agent an obligation to demonstrate that he had been the effective cause of the purchase in question in order to qualify for commission. The agents were unable to show that on the facts, and the claim failed.
A party signing a document containing blanks must envisage that they will be completed, and he will be bound so long as the words inserted fell within the scope of what he could reasonably have expected.Date: 01-Jan-1976
The claimant creditor bank made changes to the guarantee executed by the guarantee without its approval and after it had been signed and duly executed, by inserting the details of a service agent.
Held: The insertion did not work to alter the guarantor’s liability, and had not been prejudicial to its legal rights and obligations and accordingly was not material. The guarantee remained enforceable. An alteration to the contract after signature did not invalidate it unless it was material in the sense of being ‘potentially prejudicial to the legal rights or obligations of the affected party’.
The House was asked whether the appellant railway company had delivered the goods unconditionally to the goods owner so as to lose its lien for the price of coal carriage, or was there an agreement conferring “a right in equity to any personal chattels or to any charge or security thereon” under the 1878 Act.
Held: (Majority) It had not done so. The lien which it exercised, therefore, was based upon its actual possession as carrier of the goods, which was not destroyed by its contractual arrangements with the receiver or by delivery up of the goods. A lien is a mere personal right of detention and therefore requires actual possession.
The word “charge” does not in its ordinary and accepted legal sense embrace a legal possessory lien even, so it would seem, if the contract gives the right of sale.
The tenant company had defaulted under the lease, and the landlord had retaken possession. The landlord discarded the tenant’s possessions, and the tenant now sued, saying that the landlords as involuntary bailees owed duties to the proper owner.
Held: In the context of commercial goods, the purpose of which is to earn profit, the assessment of what the Claimant has lost and of the damages that would be reasonable as between the Claimant and the Defendant must take into account the commercial usefulness of the goods to the Claimant. If the reality is that what was destroyed was commercially useless to the Claimant, that cannot be ignored in the assessment of damages.
The defendants had not discharged the burden on them of proving abandonment. Liability was not strict, and it had to be shown that the defendants knew or ought to have known that the goods belonged to a third party. That could not be shown in this particular case, and the claim failed.
The defendant appealed against the award of the estate agent’s fees, acting under a sole agency agreement. The agreement had been terminated. A buyer who had seen the property first under the agency later returned and negotiated a purchase.
Held: It was not enough that the agents had introduced the purchaser to the property, they must introduce him to the purchase. However the judge had concluded that the purchaser had acted deliberately to await the loss of involvement of the agent before seeking a lower price to reflect the saving to the seller. That conclusion of fact was capable of support on the facts, and an appeal court should not intervene. The appeal failed.
A commission del credere is an absolute engagement to the principal from the broker, and makes him liable in the first instance. A broker with such a commission may set-off, under the general issue, a loss upon a policy happening before a bankruptcy, to an action by the assignees of the bankrupt, for premiums upon various policies under-written by him, and for which he had debited the broker : but such a loss carinot be proved under a riotice of set-off.Date: 31-Jan-1786
The appellants had audited the books of the respondent company, but had failed to identify substantial frauds by an employee of the respondent. The auditors appealed a finding of professional negligence, relying on the maxim ex turpi causa non oritur actio.
Held: (Mance and Scott LL dissenting) The appeal succeeded. The company could not bring a claim which was based upon its own unlawful actions. The Hampshire Land principle that knowledge of an agent would not be imputed to its principal where that knowledge related to the agents own breach of duty to the principal was a general principle of the law of agency and was not limited to claims. In the case of a one man company, the sole actor test could be applied to impute to the company the knowledge of its agent – in this case as to the fraud he was undertaking.
Lord Phillips summarised his conclusions: ‘1) Under the principle of ex turpi causa the court will not assist a claimant to recover compensation for the consequences of his own illegal conduct.
2) This appeal raises the question of whether, and if so how, that principle applies to a claim by a company against those whose breach of duty has caused or permitted the company to commit fraud that has resulted in detriment to the company.
3) The answer to this question is not to be found by the application of Hampshire Land or any similar principle of attribution. The essential issue is whether, in applying ex turpi causa in such circumstances, one should look behind the company at those whose interests the relevant duty is intended to protect.
4) While in principle it would be attractive to adopt such a course, there are difficulties in the way of doing so to which no clear resolution has been demonstrated.
5) On the extreme facts of this case it is not necessary to attempt to resolve those difficulties. Those for whose benefit the claim is brought fall outside the scope of any duty owed by Moore Stephens. The sole person for whose benefit such duty was owed, being Mr Stojevic who owned and ran the company, was responsible for the fraud.
6) In these circumstances ex turpi causa provides a defence to the claim.’
The court was asked whether the the appellant was a commercial agent of the defendant within the regulations, and so would be entitled to compensation on termination of the agency.
Longmore LJ said: ‘It does not follow that every agent acting on behalf of the principal is necessarily a ‘commercial agent . . ‘
The OFT had sought and obtained an injunction regarding the use of certain standard terms in their estate agency business. Both parties appealed.
Held: The OFT’s appeal succeeded. The court had been wrong to restrict the effect of the injuncion to contracts not already in existence. It should extend to existing contracts. The Regulations were intended to implement the Directive, and the court must have power to give it proper and full effect, though it was for the court seised of the matter to decide whether such an order was correct in the circumstances.
The Defendant had bribed the Plaintiff’s agent to make extracts of false entries from the books of the Plaintiff. The Plaintiff did not move for an injunction on the Defendant’s answer; but, on the cause coming on for hearing, it appeared that Clarke had filed another bill in the Rolls Court, and had obtained in that suit an inspection of those books; and therefore the bill was dismissed. But the principle that an agent could not be allowed to communicate the contents of his employer’s books to another person, and that that person could not publish the information so improperly obtained, was directly admitted by the Vice-Chancellor. A person guilty of bribery takes the knowledge he obtains with no better right to use it than the party communicating it; but here there is neither bribery nor fraud.Date: 18-Apr-1846
The defendant, the plaintiff’s ex-land agent was ordered to deliver up documents to former principal relating to her estate and its managementDate: 31-Jul-1851
The appellant company acted for the respondent footballer in placing him with a football club. The respondent said that he had also taken a payment from the club, nominally for arranging a work permit. The respondent said this was improper. The agent now appealed.
Held: The side deal was within the agency and should have been disclosed.
Jacob LJ said: ‘The law imposes on agents high standards. Footballers’ agents are not exempt from these. An agent’s own personal interests come entirely second to the interest of his client. If you undertake to act for a man you must act 100%, body and soul, for him. You must act as if you were him. You must not allow your own interest to get in the way without telling him. An undisclosed but realistic possibility of a conflict of interest is a breach of your duty of good faith to your client.’ This was not an honest breach of contract. This was a secret profit and a breach of fiduciary duty because of the conflict of interest. Not only was the secret payment to be paid across, but no further agency fees were payable.
The plaintiff asked the defendant estate agents to find a purchaser for his property at a price of £2,500 and if one such was found the agents’ fee would be £50. A purchaser, one Clutterbuck, at £2,100 was found. He paid the agents £100 by way of deposit. The agents paid the principal £50 and, with the principal’s consent, retained £50 as their commission. But it then transpired that the agents had had a side deal with Clutterbuck whereby he paid them £20. In the first action the principal claimed and recovered the £20 as a secret profit made by the agent in breach his duty of good faith. In the second action the principal claimed the return of the £50.
Held: He succeeded – even though he had had the benefit of the agent’s services.
Lord Alverstone CJ said: ‘It is said that the defendants ought not to be called upon to hand over the £50 to the plaintiff because the plaintiff has had the benefit of their services. The principle of Salomons v. Pender (1865) 3 H&C 639 seems to me to govern the case, and it is, in my opinion, amply sufficient to do so. In that case it was held that an agent who was himself interested in a contract to purchase property of his principal was not entitled to any commission from the principal. The principle there laid down is that, when a person who purports to act as an agent is not in a position to say to his principal, ‘I have been acting as your agent, and I have done my duty by you,’ he is not entitled to recover any commission from that principal. . . It seems to me that this case is only an instance of an agent who has acted improperly being unable to recover his commission from his principal. It is impossible to say what the result might have been if the agent in this case had acted honestly. It is clear that the purchaser was willing to give £20 more than the price which the plaintiff received, and it may well be that he would have given more than that. It is impossible to gauge in any way what the plaintiff has lost by the improper conduct of the defendants. I think, therefore, that the interest of the agents here was adverse to that of the principal. A principal is entitled to have an honest agent, and it is only the honest agent who is entitled to any commission. In my opinion, if an agent directly or indirectly colludes with the other side, and so acts in opposition to the interest of his principal, he is not entitled to any commission. That is, I think, supported both by authority and on principle; but if, as is suggested, there is no authority directly bearing on the question, I think that the sooner such an authority is made the better.’
Wills J said: ‘The £50 in question was paid by the purchaser to the defendants as agents for the plaintiff as part of the £100 deposit on the purchase, and the defendants were allowed by the plaintiff to retain £50 in the belief that they had earned that sum as commission. If the money had all been paid over, and the defendants had had to sue the plaintiff for commission, it seems to me perfectly clear that they could not recover it. They would have no chance whatever of succeeding in such an action, and I think that they ought not to stand in any better position because the plaintiff, believing that they had acted properly, had allowed them to retain the £50. The case ought to be the same whether the commission has already been paid or whether the agent has to sue for it.’
The plaintiff agent acted to find a seller of mineral rights for the defendant principal. He told his principal that the properties could be purchased for from £8,000 to £10,000. If the agent could find a seller at below £9,000, then, the defendant agreed, the plaintiff could have the difference between the actual price and £9,000. The agent found a seller at £6,625 and claimed the difference, viz. £2,375. But secretly the agent had also negotiated with the seller, at a time when they made the contract with the buyer, to be paid a commission on the sale. Lush J had found for the defendant.
Held: The agent’s claim failed. It made no difference to the agent’s position that no damage was caused to his principal, or that the principal may be advantaged by the agent’s breach of duty in accepting the secret commission.
Bankes LJ said: ‘There seems to be an idea prevalent that a person who is acting agent or servant of another is committing no wrong to his employer in taking a commission or bribe from the other side, provided that in his opinion his employer or principal does not have to pay more than if the bribe were not given. There cannot be a greater misconception of what the law is, or what the duty of a servant or agent towards his master or principal in reference to such maters is, and I do not think the rule can too often be repeated or its application more frequently insisted upon. . . what was [the agent’s] position and what was his duty. Of course, as long as he was acting for the vendors of these properties only he was perfectly entitled to suggest to them that they should fix a price which would include a commission to himself, and he would be perfectly justified in receiving that commission or putting forward the price to an intending purchaser as the only price which he could persuade the vendors to give, so long as that was his real opinion. But the moment he accepted the position of agent for the intending purchasers his entire position in law changed. He could no longer consistently with his duty, unless he disclosed the facts, act as agent for the vendors to procure purchasers with the result of some commission or payment to himself. He could not retain that position consistently with his duty to the purchasers of obtaining these properties at as low a price as he possibly could. . . the moment he accepted the position of agent to procure these properties as cheap as possible for the intending purchasers his interest and duty conflicted, and he could no longer act honestly towards the intending purchasers without disclosing to them that in that figure of £8,000 to £10,000 which he had mentioned as the probable price of these properties he had included a figure which he intended should cover a commission to himself.’
Scrutton LJ said: ‘I agree with the judgment that has just been delivered and I only propose to re-state it in my own words because I think it is of very great importance that the principle upon which we are acting should be thoroughly understood, and from Mr Vachell’s argument it is not thoroughly understood by commercial men, especially in that part of the country from which his clients appear to come . . The law I take to be this: that an agent must not take remuneration from the other side without both disclosure to and consent from his principal. If he does take such remuneration he acts so adversely to this employer that he forfeits all remuneration from the employer, although the employer takes the benefit and has not suffered a loss by it. . . I hope it is thoroughly understood in London; and if it is not thoroughly understood in the Forest of Dean, then the sooner it is understood there the better for commercial honesty.’ and
‘But I decide it on the broad principle that whether it causes damage or not, when you are employed by one man for payment to negotiate with another man, to take payment from that other man without disclosing it to your employer is a dishonest act. It does not matter that the employer takes the benefit of his contract with the vendor; that has no effect whatever on the contract with the agent, and it does not matter that damage is not shown. The result may actually be that the employer makes money out of the fact that the agent has taken commission.
In this case, therefore, it appears that as one of the two joint agents has, in breach of his duty, taken commission from the other side, he forfeits, and they both forfeit, all right to remuneration from their employer. The more that principle is enforced the better for the honesty of commercial transactions. I have only repeated what my Lord has said because it cannot be repeated too often to commercial men – that in matters of agency they must act with strict honesty.’
Atkin LJ said: ‘This is a class of case where the Courts always have maintained, and do maintain, and I trust always will maintain, a very high standard of conduct on the part of agents. It is a standard of conduct which I am afraid sometimes conflicts with the standard of conduct adopted for themselves by commercial men – not by honourable men in commerce, but by a great many men engaged in mercantile transactions. I entirely agree with what has been said as to the importance of repeating and letting it be known as widely as possible what the standard of conduct expected of an agent is at law. . . Now that is not an impossible standard of attainment. It is laid down by the law and it is in respect of a practical matter. The remedy is a very simple one and it is well within the compass of any ordinary business man. The complete remedy is disclosure, and if an agent wishes to receive any kind of remuneration from the other side and wishes to test whether it is honest or not, he has simply to disclose the matter to his own employer and rest upon the consequences of that. If his employer consents to it, then he has performed everything that is required of an upright and responsible agent.’
Insurance. Suppression of material fact. Principal and agent. Money had and received. A, as agent for a foreign owner, entered into a policy of insurance on a ship in the usual form. At the time of effecting the insurance, A was in possession of a letter from the captain, informing him that the ship had received injury, which fact he, without fraudulent intention to deceive, omitted to disclose to the underwriters. The ship waa lost, and B, one of the underwriters paid to A, his amount of the insurance ; but, having subsequently become acquainted with the above circumstance, brought an action for money had and received against him to recover it back. A., before he was aware of B.’s intention to dispute the policy, and acting bona fide throughout, transmitted to his principal the money he had received from the various underwriters; with the exception of a certain amount for which he had allowed the principal credit iri a settled account, and of another which, with the autbority of the principal, he had expended in a suit brought by him on behalf of the principal against C, another underwriter, on the policy :
Held: (In accordance with the decision in Russell v. Thornton, 4 H. & N. 788, affirmed on error, 6 Id. 140), that, in consequence of the concealment from the underwriters of the fact stated in the captain’s letter, the policy was voidable at the election of the underwriters. 2. That A. being only an agent, of which B. was aware, and having, without notice of B’s intention to repudiate the contract, paid over to his principal the amount received from the underwriters, B. was not entitled to recover back from A. his amount of the insurance. 3. That there was no difference in this respect between the money actually paid over by A. to his principal, and the moneys which had either been allowed in account between them or expended in the suit agaitist C, 4. Quaere, whether B. would have been entitled to recover, if he had not known that A. was acting merely as agent?
The defendant hospital had custody of sperm samples given by the claimants in the course of fertility treatment. The samples were effectively destroyed when the fridge malfunctioned. Each claimant was undergoing chemotherapy which would prevent them providing future samples. They appealed a finding that they they had no losses, based on the suggestion that the 1990 Act so circumscribed the managememt of the samples as to deny any assertion of a proprietory interest in the samples. They claimed psychological injury and losses.
Held: The appeal was allowed. The hospital owed the claimants a duty of care. The concept of ownership is no more than a convenient global description of different collections of rights held by persons over physical and other things. The men owned the specimens. The Act itself required expicit consent from the donors for various acts, and this itself acknowledged rights. Doodward was framed as an exception to the common law rule, and was not a good basis for the modern law. The common law needed re-examination.
The court considered and set out the law of bailment as it might apply to the case. The defendants were bailees.
Arden LJ considered the principles to be applied when considering whether a party to civil litigation should be allowed to appeal a trial judge’s decision on the basis that a claim, which could have been brought before him but was not, would have succeeded if it had been so brought. She concluded: “CPR 52.8 provides that an appellant’s notice may not be amended without the permission of the court. When the court gives its permission, it must take into account the overriding objective in the CPR, which is to deal with cases justly. An application to amend a notice of appeal raises special considerations which do not apply to an application to amend a pleading prior to a trial. In the case of a pleading the court will (subject to any prejudice to the parties or to the administration of justice) readily give permission to amend so that the real dispute between the parties can be adjudicated upon. But on appeal the position is different. The simple fact is that there has already been a trial, and the significance of that is that the parties will have had an opportunity to put forward their cases, and incurred costs, and there will have been a decision. These points were powerfully put by May LJ in Jones v MBNA:
Civil trials are conducted on the basis that the court decides the factual and legal issues which the parties bring before the court. Normally each party should bring before the court the whole relevant case that he wishes to advance. He may choose to confine his claim or defence to some only of the theoretical ways in which the case might be put. If he does so, the court will decide the issues which are raised and normally will not decide issues which are not raised. Normally a party cannot raise in subsequent proceedings claims or issues which could and should have been raised in the first proceedings. Equally, a party cannot, in my judgment, normally seek to appeal a trial judge’s decision on the basis that a claim, which could have been brought before the trial judge, but was not, would have succeeded if it had been so brought. The justice of this as a general principle is, in my view, obvious. It is not merely a matter of efficiency, expediency and cost, but of substantial justice. Parties to litigation are entitled to know where they stand. The parties are entitled, and the court requires, to know what the issues are. Upon this depends a variety of decisions, including, by the parties, what evidence to call, how much effort and money it is appropriate to invest in the case, and generally how to conduct the case; and, by the court, what case management and administrative decisions and directions to make and give, and the substantive decisions in the case itself. Litigation should be resolved once and for all, and it is not, generally speaking, just if a party who successfully contested a case advanced on one basis should be expected to face on appeal, not a challenge to the original decision, but a new case advanced on a different basis. There may be exceptional cases in which the court would not apply the general principle which I have expressed. But in my view this is not such a case.’
The court must examine each application on its own facts in the light of the guidance to be found in the authorities. On that, the starting point is a passage from the speech of Lord Hershell in The Tasmania: ‘My Lords, I think that a point such as this, not taken at the trial, and presented for the first time in the Court of Appeal, ought to be most jealously scrutinised. The conduct of a cause at the trial is governed by, and the questions asked of the witnesses are directed to, the points then suggested. And it is obvious that no care is exercised in the elucidation of facts not material to them’.
It appears to me that under these circumstances a Court of Appeal ought only to decide in favour of an appellant on a ground there put forward for the first time, if it be satisfied beyond doubt, first, that it has before it all the facts bearing upon the new contention, as completely as would have been the case if the controversy had arisen at the trial; and next, that no satisfactory explanation could have been offered by those whose conduct is impugned if an opportunity for explanation had been afforded them when in the witness box.
Lord Hershell was there dealing with the situation where a party seeks to raise a new case by asserting that an accident happened in a different way from that which was suggested at trial. The passage stresses the importance of ensuring that the other party is not put at risk of prejudice. In his judgment in Jones v MBNA (a case under the CPR: see  of the judgment), Peter Gibson LJ helpfully elaborated the point, and expressed the view that it would be difficult to see how the court could ever, consistently with the overriding objective, allow a new point to be taken on appeal if further evidence might have been produced at trial on it or if the new point requires an evaluation by the appeal court of evidence which might be affected by seeing the witnesses.
38. It is not in dispute that to withdraw a concession or take a point not argued in the lower court requires the leave of this court. In general the court expects each party to advance his whole case at the trial. In the interests of fairness to the other party this court should be slow to allow new points, which were available to be taken at the trial but were not taken, to be advanced for the first time in this court. That consideration is the weightier if further evidence might have been adduced at the trial, had the point been taken then, or if the decision on the point requires an evaluation of all the evidence and could be affected by the impression which the trial judge receives from seeing and hearing the witnesses. Indeed it is hard to see how, if those circumstances obtained, this court, having regard to the overriding objective of dealing with cases justly, could allow that new point to be taken.
There is further useful guidance in this passage for the purposes of the present case. Peter Gibson LJ adopted the approach that, before allowing a new case to be raised on appeal, he had to be satisfied that, if the new case had been raised at trial, the other party would not have altered the way it conducted the case. Likewise, in this case, in my judgment the court has to be satisfied that SHS will not be at risk of prejudice if the new point is allowed because it might have adduced other evidence at trial, or otherwise conduct the case differently. It should consider for itself, as best it can, what factual issues are likely to be raised by the new case. Moreover, in circumstances such as the present, where there has been no disclosure relative to the new way in which the appellant seeks to put his case and virtually no opportunity to consider the matter, I do not consider that the court can reasonably expect the party against whom the amendment is sought to be made to be specific about the evidence he would have adduced had the point been raised earlier. If there is any area of doubt, the benefit of it must be given to the party against whom the amendment is sought. It is the party who should have raised the point at trial who should bare any risk of prejudice.
The circumstances in which a party may seek to raise a new point on appeal are no doubt many and various, and the court will no doubt have to consider each case individually. However, the principle that permission to raise a new point should not be given lightly is likely to apply in every case, save where there is a point of law which does not involve any further evidence and which involves little variation in the case which the party has already had to meet (see Pittalis v Grant  QB 605).”
The parties disputed whether the claimants were commercial agents within the regulations. The defendants said that this was a mere distributorship agreement.Court: ComC
The property mortgaged was specialised sound and lighting equipment used at pop concerts. The mortgagee’s guarantor was dissatisfied with the way in which the receiver sold the equipment.
Held: Where a company receiver was appointed under a charge in common form, he acted as the agent of the the mortgagor until the mortgagor’s liquidation. Something more is required to constitute a relationship of principal and agent between the mortgagee and the receiver than the mere appointment under the terms of a debenture which in its normal form constitutes the receiver an agent for the mortgagor. While he was such, the mortgagee was not responsible for what the receiver did unless and until he directed or interfered with the receiver’s activities. Furthermore, the mortgagee, or receiver, had a duty of care to the guarantor of the mortgagor’s debt to obtain the true market value of the mortgaged property when either of them realised the property in the exercise of a power of sale. In the circumstances of this case the receiver had not taken reasonable care to obtain the true market value.
Mann J said: “In my judgment the receiver did not take reasonable care in all the circumstances of the case to obtain the true market value of the equipment. He had in his hands equipment which he knew had been valued at £193,323 and which he knew was of a specialist nature. In regard to the disposal of the equipment he did nothing. Although advised by Edward Symmons Ltd that he should look to the trade the receiver did not do so but was content that the trade should look to him. In my judgment the failure to take reasonable care is manifest in these forms: (i) a failure to take specialist advice from a person in the popular music industry; (ii) a failure to advertise in publications concerning the popular music industry. The receiver is liable in negligence to the guarantor.”
The defendant appealed against a finding that she was liable to pay her estate agent, appointed as sole agent, on the sale of her property. The eventual purchasers had visited but rejected the property. The agency was later terminated, and the buyers were re-introduced by a subsequent agent. The claimants claimed entitlement because the sale was to ‘a purchaser introduced by’ them.
Held: The appeal succeeded. Lord Neuberger of Abbotsbury said: ”A purchaser introduced by us’ meant a person who becomes a purchaser as a result of our introduction’. This was consistent with the intent of the 1991 Regulations, and the claimants interpretation would leave the sellers open to a claim at whatever future point the buyer was persuaded.
Lord Neuberger examined the case law and said: ‘More generally the judgments in those cases establish the following propositions. First, the term identified in Article 57 of Bowstead is ‘very readily’ implied, especially in a residential consumer context, unless the provisions of the particular contract or the facts of the particular case negative it . . Secondly, the main reason for implying the term is to minimise the risk of a seller having to pay two commissions . . Thirdly, it is not entirely clear whether the test is ‘an effective cause’ or ‘the effective cause’ . . Fourthly, whether an agent was the effective cause is a question whose resolution turns very much on the facts of the particular case . . Fifthly, while two commissions are to be avoided, there will be cases where the terms of the relevant contracts and the facts compel such a result . . Sixthly, where the term is implied, the burden is on the agent seeking the commission to establish that he was the effective cause.’
Diplock LJ said: ‘The legal relationship of bailor and bailee of a chattel can exist independently of any contract.’ Where goods are lost or damaged, the burden is on the bailee (or sub-bailee) to ‘show – that the loss or damage caused without any neglect or default or misconduct of himself or of any of the servants to whom he delegated his duty.’Court: CA
For an estate agent to recover his commission, it was ‘necessary’ to show that the agent’s introduction was an ‘efficient’ (namely effective) cause in bringing about the transaction.Court: CA
The estate agency agreement at issue said that commission was payable on the agents ‘introducing a person ready, willing and able to enter into a binding contract to purchase’. The purchaser entered into the contract, but then resiled after discovery of a misrepresentation. The contract was cancelled by agreement between the parties on payment of a sum of money by the purchaser. The estate agents claimed their commission but the vendor refused to pay. The agent failed in their action for breach of contract. That action failed.
Held: In this context, a ‘binding contract’ meant one which was legally enforceable by the vendor against the purchaser. Since the contract had been rendered unenforceable by the vendor as a result of the innocent misrepresentation of the estate agents, no commission was payable. The estate agents argued that the vendor could not take advantage of the misrepresentation made by them to the purchaser since she herself had given the relevant information to the estate agents. Singleton LJ did not agree. The making of such a representation to the purchaser without checking the information given by the vendor bordered on recklessness.
Romer, LJ, said: ‘I have no doubt that the contract which [the purchaser] did sign was not a binding contract within the terms of the commission note. I agree . . that ‘a binding contract’ in this context is the same as a legally binding contract, and that means a contract binding on the purchaser and legally enforceable against the purchaser by the vendor. The contract which [the purchaser] signed was never legally enforceable against her by [the vendor] because of the innocent misrepresentation which was made to her by [the estate agents’ representative]. Moreover, the contract was voidable by [the purchaser], who could rescind it the moment that she discovered what the true facts were. Accordingly, it appears to me impossible to say that it was a binding contract within the meaning of that phrase as used in the commission note.
A voidable contract, when rescinded, is avoided ab initio.’
Morris LJ said: ‘The Plaintiffs further submit there was an estoppel. They plead as follows in paragraph 3 of the reply: ‘If it is found that the said contract was not binding on [the purchaser] [the estate agents] will further say that [the vendor] having innocently misled [the estate agents’ representative] who upon [the vendor’s] said instructions innocently misled [the purchaser], [the vendor] is estopped from setting up her own misrepresentation, resulting in the rescission of her contract with [the purchaser], to defeat [the estate agents’] claim for commission.’ But, in my judgment, this is not a case where the doctrine of estoppel can be relied upon. There was nothing to prevent [the purchaser] from proving that there had been an innocent misrepresentation and so from resiling from the contract. Upon proof that [the purchaser] did disaffirm the contract it was shown there had been no binding contract and so that commission had not been earned. There is no evidence, for no oral evidence was called, that had Mrs Pritchard known the true facts as to the road widening she might have purchased at a lower figure and so enabled [the estate agents] to earn some commission. There was no evidence to that effect.
What, then, is the legal basis of [the estate agents’] complaint? [The estate agents] may say that they wasted some time because they had some dealing with [the purchaser] which led to an abortive contract. But there is no claim against [the vendor] on that basis; nor do I see there could be. [The vendor] made no fraudulent misrepresentation to [the estate agents], and no sort of suggestion of that kind is or could be made. [The estate agents] do not suggest that [the vendor] gave any warranty to them of the truth of the representation which she made.’
A principal or employer is entitled to delivery up of original documents (or other property) retained or removed by an agent or employee and relating to transactions done as agent.Court: ComC
A secret commission had been agreed and paid to the agent. The court was asked whether the principal had elected to affirm the contract with the other party at a later meeting when he was given some information about what had happened.
Held: He had not. The principal had still not made his election with full knowledge of the material facts. There had been an inadequate initial disclosure.
The defendant ran a post office. A cash shortage was found, and he challenged the calculation of the account.
Held: The defendant was liable for the deficit in law. He had shown no sufficient reason to make the court think the calculations were wrong, and the defence failed.