England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(MANCHESTER DISTRICT REGISTRY)
(HIS HONOUR JUDGE KERSHAW QC sitting as a High Court Judge)

		Royal Courts of Justice Strand London WC2A 2LL Friday 17 November 2000

1. LORD JUSTICE WARD: This is an application for permission to appeal the order made by His Honour Judge Kershaw on 3 August 2000 when he found that the contract made between the claimant and the defendant hauliers was on terms that the defendant was indemnifying the claimant against loss or damage of the computer hardware which was being transported up to £5,000 for each item, later varied to £3,500.
2. The nub of the case is that a Mr Jameson was acting for the claimant. The defendant company operated from a head office which was the centre of the collection and delivery service. From that head office there were a group of franchisees, one of them in Blackburn. Panic Link Plc operated through that franchisee in the form of Mr Hobson.
3. The judge was satisfied that there was an oral agreement between Mr Jameson and Mr Hobson. He was satisfied that Mr Jameson had some authority to negotiate. That was made clear in an answer to a question the judge posed. The issue was how far that authority to negotiate extended. The judge decided the question on apparent authority putting the test, in terms:

"....whether the defendant led the claimant reasonably to believe that Mr Hobson had such authority."

4. In accordance with article 75 of Bowstead on Agency he said:

"No act done by an agent in excess of his actual authority is binding on the principal with respect to persons having notice that in doing the act the agent is exceeding authority."

5. The judge appears to have taken that to lead to this question:

"....whether the claimant had notice which would have to be clear of a limitation to that authority?" (My emphasis).

6. Mr Howlett submits that that was a misdirection; that notice, even in the law of agency, can now be taken to mean constructive notice as that term has come to be understood; that in this case it would involve knowledge of the fifth category in the case of Baden, Delvaux v Société General [1983] BCLC 325, namely that knowledge of circumstances will put an honest and reasonable man on enquiry; that if Mr Jameson, who is honest, had reasonably applied his mind to the facts, he would have been put on enquiry of the principal of the head office of Panic, which would have revealed the actual defects in the authority apparently being exercised by Mr Hobson and the truth would have been revealed.
7. The judge concluded:

"....the defendant has wholly failed to bring to the attention of the claimant that Mr Hobson, who had its authority to negotiate carriage of goods contracts, did not have authority to offer Goods in Transit insurance."

8. That may not satisfy a test of constructive notice because it seems to have put the burden on the defendant to bring matters to the attention of the claimant when, Mr Howlett submits, it should have been the claimant who was put on enquiry.
9. The facts Mr Howlett relies upon are set out in paragraph 5 of his skeleton argument. They are, essentially, that, in the original negotiation, the head office made it plain that they only contracted on written standard terms unless those were varied in writing by the director. In this case there was an oral contract, unusual in the industry. There was no variation agreed by a director. Perhaps most suspiciously of all, Mr Hobson did produce a standard form of trading agreement and did persuade Mr Jameson to sign it. But he then said, "You have got to sign it but it is absolutely 'meaningless', it is 'purely administrative' and nobody bothers about these written terms". Mr Howlett submits that that should have set the red flights flashing, should have put Mr Jameson on enquiry and led to the revelation of the truth.
10. It is just about arguable. I am not at all convinced that constructive notice ought to be imported into the question of apparent authority, but Bowstead seems to think it might, so that must be arguable. I am not at all sure that the facts justify the conclusion for which Mr Howlett contends. But, if the judge did not ask the right question, it maybe he would have given a different answer if he had done so.
11. Accordingly, a little hesitantly, Mr Howlett can take his leave and the matter should be set down with a time estimate of one day.
12. LORD JUSTICE SEDLEY: I agree.
Order: Permission to appeal granted. Notice of appeal to be served within 7 days. Time estimate 1 day. Costs to be costs in the appeal. (Order does not form part of approved judgment)