Supreme Court of Ireland Decisions

1. The defendant Michael English (‘the vendor’) owns a garage. In 1979 he sold a secondhand Fiat motor car to a man called Richard Shannon (‘the purchaser’). The car proved to be mechanically defective, so the vendor took it back to his garage to have it repaired, leaving a Renault motor car with the purchaser as a temporary replacement until the Fiat was put right. The purchaser had the use of the Renault for a few days and was then told to bring it back, as it had by then been sold by the vendor to someone else.

2. The purchaser called to the garage with the Renault. The vendor was not there. In fact the only person he found there was a Mr. Toomey, a mechanic (‘the mechanic’). He enquired of him if the Fiat was ready. He was told that it would be ready that evening. The purchaser said that he needed a car immediately. To oblige him, the mechanic let him have the loan of a Mini motor car which was standing in the garage. The purchaser drove off in the Mini.

3. That was on a Friday. On the following Sunday the purchaser, driving the Mini, negligently collided with the plaintiff as she was walking on the public road and she suffered very severe injuries. The accident was entirely due to the purchaser’s negligence. She brought a claim for damages in the ‘High Court against both the purchaser and the vendor – against the purchaser as the driver and against the vendor on the footing that the purchaser was driving as his servant or agent.

4. The plaintiff’s claim against the purchaser has been settled for £42,500, but alas his driving of the Mini was not covered by insurance. The question in this case is whether she is confined to recovering damages under the Motor Insurance Bureau scheme or whether she can recover against the vendor’s insurers.

5. The plaintiff got a trial, as a separate issue before a judge and jury in the High Court, of the question whether at the time of the accident the purchaser was driving with the consent of the vendor. The jury answered ‘Yes’ to that question. The result, by reason of the terms of s. 118 of the Road Traffic Act 1961, is that the purchaser is to be deemed to have been using the Mini as the agent of the vendor, so the latter (or, properly speaking, his insurance company) would be vicariously liable for the plaintiff’s damages if that finding stands. However, the vendor has brought this appeal to have that finding set aside.

6. The net question is whether the mechanic was acting as agent- for the vendor when he allowed the purchaser to take the Mini. Put otherwise, the question is whether the vendor had given authority to the mechanic to lend the Mini to the purchaser.

7. In the law of agency a distinction is drawn between actual (or real) authority and ostensible (or apparent) authority. Actual authority exists when it is based on an actual agreement between the principal and the agent. In this case the uncontradicted evidence of both the vendor and the mechanic was that the vendor had never authorised the mechanic to lend a car to a customer. So it is clear that the mechanic was without actual authority to lend the Mini to the purchaser.

8. Ostensible authority, on the other hand, derives not from any consensual arrangement between the principal and the agent, but is founded on a representation made by the principal to the third party which is intended to convey, and does convey, to the third party that the arrangement entered into under the apparent authority of the agent will be binding on the principal. It is agency of this kind that is contended for by the plaintiff and the purchaser.

9. It is a contention which I fear cannot be sustained in the particular circumstances of this case. The essence of ostensible authority is that it is based on a representation by the principal (the vendor) to a third party (the purchaser) that the alleged agent (the mechanic) had authority to bind the principal by the transaction he entered into. Such a. representation, however, was absent in this case.

10. The law on ostensible or apparent authority is fully and illuminatingly dealt with by Diplock LJ in Freeman & Lockyer v Buckhurst Park Proper ties (Mangal) Ltd [1964] 2 QB 480. Having referred to that judgment, Robert Goff LJ in Armagas Ltd v Mundogas SA [1985] 3 All ER 1795 says:-

11. It appears, from that judgment, that ostensible authority is created by a representation by the principal to the third party that the agent has the relevant authority, and that the representation, when acted on by the third party, operates as an estoppel, precluding the principal from asserting that he is not bound. The representation which creates ostensible authority may take a variety of forms, but the most common is a representation by conduct, by permitting the agent to act in some way in the conduct of the principal’s business with other persons, and thereby representing that the agent has the authority which an agent so acting in the conduct of his principal’s business usually has (at p. 804).

12. I have no doubt that in the eyes of the purchaser the mechanic had ostensible authority to lend him the Mini. But that is not enough to create ostensible authority in the law of agency. There should have been a representation of some kind by the vendor to the purchaser that the mechanic had authority to lend the Mini. On that aspect of the case the facts are clear and unequivocal. There was no representation of any kind by the vendor to the purchaser in regard to the mechanic. The mechanic was one of four or five mechanics who worked in the garage. When the purchaser called to return the Renault, this mechanic happened to be the only member of the staff on the premises. He took it on himself to lend the purchaser the Mini. He had no authority from the vendor to do so. And there is not the slightest suggestion in the evidence that the vendor had by word or deed represented to the purchaser that the mechanic was authorised to lend the Mini. I must therefore hold that in lending the Mini to the purchaser the mechanic was not the vendor's agent. At the time of the accident, therefore, the purchaser was not driving with the vendor’s consent, so he cannot be classified as the servant or agent of the vendor. That means that he cannot be held liable for the purchaser’s negligent driving.

13. I would allow this appeal and hold that the application of counsel for the vendor made in the High Court to have the issue being tried withdrawn from the jury should have succeeded.