A divided Inner House of the Court of Session on whether section 5 of the Employers’ Liability (Compulsory Insurance) Act 1969 imposes civil liability upon directors and other officers of companies if they consent or connive at, or are negligent in respect of, an insolvent company’s failure to provide adequate accident insurance for its employees, the only consequences set out in the Act for such directors being criminal in nature.  The majority is for the negative, Lord Drummond Young being the minority:  Campbell v Peter Gordon Joiners Ltd and Peter Gordon [2015] CSIH 11 - http://www.scotcourts.gov.uk/search-judgments/judgment?id=c461c5a6-8980-69d2-b500-ff0000d74aa7

Hector L MacQueen FBA FRSE

Professor of Private Law

University of Edinburgh Law School

Old College

South Bridge

Edinburgh EH8 9 YL

Currently working at the Scottish Law Commission tel (0)131-662-5222

________________________________________

From: Peter Watts (Law) <pg.watts@auckland.ac.nz>

Sent: 02 February 2015 22:34

To: Gerard Sadlier

Cc: obligations@uwo.ca

Subject: Re: Vicarious Liability of Undisclosed Principle?

Yes, but vicarious liability for torts and other wrongs has not generally

(pace, physical molestation) been applied to principals who are not either

the employer or a partner of the tortfeasor. Merely having an agency

relationship with the tortfeasor is not enough. If the principal IS an

employer it will not usually matter whether the employer is undisclosed.

But at least on one view, employer liability for some torts (e.g. deceit,

negligent misstatement) does turn on apparent authority in the

employee,and hence undisclosed principals would not be liable without

express authorisation. Equally, where there was apparent authority to make

the relevant statement, an agency relationship is sufficient to make the

principal liable. I discussed these controversial issues in (2012) 128 LQR

260. Peter.

On 3/02/15 4:14 am, "Gerard Sadlier" <gerard.sadlier@gmail.com> wrote:

Angela,

Many thanks.

I much prefer the Canadian decision, at least so far as contracts are

concerned  and I note that Watteau's case has been doubted in Bowstead

and Reynolds (at 8.79) and has rarely if ever been followed in more

than a hundred years, in any reported case that I can find!

I wonder however, whether such private limitations between undisclosed

principle and agent, are similarly effective, where what is at issue

is the principle's vicarious liability?

After all, reliance on the employer by the victim is not at the heart

of the vicarious liability cases concerning employees and the law

seems to be far closer to the enterprize liability rationale you speak

of.

Kind regards

Ger

On 2/2/15, Angela Swan <aswan@airdberlis.com> wrote:

In Watteau v. Fenwick, [1893] 1 Q.B. 346, the plaintiff made a contract

with

the manager of a pub for the supply of goods.  The plaintiff was not

paid

and sued the defendant, the owner of the pub.  The manager had been the

owner of the pub, but he had sold it to the defendant, remaining on as

manager.  The licence was taken out in the manager's name and his name

alone

appeared as the licensee.  The manager was instructed not to purchase

certain supplies for the pub from outside parties.  In breach of these

instructions, the manager purchased supplies from the plaintiff.  The

Divisional Court, on appeal from the County Court, held that what the

manager did was within the usual authority of a person managing a pub

and

that the acts of the manager within the scope of this authority bound

the

principal, even though the third party neither knew of the agency nor

relied

on anything done by the principal.

The only justification that the court gave was that if the defendant

were

not made liable, then

in every case of undisclosed principal, or at least in every case where

the

fact of there being a principal was undisclosed, the secret limitation

of

authority would prevail and defeat the action of the person dealing

with the

agent and then discovering that he was an agent and had a principal.

([1893]

1 Q.B. 346 at 349)

The court made reference to the law of limited partnerships, pointing

out

that actions taken by the general partner within the scope of his usual

authority would bind a limited partner.   The court then claimed that

the

law of partnership was but a branch of the general law.

An alternative view was taken in McLaughlin v. Gentles (1920), 46 O.L.R.

477, 51 D.L.R. 383 (App. Div.).  The defendants were the members of a

mining

syndicate that had sent out one of their number, a man called Chisholm,

to

prospect.  The plaintiff supplied goods to Chisholm and, when Chisholm

refused to pay, sued the other members of the syndicate to recover the

price

of the goods.  The Appellate Division held that the defendants (other

than

Chisholm) were not liable as they had not held Chisholm out as their

agent

or as having authority to buy the goods.  The court referred to Watteau

v.

Fenwick and other cases, but declined to follow the Divisional Court.

The

Appellate Division said:

It seems to be straining the doctrine of ostensible agency or of holding

out, to apply it to a case where the fact of the agency and the holding

out

were unknown to the person dealing with the so-called agent at the

time, and

to permit that person, when he discovered that his purchaser was only an

agent, to recover against the principal, on the theory that he is

estopped

from denying that he authorized the purchase.  It appears to me that the

fact that there was a limitation of authority is [at] least as

important as

the fact that the purchaser was an agent.  The vendor did not know

either of

these facts, and so did not draw any conclusion involving the principal

when

he sold and delivered the goods.  Should he be permitted, when he

elects to

look to the principal, to do so upon any other terms than in accordance

with

the actual authority given at that time?  It is entirely different where

there is a holding out as agent and the fact of the agency is known, but

where neither is an element in the bargain nor the reason why the

credit was

given, and so not an additional security known to the vendor at the

time, no

equity should be raised in favour of the vendor as against the

principal so

as to make the latter liable.

((1920), 46 O.L.R. 477, 490, 51 D.L.R. 383, 394-95, per Hodgins J.A.)

The comparison between Watteau v. Fenwick and McLaughlin v. Gentles

neatly

presents the issue.  The first case establishes a kind of "enterprise"

liability, making the owner, the undisclosed principal, liable for any

contracts made with the plaintiff.  The second sees no reason to spread

the

loss among the partners or to do anything other than to say that the

plaintiff must, in the future, make sure that anyone he deals with has

assets sufficient to complete the purchase.

Angela Swan

-----Original Message-----

From: Gerard Sadlier [mailto:gerard.sadlier@gmail.com]

Sent: February-02-15 9:31 AM

To: Harrington Matthew P.

Cc: obligations@uwo.ca

Subject: Re: Vicarious Liability of Undisclosed Principle?

Mat

Much appreciated!

Thanks

Ger

On 2/2/15, Harrington Matthew P.

<matthew.p.harrington@umontreal.ca<mailto:matthew.p.harrington@umontreal.

ca>>

wrote:

Ger

Here is a relatively recent Ontario AC case discussing the general

rule.

John Ziner Lumber Ltd. v. Kotov, 2000 CanLII 16894 (ON CA)

http://www.canlii.org/en/on/onca/doc/2000/2000canlii16894/2000canlii1689

4.html

An early American Supreme Court case is

Ford v. Williams, 62 U.S. 287 (U.S. 1858)

An old, but pretty good law journal article is

Arnold Rochvarg, Ratification and Undisclosed Principals, 1989 McGill

L.J.

http://lawjournal.mcgill.ca/userfiles/other/4930762-Rochvarg.pdf

---------------------------------------

Matthew P. Harrington

Professeur titulaire

Faculté de droit

Université de Montréal

3101 chemin de la Tour

Montréal, Québec H3T 1J7

514.343.6105

www.droit.umontreal.ca<http://www.droit.umontreal.ca>

---------------------------------------

From: Gerard Sadlier<mailto:gerard.sadlier@gmail.com>

Sent: Monday, February 02, 2015 8:06 AM

To:

obligations@uwo.ca<mailto:obligations@uwo.ca<mailto:obligations@uwo.ca%3

cmailto:obligations@uwo.ca>>

Dear all,

I'd be really grateful for any authorities on the question whether a

principle is vicariously liable for acts of their agent in the course

of or incidental to the agent's agency, in circumstances where the

principle is undisclosed to third parties.

Where, in other words, T (the third party) deals with A (the agent)

not realizing that A acts for P (the principle).

Many thanks

Ger

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