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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Winter v Hockley Mint Ltd  EWCA Civ 2480 (15 November 2018)
Cite as:  EWCA Civ 2480,  1 WLR 1617,  2 All ER 1054,  WLR 1617
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
BIRMINGHAM DISTRICT REGISTRY
HHJ Purle QC (sitting as a Judge of the High Court)
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE FLAUX
MRS JUSTICE CARR
| JAMES SCOTT WINTER
|- and -
|HOCKLEY MINT LIMITED
Mohammed Zaman QC (instructed by Tenet Compliance & Litigation Ltd) for the Respondent
Hearing dates: 24 and 25 October 2018
Crown Copyright ©
Sir Terence Etherton MR, Lord Justice Flaux and Mrs Justice Carr:
The grounds of appeal
The respondent's notice
The grounds of appeal
"In cases of fraud at least, involving as they do a representation by the servant in reliance upon which the third party has acted to his detriment, the master can only be vicariously liable for the servant's fraud where he has acted within his ostensible authority. If this were not the law, in many cases where the servant has warranted his authority, fraudulently or even negligently, the master would be vicariously liable for the tort; there is no trace in the authorities of this being so. …"
"This approach can moreover, in my judgment, be justified as a matter of policy. For where the servant's wrong consists of a misrepresentation upon which the plaintiff relies, if that misrepresentation is not within the ostensible authority of the servant, the plaintiff is placing reliance on a statement by the servant which, as I have already indicated, either does not fall within the class of acts which a person in his position is usually authorised to perform, or is a statement made in circumstances where the plaintiff has notice that his authority is limited. In either case, in my judgment, the plaintiff is placing his reliance exclusively upon the servant; and it is understandable that it should be the policy of the law in those circumstances, not merely that the unauthorised act should not be imputed to the master, but also that the master should not be vicariously liable for the servant's wrong."
"On this basis, those torts which involve reliance by the plaintiff upon a representation by the servant should be distinguished from other wrongs, for example those which involve intentional or negligent physical acts by the servant. In the latter class of case, the ostensible authority of the servant does not provide the criterion of the master's vicarious liability: see, in particular, Bugge v. Brown (1919) 26 C.L.R. 110 , 116, et seq., per Isaacs J. and, at p. 132, per Higgins J."
"This dictum [of Denning LJ in Navarro v Moregrand Ltd  2 TLR 674, 680] which was not concurred in by the other two members of the Court of Appeal, may have some validity in relation to torts other than those concerned with fraudulent misrepresentation, but in my opinion it has no application to torts of the latter kind, where the essence of the employer's liability is reliance by the injured party on actual or ostensible authority. … At the end of the day the question is whether the circumstances under which a servant has made the fraudulent misrepresentation which has caused loss to an innocent party contracting with him are such as to make it just for the employer to bear the loss. Such circumstances exist where the employer by words or conduct has induced the injured party to believe that the servant was acting in the lawful course of the employer's business. They do not exist where such belief, although it is present, has been brought about through misguided reliance on the servant himself, when the servant is not authorised to do what he is purporting to do, when what he is purporting to do is not within the class of acts that an employee in his position is usually authorised to do, and when the employer has done nothing to represent that he is authorised to do it."
"reflects what I have divined to be the closest I can get to the ratio in Armagas …"
"23. … Lord Denning MR once said that on this question the cases are baffling: see Morris v C W Martin & Sons Ltd  1 QB 716, 724. Perhaps the best general answer is that the wrongful conduct must be so closely connected with acts the partner or employee was authorised to do that, for the purpose of the liability of the firm or the employer to third parties, the wrongful conduct may fairly and properly be regarded as done by the partner while acting in the ordinary course of the firm's business or the employee's employment…"
"122. The vicarious liability of an employer does not depend upon the employee's authority to do the particular act which constitutes the wrong. It is sufficient if the employee is authorised to do acts of the kind in question: see Navarro v Moregrand Ltd  2 TLR 674, 680, per Denning LJ. This is equally true of partners, though it is perhaps less obvious in their case, since the relation between partners is essentially one of agency. An employer may authorise his employee to drive, but he does not authorise him to drive negligently. A firm of solicitors may authorise a partner to draft agreements for a client, but it does not authorise him to draft sham agreements. Lord Lindley wrote "it is obvious that it does not follow from the circumstance that such tort or fraud was not authorised, that therefore the principal is not legally responsible for it" cited in Lindley & Banks on Partnership, 17th ed (1995) , pp 332-333."
"124 … If regard is paid to the closeness of the connection between the employee's wrongdoing and the class of acts which he was employed to perform, or to the underlying rationale of vicarious liability, there is no relevant distinction to be made between performing an act in an improper manner and performing it for an improper purpose or by an improper means. …"
"... that confirms, as do other passages in the same case, that the relevant test which has now emerged is whether there is a sufficiently close connection between the employee or, in this case, the agent's wrongdoing and the class of acts he was employed to perform."
"53. It seems to me that, taking the test as the broad one and looking at the closeness of the connection between Mr Ramsden's authorised activities and the representations he made, they were all an integral part of the same selling process. It is unreal and quite unlike Armagas … to separate the representations which he made about postal savings and the like from the actual selling of the equipment. I cannot do so.
54. Mr Ramsden did not separate those representations from the selling process either, and accordingly, it seems to me, that this case falls on the other side of line from Armagas... Mr Ramsden was carrying out authorised activities in the way he saw fit. He was authorised to enter into and complete the transactions. He must have been authorised also to hold himself out as authorised by Erskine Hathaway, which in fact he was. Mr Winter confirmed in his own evidence that he authorised BNP/1 in May 2015 and also authorised the later transactions as well. He saw nothing wrong with them, as neither did the financiers who financed them. They did not know about the representations that Mr Ramsden was making but Mr Ramsden, whilst not acting for the financiers, was undoubtedly acting for Mr Winter because he was the ultimate supplier. He stood to gain from these transactions and the representations were made as an integral part of the selling process from which the gain derived. In those circumstances, it seems to me right and just that vicarious liability should apply. I accordingly find Mr Winter liable vicariously, though not as a deceiver, in respect of the transactions in question."
"Dishonest conduct perpetrated with no intention of benefiting the employer but solely with that of procuring a personal gain or advantage to the employee is governed, in the field of vicarious liability, by a set of principles and a line of authority of peculiar application."
"The only difference in my opinion between the case where the principal receives the benefit of the fraud, and the case where he does not, is that in the latter case the principal is liable for the wrong done to the person defrauded by his agent acting within the scope of his agency; in the former case he is liable on that ground and also on the ground that by taking the benefit he has adopted the act of his agent; he cannot approbate and reprobate."
The respondent's notice
"…the principle is firmly established that an appellate court should only interfere with a finding of fact made by the trial judge if satisfied that the conclusion is "plainly wrong". …"[W]hat this amounts to is that it must be possible to identify a material error in the judge's process of reasoning – such as "a material error of law", or the making of a critical finding of fact which has no basis in the evidence, or a demonstrable misunderstanding of relevant evidence, or a demonstrable failure to consider relevant evidence…; or, if there is no such identifiable error and the question is simply one of judgment as to the appropriate weight to be given to the relevant evidence, the appellate court must be satisfied that the judge's conclusion "cannot reasonably be explained or justified".."
"…Mr Winter confirmed in his own evidence, that he authorised BNP1 in May 2015 and also authorised the later transactions as well. He saw nothing wrong with them, as neither did the financiers who financed them. They did not know about the representations that Mr Ramsden was making…"