British Bank of the Middle East v Sun Life Assurance Company of Canada (U.K.) Ltd
| Jurisdiction | UK Non-devolved |
| Judge | Lord Diplock,Lord Keith of Kinkel,Lord Roskill,Lord Brandon of Oakbrook,Lord Templeman |
| Judgment Date | 05 May 1983 |
| Judgment citation (vLex) | [1983] UKHL J0505-2 |
| Date | 05 May 1983 |
| Court | House of Lords |
[1983] UKHL J0505-2
House of Lords
Lord Diplock
Lord Keith of Kinkel
Lord Roskill
Lord Brandon of Oakbrook
Lord Templeman
My Lords,
I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Brandon of Oakbrook. I agree with it, and for the reasons he gives I would dismiss the appeal.
My Lords,
For the reasons given in the speech to be delivered by my noble and learned friend, Lord Brandon of Oakbrook, which I have had the benefit of reading in draft and with which I agree, I too would dismiss the appeal.
My Lords,
I have had the advantage of reading in draft the speech delivered by my noble and learned friend, Lord Brandon of Oakbrook. For the reasons he gives I, too, would dismiss this appeal.
My Lords,
This case concerns certain written undertakings in favour of the appellant bank ("the Bank"), which a junior employee of the respondent insurance company ("Sun Life UK") purported to execute as agent on its behalf. The question for decision is whether the undertakings so executed are binding on Sun Life UK, so as to be enforceable by the Bank against it; and the answer to that question depends on whether the junior employee of Sun Life UK concerned had its authority, either actual or ostensible, to execute the undertakings on its behalf. Milmo J. at first instance, and the Court of Appeal (Stephenson, Ackner and Griffiths L.JJ.) unanimously on appeal from him, have held that the undertakings are not binding on Sun Life UK and cannot therefore be enforced by the Bank against it. The Bank, pursuant to leave given by the Appeal Committee, now brings a further appeal to your Lordships' House.
My Lords, the material facts are these. Sun Life UK, which is a company registered in England, is a subsidiary of Sun Life Assurance of Canada ("Sun Life Canada"), which is registered in Canada. So far as the United Kingdom is concerned, Sun Life UK carries on, and carries on only, the business of life assurance. Sun Life Canada, on the other hand, carries on not only the same business of life assurance as Sun Life UK, but also the further business of mortgages on real property. But the companies share a common administrative headquarters at 2, 3 and 4 Cockspur Street, London SW1. They also share what I think can fairly be called a common operational infrastructure, comprising a number of levels, and staffed by persons employed by them jointly. This infrastructure, beginning at its top level and working downwards, consists of (1) Regional Offices (six in the United Kingdom) run by Regional Managers, (2) Branch Offices (six or seven in each region) run by Branch Managers, (3) Units (several under each Branch) run by Unit Managers, and (4) groups of Sales Representatives, responsible to and under the supervision of Unit Managers, who carry out the field work in direct contact with potential customers.
So far as both Sun Life Canada and Sun Life UK are concerned the only function of the various persons staffing the infrastructure which I have described is to solicit from members of the public applications for life assurance and pass them upwards, through the various levels to which I have referred, to the administrative headquarters in Cockspur Street. So far as Sun Life Canada is concerned, the persons staffing the infrastructure also solicit, from business men and members of the public, applications for mortgages on real property, which are similarly passed upward, through the various levels, to the administrative headquarters. Each application for life assurance, or for a loan on mortgage, is vetted as it makes its way upwards through each level of the infrastructure, and may during that upward passage either be turned down as unacceptable or recommended for approval. No person employed by either or both companies at any level of the infrastructure, whether as Regional Manager, Branch Manager, Unit Manager or Sales Representative, has power to give final approval to an application either for life assurance or for a loan on mortgage. The power to give such final approval, and to execute and issue the documents necessary to give effect to either kind of transaction, is reserved to authorised officers of the two companies at their joint administrative headquarters.
My Lords, in July 1974, following a period of negotiation, an agreement for a loan of up to £150,000 was concluded between the Bank as lender and an English company, Nellpine Limited ("Nellpine"), as borrower. Nellpine were property dealers, whose main business was the purchase of dilapidated houses, the conversion of them into a number of separate flats, and the sale or letting of such flats to private individuals. The terms of the loan agreement were set out in a letter dated 11th July 1974 from a Mr. Standing, as Manager of the Bank, to Nellpine, and a copy of that letter, with a statement at its foot that Nellpine agreed to it, was signed by two directors of that company.
The letter to which I have referred contained various terms numbered from 1 to 8, intended for the protection of the Bank. Term 6 provided:
"Prior to any moneys under this Facility being allocated to any particular property, the Sun Life Assurance Company of Canada (U.K.) Limited must execute and deliver to the Bank an Undertaking in the form of one of the two drafts annexed hereto (Annexes 1 and 2) according to whether the property is to be acquired for conversion and resale, or is to be acquired for conversion and retention by you."
The forms of undertaking annexed to the letter were not printed forms generally in use by the Bank. They were, on the contrary, non-standard typewritten forms specially drafted by the Bank's solicitors for use in connection with the loan agreement between the Bank and Nellpine.
On or about 17th July 1974 there came into existence a typewritten undertaking which was addressed to the Bank and which a Mr. Dehnel had purported to execute as agent for Sun Life UK. The form of that undertaking followed that one of the two draft undertakings annexed to the loan agreement which was appropriate for the transaction concerned. The first sheet of notepaper used for the undertaking and the schedules to it was headed with the names of both Sun Life Canada and Sun Life UK. The heading also contained the following indication of its origin:
"BERNARD DEHNEL
Unit Manager
Sun Life Assurance Company of Canada,
City Branch
Chancery House,
53/56 Chancery Lane,
London, WC2A 1RS"
The terms of the undertaking, which followed, as I indicated earlier, one of the forms specially drafted by the Bank's solicitors, were as follows:
"THIS UNDERTAKING is given by the SUN LIFE ASSURANCE COMPANY OF CANADA (U.K.) LIMITED of 53/56 Chancery Lane, London WC2 1RS ('the Company') to the BRITISH BANK OF THE MIDDLE EAST of 20 Abchurch Lane, London EC4A 7AY (' the Bank ').
In consideration of the Bank agreeing to provide overdraft facilities to Nellpine Limited, a Company incorporated in England and having its registered office at Burlington House, Burlington Road SW6 to enable Nellpine Limited to purchase and convert a property at 39 Parkhurst Road N7 (' the Property ') the Property to be divided into five Units for re-sale, the Company hereby undertakes and agrees with the Bank to pay the sum of £31,500 to the Bank on the sale of the Property by Nellpine Ltd. or on 11.7.76 whichever is the earlier. In the event that each Unit of the Property is sold separately the Company hereby undertakes to pay to the Bank the sums relating to each Unit specified in the Schedule hereto on the sale of each Unit or on 12.7.76 whichever is earlier, being the proportion of the total sum referred to in this Undertaking attributable to each Unit. Each sum shall be paid against the Bank's simple request and otherwise in accordance with the Bank's letter to the Company dated 11.7.74.
AS WITNESS hereof this Undertaking has been executed on behalf of the Company by its duly authorised representatives, the day and the year below written.
SCHEDULE
Unit
Amount
39 Parkhurst Road London N7
£31,500 being 75% of the sum of the values of the five self-contained flats
SIGNED by B. H. Dehnel for and on behalf of SUN LIFE ASSURANCE COMPANY OF CANADA (U.K.) LIMITED in the presence of:—
[signature of Mr. Dehnel]
[name, address and signature of witness]"
There followed on a second sheet of notepaper, headed in the same way as the first, a further Schedule in these terms:
"UNIT
AMOUNT
39 Parkhouse Road, N7
Basement Rear Flat … … … …
£4,500
Basement Front Flat … … … …
£4,500
Hall Floor—one flat … … … …
£7,500
First Floor—one flat … … … …
£7,500
Second Floor—one flat … … … …
£7,500
SIGNED by B. H. Dehnel for and on behalf of the Sun Life Assurance Company of Canada (sic) in the presence of:
[signature of Mr. Dehnel]
[Signature, occupation and address of witness]
The first sheet of notepaper...
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