Kooragang Investments Pty. Ltd v Richardson & Wrench Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 1981 |
| Date | 1981 |
| Year | 1981 |
| Court | Privy Council |
Vicarious Liability - Master and servant - Course of employment - Valuer employed by estate agent to value property - Direction not to value for group of companies - Valuer negligently acting for companies in disregard of prohibition - Whether estate agent Liable for third party's loss
The defendants' servant, a valuer, carried out valuations on the defendants' behalf for a group of companies which was a client of theirs. Those valuations were made with the defendants' knowledge and authority. The group of companies failed to pay for the valuations and the defendants instructed the valuer not to carry out any more work for the group. The valuer became a director of one of the group's member companies and thereafter, despite the defendants' instructions and without their authority or knowledge, carried out about 30 valuations for the group. He used the group's premises to prepare the valuations but used the defendants' writing paper for the valuations and initialled and signed them with the defendants' corporate name. The defendants did not ask for or receive a fee for them. The group passed two of those valuations to the plaintiff which advanced money on the security of land relying on them. Later those two valuations turned out to have been negligently made and the plaintiff suffered financial loss. The plaintiff brought an action against the defendants claiming that as the valuer's employers they were vicariously liable for his negligence. The Supreme Court of New South Wales dismissed the action.
On the plaintiff's appeal to the Judicial Committee:—
Held, dismissing the appeal, that an employer's actual authority to his servant to do a particular act could not be inferred merely from the fact that the act itself was of a class which the employer had authorised his servant to do; that, accordingly, no authority could be inferred from the fact that the defendants had authorised the valuer to carry out other valuations and, since the defendants had forbidden him to make valuations for the group and had not taken part in or benefited by them, the valuer in making them had been acting outside the scope of his employment with the defendants and the defendants were not liable to the plaintiff for his negligence (post, pp. 498E–H, 499A–B, 500B–G).
The following cases are referred to in the judgment of their Lordships:
Barwick v. English Joint Stock Bank (
Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [
Lloyd v. Grace, Smith & Co. [
Mackay v. Commercial Bank of New Brunswick (
Swift v. Winterbotham and Goddard (
Swire v. Francis (
Uxbridge Permanent Benefit Building Society v. Pickard [
The following additional cases were cited in argument:
Arenson v. Arenson [
Batty v. Metropolitan Property Realisations Ltd. [
Candler v. Crane. Christmas & Co. [
Dundonald (Earl of) v. Masterman (
Esso Petroleum Co. Ltd. v. Mardon [
Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd. [
Goh Choon Seng v. Lee Kim Soo [
Hamlyn v. John Houston & Co. [
Midland Bank Trust Co. Ltd. v. Hett. Stubbs & Kemp [
Ministry of Housing and Local Government v. Sharp [
Morris v. C. W. Martin & Sons Ltd. [
Navarro v. Moregrand Ltd. [
Polkinghorne v. Holland (
Rose v. Plenty [
Ross v. Caunters [
Ruben v. Great Fingall Consolidated [
Twine v. Bean's Express Ltd. (
United Africa Co. Ltd. v. Saka Owoade [
APPEAL (No. 26 of 1981) by the plaintiff, Kooragang Investments Pty. Ltd., from a judgment of Rogers J. in the Common Law Division (Commercial List) of the Supreme Court of New South Wales given on July 4, 1980 whereby he dismissed the plaintiff's action against the defendants Richardson & Wrench Ltd. claiming damages for negligence.
The facts are stated in the judgment.
David Hirst Q.C., Michael McHugh Q.C. and John Garnsey (the latter two of the New South Wales Bar) for the plaintiff.
Robert Alexander Q.C., I. M. N. Rolfe Q.C. and Stephen Austin (the latter two of the New South Wales Bar) for the defendants.
July 27. The judgment of their Lordships was delivered by LORD WILBERFORCE.
This is an appeal from a judgment of Rogers J. in the Supreme Court of New South Wales, Common Law Division, Commercial List, whereby he dismissed the plaintiff's action with costs.
The plaintiff company is a finance or moneylending company which (inter alia) lends money on mortgage. In March and June 1973 it made two advances on mortgage of real property in suburbs of Sydney, one of property in Glebe, the other of property at McMahons Point. Both of these advances were made in reliance on valuations made by Thomas George Rathborne (“Rathborne”) and it is not now disputed that they were made negligently. They resulted in a loss to the plaintiff. The defendants, Richardson & Wrench Ltd., are real estate agents and valuers. They employed valuers, of whom Rathborne was one. The issues in this action now remaining for decision are (a) whether the defendants are vicariously responsible for Rathborne's negligence. (b) whether the defendants owed a duty of care to the plaintiff in respect of either or both of the two valuations. Both issues were decided in favour of the defendants at the trial.
The first issue depends upon whether the valuations in question were made by Rathborne in the course of his employment by the defendants. Evidence as to the authority of the valuers employed by the defendants was given by a director, Mr. Hodgson. Rathborne himself was not called by either side.
When the defendants received instructions to value property, the work was allocated by Mr. Hodgson to one of five valuers of whom Rathborne was one; a Mr. Rowan was another. Usually work was allotted on a geographical basis, but in some case where a particular client called for a number of valuations the same valuer would deal with those valuations, irrespective of location. One such instance was work done for the Giles Bourke Group of Companies (“G.B. Group”) which played a critical role in this...
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