Uxbridge Permanent Benefit Building Society v Pickard
| Jurisdiction | England & Wales |
| Date | 1939 |
| Year | 1939 |
| Court | Court of Appeal |
Principal and agent - Authority - Fraud of agent - Forgery - Liability of principal.
The defendant P. was a solicitor practising in London, with a branch office at S. which at all material times was managed by C. The plaintiffs were induced by a fraud to which, as the Court found, C. was a party, to advance money to a person alleged by C. to be a client of the branch on mortgage of freehold property. The supposed title to the property was fictitious and the title deeds were forgeries. No allegation was made against P., but the plaintiffs claimed damages for fraud on the basis that P. was responsible for the fraud of his agent. Alternatively they claimed the net amount owing in respect of their advance as money had and received to their use:—
Held, that notwithstanding the fact that the persons defrauded were not P.'s clients, and that C.'s fraud involved the uttering of a forgery, P. was answerable in damages for it.
APPEAL from Atkinson J.F1
The defendant, Mr. John Henry Pickard, was a solicitor carrying on business in London under the style of Pickard & Co., with a branch office at Slough. At all material times the Slough office was managed by one Conway, as managing clerk for Mr. Pickard. The plaintiffs, the Uxbridge Permanent Benefit Building Society, made no allegation of any sort against Mr. Pickard personally, but they alleged that they had been induced to lend 500 l. on the supposed security of freehold property by a fraud to which Conway was a party, and that Mr. Pickard was liable for the fraud of his agent. They claimed on that basis damages for fraud or, alternatively, 479 l. 12 s. 6 d. (being the 500 l. less 20 l. 7 s. 6 d. repaid to them) as money had and received to their use. It was admitted that the plaintiffs had been defrauded, but Conway denied that he had been any party to the fraud, and alleged that he had himself been deceived.
A great deal of evidence was directed to this issue of fact at the trial, but Atkinson J. ultimately found that Conway was a party to the fraud. The Court of Appeal affirmed that decision, and the report only relates to the question of law involved on this view of the facts.
On April 6, 1936, Conway wrote to the plaintiffs enclosing an application for an advance of 500 l. on the security of freehold property. This application purported to be signed by one Philip Cox, of Brown's Hotel, Dover Street, London, W., and represented that he was proposing to purchase 9 St. Bernards Road, Slough, for 850 l., and that it was on the security of this property that the loan was asked for. The plaintiffs assented to the application, subject to the execution of a mortgage, and passed the matter to their solicitors, Messrs. Woodbridge & Sons, to be dealt with. In the course of the ordinary investigations of title Conway represented to Messrs. Woodbridge & Sons that Cox was a civil servant and was a contemplated purchaser of 9 St. Bernards Road from one Littelstone, who in 1906 had acquired it from one Commander Kyedon, R.N. (retired), of Deans Court, Feckenham, in the County of Worcester, and title deeds purporting to show this devolution of title together with a conveyance from Littelstone to Cox were produced to Messrs. Woodbridge & Sons. The mortgage was accordingly prepared and executed by Cox and the sum of 500 l. advanced by the plaintiffs.
In fact Cox was not a civil servant, he was unknown at Brown's Hotel, Littelstone and Commander Kyedon were fictitious persons, and the deeds were forgeries. On discovery of the fraud the plaintiffs brought this action.
Atkinson J. held that, although the persons defrauded were not clients of the defendant, he was liable in damages for Conway's fraud, seeing that Conway in committing the fraud was engaged in a transaction which, on the face of it, was within his actual and ostensible authority. In this respect a fraud involving forgery stood on the same footing as any other fraud.
The defendant appealed. The appeal was heard on March 8, 9, 10, 13, 14, 15 and 16, 1939.
On March 15, 1939, the Court of Appeal gave judgment affirming the decision of Atkinson J. that on the facts Conway had been a party to the fraud. The question of law was then argued whether in these circumstances the defendant was liable in damages to the plaintiffs for Conway's fraud.
J. W. Morris K.C. and C. A. Collingwood for the appellant. This case differs from Lloyd v. Grace, Smith & Co.F2 in that the plaintiffs here were not clients of the defendant. The broad principle applicable in cases of principal and agent is that the principal is liable for the act of his agent if it be done in the course of the agent's employment and within the scope of his agency. There are many restrictions on the broad principle, and the facts here either do not bring the case within the broad principle or bring it within one of the restrictions.
If a person is doing something he is employed to do though in a way he is not supposed to do it, the master is liable; but if he is not doing his master's business, the master is not liable. The facts of the present case are that Pickard is free of all complicity and that his managing clerk has deceived both his employer and the plaintiffs. Since the decision in Lloyd v. Grace, Smith & Co.F2 it is clear that the fraud need not have been committed for the benefit of the master in order to make him liable. But the liability does not exist when the agent is carrying out some private purpose of his own and not doing what he was directed to do: see Barwick v. English Joint Stock BankF3 and British Mutual Banking Co. v. Charnwood Forest Ry. Co.F4 In the latter case Lord Esher recognized that where a fraud is committed by a servant when he is acting in his interest and not dealing with the master's business at all, though it may be that the person defrauded thinks he is, the master is not liable. That statement is not commented on at all by Lord Macnaghten in Lloyd v. Grace, Smith & Co.F2, though statements in the judgments of the other judges are. It is not every act of the employer's servant that makes him liable, although it be done at the employer's premises in the employer's time and involves the use of the employer's property. The vital distinction from Lloyd's caseF5 here is that the person defrauded was not a client and that the whole fraud was carried through by the servant for his own purposes.
[SIR WILFRID GREENE M.R. The plaintiffs here were relying on the authority of a person occupying the position...
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