Armagas Ltd. v. Mundogas S.A. (The "Ocean Frost")</HEAD> <BODY> <FONT STYLE='font:11pt "Times New Roman"'><STYLE>.clsTerm { font-weight:bold; color:red; }</STYLE><A NAME="PL717"></A><A NAME="TERM0"></A> <TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>717 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD></TR></TABLE> <BR><BR><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="40%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=6%></TD><TD WIDTH=88%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:11pt'><A HREF='http://www.justis.com/pdf2/lrpdf/ELR/S8640/S8640029.PDF' target='_blank'>Original Printed Version (PDF)</A></FONT></P></TD><TD WIDTH=6%></TD></TABLE></FONT></TD></TR></TABLE><BR> <TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'>[HOUSE OF LORDS] </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR> <TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="50%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=5%></TD><TD WIDTH=90%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:11pt'>ARMAGAS LTD. </FONT></P></TD><TD WIDTH=5%></TD></TABLE></FONT></TD><TD WIDTH="50%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=5%></TD><TD WIDTH=90%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:11pt'>APPELLANTS </FONT></P></TD><TD WIDTH=5%></TD></TABLE></FONT></TD></TR></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:11pt'>AND </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="50%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=5%></TD><TD WIDTH=90%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:11pt'>MUNDOGAS S.A. </FONT></P></TD><TD WIDTH=5%></TD></TABLE></FONT></TD><TD WIDTH="50%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=5%></TD><TD WIDTH=90%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:11pt'>RESPONDENTS </FONT></P></TD><TD WIDTH=5%></TD></TABLE></FONT></TD></TR></TABLE> <BR> <TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="50%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=5%></TD><TD WIDTH=90%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:11pt'>1984 June 5, 6, 7, 8, 11, 12, 13, 14, 15, 18, 19, 20, 21, 22, 25, 26, 27, 28, 29; July 3, 4, 5; Oct. 18 </FONT></P></TD><TD WIDTH=5%></TD></TABLE></FONT></TD><TD WIDTH="50%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=5%></TD><TD WIDTH=90%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:11pt'>Stephenson, Dunn and Robert Goff L.JJ. </FONT></P></TD><TD WIDTH=5%></TD></TABLE></FONT></TD></TR></TABLE><BR><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="50%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=5%></TD><TD WIDTH=90%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:11pt'>1986 April 14, 15, 16, 17, 21; May 22 </FONT></P></TD><TD WIDTH=5%></TD></TABLE></FONT></TD><TD WIDTH="50%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=5%></TD><TD WIDTH=90%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:11pt'>Lord Keith of Kinkel, Lord Brandon of Oakbrook, Lord Templeman, Lord Griffiths and Lord Oliver of Aylmerton </FONT></P></TD><TD WIDTH=5%></TD></TABLE></FONT></TD></TR></TABLE> <BR> <TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><I>Agency - Authority - Ostensible authority - Agent stating that he had his principal's authority to enter into specific agreement - Agent having no authority to agree terms - Whether principal bound by agreement </I></FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><I>Vicarious Liability - Master and servant - Deceit - Bribed employee representing that he had authority to enter into agreement on behalf of employer - Whether employer vicariously liable for deceit of employee - Whether bound by terms of contract </I></FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR> <TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P STYLE='text-indent: 3%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:10pt'>The plaintiffs were formed to purchase a ship from the defendants on the basis that the vessel was to be chartered back to the defendants for a period of three years at a minimum hire of U.S. $350,000 a month. Before the plaintiffs were Incorporated, J., a broker, carried out negotiations on their behalf with M., who was the defendants' vice-president (transportation) and chartering manager. J. was to acquire a substantial interest in the plaintiffs and he and M. completed a transaction by which M., accepting a bribe of part of J.'s interest in the plaintiffs, met the plaintiffs' representatives in Denmark and told them that he had authority to complete an agreement for the sale of the ship with a three year charter back to the defendants. The plaintiffs were told that for internal reasons the defendants needed a charterparty for a period of 12 months only. Thus documents purporting to be a three year and a 12 month charterparty came into existence. J. never sent the three year charterparty to the defendants. The defendants acting In the belief that they had sold the vessel and had entered into a 12 month charterparty, redelivered the vessel at the end of the year. The plaintiffs issued a writ claiming damages for breach of the charterparty. M. admitted that he had made and signed the charterparty for a three year period without the knowledge or authority of the defendants but alleged that J. was aware of that and had offered him "a piece of the ship." The judge found that the defendants were liable on the basis that M. had ostensible authority to communicate the fact that he had the defendants' express authority to enter into the agreement with the plaintiffs. On appeal by the defendants the Court of Appeal, allowing the appeal, held that the defendants were not bound by the terms of the three year charter and, as M. had been acting outside the scope of his ostensible authority, they were not vicariously liable to the. plaintiffs for his deceit. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL718"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>718 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (H.L.(E.)) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B></B></FONT></P></TD><TD WIDTH=12%></TD></TABLE> </FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P STYLE='text-indent: 3%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:10pt'>On appeal by the plaintiffs: - </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P STYLE='text-indent: 3%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:10pt'><I>Held,</I> dismissing the appeal, (1) that notwithstanding M. having been appointed by the defendants as vice-president (transportation) and chartering manager, he was known not to have any general authority to enter into a three year charterparty and he could not, in the absence of any representation by the defendants as to his authority, reasonably be believed to have specific authority to notify the other contracting party that the defendants' consent had been obtained and thereafter to complete the agreement (post, pp. <A NAME="L1"></A><A HREF="#PL777">777B-C</A>,<A NAME="L2"></A><A HREF="#PL777"> H - 778D</A>,<A NAME="L3"></A><A HREF="#PL779"> 779F-G</A>,<A NAME="L4"></A><A HREF="#PL783">783B - 784A</A>). </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P STYLE='text-indent: 3%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:10pt'><A NAME="L5"></A>Russo-Chinese Bank v. Li Yau Sam</A> [1910] A.C. 174, P.C. applied. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P STYLE='text-indent: 3%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:10pt'><A NAME="L6"></A><I>Berryere v. Fireman's Fund Insurance Co.</I></A> (1965) 51 D.L.R. (2d) 603 considered. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P STYLE='text-indent: 3%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:10pt'>(2) That although an employer whose servant, having made a fraudulent representation which had caused loss to an innocent party contracting with him, could be liable to bear the loss by reason of having by words or conduct induced the innocent party to believe that the servant was acting in the course of the employer's business, such circumstances did not exist where such belief, although present, had been brought about through misguided reliance on the servant himself, when the servant was not authorised to do what he was purporting to do, when what he was purporting to do was not within the class of acts that an employee in his position was usually authorised to do, and when the employer had done nothing to represent that he was authorised to do it; and that, accordingly, the defendants were not vicariously liable for M.'s deceit (post, pp. <A NAME="L7"></A><A HREF="#PL781">781D-F</A>,<A NAME="L8"></A><A HREF="#PL782"> 782H - 783E</A>,<A NAME="L9"></A><A HREF="#PL783"> F - 784A</A>). </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P STYLE='text-indent: 3%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:10pt'><A NAME="L10"></A>Lloyd v. Grace, Smith & Co.</A> [1912] A.C. 716, H.L.(E.) applied. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P STYLE='text-indent: 3%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:10pt'><A NAME="L11"></A>Uxbridge Permanent Benefit Building Society v. Pickard</A> [1939] 2 K.B. 248, C.A. and dictum of Denning L.J. in <A NAME="L12"></A><I>Navarro v. Moregrand Ltd.</I></A> [1951] 2 T.L.R. 674, 680, C.A. considered. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P STYLE='text-indent: 3%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:10pt'> <A NAME="L13"></A>Decision of the Court of Appeal</A>, post p. <A NAME="L14"></A><A HREF="#PL723">723G</A>; [1985] 3 W.L.R. 640; [1985] 3 All E.R. 795; [1985] 1 Lloyd's Rep. 1 affirmed. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR> <TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The following cases are referred to in the opinion of Lord Keith of Kinkel: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L15"></A><I>Barwick v. English Joint Stock Bank</I></A> (1867) L.R. 2 Ex. 259 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L16"></A><I>Berryere v. Fireman's Fund Insurance Co.</I></A> (1965) 51 D.L.R. (2d) 603 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L17"></A><I>Cypress Disposal Ltd. v. Inland Kenworth Sales (Nanaimo) Ltd.</I></A> (1975) 54 D.L.R. (3d) 598 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L18"></A><I>Farquharson Brothers & Co. v. C. King & Co.</I></A> [1902] A.C. 325, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L19"></A><I>Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd.</I></A> [1964] 2 Q.B. 480; [1964] 2 W.L.R. 618; [1964] 1 All E.R. 630, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L20"></A><I>Hern v. Nichols</I></A> (1700) 1 Salk. 289 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L21"></A><I>Jensen v. South Trail Mobile Ltd.</I></A> (1972) 28 D.L.R. (3d) 233 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L22"></A><I>Lickbarrow v. Mason</I></A> (1787) 2 Durn. & E. 63 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L23"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. 716, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L24"></A><I>Morris v. C. W. Martin & Sons Ltd.</I></A> [1966] 1 Q.B. 716; [1965] 3 W.L.R. 276; [1965] 2 All E.R. 725, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L25"></A><I>Navarro v. Moregrand Ltd.</I></A> [1951] 2 T.L.R. 674, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L26"></A><I>Russo-Chinese Bank v. Li Yau Sam</I></A> [1910] A.C. 174, P.C. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L27"></A><I>Slingsby v. District Bank Ltd.</I></A> [1932] 1 K.B. 544, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL719"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>719 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (H.L.(E.)) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B></B></FONT></P></TD><TD WIDTH=12%></TD></TABLE> </FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L28"></A><I>United Africa Co. Ltd. v. Saka Owoade</I></A> [1955] A.C. 130; [1955] 2 W.L.R. 13; [1957] 3 All E R 216, P.C. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L29"></A><I>Uxbridge Permanent Benefit Building Society v. Pickard</I></A> [1939] 2 K.B. 248; [1939] 2 All E.R. 344, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The following additional cases were cited in argument in the House of Lords: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L30"></A><I>Bugge v. Brown</I></A> (1919) 26 C.L.R. 110 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L31"></A><I>Crabtree-Vickers Pty. Ltd. v. Australian Direct Mail Advertising & Addressing Co. Pty. Ltd.</I></A> (1975) 133 C.L.R. 72 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L32"></A><I>Dyer v. Munday</I></A> [1895] 1 Q.B. 742, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L33"></A><I>Egyptian International Foreign Trade Co. v. Soplex Wholesale Supplies Ltd.</I></A> [1984] 1 Lloyd's Rep. 102; [1985] 2 Lloyd's Rep. 36, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L34"></A><I>Hamlyn v. John Houston & Co.</I></A> [1903] 1 K.B. 81, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L35"></A><I>Heatons Transport (St. Helens) Ltd. v. Transport and General Workers' Union</I></A> [1973] A.C. 15; [1972] 3 W.L.R. 431; [1972] 3 All E.R. 101, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L36"></A><I>Hely-Hutchinson v. Brayhead Ltd.</I></A> [1968] 1 Q.B. 549; [1967] 3 W.L.R. 1408; [1967] 3 All E.R. 98, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L37"></A><I>Kooragang Investments Pty. Ltd. v. Richardson & Wrench Ltd.</I></A> [1982] A.C. 462, [1981] 3 W.L.R. 493; [1981] 3 All E.R. 65, P.C. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L38"></A><I>Pearson (S.) & Son Ltd. v. Dublin Corporation</I></A> [1907] A.C. 351, H.L.(I.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L39"></A><I>Smith v. Martin and Kingston-upon-Hull Corporation</I></A> [1911] 2 K.B. 775, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The following cases are referred to in the judgments in the Court of Appeal: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L40"></A><I>Barry v. Stoney Point Canning Co.</I></A> (1917) 55 S.C.R. 51 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L41"></A><I>Barwick v. English Joint Stock Bank</I></A> (1867) L.R. 2 Ex. 259 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L42"></A><I>Benmax v. Austin Motor Co. Ltd.</I></A> [1955] A.C. 370; [1955] 2 W.L.R. 418; [1955] 1 All E.R. 326, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L43"></A><I>Berryere v. Fireman's Fund Insurance Co.</I></A> (1965) 51 D.L.R. (2d) 603 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L44"></A><I>Boys v. Chaplin</I></A> [1971] A.C. 356; [1969] 3 W.L.R. 322; [1969] 2 All E.R. 1085, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L45"></A><I>Bradford Third Equitable Benefit Building Society v. Borders</I></A> [1941] 2 All E.R. 205, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L46"></A><I>British Bank of the Middle East v. Sun Life Assurance Co. of Canada (U.K.) Ltd.</I></A> [1983] 2 Lloyd's Rep. 9, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L47"></A><I>Bugge v. Brown</I></A> (1919) 26 C.L.R. 110 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L48"></A><I>Container Transport International Inc. v. Oceanus Mutual Underwriting Association (Bermuda) Ltd.</I></A> [1984] 1 Lloyd's Rep. 476, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L49"></A><I>Crabtree-Vickers Pty. Ltd. v. Australian Direct Mail Advertising & Addressing Co. Pty. Ltd.</I></A> (1975) 133 C.L.R. 72 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L50"></A><I>Cypress Disposal Ltd. v. Inland Kenworth Sales (Nanaimo) Ltd.</I></A> (1975) 54 D.L.R. (3d) 598 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L51"></A><I>Diamond v Bank of London and Montreal Ltd.</I></A> [1979] Q.B. 333; [1979] 2 W.L.R. 228; [1979] 1 All E.R. 561, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L52"></A><I>Dyer v Munday</I></A> [1895] 1 Q.B. 742, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L53"></A><I>Egyptian International Foreign Trade Co. v. Soplex Wholesale Supplies Ltd.</I></A> [1984] 1 Lloyd's Rep. 102 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L54"></A><I>F. (A Minor) (Wardship: Appeal), In re</I></A> [1976] Fam. 238; [1976] 2 W.L.R. 189; [1976] 1 All E.R. 417, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L55"></A><I>Farquharson Brothers & Co. v. C. King & Co.</I></A> [1902] A.C. 325, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L56"></A><I>Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd.</I></A> [1964] 2 Q.B. 480; [1964] 2 W.L.R. 618; [1964] 1 All E.R. 630, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL720"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>720 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (H.L.(E.)) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B></B></FONT></P></TD><TD WIDTH=12%></TD></TABLE> </FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L57"></A><I>Hamlyn v. John Houston & Co.</I></A> [1903] 1 K.B. 81, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L58"></A><I>Heatons Transport (St. Helens) Ltd. v. Transport and General Workers' Union</I></A> [1973] A.C. 15; [1972] 3 W.L.R. 431; [1972] 3 All E.R. 101, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L59"></A><I>Hely-Hutchinson v. Brayhead Ltd.</I></A> [1968] 1 Q.B. 549, [1967] 3 W.L.R 1408; [1967] 3 All E.R. 98, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L60"></A><I>Hern v. Nichols</I></A> (1700) 1 Salk. 289 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L61"></A><I>Houghton & Co. v. Nothard, Lowe and Wills Ltd.</I></A> [1927] 1 K.B. 246, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L62"></A><I>Ilkiw v. Samuels</I></A> [1963] 1 W.L.R. 991; [1963] 2 All E.R. 879, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L63"></A><I>Jensen v. South Trail Mobile Ltd.</I></A> (1972) 28 D.L.R. (3d) 233 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L64"></A><I>Joyce v. Yeomans</I></A> [1981] 1 W.L.R. 549, [1981] 2 All E.R. 21, C.A </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L65"></A><I>Kleinwort, Sons & Co. v. Associated Automatic Machine Corporation Ltd.</I></A> (1934) 50 T.L.R. 244, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L66"></A><I>Kooragang Investments Pty. Ltd. v. Richardson & Wrench Ltd.</I></A> [1982] A.C. 462; [1981] 3 W.L.R. 493; [1981] 3 All E.R. 65, P.C. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L67"></A><I>Lickbarrow v. Mason</I></A> (1787) 2 Durn. & E. 63 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L68"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. 716, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L69"></A><I>Mackay v. Commercial Bank of New Brunswick</I></A> (1874) L.R. 5 P.C. 394, P.C. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L70"></A><I>Mahesan s/o Thambiah v. Malaysia Government Officers' Co-operative Housing Society Ltd.</I></A> [1979] A.C. 374; [1978] 2 W.L.R. 444; [1978] 2 All E.R. 405, P.C. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L71"></A><I>Montgomerie & Co. Ltd. v. Wallace-James</I></A> [1904] A.C. 73, H.L.(Sc.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L72"></A><I>Morris v. C. W. Martin & Sons Ltd.</I></A> [1966] 1 Q.B. 716; [1965] 3 W.L.R 276; [1965] 2 All E.R. 725, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L73"></A><I>Navarro v. Moregrand Ltd.</I></A> [1951] 2 T.L.R. 674, C.A </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L74"></A><I>Panama and South Pacific Telegraph Co. v. India Rubber, Gutta Percha and Telegraph Works Co.</I></A> (1875) L.R. 10 Ch. App. 515 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L75"></A><I>Powell v. Streatham Manor Nursing Home</I></A> [1935] A.C. 243, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L76"></A><I>Rose v. Plenty</I></A> [1976] 1 W.L.R. 141; [1976] 1 All E.R. 97, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L77"></A><I>Ruben v. Great Fingall Consolidated</I></A> [1906] A.C. 439, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L78"></A><I>Russo-Chinese Bank v. Li Yau Sam</I></A> [1910] A.C. 174, P.C. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L79"></A><I>Smith v. Martin and Kingston-Upon-Hull Corporation</I></A> [1911] 2 K.B. 775, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L80"></A><I>Slingsby v. District Bank Ltd.</I></A> [1932] 1 K.B. 544, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L81"></A><I>United Africa Co. Ltd. v. Saka Owoade</I></A> [1955] A.C. 130; [1955] 2 W.L.R 13; [1957] 3 All E.R. 216, P.C. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L82"></A><I>Uxbridge Permanent Benefit Building Society v. Pickard</I></A> [1939] 2 K.B. 248; [1939] 2 All E.R. 344, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L83"></A><I>Watt (or Thomas) v. Thomas</I></A> [1947] A.C. 484; [1947] 1 All E.R. 582, H.L.(Sc.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L84"></A><I>Whitechurch (George) Ltd. v. Cavanagh</I></A> [1902] A.C. 117, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The following additional cases were cited in argument in the Court of Appeal: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L85"></A><I>Alexander v. Webber</I></A> [1922] 1 K.B. 642 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L86"></A><I>Bartram and Sons v. Lloyd</I></A> (1904) 90 L.T. 357, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L87"></A><I>Barnett, Hoares & Co. v. South London Tramways Co.</I></A> (1887) 18 Q.B.D. 815, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L88"></A><I>Breen (orse. Smith) v. Breen</I></A> [1964] P. 144; [1961] 3 W.L.R. 900; [1961] 3 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L89"></A><I>Castree v. E. R. Squibb & Sons Ltd.</I></A> [1980] 1 W.L.R. 1248; [1980] 2 All E.R. 589, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L90"></A><I>Cordova Land Co. Ltd. v. Victor Brothers Inc.</I></A> [1966] 1 W.L.R. 793 </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL721"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>721 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B></B></FONT></P></TD><TD WIDTH=12%></TD></TABLE> </FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L91"></A><I>Coupland v. Arabian Gulf Oil Co.</I></A> [1983] 1 W.L.R. 1136; [1983] 3 All E.R. 226, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L92"></A><I>Davie v. Edinburgh Magistrates,</I></A> 1953 S.C. 34 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L93"></A><I>Distillers Co. (Biochemicals) Ltd. v. Thompson</I></A> [1971] A.C. 458; [1971] 2 W.L.R. 441; [1971] 1 All E.R. 694, P.C. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L94"></A><I>Edwards v. Brookes (Milk) Ltd.</I></A> [1963] 1 W.L.R. 795; [1963] 3 All E.R. 62, D.C. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L95"></A><I>Financings Ltd. v. Stimson</I></A> [1962] 1 W.L.R. 1184; [1962] 3 All E.R. 386, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L96"></A><I>Grant v. Gold Exploration and Development Syndicate Ltd.</I></A> [1900] 1 Q.B. 233, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L97"></A><I>Hovenden and Sons v. Millhoff</I></A> (1900) 83 L.T. 41, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L98"></A><I>Industries and General Mortgage Co. Ltd. v. Lewis</I></A> [1949] 2 All E.R. 573 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L99"></A><I>Kwei Tek Chao v. British Traders and Shippers Ltd.</I></A> [1954] 2 Q.B. 459; [1954] 2 W.L.R. 365; [1954] 3 W.L.R. 496; [1954] 1 All E.R. 779 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L100"></A><I>Monro (George) Ltd. v. American Cyanamid and Chemical Corporation</I></A> [1944] K.B. 432; [1944] 1 All E.R. 386, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L101"></A><I>Newlands v. National Employers' Accident Association Ltd.</I></A> (1885) 54 L.J.Q.B. 428, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L102"></A><I>Qualcast (Wolverhampton) Ltd. v. Haynes</I></A> [1959] A.C. 743; [1959] 2 W.L.R. 510; [1959] 2 All E.R. 38, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L103"></A><I>Rowland v. Chapman</I></A> (1901) 17 T.L.R. 669 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L104"></A><I>Shipway v. Broadwood</I></A> [1899] 1 Q.B. 369, C.A. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L105"></A><I>Wellington (Duke of), In re</I></A> [1947] Ch. 506; [1947] 2 All E.R. 854 </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L106"></A><I>Whitehouse v. Jordan</I></A> [1981] 1 W.L.R. 246; [1981] 1 All E.R. 267, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L107"></A><I>Woodhouse A.C. Israel Cocoa Ltd. S.A. v. Nigerian Produce Marketing Co. Ltd.</I></A> [1972] A.C. 741; [1972] 2 W.L.R. 1090; [1972] 2 All E.R. 271, H.L.(E.) </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR> <TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>APPEAL from Staughton J. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>On 18 June 1982 the plaintiffs, Armagas Ltd., issued a writ against the defendants, Mundogas S.A. of Hamilton in Bermuda, seeking damages and statutory interest for the defendants' wrongful repudiation of the charterparty made on 30 May 1980 between a company to be named by the Armada Group, as owners, and the defendants, as charterers of the vessel <I>Ocean Frost</I> (formerly <I>Havfrost</I>) for a period of "36 months, one month more or less in the charterer's option" commencing from the time and date of delivery. The alleged charterparty was purported to be made between the parties in consequence of a transaction for the sale of the vessel by the defendants through their chartering manager and vice-president (transportation), Harald Magelssen, and two Danish shipowners, Torben Jensen and Jorgen Dannesb¿e. Jon Johannesen, a shipping broker, acting as such, was to have an interest in the plaintiffs which were incorporated to acquire the vessel. Staughton J. made the order sought. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>By a notice of appeal dated 13 October 1983 the defendants appealed on the grounds, inter alia, that (1) the judge erred in law in concluding that there was ostensible authority and, accordingly, that the defendants were bound by the three year charterparty of the vessel and liable in damages for repudiatory breach thereof; (2) further or alternatively, certain of the judge's findings of fact in relation to his conclusion on ostensible authority were contrary to, and/or unsupported by the evidence; (3) the judge should have held that Mr. Magelssen did not </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL722"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>722 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B></B></FONT></P></TD><TD WIDTH=12%></TD></TABLE> </FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>have ostensible authority to conclude or notify the defendants' board's approval of the three year charterparty, that, accordingly, the defendants were not bound thereby and that plaintiffs' claim for damages for breach of contract failed; (4) the judge was wrong to prefer Mr. Johannesen's evidence to that of Mr. Magelssen on all or any questions relating to the validity of the three year charterparty and to give due weight to their respective behaviour in the witness box and his decision on the central issues of fact was against the weight of the evidence and/or contrary to the inherent probabilities; (5) the judge erred in law in concluding that if Mr. Magelssen's evidence as to what passed between him and Mr. Johannesen at the end of May and in June 1980 was correct, the plaintiffs' claim would not have failed on the ground of absence of animus contrahendi; (6) the judge addressed himself to the wrong questions, namely, whether Mr. Johannesen was the plaintiffs' agent to receive the information that the three year charterparty was made without authority and was not intended to be binding, and/or whether the plaintiffs had constructive notice of such facts and matters; (7) the judge should have held that Mr. Johannesen was as a matter of fact appointed the agent of the plaintiffs (or Mr. Jensen and Mr. Dannesb¿e and/or the Armada Group) to negotiate and, if possible, conclude a deal with the defendants; and as a matter of law, that by virtue of the facts the relevant animus was that of Mr. Johannesen, and that, because Mr. Johannesen lacked animus contrahendi, no contract was concluded, even if, contrary to the defendants' primary contention, there was ostensible authority; (8) if, contrary to the defendants' primary contention, the defendants were prima facie bound by the three year charterparty, then the judge erred in law in concluding that Mr. Johannesen's promise to Mr. Magelssen, in May 1980, of a share in the vessel, was not a bribe and should have concluded that that promise was a bribe, made or given by Mr. Johannesen, as the agent of the plaintiffs and/or the joint venture, duly authorised to negotiate and (if possible) conclude a deal with the defendants, to induce Mr. Magelssen to sign the three year charterparty; (9) further or alternatively, the judge erred in law in concluding that the plaintiffs were not under a duty to notify the defendants thereof, and/or that Mr. Jensen's failure to disclose to the defendants Mr. Magelssen's interest did not constitute adoption or ratification of a bribe; (10) the judge should have concluded that by failing to disclose their knowledge of Mr. Magelssen's interest to the defendants, the plaintiffs acted in repudiatory breach of contract and/or in breach of duty and/or adopted and/or ratified the bribe; (11) the judge should have held: that (a) the defendants had validly rescinded the three year charterparty and/or (b) the defendants had validly determined the same and were absolved as from redelivery in April 1982 from further performance thereof (c) the defendants were entitled to recover either damages for bribery, or the value of the bribe, from the plaintiffs; (12) the judge was wrong in law to conclude that on the true construction of the three year charterparty and the addendum thereto, the contractual promise of the defendants was: that they undertook to pay the plaintiffs at least $350,000 per month; (13) the judge should have concluded that the terms therein as to hire were uncertain and/or </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL723"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>723 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B></B></FONT></P></TD><TD WIDTH=12%></TD></TABLE> </FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>left the rate of hire to be agreed, and that, accordingly, the charterparty was void for uncertainty. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>By a respondents' notice dated 25 November 1983, and amended in May 1984, the plaintiffs sought the judgment to be affirmed on, inter alia, the following additional grounds: that (1) on the facts found by the judge he ought to have held that Mr. Magelssen had had actual authority to conclude the three year charterparty; (2) the judge ought to have taken all the facts and surrounding circumstances and considered whether Mr. Johannesen, Mr. Jensen and Mr. Dannesb¿e were entitled to deal with the defendants through Mr. Magelssen in the manner in which they did deal with him; (3) in connection with deceit the test of "acting in the course of employment" meant: was the servant acting in and about his master's business, albeit dishonestly or negligently, or was he acting in and about his own business? In the circumstances of the present case, there could be no doubt that Mr. Magelssen was acting in and about the business of the defendants; (4) the judge should have rejected the evidence of Mr. Magelssen that Mr. Johannesen had offered him a "piece of the ship" prior to or at the time of the conclusion of the charterparty on 30 May 1980; (5) in the absence of independent evidence to corroborate the evidence of Mr. Johannesen or Mr. Magelssen, the judge ought to have decided the question of whose account to accept in accordance with his general findings as to the credibility of the witnesses; (6) where foreign law fell to be considered, there was a presumption of English law that foreign law was identical to English law and the burden was on the party who asserted to the contrary to prove on the balance of probabilities that the applicable foreign law was different from English law. Applying that presumption to the rules relating to "foreign torts" as re-stated in <A NAME="L108"></A><I>Boys v. Chaplin</I></A> [1971] A.C. 356, the judge ought to have held that the defendants had failed to establish so close a connection between the tort alleged by the plaintiffs and any country (and in particular with Denmark) so as to render that country the locus delicti. In particular the judge ought to have taken into account or given more weight to the diverse national elements involved. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The facts are stated in the judgment of Robert Goff L.J. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR> <TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><I>Gordon Pollock Q. C.</I> and <I>Richard Siberry</I> for the defendants. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><I>Robert Alexander Q.C., Richard B. Mawrey</I> and <I>Simon Rainey</I> for the plaintiffs. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="40%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=82%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:11pt'><I>Cur. adv. vult. </I></FONT></P></TD><TD WIDTH=6%></TD></TABLE></FONT></TD></TR></TABLE> <BR> <TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>18 October 1984. The following judgments were handed down. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>ROBERT GOFF L.J. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I. <I>Introduction</I></FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>This case is about fraud and the consequences of fraud, and about bribery and the consequences of bribery. The fraud and the bribery occurred in relation to the sale of a ship - a liquid petroleum gas ("LPG") carrier called the <I>Havfrost,</I> later re-named the <I>Ocean Frost</I> - by </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL724"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>724 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>the appellant defendants, Mundogas S.A., to the respondent plaintiffs, Armagas Ltd., in May 1980. The defendants are a Panamanian corporation with their headquarters in Bermuda; at the material time they were owned by three substantial organisations - P. & O., Thyssen-Bornemisza, and the Ultra Group of Brazil. The plaintiffs are a Liberian corporation, formed to own the <I>Ocean Frost</I> after her purchase from the defendants. At the time of the sale contract, the plaintiffs were not yet formed; but it was known that they would be controlled by two Danish shipowners, Torben Jensen and Jorgen Dannesb¿e, through their shipping group, the Armada Group. The sale of the vessel by the defendants to the plaintiffs was transacted through two old friends, both Norwegian, Harald Magelssen, the chartering manager and vice-president (transportation) of the defendants; and Jon Johannesen, a broker, who (with the agreement of Mr. Jensen and Mr. Dannesb¿e) was to acquire a substantial interest in the plaintiffs if the sale went through. Mr. Jensen and Mr. Dannesb¿e made it plain to Mr. Johannesen, and through him to Mr. Magelssen, that the ship would not be purchased unless she was chartered back to the defendants for a period of three years at a minimum hire of U.S. $350,000 per month, thereby securing (accidents apart) the necessary finance for the purchase of the ship. The ship was then sold by the defendants to the plaintiffs; and there came into existence not only a memorandum of agreement relating to the sale, but also a document purporting to be a three year charter back to the defendants, signed by Mr. Dannesb¿e on behalf of the plaintiffs and by Mr. Magelssen on behalf of the defendants. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The status and effect of this latter document lies at the heart of the dispute between the parties. The case of the defendants has been that the three year charter was a spurious transaction, invented by Mr. Johannesen and Mr. Magelssen (whom Mr. Johannesen had bribed with an offer of part of his share in the ship) with the fraudulent purpose of persuading Mr. Jensen and Mr. Dannesb¿e to agree to the purchase of the ship. The case of the plaintiffs has been that Mr. Johannesen was innocent of any such fraud, and that the three year charter was a genuine transaction, entered into by Mr. Magelssen with the authority of one or more of the top management of the defendants. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The negotiations for the sale of the ship by the defendants to the plaintiffs, and for the alleged three year charter, took place in late May 1980; the memorandum of agreement and the charter document are both dated 30 May 1980. But the ship was not available for delivery until early April 1981. Before she was delivered, the defendants and the plaintiffs purported to enter into another charterparty in relation to the ship, also negotiated between Mr. Johannesen and Mr. Magelssen. The period of this charter was 12 months, coinciding with the first 12 months of the three year charter. Mr. Jensen and Mr. Dannesb¿e were told by Mr. Johannesen that this charter was required for "internal reasons" of the defendants. It was the case of the plaintiffs that the 12 month charter did not affect the binding nature of the three year charter: it was the case of the defendants that they were bound only by the 12 month charter, the top management of the defendants being unaware of the existence of the three year charter. At all events, in early April 1981, </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL725"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>725 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>the vessel entered upon her chartered service with the defendants, though the principals on each side thought that her service was under a different charter. During the next 12 months, attempts were made to negotiate a further 12 month charter, to come into effect on the expiry of the first. But the market had fallen, and it proved impossible to agree a monthly hire rate as high as the minimum of $350,000 originally required by Mr. Jensen and Mr. Dannesb¿e and specified as the minimum hire rate in the three year charter. So the negotiations failed. At the end of the first 12 month period, in April 1982, the defendants tendered the ship back to the plaintiffs. Then the balloon went up. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Meetings took place in London, when Mr. Jensen and Mr. Dannesb¿e on the one hand, and the top management of the defendants on the other, met for the first time. Mr. Jensen and Mr. Dannesb¿e maintained that the only binding charter was the three year charter, and that the defendants had repudiated it. The defendants' top management maintained that they had never heard of the three year charter, and that the only binding charter was the 12 month charter which had expired. The meeting produced no solution; and shortly afterwards, on 18 June 1982, the plaintiffs issued and served a writ on the defendants in this country, claiming damages for wrongful repudiation in excess of $8,000,000. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>As so often happens in a case of this kind, the case advanced by each party against the other took a form which now appears to be extreme. The primary case of the plaintiffs was that the three year charter had been entered into by Mr. Magelssen with the actual authority of the top management of the defendants. The primary case of the defendants was not merely that the charterparty was the fruit of a fraudulent conspiracy between Mr. Johannesen and Mr. Magelssen, but that Mr. Jensen and Mr. Dannesb¿e, if not implicated, must have been aware of some of the nefarious features of the transaction, and in particular of the bribery of Mr. Magelssen by Mr. Johannesen. That there were nefarious features, there can be no doubt; these have gradually come to light as the matter has been investigated. Mr. Magelssen was confronted by the top management of the defendants with his signature on the three year charter, when it came to light. He first said that the charter had been signed by him for the internal purposes of the plaintiffs. The implication must have been that the plaintiffs needed such a document, presumably to raise finance with their bankers. This proved to be entirely untrue; and in August 1982 Mr. Magelssen informed the defendants' solicitor (Mr. Taylor, a partner in Freshfields) that the true origin of the three year charter was that he had been bribed by Mr. Johannesen with an offer of an interest in the ship (if purchased by the plaintiffs) to sign a spurious three year charter, thereby ensuring that the deal would go through and that he and Mr. Johannesen would both obtain their share in the ship so purchased. Mr. Johannesen and Mr. Magelssen were both apparently confident that the market would at least retain its then current level. Their plan was that the three year charter would be kept secret from the defendants. Then, if the vessel was not quickly resold at a profit by the plaintiffs, the period of the three year charter would be covered by short charters at or </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL726"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>726 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>above the minimum rate specified in the three year charter, under which the defendants would believe the ship to be operating. On this basis, neither the plaintiffs nor the defendants would ever know that they were being deceived; the three years would pass by, and Mr. Johannesen and Mr. Magelssen would each acquire his share in the ship. But the plan collapsed when, the market having fallen, it proved impossible to negotiate a second short term charter with the defendants at a rate of $350,000 to take effect in succession to the first 12 month charter. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Such was Mr. Magelssen's account. It was however strongly contested by Mr. Johannesen. He maintained that he was innocent of any such fraud. His case was that Mr. Magelssen told him that he had obtained express authority from the defendants to enter into the three year charter. He also maintained that no question of Mr. Magelssen acquiring an interest in the ship arose until some months after the sale and the three year charter had been concluded; and he produced documents, dated 31 May 1980 and 18 March 1981, which he said were sent to the defendants on the dates they bore, and which were consistent only with the three year charter having been entered into with the knowledge of the defendants. At the trial, the defendants alleged that these documents were forgeries, and called expert evidence in support of that contention. The judge found that Mr. Johannesen had offered Mr. Magelssen "a piece of the ship" at the time of the negotiations in May 1980; he also found that the disputed documents were never sent by Mr. Johannesen to the defendants. He therefore disbelieved Mr. Johannesen's evidence on two important matters. Nevertheless, he preferred Mr. Johannesen's account of how the charter came into existence to that of Mr. Magelssen, and he acquitted Mr. Johannesen of any part in the alleged fraud. He therefore held that Mr. Magelssen had told Mr. Johannesen that he had received authority from the defendants to enter into the three year charter; and he further held that this transaction was known to one man (though only one man) in the top management of the defendants. This man, though not named as such by the judge in his judgment, is readily recognisable from other passages in the judgment as Mr. Sandro Bronzini. He also held that the disputed documents, though never sent to the defendants, were not forgeries. These findings of fact by the judge have, as we shall see, been the subject of severe criticism before this court. However, it was of course on the basis of those findings that the judge considered the various questions of law which fell for decision by him in relation to the three year charter. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The first question he had to consider was whether Mr. Magelssen had authority from the defendants to enter into the three year charter. The primary argument of the plaintiffs was that he had actual authority; but that argument failed on the evidence, and is no longer pursued. Their second argument was that Mr. Magelssen had, by virtue of his position, ostensible authority to enter into such a contract; but that argument also failed on the evidence. However, on a basis which was not pleaded, and indeed originated from a suggestion by the judge himself, he held that Mr. Magelssen had ostensible authority to communicate the fact that he had received express authority from the defendants to enter into this particular transaction. On that basis, the </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL727"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>727 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>judge held that the defendants were bound by the three year charter, rejecting also an argument that there was no animus contrahendi on the part of the parties. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The next question which the judge had to consider was whether, as a result of the offer by Mr. Johannesen to Mr. Magelssen of an interest in the ship, the contract was avoidable by the defendants on the ground of bribery, or alternatively whether the plaintiffs were liable to the defendants in damages by reason of any such bribe. He rejected both these arguments. Finally, he considered the question of deceit, arising out of the fraud of Mr. Magelssen. On his finding that the defendants were bound by the three year charter, this question did not arise; but he considered the question on the hypothetical basis that the defendants were not bound by the charter. The question was whether the defendants were vicariously liable to the plaintiffs for the fraud of Mr. Magelssen. On that issue, the defendants submitted that since the relevant fraudulent misrepresentation was communicated to Mr. Jensen and Mr. Dannesb¿e in Denmark, the defendants could only be liable if the tort was actionable not only by English law, but also by Danish law. The judge held that the defendants were not vicariously liable, either by English law or by Danish law. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Before this court, the defendants have appealed on the issue of ostensible authority and animus contrahendi, and also on the issue of bribery. The plaintiffs have, by a respondents' notice, challenged the judge's conclusion on deceit, both in English and in Danish law. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>However, as I have already foreshadowed, a serious challenge has been mounted in this court to certain central findings of fact by the judge. The attack of the plaintiffs was concentrated upon the finding, so adverse to their case, that Mr. Johannesen offered Mr. Magelssen an interest in the ship at the time of the negotiations in May 1980. But the attack of the defendants was far more far-reaching, and was directed towards the findings of the judge implicating Mr. Bronzini in the transaction, and exonerating Mr. Johannesen. To a very considerable extent, however, the issues of law in the case are unaffected by these findings of fact. This is certainly true of the issue of ostensible authority, and also (in my judgment) the issue of deceit. It is very tempting, therefore, not to assume the burden of reconsidering the findings of fact in this case, especially as they involve the judge's assessment of the credibility of certain witnesses. But I have come to the conclusion that it is inescapable that we should undertake this task. The first reason is that the judge has made findings which are most serious as regards the character of a senior executive, Mr. Bronzini. I have come to the clear conclusion that those findings are without foundation, indeed, as the argument developed, Mr. Alexander, who appeared in this court for the plaintiffs but did not appear below, obviously found great difficulty in supporting those findings before this court. Justice requires that Mr. Bronzini should be publicly exonerated. Second, having been taken through the evidence in great detail, and paying due regard to the great importance which must be attached by this court to the trial judge's conclusions on credibility, I have come to the clear conclusion that the fraud which was perpetrated in this case was as Mr. Magelssen described </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL728"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>728 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>it, and that it originated in a dishonest conspiracy between Mr. Johannesen and Mr. Magelssen. This has an impact upon the argument of the defendants founded upon the bribery of Mr. Magelssen by Mr. Johannesen. But it also has a profound impact upon what are usually called the merits of the case. For what has now emerged is a case in which the top management on both sides were innocent, and were the victims of fraud by two men, each of whom was associated with one of the two sides in the dispute - by Mr. Johannesen, who was not merely a broker but a joint venturer in the purchase of the ship with Mr. Jensen and Mr. Dannesb¿e, and by Mr. Magelssen, who was a senior employee of the defendants. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I propose therefore to approach the case by first considering the appeal (and the respondents' notice) on the issues of fact, and then turning to the appeal (and the respondents' notice) on the issues of law. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>[His Lordship in sections II to VI of his judgment described the parties to the proceedings, reviewed the factual background to the dispute, and considered the disputed three year charter, subsequent events and the defendants' challenge to Staughton J.'s findings of fact. His Lordship, having referred to <A NAME="L109"></A><I>Powell v. Streatham Manor Nursing Home</I></A> [1935] A.C. 250; <A NAME="L110"></A><I>Watt (or Thomas) v. Thomas</I></A> [1947] A.C. 484, in particular to the speech of Lord Thankerton, at pp. 487-488, and <A NAME="L111"></A><I>Benmax v. Austin Motor Co. Ltd</I></A> [1955] A.C. 370, continued:] For these reasons, I find myself differing from the conclusion of the judge as to the circumstances in which the three year charter came into existence. I wish, however, to observe that, as appears from the transcript, this is clearly one of those cases where the judge was faced with a situation which changed on more than one occasion during the trial. The case as presented by the parties was, at the outset at least, in an extreme form; moreover, as matters developed during the trial, the judge was faced with the problem of adjusting more than once any provisional view which he may have formed on the evidence already before him. I have no doubt that this court, which has been able to consider the evidence as a whole, has been faced with an easier task than that which faced the judge himself. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In the outcome, the facts as I find them to be show that Mr. Johannesen and Mr. Magelssen conspired together, between 27 May and 30 May 1980, to deceive Mr. Jensen and Mr. Dannesb¿e into believing that a genuine three year charter had been made, and so to agree that the ship should be purchased. The principals on both sides - the top management of the defendants on the one hand, and Mr. Jensen and Mr. Dannesb¿e on the other - were innocent of the fraud. The question therefore arises as to what, in these circumstances, are the respective rights and responsibilities of the plaintiffs and the defendants in law. To that question I now turn. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>VII. <I>Ostensible authority</I></FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The judge held that the defendants were bound by the three year charter with the plaintiffs. He approached the matter as follows. He had held that Mr. Johannesen was not party to the fraud with Mr. Magelssen, and that on 29 May 1980 Mr. Magelssen told Mr. Johannesen that he </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL729"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>729 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>had obtained express authority from his superiors at the defendants to enter into the three year charter, with the words "As I thought, I got it." The judge rejected a submission by Mr. Evans for the plaintiffs that Mr. Magelssen had actual authority to enter into such a contract; he held that it was plain that he did not have any such authority. He turned therefore to consider the question of ostensible authority. Of the particulars of facts pleaded by the plaintiffs as giving rise to ostensible authority, he considered that the only material facts were (A) Mr. Magelssen's appointment to the post of vice-president (transportation) of the defendants, and (B) the fact that, in the course of his employment, Mr. Magelssen executed numerous charterparties on behalf of the defendants. However, the judge next referred to the evidence which showed that neither Mr. Johannesen, nor Mr. Jensen and Mr. Dannesb¿e, thought that Mr. Magelssen had general authority to enter into a three year charter; they thought that it was necessary for Mr. Magelssen to refer back to his superiors for specific authority to enter into this particular contract, and they believed that he had done so. Even so, the judge held that the three year charter was binding on the defendants, on the basis that Mr. Magelssen had ostensible authority to notify approval by the top management of chartering transactions. He expressed his conclusion in the following words: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"But on a true analysis I do not think that it is a case of the contractor seeking to rely on the agent's own representation as to his actual authority and nothing more. The defendants appointed Mr. Magelssen vice-president (transportation) and chartering manager and allowed him to act as such. Let it be assumed that they did not thereby represent to Mr. Johannesen, Mr. Jensen or Mr. Dannesb¿e that he had general authority to conclude charterparties for three years. But they did, as I find, thereby represent to Mr. Johannesen that Mr. Magelssen was authorised to notify approval by the top management of chartering transactions. The representation to Mr. Johannesen must, I think, in the circumstances of this case either be regarded as a representation to Mr. Johannesen as agent for Mr. Jensen and Mr. Dannesb¿e, or else it was in effect passed on to Mr. Jensen by Mr. Johannesen. It is that representation which Mr. Johannesen, and through him Mr. Jensen and Mr. Dannesb¿e, clearly relied on. It was that representation which induced Mr. Jensen and Mr. Dannesb¿e to enter into the contract. There was therefore ostensible authority." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>He sought to fortify his conclusion with a reference to the well known observation of Holt C.J. in <A NAME="L112"></A><I>Hern v. Nichols</I></A> (1700) 1 Salk. 289: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"seeing somebody must be a loser by this deceit, it is more reason that he that employs and puts a trust and confidence in the deceiver should be a loser, than a stranger:..." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Staughton J. continued: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"No doubt in some American corporations the title 'vice-president' does not necessarily signify a person at the peak of the hierarchy. But I consider that a company which confers that title on one of its </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL730"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>730 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>employees has only itself to blame if third parties assume that he has some significant authority - in this case, authority to notify them of approval by the top management. Of course it may often happen, as Diplock L.J. observed, that a contractor relies on the servant or agent's warranty of authority rather than on any representation by his principal. But in a commercial deal worth $12.6 million that does not seem likely. In truth Mr. Jensen in the present case relied, as will generally happen in large commercial contracts, on the trappings of authority with which the defendants had clothed Mr. Magelssen." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>It is right that I should observe that this approach formed no part of the pleaded case of the plaintiffs, which was that Mr. Magelssen had actual authority to enter into the transaction, or in the alternative that he had ostensible authority to do so. There was no reliance upon any ostensible authority of Mr. Magelssen to notify approval by top management of a transaction which was known to be outside his actual authority. That approach appears to have had its origin in certain remarks which fell from the judge himself, in the course of counsel's final speeches before him. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I have already recorded that, in my judgment, Mr. Magelssen did not indicate to Mr. Johannesen that he had received the approval of his superiors to enter into the three year charter; on the contrary, in my judgment Mr. Johannesen was a party with Mr. Magelssen to the fraud. Even so, on that basis Mr. Alexander sought, before this court, to uphold the conclusion of the judge. He relied upon the facts that Mr. Magelssen called at Copenhagen on 19 June 1980 to sign the three year charter on behalf of the defendants, and that, while at World Marine's offices on that occasion, he met Mr. Dannesb¿e and expressed the defendants' pleasure at the conclusion of the transaction. It followed, he submitted, that, whatever had previously passed between Mr. Magelssen and Mr. Johannesen, Mr. Magelssen did thereby represent to the plaintiffs, in the person of Mr. Dannesb¿e, that he had received the approval of his superiors for this transaction. Even so, Mr. Alexander's primary argument on the point was not founded on the reasoning of the judge. His primary submission was not that Mr. Magelssen had ostensible authority to notify the approval of the top management of the defendants, but rather that Mr. Magelssen had ostensible authority to enter into a transaction of this kind. He posed the question at issue in the following words: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"Are we justified in assuming by virtue of his position that he has been given authority? The fact that we assume that before concluding he would have had to refer back to the board does not prevent his being held out to us as the person who will be sent out into the world to conclude the deal." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Mr. Alexander stated that the judge's approach provided a second string to his bow; in other words, he did not abandon it. But his detailed argument was devoted to his own submission, and not to supporting the judge's reasoning. I must confess to no surprise at Mr. Alexander's lack of enthusiasm for the judge's approach. For the effect of the judge's </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL731"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>731 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>conclusion was that, although Mr. Magelssen did not have ostensible authority to enter into the contract, he did have ostensible authority to tell Mr. Jensen and Mr. Dannesb¿e that he had obtained actual authority to do so. This is, on its face, a most surprising conclusion. It results in an extraordinary distinction between (1) a case where an agent, having no ostensible authority to enter into the relevant contract, wrongly asserts that he is invested with actual authority to do so, in which event the principal is not bound; and (2) a case where an agent, having no ostensible authority, wrongly asserts after negotiations that he has gone back to his principal and obtained actual authority, in which event the principal is bound. As a matter of common sense, this is most unlikely to be the law. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I, for my part, am unable to accept either the reasoning of the judge, or the submission of Mr. Alexander. My starting point is, of course, the locus classicus on the subject of ostensible authority, the judgment of Diplock L.J. in <A NAME="L113"></A><I>Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd.</I></A> [1964] 2 Q.B. 480. I hope that I may be forgiven if I do not quote in extenso from this very well known judgment. It appears, from that judgment, that ostensible authority is created by a representation by the principal to the third party that the agent has the relevant authority; and that the representation, when acted upon by the third party, operates as an estoppel, precluding the principal from asserting that he is not bound. The representation which creates ostensible authority may take a variety of forms; but the most common is a representation by conduct, by permitting the agent to act in some way in the conduct of the principal's business with other persons, and thereby representing that the agent has the authority which an agent so acting in the conduct of his principal's business usually has. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Applying these principles to the facts of the present case, it is plain that neither Mr. Jensen nor Mr. Dannesb¿e acted on the basis of any representation by the defendants, by virtue of their appointment of Mr. Magelssen as chartering manager and vice-president (transportation) and allowing him to act as such, that Mr. Magelssen had authority to enter into the three year charter because to enter into such a contract was within the usual authority of a person in his position. Quite apart from the question whether such a charter was, with or without its extraordinary features, within the usual authority of such a person (and the evidence before the judge indicated very strongly that it was not), it is plain that Mr. Jensen and Mr. Dannesb¿e did not act on that basis, since they thought that it was necessary for Mr. Magelssen to obtain the express approval of his superiors. The judge's way round this difficulty was to hold that the defendants, by appointing Mr. Magelssen to his position and allowing him to act as such, thereby represented that Mr. Magelssen had authority to notify approval of the top management of the defendants of chartering transactions. This must, as I understand it, mean that the defendants thereby represented that Mr. Magelssen was authorised to notify such approval, with the effect that the defendants were bound by it, whether or not such approval had in fact been given. I can see no basis for any such conclusion. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL732"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>732 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In his judgment in <A NAME="L114"></A><I>Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd.</I></A> [1964] 2 Q.B. 480, Diplock L.J. confined his analysis to ostensible authority of an agent to bind his principal to a contract. I, for my part, can see no reason why the same principles should not be applicable to other acts by an agent, for example, the making of representations by the agent, provided that it is clearly understood that, to give rise to ostensible authority, the representation by the principal must be to the effect that the agent is authorised to make the representation on his, the principal's behalf, so that the third party is entitled to rely upon it as such. On this basis, a representation by an agent within his ostensible authority may give rise to an estoppel against his principal. However, where, as here, it is suggested that it was within the agent's ostensible authority to communicate to the third party the principal's approval of the agent entering into a transaction which would otherwise not be within the agent's authority, the only representation of the principal which can give rise to such ostensible authority is a representation to the effect that the third party can rely upon the agent's communication of the principal's approval. It is possible to construct a theoretical case in which such a representation is expressly made by a principal, where he states to the third party that he should look to the agent for the necessary approval, and that he can rely upon the agent's statement whether such approval has been given. But I can see no basis for concluding, on the facts of the present case, that the defendants ever made any such representation regarding Mr. Magelssen. No doubt, by appointing Mr. Magelssen to his position and allowing him to act as such, they did represent that he had authority to bind his principals to those contracts which an agent in his position ordinarily has authority to make; and no doubt that ostensible authority would embrace the making of such representations concerning the subject matter of any such contract as might reasonably be understood to fall within such usual authority. But that does not, in my judgment, embrace authority by Mr. Magelssen to communicate approval by his superiors to his making contracts which, to the knowledge of the third party, he had no authority to enter into without such approval, with the effect that the defendants would be bound by such communication. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In reaching his conclusion, the judge appears to have been influenced by the fact that on previous occasions Mr. Magelssen (or his assistant Mr. Hollis) had been entrusted with the task of communicating to others the fact that the board of the defendants had given its approval to certain transactions. But that fact does not, in my judgment, support the judge's conclusion. For, quite apart from the fact that neither Mr. Jensen nor Mr. Dannesb¿e was aware that this had been done, it does not follow from the mere fact that an agent has on previous occasions been entrusted by his principal with the task of communicating to a third party his principal's approval to certain transactions, that the principal has thereby represented that the agent has authority to communicate such approval in relation to future transactions, with the effect that the principal will be bound by such communication. It is only necessary to consider the case of an ordinary shipbroker, who regularly acts on behalf of a certain principal. Every time he makes a contract for his </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL733"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>733 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>principal, he communicates to the third party his principal's acceptance of the terms finally offered. But simply by using the broker as his channel of communication for that purpose in those transactions, the principal makes no representation that the broker has authority to make any such communication in relation to future transactions, so as to bind the principal. It is well settled that mere repetition of this kind does not of itself constitute a representation necessary to found ostensible authority: see <A NAME="L115"></A><I>Slingsby v. District Bank Ltd.</I></A> [1932] 1 K.B. 544, 566, <I>per</I>Romer L.J. All that a third party can derive from what has happened is that the principal regularly transacts business through the broker in question, and that when he does so he uses the broker to communicate his approval of transactions when he has in fact given such approval. If the broker should thereafter indicate that his principal has given his approval to a transaction when he has not in fact done so, the principal is not ipso facto bound. No doubt it can be said that, in a sense, a third party may rely on the fact that the broker is the principal's regular broker; but that is not enough, for there has been no representation by the principal necessary to give rise to ostensible authority. So also it can be said in the present case (as indeed the judge said) that, in a sense, Mr. Jensen relied on "the trappings of authority with which the defendants clothed Mr. Magelssen"; but that, on analysis, means no more than that the plaintiffs felt it safe to rely on Mr. Magelssen's own representation that he had received the necessary approval from his superiors. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>For similar reasons, I am unable to accept the basis upon which Mr. Alexander sought to justify the judge's conclusion. Mr. Alexander submitted that the mere fact that Mr. Jensen and Mr. Dannesb¿e assumed that Mr. Magelssen would have to obtain the approval of his superiors for the contract did not prevent him from being held out by the defendants as the person who could conclude the deal, because they were reasonably entitled to assume by virtue of his position that he had been given authority when he said that he had obtained it. In support of this submission, he relied upon the facts that Mr. Magelssen generally negotiated contracts in this area; that it was Mr. Magelssen who concluded the deal; and that it was Mr. Magelssen who, because of his position, signed and executed important charterparties. In my judgment, however, this submission is not in accordance with the law. The representation by the defendants which was to be derived from the fact that they appointed Mr. Magelssen as chartering manager and vice-president, and allowed him to act as such in the conduct of its business, was simply that Mr. Magelssen had that authority to bind his principal to contracts which a person in his position usually had. No representation can be derived from Mr. Magelssen's appointment, or his being allowed to act in that capacity, that he would be given specific authority to enter into any contract which he stated that he had received authority to enter into. Indeed, any other conclusion could lead to principals being bound to the most extravagant transactions, which they had never authorised and which were far beyond the usual authority of a person in the agent's position. Mr. Alexander's submission suffers, in my judgment, from the same defect as the reasoning of the judge, in that it confuses reliance by </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL734"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>734 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>a third party on a representation by the principal that the agent had authority with an assumption by the third party that it would in the circumstances be safe to rely on the agent's representation that he had authority. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>There is clear authority which shows that Mr. Alexander's submission is inconsistent with the established law, because the representation of the principal to be derived from the agent's position is limited to the fact that the agent has the usual authority possessed by a person in that position. In <A NAME="L116"></A><I>Russo-Chinese Bank v. Li Yau Sam</I></A> [1910] A.C. 174, Lord Atkinson, in delivering the advice of the Privy Council, said, at p. 184: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"It is undoubted that a person who deals with an agent, whose authority he knows to be limited, as the plaintiff knew in this case, does so at his peril, in this sense, that should the agent be found to have exceeded his authority his principal cannot be made responsible. While the several authorities cited by Mr. Scrutton, from <A NAME="L117"></A><I>Grant v. Norway</I></A> (1851) 10 C.B. 665, down to <A NAME="L118"></A><I>Ruben v. Great Fingall Consolidated</I></A> [1906] A.C. 439, establish, in their Lordships' opinion, the proposition that, in order that the principle of 'holding out' should in any given case of agency apply, the act done by the agent, and relied upon to bind the principal, must be an act of that particular class of acts which the agent is held out as having a general authority on behalf of his principal to do, and, of course, the party prejudiced must have believed in the existence of that general authority and been thereby misled. In other words, if the agent be held out as having only a limited authority to do on behalf of his principal acts of a particular class, then the principal is not bound by an act done outside that authority, even though it be an act of that particular class, because, the authority being thus represented to be limited, the party prejudiced has notice, and should ascertain whether or not the act is authorised." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>If further authority is required, it is to be found in the judgment of MacKinnon L.J. in <A NAME="L119"></A><I>Uxbridge Permanent Benefit Building Society v. Pickard</I></A> [1939] 2 K.B. 248, 258. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In my judgment, this is a clear case in which Mr. Magelssen had no actual or ostensible authority to enter into the three year charter. In truth, Mr. Jensen and Mr. Dannesb¿e realised that this was so but, relying on what Mr. Johannesen has told them, believed that Mr. Magelssen had obtained the necessary approval from his superiors in the defendants. He had not done so; and, since he lacked any actual or ostensible authority, he could not bind the defendants. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I wish to add two footnotes to this section of my judgment. First, Mr. Pollock relied strongly upon the extraordinary features of the three year charter (viz., secrecy, the minimum charter rate, and the plaintiffs' option to cancel) as in any event putting Mr. Jensen and Mr. Dannesb¿e on inquiry. I have no doubt that that is right: see <A NAME="L120"></A><I>Houghton & Co. v. Northard, Lowe and Wills Ltd.</I></A> [1927] 1 K.B. 246, 261, <I>per</I> Bankes L.J. But in my judgment, quite apart from these extraordinary features of the transaction, Mr. Magelssen lacked ostensible authority to enter into the charter. Second, in his judgment the judge prayed in aid the </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL735"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>735 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>observation of Holt C.J. in <A NAME="L121"></A><I>Hern v. Nichols,</I></A> 1 Salk. 289, which I have already quoted, and Mr. Alexander made frequent references to that observation in the course of his argument. That observation has its place in the history of vicarious liability for the tort of deceit; but, vivid though it is, it provides no sure guidance for the scope of such liability, still less for the scope of ostensible authority, today. The remarks of Lord Lindley in <A NAME="L122"></A><I>Farquharson Brothers & Co. v. C. King & Co.</I></A> [1902] A.C. 325, concerning the equally historic statement of Ashhurst J. in <A NAME="L123"></A><I>Lickbarrow v. Mason</I></A> (1787) 2 Durn. & E. 63, are just as applicable to the statement of Holt C.J. in <A NAME="L124"></A><I>Hern v. Nichols.</I></A> Lord Lindley said, at p. 342: "Such a doctrine is far too wide;... it cannot be relied upon without considerable qualification." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In the light of my conclusion on ostensible authority, it follows that the defendants were not bound by the three year charter with the plaintiffs. In these circumstances, the alternative submission of the defendants that there was no animus contrahendi and that, on that ground, they were not bound, does not arise; and I do not think that it is necessary for me to deal with it in this judgment. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>VIII. <I>Deceit</I></FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I turn next to the plaintiffs' claim against the defendants for damages for deceit, on the basis that the defendants were vicariously liable for the deceit of Mr. Magelssen. The judge had of course held that the three year charter was binding on the defendants, because it was within the ostensible authority of Mr. Magelssen to notify the approval of the defendants to his entering into the charter. So for him, the question of damages for deceit only fell for consideration on the hypothetical basis that the defendants were not bound by the charter; whereas, on the view I have formed of ostensible authority, the plaintiffs' claim for damages for deceit arises directly for decision. He also approached the question of deceit on the basis that the relevant fraudulent misrepresentation of Mr. Magelssen was his statement to Mr. Johannesen on 29 May 1980 - "As I thought, I got it." On my view of the facts, there was a fraudulent conspiracy between Mr. Johannesen and Mr. Magelssen to deceive Mr. Jensen and Mr. Dannesb¿e. But that is for present purposes immaterial, because it is accepted that, on any view of the case, Mr. Magelssen did indeed deceive the plaintiffs into thinking that he had received express authority from the defendants to enter into the three-year charter. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The judge held, however, that, although a claim by the plaintiffs against Mr. Magelssen for damages for deceit would succeed, nevertheless, if Mr. Magelssen was not acting within his ostensible authority, a claim by the plaintiffs against the defendants on the basis of vicarious liability for Mr. Magelssen's fraud would fail. He first referred to passages in the speeches of Lord Macnaghten in <A NAME="L125"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. 716, 736, and of Lord Wilberforce in <A NAME="L126"></A><I>Heatons Transport (St. Helens) Ltd. v. Transport and General Workers' Union</I></A> [1973] A.C. 15, 99, as indicating that the course of a servant's employment can never be wider than his actual or ostensible authority; with that he contrasted a </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL736"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>736 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>dictum of Denning L.J. in <A NAME="L127"></A><I>Navarro v. Moregrand Ltd.</I></A> [1951] 2 T.L.R. 674, 680, to the opposite effect. He then said: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"I do not express any general view on the distinction between those authorities, or on which I ought to prefer, even if it is open to me to choose between them. In the circumstances of this particular case I am satisfied that 'course of employment' and 'actual or ostensible authority' mean the same thing. One can test that proposition by removing the trappings of authority with which Mr. Magelssen had been invested by [the defendants]. Suppose he had been not a vice-president but the office boy. Suppose that he had then said to Mr. Jensen: 'Here is a three year charter party. Of course I have no general authority to conclude it, but I have been specifically authorised to sign it and I now do so.' Let it also be supposed that he had not been held out in any other way to convey the approval of top management to the contract. He would not have been acting within his ostensible authority; nor would he have been acting within the course of his employment. In my judgment the two expressions have the same meaning in the context of this case." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The conclusion of the judge was the subject of a strong attack in this court by Mr. Alexander for the plaintiffs. The burden of his argument was that Mr. Magelssen was authorised to negotiate and conclude the sale of the ship to the plaintiffs, and that in the course of his employment to carry out that authorised transaction he fraudulently misrepresented that he had authority to enter into the three year charter back. Since that fraudulent misrepresentation was made to induce the plaintiffs to enter into the sale contract which he had been authorised to make, the sale and charter back being (as Mr. Alexander called them) an "integral transaction", the fraudulent misrepresentation was made in the course of his employment. It made no difference, submitted Mr. Alexander, that the three year charter was not within the ostensible authority of Mr. Magelssen. Of course, if an act is within the ostensible authority of a servant, clearly it will be performed in the course of his employment; but it does not follow, he submitted, that an act which is not within the ostensible authority of a servant cannot be performed in the course of his employment. There was, he submitted, no authority which decided any such thing; in particular, <A NAME="L128"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. 716 was concerned with a master's vicarious liability for fraud by his servant within his ostensible authority, and <A NAME="L129"></A><I>Heatons Transport (St. Helens) Ltd. v. Transport and General Workers' Union</I></A> [1973] A.C. 15 was concerned not with vicarious liability but with the question whether a particular act by an agent could be imputed to his principal. He relied, of course, on the dictum of Denning L.J. in <A NAME="L130"></A><I>Navarro v. Moregrand Ltd.</I></A> [1951] 2 T.L.R. 674, 680, that a master or principal is </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"responsible in tort for all wrongs done by the servant or agent in the course of his employment, whether within his actual or ostensible authority or not." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The point is by no means easy; and I wish to express my indebtedness both to Mr. Alexander and to Mr. Pollock for their admirable arguments </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL737"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>737 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>addressed to this court. We are here concerned with a question of vicarious liability of a master for the tort of his servant. It is, of course, well settled that a master is vicariously liable for a tortious act done by his servant in the course of his employment, and that an act is done by a servant in the course of his employment if it is an unauthorised mode of doing some act authorised by the master. I quote from the well known passage from <I>Salmond & Heuston on Torts,</I> 18th ed. (1981), pp. 437-438, para. 176: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"But a master, as opposed to the employer of an independent contractor, is liable even for acts which he has not authorised, provided they are so connected with acts which he has authorised that they may rightly be regarded as modes - although improper modes - of doing them. In other words, a master is responsible not merely for what he authorises his servant to do, but also for the way in which he does it. If a servant does negligently that which he was authorised to do carefully, or if he does fraudulently that which he was authorised to do honestly, or if he does mistakenly that which he was authorised to do correctly, his master will answer for that negligence, fraud or mistake. On the other hand, if the unauthorised and wrongful act of the servant is not so connected with the authorised act as to be a mode of doing it, but is an independent act, the master is not responsible: for in such a case the servant is not acting in the course of his employment, but has gone outside of it." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>So here, in Mr. Alexander's submission, the relevant employment of Mr. Magelssen was to conclude a sale of the ship to the plaintiffs. He did fraudulently what he was authorised to do honestly, because he induced the sale contract by the fraudulent misrepresentation that he was authorised to enter into the three year charter back. This was therefore an improper mode of doing that which he was authorised to do, and so was in the course of his employment. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>There is ample authority that a master may be vicariously liable for the fraud of his servant. This was so held by Holt C.J. in <A NAME="L131"></A><I>Hern v. Nichols,</I></A> 1 Salk. 289: in more recent years, the same conclusion was reached in the leading cases of <A NAME="L132"></A><I>Barwick v. English Joint Stock Bank</I></A> (1867) L.R. 2 Ex. 259, and of <A NAME="L133"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. 716, in which the House of Lords held that a master may be so liable where the servant's fraud is committed solely for his own benefit. Furthermore, there is authority that, where a servant is authorised to do a certain act and while doing that act he assaults the plaintiff, he may be held to have committed the assault in the course of his employment if it is an improper mode of carrying out that which he was employed to do (see <A NAME="L134"></A><I>Dyer v. Munday</I></A> [1895] 1 Q.B. 742); and there is also authority that, where an agent bribes the clerk of the plaintiff in order to obtain information concerning the plaintiff which he was employed to obtain by legitimate means, the action of the agent in bribing the clerk may likewise be held to be committed within the course of his employment: see <A NAME="L135"></A><I>Hamlyn v. John Houston & Co.</I></A> [1903] 1 K.B. 81. If a servant who is authorised by his master to conclude a certain contract with a third </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL738"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>738 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>party, induces him to enter into the contract by a fraudulent misrepresentation, that may likewise be thought to be a wrongful mode of doing that which he is authorised to do so that the fraudulent misrepresentation is made in the course of his employment. It may also be thought to be immaterial whether the misrepresentation is itself within the actual or ostensible authority of the servant. The existence of such authority would be relevant to the question whether the representation could be imputed to the master, so that he is bound by it; for example, if it amounted to a collateral warranty, actual or ostensible authority would be essential before the master could be held liable for breach of the warranty. But, it may be said, actual or ostensible authority should not be decisive of the question whether the master is vicariously liable for the servant's tort, for which in any event the measure of damages is different. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In my judgment, however, the weight of authority is against this approach. 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. Similarly, if this is not the law, it is difficult to understand how, in certain cases where there has been an unsuccessful attempt to establish that a servant or agent acted within his ostensible authority, there was no alternative claim for damages on the basis of vicarious liability for deceit; for a prominent example of such a case, see <A NAME="L136"></A><I>Slingsby v. District Bank Ltd.</I></A> [1932] 1 K.B. 544. In other cases, the reasoning of the court is consistent only with the proposition that the criterion for the master's vicarious liability is that the servant acted within his ostensible authority. I refer in particular to the judgments of the Court of Appeal in <A NAME="L137"></A><I>Uxbridge Permanent Benefit Building Society v. Pickard</I></A> [1939] 2 K.B. 248, 253-254, <I>per</I> Sir Wilfrid Greene M.R. and, at p. 258, <I>per</I> MacKinnon L.J. and to the leading case of <A NAME="L138"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. 716, in which Lord Macnaghten, in the context of a claim against the master for damages for his servant's deceit, treated, at p. 736, the expressions "acting within his authority" and "acting in the course of his employment" as meaning one and the same thing. A similar approach was adopted in the House of Lords in <A NAME="L139"></A><I>George Whitechurch Ltd. v. Cavanagh</I></A> [1902] A.C. 117, <A NAME="L140"></A><I>Ruben v. Great Fingall Consolidated</I></A> [1906] A.C. 439 and <A NAME="L141"></A><I>Kleinwort, Sons & Co. v. Associated Automatic Machine Corporation Ltd.</I></A> (1934) 50 T.L.R. 244. Only in the third of these last cases, the <A NAME="L142"></A><I>Kleinwort</I></A> case, was there in fact a claim for damages for fraudulent misrepresentation; but each case was concerned with the fraud of a secretary of a company, and in each case the analysis was the same, the liability of the company being held to depend on whether the secretary acted within his authority. Similarly, as I read it, the advice of the Privy Council delivered by Lord Wilberforce in <A NAME="L143"></A><I>Kooragang Investments Pty. Ltd. v. Richardson & Wrench Ltd.</I></A> [1982] A.C. 462, is based on the assumption that the respondents were only vicariously </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL739"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>739 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>liable for negligent valuations by their servant where those were within the actual or ostensible authority of the servant. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>It is right that we should ask ourselves: why should ostensible authority, which prima facie appears to be relevant to the question whether the servant's unauthorised act should be imputed to the master, also provide the criterion for the master's vicarious liability for his servant's deceit? In considering this question, we must bear in mind the circumstances in which a servant's fraudulent act may fall within his ostensible authority. Generally speaking, his act will be within his ostensible authority when it is within that class of acts which a person in his position usually has authority to perform; it will not be within his ostensible authority, either when it does not fall within that class of acts or where, in the case of the particular servant, his authority is limited and the third party has notice of the limitation on his authority. Now, in cases of deceit, we are concerned with liability for a representation made by the servant to a third party. The dealings which that servant is employed to enter into with third parties, including the promises and representations which comprise those dealings, are to be identified with reference to his authority, either his actual authority or (by virtue of estoppel) his ostensible authority. In considering whether a master is vicariously liable for a particular fraudulent misrepresentation of his servant, it is in theory necessary to inquire - (1) what the servant was employed to do, and (2) whether the wrongdoing of the servant constituted a wrongful mode of doing that which he was authorised to do. However, since we are here concerned with liability for a misrepresentation, the second question does not arise, because it cannot be said that the making of an unauthorised misrepresentation, even one which induces an authorised transaction, is an improper mode of concluding that transaction; for, where some representations fall within the servant or agent's authority and some do not, only those which do so can be said to constitute modes of performance of that which he has been authorised to do. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>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. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>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 </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL740"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>740 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>liability: see, in particular, <A NAME="L144"></A><I>Bugge v. Brown</I></A> (1919) 26 C.L.R. 110, 116, et seq., <I>per</I> Isaacs J. and, at p. 132, <I>per</I> Higgins J. So where a servant is authorised to carry on a certain dealing or transaction with the plaintiff and reinforces his approach to the plaintiff with an (unauthorised) physical assault upon him, his master may be vicariously liable for the assault: see <A NAME="L145"></A><I>Dyer v. Munday</I></A> [1895] 1 Q.B. 742; but where the servant induces the plaintiff to enter into an authorised transaction by means of a fraudulent misrepresentation which is not within his ostensible authority, the master will not be vicariously liable for the fraud. It also follows that there are acts of a servant for which a master may be vicariously liable, although they are not within the servant's ostensible authority; so that the conclusion which I have reached on the authorities is not inconsistent with the dictum of Denning L.J. in <A NAME="L146"></A><I>Navarro v Moregrand Ltd.</I></A> [1951] 2 T.L.R. 674, 680, upon which Mr. Alexander relied. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>For these reasons, in agreement with the conclusion reached by the judge on this point, I am of the opinion that the defendants are not vicariously liable to the plaintiffs for the deceit of their servant, Mr. Magelssen, such deceit consisting of a misrepresentation which was outside the ostensible authority of Mr. Magelssen. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I should, however, add that, even if I had not reached the same conclusion as the judge on this point as a matter of English law, I should still have held, in agreement with the judge, that the plaintiffs' claim under this head must fail because it was not actionable in Danish law. The judge held, applying the law as stated by Lord Wilberforce in <A NAME="L147"></A><I>Boys v. Chaplin</I></A> [1971] A.C. 356, 389, that the basic rule of English law with regard to foreign torts required: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"actionability as a tort according to English law, subject to the condition that civil liability in respect of the relevant claim exists as between the actual parties under the law of the foreign country where the act was done." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>See also <I>Dicey & Morris, The Conflict of Laws,</I> 10th ed. (1980), p. 935. He next held, applying in particular <A NAME="L148"></A><I>Diamond v. Bank of London and Montreal Ltd.</I></A> [1979] Q.B. 333, that the tort in the present case, being the tort of fraudulent misrepresentation, was committed when the representation was made, i.e. when it was communicated to Mr. Jensen and Mr. Dannesb¿e, and when it was acted upon. Here the representation was both communicated to Mr. Jensen and Mr. Dannesb¿e, and acted upon, in Denmark, and so the judge held that the tort was committed in Denmark. Finally, having heard expert evidence on the point, the judge held that, on the balance of probabilities, a Danish court would hold the defendants not liable for Mr. Magelssen's deceit. On all these points despite Mr. Mawrey's argument to the contrary, I find myself in agreement with the judge. I agree with him that the applicable principle in respect of foreign torts is as stated by Lord Wilberforce in his speech in <A NAME="L149"></A><I>Boys v. Chaplin</I></A> [1971] A.C. 356. I also agree with him that the tort was committed in Denmark in the present case. Furthermore, contrary to Mr. Mawrey's submission, I am satisfied that the judge directed himself correctly on the burden of proof. Lastly, having been taken </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL741"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>741 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>through the evidence of Danish law before the judge, I can see no justification for interfering with his conclusion on the point. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>IX. <I>Bribery</I></FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Since I have concluded that the defendants were never bound by the three year charter, and that they are not vicariously liable to the plaintiffs for the deceit of Mr. Magelssen, the issue of bribery has, on the view I have formed of the case, no bearing upon the actual decision. However, having heard full argument upon it, I propose to state my conclusion on this issue also, as briefly as I can. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The evidence showed that, as the judge held, during the negotiations in late May 1980 Mr. Johannesen offered Mr. Magelssen "a piece of the ship" - a share which was then unquantified but was later defined as one-third of the 49 per cent. interest which World Marine acquired through Rugas Shipping Inc.; but Mr. Jensen and Mr. Dannesb¿e were unaware, before the three year charter was signed, of Mr. Magelssen's participation. It was not until December 1980 that Mr. Jensen discovered, in conversation with Mr. Johannesen, that Mr. Magelssen had acquired (through Havicha) a one-third share in Rugas. It was the submission of the defendants before the judge that the offer of a piece of the ship, putting Mr. Magelssen in a position where his interest conflicted with his duty to the defendants, constituted a bribe, and that on discovery of it the defendants became entitled to determine the three year charter. It was submitted that the defendants were entitled to do so, either on the basis that Mr. Johannesen made the offer in the course of acting as the agent for the joint venture between himself and Mr. Jensen and Mr. Dannesb¿e; or on the basis that, on discovering Mr. Magelssen's interest, Mr. Jensen was under a duty to reveal it to the defendants and that, he having failed to do so, the plaintiffs thereby adopted the bribe. The defendants also claimed that the plaintiffs were vicariously liable for the bribery by Mr. Johannesen of Mr. Magelssen, and so liable in damages to the defendants; this claim acquired a new dimension before this court when leave was given to the defendants to amend their defence and counterclaim to claim that, if they were vicariously liable in damages to the plaintiffs for the deceit of Mr. Magelssen, they were entitled to set off their claim for damages for the bribery by Mr. Johannesen of Mr. Magelssen against the plaintiffs' claim for damages for deceit. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The judge held that Mr. Johannesen's offer to Mr. Magelssen of a piece of the ship constituted a secret commission for which Mr. Magelssen was accountable to the defendants; but he held that it did not constitute a bribe in law, because Mr. Johannesen was not and did not become an officer of the plaintiffs, and so must be regarded as in the position of a stranger. He said: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"In May 1980 Mr. Jensen and Mr. Dannesb¿e did not know of any gift or promise by Mr. Johannesen to Mr. Magelssen, and had not authorised one. Mr. Johannesen was not and did not become an officer of the plaintiffs. The offer which he made was to be implemented out of World Marine's share in the plaintiffs, and not by Mr. Jensen or Mr. Dannesb¿e or the plaintiffs themselves. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL742"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>742 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Certainly there was a secret profit, which the defendants would be entitled to receive from Mr. Magelssen. It may be that they also have remedies against Mr. Johannesen. But neither Mr. Jensen nor Mr. Dannesb¿e nor the plaintiffs were involved in bribery. The charterparty cannot be rescinded or determined." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>It followed that Mr. Pollock's submission on behalf of the defendants before the judge, founded on Mr. Johannesen's offer of a piece of the ship, failed. With regard to Mr. Jensen's subsequent discovery of Mr. Magelssen's interest in December 1980, the judge also rejected Mr. Pollock's submission. He said: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"The present is not a case of a bribe given or promised by (a contracting party) himself in the course of performance of a contract nor is it a case of (a contracting party) discovering subsequently that (a stranger) made or promised a bribe to induce the contract initially. All that Mr. Jensen discovered was that Mr. Magelssen had come to have an interest in the venture; and Mr. Jensen believed that Mr. Magelssen had disclosed this to the defendants. I can see no ground for saying that, because he did not himself disclose this to the defendants, he thereby adopted or ratified a bribe. Nor can I see any other ground upon which he became under a duty to disclose to the defendants what he had learned." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I approach the matter as follows. First of all, I find myself unable to agree with the judge's view that Mr. Johannesen, when he made the offer to Mr. Magelssen, is to be regarded as a stranger to the transaction. The evidence shows that World Marine were brokers; and no doubt, in the initial stages of the negotiations, following Mr. Magelssen's approach to Mr. Johannesen, he was acting as an independent broker in the usual way. But a change took place on 26 May 1980 when it was agreed in principle between Mr. Jensen and Mr. Johannesen that the vessel should be purchased on a joint venture basis, split as to 51 per cent. to the Jensen/Dannesb¿e interest, and as to 49 per cent. to the Johannesen/Olrik interest. Thereafter when, with the authority of Mr. Jensen, Mr. Johannesen negotiated with Mr. Magelssen and concluded the sale contract and purported to conclude the three year charter, he can no longer, in my judgment, be regarded as a stranger to the transaction. He was an interested party, one of the joint venturers; and he was acting thereafter as the agent of all the joint venturers. It is true that, under the agreement which was reached between the plaintiffs and the defendants, a commission was payable to World Marine in recognition of its services; but it would, in my judgment, be unrealistic to regard Mr. Johannesen, after 26 May, as acting simply as an independent broker. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Now, had Mr. Johannesen himself been the purchaser of the ship from the defendants who chartered the ship back to the defendants, the case would have presented no problems. It is plain that the offer to Mr. Magelssen would have constituted a bribe, which would have had a number of consequences in law, quite apart from Mr. Magelssen's duty to account to the defendants or his liability in damages to the defendants. In particular, the defendants would have been entitled to rescind the </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL743"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>743 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>contract on discovering the bribe; or, if it was too late to rescind, to bring the contract to an end: see <A NAME="L150"></A><I>Panama and South Pacific Telegraph Co. v. India Rubber, Gutta Percha, and Telegraph Works Co.</I></A> (1875) L.R. 10 Ch.App. 515. Further, Mr. Johannesen would have been liable in damages to the defendants in tort, although the defendants could in the alternative recover from him the amount of the bribe as money had and received: see <A NAME="L151"></A><I>Mahesan s/o Thambiah v. Malaysia Government Officers' Co-operative Housing Society Ltd.</I></A> [1979] A.C. 374. However, the matter is considerably complicated in the present case by two facts: first, that Mr. Johannesen did not act as principal but as agent, and second that the plaintiffs were not incorporated until 12 June 1980. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>There is a singular dearth of authority in this country on the legal position of a principal whose agent bribes the servant of a third party in order to induce the third party to enter into a contract with his principal. In all the English cases, the briber appears to have been himself the principal, or (as in the original <A NAME="L152"></A><I>Panama</I></A> case, L.R. 10 Ch.App. 515) the servant or agent of a principal who has authorised him to enter into the transaction which gave rise to the bribe, so that there was no doubt that the bribe could be imputed to the principal. I shall, however, first of all consider the liability of the principal in damages, where his agent has without his authority, or indeed knowledge, bribed the servant of the third party to induce the third party to contract with his principal. It is now established that the claim against the briber for damages, which appears in origin to have been a claim for equitable fraud, should be regarded as a claim in damages in tort: see the <A NAME="L153"></A><I>Mahesan</I></A> case [1979] A.C. 374, 383, <I>per</I> Lord Diplock. Accordingly, the liability of the principal for the agent's tort must depend upon the principles of vicarious liability, in so far as those principles are applicable in the case of an agent who is not a servant. Certainly, the principal cannot be liable unless the agent was acting in the course of his employment as such or (as is sometimes said) in the course of his authority. For an example where a principal was so held liable, we have the authority of the decision of this court in <A NAME="L154"></A><I>Hamlyn v. John Houston & Co.</I></A> [1903] 1 K.B. 81. That was a case in which one partner was held liable in damages to the plaintiff for the conduct of another partner in bribing a servant of the plaintiff to communicate to him information concerning the plaintiff, where it was within his authority to obtain such information by legitimate means. Collins M.R. said, at p. 85: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"If the act done by the agent is within the general scope of the authority given to him, it matters not for the present purpose that it was directly contrary to the instructions of his principal, or even that it may have been an offence against society itself. The test is that which is applied to this case by the learned judge. Was it within the scope of the authority given to Houston to obtain this information by legitimate means? If so, it was within the scope of his authority for the present purpose to obtain it by illegitimate means, and the defendants are liable." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I next ask myself, putting on one side for the moment the fact that the plaintiffs were not incorporated until 12 June 1980, whether Mr. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL744"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>744 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Johannesen, in offering a piece of the ship to Mr. Magelssen, was acting in the course of his employment or authority as agent for the joint venturers. It is, I think, unnecessary for the purposes of this judgment to consider the circumstances in which a principal whose agent has only a limited authority may be vicariously liable for his tortious conduct. I recognise that here Mr. Johannesen was indeed given specific authority by Mr. Jensen to conclude the purchase and charter back on certain terms, though by 27 May he had been given a certain discretion as to the terms upon which he might conclude the transaction. Nevertheless, even if he was not in law a partner with the other joint venturers, he was in a closely analogous position, and he was authorised to negotiate and conclude the purchase and charter back of the ship, which was the very purpose for which the joint venture had come into existence. In those circumstances, Mr. Johannesen having concluded by illegitimate means the transaction which he was authorised to conclude by legitimate means, in my view the other joint venturers were liable in damages in the same way as the partner was liable in <A NAME="L155"></A><I>Hamlyn v. John Houston & Co.</I></A> [1903] 1 K.B. 81. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I next ask myself, still putting on one side the fact that the plaintiffs were not incorporated until 12 June 1980, whether, where an agent has, in the course of his employment or authority, bribed the servant of a third party to induce the third party to contract with his principal, the third party is entitled to rescind the contract or, if it is too late to rescind, to bring it to an end. It was argued before us by Mr. Alexander that this is not the law, and that only where the bribe can be imputed to the principal as having been within the agent's authority is the third party entitled either to rescind, or determine, the contract with the principal: in practical terms, this is likely to occur only where the agent's bribe was actually authorised by his principal, as in <A NAME="L156"></A><I>Panama and South Pacific Telegraph Co. v. India Rubber, Gutta Percha, and Telegraph Works Co.,</I></A> L.R. 10 Ch.App. 515, because it is difficult to imagine a case where such a bribe, if not actually authorised, is within the agent's ostensible authority. No English authority on the point was cited to us; but we are indebted to the industry of Mr. Pollock and his junior, Mr. Siberry, for the citation of a decision of the Supreme Court of Canada on the point, <A NAME="L157"></A><I>Barry v. Stoney Point Canning Co.</I></A> (1917) 55 S.C.R. 51, a case which was not cited to the judge. In that case it was held by a majority of the Supreme Court that, where the agent acted in the course of his employment in making a bribe to the third party's own agent, the third party could on this ground justify his repudiation of the contract with the bribing agent's principal. The leading judgment of the majority was delivered by Anglin J. He said, at p. 80: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"Finally the fact that the agreement to split the commission was not made by the plaintiffs themselves, but by their agent Millman, is not an answer to the defendant's assertion of his right to repudiate. What Millman did was done while purporting to act within the scope of his employment, and in the course of the service for which he was engaged by the plaintiffs; and it is immaterial that it may have been in his own interest as well as in, or even to the exclusion of, that of the plaintiffs: <A NAME="L158"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL745"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>745 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>716. The defendant's agent was given the disqualifying adverse interest which made him incapable of binding his principal." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Although this decision is not binding upon us, it constitutes strong persuasive authority; and I respectfully agree with it and adopt it. Applying it to the present case, it would, I consider, be strange indeed if a principal whose agent had, in the course of his employment, bribed the third party's agent, should, though liable in damages to the third party, be entitled nevertheless to resist a claim by the third party to rescind the contract or, if it was too late to rescind, to bring it to an end on the ground of the bribe. Indeed, it can be argued that the case of rescission is stronger than the case of vicarious liability for damages; and I wish to reserve the question whether a party to a contract induced by the bribery of his servant by a stranger, or indeed a party to a contract induced by the fraud of a stranger, should not be entitled to rescind the contract on the discovery of the bribery or the fraud, on the basis that it would be inequitable for the other party, though innocent, to hold him to a contract so procured. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I next consider what is the effect, if any, in the present case of the fact that the plaintiffs were not incorporated until 12 June 1980, so that at the time when Mr. Johannesen actually made the offer of a piece of the ship to Mr. Magelssen, the plaintiffs were not yet in existence. Once again, it would be very strange if, in the circumstances of the present case, the plaintiffs could retain the benefit of a contract as against the defendants which had been induced by a bribe by one of the joint venturers who, as agent for them all, negotiated the contract to be concluded with a company to be nominated, which in due course proved to be the plaintiffs. In my judgment, it cannot do so; and, just as an assignee takes subject to equities, so here the plaintiffs took the benefit of the three year charter (such as it was) subject to the right of the defendants to rescind the contract or, if it was too late to rescind, to bring it to an end. Furthermore, on the facts of the present case, the plaintiffs are, in my judgment, vicariously liable to the defendants for the bribery by Mr. Johannesen of the defendants' servant, Mr. Magelssen. For it is plain that, once the plaintiffs had been incorporated, Mr. Johannesen continued to act as agent in the transaction vis-ˆ-vis Mr. Magelssen, acting as agent for the plaintiffs in exactly the same way as he had acted as agent for the joint venturers; in particular, it was through him that the signature of the three year charter was arranged and took place in World Marine's offices in Copenhagen, which must have been the time when the three year charter as between the plaintiffs and the defendants was actually concluded (if it ever came into existence). The offer by Mr. Johannesen to Mr. Magelssen of a piece of the ship must be regarded as a continuing offer, which continued in existence until Mr. Magelssen actually signed the charter with the plaintiffs on behalf of the defendants. In these circumstances, it appears to me that the bribe must be regarded not only as having been initially made by Mr. Johannesen to Mr. Magelssen in the course of his employment as agent for the joint venture, but also to have been maintained by him in the course of his employment as agent for the </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL746"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>746 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Robert Goff L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>plaintiffs after their incorporation. It follows, in my judgment, that it is of no materiality in the present case that the plaintiffs were not in existence when the negotiations for the three year charter were concluded in late May 1980. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>For these reasons I am satisfied that (1) if, contrary to my view, the defendants were bound by the three year charter with the plaintiffs, they were justified, by reason of the bribe given to their servant, in bringing the contract to an end when they did; and (2) if, contrary to my view, the defendants were vicariously liable to the plaintiffs in damages for the deceit of their servant, Mr. Magelssen, nevertheless the plaintiffs were liable to the defendants in damages for the bribe of their agent, Mr. Johannesen, to Mr. Magelssen, and the defendants are entitled to set off such damages against the plaintiffs' claim for damages for deceit. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>It is unnecessary for me therefore to deal with Mr. Pollock's alternative submission that, even if Mr. Johannesen was a stranger to the transaction, nevertheless the defendants became entitled, on discovery of his bribery of Mr. Magelssen, to bring the contract to an end, and I express no opinion upon it, though I have already indicated that it raises a point of law on which I wish to reserve my opinion. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I would allow the appeal. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>DUNN L.J. Three questions appear to arise for decision in this appeal: (1) Was Mr. Magelssen acting within the scope of his ostensible authority in concluding the three year charterparty, so that the defendants are bound by its terms? (2) Are the defendants vicariously liable for damages in deceit to the plaintiffs for the fraudulent misrepresentation of Mr. Magelssen that he was authorised to conclude the three year charterparty? (3) Did the offer by Mr. Johannesen to Mr. Magelssen of "a piece of the ship" constitute a bribe for the consequences of which the plaintiffs are liable? </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The judge answered question (1) in the affirmative and questions (2) and (3) in the negative. I approach the three questions, in the first instance, on the basis of the judge's principal findings of fact, which may be summarised as follows. (1) Some person in the defendants, senior to Mr. Magelssen but not a member of the board of directors, knew and approved of the three year charterparty in May 1980. (2) Mr. Johannesen offered Mr. Magelssen "a piece of the ship" in May 1980, and in December 1980 Mr. Jensen learnt for the first time that Mr. Magelssen had a third share in Rugas, which had a 49 per cent. share in the plaintiffs. (3) In May 1980 Mr. Johannesen believed that Mr. Magelssen was authorised to conclude the three year charterparty, because Mr. Magelssen told him so. (4) In May 1980 Mr. Jensen gave Mr. Johannesen authority to conclude a contract for the purchase of the vessel for up to $5,750,000, linked to a three year charterparty back to the defendants at a minimum hire rate of $350,000 per month. (5) Mr. Jensen and Mr. Dannesb¿e acted throughout with complete honesty and propriety. They were the victims and not the perpetrators of fraud. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><I>Ostensible authority</I></FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>It was the evidence of Mr. Jensen, Mr. Dannesb¿e and Mr. Johannesen that they did not believe that Mr. Magelssen had general </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL747"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>747 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Dunn L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>authority to conclude a three year charterparty without the authority of the board of the defendants, and the judge so found. But he went on to find that Mr. Jensen and Mr. Dannesb¿e both believed Mr. Johannesen when he told them that Mr. Magelssen had said that he had obtained authority to conclude the charterparty in question, and that by reason of his position as a vice-president and chartering manager of the defendants he was authorised to notify the approval of the board to chartering transactions. The judge relied on the fact that on two previous occasions either Mr. Magelssen or his subordinate had been entrusted with the task of informing Mr. Johannesen that board approval had been obtained. Accordingly the judge held that Mr. Magelssen had specific ostensible authority to conclude the three year charterparty. The two transactions on which the judge relied were a two month charterparty with an option to purchase, and a 30 month charterparty. Neither Mr. Jensen nor Mr. Dannesb¿e knew of either of these transactions, and in any event both of them were very different from the transaction in question. That involved not only a three year charterparty, but the inclusion of terms that the rate of hire was to be a minimum $350,000 per month, that the plaintiffs were to have an option declarable latest 10 January 1981 to cancel the charterparty and that the existence of the charterparty was to be kept secret from the chartering and operations departments of the defendants. The judge found that these terms were "most unusual." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Although neither Mr. Jensen nor Mr. Dannesb¿e had experience of the gas market, and may not have appreciated how unusual the terms were, the question is whether the defendants could be said to have held out Mr. Magelssen as having authority to conclude such a transaction so that the defendants are estopped from denying his authority. As Pearson L.J. said in <A NAME="L159"></A><I>Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd.</I></A> [1964] 2 Q.B. 480, 498: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"The expressions 'ostensible authority' and 'holding out' are somewhat vague. The basis of them, when the situation is analysed, is an estoppel by representation. The agent professes to act on behalf of the company, and he thereby impliedly represents and warrants that he has authority from the company to do so: <A NAME="L160"></A><I>Firbank's Executors v. Humphreys</I></A> (1886) 8 Q.B.D. 54, 62. We are concerned in this case only with the representation, and not with the warranty which in some other case might give to the other contracting party a right of action for damages for breach of warranty. In this case the company has known of and acquiesced in the agent professing to act on its behalf, and thereby impliedly representing that he has the company's authority to do so. The company is considered to have made the representation, or caused it to be made, or at any rate to be responsible for it. Accordingly, as against the other contracting party, who has altered his position in reliance on the representation, the company is estopped from denying the truth of the representation." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>A distinction is made in the cases between a representation deriving from the position of a servant or agent in the organisation of the master </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL748"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>748 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Dunn L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>or principal giving rise to a general authority to conclude a particular class of transactions, and a representation that the servant or agent is authorised to conclude a specific transaction giving rise to a limited authority. Examples of the latter are <A NAME="L161"></A><I>Russo-Chinese Bank v. Li Yau Sam</I></A> [1910] A.C. 174; <A NAME="L162"></A><I>Slingsby v. District Bank Ltd.</I></A> [1932] 1 K.B. 544 and <A NAME="L163"></A><I>British Bank of the Middle East v. Sun Life Assurance Co. of Canada (U.K) Ltd.</I></A> [1983] 2 Lloyd's Rep. 9. In <A NAME="L164"></A><I>Russo-Chinese Bank v. Li Yau Sam</I></A> Lord Atkinson said, at p. 184: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"It is undoubted that a person who deals with an agent, whose authority he knows to be limited, as the plaintiff knew in this case, does so at his peril, in this sense, that should the agent be found to have exceeded his authority his principal cannot be made responsible. While the several authorities cited by Mr. Scrutton, from <A NAME="L165"></A><I>Grant v. Norway,</I></A> 10 C.B. 665, down to <A NAME="L166"></A><I>Ruben v. Great Fingall Consolidated</I></A> [1906] A.C. 439, establish, in their Lordships' opinion, the proposition that, in order that the principle of 'holding out' should in any given case of agency apply, the act done by the agent, and relied upon to bind the principal, must be an act of that particular class of acts which the agent is held out as having a general authority on behalf of his principal to do; and, of course, the party prejudiced must have believed in the existence of that general authority and been thereby misled. In other words, if the agent be held out as having only a limited authority to do on behalf of his principal acts of a particular class, then the principal is not bound by an act done outside that authority, even though it be an act of that particular class, because, the authority being thus represented to be limited, the party prejudiced has notice, and should ascertain whether or not the act is authorised." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The fact that Mr. Magelssen had on two previous occasions been authorised to communicate the approval of the board to particular transactions does not in my judgment warrant the conclusion that the defendants held him out to communicate the approval of the board to this most unusual transaction. Both Mr. Jensen and Mr. Dannesb¿e knew that Mr. Magelssen's authority was limited, and the words of Lord Atkinson show that the defendants will not be bound if in fact Mr. Magelssen exceeded his authority, unless there was a holding out by the defendants that Mr. Magelssen had some increased authority to communicate board decisions beyond his limited authority: see also <A NAME="L167"></A><I>Slingsby v. District Bank Ltd.</I></A> [1932] 1 K.B. 544, 566, <I>per</I> Romer L.J. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>There was no evidence that Mr. Jensen or Mr. Dannesb¿e supposed that Mr. Magelssen had general authority to communicate decisions of the board of the defendant. Such authority would involve a representation by the defendants that, by reason of his position as a vice-president and chartering manager, and because he and his subordinate had on two previous occasions been authorised to communicate decisions of the board, a contracting party could rely on any representation made by Mr. Magelssen as to any chartering transaction in respect of which he alleged the board had given its approval, in other words, that the contracting party could rely on his word. It is perhaps not surprising that no such </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL749"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>749 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Dunn L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>representation was pleaded, or that Mr. Alexander had difficulty in formulating the precise terms of such a representation. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In the absence of such a representation the plaintiffs can rely only on the representation by Mr. Magelssen himself to Mr. Johannesen, "As I thought I got it," meaning the authority of the board to conclude the three year charterparty. In <A NAME="L168"></A><I>Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd.</I></A> [1964] 2 Q.B. 480, 505, Diplock L.J. said: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"It follows that where the agent upon whose 'apparent' authority the contractor relies has no 'actual' authority from the corporation to enter into a particular kind of contract with the contractor on behalf of the corporation, the contractor cannot rely upon the agent's own representation as to his actual authority. He can rely only upon a representation by a person or persons who have actual authority to manage or conduct that part of the business of the corporation to which the contract relates." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L169"></A><I>Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd.</I></A> was approved by the House of Lords in <A NAME="L170"></A><I>British Bank of the Middle East v. Sun Life Assurance Co. of Canada (U.K.) Ltd.</I></A> [1983] 2 Lloyd's Rep. 9 in which Lord Brandon of Oakbrook emphasised, at p. 17, that a holding out by a servant as having authority himself did not bind the master unless the master had authorised the servant either expressly or impliedly so to hold himself out. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In my judgment this was a case of Mr. Magelssen, without the knowledge or permission of the defendants, holding himself out as having authority to communicate to the plaintiffs that the board of the defendants had approved a transaction which they had not approved, and which both Mr. Jensen and Mr. Dannesb¿e knew required their approval. There was no representation express or implied by the defendants that Mr. Magelssen had authority either to conclude the transaction or to communicate the approval of the board of the plaintiffs. In those circumstances there was no estoppel and no ostensible authority whereby the defendants were bound by the three year charterparty. It would indeed be strange if a servant who had no ostensible authority to conclude a transaction were to be held to have ostensible authority to communicate that that very transaction had been approved by his master. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><I>Deceit</I></FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>If Mr. Magelssen did not have ostensible authority to conclude the three year charterparty so as to bind the defendants, the next question for decision is whether the defendants are vicariously liable in damages for deceit by the admitted misrepresentation by Mr. Magelssen that he was authorised to conclude the charterparty. It matters not whether, as the judge held, the misrepresentation was made to Mr. Johannesen and transmitted to Mr. Jensen and Mr. Dannesb¿e or whether as the defendants contended the misrepresentation was made to Mr. Jensen and Mr. Dannesb¿e as the result of a conspiracy between Mr. Magelssen and Mr. Johannesen, or whether, as the plaintiffs contended in the alternative, it is to be implied from Mr. Magelssen's action in signing the </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL750"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>750 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Dunn L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>charterparty on 19 June 1980. In any event the judge found that Mr. Jensen and Mr. Dannesb¿e relied upon the representation, and that finding has not been challenged. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The case on deceit was argued below on the question whether the phrase "acting in the course of employment" meant the same as "acting within the scope of authority," and the judge held that, as it was not within the scope of Mr. Magelssen's authority to conclude a three year charterparty, he was not acting in the course of his employment when he signed it, and accordingly the defendants were not vicariously liable in deceit. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The case for the plaintiffs was put rather differently in this court. It was said that Mr. Magelssen had actual authority to conclude the contract for the sale of the vessel, and that the fraudulent misrepresentation that he had authority to conclude the three year charterparty was made in order to induce the sale which was for the benefit of the defendants. Accordingly it was said that Mr. Magelssen was acting in the course of his employment in making the representation and in signing the charterparty. Mr. Alexander boldly submitted that any fraudulent misrepresentation by a servant or agent which induced a contract which the servant or agent had actual authority to conclude was to be regarded as having been made in the course of the employment of the servant or agent, even if the representation was outside the scope of his ostensible authority. He relied strongly on the decision of the High Court of Australia in <A NAME="L171"></A><I>Bugge v. Brown,</I></A> 26 C.L.R. 110, and in particular on the judgment of Isaacs J., at p. 116. He submitted that unless the act of a servant could be said to be the unauthorised act of a stranger, then the master was vicariously liable. He submitted that the courts have put a liberal interpretation on the phrase "in the course of his employment" following the principle expounded by Holt C.J. in <A NAME="L172"></A><I>Hern v. Nichols,</I></A> 1 Salk. 289: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"for seeing somebody must be a loser by this deceit, it is more reason that he that employs and puts a trust and confidence in the deceiver should be a loser, than a stranger:..." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>He submitted that there was no difference between vicarious liability for fraud or deceit and any other tort: see <A NAME="L173"></A><I>United Africa Co. Ltd. v. Saka Owoade</I></A> [1955] A.C. 130, 143, <I>per</I> Lord Oaksey, and he relied on the statement by Denning L.J. in <A NAME="L174"></A><I>Navarro v. Moregrand Ltd.</I></A> [1951] 2 T.L.R. 674, 680: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"The presence of actual or ostensible authority is decisive to show that [the servant's] conduct is within the course of his employment, but the absence of it is not decisive the other way." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Mr. Alexander submitted that there was no contradiction in holding that the servant might be acting beyond the scope of his authority so that his master was not bound by the contract, but within the course of his employment so that the master was liable in damages for deceit. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I would accept that the test to be applied when considering whether the master is vicariously liable for the torts of his servant is that which has appeared in many editions of <I>Winfield and Jolowicz on Tort,</I> 12th </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL751"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>751 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Dunn L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>ed. (1984), p. 579, and has often been accepted by the courts, namely: A wrongful act will fall within the course of the employment if the act in question is authorised by the employer, or is an act which is done within the scope of the employee's duties but in a wrongful and unauthorised manner; and in the latter case the act must be so connected with the acts which the employer has authorised, that it is to be regarded as a mode, albeit an improper mode, of doing an authorised act. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In most torts this test involves no holding out of the servant. It is a question of degree in each case whether the acts of the servant constituted an improper mode of doing an authorised act, or whether the servant was "on a frolic of his own," and there are numerous decisions of the courts both ways which indicate the difficulty of applying the test. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>But the tort of deceit, involving as it does a fraudulent misrepresentation, does involve a holding out and at least an implied representation that the servant is acting within the scope of his authority. That is the whole basis of the tort, and it necessarily involves a consideration not only whether the servant was acting within his actual authority, but also whether in holding himself out he was acting within the scope of his ostensible authority. The scope of the ostensible authority defines the course of the employment. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I believe this view to be supported by the authorities. It is supported by the speeches of Lord Macnaghten, at p. 736, Lord Atkinson who agreed with Lord Macnaghten, and Lord Shaw of Dunfermline, at p. 742, in <A NAME="L175"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. 716; by the judgments of Scrutton L.J., at p. 560, Greer L.J., at p. 563, and Romer L.J., at p. 566, in <A NAME="L176"></A><I>Slingsby v. District Bank Ltd.</I></A> [1932] 1 K.B. 544; and by the judgments of Sir Wilfred Greene M.R., at pp. 252, 256, and MacKinnon L.J. and Finlay L.J., at p. 258, in <A NAME="L177"></A><I>Uxbridge Permanent Benefit Building Society v. Pickard</I></A> [1939] 2 K.B. 248. Coming to more recent times Lord Wilberforce, giving the joint opinion of the House in <A NAME="L178"></A><I>Heatons Transport (St. Helens) Ltd. v. Transport and General Workers' Union</I></A> [1973] A.C. 15, 99, said: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"No new development is involved in the law relating to the responsibility of a master or principal for the act of a servant or agent. In each case the test to be applied is the same: was the servant or agent acting on behalf of, and within the scope of the authority conferred by, the master or principal?" </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Finally in <A NAME="L179"></A><I>Kooragang Investment Pty. Ltd. v. Richardson & Wrench Ltd.</I></A> [1982] A.C. 462, Lord Wilberforce giving the advice of the Board held that the negligent valuer was not acting in the course of his employment because he was not authorised by his employer to carry out the valuation in question, although valuations were a class of acts which he could perform on their behalf. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>As Lord Lindley said in <A NAME="L180"></A><I>Farquharson Brothers & Co. v. C. King & Co.</I></A> [1902] A.C. 325, 342: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"It is, of course, true that by employing Capon and trusting him as they did the plaintiffs enabled him to transfer the timber to anyone; in other words, the plaintiffs in one sense enabled him to cheat both </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL752"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>752 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Dunn L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>themselves and others. In that sense, everyone who has a servant enables him to steal whatever is within his reach. But if the word 'enable' is used in this wide sense, it is clearly untrue to say, as Ashhurst J. said in <A NAME="L181"></A><I>Lickbarrow v. Mason,</I></A> 2 Durn. & E. 63, 'that wherever one or two innocent persons might suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it.' Such a doctrine is far too wide; and the cases referred to in the argument and commented on by Vaughan Williams L.J. show that it cannot be relied upon without considerable qualification." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The cases I have cited show the qualifications upon the principle which have been made by the courts. The remarks of Denning L.J. in <A NAME="L182"></A><I>Navarro v. Moregrand Ltd.</I></A> [1951] 2 T.L.R. 674, 680, were obiter, as the case turned upon the construction of a section of the Rent Acts upon which he and Somervell L.J. disagreed, Somervell L.J. holding that the question was one of ostensible authority. It may be that in theory a person can act in the course of his employment but beyond the scope of his authority. But <A NAME="L183"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. 716; <A NAME="L184"></A><I>Slingsby v. District Bank Ltd.</I></A> [1932] 1 K.B. 544 and <A NAME="L185"></A><I>Uxbridge Permanent Benefit Building Society v. Pickard</I></A> [1939] 2 K.B. 248 all show that in cases of fraud the parameters of the course of the employment are set by the scope of the ostensible authority. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Mr. Magelssen had no ostensible authority to conclude the most unusual transaction involved in the three year charterparty, or to represent that he had received such authority, and in those circumstances I agree with the judge that he was not acting in the course of his employment, and the defendants are not liable for his fraud. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Even if that conclusion be wrong, the defendants will still not be liable unless they would have also been liable in Danish law, since the contract was concluded in Denmark. Despite Mr. Mawrey's able argument to the contrary, I am of the opinion, on established principles of conflict of laws, that it is virtually unarguable that the contract was not concluded in Denmark. Nor can I find any fault in the judge's conclusion, having seen and heard the experts, that he accepted the evidence of Professor Gomard that the defendants would not be vicariously liable in Danish law for the fraud of Mr. Magelssen. The principles upon which this court will interfere with findings of a trial judge upon conflicting expert evidence do not differ materially from those applicable to other witnesses: see <A NAME="L186"></A><I>Joyce v. Yeomans</I></A> [1981] 1 W.L.R. 549. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Mr. Mawrey raised, however, a point of general interest with which I should deal. He submitted that for the purpose of the "double actionability test" as laid down in <A NAME="L187"></A><I>Boys v. Chaplin</I></A> [1971] A.C. 356 the question was not which party would be likely to succeed in the foreign court, but rather whether the conduct complained of was actionable in the foreign court, in the sense that it was not demurrable. He submitted that since vicarious liability for a wrong constituted on the evidence of both experts a cause of action in Denmark, then the vicarious liability of Mr. Magelssen was actionable in that sense. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL753"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>753 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Dunn L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>With respect to that argument it seems to me to be inconsistent with the speeches in <A NAME="L188"></A><I>Boys v. Chaplin.</I></A> Lord Wilberforce said, at p. 389: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"I would, therefore, restate the basic rule of English law with regard to foreign torts as requiring actionability as a tort according to English law, subject to the condition that civil liability in respect of the relevant claim exists as between the actual parties under the law of the foreign country where the act was done." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>This statement emphasises that it is the relevant claim as between the actual parties which must be looked at, and not whether such a claim could in theory be actionable. This was the basis upon which the case was argued below, and it was not without interest that the question which Mr. Strojer, the plaintiffs' expert, was asked, on assumed facts and in accordance with Danish law, was: "Would the defendants be vicariously liable in tort for the loss caused to the plaintiffs by the fraud of Mr. Magelssen?" </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><I>Bribery</I></FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The final question which falls for decision in this appeal is whether the offer by Mr. Johannesen to Mr. Magelssen of "a piece of the ship" constituted a bribe for the consequences of which the plaintiffs are liable. The case was argued before the judge on the basis that, in failing to disclose the offer to the defendants when he learned about it in December 1980, Mr. Jensen ratified and adopted the bribe, thus rendering the plaintiffs liable to equitable remedies as in <A NAME="L189"></A><I>Panama and South Pacific Telegraph Co. v. India Rubber, Gutta Percha, and Telegraph Works Co.,</I></A> L.R. 10 Ch. App. 515. The judge rejected that argument, finding that Mr. Jensen had reasonably believed that Mr. Magelssen had disclosed the existence of the offer to the defendants, and accordingly was not guilty of any fraud, actual or constructive, which would give rise to equitable remedies. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Although that argument was repeated in this court, more reliance was placed by Mr. Pollock on a decision of the Supreme Court of Canada, <A NAME="L190"></A><I>Barry v. Stoney Point Canning Co.,</I></A> 55 S.C.R. 51, which was not cited below. In that case the majority held that the payment by brokers to the buyer's agent, who had signed contracts for the sale of goods on behalf of the buyer, of one half the broker's commission, constituted a bribe so that the contracts were void even though the sellers did not know of the offer. Idington J. said, at p. 65: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"The illicit commission must be most rigidly suppressed if honest men who will not stoop to its use are to be given a fair chance for their commercial life in Canada. The proof of knowledge on the part of anyone whose agent has yielded rests with him so asserting. An honest business man giving such gratuity will always put beyond peradventure his ability to prove that he had given notice to the principal in the plainest terms. If such clear proof be required there will not be many gratuities of substantial amount going into the hands of the agent, I imagine. It seems bordering on childishness to ask in this age for further proof of the motive than the promise of such substantial payment, on the successful accomplishment of its </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL754"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>754 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Dunn L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>purpose, as implied in above letter. Nor can I entertain the pro forma submission made that as it was not proven that [the sellers] knew of this splitting of commission it should succeed, although the legal existence of the contract repudiated therefor is gone." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Duff J. agreed with Idington J. Anglin J. said, at p. 73: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"No doubt actual fraud must be shown when no fiduciary relationship exists (<A NAME="L191"></A><I>Lands Allotment Co. v. Broad</I></A> (1895) 2 Manson 470: see, however, the observations on this decision of Collins L.J. in <A NAME="L192"></A><I>Grant v. Gold Exploration and Development Syndicate Ltd.</I></A> [1900] 1 Q.B. 233, 249-250). But given that relationship between one principal and the recipient of a secret commission and knowledge of it by the other principal (or his agent), who makes the agreement to pay such commission, it is quite as unnecessary (and it would seem even more clearly immaterial) to prove an actual fraudulent or dishonest motive on the part of the latter as it is to prove that the former was in fact induced by the promise of the commission to betray his trust. The fundamental principle in all these cases is that one contracting party shall not be allowed to put the agent of the other in a position which gives him an interest against his duty. The result to the agent's principal is the same whatever the motive which induced the other principal to promise the commission. The former is deprived of the services of an agent free from the bias of an influence conflicting with his duty, for which he had contracted and to which he was entitled." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>And, at p. 80: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"Finally the fact that the agreement to split the commission was not made by the plaintiffs [the sellers] themselves, but by their agent Millman, is not an answer to the defendant's assertion of his right to repudiate. What Millman did was done while purporting to act within the scope of his employment, and in the course of the service for which he was engaged by the plaintiffs; and it is immaterial that it may have been in his own interest as well as in, or even to the exclusion of, that of the plaintiffs: <A NAME="L193"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. 716. The defendants' agent was given the disqualifying adverse interest which made him incapable of binding his principal." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>It was submitted that this decision is inconsistent with the observations of Denning L.J. in <A NAME="L194"></A><I>Navarro v. Moregrand Ltd.</I></A> [1951] 2 T.L.R. 674, 681: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"if, in the present case, the agent had demanded, not a premium, but a bribe for himself, the principal would not be liable. When an agent demands a premium as such, he is doing the landlord's business - no doubt doing it wrongfully; it may be, doing it for his own benefit - but, nevertheless, he is doing the landlord's business and the landlord is civilly responsible for it. But if an agent demands the bribe for himself, known to be a bribe for him to put in his own pocket, he is doing his own business. He is, so to speak, on a frolic of his own." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Denning L.J. in that passage was considering the position of the agent who had demanded the bribe. So far as the agent offering the </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL755"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>755 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Dunn L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>bribe is concerned his position is no different in principle from that of any other agent who commits a fraud. The question is whether the fraud, in the instant case the offer of "a piece of the ship," is within the scope of the authority of the agent. I would therefore prefer the judgment of the majority in <A NAME="L195"></A><I>Barry v. Stoney Point Canning Co.,</I></A> 55 S.C.R. 51, to the observation of Denning L.J. in so far as it suggests the contrary, and would adopt their approach. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The judge in his judgment treated Mr. Johannesen for the purpose of the offer of a bribe as a stranger to the transaction. With respect I cannot accept that analysis. The judge held that, although Mr. Johannesen during the negotiations was an independent broker acting neither on behalf of the plaintiffs nor the defendants, he was before the contract was concluded given actual authority by the plaintiffs to sell the vessel for up to $5.75m. Thereby he became the agent of the plaintiffs for the purpose of effecting the sale, on condition that the three year charterparty was agreed on the terms suggested by the plaintiffs. In my view It matters not whether the offer of "a piece of the ship" was made before or after he received that authority. It was a continuing offer made within the scope of his actual authority. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In any event I find it difficult to accept that Mr. Johannesen was at any stage a stranger to the transaction. He had been offered by Mr. Jensen an interest in the transaction, which was to be a joint venture between Mr. Johannesen, Mr. Jensen and Mr. Dannesb¿e. The plaintiffs were to be formed as a vehicle to effect the purchase and subsequent operation of the vessel for the benefit of the three of them, and Mr. Johannesen was to form a company with a 49 per cent. interest in the plaintiffs. In those circumstances it seems to me that Mr. Johannesen was negotiating throughout on his own behalf and on behalf of his joint venturers, Mr. Jensen and Mr. Dannesb¿e, who for the purpose of the deal might be regarded as his partners. But whichever way the case is put it seems to me indistinguishable on its facts from <A NAME="L196"></A><I>Barry v. Stoney Point Canning Co.,</I></A> 55 S.C.R. 51, and on that ground I would hold that the plaintiffs are vicariously liable for the offer of a bribe by its agent to Mr. Magelssen, even though Mr. Jensen and Mr. Dannesb¿e did not know of it. I find it unnecessary to consider whether by failing to disclose the offer to the defendants in December 1980 Mr. Jensen expressly adopted the bribe. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The existence of the bribe only becomes relevant in relation to the contract if, contrary to my view, Mr. Magelssen had ostensible authority to conclude the three year charterparty, because if he did not have authority the defendants are not bound by the contract in any event. Assuming that Mr. Magelssen did have authority, then the three year charterparty would be void by reason of the bribe. But if Mr. Magelssen did not have ostensible authority to conclude the three year charterparty, and contrary to my view the defendants were vicariously liable for the deceit of Mr. Magelssen, then I conceive that the defendants would be entitled to recover from the plaintiffs as damages for tort the actual loss which they have sustained as a result of entering into the three year charterparty: see <A NAME="L197"></A><I>Mahesan s/o Thambiah v. Malaysia Government Officers' Co-operative Housing Society Ltd.</I></A> [1979] A.C. 374. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL756"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>756 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Dunn L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I would accordingly allow the appeal by reversing the judge's findings that Mr. Magelssen had ostensible authority to conclude the three year charterparty, and if it should be relevant, that there was no bribe for which the plaintiffs are liable. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><I>The facts</I></FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Both parties appealed against three of the judge's principal findings of fact which I summarised at the outset of this judgment. The defendants challenged the findings that some person in the defendants knew and approved of the three year charterparty in May 1980, and that Mr. Johannesen believed that Mr. Magelssen was authorised to conclude the three year charterparty. The plaintiffs challenged the finding that Mr. Johannesen offered Mr. Magelssen "a piece of the ship" as early as May 1980. Both parties, however, accepted that the findings of fact for which they each contended, even if accepted, would have no effect on the issues of law with which the court was primarily concerned. On one view, therefore, the challenges to the facts were irrelevant, and the court could have taken the robust course of refusing to hear argument upon them. On the other hand the findings involved at least by implication a finding of dishonesty against Mr. Bronzini, and findings that, although Mr. Magelssen had deceived not only his own employers but also the plaintiffs (which was admitted), Mr. Johannesen had acted honestly with no intention of deceiving his employers or the defendants. If it was shown that those findings were wrong, it could not be just that Mr. Bronzini should have his reputation impaired by a finding of dishonesty or that Mr. Johannesen should stand acquitted of deceit if in fact, as the defendants alleged, he was at least a conspirator with Mr. Magelssen to deceive not only the defendants but also the plaintiffs, if not the originator of the whole fraud. Accordingly we allowed the issues on the facts to be fully argued. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The judge made his essential findings of fact principally on the basis of the view that he formed of the credibility as witnesses of Mr. Magelssen and Mr. Bronzini on the one hand, and Mr. Johannesen on the other. He came to the conclusion that Mr. Magelssen and Mr. Johannesen were both liars, although he preferred Mr. Johannesen's evidence on the crucial issue as to his belief in Mr. Magelssen's authority to conclude the charterparty to that of Mr. Magelssen, while finding that the inherent probabilities were so strong that he accepted that Mr. Johannesen had offered Mr. Magelssen a "piece of the ship" in May 1980. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Much argument was directed to the circumstances in which this court could and should reverse the findings of fact of a trial judge who had based himself upon his view of the credibility of witnesses which this court had not had the advantage of seeing and hearing give evidence. The principles are well established in authoritative cases including <A NAME="L198"></A><I>Montgomerie & Co. Ltd. v. Wallace-James</I></A> [1904] A.C. 73, <A NAME="L199"></A><I>Powell v. Streatham Manor Nursing Home</I></A> [1935] A.C. 243, <A NAME="L200"></A><I>Watt (or Thomas) v. Thomas</I></A> [1947] A.C. 484, especially <I>per</I> Lord Thankerton, at pp. 487-488, and <A NAME="L201"></A><I>Benmax v. Austin Motor Co. Ltd.</I></A> [1955] A.C. 370. I have found particularly helpful the statement made by Lord Macmillan in </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL757"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>757 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Dunn L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L202"></A><I>Powell v. Streatham Manor Nursing Home,</I></A> when he said [1935] A.C. 243, 256: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"Where, however, as in the present instance, the question is one of credibility, where either story told in the witness box may be true, where the probabilities and possibilities are evenly balanced and where the personal motives and interests of the parties cannot but affect their testimony, this House has always been reluctant to differ from the judge who has seen and heard the witnesses, unless it can be clearly shown that he has fallen into error." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I respectfully agree with Browne L.J. when he said in <A NAME="L203"></A><I>In re F. (A Minor) (Wardship: Appeal)</I></A> [1976] Fam. 238, 259, that in his experience it was difficult to decide from seeing and hearing witnesses whether or not they are speaking the truth at the moment. That has been my own experience as a judge of first instance. And especially if both principal witnesses show themselves to be unreliable, it is safer for a judge, before forming a view as to the truth of a particular fact, to look carefully at the probabilities as they emerge from the surrounding circumstances, and to consider the personal motives and interests of the witnesses. As Lord Wright said in <A NAME="L204"></A><I>Powell v. Streatham Manor Nursing Home</I></A> [1935] A.C. 243, 267-268: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"Yet even where the judge decides on conflicting evidence, it must not be forgotten that there may be cases in which his findings may be falsified, as for instance by some objective fact;..." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>and he referred in particular to some conclusive document or documents which constitute positive evidence refuting the oral evidence of the witnesses. [His Lordship then reviewed the evidence and held that the probabilities were so overwhelmingly against Mr. Bronzini having known or approved of the three year charterparty, that the judge's finding to the contrary could not stand. He also held that the judge fell into error in accepting that Mr. Johannesen did not conspire with Mr. Magelssen from the start to deceive both the defendants and the plaintiffs.] </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>STEPHENSON L.J. The plaintiffs bought the <I>Ocean Frost</I> from the defendants and chartered it back to the defendants. The deal was negotiated for them by a broker named Johannesen, with his friend the defendants' vice president (transportation) and chartering manager named Magelssen. The plaintiffs had a time charter for three years signed by Mr. Magelssen on the defendants' behalf, and assumed that when the defendants took delivery of the vessel they took delivery of her under that charterparty. But a year later the defendants said that they were acting under a 12 month charterparty and knew nothing of the three year charterparty. They repudiated Mr. Magelssen's signature and denied that he had signed on their behalf: he had authority to sell the vessel but not to conclude or sign the three year charterparty and they refused to carry out its terms or pay the hire outstanding under it. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Mr. Magelssen admitted that he had made and signed that charterparty without the knowledge or authority of the defendants, but he alleged that Mr. Johannesen knew that he had no such authority. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL758"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>758 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Stephenson L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The plaintiffs claimed that he had actual authority, or if not, ostensible authority, or if he had no authority, actual or ostensible, from the defendants, he was acting in the course of his employment by the defendants in falsely representing that he had their authority whereby the plaintiffs were induced to enter into the contract of sale and charter of the vessel to their detriment. The defendants have relied on successive versions given by Mr. Magelssen of what he agreed with Mr. Johannesen and by successive amendments have alleged that he was acting outside the scope of his authority or the course of his employment, was promised a bribe by Mr. Johannesen to the plaintiffs' knowledge and agreed with Mr. Johannesen that the charterparty was never intended to be binding. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Out of a mass of evidence emerged many conflicts of fact, which the judge had the difficult task of resolving and this court has heard discussed in the forefront of counsel for the defendants' argument. However those conflicts are resolved, the question of the defendants' responsibility for Mr. Magelssen's actions can be decided on facts which are not materially in contention. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>As so often, the case has changed its shape as it has progressed. The plaintiffs "went all out" to prove that Mr. Magelssen actually had the authority he claimed - and they failed. Their own witnesses admitted that for a contract of this kind he required specific authority from the defendants, that is to say, from some person or persons higher in the defendants' employment than he. They knew that he required it and believed that he had got it. He required specific authority because it was not within the general authority of persons employed in his position. The very reason for that requirement was his lack of any apparent or ostensible authority. The plaintiffs knew that his authority was limited to exclude this transaction and that the defendants were not representing to them that he had authority to conclude it nor holding him out as having authority to conclude it. This was therefore an unauthorised transaction not binding the defendants. So when actual authority fell to the ground ostensible authority fell with it. Many if not all the arguments addressed to us on ostensible authority by the plaintiffs' counsel ignored that fatal consequence of the accepted need for actual authority. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>This consequence the judge sought to avoid by ingeniously suggesting and holding that, though Mr. Magelssen had no ostensible authority to make this contract, he had ostensible authority to notify approval by the top management, whether he had that approval or not. This authority to communicate a decision in an agent who has no authority to take a decision is so paradoxical that it comes as no surprise that the defendants' counsel could find no support for it anywhere but in the judgments of four Canadian judges, two of them dissenting judgments <A NAME="L205"></A><A HREF="#FS216"><SUP>1</SUP></A>. The reason for its novelty is not hard to find. What is it but an agent's authority to represent or warrant that he has authority? And how does his principal hold him out as having authority to hold himself out as having it except </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR> <A NAME="FS216"></A><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:10pt'>1 <A NAME="L206"></A><I>Barry v. Stoney Point Canning Co.</I></A> 55 S.C.R. 51, <A NAME="L207"></A><I>Cypress Disposal Ltd v. Inland Kenworth Sales (Nanaimo) Ltd.</I></A> (1975) 54 D.L.R. (3d) 598, <A NAME="L208"></A><I>Jenson v. South Trail Mobile Ltd.</I></A> (1972) 28 D.L.R. (3d) 233 and <A NAME="L209"></A><I>Berryere v. Fireman's Fund Insurance Co.</I></A> (1965) 51 D.L.R. (2d) 603. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL759"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>759 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Stephenson L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>by the principal placing him in a position to make the contract, conduct which has been already decided not to constitute a holding out by the principal? And if that holding out of the agent as authorised to communicate the principal's decision can ever be derived from previous transactions concluded by the agent and accepted as binding by the principal, I agree that the few previous transactions in this case cannot amount to any such holding out of Mr. Magelssen by the defendants. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The judge recognised that if Mr. Magelssen had ostensible authority to communicate or notify approval of the charterparty, he had ostensible authority to conclude the charterparty, as indeed he said in his second judgment, which means that this warranty of authority was not broken, though it was untrue - another paradox. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The only authority for the judge's conclusion on Mr. Magelssen's ostensible authority is the decision of the majority of the Manitoba Court of Appeal in <A NAME="L210"></A><I>Berryere v. Fireman's Fund Insurance Co.</I></A> (1965) 51 D.L.R. (2d) 603. I prefer the dissenting judgment of Guy J.A. in that case. So, I think, did the majority of the Alberta Supreme Court's Appellate Division in <A NAME="L211"></A><I>Jensen v. South Trail Mobile Ltd.</I></A> (1972) 28 D.L.R. (3d) 233, where McDermid J.A., dissenting, followed <A NAME="L212"></A><I>Berryere's</I></A> case; and so also did the majority of the British Columbia Court of Appeal following <A NAME="L213"></A><I>Jensen's</I></A> case in <A NAME="L214"></A><I>Cypress Disposal Ltd. v. Inland Kenworth Sales (Nanaimo) Ltd.</I></A> (1975) 54 D.L.R. (3d) 598, where Seaton J.A., dissenting, followed <A NAME="L215"></A><I>Berryere's</I></A> case again and distinguished Jensen's case. Clement J.A., Allen J.A. concurring, disposed of Jensen's claim to bind the defendant company to a contract entered into by their representative Kozmeniuk in two sentences, 28 D.L.R. (3d) 233, 242: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"Kozmeniuk disclosed to Jensen the limitation on his authority to sell, and it was his duty to do so. I am unable to attribute to this circumstance a holding out by the company that Kozmeniuk was authorised to inform Jensen in effect that he, by his own signature, could bind the company." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Farris C.J.B.C., in a judgment in <A NAME="L216"></A><I>Cypress Disposal Ltd. v. Inland Kenworth Sales (Nanaimo) Ltd.,</I></A> with which McIntyre J.A. agreed, dealt even more curtly with the claim of Cypress Disposal Ltd. that the defendants were bound by a contract made by their salesman Nontell, 54 D.L.R. (3d) 598, 601: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"The only representation by the principal was that the salesman had no authority to contract. Any statements made by Nontell to the contrary cannot change that." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The judgment of the High Court of Australia given by Gibbs J. in <A NAME="L217"></A><I>Crabtree-Vickers Pty. Ltd. v. Australian Direct Mail Advertising & Addressing Co. Pty. Ltd.</I></A> (1975) 133 C.L.R. 72, 78, indicates that the actual representation of authority may be made by the agent on behalf of his principal: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"either by a previous course of dealing or by putting the agent in a position or by allowing him to act in a position from which it can be inferred that his actual representation of authority in himself is in fact correct." </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL760"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>760 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Stephenson L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>But the cases in which a principal's conduct estops him from denying that the agent's representation is in effect his own representation must be rare indeed, and this case is not one of them. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>If Mr. Magelssen had no ostensible authority to bind the defendants to this transaction, was he nevertheless acting in the course of his employment by them so as to make them vicariously liable for his fraudulent misrepresentation that he had their authority and for any loss suffered by the plaintiffs in acting upon his representation and entering into the transaction? Was the representation made in the course of his employment, though outside the scope of his authority? </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>One person employs another to do something for him. He may employ him as his servant to carry out certain duties generally; he may employ him as an agent, usually to carry out a particular task. It has become usual to describe the servant as <I>employed</I> by the master, the agent as <I>engaged</I> by the principal. The master or principal may be a corporation and therefore act only through servants or agents. The job or jobs which the master gives his servants to do, the job or jobs which a principal gives his agents to do, may be anything from driving a lorry to valuing a property, from building a house to negotiating or concluding a building contract. But in every case the responsibility of the master or principal to third parties for what his servant or agent has done depends primarily on what the master or principal has employed or authorised the servant or agent to do. When the servant or agent has done something wrong, something which injures a third party or gives a third party a cause of action in contract or in tort against him, the first question to be answered in determining whether the master or principal is responsible for the wrongful act is: What is the scope of the employment or authority given by the one to the other? </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>So far I cannot detect any difference of opinion in the numerous authorities cited to us. In <A NAME="L218"></A><I>Smith v. Martin and Kingston-upon-Hull Corporation</I></A> [1911] 2 K.B. 775, this court had to consider whether the defendants were responsible for the act of their servant, a teacher employed by them, in ordering the infant plaintiff to poke a fire and draw the damper. Fletcher Moulton L.J. spoke, at p. 782, indifferently of "the scope of the employment" and "the intended ambit of the teacher's authority"; Farwell L.J. referred, at p. 785, to the teacher's orders being "within the scope of the teacher's authority" and not "beyond the scope of her employment." In <A NAME="L219"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. 716, where the House of Lords held a firm of solicitors responsible for the fraud of their managing clerk, Lord Macnaghten said, at p. 736: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"the expressions 'acting within his authority', 'acting in the course of his employment', and the expression 'acting within the scope of his agency' (which Story uses) as applied to an agent, speaking broadly, mean one and the same thing." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>And Lord Shaw of Dunfermline said, at p. 742: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"the fraud was committed in the course of, and within the scope of, the duties with which the defendants had entrusted Sandles as their managing clerk." </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL761"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>761 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Stephenson L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In <A NAME="L220"></A><I>Heatons Transport (St. Helens) Ltd. v. Transport and General Workers' Union</I></A> [1973] A.C. 15, the House of Lords held that the defendants, through their shop stewards, had been guilty of an unfair industrial practice. The Court of Appeal had decided that the defendants were not responsible for the acts of their shop stewards and Lord Wilberforce delivering the joint opinion of their Lordships, said, at pp. 99-100: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"In the Court of Appeal Lord Denning M.R. and Roskill L.J. in considering the scope of the shop stewards'... authority placed considerable reliance on the fact that the shop stewards were agents rather than servants. But we think that is not an important factor in this case. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P STYLE='text-indent: 3%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"No new development is involved in the law relating to the responsibility of a master or principal for the act of a servant or agent. In each case the test to be applied is the same: was the servant or agent acting on behalf of, and within the scope of the authority conferred by, the master or principal?: <A NAME="L221"></A><I>Hewitt v. Bonvin</I></A> [1940] 1 K.B. 188 and <A NAME="L222"></A><I>Launchbury v. Morgans</I></A> [1973] A.C. 127. Usually a servant, as compared with an agent, has a wider authority because his employment is more permanent and he has a larger range of duties as he may have to exercise discretion in dealing with a series of situations as they arise. The agent in an ordinary case is engaged to perform a particular task on a particular occasion and has authority to do whatever is required for that purpose but has no general authority. That is the explanation of the reasoning in the case of the <A NAME="L223"></A><I>Wigan Election Petition</I></A> (1869) 21 L.T. 122 and in <A NAME="L224"></A><I>Lucas v. Mason</I></A> (1875) L.R. 10 Exch. 251. In the former case Martin B. was stating and applying, at p. 123, 'the ordinary rule with regard to principal and agent': that the principal 'is only responsible for that which he authorises the agent to do.' In the latter case Pollock B. said, at pp. 253-254: 'In the present case there was no relation of master and servant, or of principal and general agent, or agent for such cases as might occur in the absence of the principal, but a particular direction as to a particular matter... In the case of master and servant the character and duties attaching to the employment are known and defined beforehand, the servant who is to perform them is selected accordingly. In the present case no such relationship existed in the first instance, nor did it arise during the transaction.... There is no such pre-existing relationship as exists in the case of master and servant, and there is, we think, no ground for extending by implication an express authority limited in its terms.' Those two cases do not show that for the purpose of determining the responsibility of the master for acts of a servant and that of the principal for the acts of an agent different tests are to be applied. They only show that application of the same test may produce different results. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P STYLE='text-indent: 3%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"But there are cases in which an agent who is not a servant does have authority of considerable generality. He may be elected or appointed to some office or post for a substantial period and he may have to perform acts of several classes on behalf of the </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL762"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>762 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Stephenson L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>principal and he may have to exercise a discretion in dealing with a series of situations as they arise. The position of such an agent and the scope of his authority are very similar to those of a servant." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>So "the liability of employers for the acts of employees (masters for servants, principals for agents)," as Lord Wilberforce put it in giving the advice of the Judicial Committee in <A NAME="L225"></A><I>Kooragang Investments Pty. Ltd. v. Richardson & Wrench Ltd.</I></A> [1982] A.C. 462, 471, begins with the scope of their "employment"; and that depends on the contract between the particular master and servant, principal and agent. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>But it does not stop there. The duties of the servant or agent will bring him into contact with third parties either by proximity or contract, and the duties of the servant or agent will be seen by third parties as the duties of the position into which the master or principal has put him. The master or principal may limit those duties by instructions contractually binding on his servant or agent: the bus driver may be instructed not to obstruct other buses, the vice president (transportation) and chartering manager not to conclude long term charterparties. But the master will be liable for damage caused by the driver of the bus in disobeying those instructions or for any contracts made by the vice president which are within the scope of the ordinary duties of a man in that position. The position of the servant or agent will give him apparent or ostensible authority to do what persons in such a position may be expected to do and will carry with it implied authority to do what is reasonably incidental to, and necessary for, carrying out the duties of his position and doing what he is expressly authorised to do. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>It might be thought with those factors in mind that there would be no material difference between what a servant does in the course of his employment and what a servant or agent does within the scope of his authority. If a servant or agent is employed to act unlawfully or fraudulently, the master or principal is obviously liable; but it is to be hoped that it is still true that "in mercantile transactions, principals do not authorise their agents to act wrongfully," as Sir Montague Smith said over a hundred years ago in <A NAME="L226"></A><I>Mackay v. Commercial Bank of New Brunswick</I></A> (1874) L.R. 5 P.C. 394, 411, and that most servants and agents are employed to act honestly and carefully. Yet their innocent employers have long been held liable at common law for their doing dishonestly or negligently what they were employed to do honestly and carefully. The tendency towards more liberal protection of innocent third parties against the wrongful acts of employees, to which Lord Wilberforce referred in <A NAME="L227"></A><I>Kooragang's</I></A> case [1982] A.C. 462, 471, perhaps began with Holt C.J.'s often quoted statement in <A NAME="L228"></A><I>Hern v. Nichols,</I></A> 1 Salk. 289, and was propelled forward by the equally well known dictum of Ashhurst J. in <A NAME="L229"></A><I>Lickbarrow v. Mason</I></A> (1787) 2 Durn. & E. 63, 70: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"that, wherever one of two innocent persons must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it" </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>But what those wrongful acts of employees are is the subject of many authorities not always easy to reconcile and of different tests none of which has escaped criticism. The issue which seems to have led to a </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL763"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>763 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Stephenson L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>difference of opinion is whether a tort may be committed outside the scope of the employee's authority yet in the course of his employment. If that cannot be, then the defendants cannot be made liable for the deceit of an employee who, like Mr. Magelssen, had no authority, actual or ostensible. If their liability is not limited by the extent or scope of Mr. Magelssen's authority, they may be liable for any damage caused to the plaintiffs by his fraud, though not liable to perform the contract which it induced or to pay the plaintiffs damages for breach of the contract. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The test of vicarious liability for wrongful acts which has found most favour is that now appearing in <I>Salmond & Heuston on Torts,</I> 18th ed. (1981), p. 437, para. 176: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"A master is not responsible for a wrongful act done by his servant unless it is done in the course of his employment. It is deemed to be so done if it is either (1) a wrongful act authorised by the master, or (2) a wrongful and unauthorised mode of doing some act authorised by the master. It is clear that the master is responsible for acts actually authorised by him: for liability would exist in this case, even if the relation between the parties was merely one of agency, and not one of service at all. But a master, as opposed to the employer of an independent contractor, is liable even for acts which he has not authorised, provided they are so connected with acts which he has authorised that they may rightly be regarded as modes-although improper modes - of doing them. In other words, a master is responsible not merely for what he authorises his servant to do, but also for the way in which he does it. If a servant does negligently that which he was authorised to do carefully, or if he does fraudulently that which he was authorised to do honestly, or if he does mistakenly that which he was authorised to do correctly, his master will answer for that negligence, fraud or mistake. On the other hand, if the unauthorised and wrongful act of the servant is not so connected with the authorised act as to be a mode of doing it, but is an independent act, the master is not responsible: for in such a case the servant is not acting in the course of his employment, but has gone outside of it." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I suspect that "authorities", "authorised", "unauthorised", "not authorised", in this paragraph refer to actual authority only, and I note that in <I>Winfield and Jolowicz on Tort,</I> 11th ed. (1979), p. 558, the test is stated: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"A wrong falls within the scope of employment if it is <I>expressly</I> <I>or impliedly</I> authorised [my emphasis] by the master or is an unauthorised manner of doing something which is authorised,..." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>to which I would again add "expressly or impliedly." Ostensible authority is not considered nor is the question whether modes not expressly or impliedly authorised might be ostensibly authorised. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>When judges speak of authority and its scope, in some at least of their statements relied on as extending course of employment beyond scope of authority, their language also must be read in the light of the </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL764"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>764 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Stephenson L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>two considerations that most employers do not actually authorise illegal acts, even by implication, but may nevertheless put their servants or agents in a position which may estop them from denying apparent authority to do illegal acts. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>For instance, in <A NAME="L230"></A><I>Dyer v. Munday</I></A> [1895] 1 Q.B. 742, where this court held a defendant liable for an assault committed by his branch manager in the execution of his duties, Rigby L.J. said, at p. 748: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"If the expression 'scope of authority' means 'authority', the case would be different; but it seems to me that it has exactly the same meaning as the expression 'course of employment', and the act complained of must be done in the course of the employment of the person doing it, though it may be beyond any authority <I>actually given</I> to him." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>There "actually given" may mean "expressly given" or "expressly or impliedly given", but not I think "apparently (or ostensibly) given." The same applies to the statement of Lord Esher M.R., at p. 746: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"if, in the course of carrying out his employment, the servant commits an excess beyond the scope of his authority, the master is liable...." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>and (more clearly) to the similar statement of Lopes L.J., at p. 747, that "the master is liable, although the authority <I>that he gave</I> is exceeded." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In <A NAME="L231"></A><I>Bugge v. Brown,</I></A> 26 C.L.R. 110, the High Court of Australia (by a majority) held an employee liable for damage caused by a fire he lit in a place other than that where he had been instructed to light it. Isaacs J., at p. 116, stated the law in eleven propositions, of which the first two are: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"(1) The responsibility of a master for the wrongful act of his servant does not depend merely on the question of authority, express or implied. He may be liable though the act be beyond any authority actually given by him. The expression 'scope of authority' in its relevant sense may be wider than the limits of the 'authority' itself. This position is well explained in <A NAME="L232"></A><I>Dyer v. Munday</I></A> [1895] 1 Q.B. 742 and is authoritatively settled in <A NAME="L233"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. 716, 732, 737. (2) Nor does his responsibility rest upon any notion of ostensible authority (<A NAME="L234"></A><I>Hamlyn v. John Houston & Co.</I></A> [1903] 1 K.B. 81. 85)." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>And Higgins J., after reviewing some of the cases, said, in relation to an employee in the sense of a servant, at p. 132: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"the phrases 'in the course of the employment', 'in the course of the service', 'within the scope (or sphere) of his authority', etc., do not mean 'in exercise of his authority' in the same sense as in the case of contracts made by agents. The precise terms of the authority are not the criterion of liability: the function, the operation, the class of act to be done by the employee, is the criterion - whatever be the instructions as to the time, the place, or the manner of doing the act." </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL765"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>765 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Stephenson L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><A NAME="L235"></A><I>Hamlyn v. John Houston & Co.</I></A> [1903] 1 K.B. 81 is good authority for Isaacs J.'s second proposition, for there Collins M.R. said, at p. 85, in the course of holding both partners liable for the act of one in obtaining from the plaintiffs by the illegitimate means of bribing the clerk information which he was authorised to obtain by legitimate means: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"Was it within the scope of the authority given to Houston to obtain this information by legitimate means? If so, it was within the scope of his authority for the present purpose to obtain it by illegitimate means, and the defendants are liable. That is the law as expressed in the Partnership Act 1890 and as laid down by decisions previous to that Act, in which it has been held that a principal is liable for the fraud or other wrongful act of his agent if committed within the scope of his employment. This doctrine does not appear to rest upon the notion of the principal's holding out the agent as having authority. The grounds upon which it seems to rest, as explained in cases such as <A NAME="L236"></A><I>Barwick v. English Joint Stock Bank</I></A> (1867) L.R. 2 Ex. 259, appear to be that the principal is the person who has selected the agent, and must therefore be taken to have had better means of knowing what sort of a person he was than those with whom the agent deals on behalf of his principal; and that, the principal having delegated the performance of a certain class of acts to the agent, it is not unjust that he, being the person who has appointed the agent, and who will have the benefit of his efforts if successful, should bear the risk of his exceeding his authority in matters incidental to the doing of the acts the performance of which has been delegated to him." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>But what was there said about holding out must be read in the light of <A NAME="L237"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. 716, where in holding the defendant solicitors liable for their managing clerk's fraud Earl Loreburn, at p. 725, based their liability on the agent "purporting to act in the course of business such as he was authorised, or held out as authorised, to transact on account of his principal," and Lord Shaw of Dunfermline, at p. 740, on the agent's ostensible or apparent authority. In <A NAME="L238"></A><I>Uxbridge Permanent Benefit Building Society v. Pickard</I></A> [1939] 2 K.B. 248, all three judges of this court, applying <A NAME="L239"></A><I>Lloyd's</I></A> case, treated the fraudulent doing of an act of the class which such a servant or agent is actually authorised to do honestly as within his ostensible authority: Sir Wilfrid Greene M.R., at p. 254, MacKinnon L.J., at p. 258, Finlay L.J., agreeing with both judgments, at p. 258. In <A NAME="L240"></A><I>Navarro v. Moregrand Ltd.</I></A> [1951] 2 T.L.R. 674, both Somervell L.J. and Denning L.J., at pp. 677 and 680, treated and applied <A NAME="L241"></A><I>Lloyd's</I></A> case [1912] A.C. 716 as deciding that a principal is responsible for the fraud of his agent acting within his ostensible authority; but Denning L.J. regarded the course of employment as wider than the scope of actual or ostensible authority: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"The presence of actual or ostensible authority is decisive to show that his conduct is within the course of his employment, but the absence of it is not decisive the other way," </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL766"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>766 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Stephenson L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>and he went on to consider cases of a master's civil responsibility for his servant's wrongs, such as <A NAME="L242"></A><I>Dyer v. Munday</I></A> [1895] 1 Q.B. 742, as cases of acts done outside the scope of actual or ostensible authority but in the course of employment (see [1951] 2 T.L.R. 674, 680), and he held the landlords responsible for their estate agents' taking an illegal premium. Birkett L.J. confined himself to agreeing with the decision of the court and accordingly left open the question whether the landlords' responsibility should be based on ostensible authority, with Somervell L.J., or course of employment, with Denning L.J. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I prefer Somervell L.J.'s view to Denning L.J.'s and hold that by entrusting a servant or agent to do work or carry out duties of a particular kind or class the employer employs him, and holds him out as having authority, to do those acts and all that is reasonably incidental to them in the ordinary course of doing that work and carrying out those duties. He does not employ or authorise him to do the work or carry out the duties carelessly or dishonestly or unlawfully, but he will be responsible for his doing so unless what he does is outside the ordinary course of that work and those duties. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>No attempt to formulate the test of what is taken outside the scope of the employment or authority is satisfactory or easy to apply. I have quoted the attempt made by <I>Salmond & Heuston on Torts,</I> 18th ed. (1981), p. 437, para. 176. Isaacs J. suggested in <A NAME="L243"></A><I>Bugge v. Brown,</I></A> 26 C.L.R. 110, 116, acts altogether so utterly outside of, and unconnected with, the employee's employment or anything he was employed to do anywhere so as to be in effect or virtually the acts of a stranger in relation to his employer: at pp. 118 and 119. Others have found assistance in the concept of acts outside the sphere of employment altogether: e.g. <A NAME="L244"></A><I>Rose v. Plenty</I></A> [1976] 1 W.L.R. 141, <I>per</I> Lord Denning M.R., at pp. 144-145, and <I>per</I> Scarman L.J., at p. 149. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I find more help, and more justice, in testing the employer's responsibility by how unusual or abnormal the employee's transaction is. This approach to the problem is not without support from judicial authority. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In <A NAME="L245"></A><I>Houghton & Co. v. Nothard, Lowe and Wills Ltd.</I></A> [1927] 1 K.B. 246, the Court of Appeal held that a company director's agreement to apply the money of one company in payment of the debt of another was so unusual that the plaintiffs were put on inquiry as to whether the director had any authority to make it and his company was not liable, Sargant L.J., at p. 267, rejecting an argument which would lead to the contention that a director could </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"be treated by a third party acting in good faith as capable of binding the company by any sort of contract, however exceptional, on the ground that a power of making such a contract might conceivably have been entrusted to him." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In <A NAME="L246"></A><I>Bradford Third Equitable Benefit Building Society v. Borders</I></A> [1941] 2 All E.R. 205, 211, Viscount Maugham said: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"Whether the act is within the scope of the agent's authority should be tested, if he has a permanent employment, by reference to the </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL767"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>767 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Stephenson L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>ordinary duties of that employment, which he clearly cannot extend by a fraudulent act." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In <A NAME="L247"></A><I>Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd.</I></A> [1964] 2 Q.B. 480, 503-504, Diplock L.J. said: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"The representation which creates 'apparent' authority may take a variety of forms of which the commonest is representation by conduct, that is, by permitting the agent to act in some way in the conduct of the principal's business with other persons. By so doing the principal represents to anyone who becomes aware that the agent is so acting that the agent has authority to enter on behalf of the principal into contracts with other persons of the kind which an agent so acting in the conduct of his principal's business has usually 'actual' authority to enter into." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In his comments, at pp. 508-509, on <A NAME="L248"></A><I>Houghton & Co. v. Nothard, Lowe and Wills Ltd.</I></A> [1927] 1 K.B. 246 he stresses the distinction between normally authorised and abnormal contracts. <A NAME="L249"></A><I>Hely-Hutchinson v. Brayhead Ltd.</I></A> [1968] 1 Q.B. 549 was a case of a company being bound by a contract which would not have fallen within the usual scope of its agent's authority were it not for the conduct of the parties and the circumstances of the case, in that case placing him in the position of acting managing director and acquiescing in his activities: see <I>per</I> Lord Denning M.R., at pp. 583-584, and <I>per</I> Pearson L.J., at p. 593. In <A NAME="L250"></A><I>Egyptian International Foreign Trade Co. v. Soplex Wholesale Supplies Ltd.</I></A> [1984] 1 Lloyd's Rep. 102, 110, Leggatt J. said that he did not find useful a submission that "usual authority does not extend to abnormal contracts," abnormality being only a circumstance to be taken into account in determining whether a transaction is within the scope of an employee's authority. But in my opinion abnormality is always an important circumstance and in the instant case decisive. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>There are clearly degrees of abnormality and the usual shades into the unusual at different points in different cases. But in this case what Mr. Magelssen did was so clearly and extravagantly unusual for a man in his position that it should not only have put the plaintiffs on inquiry but fell right outside his authority or employment, whether or not the two are coextensive. True he had authority to sell the vessel, but he had no authority, express, implied or apparent, to back it with a charterparty and addendum with the features which the judge rightly accepted as unusual or even most unusual. What is more, the plaintiffs knew that his actual authority was limited to exclude this transaction looked at, as it must be, as a whole and not dissected, as counsel for the plaintiffs would dissect it, into its component parts: <A NAME="L251"></A><I>Ilkiw v. Samuels</I></A> [1963] 1 W.L.R. 991, 1004, <I>per</I> Diplock L.J. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Knowing that they should have referred to the defendants' top management for confirmation of Mr. Magelssen's representation that he had their authority and should not have relied on his representation (or on their agent Mr. Johannesen, who transmitted it to them), they took the risk of Mr. Magelssen's representation of authority being untrue and cannot hold the defendants responsible for his fraudulent misrepresentation either in contract or in tort. I find support for this </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL768"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>768 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Stephenson L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>conclusion in <A NAME="L252"></A><I>Russo-Chinese Bank v. Li Yau Sam</I></A> [1910] A.C. 174. It would be yet another paradox to state in one breath that the defendants did not hold Mr. Magelssen out as authorised to conclude this most unusual transaction, yet were liable to pay damages for his fraudulent misrepresentation that he was authorised to conclude it because that accompanying misrepresentation was what it plainly was not - a mode of performing his authorised duties in the course of his employment. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The tort of deceit consists of some fraudulent misrepresentation which induces another to act to his detriment. If the detrimental action is the conclusion of a contract, I do not see how it can sensibly be said that a servant's fraudulent misrepresentation, which is not authorised by his master, is a mode of performing his duty, or of exercising his power, to conclude contracts for his master, whether the contract is authorised or unauthorised and whether the misrepresentation represents that the servant has authority or relates to some other matter. So if it were permissible to split Mr. Magelssen's transaction with the plaintiffs into an (authorised) contract of sale and an (unauthorised) charter back, as contended by plaintiffs' counsel, I agree with Robert Goff L.J. that Mr. Magelssen's false pretence would remain unauthorised and a tort outside the course of his employment. But I do not accept that what the plaintiffs' counsel himself called "an integral transaction" can be split into sale and charter back, and so open the possibility of treating Mr. Magelssen's fraud as a dishonest mode of doing something he was employed to do honestly. Authority to sell the ship did not give him authority to back the sale with this charter; and I reject the argument that his fraudulent misrepresentation was made in the course of his employment because it was made to induce the sale, which was authorised, when it was in fact made to induce the whole unusual and unauthorised transaction of sale and charter back. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In my judgment, the judge was therefore right on principle and authority to hold: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"the two expressions 'acting within his ostensible authority' and 'acting in the course of his employment' have the same meaning in the context of this case..." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>even if they do not have it in all cases; for this is a case of deceit, which (unlike negligence) involves a false representation of authority acted upon by the sufferer. But that leads me to the opposite conclusion to his, because, respectfully disagreeing with his judgment on this point, I find that Mr. Magelssen had no ostensible authority to make the false representation or to conclude the transaction. This is emphatically not a case which calls for the application of Holt C.J.'s "old, robust and moral principle" (as Diplock L.J. called it in <A NAME="L253"></A><I>Morris v. C. W. Martin & Sons Ltd.</I></A> [1966] 1 Q.B. 716, 733C) in the plaintiffs' favour. The defendants did indeed enable Mr. Magelssen to occasion any loss which the plaintiffs may have suffered from this transaction but Ashhurst J.'s doctrine in <A NAME="L254"></A><I>Lickbarrow v. Mason,</I></A> 2 Durn. & E. 63, 70, that that is enough to make them liable for that loss, is, as Lord Lindley said in <A NAME="L255"></A><I>Farquharson Brothers & Co. v. C. King & Co.</I></A> [1902] A.C. 325, 342, "far too wide." </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL769"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>769 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Stephenson L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In all the circumstances of this case any loss must fall on the plaintiffs themselves. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Furthermore, on that aspect of the case, I agree with the judge on Danish law and its applicability and with the judgments of Robert Goff and Dunn L.JJ. that his correct opinion on these matters leads to the conclusion, contrary to his, that the loss caused by Mr. Magelssen's fraud falls on the plaintiffs. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I agree also with all that Robert Goff and Dunn L.JJ have said about bribery and would only add that the judge might not have taken the view which he did of this part of the case if he had had the Canadian case, <A NAME="L256"></A><I>Barry v. Stoney Point Canning Co.,</I></A> 55 S.C.R. 51, cited to him. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Finally I agree with their decision to reverse some of the judge's conclusions on the facts and evidence, and with the reasons they give for that decision. I should have preferred to determine this appeal without interfering with the judge's findings of fact, but for the reasons they give I agree that we ought to reconsider them and state where we are compelled to disagree with them. I have well in mind what has been said in the House of Lords on the caution which this court must always exercise in taking a different view on fact from that of the trial judge: <A NAME="L257"></A><I>Watt (or Thomas) v. Thomas</I></A> [1947] A.C. 484, 487, 488. I referred to the principal considerations which their Lordships have stated for our guidance in <A NAME="L258"></A><I>Container Transport International Inc. v. Oceanus Mutual Underwriting Association (Bermuda) Ltd.</I></A> [1984] 1 Lloyd's Rep. 476, 524, and I do not repeat them. I can only say, with reluctance and regret, that this is, in my judgment, one of those rare cases where the judge was plainly wrong to accept some of the evidence which he did accept and to reject some of the evidence which he did reject. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The contract which Mr. Magelssen made or purported to make with Mr. Johannesen struck every member of this court as most unusual. The judge accepted that it had three unusual features, one of them most unusual, namely that the terms of the three year charterparty were to be kept secret from the operations and chartering department of the defendants. I cannot see why Mr. Bronzini should have agreed to such a term, or how Mr. Johannesen could have believed that either he or the rest of the board could have agreed to it; and I do not think Mr. Jensen or Mr. Dannesb¿e could have accepted it without question, honestly and properly as the judge found, unless they had put their whole trust in Mr. Johannesen. Common sense prompts the questions: Why did Mr. Bronzini do that? How could Mr. Johannesen believe that? And looking at their evidence, admittedly in the lifeless record of the shorthand transcript and without the advantage of seeing and hearing them give it, I can find no indication to support the judge's view that Mr. Bronzini was not wholly frank, or that Mr. Johannesen was not the sort of man to conspire from the start with Mr. Magelssen to deceive the plaintiffs by producing a charterparty which he knew to be unauthorised. The picture which emerges from all the evidence after all the argument before us is of two dishonest friends and compatriots conspiring to make money for themselves - and, if the market had held up, for the plaintiffs and the defendants - without the knowledge or authority of the latter, who trusted them. The judge's partial vindication of Mr. Johannesen </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL770"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>770 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Stephenson L.J. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>cannot, in my opinion, stand against the evidence of the disputed documents. They seem to me "to give the game away" as far as it was being played by Mr. Johannesen. [His Lordship considered that evidence and concluded:] I recognise to the full the dangers of an appellate court taking a fundamentally different view of the facts and evidence from the view taken by the trial judge. But he had the difficult task of evaluating the conflicting evidence of two protagonists who were both admitted or proved to his satisfaction to be liars; and of trying what may once have seemed a fairly simple case, of a defendant wrongly repudiating liability for its servant's acts, as it developed by stages over many weeks into ever more complicated disputes of fact and law. In such a case the appellate court, which starts at the end, has some advantages over the judge at first instance. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>For all these reasons I agree that the appeal should be allowed. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR> <TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="40%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=82%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:11pt'><I>Appeal allowed with costs. </I></FONT></P></TD><TD WIDTH=6%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=82%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:11pt'><I>Leave to appeal refused. </I></FONT></P></TD><TD WIDTH=6%></TD></TABLE></FONT></TD></TR></TABLE> <BR> <TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>18 December 1984. The Appeal Committee of the House of Lords (Lord Fraser of Tullybelton, Lord Diplock and Lord Brightman) allowed the plaintiffs' petition for leave to appeal. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR> <TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><I>Solicitors: Freshfields; Bentleys Stokes & Lowless.</I></FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR> <TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:11pt'>A. R. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR> <TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>APPEAL from the Court of Appeal. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>This was an appeal by the plaintiffs, Armagas Ltd., by leave of the House of Lords, from an order of the Court of Appeal (Stephenson Dunn and Robert Goff L.JJ.) ante, p. 723G allowing the appeal of the defendants, Mundogas S.A. from the judgment of Staughton J. [1985] 1 Lloyd's Rep. 1 giving judgment for the plaintiffs for damages for breach of contract and those damages to be assessed. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The facts are stated in the opinion of Lord Keith of Kinkel. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR> <TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><I>David Steel Q.C., Richard B. Mawrey Q.C.</I> and <I>Simon Rainey</I> for the plaintiffs. The first question is whether, as a matter of law, where a servant or agent does not have actual or ostensible authority to conclude a contract without the approval of a superior, that servant or agent can, in appropriate circumstances, possess ostensible authority to notify the other party that the approval of the superior has been obtained and thereafter to conclude the contract with the other party. There is no general principle which would necessitate a rule of law excluding the concept of ostensible authority of an agent to represent that he has been specifically authorised to enter into a particular transaction. In many transactions of everyday life a subordinate informs an intended H contracting party that he has to obtain the approval of a superior and subsequently informs that party that the superior has authorised the transaction, whereupon the contract is concluded. It should not in </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL771"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>771 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B></B></FONT></P></TD><TD WIDTH=12%></TD></TABLE> </FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>principle be necessary in all such cases for the other party to seek out the agent's superior and to obtain from him express confirmation that authority has been given to the subordinate. In the present appeal, the defendants are estopped from denying that their vice-president (transportation) and chartering manager M. had ostensible authority to communicate the approval of his superiors to enter into the charterparty. He had been held out by them as having such authority. The Court of Appeal was accordingly wrong to interfere with the trial judge's conclusion that M. had ostensible authority. Reliance is placed on the following authorities which counter the theme of the Court of Appeal's judgment: <A NAME="L259"></A><I>Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd.</I></A> [1964] 2 Q.B. 480, 498, 503, 505; <A NAME="L260"></A><I>Hely-Hutchinson v. Brayhead Ltd.</I></A> [1968] 1 Q.B. 549, 583, 592-593 and <A NAME="L261"></A><I>Egyptian International Foreign Trade Co. v. Soplex Wholesale Supplies Ltd.</I></A> [1984] 1 Lloyd's Rep. 102; [1985] 2 Lloyd's Rep. 36. Although it is established law that an agent cannot confer authority upon himself simply by representing that he has it, the authorities have not either considered or decided whether a servant or agent can have ostensible authority to represent that he has been specifically authorised to enter into a particular contract and can bind his principal by concluding that contract. <A NAME="L262"></A><I>Russo-Chinese Bank v. Li Yau Sam</I></A> [1910] A.C. 174 was treated by the Court of Appeal as establishing that an agent can never have such ostensible authority. That was a case which turned upon its peculiar and special facts which are clearly distinguishable from the facts of the present appeal, and further, the Judicial Committee of the Privy Council neither considered nor pronounced upon the particular question of ostensible authority to represent the authorisation of a superior to enter into a particular contract. <A NAME="L263"></A><I>Jensen v. South Trail Mobile Ltd.</I></A> (1972) 28 D.L.R. (3d) 233 can also be distinguished on its facts. Reliance is placed on <A NAME="L264"></A><I>Berryere v. Fireman's Fund Insurance Co.</I></A> (1965) 51 D.L.R. (2d) 603 and <A NAME="L265"></A><I>Cypress Disposal Ltd. v. Inland Kenworth Sales (Nanaimo) Ltd.</I></A> (1975) 54 D.L.R. (3d) 598, 607. [Reference was also made to <A NAME="L266"></A><I>Crabtree-Vickers Pty. Ltd. v. Australian Direct Mail Advertising & Addressing Co. Pty. Ltd.</I></A> (1975) 133 C.L.R. 72.] </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><I>Mawrey Q. C.</I> following on the question of the defendants being vicariously liable for M.'s deceit. The test of whether the agent was acting "in the course of his employment" is and ought to be a universal test of liability in tort; the concept of authority does not and should not enter into it. [Reference was made to <A NAME="L267"></A><I>Dyer v. Munday</I></A> [1895] 1 Q.B. 742; <A NAME="L268"></A><I>Hamlyn v. John Houston & Co.</I></A> [1903] 1 K.B. 81; <A NAME="L269"></A><I>Smith v. Martin and Kingston-upon-Hull Corporation</I></A> [1911] 2 K.B. 775; <A NAME="L270"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. 716; <A NAME="L271"></A><I>Bugge v. Brown</I></A> (1919) 26 C.L.R. 110; <A NAME="L272"></A><I>Uxbridge Permanent Benefit Building Society v. Pickard</I></A> [1939] 2 K.B. 248 and <A NAME="L273"></A><I>Navarro v. Moregrand Ltd.</I></A> [1951] 2 T.L.R. 674]. The correct test is course of employment, which is wider than actual or ostensible authority. One then applies that test to the facts. The Court of Appeal adopted the wrong test and therefore viewed the facts in the wrong way. If, as is submitted, it is a universal test for tort, one does not even start </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL772"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>772 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B></B></FONT></P></TD><TD WIDTH=12%></TD></TABLE> </FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>to look for "authority." Difficulty has arisen through the word "authority" being used in cases when what was really being looked for was employment. [Reference was also made to <A NAME="L274"></A><I>United Africa Co. Ltd. v. Saka Owoade</I></A> [1955] A.C. 130; <A NAME="L275"></A><I>Morris v. C. W. Martin & Sons Ltd.</I></A> [1966] 1 Q.B. 716; <A NAME="L276"></A><I>Heatons Transport (St. Helens) Ltd. v. Transport and General Workers' Union</I></A> [1973] A.C. 15, 99 and <A NAME="L277"></A><I>Kooragang Investments Pty. Ltd. v. Richardson & Wrench Ltd.</I></A> [1982] A.C. 462.] In summary, the only test for all torts as to whether a master is vicariously liable for the torts of his servant is whether at the time the tort was committed the servant was acting in the course of his employment. Course of employment is an objective fact and does not necessarily depend on the knowledge of the victim of the tort. When determining the factual question of course of employment it is helpful in most if not all cases to ask whether he had actual authority. If the act was within the authority of the servant then a fortiori it was within the course of employment and the master is liable. There is a class of cases where the act, though not within the authority of the servant, is within the course of employment (which is a wider test). In determining whether an act is within the course of employment one asks (<I>a</I>) was this act within or incidental to the class of acts that the servant was employed to do; (<I>b</I>) assuming the answer to (<I>a</I>) to be in the affirmative, was the servant acting so far away from the course of his duties that he was acting on his own or, as put in the old cases, "on a frolic of his own." Subsumed in question (<I>a</I>) is the proposition that a servant who performs an act which he is employed to do in an unauthorised manner will render his employer liable. Given all those tests, the question is a question of fact. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><I>Gordon Pollock Q. C.</I> and <I>Richard Siberry</I> for the defendants. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>[Their Lordships indicated that they wished to hear argument only on the question of vicarious liability.] </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The plaintiffs' main submission was that there is only one test for vicarious liability - course of employment. In so far as that submission merely produces a convenient shorthand expression, there is no vice in it. The difficulty with the submission arises if it is taken one stage further, so that the contention is that the content of the test identified by the expression "course of employment" is identical in all the differing circumstances in which a question of vicarious liability can arise. In deciding what test is to be applied in order to determine what amounts to the "course of employment", one may have to adopt different substantive tests for different categories of tort - the test cannot be reduced to a single mechanical test. Staughton J. and the Court of Appeal (and see particularly the analysis of Goff L.J.) were correct in holding that in cases involving misrepresentation or liability for incorrect statements, the test for course of employment is actual or ostensible authority. The above submissions are supported not only by authority but by the standard textbooks on tort. The latter show that there is no single test; and it has long been thought by writers, on the basis of authority, that fraud forms a sub-category where the appropriate test, </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL773"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>773 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B></B></FONT></P></TD><TD WIDTH=12%></TD></TABLE> </FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>perhaps for policy reasons, is to be found in the concept of authority, which is borrowed from the law of contract. At the end of the day, the principles of vicarious liability involve policy decisions, and policy considerations can well differ as regards different types of tort. [Reference was made to <I>Winfield and Jolowicz on Tort,</I> 12th ed. (1984), pp. 579-580 and 588-590; <I>Fleming, The Law of Torts,</I> 6th ed. (1983), pp. 348-356; <I>Salmond & Heuston on Torts,</I> 18th ed. (1981), pp. 437, 440 and <I>Clerk & Lindsell on Torts,</I> 15th ed. (1982), pp. 168, 183.] </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><I>Mawrey Q. C.</I> in reply. Misrepresentation should not be treated differently than any other tort; although it alters the relationship between master and third parties, that is so in all vicarious liability cases. If the defendant's arguments are accepted, one is faced with the following situations: (i) in torts involving misrepresentation, to establish vicarious liability it will be necessary for the plaintiff to prove that he relied upon some sort of actual or ostensible authority - that would not be an ingredient of any other tort; and (ii) with the tort of deceit the plaintiff would have to prove two different types of reliance; that he had relied on the deceit and that he reasonably relied on the ostensible authority of the person making the statement. As it at present stands, the test for deceit to make the tort complete is purely reliance by the person deceived; he does not have to prove that he was reasonable in so relying. <A NAME="L278"></A><I>S. Pearson & Son Ltd. v. Dublin Corporation</I></A> [1907] A.C. 351 shows that in a deceit case one cannot get out of liability for deceit by saying that the person being deceived must verify every statement made. Further, if the decision in <A NAME="L279"></A><I>Slingsby v. District Bank Ltd.</I></A> [1932] 1 K.B. 544 is intended as a general statement of the law relating to vicarious liability, it is wrong. Ostensible authority has nothing at all to do with vicarious liability. There should only be one test for vicarious liability, which is a consideration of a question of fact as to whether the act was in the course of employment. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Their Lordships took time for consideration. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR> <TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>22 May. LORD KEITH OF KINKEL. My Lords, the respondents ("Mundogas") are a Panamanian corporation having as its shareholders three very substantial and important commercial groups in different countries. Their business activities comprise trading in liquid petroleum gas (L.P.G.) and chemicals, shipowning and the chartering of ships. In 1979 the International Gas Corporation of Oslo were owners of an L.P.G. carrying ship, the M.T. <I>Havfrost,</I> later renamed <I>Ocean Frost</I>("the vessel"). On 24 October 1979 they let the vessel on time charter to Mundogas for a period of 12 months. The charterparty contained an option for Mundogas to purchase the vessel for delivery at the end of the charterparty period at the price of U.S.$5,200,000 the option to be exercised at the latest on 6 June 1980. A formal contract of sale, also dated 24 October 1979, was drawn up and signed on behalf of International Gas and of Mundogas. A Danish firm of shipbrokers called World Marine Chartering A.S., one of the partners in which was a Mr. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL774"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>774 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Lord Keith of Kinkel </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Jon Tony Johannesen, acted as agents in connection with this transaction. The signatory on behalf of Mundogas was Mr. Harald Magelssen, their vice-president (transportation) and chartering manager. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Early in 1980 it appeared to Mundogas that there were prospects of selling the vessel at a profit over the option price, and negotiations were initiated with a number of parties, but nothing came of these. In May 1980 Mr. Johannesen interested the principals of a Danish shipowning concern called the Armada group in a possible purchase. These principals were Mr. Torben Gunnar Jensen and Mr. Jorgen Poulsen Dannesb¿e. These gentlemen informed Mr. Johannesen that they would not be prepared to purchase the vessel unless at the same time Mundogas agreed to charter it back for a period of three years at an appropriate rate of hire. What happened next, according to the findings of fact arrived at by the Court of Appeal, ante, p. 723G; [1985] 1 Lloyd's Rep. 1, which differed in certain respects from those of the trial judge, Staughton J. [1985] 1 Lloyd's Rep. 1, 3, but are not challenged by the appellants, was that Mr. Johannesen and Mr. Magelssen entered into a fraudulent conspiracy to bring a spurious three year charterparty into existence and to deceive Mr. Jensen and Mr. Dannesb¿e into believing that the charter was genuine, so as to induce them to agree to the purchase of the vessel. Mr. Magelssen had authority from Mundogas to agree to a straightforward sale of the vessel. He had no authority to agree to a three year charter back of the vessel, and was well aware that it would be impossible for him to obtain such authority. Mr. Johannesen arranged with Mr. Jensen and Mr. Dannesb¿e that the transaction was to be with a company to be incorporated by the latter in which Mr. Johannesen's firm, World Marine, was to have a 49 per cent. interest. Mr. Johannesen offered Mr. Magelssen "a piece of the ship," and later transferred to him a one third share in World Marine's interest. In pursuance of the conspiracy Mr. Johannesen falsely represented to Mr. Jensen and Mr. Dannesb¿e that Mr. Magelssen had actual authority to agree not only to the sale of the vessel but also to its charter back by Mundogas for three years. They were told that he had no general authority from Mundogas to enter into such a transaction, but that he had sought and obtained specific authority for it. The transaction was not one which Mr. Jensen and Mr. Dannesb¿e believed to be within the usual authority of an employee in Mr. Magelssen's position. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In the result, a contract of sale was entered into dated 30 May 1980 under which Mundogas agreed to sell the vessel to a company to be named by the Armada group for the sum of U.S.$5,750,000. Delivery was to take place not earlier than 1 February and not later than 15 March 1981, in order to allow for the expiry of Mundogas's current charter with International Gas. The contract was signed by Mr. Johannesen on behalf of Mundogas, he having obtained telex authority to do so, and by Mr. Dannesb¿e on behalf of the purchaser. Shortly afterwards the appellant company Armagas Ltd. was incorporated by the Armada group and nominated as purchaser of the vessel. On 19 June 1980, in Copenhagen, Mr. Magelssen signed, purportedly on behalf </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL775"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>775 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Lord Keith of Kinkel </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>of Mundogas, a charterparty dated 30 May 1980 whereby Armagas agreed to let the vessel to Mundogas for a period of 36 months, with delivery not before 1 February 1981, the rate of hire to be "as agreed." The charterparty was signed by Mr. Dannesb¿e on behalf of Armagas. At the same time Mr. Magelssen and Mr. Dannesb¿e signed an addendum to the charterparty agreeing that the rate of hire was to be a minimum of U.S.$350,000 per month and that the owners were to have an option exerciseable not later than 10 January 1981 of cancelling the charterparty. The reason for the option to cancel was that it had been agreed orally between Mr. Jensen and Mr. Johannesen that if Armagas could find a buyer for the vessel at $6.5 million or more, on or before 10 January 1981, the vessel would be sold, the charterparty cancelled and the profit divided equally between the Armada group, World Marine and Mundogas. It was further agreed that the three year charterparty was to be kept strictly private and confidential, not only in the ordinary sense, i.e. that outsiders were not to be allowed to learn of its terms, but also to the extent that its existence was to be kept a secret from the chartering and operations department of Mundogas. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>At this time a rate of hire of $350,000 per month was a reasonable one having regard to the state of the market. Mr. Magelssen and Mr. Johannesen believed, mistakenly as it turned out, that the market would continue to be buoyant, and that they would be able to arrange with Mundogas a series of 12 month charters covering the period of the spurious three year charterparty at monthly rates of hire not less than $350,000. This was essential to the success of their scheme. So in November 1980 they drew up a 12 month charter by Armagas to Mundogas at the monthly rate of $365,000 commencing when the vessel passed to Armagas early in 1981. This document, dated 28 November 1980, was signed by Mr. Johannesen on behalf of Mundogas, and he asked Mr. Jensen to sign it on behalf of Armagas, representing that it was required for the internal purposes of Mundogas. Mr. Jensen was willing to do so only if at the same time an addendum was made to the three year charterparty reducing its period to two years, and produced the text of such an addendum. There followed a period when Mundogas was pressing Mr. Johannesen to obtain the signature of Armagas to the 12 month charter and Mr. Jensen was pressing him to obtain Mundogas' signature to the addendum. Neither was in the event ever signed. In April 1981 the vessel completed her service under the charter by International Gas, and became the property of Armagas. She remained, however, in the service of Mundogas, as the latter believed, under the twelve month charter, and as Armagas believed, under the three year charterparty. The managers and master of the vessel were each provided with a copy of the 12 month charter unsigned by Armagas, Mr. Jensen and Mr. Dannesb¿e having been persuaded by Mr. Johannesen to do this on the ground that the three year charter had to be kept secret. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The fraudulent scheme blew up in April 1982. The freight market had fallen to such an extent that a rate of $350,000 per month was out </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL776"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>776 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Lord Keith of Kinkel </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>of the question. There was no possibility of Mr. Johannesen being able to keep the ball in the air by negotiating with Mundogas a rate of at least that amount for the following 12 months. Furthermore, by this time Mr. Magelssen had left the employment of Mundogas. On 2 March Mundogas gave Mr. Johannssen notice of redelivery of the vessel on 2 April 1982, and on 8 April they tendered redelivery to Armagas. The latter refused to accept it, founding on the spurious three year charterparty. Mundogas disclaimed all knowledge of that charterparty, and asserted that they were redelivering in terms of the 12 month charter. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>My Lords, the foregoing represents the minimum statement of the facts of the case necessary to enable the legal issues which arise to be examined. The judgment of Robert Goff L.J. in the Court of Appeal ante, p. 723G contains a most impressive analysis of all the material evidence leading to detailed findings of facts to which reference may be made. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In June 1982 Armagas commenced proceedings against Mundogas claiming damages for breach of the three year charterparty, by wrongfully repudiating it. It was alleged that Mr. Magelssen had actual authority to bind Mundogas to that charterparty. In the course of the trial before Staughton J., and in the light of the way in which the evidence was developing, Armagas amended its pleadings so as to claim alternatively damages in tort for Mr. Magelssen's deceit in falsely representing that he had authority to enter into the three year charterparty, Mundogas being alleged to be vicariously liable for that deceit. Mundogas contended that if it was bound by the three year charter it was entitled to bring the contract to an end by reason of alleged bribery of Mr. Magelssen by Armagas, and counter-claimed for damages. The basis of this claim was the offer by Mr. Johannesen to Mr. Magelssen of "a piece of the ship," to which Mr. Jensen and Mr. Dannesb¿e were said to be party. Staughton J. held that Mr. Magelssen had no actual or ostensible authority from Mundogas to conclude the charterparty, but he went on to hold that he had ostensible authority from Mundogas to communicate the latter's approval of his concluding it, and he therefore found that Mundogas were bound by the charterparty and liable in damages for breach of it. In case, however, that decision might be wrong, Staughton J. went on to consider the issue of Mundogas' vicarious liability for Mr. Magelssen's deceit, and to decide that issue against Armagas. On the issue of bribery, he decided against Mundogas. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The Court of Appeal (Stephenson, Dunn and Robert Goff L.JJ.) ante, p. 723G reversed the decision of Staughton J. on liability for breach of contract and agreed with him that Mundogas was not vicariously liable for Mr. Magelssen's deceit. Opinions in favour of Mundogas were expressed upon the bribery issue. Armagas now appeal, with leave, to this House. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Upon the issue of Mr. Magelssen's authority to conclude the three year charterparty on behalf of Mundogas, counsel for Armagas accepted that he did not have actual or ostensible general authority to enter into </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL777"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>777 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Lord Keith of Kinkel </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>contracts of such an onerous character, but argued that he had ostensible specific authority to enter into this particular contract. Ostensible authority comes about where the principal, by words or conduct, has represented that the agent has the requisite actual authority, and the party dealing with the agent has entered into a contract with him in reliance on that representation. The principal in these circumstances is estopped from denying that actual authority existed. In the commonly encountered case, the ostensible authority is general in character, arising when the principal has placed the agent in a position which in the outside world is generally regarded as carrying authority to enter into transactions of the kind in question. Ostensible general authority may also arise where the agent has had a course of dealing with a particular contractor and the principal has acquiesced in this course of dealing and honoured transactions arising out of it. Ostensible general authority can, however, never arise where the contractor knows that the agent's authority is limited so as to exclude entering into transactions of the type in question, and so cannot have relied on any contrary representation by the principal: <A NAME="L280"></A><I>Russo-Chinese Bank v. Li Yau Sam</I></A> [1910] A.C. 174. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>It is possible to envisage circumstances which might give rise to a case of ostensible specific authority to enter into a particular transaction, but such cases must be very rare and unusual. Ex hypothesi the contractor knows that the agent has no general authority to enter into the transaction, as was the position here. The principal might conceivably inform the contractor that, in relation to a transaction which to the contractor's knowledge required the specific approval of the principal, he could rely on the agent to enter into the transaction only if such approval had been given. In such a situation, if the agent entered into the transaction without approval, the principal might be estopped from denying that it had been given. But it is very difficult to envisage circumstances in which the estoppel could arise from conduct only in relation to a one-off transaction such as this one was. That, however, was the case which Armagas sought to make out, and which the trial judge accepted as having been made out. The way he put it was that although Mr. Magelssen did not have ostensible authority to conclude the three year charterparty, yet he did have ostensible authority to notify to Mr. Jensen and Mr. Dannesb¿e approval by Mundogas of the transaction. He took the view that by appointing Mr. Magelssen to be vice-president (transportation) and chartering manager Mundogas represented that he had authority to convey such approval. This conclusion appears to have originated in an idea which the judge himself had in the course of the trial. Armagas had not pleaded any such representation nor reliance on it by Mr. Jensen and Mr. Dannesb¿e, and naturally there had been no evidence by the latter that they did rely on it. The truth clearly was that they relied on the knowingly false representation made by Mr. Johannesen, in implementation of his fraudulent conspiracy with Mr. Magelssen, that the latter had obtained specific authority from Mundogas. Mr. Magelssen purported to conclude the charterparty in Copenhagen on 19 June 1980, and may thus be taken </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL778"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>778 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Lord Keith of Kinkel </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>to have made a direct representation of his own that he was empowered to do so. But no representation by Mr. Magelssen can help Armagas. They must be in a position to found upon some relevant representation by the responsible management of Mundogas as to Mr. Magelssen's authority: <A NAME="L281"></A><I>Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd.</I></A> [1964] 2 Q.B. 480, 505, <I>per</I> Diplock L.J. Counsel for Armagas sought to find such a representation in the appointment of Mr. Magelssen as vice-president (transportation) and chartering manager, the circumstance that he had some general authority to enter into charterparties and that on two previous occasions he had entered into charterparties, with the specific approval of Mundogas conveyed by him, which were beyond his ostensible general authority, and the fact that it would have been unreasonable to expect Armagas to obtain direct confirmation from Mundogas of its approval, particularly in view of the shortness of time. But the nature of Mr. Magelssen's appointment was known not to carry general authority to conclude a charterparty such as this one, the two previous transactions referred to, though known to Mr. Johannesen the fellow conspirator, were not known to Mr. Jensen or Mr. Dannesb¿e, and the difficulty of obtaining confirmation from Mundogas is irrelevant. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In support of the view taken by the trial judge, reliance was placed upon <A NAME="L282"></A><I>Berryere v. Fireman's Fund Insurance Co.</I></A> (1965) 51 D.L.R. (2d) 603, a decision of the Manitoba Court of Appeal. The facts were that one Kariotis applied to an insurance agent for automobile insurance, and was told that because of a previous accident the application would have to be approved by the defendant insurance company. Kariotis later asked the agent whether the application had been approved. The agent wrongly told him that it had been and issued him with the equivalent of a temporary cover note. Shortly afterwards, and before the defendants had reached a decision on whether to approve the application, Kariotis was responsible for a driving accident resulting in injury to the plaintiff, who obtained judgment for damages against him. The plaintiff then sued the defendants under legislation providing that the proceeds of a policy of motor insurance should be applied in payment of a judgment for damages obtained against the insured. The question was whether the agent had bound the defendant insurance company to the policy. The trial judge answered this question in the affirmative, and the Court of Appeal by a majority affirmed his decision. Schultz J.A., with the concurrence of Monnin J.A., held that the agent, having been provided with a supply of cover notes and given wide powers to bind the company by issuing them, had been clothed with indicia of authority which impliedly included authority to convey to Kariotis the result of the reference to the company of his application. He distinguished <A NAME="L283"></A><I>Russo-Chinese Bank v. Li Yau Sam</I></A> [1910] A.C. 174 on the ground that there the fraudulent employee was never held out as having any authority beyond the limited one he was known to the plaintiff to have. Guy J.A. dissented upon the ground that Kariotis knew of the limitations upon the agent's authority to enter into a policy of insurance with him and </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL779"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>779 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Lord Keith of Kinkel </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>that the cover note which the agent issued was neither itself a policy of insurance nor any guarantee that insurance was in force. <A NAME="L284"></A><I>Berryere's</I></A> case was referred to in two other Canadian decisions, <A NAME="L285"></A><I>Jensen v. South Trail Mobile Ltd.</I></A> (1972) 28 D.L.R. (3d) 233, in the Alberta Supreme Court Appellate Division, and <A NAME="L286"></A><I>Cypress Disposal Ltd. v. Inland Kenworth Sales (Nanaimo) Ltd.</I></A> (1975) 54 D.L.R. (3d) 598, in the British Columbia Court of Appeal. Both of these were majority decisions. In the first of them the dissenting judge applied <A NAME="L287"></A><I>Berryere's</I></A> case, but the two majority judges did not. In the second the majority distinguished <A NAME="L288"></A><I>Berryere's</I></A> case as decided on its own particular facts, while the dissenting judge would have followed it and distinguished the <A NAME="L289"></A><I>Cypress Disposal</I></A> case. It may well be that <A NAME="L290"></A><I>Berryere's</I></A> case was rightly decided on its facts, having regard to the wide powers ostensibly given to the agent to bind the insurance company, although there is much force in the dissenting judgment of Guy J.A. But however that may be, I do not regard the case as authority for the general proposition that ostensible authority of an agent to communicate agreement by his principal to a particular transaction is conceptually different from ostensible authority to enter into that particular transaction. Robert Goff L.J. said of the trial judge's view in this case, ante, pp. 730H - 731C: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"the effect of the judge's conclusion was that, although Mr. Magelssen did not have ostensible authority to enter into the contract, he did have ostensible authority to tell Mr. Jensen and Mr. Dannesb¿e that he had obtained actual authority to do so. This is, on its face, a most surprising conclusion. It results in an extraordinary distinction between (1) a case where an agent, having no ostensible authority to enter into the relevant contract, wrongly asserts that he is invested with actual authority to do so, in which event the principal is not bound; and (2) a case where an agent, having no ostensible authority, wrongly asserts after negotiations that he has gone back to his principal and obtained actual authority, in which event the principal is bound. As a matter of common sense, this is most unlikely to be the law." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I respectfully agree. It must be a most unusual and peculiar case where an agent who is known to have no general authority to enter into transactions of a certain type can by reason of circumstances created by the principal reasonably be believed to have specific authority to enter into a particular transaction of that type. The facts of the present case fall far short of establishing such a situation. I conclude that the Court of Appeal rightly rejected the claim based on ostensible authority. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The next matter for consideration is the claim on the ground of vicarious liability on the part of Mundogas for Mr. Magelssen's deceit. The broad proposition of law founded upon is that an employer is vicariously liable for the torts of his employee committed in the course of his employment. "Course of employment" is a concept which has engendered much disputation and spawned a plethora of reported decisions. The starting point should be to consider the fundamental </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL780"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>780 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Lord Keith of Kinkel </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>principles which govern vicarious liability in the field of intentional wrongdoing by the servant, particularly by way of dishonest conduct. It is unnecessary to consider the development of the basis of vicarious liability in relation to torts such as negligence or trespass, which has followed a somewhat different line. Dishonest conduct is of a different character from blundering attempts to promote the employer's business interests, involving negligent ways of carrying out the employee's work or excessive zeal and errors of judgment in the performance of it. 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 genesis of these principles is to be found in the statement of Holt C.J. in <A NAME="L291"></A><I>Hern v. Nichols</I></A> (1700) 1 Salk. 289: "Seeing somebody must be a loser, by this deceit, it is more reason that he that employs and puts a trust and confidence in the deceiver should be a loser, than a stranger." In <A NAME="L292"></A><I>Lickbarrow v. Mason</I></A> (1787) 2 Durn & E. 63, 70, Ashhurst J. spoke to similar effect: "That, whenever one of two innocent persons must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it." These broad statements do, however, fall to be confined within the limits that justice truly requires. In <A NAME="L293"></A><I>Farquharson Brothers & Co. v. C. King & Co.</I></A> [1902] A.C. 325, 342 Lord Lindley observed that the doctrine enunciated by Ashhurst J. was far too wide. "So far as I know, the doctrine has never been judicially applied where nothing has been done by one of the innocent parties which has in fact misled the other. " That was a case where the issue was estoppel by ostensible authority, a fraudulent clerk in the employment of the plaintiffs having procured a purported sale of their timber to the defendants, the value of which the plaintiffs sought to recover. But the question of ostensible authority in the contractual field is closely intertwined with that of vicarious liability for the fraud of a servant. Then in <A NAME="L294"></A><I>Slingsby v. District Bank Ltd.</I></A> [1932] 1 K.B. 544, 560, Scrutton L.J., under reference to the passage quoted from Lord Lindley, explained "enabling" in the dictum of Ashhurst J. as meaning that the employer has in some way held out or represented the servant as having authority to do the acts complained of. It is well settled that a master is not liable for the dishonest tort of his servant merely because the latter's employment has given him the opportunity to commit it: <A NAME="L295"></A><I>Morris v. C. W. Martin & Sons Ltd.</I></A> [1966] 1 Q.B. 716, 737, <I>per</I> Diplock L.J. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>The leading case in this field is <A NAME="L296"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. 716, the facts of which are too well known to require recapitulation. The proposition established by that case is epitomized in the speech of Earl Loreburn, at p. 725: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"If the agent commits the fraud purporting to act in the course of business such as he was authorised, or held out as authorised, to </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL781"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>781 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Lord Keith of Kinkel </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>transact on account of his principal, then the latter may be held liable for it." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Lord Shaw of Dunfermline said, at pp. 739-740: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"The case is in one respect the not infrequent one of a situation in which each of two parties has been betrayed or injured by the fraudulent conduct of a third. I look upon it as a familiar doctrine as well as a safe general rule, and one making for security instead of uncertainty and insecurity in mercantile dealings, that the loss occasioned by the fault of a third person in such circumstances ought to fall upon the one of the two parties who clothed that third person as agent with the authority by which he was enabled to commit the fraud." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Later he equiparates ostensible authority with actual authority. The principal importance of the case lies in its having dispelled misunderstanding of certain observations by Willes J. in <A NAME="L297"></A><I>Barwick v. English Joint Stock Bank</I></A> (1867) L.R. 2 Ex. 259, and having established that it is not necessary to a master's liability for the fraud of his servant that the fraud should have been committed for the master's benefit. It was argued for Armagas that in <A NAME="L298"></A><I>Lloyd v. Grace, Smith & Co.</I></A> the fraudulent clerk was not acting within the scope of his actual or ostensible authority but was acting in the course of his employment, and that it was the latter which made the employer liable. In the present case, so it was maintained, Mr. Magelssen was acting in the course of his employment though not within the scope of his actual or ostensible authority, so Mundogas was liable. In my opinion the attempted distinction has no validity in this category of case. Lord Macnaghten, in <A NAME="L299"></A><I>Lloyd v. Grace, Smith & Co.</I></A> [1912] A.C. 716, 736, regarded the two expressions as meaning one and the same thing. The essential feature for creating liability in the employer is that the party contracting with the fraudulent servant should have altered his position to his detriment in reliance on the belief that the servant's activities were within his authority, or, to put it another way, were part of his job, this belief having been induced by the master's representations by way of words or conduct. In <A NAME="L300"></A><I>Uxbridge Permanent Benefit Building Society v. Pickard</I></A> [1939] 2 K.B. 248, 254-255, Sir Wilfrid Greene M.R., rejecting the argument that the actings of the fraudulent solicitors' clerk who had induced the building society to advance money to a non-existent client, were analogous to "a frolic of his own" said: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"With all respect to that argument, I cannot accept it. It appears to me to be drawing an analogy where no analogy exists, because in the case of the servant who goes off on a frolic of his own, no question arises of any actual or ostensible authority upon the faith of which some third person is going to change his position. The very essence of the present case is that the actual authority and the ostensible authority to Conway were of a kind which, in the ordinary course of an everyday transaction, were going to lead third persons, on the faith of them, to change their position, just as a purchaser from an apparent client or a mortgagee lending money to </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL782"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>782 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Lord Keith of Kinkel </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>a client is going to change his position by being brought into contact with that client. That is within the actual and ostensible authority of the clerk." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>In further pursuance of the argument, reliance was placed on a dictum of Denning L.J. in <A NAME="L301"></A><I>Navarro v. Moregrand Ltd.</I></A> [1951] 2 T.L.R. 674, 680 a case where a house agent had obtained an illegal premium from a tenant and the landlord was found liable for its repayment, who after referring to <A NAME="L302"></A><I>Lloyd v. Grace, Smith & Co.</I></A> and the <A NAME="L303"></A><I>Uxbridge</I></A> case, as authority for the view that a servant acting within his actual or ostensible authority was acting in the course of his employment, continued: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"But the judge inferred from those cases the converse proposition - namely, that if a servant or agent is not acting within his actual or ostensible authority, then he is not acting in the course of his employment. I do not think that that is correct: it is a confusion between the responsibility of a principal in contract and his responsibility in tort. He is only responsible in contract for things done within the actual or ostensible authority of the agent, but he is responsible in tort for all wrongs done by the servant or agent in the course of his employment, whether within his actual or ostensible authority or not. The presence of actual or ostensible authority is decisive to show that his conduct is within the course of his employment, but the absence of it is not decisive the other way." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>This dictum, 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. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Reference was also made to an observation of Lord Oaksey delivering the advice of the Judicial Committee of the Privy Council in <A NAME="L304"></A><I>United Africa Co. Ltd. v. Saka Owoade</I></A> [1955] A.C. 130, 144, a case where the defendants were held liable to the plaintiffs for the conversion of their goods by the defendants' servants, to whom the goods had been entrusted for carriage. He said: </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=5%></TD><TD WIDTH=93%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>"There is in their Lordships' opinion no difference in the liability of a master for wrongs whether for fraud or any other wrong committed by a servant in the course of his employment. It is a question of fact in each case whether the wrong was committed in the course of the servant's employment..." </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>This observation appears unexceptionable so far as it goes, but it was not uttered in the context of a consideration of the basis of liability for a servant's fraudulent misrepresentation and does not, in my opinion provide any assistance in elucidating that basis. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>Many other cases were cited, but none of them, in my view, provides any further certain guidance. 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. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL783"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>783 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Lord Keith of Kinkel </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>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. In the present case Mr. Magelssen was not authorised to enter into the three year charterparty, to do so was not within the usual authority of an employee holding his position, and Armagas knew it, and Mundogas had done nothing to represent that he was authorised to do so. It was contended for Armagas that concluding the contract for the sale of the vessel was within Mr. Magelssen's actual authority, and that inducing the sale by falsely representing that he had authority to enter into the charterparty amounted to no more than an improper method of performing what he was employed to do, such as in other contexts was sufficient to attract vicarious liability. But the sale of a ship backed by a three year charterparty is a transaction of a wholly different character from a straightforward sale, even if the charterparty is not to be regarded as a transaction separate and distinct from the sale, and Mr. Jensen and Mr. Dannesb¿e knew that Mr. Magelssen had no authority to enter into a transaction of that character on his own responsibility. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>I conclude that the Court of Appeal rightly held that Mundogas were not vicariously liable in English law for Mr. Magelssen's deceit. It is, therefore, unnecessary to consider two other issues upon which opinions were expressed by the trial judge and by the Court of Appeal, namely the position under the law of Denmark, where the tort was committed, as regards the vicarious liability of Mundogas, and the matter of bribery. By reason of the views which your Lordships formed, in the course of the hearing, upon the two primary issues, no argument was required to be advanced upon those subordinate questions. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>My Lords, for these reasons I would dismiss the appeal with costs. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>LORD BRANDON OF OAKBROOK. My Lords, I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Keith of Kinkel. I agree with it, and for the reasons which he gives I would dismiss the appeal. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>LORD TEMPLEMAN. My Lords, for the reasons given by my noble and learned friend, Lord Keith of Kinkel, I would dismiss this appeal. </FONT></P></TD><TD WIDTH=2%></TD></TABLE><BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>LORD GRIFFITHS. My Lords, I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Keith of Kinkel. I agree with it, and for the reasons which he gives I would dismiss the appeal. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR><HR><BR><A NAME="PL784"></A><TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>[1986] </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>784 </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR><TR VALIGN='TOP'><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:10pt'><B>A.C. </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=4%></TD><TD WIDTH=92%><P ALIGN=Center><FONT FACE='Times New Roman' style='font-size:10pt'><B>Armagas Ltd. v. Mundogas S.A. (C.A.) </B></FONT></P></TD><TD WIDTH=4%></TD></TABLE></FONT></TD><TD WIDTH="20%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=76%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:10pt'><B>Lord Keith of Kinkel </B></FONT></P></TD><TD WIDTH=12%></TD></TABLE></FONT></TD></TR></TABLE> <BR><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'>LORD OLIVER OF AYLMERTON. My Lords, I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Keith of Kinkel. I agree with it and for the reasons which he gives I too would dismiss the appeal. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR> <TABLE WIDTH="100%" CELLSPACING=0 CELLPADDING=1 border=0><TR VALIGN='TOP'><TD WIDTH="60%"><FONT STYLE='font:11pt "Times New Roman"'> </FONT></TD><TD WIDTH="40%"><FONT STYLE='font:11pt "Times New Roman"'><TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR><TD WIDTH=12%></TD><TD WIDTH=82%><P ALIGN=Left><FONT FACE='Times New Roman' style='font-size:11pt'><I>Appeal dismissed with costs. </I></FONT></P></TD><TD WIDTH=6%></TD></TABLE></FONT></TD></TR></TABLE> <BR> <TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P STYLE='text-indent: 2%' ALIGN=Justify><FONT FACE='Times New Roman' style='font-size:11pt'><I>Solicitors: Bentleys, Stokes & Lowless; Freshfields. </I></FONT></P></TD><TD WIDTH=2%></TD></TABLE> <BR> <TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0><TR VALIGN='top'><TD WIDTH=2%></TD><TD WIDTH=96%><P ALIGN=Right><FONT FACE='Times New Roman' style='font-size:11pt'>C. T. B. </FONT></P></TD><TD WIDTH=2%></TD></TABLE> </DOC> </FONT> </BODY>  <script type="text/javascript" language="javascript"> var sc_project=725110; var sc_partition=6; var sc_security="f8a2fd19"; </script> <script type="text/javascript" language="javascript" src="http://www.statcounter.com/counter/counter.js"></script><noscript><a href="http://www.statcounter.com/" target="_blank"><img src="http://c7.statcounter.com/counter.php?sc_project=725110&java=0&security=f8a2fd19" alt="counter statistics" border="0"></a> </noscript>  </HTML>