Agency - Agents’ liabilities - Misrepresentation - Mistake

Knight Frank LLP v Aston Du Haney: CA (Civ Div) (Lord Justices Lloyd, Wilson, Tomlinson): 12 April 2011

The appellant firm of chartered surveyors (K) appealed against a decision that the respondent (H) was not liable in respect of a contract which he had entered into as agent for an investment company (M).

H had commissioned K to prepare a valuation appraisal in respect of a development site.

In doing so, H acted as agent for M, a company called Morecambe Investment Company Limited. K wrote a letter to M setting out the basis upon which it would undertake the valuation but erroneously referred to M’s name as ‘Morecombe Investments Limited’.

H signed above the rubric ‘For and on behalf of Morecombe Investments Limited’ and added the words ‘As Agent’.

In other documents, K misspelt M’s name as ‘Morecambe Investment Limited’.

When the appraisal fee was not paid, K claimed against H. The judge found that H had not deliberately misstated the name of his principal and was not liable to pay the valuation fee.

The issue was whether an agent who misrepresented the name of his principal in the course of making a contract with a third party, in circumstances where the principal’s correct name was capable of being established, attracted: (i) liability for breach of warranty of authority; and (ii) ­personal liability.

Held: (1) H had made it very clear that he was acting only as agent of the entity that was negotiating to purchase the site and there had been no reason not to believe that.

It had not therefore been demonstrated that he had been in breach of his warranty of authority.

It was true that H had misrepresented the name of his principal but he had not warranted the accuracy of the names given in the sense of effectively guaranteeing that they were correct.

The warranty that he had given was as to the fact of his agency, not as to the precise accuracy of the names which he attributed to his principal.

He had identified and named his principal in a manner which had been entirely adequate for all practical purposes and, if necessary, K could have made independent enquiries as to the correct title of his principal.

Neither the misspelling of Morecambe nor the rendering of Investment in the plural were of any great moment.

M had never denied that it was the principal of H and K had not sought to bring proceedings against M or pressed it for payment of the outstanding fee, SEB Trygg Holding AB v Manches [2005] EWCA Civ 1237, [2006] 1 WLR 2276 applied.

In any event, the judge’s findings made it clear that no representation by H as to the name of his principal had induced K to act in a manner in which it would otherwise not have acted (see paragraphs 13-16, 20, 23-24 of judgment).

(2) K had made no attempt to show that H did not have the authority which he warranted or that he had not been acting as agent.

There was no basis upon which H could be held under a personal liability to K (paragraph 27).

Appeal dismissed.

Edward Denehan (instructed by Freeman Box) for the appellant; Mark Tempest (instructed by Haldanes) for the respondent.