The Gazette 1988

333 / 370

GAZETTE DECEMBER 1988
An agent is not contractually
en t i t l ed to r e i mbu r s ement or
indemnity in respect of breaches of
duty32 unless the principal ratifies
the breaches. Such an agent may
be able to maintain an action in
restitution. Lage -v- Siemens Bros.
& Co. Ltd33 is an example of
where an agent was held not to be
en t i t l ed to r e i mbu r s ement or
indemnity where it was in breach
of its duties to the principal.
McKinnon J. held that because the
agents had been in breach of their
duties to the principal they were
not entitled to their right to
indemnity.
An agent is not contractually
en t i t l ed to r e i mbu r s ement or
indemnity insofar as s/he exceeds
authority or acts w i t hout any
au t ho r i ty at all34 (unless the
p r i nc i pal r a t i f i es t he a g e n t 's
actions).
On the basis of agency law, an
agent is not e n t i t l ed to
reimbursement or indemnity in
respect of an act contrary to the
criminal law.35 There are a number
of cases which hold that an agent
can claim indemnity where s/he
cannot demonstrate that s/he was
aware of the illegality and that the
act was not manifestly illegal.36
While the agent is not entitled to
reimbursement or indemnity in
respect of criminal acts, the
position w i t h respect to civil
wrongs is not so clear-cut.
The agent is not entitled to
reimbursement or indemnity in
respect of gaming and wagering
transactions. More generally, it has
been held that an agent is not
e n t i t l ed to r emu n e r a t i on or
indemnity where the transaction is
contrary to public policy.37
It is submitted that an agent is
not entitled to reimbursement or
indemnity for a loss if it is due to
t he a g e n t 's o wn de f au lt or
negligence, even if the loss is
incurred wh i le ac t i ng for the
principal.38 In Lewis -v- Samuel 39
the agents (solicitors) were held not
to be entitled to enforce their claim
for indemnity from the principal
(the client) for work done (drafting
documents) because it was done
negligently.
Stoljar recalls an impo r t ant
restriction: " [ an agent] cannot
claim an indemnity if and where he
ac ts me r e ly o f f i c i o u s l y. For
example, where a broker contracts
on behalf of [the principal] but [the
principal] withdraws, the broker
cannot by a purely voluntary pay-
ment make himself Ithe principal's!
creditor; in fact, to be entitled to an
indemnity, the agent must show
some sort of compulsion, such as
a usage on the Stock Exchange."40
En f o r c eme nt
(a) A c t i on
The agent may enforce the rights
of reimbursement and indemnity by
way of action for the amount owing
by the principal.
(b) Lien
The agent may enforce the rights
of reimbursement and indemnity by
exercising his or her lien 41 on
goods wh i ch the agent lawfully
acquired. A possessor lien may be
defined as the legal right of one
person (such as a creditor) to retain
lawful possession of the property
of another person (such as a
debtor) until a claim (such as a
debt) by the person in possession
against the owner is satisfied. Liens
are very important in the area of
agency. Silvertown has written:
Whe re t he r e l a t i on s h ip of
principal and agent exists, the
agent will have a valid lien on the
moveable property including
money in respect of all valid
claims he may have in his
capacity of agent for earnings
and commi ss i on, or money
advanced or liabilities property
incurred arising during the
course of his agency, provided:
(i) there is no term of a
c o n t r a ct b e t we en t he
principal and agent which
is inconsistent w i th the
right of lien; and
(ii) that the moveable property
or money was not delivered
to the agent w i th express
stipulations inconsistent
w i th the right of lien.42
(c) Se t - o ff
Where the agent is sued by the
principal (or anyone c l a imi ng
through the principal then the
agent may enforce the rights of
reimbursement and indemnity by
was of set-off. 43
The author wishes to express his
gratitude to Robert A. Pearce and
Irene Lynch, of the Law Faculty at
University College Cork for their help-
ful comments and suggestions in
respect of an earlier draft of this article
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FOOTNOTES
1. See Merryweather -v- Nixan (1799) 8
TR 186; Wilson -v- Milner (1810) 2
Camp 452; Betts v- Gibbins (1834) 2
A & E 57.
2. See Moore -v- Moore (1611) 1 Bulst.
169; Thacker -v- Hardy (1878) 4 QBD
685.
3. See Moore -v- Moore (1611) 1 Bulst.
169; Adamson -v-Jarvis (1827) 4 Bing
66; Frixione -v-Taglaiafero & Sons
(1856) 10 Moo PCC 175.
4. See Adams -v-Jarvis (1827) 4 Bing 66;
Thacker -v-Hardy (1878) 4 QBD 685;
Adamson -v-Morgan & Co. 119241 1 KB
751; Hichens, Harrison, Woolston & Co.
-v- Jackson & Sons 119431 1 A11 ER
128; Anglo Overseas Transport Ltd. -v-
Titan Industrial Corporation (United
Kingdom) Ltd. 119591 2 Lloyd's Rep.
152.
5. This does not operate where the money
due to the principal is held on trust: see
Stumore -v- Campbell & Co. 118921 1
QB 314; Re Mid-Kent Fruit Factory
118961 1 Ch 567.
6. Re Mid-Kent Fruit Factory [18961 1 Ch.
567.
7. See Crean -v- Deane 119591 IR 347.
8. Adamson -v- Jarvis (1827) 4 Bing 66
at 72.
9. See Henehan -v-Courtney (1967) 101
ILTR 25; Murphy, Buckley, Keogh -v- Rye
(Ireland) Ltd. 11971) IR 57; O'Toole -v-
Palmer [19431 Ir. Jur. Rep. 59.
10. At least the rights of reimbursement
and indemnity.
11. Estate agents may be entitled to seek
reimbursement of expenses n o t w i th
standing a failure to bring about con-
tracts between their clients (principals)
and third parties: but this depends on
the particular agency agreements: Ber-
nard Thorpe & Partners -v Flannery
(1977) 2 44 EG 129.
3 1 9