The Gazette 1988

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 duty 32 unless the principal ratifies the breaches. Such an agent may be able to maintain an action in restitution. Lage -v- Siemens Bros. & Co. Ltd 33 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 all 34 (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 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 (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 En f o r c eme nt (a) A c t i on or money was not delivered to the agent w i th express stipulations inconsistent w i th the right of lien. 42

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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.

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