Marine Blast Ltd v Targe Towing Ltd & Anor

An alleged agent bears the burden of proving that the principal consented to the agency, expressly or by conduct. Implied authority is assessed objectively. The question is whether the principal’s words or conduct reasonably conveyed consent to the alleged agent acting on the principal’s behalf. Mere knowledge that a contract is being arranged, receipt of contractual terms, silence or subsequent delivery of property will not ordinarily establish consent. Consent to a sub-bailment on terms is conceptually different from consent to a direct contractual relationship and does not itself confer authority to act as agent.

Marine Blast appealed from a preliminary-issue judgment of HHJ Hallgarten QC in the Central London County Court, Mercantile Division. The dispute concerned Targe’s claim for an indemnity under clause 18(2)(b) of a Towcon towage contract under which Marine Blast was named as hirer and Targe as tugowner. The dredger, owned by Noas, was lost during the tow.

The judge held that Noas was not a party to the towage contract and answered the consequential contractual question in the negative. Marine Blast argued that Noas had authorised it to contract on Noas’s behalf, relying on the charterparty, communications referring to Towcon terms, Noas’s receipt of the contract, silence and delivery of the dredger. The central issue was whether those circumstances established implied authority or ratification.

1. Appeal dismissed. The Court of Appeal reassessed the issue in light of the unchallenged factual findings because the first-instance judge had used an inappropriate test for implied authority.
2. The judge was right to place the burden on Marine Blast to prove that Noas was party to the towage contract. However, the word “necessarily” was inappropriate. Implied agreement to agency may be inferred where conduct reasonably leads the other party to infer consent to an agency relationship. Agency derives from consent, which may be consent to a state of facts carrying the legal consequences of agency. Silence alone does not ordinarily establish assent unless accompanied by a further indication of acquiescence.
3. The charterparty did not authorise Marine Blast to act for Noas. It made Marine Blast responsible for arranging and paying for the towage, selecting the tug and paying the relevant insurance premium. It did not indicate that Noas was to become an additional contracting party.
4. The communications did not establish consent. The Towcon terms were not presented as proposed contractual terms between Targe and Noas. The full contract was sent shortly before signature without telling Noas that it was a document by which Noas was to be bound or that it contained authority for Marine Blast to act on Noas’s behalf. Noas’s silence and delivery of the dredger were equally consistent with ignorance of, or indifference to, the precise terms and compliance with the charterparty.
5. In an obiter discussion, the court explained that consent to a sub-bailment, or to a direct non-contractual bailment, on terms is conceptually distinct from consent to a contract binding the original bailor. The The Pioneer Container analogy therefore did not establish agency. Unusual or unreasonable terms may also fall outside the consent given.
6. Clause 22 could not itself establish Noas’s consent to agency. Its language referred generally to the agreement and all its conditions, and could not be confined to conditions regulating liability; the Towcon terms also contained positive obligations. The findings did not support authority or ratification.

• Court of Appeal (Civil Division): [2004] EWCA Civ 346. Marine Blast’s appeal was dismissed.
• Central London County Court, Mercantile Division: HHJ Hallgarten QC, by order dated 9 May 2003 as amended on 11 June 2003, held that Noas was not a party to the towage contract and answered the consequential contractual question in the negative.