American Jewellery Company Limited and others v Commercial Corporation Jamaica Limited and others

Ostensible authority depends on the principal’s representation and the range of acts a third party would ordinarily expect the appointed solicitor to undertake. The inquiry is fact-sensitive. Appointment to carry out a land sale and hold the deposit may represent authority to agree contractual variations. Earlier dealings in which the solicitor negotiated variations without repudiation are relevant. Delay, substantial advance payments and a dispute requiring adjustment of the completion balance may reinforce the representation. A solicitor’s authority is not subject to a categorical rule that contractual variations are always outside its scope. The appeal was dismissed because the solicitor had ostensible authority to agree deductions from the sale price.

The appeal concerned a contract for the sale of a retail property and a related lease-back arrangement. American Jewellery Company Limited and others appealed against orders made in litigation involving Commercial Corporation Jamaica Limited and others.

Beswick J held that rent became payable on completion of the sale and ordered payment of a disputed deduction. She also ordered interest concerning an undertaking given by the purchaser’s solicitor. The Court of Appeal of Jamaica substantially dismissed the appeal, holding that the vendor’s solicitor had ostensible authority to agree deductions from the price, although its orders created a possible inconsistency concerning the principal sum and interest.

The central issues before the Board were whether the solicitor had ostensible authority to agree deductions of $575,000 and $862,500 for rent, and whether the interest order required correction.

Lord Wilson delivered the Board’s judgment. The appeal was dismissed.

1. Actual authority. The inquiry into ostensible authority presupposed that the solicitor lacked actual authority, although the Board considered that presupposition uncertain. Applying the burden identified in Thompson v Cartwright [1863] 33 Beav 178, the principal should probably be taken to have failed to show that the solicitor had not communicated relevant facts. On the assumed facts, there was no evidence that the principal had declined to authorise acceptance of the deductions. This was a subsidiary and hypothetical observation, not an independent basis of decision.
2. Applicable test. Ostensible authority is created by a representation from the principal to the contractor, intended to be and acted upon by the contractor, that the agent has authority to enter into a contract of the relevant kind. The question was whether agreeing the deductions fell within the range of actions for which a third party would usually expect the solicitor to have authority. The Board considered whether the deductions were collateral or extraneous to the sale. The reasoning in Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 and Waugh v HB Clifford and Sons Ltd [1982] Ch 374 informed that inquiry.
3. Application. Four features were decisive: the express representation that the solicitor’s firm had carriage of the sale and held the deposit; his negotiation of an earlier variation concerning mortgage redemption; his negotiation of a further substantial variation involving advance payment and possession; and the circumstances of delayed completion, substantial payments in advance, and the dispute over rent. The invitation to obtain a countersignature did not alter the purchaser’s reasonable perspective, since the solicitor had not indicated that he lacked authority and the principal had not repudiated the earlier arrangements. The Board concluded that the solicitor had ostensible authority to agree both deductions.
4. Interest and procedural order. The Board noted a possible inconsistency between the Court of Appeal’s reasoning and its drawn orders concerning the $575,000 principal sum. The vendor’s solicitor was not a party to the appeal and had neither cross-appealed nor been given an opportunity to address the issue. The Board therefore made no alteration. It observed that an application under Rule 42.10 of the Civil Procedure Rules, the slip rule, might have been made in the Court of Appeal.

The Board advised that the appeal be dismissed. Subject to any reasoned objection within fourteen days, the appellants were ordered to pay the respondent’s costs of and incidental to the appeal.

• Supreme Court of Jamaica: Beswick J delivered judgment on 4 December 2006 after hearing five consolidated actions. She ordered payment of the disputed rent deduction and interest relating to the solicitor’s undertaking.
• Court of Appeal of Jamaica: By orders dated 1 October 2010, the court allowed the appeal in limited respects but substantially dismissed it. It held that the vendor’s solicitor had ostensible authority to agree the deductions and varied the interest consequences.
• Privy Council: The further appeal was dismissed under [2013] UKPC 5, with costs subject to the stated fourteen-day objection period.