Watson & Anor v Jones & Anor

The scope of an agent’s actual authority is assessed objectively, by interpreting the principal’s words in their context. Authority given to an intermediary to provide or present instructions to solicitors may permit negotiations, but does not necessarily permit the solicitor to conclude a settlement. A solicitor may have authority to receive proposed terms and refer them for approval without having authority to bind the client. Ostensible authority requires a representation or manifestation attributable to the principal. Where the proposed appeal has no real prospect of success, permission should be refused.

The claimants, freehold owners of office premises, sought to enforce rental liabilities against the defendants, who had guaranteed a tenant’s obligations under a lease. During negotiations, the claimants authorised Mr Watson to provide or present instructions to solicitors. Their solicitor, Mr Murtagh, subsequently purported to enter into a settlement agreement making substantial concessions concerning the defendants’ liabilities.

The Doncaster County Court and Family Court, before Recorder Miller, declared on 22 August 2014 that the agreement was not binding because Mr Murtagh lacked actual and ostensible authority. Longmore LJ refused permission to appeal on paper. The issue before Kitchin LJ was whether that refusal should be reconsidered at an oral hearing.

The application for reconsideration of the refusal of permission to appeal was dismissed. The proposed appeal had no real prospect of success.

1. The extent of actual authority is determined objectively by construing the relevant communications in their context.
2. The claimants’ statements authorising Mr Watson to provide or present instructions to solicitors authorised him to pursue negotiations for recovery of rental arrears. They did not authorise him to confer on Mr Murtagh authority to conclude a settlement agreement.
3. Mr Murtagh might have been authorised to receive proposed settlement terms and refer them to Mr Watson and the claimants for consideration and approval. His authority did not extend to entering into an agreement embodying a radical concession as to the defendants’ liabilities. The Recorder was entitled to find that there was no actual implied authority.
4. The claimants had made no representation or other manifestation that Mr Murtagh possessed authority beyond the express terms of their communications. Accordingly, he had no ostensible authority.
5. The agreement made on 2 August 2013 was therefore not binding on the claimants. The Recorder was entitled to grant the declaration and consequential relief, and there was no realistic basis for interfering with that decision.

• Court of Appeal (Civil Division): On 21 July 2015, Kitchin LJ dismissed the oral reconsideration application and refused permission to appeal: [2015] EWCA Civ 1093.
• Court of Appeal (Civil Division): Longmore LJ refused permission to appeal on the papers on 4 February 2015.
• Doncaster County Court and Family Court: Recorder Miller declared on 22 August 2014 that the settlement agreement was not binding on the claimants because the solicitor lacked actual and ostensible authority.