Taylor v Rhino Overseas Inc.

An agent’s express authority to enter commitments of any description for the purposes of a business does not give carte blanche to assume any borrowing, regardless of its terms or the parties’ ability to perform it. The authority is implicitly confined to commitments made in the ordinary course of the business and in the principal’s best interests. The Court of Appeal also confirmed the need for grounds of appeal to identify clearly any challenge to a finding of fact, leaving supporting reasons to the skeleton argument.

Kevin Taylor appealed against the dismissal of claims against Rhino Overseas Inc, an alleged undisclosed principal of Van Dutch Marine Ltd, arising from an unpaid loan. The Deputy High Court Judge dismissed claims in contract, misrepresentation, conspiracy, unjust enrichment and constructive trust, holding that the agency agreement did not authorise the transaction and that the contractual claim was in any event barred by the rule in Kendall v Hamilton.

Permission to appeal was granted on the scope of the agency relationship and the effect of the unsatisfied default judgment. The appeal principally concerned whether the agency agreement authorised the loan and whether Van Dutch Marine Ltd was a contracting party. The Court of Appeal also considered, but did not decide, the basis of the rule in Kendall v Hamilton.

1. Appeal dismissed. The agency agreement authorised Van Dutch Marine Ltd to carry on Rhino’s business of buying pleasure yachts from the Netherlands and selling them worldwide. The words in clause 3(d), permitting commitments, obligations and liabilities of any description, authorised commitments of any type for that purpose. They did not confer carte blanche to enter any loan, however onerous its terms or regardless of whether the agent or principal could perform it. The limitation to borrowing in the ordinary course of the business was implicit in the agreement and in the requirement to act to the principal’s best account.
2. The proposed short-term bridging loan, carrying interest equivalent to 48% per annum and rising to 60%, and purporting to provide security which the relevant companies could not offer, fell outside that authority. The court therefore did not decide whether the agreement authorised borrowing for manufacturing rather than buying and selling yachts.
3. The court also upheld the Judge’s analysis of the Nominee Agreement. It was not itself an agency agreement and did not necessarily supersede the Agency Agreement. It displaced the earlier agreement only in relation to the assets specifically addressed by it, leaving the Agency Agreement applicable generally to the distribution and sale of boats.
4. On the assumed application of the approach in Hamid v Francis Bradshaw Partnership, the identity of the parties to the wholly written Heads of Terms was an objective question and extrinsic evidence could assist. The incomplete later Loan Agreement, although naming and executed by Van Dutch Marine Ltd, was at most an unaccepted offer and did not establish that Van Dutch Marine Ltd was an additional party to the earlier agreement. Without it being a contracting party, it could not have contracted as Rhino’s agent.
5. The second ground was not decided. The court left open the true basis of the rule in Kendall v Hamilton and whether the liabilities of an agent and undisclosed principal are alternative or joint and several. An application to adduce further evidence was dismissed in any event because the first ground had failed.
6. Arnold LJ gave the judgment, with Henderson LJ and Underhill LJ agreeing. The court stated that grounds of appeal must clearly identify any challenge to a finding of fact. Underhill LJ expressly echoed that guidance.

• Court of Appeal (Civil Division): The appeal against the judgment of the Deputy High Court Judge was dismissed. The court upheld the conclusion that the agency agreement did not authorise the loan and did not determine the alternative issue concerning the rule in Kendall v Hamilton.
• Business and Property Courts, Business List (Chancery Division): Julia Dias QC, sitting as a Deputy High Court Judge, dismissed all claims against the Additional Defendants in [2019] EWHC 1951 (Ch).