Agency and Partnership Law
| Date | 01 December 2011 |
| Published date | 01 December 2011 |
| Author | Pearlie KOH LLB (Hons) (National University of Singapore), LLM (University of Melbourne); Advocate and Solicitor (Singapore); Associate Professor, School of Law, Singapore Management University. Stephen BULL BA, LLB (Hons) (Wellington), LLM (Harvard); Solicitor (England and Wales), Barrister and Solicitor (New Zealand), Member of the New York Bar; Associate Professor (Practice), School of Law, Singapore Management University. |
3.1 In Yong Sheng Goldsmith Pte Ltd v Liberty Insurance Pte Ltd[2011] SGHC 156, an insurance agent who was registered with the defendant insurers was held to be the latter's agent for the purposes of the plaintiff's insurance policy with the defendant. Accordingly, the defendant, as principal, could properly be imputed with the knowledge of its agent.
3.2 The issue arose in the context of a claim by the plaintiff on a contract of insurance it had entered into with the defendant. The defendant had attempted to repudiate the policy on the basis of material non-disclosure by the plaintiff. The plaintiff had, in fact, communicated the material information to one Johnny, the insurance agent who had been handling, since 2003, all matters relating to the plaintiff's policy with the defendant, including its procurement and subsequent renewals. The defendant denied that Johnny was its agent, claiming instead that he was the agent for the plaintiff as he had placed policies for the plaintiff with other insurance companies. The court rejected this submission, holding that the evidence (which included a valid name card issued by the defendant) clearly showed Johnny to be the agent of the defendant with authority to procure and put into effect insurance policies. In the circumstances, the communication by the plaintiff of the material information to Johnny was akin to a communication to the defendant, so that Johnny's knowledge constituted the defendant's knowledge. That Johnny did not in fact communicate the information to the defendant was held to be irrelevant to the issue.
3.3 It is an established principle of agency law that an agent cannot self-authorise or create his own appearance of authority (see Armagas Ltd v Mundogas SA (The Ocean Frost)ELR[1986] AC 717 (The Ocean Frost). This principle appears to have been circumvented by the English Court of Appeal in First Energy (UK) Ltd v Hungarian International Bank LtdUNK[1993] 2 Lloyd's Rep 194(First Energy) which held that an agent who had no actual or apparent authority to conclude, on his principal's behalf, the transaction itself, may nevertheless have the apparent authority to represent that the principal had approved and concluded that transaction: The Ocean Frost at 779. The effect of this apparent authority is that the principal is similarly bound. Given the razor-edge thinness (G McMeel, Philosophical Foundations of the Law of Agency(2000) 116 LQR 387 at 405) of the distinction between this case and that of the House of Lords in The Ocean Frost, it is not surprising that the decision has not been universally embraced (see, eg, C H Tan, The Law of Agency (Singapore: Academy Publishing, 2010) at [05.043]; cf I Brown, The Agent's Apparent Authority: Paradigm or Paradox? (1995) Journal of Business Law at 360). In Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd[2011] 3 SLR 540 (Skandinaviska), the Court of Appeal had occasion to consider the principle laid down in First Energy.
3.4 The issue before the court in Skandinaviska was whether the defendant company, APBS, was bound by certain acts of its employee. Chia, who held the title of finance manager, had managed to obtain credit and loan facilities from the plaintiff banks, purportedly for the company's purposes. This was, however, part of a scheme to defraud the banks of large sums of money which Chia effected by providing the banks with forged documents, including forged resolutions of the APBS board. The banks claimed against APBS for the repayment of these sums on the basis, inter alia, that Chia had actual or ostensible authority to enter into the relevant transactions on APBS's behalf. The claims failed in the High Court before Belinda Ang Saw Ean J ([2009] 4...
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