Dear Neil,

Thank you for your comments.

To clarify, I did not mean to say that the whole law of vicarious
liability could be explained as instances of ostensible authority -
though having re-read my previous email, I see how it could be
understood in that way.

The point which I was trying to make was that in a case like this one,
I'm not clear that purely because the duty of care owed by the erring
employee lies in contract only, the employer would (or should) escape
liability.

The point is potentially important, even where there is a cause of
action in both contract and tort, in terms of limitation issues and
the quantum of damages.

Kind regards

Ger

On 5/16/13, Neil Foster <Neil.Foster@newcastle.edu.au> wrote:
> Dear Gerard;
> Thanks for your very helpful comments. I concede that there is a difficulty
> here in saying that there was a contractual duty, as you are right to point
> out that Ms R seems to have agreed to carry out the transaction for no
> charge. No doubt others will be aware more than I am of the cases governing
> situations where a solicitor undertakes to act as such for free; clearly the
> solicitor would impliedly agree to act in accordance with proper
> professional standards (and I see that this opinion was offered by an expert
> called on professional standards at [36]). This seems to be one of those
> "borderline" cases like some of the cases on negligent misrepresentation,
> where there has been a voluntary assumption of an obligation to behave in a
> certain way which is "almost" contractual.
> The comparison with Lloyd v Grace, Smith is of course apt, although of
> course the major difference in that case was that the client there had
> approached the firm generally, and was dealt with by a clerk who clearly had
> authority to deal with conveyancing transactions.
> If we are dealing, then, with a tort of "voluntary assumption of
> responsibility" of some sort, is it appropriate to discuss vicarious
> liability? I am not aware that any of the major cases on this area (eg
> Hedley Byrne or MLC v Evatt) discuss the question, though presumably in
> those cases someone has spoken on behalf of a company. It seems that the
> courts assume the normal principles of contractual liability apply (in these
> "quasi-contractual" cases): if an employee who has apparent authority to
> speak on behalf of the company, says something, it will be a case of
> "personal liability" of the company, as the company can only speak through
> its employees. So here perhaps the most satisfactory way to deny Mr E's
> liability would be to analyse the case in terms of whether or not Ms R had
> ostensible authority, as you say. And it seems likely that she did not, due
> to circumstances in which the relationship of solicitor and client was
> entered into. I would still like to suggest that "vicarious liability" is
> not the appropriate way to carry out the analysis, and perhaps this again is
> another pointer to the odd nature of the "voluntary assumption" cases.
> You seem to be, though probably are not, suggesting that all cases of
> vicarious liability are cases where "a principle is responsible for the
> acts of
>>
>> an agent which are within the scope of the agents ostensible (though
>> not actual) authority".
> I think this cannot be right, for ordinary cases of personal injury by
> carelessness of the employee, harming a third person. I think it would be
> stretching the concept of the "scope of ostensible authority" too far to say
> that an employed delivery driver has "ostensible authority" to run down a
> pedestrian. There may be some financial harm cases where the analysis works,
> but at the moment I would not be persuaded that it is a general principle.
> Regards
> Neil
>
> On 16/05/2013, at 2:16 AM, Gerard Sadlier wrote:
>
>> Dear Neil,
>>
>> Thank you very much for circulating this decision. Having read the
>> case, I must say that I think it was rightly decided, essentially for
>> the reasons which Ward JA gives.
>>
>> On the question of vicarious liability, the crucial finding is surely
>> the conclusion which can be extracted from the reasoning at paras
>> 118-125 that the client Mr. Z knew perfectly well that Ms. R was not
>> acting on behalf of her employee but was acting on her own account as
>> a favour. That finding distinguishes the case from the superficially
>> similar decision in Lloyd v Grace, Smith & Co (1912) AC 732, where the
>> clark was held out by the firm as transacting the relevant business
>> and purported to do so on behalf of the firm.
>>
>> Regarding your view that the duty of care was contractual, I think
>> that R's duty of care was either tortious only or owed in both
>> contract and tort.
>>
>> I think the court treated it as tortious - see at para 57, where the
>> issues on appeal are set out and the court refers to Ms. R's torts.
>>
>> Indeed, there might have been some difficulty in finding consideration
>> to support a contract, if the point was relevant, since Ms. R
>> apparently acted for nothing - see the extract from her evidence at
>> para 25.
>>
>> Finally, I would note that in Lloyd, above, the HL dealt with a breach
>> of duties owed in both contract and tort as properly forming the
>> subject of a claim for vicarious liability. See per Gleeson CJ in
>> State of NSW v Lepore [2003] HCA 4 at para 44.
>>
>> For myself, I cannot see a difference between a claim for vicarious
>> liability and a claim that a principle is responsible for the acts of
>> an agent which are within the scope of the agents ostensible (though
>> not actual) authority - where a claim for breach of contract would be
>> uncontravertial.
>>
>> No doubt, I am missing something?
>>
>> I would be interested in any comments which listers may have,
>> particularly regarding the difference between vicarious liability and
>> the law of agency regarding ostensible authority.
>>
>> Kind regards
>>
>> Ger
>>
>> On 5/15/13, Neil Foster <Neil.Foster@newcastle.edu.au> wrote:
>>> Dear Colleagues;
>>> There is an interesting decision of the NSW Court of Appeal in Zakka v
>>> Elias
>>> [2013] NSWCA 119 (13 May 2013)
>>> http://www.caselaw.nsw.gov.au/action/PJUDG?jgmtid=164672 which raises
>>> the
>>> question whether and in what circumstances a solicitor can be held
>>> vicariously liable for the actions of one of their employees.
>>> Mr Elias, a sole practitioner, employed Ms Rahe, a recently admitted
>>> graduate, in his practice. In accordance with the relevant admission
>>> rules,
>>> she had a "restricted practicing certificate" which meant that she was
>>> not
>>> entitled yet to take on clients herself. Unbeknownst to her employer,
>>> she
>>> took on as a client a Mr Zakka, a family friend, and acted in arranging
>>> a
>>> loan of $50,000 to be paid to her brother. The lower court found that
>>> this
>>> was a breach of her duty as a solicitor to avoid a clear conflict of
>>> interest- see the appeal at [47]-[48].
>>> The interesting question for current purposes was whether Mr Elias could
>>> be
>>> held vicariously liable for the wrong committed by Ms Rahe, his
>>> employee.
>>> Ward JA addresses the issue from [117] and concludes not, applying a
>>> number
>>> of the comments from NSW v Lepore [2003] HCA 4 from [126] ff. The trial
>>> judge had adopted the language of Gummow and Hayne JJ in that case
>>> concerning "pursuit of the employer's interests" and "ostensible
>>> authority"
>>> and found those criteria not satisfied. Ward JA accepted that it was
>>> also
>>> necessary to consider matters discussed by Gleeson CJ (as well as Kirby
>>> J)
>>> in Lepore about "close connection". Her Honour held that there was not a
>>> sufficiently close connection- Mr Zakka had directly approached Ms Rahe,
>>> she
>>> had concealed the fact of her acting for him from Mr Elias and indeed
>>> knew
>>> that under the conditions of her restricted practicing certificate she
>>> was
>>> not entitled to take on clients on her own. She was on a "frolic of her
>>> own". (See also Emmett JA at [158].)
>>> The outcome seems sensible but I must say something seems odd about the
>>> reasoning. I think the main problem is that the question of vicarious
>>> liability was being addressed in a situation where it was not clear to
>>> me
>>> that a tort had been committed! When you analyse what Ms Rahe had done,
>>> it
>>> was in my view a breach of the implied term of her contract as a
>>> solicitor
>>> not to enter into a transaction where there was a conflict of interest.
>>> At
>>> [48] this is described as "Ms Rahe's breach of duty" but I would have
>>> thought this was a contractual, not a tortious, duty. As far as I am
>>> aware,
>>> no-one has ever suggested there can be vicarious liability for breach of
>>> a
>>> purely contractual duty.
>>> So I think it would have been a simpler way to the desired outcome to
>>> strike
>>> out the claim for vicarious liability on this basis. As it is, it seems
>>> to
>>> me that the judgment potentially muddies the waters of the law on
>>> vicarious
>>> liability even more than they were left after Lepore. For example, if
>>> this
>>> were a tort, was it "intentional" or not? If not, is it even appropriate
>>> to
>>> be applying the Lepore test(s)?
>>> Perhaps the matter could be tested by altering the facts. Suppose that,
>>> in
>>> pursuit of the identical transaction, Mr Zakka had come into the office
>>> in
>>> Mr Elias' absence and Ms Rahe in the course of dealing with him caused
>>> him
>>> some negligent physical injury (left a cord on the floor he tripped
>>> over,
>>> accidentally poured boiling water over him while making coffee, etc.) Can
>>> it
>>> really be supposed that a court would not find Mr Elias vicariously
>>> liable
>>> for physical harm caused by an employed solicitor while consulting a
>>> client
>>> in his office, however much the transaction concerned went beyond what
>>> Ms
>>> Rahe was authorised to do? The reason I ask is that it seems to me that
>>> the
>>> court, in seeking to rule out liability, may have overstated the "lack
>>> of
>>> connection" between what Ms Rahe was employed to do and the way the harm
>>> took place. Better to simply rule out vicarious liability as not applying
>>> to
>>> this sort of duty.
>>> Regards
>>> Neil
>>>
>>> Neil Foster
>>> Associate Professor in Law,
>>> Newcastle Law School;
>>> Faculty of Business & Law
>>> University of Newcastle
>>> Callaghan NSW 2308
>>> AUSTRALIA
>>> Room MC177,
>>> McMullin Building
>>> ph 02 4921 7430
>>> fax 02 4921 6931
>>>
>>> http://www.newcastle.edu.au/staff/profile/neil.foster.html
>>>
>>> http://works.bepress.com/neil_foster/
>>>
>>> http://simeonnetwork.org/testimonies/119/Neil_Foster
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>
> Neil Foster
> Associate Professor in Law,
> Newcastle Law School;
> Faculty of Business & Law
> University of Newcastle
> Callaghan NSW 2308
> AUSTRALIA
> Room MC177,
> McMullin Building
> ph 02 4921 7430
> fax 02 4921 6931
>
> http://www.newcastle.edu.au/staff/profile/neil.foster.html
>
> http://works.bepress.com/neil_foster/
>
> http://simeonnetwork.org/testimonies/119/Neil_Foster
>
>
>
>
>
>
>
>