From: Neil Foster <>
To: MACQUEEN Hector <>
Peter Watts (Law) <>
Gerard Sadlier <>
Date: 04/02/2015 23:24:17 UTC
Subject: Re: Civil Liability under a Criminal Statute

Dear Hector;
Thanks for noting this decision. I am particularly grateful because it intersects with two key interests of mine, personal liability of company officers in relation to workplace injury (see my piece on the topic on (2008) 16 TLJ 20) and the action for breach of statutory duty (which I wrote about in (2011) 33 Sydney LR 67). For those who haven’t read it, the 2-1 decision here in Campbell v Peter Gordon Joiners Ltd interestingly parallels (and follows) the 2-1 decision some time ago of the EWCA in Richardson Pitt‑Stanley [1995] QB 123 on precisely the same point.
It is at least somewhat encouraging to see that Lord Brodie for the majority here does not follow the views of Lord Stuart-Smith in the previous decision in saying that legislation imposing a duty to insure was “mainly” for the benefit of the company! Clearly, as Sir John Megaw said in dissent in Richardson, the main point of the obligation is to attempt to ensure that an injured worker has some avenue to recover compensation when a company goes bust. Lord Brodie concedes as much at [20]:
Agreeing with the Lord Ordinary, I am not persuaded, as Stuart-Smith LJ was persuaded, that the sole purpose of this legislation was not simply to protect employees but also had, as a secondary purpose, the object of protecting employers against the possibility of being faced with a large claim for damages at the instance of an injured employee.
If I hadn’t made it clear elsewhere, I think both Richardson and now Campbell are wrongly decided, and am persuaded that the dissenting judges in each case get it right. Of course there is room for argument, and I concede that the form in which the relevant duty is imposed on directors is a little unusual – rather than clearly stating that they have a duty to see that insurance is effected, the Act deems them to be guilty of an offence if they have not acted to see that the company does the effecting. But when analysed this does, in my view, impose a relevant duty on the officer to take such measures, and on other grounds (the class of persons the legislation is designed to protect, the fact that in general legislation which touches on industrial safety issues is usually construed as creating civil liability, and indeed the still binding authority of the decision in Monk v Warby [1935] 1 KB 75 which has stood for many years) I think the duty ought to have been held to be civilly actionable.
neil foster 
Associate Professor
Newcastle Law School
Faculty of Business and Law

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From: Hector MacQueen <>
Date: Wednesday, 4 February 2015 12:53 am
To: "" <>, Gerard Sadlier <>
Cc: "" <>
Subject: Civil Liability under a Criminal Statute

A divided Inner House of the Court of Session on whether section 5 of the Employers’ Liability (Compulsory Insurance) Act 1969 imposes civil liability upon directors and other officers of companies if they consent or connive at, or are negligent in respect of, an insolvent company’s failure to provide adequate accident insurance for its employees, the only consequences set out in the Act for such directors being criminal in nature.  The majority is for the negative, Lord Drummond Young being the minority:  Campbell v Peter Gordon Joiners Ltd and Peter Gordon [2015] CSIH 11 -

Hector L MacQueen FBA FRSE
Professor of Private Law
University of Edinburgh Law School
Old College
South Bridge
Edinburgh EH8 9 YL

Currently working at the Scottish Law Commission tel (0)131-662-5222

From: Peter Watts (Law) <>
Sent: 02 February 2015 22:34
To: Gerard Sadlier
Subject: Re: Vicarious Liability of Undisclosed Principle?

Yes, but vicarious liability for torts and other wrongs has not generally
(pace, physical molestation) been applied to principals who are not either
the employer or a partner of the tortfeasor. Merely having an agency
relationship with the tortfeasor is not enough. If the principal IS an
employer it will not usually matter whether the employer is undisclosed.
But at least on one view, employer liability for some torts (e.g. deceit,
negligent misstatement) does turn on apparent authority in the
employee,and hence undisclosed principals would not be liable without
express authorisation. Equally, where there was apparent authority to make
the relevant statement, an agency relationship is sufficient to make the
principal liable. I discussed these controversial issues in (2012) 128 LQR
260. Peter.

On 3/02/15 4:14 am, "Gerard Sadlier" <> wrote:


Many thanks.

I much prefer the Canadian decision, at least so far as contracts are
concerned  and I note that Watteau's case has been doubted in Bowstead
and Reynolds (at 8.79) and has rarely if ever been followed in more
than a hundred years, in any reported case that I can find!

I wonder however, whether such private limitations between undisclosed
principle and agent, are similarly effective, where what is at issue
is the principle's vicarious liability?

After all, reliance on the employer by the victim is not at the heart
of the vicarious liability cases concerning employees and the law
seems to be far closer to the enterprize liability rationale you speak

Kind regards


On 2/2/15, Angela Swan <> wrote:
In Watteau v. Fenwick, [1893] 1 Q.B. 346, the plaintiff made a contract
the manager of a pub for the supply of goods.  The plaintiff was not
and sued the defendant, the owner of the pub.  The manager had been the
owner of the pub, but he had sold it to the defendant, remaining on as
manager.  The licence was taken out in the manager's name and his name
appeared as the licensee.  The manager was instructed not to purchase
certain supplies for the pub from outside parties.  In breach of these
instructions, the manager purchased supplies from the plaintiff.  The
Divisional Court, on appeal from the County Court, held that what the
manager did was within the usual authority of a person managing a pub
that the acts of the manager within the scope of this authority bound
principal, even though the third party neither knew of the agency nor
on anything done by the principal.

The only justification that the court gave was that if the defendant
not made liable, then

in every case of undisclosed principal, or at least in every case where
fact of there being a principal was undisclosed, the secret limitation
authority would prevail and defeat the action of the person dealing
with the
agent and then discovering that he was an agent and had a principal.
1 Q.B. 346 at 349)

The court made reference to the law of limited partnerships, pointing
that actions taken by the general partner within the scope of his usual
authority would bind a limited partner.   The court then claimed that
law of partnership was but a branch of the general law.

An alternative view was taken in McLaughlin v. Gentles (1920), 46 O.L.R.
477, 51 D.L.R. 383 (App. Div.).  The defendants were the members of a
syndicate that had sent out one of their number, a man called Chisholm,
prospect.  The plaintiff supplied goods to Chisholm and, when Chisholm
refused to pay, sued the other members of the syndicate to recover the
of the goods.  The Appellate Division held that the defendants (other
Chisholm) were not liable as they had not held Chisholm out as their
or as having authority to buy the goods.  The court referred to Watteau
Fenwick and other cases, but declined to follow the Divisional Court.
Appellate Division said:

It seems to be straining the doctrine of ostensible agency or of holding
out, to apply it to a case where the fact of the agency and the holding
were unknown to the person dealing with the so-called agent at the
time, and
to permit that person, when he discovered that his purchaser was only an
agent, to recover against the principal, on the theory that he is
from denying that he authorized the purchase.  It appears to me that the
fact that there was a limitation of authority is [at] least as
important as
the fact that the purchaser was an agent.  The vendor did not know
either of
these facts, and so did not draw any conclusion involving the principal
he sold and delivered the goods.  Should he be permitted, when he
elects to
look to the principal, to do so upon any other terms than in accordance
the actual authority given at that time?  It is entirely different where
there is a holding out as agent and the fact of the agency is known, but
where neither is an element in the bargain nor the reason why the
credit was
given, and so not an additional security known to the vendor at the
time, no
equity should be raised in favour of the vendor as against the
principal so
as to make the latter liable.

((1920), 46 O.L.R. 477, 490, 51 D.L.R. 383, 394-95, per Hodgins J.A.)

The comparison between Watteau v. Fenwick and McLaughlin v. Gentles
presents the issue.  The first case establishes a kind of "enterprise"
liability, making the owner, the undisclosed principal, liable for any
contracts made with the plaintiff.  The second sees no reason to spread
loss among the partners or to do anything other than to say that the
plaintiff must, in the future, make sure that anyone he deals with has
assets sufficient to complete the purchase.

Angela Swan

-----Original Message-----
From: Gerard Sadlier []
Sent: February-02-15 9:31 AM
To: Harrington Matthew P.
Subject: Re: Vicarious Liability of Undisclosed Principle?


Much appreciated!



On 2/2/15, Harrington Matthew P.



Here is a relatively recent Ontario AC case discussing the general

John Ziner Lumber Ltd. v. Kotov, 2000 CanLII 16894 (ON CA)


An early American Supreme Court case is

Ford v. Williams, 62 U.S. 287 (U.S. 1858)

An old, but pretty good law journal article is

Arnold Rochvarg, Ratification and Undisclosed Principals, 1989 McGill


Matthew P. Harrington

Professeur titulaire

Faculté de droit

Université de Montréal

3101 chemin de la Tour

Montréal, Québec H3T 1J7



From: Gerard Sadlier<>

Sent: Monday, February 02, 2015 8:06 AM


Dear all,

I'd be really grateful for any authorities on the question whether a

principle is vicariously liable for acts of their agent in the course

of or incidental to the agent's agency, in circumstances where the

principle is undisclosed to third parties.

Where, in other words, T (the third party) deals with A (the agent)

not realizing that A acts for P (the principle).

Many thanks


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