Cork Debs: Whose Agent?

It is reported that approximately €196,000 paid by Cork teenagers for their Debs’ dance or dances, has gone missing.

They paid the money to one individual and it appears he did not pay it to the relevant hotel.

It is clear that he was a middleman. He was not providing the facilities for the dance himself; the hotel was dong that. He was not funding the facilities; the teenagers were doing that.

The role of the hotel was fully known to the teenagers (they knew the location of the intended dance).

It is, therefore a pertinent question, as to whose agent the middleman was. If he was acting as an agent for the hotel, express or implied, or if he had ostensible (not to speak of actual) authority to act as agent for the hotel, then, of course he was the hotel’s agent.

If he was not held out as the agent of the hotel or permitted without contradiction (by the hotel) to represent himself as the agent of the hotel, then it would seem he was the agent of the teenagers.

The latter is, on the known facts, unlikely. They already had an agent or agents; some of the teenagers were themselves organising the dance. It is reported that, on approaching the hotel those teenager agents were directed by the hotel to the middleman.

On those facts, prima facie, he was the agent for the hotel.

A number of rules of agency law apply to these circumstances:

1. Where the money of a third party is received by an agent while acting within the scope of his authority or in respect of a transaction ratified by the principal, and misapplied by him, or is received by the principal and misapplied by the agent, the principal is liable to repay the third party.

2. Where money is paid to an agent for the use of his principal, and the circumstances are such that the person paying the money is entitled to recover it back, the agent is personally liable to repay such money in the following cases:

a. Where the agent contracts or acts personally, and the money is paid to him in respect or pursuant to that contract or transaction;

b. Where the money is obtained by duress or by means of any fraud or wrongful act to which the agent is party or privy.

c. Where the money is paid under a mistake of fact, or under duress or in consequence of some fraud or wrongful act to which the agent is not party, or generally under circumstances in which an immediate right of recovery arises, and repayment is demanded of the agent, or notice is given to him of the intention of the payer to demand repayment, before he has in good faith paid the money over to, or otherwise dealt to his detriment with, the principal in the belief that the payment was a good and valid payment.

d. Where the receipt of the money is outside the actual and apparent authority of the agent and is not ratified by the principal.

Rule 1 is straightforward: possession by the agent is possession by the principal. In short, if the money is misapplied, it is the money of the principal that is misapplied, not the money of the third party.

Rule 2 seems not to apply to the facts of the case.

NOTE; I am indebted to the author and publishers of “Bowstead & Reynolds on Agency” 18th Ed. [2006] Sweet & Maxwell for the law cited in this post.