Summary

The trial judge, on the evidence before him, was entitled to conclude that the local authority, the owner of a racecourse, held out the chief executive of a racecourse management company as having authority to enter into an agreement with the claimant company on the local authority's behalf in respect of certain television picture rights.

Facts

The appellant local authority, a racecourse owner, appealed against the decision ((2004) EWHC 2813 (QB)) that the chief executive of a racecourse management company (D) had apparent or ostensible authority to enter into an agreement with the first respondent company (C) granting it television picture rights, which was binding on the local authority. The agreement took the form of a letter. C had sent the letter to D, which provided for its signature by "a duly authorised representative" of D. The letter was in fact signed by the chief executive of D. The trial judge found that the agreement that resulted was not with D but with the local authority, acting through the ostensible authority of D or the chief executive. The issue on appeal was whether the judge was entitled to conclude that the local authority had held out the chief executive and D as having the authority to enter into the agreement with C. The local authority submitted that the evidence showed that C intended to contract with, and made the offer to, D as principal and a claim that D acted only as an agent fell at the first hurdle.

Held

(1) It was common knowledge in the racing world that the local authority owned this particular racecourse. D had been put into the agreement because it had been named in a previous television rights agreement. It could only be established that C intended to contract with D as a principal if it could be shown that although it was axiomatic that the owner of the course normally controlled the rights; and notorious that the local authority was the owner of the course; nonetheless C believed, albeit wrongly, that it was D and not the local authority that was in a position to dispose of the rights as principal. That would require a belief on the part of C that the local authority had in some way agreed to transfer the rights to D. However, there was not a shred of evidence to support such a belief and such a belief was totally implausible. The claim that on its objective construction the letter agreement was entered into by C and D with D as a principal therefore failed. (2) All the requirements of ostensible authority, including in particular that it was the local authority, the principal, that led the parties to think that the chief executive had the authority to act on behalf of the local authority, were plainly set out in the instant case.