Kett v. Shannon

Factual and Procedural Background

The Defendant, who owns a garage, sold a second-hand Fiat motor car to the Purchaser in 1979. After mechanical defects became apparent, the Defendant took the Fiat back for repair and left a Renault with the Purchaser as a temporary replacement. When the Purchaser later returned the Renault, the Defendant was absent; only the Mechanic, one of several employees, was present. At the Purchaser’s request for immediate transport, the Mechanic—acting on his own initiative—lent the Purchaser a Mini owned by the Defendant.

Two days later, the Purchaser negligently struck the Plaintiff while driving the Mini, causing severe injuries. The Plaintiff sued both the Purchaser (as driver) and the Defendant (on the basis of vicarious liability). The claim against the Purchaser settled for £42,500, but the Purchaser was uninsured. The Plaintiff therefore sought indemnification from the Defendant’s insurer.

In the High Court a separate issue was tried before a judge and jury: whether the Purchaser was driving the Mini with the Defendant’s consent. The jury answered “Yes.” Because section 118 of the Road Traffic Act 1961 deems such driving to be on the principal’s behalf, the Defendant would be vicariously liable if the finding stood. The Defendant appealed, contending that the jury’s finding should be set aside.

Legal Issues Presented

1. Whether the Mechanic had actual authority from the Defendant to lend the Mini to the Purchaser.
2. Whether, in the absence of actual authority, the Mechanic nevertheless possessed ostensible (apparent) authority such that the Defendant is estopped from denying liability.

Arguments of the Parties

Plaintiff’s and Purchaser’s Arguments

• The Mechanic had ostensible authority to lend the Mini because he appeared to act on the Defendant’s behalf at the garage.
• Consequently, under section 118 of the Road Traffic Act 1961, the Defendant is vicariously liable for the Purchaser’s negligent driving.

Defendant’s Arguments

• The Mechanic lacked actual authority; the Defendant never authorised employees to lend vehicles to customers.
• No representation—verbal, written, or by conduct—was made by the Defendant to the Purchaser that could create ostensible authority. Therefore, the estoppel required for apparent authority cannot arise.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court first distinguished between actual and ostensible authority. It found the Mechanic had no actual authority, based on uncontradicted evidence from both the Defendant and the Mechanic.

Turning to ostensible authority, the Court reiterated that such authority is established only where the principal represents to the third party that the agent is authorised, and the third party relies on that representation. Although the Purchaser assumed the Mechanic could lend cars, the Court held that:

• No representation—express or implied—was made by the Defendant to the Purchaser concerning the Mechanic’s authority.
• The Mechanic’s unilateral act could not, without the Defendant’s involvement, create ostensible authority.
• Therefore, the statutory deeming provision in section 118 could not operate, because its trigger (use of the vehicle with the owner’s consent) was not met.

Given these findings, the jury’s affirmative answer lacked an evidential foundation, and the issue should have been withdrawn from them.

Holding and Implications

APPEAL ALLOWED. The jury’s finding that the Purchaser drove with the Defendant’s consent is set aside, and judgment is entered for the Defendant.

Implications: The Plaintiff cannot recover from the Defendant’s insurer and is confined to remedies available under the Motor Insurance Bureau scheme. The decision reinforces the strict requirements for establishing ostensible authority and clarifies that an employee’s unauthorised actions cannot bind an employer in the absence of a representation attributable to the employer. No new legal principle is created, but existing doctrine on apparent authority is reaffirmed.