AustLII Home | Databases | WorldLII | Search | Feedback

James Cook University Law Review

James Cook Univeristy Law Review (JCULR)
You are here:  AustLII >> Databases >> James Cook University Law Review >> 2022 >> [2022] JCULawRw 4

Database Search | Name Search | Recent Articles | Noteup | LawCite | Author Info | Download | Help

Harris, Bede --- "Unauthorised Beneficial Intervention in the Affairs of Another: Drawing on European Development of the Roman Law Concept of Negotiorum Gestio to Fill a Gap in the Common Law" [2022] JCULawRw 4; (2022) 28 James Cook University Law Review 51


Unauthorised Beneficial Intervention in the Affairs of Another: Drawing on European Development of the Roman Law Concept of Negotiorum Gestio to Fill a Gap in the Common Law

Bede Harris*

Abstract

The common law approach to the rights of a person who engages in unauthorised intervention in the affairs of another where it is necessary to protect the interests of that other person is incoherent. The general rule that the rights of an intervenor are not recognised is subject to narrow exceptions arising under the law of agency of necessity and bailment, but even these provide inconsistent remedies and do not protect the rights of an intervenor who has no prior relationship with the person benefited. This paper critiques the current law and proposes a new set of rules, based on the Roman law doctrine of negotiorum gestio (management of the affairs of another) as developed in modern European law that would balance the rights of the intervenor and the person on whose behalf the intervenor acts.

I Introduction

Consider the following scenarios:

• A lives on a farm near to one owned by B. Winds are blowing a fire towards a field on B’s farm in which there is a herd of cattle. A goes to B’s house but it is deserted. A knows B’s mobile phone number, but when A calls B there is no answer. A removes B’s cattle onto his (A’s) farm to escape the flames, and incurs expense in feeding them until B returns to claim them. In addition, stating that he is acting on behalf of B, A enters into a contract with C, a veterinary surgeon, for treatment of one of the cattle when it falls ill.

Under the common law, because A has no prior relationship with B imposing a duty on A to act,[1] he will be unable to recover from B the expenses he (A) incurred in feeding the cattle, and A, not B, will be liable to pay the fees owed to C.

• A is a truck driver who is carrying a consignment of bags of cement owned by B. When A arrives at the warehouse in a remote town to which the goods are to be delivered, he finds that it is closed because of industrial action by the workers. A has to get the truck back to his place of work. He finds out that C operates the town’s only storage facility, but that C only has vacant space in an open yard. A buys tarpaulins to cover the cement so that it does not harden if it rains and, saying that he is acting on behalf of B, enters into a contract with C for the goods to be stored until they are collected by B.

In this scenario, A will be deemed to be a bailee of B’s goods and as such will able to recover compensation from B in relation to the expenses he (A) incurred, however B will not be contractually bound to C and A remains liable on the contract even though he had stated that he was acting on behalf of B.

These results are perverse, but they are consistent with the position as it currently appears to be in the case law. They reveal obvious inconsistencies and shortcomings in the common law. Prima facie one would think that in each of these circumstances the law would recognise that it was legitimate for A to act on behalf of B, that A should be able to recover expenses from B and that B would be contractually bound to C.

This paper discusses the extent to which the common law recognises obligations arising when one person acts to protect the interests of another without the authorisation of that other person and, to the extent that it does not, whether the Roman law doctrine of negotiorum gestio, or an expanded version of it, could provide a useful model for developing the common law to protect the rights of a person in A’s position.

For convenience, the paper often uses the terminology of the law of agency to answer these questions, identifying the person acting in an unauthorised manner in the interests of another as the agent (or, alternatively as the intervenor), the person whose interests are being served as the principal, and a person with whom the agent enters into contractual obligations in furtherance of those interests as the third party. However, this is subject to the caveat that, as will be shown below, the law of agency provides an imperfect model for analysis of unauthorised action.

The paper addresses two different categories of potential obligation – those arising between the actor and the person for whose benefit the actor was acting, and those arising between the beneficiary and third parties with whom the actor entered into contractual relationships on the beneficiary’s behalf. The scope of this paper is limited to contract law – it does not address the legal position of intervenors under tort law.

Part II of the paper discusses negotiorum gestio, its requirements, the role it played in the Roman legal system and its continued use in modern jurisdictions.

Part III examines the extent to which common law doctrines recognise that a person acting without authorisation may create legally-binding obligations on behalf of another.

Part IV compares the common law doctrines and identifies the limitations inherent in them which prevent them from protecting the rights of benevolent intervenors.

The paper concludes in Part V by arguing that the common law should be developed to recognise a new doctrine, based on an expanded version of negotiorum gestio, which would protect the rights of unauthorised actors and third parties with whom they engage in circumstances currently not covered by the common law.

II The Roman Law Concept of Negotiorum Gestio and its Further Development in Europe

A Mandatum

Before discussing negotiorum gestio, it is necessary to explain mandatum, or mandate, which was the closest legal relationship to agency in Roman law. An analysis of the differences between mandatum and negotiorum gestio aids in understanding the unique characteristics of the latter.

Under the contract of mandatum or mandate, a mandator requested a mandatee to perform a service for him or her. The contract arose from the custom of friends asking each other to perform services and for this reason was gratuitous – in other words, he mandatee received no payment for his or her services,[2] but could recover expenses incurred in the performance of the mandate.[3] The gratuitous nature of the contract distinguished it from the contract of locatio conductio, or personal hire, in terms of which one person hired out their services to another. By the early Empire, however, mandatees were often promised an honorarium as a reward for their services, although it had to be sued for under a separate agreement rather than under the contract of mandate itself.[4] Although mandate was similar to modern agency, it lacked the essential feature of the agent creating a contract between the principal and the third party: Where a mandatee entered into a transaction with a third party in the discharge of the mandate, a contract was entered into only between the mandatee and the third party, not between the mandator and third party.[5]

B Negotiorum gestio

Negotiorum gestio arose where a person involved themselves in the affairs of another without authorisation, for example where a storm destroyed a person’s fences while he was overseas and a neighbour had them repaired.[6] In such circumstances the neighbour, or gestor, had a right to recover expenses from the owner by means of the actio negotiorum contraria.[7] In contrast to mandatum, negotiorum gestio was classified as a quasi-contract. It could not be a true contract because it lacked the essential element of agreement between the actor and the person on whose behalf he or she was acting.

Four conditions had to be satisfied for the actions of the gestor to be lawful and for them to give rise to a right on his or her part to recover compensation:[8] The actions of the gestor had to be reasonable in the circumstances, the act must have been beneficial to the dominus (the person in whose affairs the gestor was intervening), the act must have been done in furtherance of the interests of the dominus not those of the gestor, and the gestor must have been acting with the intention of recovering expenses. In other words, must not have been acting gratuitously.

The first requirement, relating to reasonableness, meant that the acts of the gestor had to be reasonable both in the sense that it was reasonable for the gestor to act rather than to wait for the dominus to attend to his or her own affairs and that the acts had to be reasonable in their scope. Thus, the gestor had a right to reimbursement only if circumstances prevented the dominus from acting himself or herself and only to the extent that it was necessary to protect the interests of the dominus. ‘Interests’ were broadly interpreted as including not only the obvious category of preservation of physical property, but also discharging of debts owed by the dominus, collecting debts he or she as owed, borrowing money on his or her behalf or buying or selling property.[9] The requirement that the acts of the gestor had to be beneficial did not mean that they had to be successful or that the dominus had to be enriched – it was enough that the gestor had acted usefully.[10] A gestor who entered into transactions with third parties in protecting another’s interests did not create a contract between the dominus and the third parties. The gestor was liable on such contracts and had to rely on an action against the dominus for compensation or recompense for the liabilities they (the gestor) had incurred.

C Negotiorum gestio in modern European legal systems

Classical negotiorum gestio, conforming precisely to Roman law,[11] forms a living part[12] of the law in South Africa, which has a hybrid Roman-Dutch/common law legal system.[13] More usually however modern legal systems incorporate adapted forms of negotiorum gestio which confer on intervenors rights which are significantly broader than under Roman law. This is true of almost all Western European jurisdictions, whose codes recognise negotiorum gestio, albeit in differing ways.[14]

Common to all these jurisdictions is a recognition of the right of a person to intervene in the affairs of another for the benefit of that other person in circumstances where it is reasonable to do so because authorisation cannot be obtained from that person.[15] The codes allow the intervenor to recover reimbursement for reasonable expenses,[16] as under classical negotiorum gestio, but go further by also allowing the intervenor to claim indemnification for liabilities incurred to third parties in furtherance of the principal’s interests.[17] (This is different from the question of whether the intervenor can create a contractual bond between the principal and third parties, which is considered below).

Most jurisdictions also allow an intervenor to recover compensation for any losses he or she may have sustained (for example in the form of damage to property or injury) in the course of acting for the benefit of the principal, which also goes further than did Roman law.[18] Justification for this is based on the principle that benevolent intervention is cost-neutral from the perspective of the intervenor.[19]

A more difficult question is whether an intervenor should be allowed to recover remuneration for time spent or for skills applied. Such a claim runs contrary to the underlying principle of negotiorum gestio that it is a benevolent, and thus gratuitous, intervention. It would also have the effect of enabling the intervenor to recover profit to the extent that that is a component of whatever amount the intervenor would usually earn.[20] Furthermore, it carries the risk, albeit a small one, of intervention developing into a business in which intervenors built a profit margin into the costing of the time spent in intervening. On the other hand, a claim for remuneration could be justified on the basis that loss of earnings by an intervenor is just as much a cost to him or her as are expenses - which are undoubtedly recoverable. Barr argues that since an intervenor who pays for professional help on behalf of the principal would (even under classical negotiorum gestio) be able to recover resultant costs from the principal, it would be inequitable not to allow an intervenor who happens to have professional skills and who applies them to recover what they would have charged.[21]

The law in European legal systems is inconsistent on this point. Most do not allow a claim for remuneration, but some allow it in cases where the gestor exercises his or her professional skill.[22] Perhaps the latter is the best approach: There is no reason why a lawyer or an engineer or a supermarket checkout operator intervening to assist an accident victim should be entitled to remuneration, which would vary according to how much each might earn per hour even though the intervention itself does not require the use of their different skills. By contrast, where a doctor applies his or her professional skills to assist a traffic victim, there is an obvious nexus between the type and duration of the effort expended for the benefit of the principal on the one hand and the intervenor’s particular skill on the other which entitles the intervenor to remuneration.[23]

Most European jurisdictions allow an intervenor to enter into contracts with third parties on behalf of the principal.[24] The justification for this is that since an intervenor who enters into a contract in his or her own name in furtherance of the principal’s interests can claim indemnification from the principal, making the principal directly liable to a third party where the contract was concluded by the intervenor in the principal’s name does not alter the financial position of the principal.[25] Third parties are protected by the knowledge that the intervenor is acting on behalf of the principal and can therefore decide whether to enter into a contract based on an estimation of the principal’s creditworthiness. In circumstances where the intervenor does not know the identity of the principal (which will often be the case) the third party can avoid the risk of entering into a contract with an unidentified party by stipulating that they are prepared only to contract with the intervenor, leaving it to the intervenor to seek indemnification from the principal.

III The Treatment of Unauthorised Action by Different Branches of the Common Law

A Introduction

In contrast to the way in which negotiorum gestio is an uncontroversial part of civil law legal systems, the common law is uncertain and inconsistent on the question of the extent to which obligations arise where one person takes unauthorised actions for the benefit of another. As we shall see, where such obligations are recognised, dispute exists on the question of the legal basis upon which they are founded, with the result that no coherent doctrine is identifiable.[26]

The historic hostility of the common law to liability being imposed without consent is illustrated by Nicholson v Chapman,[27] here the defendant had transported timber belonging to the plaintiff to a place of safety after it had drifted down a river. In an action for trover by the plaintiff, the court rejected the defendant’s argument that he had a lien over the timber pending reimbursement of his expenses in transporting it[28] unless paid by the plaintiff. Despite this, however, Eyre CJ held (obiter, because the case was decided on the narrow point of whether the defendant had a lien) that the facts would entitle the defendant[29]

... to some reasonable recompence [sic] from the bounty, if not from the justice of the owner; and of which, if it were refused, a court of justice would go so far as it could go, towards enforcing the payment.

Eyre CJ also stated that if reimbursement was to be payable, the onus would be on the claimant to prove the amount thereof. However, the effect of these statements was somewhat diminished by Eyre CJ’s statement that perhaps reward of the finder should be left to depend on ‘the moral duty of gratitude’ rather than on a duty at law,[30] which at best, left it ambiguous as to whether in his view an intervenor was entitled to compensation.

An emphatic rejection of the idea that rights should be conferred on an unauthorised intervenor is however found in the statement by Bowen LJ in Falke v Scottish Imperial Insurance Co[31] that

... liabilities are not to be forced on people behind their backs, any more than you can confer a benefit on a man against his will.

More recently in The Goring,[32] the House of Lords rejected a claim for compensation from rescuers who had intervened to gain control of a vessel that had slipped its moorings in the Thames and had been at risk of colliding with other vessels and a bridge.

Thus the general rule under the common law is that a person who engages in beneficial intervention on the part of another is remediless. The only exception to this are circumstances in which an intervenor has a claim against the beneficiary of his or her actions because they fall within the narrow confines of agency of necessity or of bailment, but even then, as will be shown, the intervenor is treated inconsistently. In passing, it should be mentioned that while some have argued that the doctrine of unjust enrichment can be used as a source of rights for intervenors, this is clearly not the case, as negotiorum gestio conferred rights on intervenors irrespective of whether the beneficiary of their actions had been enriched. Even where the dominus has been enriched, the entitlements of the intervenor are measured in accordance with his or her expenses, not the extent to which the beneficiary has been enriched.[33] Furthermore, as we shall see, a key question that needs to be explored is whether the intervenor should be able to enter into contracts on behalf of the beneficiary, in relation to which unjust enrichment is of no assistance.

As previously stated, because the rights of the intervenor may mirror the obligations that subsist in agency relationships – the right of the agent to claim reimbursement from the principal (often referred to as the internal aspect of agency) and the contractual rights created between principal and third party (often referred to as the external aspect), it is useful to use terminology from the law of agency. However it must be borne in mind that, as will be shown, agency ultimately provides an unsatisfactory foundation upon which to base the rights of intervenors.

B Admiralty law

The entitlement of intervenors to obtain compensation for expenses incurred in saving the property of another on the high seas has long been recognised under Admiralty law. The reason for this (and leaving aside modern statutory variations) is that from the inception of the Admiralty Court in the 14th century, Admiralty law was based on civil rather than common, law.[34] Most significantly for the purposes of this paper Admiralty law recognised the doctrine of negotiorum gestio by allowing a salvor who salvaged a vessel and/or its cargo without authorisation from the owner to recover both reimbursement for expenses and a reward. However, although the rights of the salvor were based on negotiorum gestio, it should be noted that the law of salvage departed from negotiorum gestio in two important respects: the salvor could recover only if they were successful in preserving the imperilled property,[35] whereas under negotiorum gestio the gestor was entitled to reimbursement irrespective of whether the intervention was successful; while the entitlement of a successful salvor to a reward (in addition to reimbursement) went beyond negotiorum gestio, which gave rise to a right to compensation only.

Separately from salvage, and of particular relevance to this paper a line of cases extending back to the 17th century provide authority, explicitly stated as being based on negotiorum gestio,[36] to the effect that the master of a vessel who has been unable to contact the ship-owner may enter into a contract for repair or salvage of the vessel,[37] may hypothecate the vessel or its cargo in order to pay for repairs,[38] may insure the vessel,[39] may sell the vessel (most obviously where the cost of repair is uneconomical)[40] and may sell the cargo where it would otherwise spoil.[41]

The application of negotiorum gestio by the Admiralty Court is explicable in practical terms by the fact that the common law of agency was ill-suited to the practicalities of maritime commerce where masters of vessels faced unexpected contingencies in relation to which they were unable to obtain instructions either from shipowners or the owners of cargo. By contrast, the lex mercatoria of the civil law solved this problem by recognising, by means of negotiorum gestio, that it was necessary for masters to be permitted to take reasonable action in the interest of both ship and cargo owners, and that such conduct gave rise to a right to recover expenses and also to bind ship and cargo-owners to third parties.

Here it must be recognised that the creation of contractual bonds between principal and third party (or, to use the terminology appropriate to negotiorum gestio, between dominus and a third party) went beyond what negotiorum gestio of Roman law allowed. As was noted above, in Roman law the gestor was personally liable on contracts entered into with third parties and had only a right of reimbursement from the dominus, whereas the fact that masters could sell or hypothecate vessels and cargo meant that under Admiralty law the master could create contracts binding as between ship and cargo-owners on the one hand and third parties on the other. As one example among many one can cite The Cynthia,[42] in which a British consul at a port in Mexico signed a bottomry bond (that is a guarantee using a ship as security) for a loan to cover the supply of stores for a vessel that had been brought into port after a mutiny by the crew. The court held that the owner was liable on the bond.[43] This case is significant in that it was not one where the agent was claiming compensation against the principal, but rather where the principal was held liable to the third party with whom the agent had contracted.

Notwithstanding the utility of the civil law doctrine, the common law courts refused to apply negotiorum gestio within their jurisdiction on land and in inland waters. Aitken argues that this was because common law judges apprehended that if principles of Admiralty law were applied other than on the high seas, they might lose jurisdiction over such cases to the Admiralty courts.[44] Yet, it is obviously unsatisfactory from the perspective of principle that an unauthorised intervenor on land should be denied a remedy in circumstances where one is available to an intervenor on the high seas.

C Agency of necessity

Unfortunately, the clarity that existed under Admiralty law was lost in the 19th century, even in relation to cases arising at sea. The Admiralty Court was absorbed into the High Court in 1875, and cases involving unauthorised action, including those arising on the high seas, came increasingly to be decided on the basis of the common law doctrine of agency of necessity rather than on the basis of the civil law concept of negotiorum gestio.

The doctrine of agency of necessity is to the effect that, contrary to the general rule of agency that an agent may act only if they have some form of authority (express, implied or apparent), in certain circumstances an agent may take unauthorised action in the interests of a principal. In such circumstances (as in any other type of agency) they may thereby obtain a right of reimbursement against the principal and may also create contractual obligations between the principal and a third party.[45]

The requirements for agency of necessity to operate are that it must be impracticable for the agent to communicate with the principal;[46] the agent’s actions must have been necessary in order to protect the interests of the principal, necessity being tested according to the standard of the reasonable person;[47] the actions that the agent took must also have been reasonable in the circumstances,[48] the agent must have acted bona fide in the interests of the principal[49] and finally, in light of the condition imposed in the case law discussed below, the agent must have been given custody over the principal’s affairs by virtue of some pre-existing legal relationship. Given that agency of necessity operates in the absence of authority from the principal, it is often categorised as a special form of agency by operation of law. However, as we shall see in Part IV, this view has been challenged by some who argue that the rights of action recognised in the cases are founded upon rules that are unrelated to agency.[50]

The requirement of impracticability of contacting the principal may give rise to difficulties.[51] In the case of a cargo vessel, for example, where a master considers it necessary to engage salvors, what is the position where there are many cargo-owners and only some are contactable within a reasonable time?[52] Or what if all cargo-owners are contactable but they give different instructions as to what is to be done? The obvious need for the master to make a decision suggests that the non-contactability requirement of agency of necessity should be given the broadest possible interpretation so as to mean practical impossibility either to receive instructions or to receive unanimous instructions where there is more than one principal.

As noted above, from the 19th century onwards courts increasingly decided shipping cases in which masters were held to have the authority to sell or hypothecate vessels or their cargo by using the theory that the masters’ actions were justified by agency of necessity. An example of this is provided by Gaudet v Brown; Cargo ex Argos (Cargo ex Argos),[53] in which the master of a vessel laden with oil destined for Le Havre was instructed by the authorities to leave the port when he arrived because it was full of munitions and flammable liquids could not be offloaded. The cargo-owners communicated no instructions as to what to do, so the master took the oil back to London, its port of origin. In finding that the shipping company was entitled to claim reimbursement from the cargo-owners of the expense of re-shipment, the Court held that the master’s actions were justified on the basis of agency of necessity.

Agency of necessity also came to be used as the basis for extending to carriers on land the principles that had been developed in cases involving shipping. The leading case usually cited is Great Northern Railway Co v Swaffield.[54] In this case, a horse had been delivered by the plaintiff company to a railway-station but the defendant, who owned the horse, was not on hand to collect it and was not contactable. The station-master (an employee of the railway company) entered into a contract for the lodgement of the horse in order to protect it from the weather. Even though the contract of carriage had come to an end, the court held that the railway company was under a duty to take care of the horse, that there could not be a duty to take care without a correlative right to compensation and that, therefore, the railway company was entitled to reimbursement of the expenses it had incurred.[55] Similarity to the Admiralty law cases was explicitly acknowledged by Kelly CB, who held[56]

My Brother Pollock has referred to a class of cases which is identical with this in principle, where it has been held that a ship-owner who, though some accidental circumstance, finds it necessary for the safety of the cargo to incur expenditure, is justified in doing so, and can maintain a claim for reimbursement against the owner of the cargo. That is exactly the present case. (Emphasis added)

Another example is provided by Sims & Co v Midland Railway Co,[57] in which a consignment of butter owned by the plaintiff being carried by the defendant railway company was delayed by a strike and, because the butter was perishable, the railway company sold it to a third party. Scrutton J (as he then was) stated that the circumstances were identical to those faced by the master of a vessel who is unable to obtain instructions from the owner of cargo in circumstances where action has to be taken.[58]

However, this case also illustrates the difference between the approach based on negotiorum gestio used by the Admiralty courts and the approach based on agency of necessity. This was because Scrutton J held that agency of necessity operated only in cases where the agent was in a pre-existing agency relationship with the person on whose behalf they were acting – in other words that agency of necessity was really a form of supplementary implied authority to be used in emergencies.

This marked a departure from the civil law doctrine of negotiorum gestio used in the Admiralty cases, which operates in the absence of any form of prior relationship. As an example of which one can cite The Cynthia[59] discussed above, in which the British consul whose bottomry contract was held to be binding on the owners of a vessel with whom the consul had no prior relationship whatsoever. (It being necessary here to remind ourselves that the Admiralty Court extended negotiorum gestio to create a contractual bond between principal and third party and not only a right of the agent to reimbursement).

Scrutton LJ re-iterated the need for a pre-existing agency relationship for agency of necessity to operate in an obiter statement in another case, Jebra v Ottoman,[60] in which he said that ‘the agent of necessity develops from an original and subsisting agency and only applies itself to unforeseen events not provided for in the original contract’[61] and that agency of necessity could not operate in the absence of that pre-existing agency, as where someone finds the goods of another and takes steps to protect them from damage, as we have seen in Nicholson v Chapman[62] and The Goring.[63]

Finally it is necessary to mention that the right of an agent of necessity to engage in unauthorised action to preserve the principal’s property has been upheld even where the agent acts contrary to the principal’s instructions, as in Tetley & Co v British Trade Corporation[64] where, contrary to his principal’s instructions, the agent transported goods from one country to another in order to avoid their destruction during war. That such a claim is allowed appears incompatible with the argument that agency of necessity is founded upon implied authority, because there obviously cannot be an implied authority to contravene the principal’s instructions.[65]

D Bailment

Despite the apparently settled state of the law, in more recent cases the courts have treated a master’s disposition of a vessel differently to actions with regard to its cargo. Whereas it is true that the master has implied authority from the ship-owner to engage in such transactions as are necessary to conduct the voyage and that that implied authority fulfils the requirement for a prior relationship necessary for agency of necessity to operate, the same is not true of the relationship between master and cargo-owner. Since there is no basis for thinking that the master is agent for the cargo-owner[66] on what basis can the master’s authority to deal with goods belonging to the cargo-owner without authorisation, as was allowed in cases such as Gaudet v Brown; Cargo ex Argos (Cargo ex Argos),[67] Great Northern Railway Co v Swaffield[68] and Sims & Co v Midland Railway Co,[69] be justified?

The answer to this question has been found in the law of bailment. Although the master of a vessel is not an agent of a cargo-owner, he is an agent for the ship-owner, who is in turn a bailee of the cargo by virtue of the fact that the cargo has been consigned to his care by the cargo-owner. From this it follows that since the master is an agent for the ship-owner, he too is a bailee of the cargo,[70] and under the law of bailment has not only a right, but indeed a duty, to take whatever steps are necessary to preserve the cargo and its value.[71]

The key case illustrating this approach is China Pacific SA v Food Corp of India (The Winson),[72] concerning a vessel containing wheat which had become stranded. The cargo-owners authorised a salvor to remove the cargo of wheat from the vessel, but gave no instructions as to what to do with it once it reached port. To preserve the wheat, the master of the salvage vessel arranged for it to be taken off the vessel and stored in a warehouse, paying the resultant costs. Although the salvors advanced the argument that they were entitled to reimbursement under the doctrine of agency of necessity, the court instead upheld their claim on the basis of bailment, holding that as bailees[73] of the respondent’s goods, they were under a duty of care to preserve them and had a right to compensation for expenses thereby incurred. Lord Diplock held that[74]

..the bailment which up to the conclusion of the salvage services had been a bailment for valuable consideration became a gratuitous bailment; and so long as that relationship of bailor and bailee continued to subsist the salvors, under the ordinary principles of the law of bailment too well known and too well-established to call for any citation of authority, owed a duty of care to the cargo owner to take such measures to preserve the salved wheat from deterioration by exposure to the elements as a man of ordinary prudence would take for the preservation of his own property. For any breach of such duty the bailee is liable to his bailor in damages for any diminution in value of the goods consequent upon his failure to take such measures; and if he fulfils that duty he has, in my view, a correlative right to charge the owner of the goods with the expenses reasonably incurred in doing so.

Later he stated that[75]

It is, of course, true that in English law a mere stranger cannot compel an owner of goods to pay for a benefit bestowed upon him against his will; but this latter principle does not apply where there is a pre-existing legal relationship between the owner of the goods and the bestower of the benefit, such as that of bailor and bailee, which imposes upon the bestower of the benefit a legal duty of care in respect of the preservation of the goods that is owed by him to their owner.

Thus far, the reasoning in The Winson is unexceptionable. However, in his decision Lord Diplock introduced what is, with respect, a complicating bifurcation into the law by stating that the doctrine of agency of necessity did not apply in The Winson, first because the cargo-owner had been contactable (although here it should be noted that contact had produced no result, as the cargo-owner had given no clear instructions) and, more fundamentally, because, in his view, agency of necessity applied only to cases involving the question of whether a contract existed between a principal and a third party. In other words, in cases involving the external dimension of the agency relationship, rather than, as in The Winson, where the agent seeks to recover his expenses from the principal, which involves only the internal dimension.[76]

Lord Diplock further stated that the exercise by the master of his powers as a bailee were not constrained by the requirements of agency of necessity (such as non-contactability) and thus did not need to be satisfied where the bailee takes steps to preserve the property of the bailor.[77]

The reasoning of Lord Diplock is, with respect, open to criticism. He stated that the law pertaining to agency of necessity is not relevant to cases involving an agent’s claim for reimbursement from the principal. This is arguably too broad in that it runs counter to the rule that agents of all types, including agents of necessity, can recover reimbursement for reasonable expenses, as was indeed affirmed in The Winson by Lord Simon of Glaisdale.[78] Thus in a case where an agent of necessity has, on his or her own account, entered into a transaction with a third party while acting in the interests of the principal, there is no reason why he or she should not frame a claim for reimbursement on that basis.

Perhaps Lord Diplock’s statement is explicable on the basis that because in that case the facts did not support the existence of agency of necessity, and thus could not have given rise to a claim that the cargo-owners were contractually bound to the owners of the facilities in which the wheat had been stored, agency of necessity could not provide justification for the claim for reimbursement, which was therefore justifiable only by bailment. On that basis, Lord Diplock’s statement about agency of necessity should be viewed as obiter and as not displacing the general principle asserted by Lord Simon of Glaisdale.

These issues were addressed in two subsequent cases:

Industrie Chimiche Italia Centrale and Cerealfin SA v Alexander G. Tsavliris & Sons Maritime Co (The Choko Star)[79] involved the external agency relationship in that it raised the question of whether a contract entered into by a master on behalf of cargo-owners was binding on the latter. The Court of Appeal held that authority on the part of the master to make contracts on the cargo-owners’ behalf could arise only under the circumstances where the requirements for agency of necessity were met (which they had not been in this case as the cargo-owners were contactable). Therefore the cargo-owners were not bound by the contract of salvage. The fact that the master would surely have been found to be bailee of the goods was of no effect as the fact that one is a bailee governs only the right to claim reimbursement from the principal and cannot form the basis of a bailee entering into contracts on behalf of the principal, which was the issue in The Choko Star.

By contrast, in ENE Kos 1 Ltd v Petroleo Brasileiro SA (No 2),[80] a case in which charterers of a vessel claimed reimbursement from the owners for expenses arising from servicing a vessel after the charterparty contract had ended, Lord Sumption JSC held that cases (such as the instant one) involving the internal relationship between agent and principal were not governed by agency of necessity but rather by bailment, and on that basis ordered that the charterers be reimbursed.[81] Consistent with that reasoning, he stated that other reimbursement cases such as Gaudet v Brown; Cargo ex Argos (Cargo ex Argos)[82] and Great Northern Railway v Swaffield,[83] previously considered agency of necessity cases were more correctly categorised as arising out of bailment.

IV A Comparison of the Doctrines

At the beginning of this paper two factual scenarios were presented in which a person had intervened benevolently in someone’s affairs. They were used to illustrate how the legal consequences were inconsistent and provided inadequate protection for the intervenor. It was argued there that the failure of the common law to adopt a coherent position on the rights of an intervenor, which has led one legal scholar to describe the law in this area as a ‘patchwork,’[84] means that there was a gap in the law that requires attention.

To return to the questions posed in Part I, to what extent do the various legal doctrines recognise the right of an intervenor to engage in unauthorised actions on behalf of a principal? To the extent that they do, do they allow the intervenor to claim reimbursement for expenses? Do they permit the intervenor to enter into contracts with third parties that are binding on the principal? These questions are best answered by examining each doctrine in turn. A comparison of the doctrines, and the proposed new doctrine based on European law, is also contained in the table that follows.

As a preliminary point, the common law allows one person to engage in unauthorised action on behalf of another only if there is a pre-existing relationship that imposes a duty on the intervenor to act in relation to the affairs of the beneficiary.[85]

So far as the doctrine of agency of necessity is concerned, it appears that an intervenor may act on behalf of a principal only where the pre-existing relationship between the principal and the intervenor is such as to confer authority on the latter to enter into transactions with third parties on behalf of the principal. That relationship will often be an agency relationship in the strictest sense but, bearing in mind the frequency with which the word ‘agent’ is misused,[86] may derive from another type of relationship carrying authority. The requirement for a pre-existing relationship means that the doctrine does not assist a true intervenor of the type covered by negotiorum gestio, who acts for the benefit of someone whom he might not even know. That apart, where its conditions can be satisfied, agency of necessity does allow an intervenor to create a contractual bond between the principal and a third party and, pace Lord Diplock, also entitles the agent to reimbursement for reasonable expenses.

However, a more fundamental point is that the law of agency in general cannot provide a satisfactory theoretical basis for the rights of intervenors. This is because of the basic principle that an agent cannot be the source of their own authority: As stated by Staunton J in United Bank of Kuwait Ltd v Hammoud[87] ‘...it is elementary law that an agent cannot hold himself out; the holding out must come from his principal, or from some agent duly authorised by the principal.’ If intervention in the absence of a prior relationship between principal and agent was permitted by the common law, it would be a form of ‘agency’ in which the agent’s authority was self-conferred. Agency thus provides an unsatisfactory basis for resolution of issues pertaining to the benevolent intervenor.

Similarly to agency of necessity, the law of bailment assists an intervenor only where there is a pre-existing relationship between intervenor and principal and so it too does not cover the classical gestor. The relationship takes the form of the entrustment of the principal’s goods into the custody of the intervenor as bailee. Bailment thus applies only to steps taken in relation to goods, and so does not provide a basis for involvement in the principal’s affairs generally. Although the bailee may obtain reimbursement from the principal for expenses, bailment does not allow the bailee to enter into contracts on behalf of a principal. Thus, one can conclude that because of the narrowness of its scope and the limitations of its remedies, bailment is no more useful than agency in providing a theoretical basis for benevolent intervention.

Negotiorum gestio as it existed under Roman law (and continues to exist under the law of South Africa) is broader than either agency of necessity or bailment in that it requires no prior relationship between gestor and dominus and also allows the intervenor to involve him or herself in relation to any aspect of the affairs of the dominus. However, the rights of the gestor are limited to reimbursement, and the gestor cannot bind the dominus to third parties.


Intervenor can obtain reimbursement for expenses from the principal.
Intervenor can create a contract between the principal a third party.
Intervenor can act in relation to the principal’s affairs generally
Intervenor can act even in the absence of a prior relationship with the principal.
Agency of necessity
x
Bailment
x
x
x
Negotiorum gestio in Roman law
x
Expanded negotiorum gestio drawn from European codes

V Conclusion and a Proposed New Rule

What we are therefore presented with is a situation where none of the common law doctrines on their own allows a person to act for the benefit of another in the absence of a prior relationship with the party benefited, and confers both a right to reimbursement and the ability to enter into a contract with third parties. In other words, each doctrine addresses some elements of the problem, but none covers all. The task facing anyone advocating for reform in this area is well summarised by Barr who states[88]

The main challenge of the law of benevolent intervention is to find a reasonable balance between the interests of the principal and those of the gestor. The rules on benevolent intervention ought not to lead to a restriction of the freedom of the principal. As a matter of principle he should not be burdened by duties he has not accepted from the outset. On the other hand, a modern private law cannot be erected on a principle of social isolation. It should therefore promote interventions in favour of helpless or absent persons if such intervention would be considered reasonable, according to the judgment of an objective observer at the material time, and, considering all information available to the intervener at the time, the intervener has accorded to the (presumed) wishes of the principal.

The solution, it can be argued, lies in adopting, either by statute or through development of the common law by the courts in an appropriate case, a form of negotiorum gestio modified so as to address the limitations of the doctrine as it existed in Roman law which, as shown in Part II, has been done in most European jurisdictions.

As we saw, a common feature of all Western European civil codes is recognition of the principle that a person may engage in beneficial intervention in the affairs of another to the extent that it is reasonably necessary to do so in order to preserve those interests. In such circumstances the intervenor will be entitled to reimbursement for expenses, indemnification in relation to obligations incurred and compensation for loss suffered. Furthermore, most jurisdictions confer on the intervenor the power to enter into transactions with third parties on behalf on the principal, thereby creating contractual relations between the principal and the third party. The only significant point of divergence is on the question of whether an intervenor who exercises professional skills on behalf of the principal should be entitled to remuneration in accordance with what they would usually have earned, and for the reasons explained in Part II above, there is justification for such claims being allowed.

Combining these principles would produce a set of rules as follows:

1. An intervenor may take unauthorised action in relation of the affairs of another (referred to as ‘the principal’) in circumstances where it is necessary to do so in order to preserve the interests of the principal.

2. In such circumstances the intervenor has a right against the principal for reimbursement of reasonable expenses, indemnification for obligations incurred and compensation for losses suffered as a result of such action, irrespective of whether the intervenor’s actions succeeded on benefiting the principal, provided that:

• it was impracticable for the intervenor to contact the principal for authorisation;

• the intervenor’s actions were reasonable in the circumstances;

• the intervenor acted bona fide for the benefit the principal and not in his or her own interests; and

• the intervenor acted with the intention of recovering reimbursement from the principal and not gratuitously.

3. The intervenor owes a duty of care to the principal and must account to the principal for any gain the intervenor has made.

4. If the intervenor enters into a transaction with a third party on behalf of the principal, the principal is bound to the third party in relation to obligations incurred on the principal’s behalf by the intervenor.

There are sound policy reasons justifying this approach. First, it would recognise the social utility of benevolent intervention by conferring on good faith intervenors protection not currently available under the common law, thereby encouraging them to act where they might otherwise not have done so, a social objective which is supported both by ethics and economics.[89] Modern communications technology may reduce the frequency with which potential intervenors are unable to contact a person in whose affairs they see a need for intervention, but it is nevertheless true that in some cases the identity of the potential beneficiary will be unknown to the potential intervenor or, even if their identity is known, they may not be contactable.

Second, reform would give coherence to an area of law which, as the case law discussed in this paper shows, is marked by piecemeal solutions not founded on general principle.[90]

Third, it would give unauthorised intervenors the security of knowing that they can recover compensation for expenses[91] and that any liabilities they create with third parties will attach to the principal rather than to themselves.

Fourth, making the principal directly liable to the third party in cases where the intervenor has concluded a contract with the third party in the name of the principal would mean that liability will follow the benefit – in other words, that the principal who benefits from the agent’s actions would rightfully be vested with the obligation that gave rise to that benefit.[92] It would also make no difference to the amount of the principal’s liability, as under the law relating to authority of necessity as it currently stands, the principal is in any event liable to reimburse the agent for liabilities that the agent incurs to third parties.[93] The only exception to this would be if the intervenor did not disclose that they were acting on behalf of a principal, in which case the third party would be able to avail himself or herself of the doctrine of election and demand performance from the intervenor, in accordance with the usual rules governing undisclosed principals,[94] leaving it to the intervenor to obtain reimbursement from the principal.

Adopting these principles into the law would mean that the actors in the scenarios outlined at the start of this paper would enjoy the same legal rights. It would eliminate the inconsistencies that arise under current law under which, if an intervenor is recognised as having rights at all, everything depends on whether his or her actions fall within the narrow rules of agency of necessity or bailment, and even then the rights that arise differ as between each category. The idea that a person may act on behalf of another without authorisation, may obtain reimbursement and may enter into contracts on behalf of that person are all known to the common law. The problem is that no single doctrine unifies these principles or recognises the rights of a person who intervenes even in the absence of a prior relationship with the person in whose interests he or she acts. The reform advocated in this paper provides a solution to these problems.


* BA (Mod) Dublin, LLB (Rhodes), DPhil (Waikato), Senior Lecturer in Law, School of Business, Charles Sturt University.

1 See Falcke v Scottish Imperial Insurance Co [1886] UKLawRpCh 230; (1886) 34 Ch D 234, 248-9, Owen v Tate [1976] QB 402, 411-12 and China Pacific SA v Food Corp of India (The Winson) [1982] AC 939, 961 [F] (Lord Diplock).

[2] Digest of Justinian D. 17.1.1.4 (Theodore Mommsen, Paul Kreuger and Alan Watson trans, University of Pennsylvania Press, 1985).

[3] Ibid D 47.2.62.5.

[4] Paul Du Plessis, Borkowski’s Textbook on Roman Law (Oxford University Press, 6th ed, 2020) 284.

[5] JAC Thomas, Textbook of Roman Law (Philip McDonald, 1976) 324-5.

[6] Du Plessis (n 4) 315.

[7] Digest of Justinian (n 2) D.3.5.2.

[8] Du Plessis (n 4) 316.

[9] Niall Whitty and Deon van Zyl, ‘Unauthorised Management of Affairs (Negotiorum Gestio)’ in Reinhard Zimmerman, Daniel Visser and Kenneth Reid, R. Mixed Legal Systems in Comparative Perspective – Property and Obligations in Scotland and South Africa (Oxford University Press, 2004) 380.

[10] Digest of Justinian (n 2) D.3.5.10.1.

[11] Whitty and van Zyl (n 9) 367-70, 373-82.

[12] For the most recent application of the doctrine by a court in South Africa see Immaculate Truck Repairs CC v Capital Acceptances Ltd [2017] ZAFSHC 20.

[13] HRH Hahlo and Ellison Khan, The South African Legal System and its Background (Juta & Co, 1968) 585-6.

[14] For a survey of those European jurisdictions that recognise negotiorum gestio see Christian Barr et al, Benevolent intervention in another's affairs (2006, Selier European Law Publishers).

[15] Ibid 101.

[16] Ibid 264-7.

[17] Ibid 261-4.

[18] Ibid 280-4.

[19] Jeroen Kortmann, Altruism in Private Law – Liability for Nonfeasance and Negotiorum Gestio (Oxford University Press, 2005) 180-2.

[20] Ibid 183.

[21] Barr et al (n 14) 99.

[22] Ibid 271-5.

[23] Kortmann (n 19) 183.

[24] Barr (n 14) 300-06.

[25] Ibid 298.

[26] Peter Watts, Bowstead and Reynolds on Agency (Thompson Reuters, 22nd ed, 2021) 165.

[27] (1793) 2 H B1 254; [1793] EngR 1598; 126 ER 536.

[28] (1793) 2 H B1 254, 258; [1793] EngR 1598; 126 ER 536, 539.

[29] Ibid.

[30] (1793) 2 H. B1. 254, 259; [1793] EngR 1598; 126 E.R. 536, 539.

[31] [1886] UKLawRpCh 230; (1886) 34 ChD 234, 248-9.

[32] [1988] 1 AC 831.

[33] Kortmann (n 19) 169-73.

[34] Francis Rose, ‘Restitution for the Rescuer’ (1989) 9 Oxford Journal of Legal Studies 167, 170-171.

[35] Ibid 198.

[36] Lee Aitken, ‘Negotiorum Gestio and the Common Law – A Jurisdictional Approach’ [1988] SydLawRw 6; (1988) 11 Sydney Law Review 566, 581-91.

[37] The Calypso [1828] EngR 922; (1828) 2 Hagg Adm 209; 166 ER 221; The Renpor [1883] UKLawRpPro 19; (1883) 8 PD 115, The Unique Mariner [1978] 1 Lloyd’s Rep 438.

[38] Morse v Slew [1726] EngR 709; (1669) 1 Vent 190; 86 ER 129; Boson v Sandford [1795] EngR 588; (1689) 2 Salk 440; 91 ER 382; Carey v White [1710] EngR 41; (1710) 5 Brown PC 325; 2 ER 708; Samson v Braginton (1750) 1 Vez 443; [1750] EngR 99; 27 ER 1132; The Gratitudine [1801] EngR 525; (1801) 3 C Rob 240; 165 ER 450; The Cynthia (1852) 20 LT (OS) 54.

[39] Wolfe v Horncastle [1798] EngR 216; (1798) 126 ER 924.

[40] The Fanny and Elmira (1809) Edw 117; 165 ER 1052; The Glasgow (1856) Swab 145; The Victor (1865) LT (NS) 2; The Karnack [1869] UKLawRpPC 10; (1869) LR 2 PC 505.

[41] Australasian Steamship Navigation Co. v Morse [1872] EngR 22; (1872) LR 4 PC 222.

[42] (1852) 20 LT (OS) 54.

[43] The case is discussed by Walter Willston, Agency of Necessity’ (1944) 22 Canadian Bar Review 492, 508.

[44] Aitken (n 36) 583-4.

[45] For an overview of agency of necessity see Watts (n 26) 165-76.

[46] Prager v Blatspiel, Stamp & Heacock Ltd [1924] 1 KB 566.

[47] Tetley & Co v British Trade Corp (1922) 10 Lloyd’s Rep. 678.

[48] Broom v Hall [1859] EngR 929; (1859) 7 CB (NS) 503, Phelps, Jones & Co v Hill [1891] UKLawRpKQB 44; [1891] 1 QB 605.

[49] Prager v Blatspiel, Stamp & Heacock Ltd [1924] 1 KB 566.

[50] Watts (n 26) 166.

[51] Ian Brown, ‘Authority of Necessity in the Law of Agency’ (1992) 55 Modern Law Review, 415.

[52] As happened in The Choko Star [1990] 1 Lloyd’s Rep. 516. See also FMB Reynolds, ‘Agency of Necessity’ (1990) Journal of Business Law, 508.

[53] [1872] UKLawRpCP 19; (1873) LR 5 PC 134.

[54] [1874] UKLawRpExch 17; (1874) LR 9 Exch 132.

[55] Ibid 136.

[56] Ibid.

[57] [1912] UKLawRpKQB 155; [1913] 1 KB 103.

[58] Ibid 112.

[59] (1852) 20 LT (OS) 54.

[60] [1927] 2 KB 254.

[61] Ibid 257.

[62] [1886] UKLawRpCh 230; (1886) 34 Ch D 234

[63] [1988] 1 AC 831.

[64] (1922) 10 Ll L Rep 678.

[65] GH Treitel, ‘Agency of Necessity’ (1954) 3 University of Western Australia Law Review, 9.

[66] Gibbs v Grey (1857) 26 LJ Ex 286, 291. See also Aitken (n 36) 595-6.

[67] [1872] UKLawRpCP 19; (1873) LR 5 PC 134.

[68] [1874] UKLawRpExch 17; (1874) LR 9 Exch 132.

[69] [1912] UKLawRpKQB 155; [1913] 1 KB 103.

[70] Watts (n 26) 167.

[71] Metcalfe v Britannia Ironworks Co. [1876] UKLawRpKQB 80; (1876) 1 QBD 613, 626.

[72] [1982] AC 939.

[73] It had been contended that the plaintiffs were sub-bailees, but this was rejected by the court – see ibid 959 [D]-[G].

[74] Ibid 960 [E]-[G].

[75] Ibid 961 [E]-[F].

[76] Ibid 958 [D]-[G].

[77] Ibid 961 [H] - 962 [A].

[78] Ibid 964 [H] - 965 [E].

[79] [1990] 1 Lloyd’s Rep 516.

[80] [2012] UKSC 17; [2012] 2 AC 164.

[81] Ibid 177-80.

[82] [1872] UKLawRpCP 19; (1873) LR 5 PC 134.

[83] [1874] UKLawRpExch 17; (1874) LR 9 Exch 132.

[84] Kortmann (n 19) 164.

[85] China Pacific SA v Food Corp of India (The Winson) [1982] AC 939, 961 [F] (Lord Diplock).

[86] See Kennedy v De Trafford [1897] UKLawRpAC 13; [1897] AC 180, 188 (Lord Herschell) and Sweeney v Boylan Nominees Pty Ltd [2005] HCA 64; (2006) 226 CLR 1, [13] (Gleeson CJ, Gummow, Hayne, Haydon and Crennan JJ).

[87] [1988] 3 All ER 418, 428.

[88] Barr et al (n 19) 95-6.

[89] Whitty and van Zyl (n 9) 372-3 and Treitel (n 65) 8.

[90] Duncan Sheehan, ‘Negotiorum Gestio: A Civilian Concept in the Common Law?’ (2006) 55 International and Comparative Law Quarterly 253, 254.

[91] Rose (n 34) 178.

[92] Reynolds (n 52) 507.

[93] Barr (n 19) 298.

[94] Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199.


AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback
URL: http://www.austlii.edu.au/au/journals/JCULawRw/2022/4.html