26 Jun Dalex Finance and Leasing Company Ltd. v Ebenezer Denzel Amanor and Ors [Unreported Judgment] Suit No. J4/02/2020 Delivered on 14 April, 2021.
“The law has been careful to limit the acts of officers and agents that could be deemed acts of the company to particular transactions. Officers and agents have no general authority for their acts to be turned into acts of the company even if they are carrying out the business of the company in the usual manner.”
The 1st Defendant presented some Local Purchase Orders, VAT Invoices and Waybills to the Plaintiff which showed that his Company, the 2nd Defendant, supplied telecommunication equipment to the 3rd Defendant and was awaiting payment. The Finance Manager of the 3rd Defendant confirmed the order on the letterhead of the 3rd Defendant and signed letters to the effect that his employer owes the 2nd Defendant.
Based on this assurance, the Plaintiff accepted a loan request and disbursed money to the 1st Defendant and his Company. The 2nd Defendant refused to pay as scheduled. Further investigations by the Plaintiff revealed that the Finance Manager of the 3rd Defendant connived with the 1st Defendant to defraud the Plaintiff.
The issue for determination was whether the 3rd Defendant was vicariously liable for the act of its agent (the Finance Manager). The High Court and the Court of Appeal dismissed the Plaintiff’s action. Plaintiff lodged an appeal at the Supreme Court.
The Supreme Court dismissed the appeal and held that officers and agents of Companies have no general authority for their acts to be turned into acts of the company even if they are carrying out the business of the company in the usual manner. Such officers must be expressly or impliedly authorised to act in the specific matter. The Court reasoned that the common law doctrine of presumption of regularity applies only to officers who occupy very important positions in the scheme of affairs of the company such as members in general meeting, board of directors and a managing director, in that order of authority.
Therefore, vicarious liability does not apply where the act is not one that the company has authorised that agent to do or that which the agent performs outside the scope of employment. The Court held that the letters signed by the Finance Manager were stated on their face to be at the request of the 2nd Defendant and there was no evidence that the 3rd Defendant engages in credit referencing bureau services as part of its usual business. Therefore, the Finance Manager engaging the Plaintiff on credit referencing cannot be deemed as an act of the 3rd Defendant. The Finance Manager was on a frolic of his own and not doing work he was employed to do. This is buttressed by the fact that he used his own stamp and not the stamp of the 3rd Defendant.
Insight: Generally, the acts of members in general meeting, board of directors and the managing director are imputed as acts of a Company. Beyond this, the Company may only be liable for the wrongful acts of its employee where the employee was authorised to perform such acts or performs them within the scope of employment.