UTLC LC-2022-000705 - [2023] UKUT 141 (LC)

So far as Ground 1 is concerned, the starting point is to identify the basis on which the Judge decided that the Appellant was bound by the Payment Agreement, notwithstanding that the purported signature of Mr Calif on the relevant counterpart was a forgery. In the absence of this signature the Payment Agreement was, without more, of no effect. The requirements for the execution of a document by a company are set out in Section 44 of the Companies Act 2006 (“Section 44”). By Section 44(2)(b) a document is validly executed by a company if it is signed by a director of the company in the presence of a witness who attests the signature. In the present case this did not happen. Mr Calif did not sign the Payment Agreement.

It seems to me that the critical paragraphs in the Judge’s reasoning in this respect are Paragraphs 5.12 and 5.14. As I read these Paragraphs, the Judge’s key reasoning was as follows:

The final step in the above summary of the Judge’s reasoning, at sub-paragraph (6), is not spelt out in terms in Paragraphs 5.12 or 5.14, or in the summary of the Judge’s conclusions at Paragraph 7.1.4. It seems to me however that this must have been what the Judge had in mind when he stated his conclusion, at Paragraph 7.1.4, that the Appellant is bound by the Payment Agreement.

As Ms Lyne developed her case on Ground 1 in oral submissions, the Appellant’s challenge to the relevant part of the Decision essentially involved three arguments, as follows:

I can take the first of these arguments very shortly. I start with Paragraph 5.12, which is in the following terms:

“5.12.The Applicant accepts: a) that Matan Amitai was authorised by it to negotiate with the Respondent on its behalf for the purpose of securing vacant possession of the Property; b) that it appointed Fladgate to act as its solicitor in its dealings with the Respondent; and c) that it caused or permitted Fladgate to hold itself out to the Respondent and his solicitors as acting for the Applicant. Nor did it substantially dispute the Respondent's case that as a matter of fact he and his solicitors reasonably relied upon Mr Amitai's and Fladgate's representations to the effect that they were duly authorised by the Applicant to cause both the Surrender and the Payment Agreement to be completed by exchange of the executed documents and payment of the monies immediately due.”

So far as (a), (b) and (c) are concerned these matters were recorded as not being in dispute. There was no suggestion that the Judge had make an error in recording these matters as not being dispute. Ms Lyne however disputed that the Judge had actually made a finding of reasonable reliance on the representations in the last sentence of Paragraph 5.12. All the Judge had done, so she submitted, was to record that the Respondent’s case on reasonable reliance was not substantially disputed.

I do not accept this argument. While, with due respect to the Judge, I can see that the last sentence of Paragraph 5.12 might have been more clearly expressed, it seems clear to me that the Judge was accepting, and finding (i) that the representations set out in the final sentence of Paragraph 5.12 had been made, and (ii) that there had been reasonable reliance upon those representations by the Respondent and his solicitors.

Turning to Paragraph 5.14, it is in the following terms:

“5.14. So, here, it seems to me that Fladgate, by exchanging the ostensibly executed copy of the Payment Agreement, represented on behalf of the Applicant and with its ostensible (if not actual) authority that it had been validly executed on behalf of its client. That the documents which they sent to the Respondent were the Applicant's deeds, not forged nullities. After all, it is impossible to think that Fladgate would have exchanged the documents on any other basis than that it believed them to be genuine. What else then could the Respondent and his solicitors reasonably have concluded upon receiving the signed copy of the Payment Agreement from Fladgate?”

The argument was essentially the same in relation to this Paragraph. The Judge, so Ms Lyne submitted, had not actually made a finding that Fladgate made the representation set out in the first and second sentences of Paragraph 5.14.

Again, I cannot accept this argument. Indeed, it does not seem to me that there is any ambiguity in what the Judge said in the first two sentences of Paragraph 5.14. As I read these two sentences the Judge, whether he was entitled to do so or not, was making a finding that Fladgate had, by exchanging the ostensibly executed copy of the Payment Agreement, represented on behalf of the Appellant and with its ostensible authority (i) that the Payment Agreement had been validly executed on behalf of the Appellant, and (ii) that the documents which they sent to the Respondent (I assume this to be a reference to the Payment Agreement and the TR1) were the Appellant’s deeds and not forged nullities. I will refer to these two representations, as found by the Judge in the first two sentences of Paragraph 5.14, as “the Representations”.

It seems to me that the findings in Paragraphs 5.12 and 5.14, assuming that the Judge was entitled to make those findings, were sufficient to support the conclusion of the Judge that the Appellant was bound by the Payment Agreement. The Judge did not, in Paragraph 5.14, make a specific finding of reasonable reliance on the Representations on the part of the Respondent or his solicitors. It seems to me however that this finding followed from the finding of reasonable reliance made by the Judge in Paragraph 5.12, and from what the Judge said in the last sentence of Paragraph 5.14. As I have already noted, the Judge did not state, in terms, that an estoppel had been created which prevented the Appellant from denying the validity of the Payment Agreement. It seems to me however that the findings in Paragraphs 5.12 and 5.14 were sufficient to support the conclusion that an estoppel arose, by which the Appellant is prevented from denying that it is bound by the Payment Agreement.

What I have said in my previous paragraph assumes of course that the Judge was entitled to find that the Representations were made. This brings me to Ms Lyne’s second and third arguments.

I will take the third argument before the second argument. It seems to me that the question of whether the doctrine of ostensible authority can be invoked at all, in circumstances where the Payment Agreement is said to have been rendered a nullity by the forgery of Mr Calif’s signature, falls to be considered before the question of whether the Judge was, in the present case, entitled to find the Representations.

In support of her third argument Ms Lyne relied upon the decision of the House of Lords in Ruben v Great Fingall Consolidated [1906] AC 439 (“Ruben”). The facts of this case were as follows. The appellants advanced in good faith a sum of money to the secretary of the respondent company on the security of a share certificate of the company. The share certificate, as issued to them by the company secretary, confirmed that the appellants were registered in the company’s register of shareholders, as transferees of the shares against which the appellants had advanced the sum of money. The company secretary had authority to issue share certificates on behalf of the company, but such share certificates had to bear the seal of the company and required the signature of two directors of the company, counter-signed by the company secretary. The share certificate issued to the appellants appeared to comply with these requirements but, unknown to the appellants, the seal of the company had been affixed fraudulently to the certificate by the company secretary and the signatures of the directors had been forged by the company secretary. The appellants sought damages from the respondent company in respect of the refusal of the respondent company to register the appellants as owners of the relevant shares.

The House of Lords upheld the decision of the Court of Appeal (reversing the decision of the judge at first instance) that the action failed. Essentially, the House of Lords decided that there was no basis upon which the respondent could be held responsible for the fraudulent activities of the company secretary. It is however necessary to look at several of the speeches in the House of Lords, in order to understand the reasoning of their Lordships.

Lord Loreburn LC stated his conclusion in the following short terms, at page 443:

“I cannot see upon what principle your Lordships can hold that the defendants are liable in this action. The forged certificate is a pure nullity. It is quite true that persons dealing with limited liability companies are not bound to inquire into their indoor management, and will not be affected by irregularities of which they had no notice. But this doctrine, which is well established, applies only to irregularities that otherwise might affect a genuine transaction. It cannot apply to a forgery.”

Lord Loreburn then went on to consider the argument that the certificate was delivered by Rowe (the company secretary) in the course of his employment, and that delivery imported a representation or warranty that the certificate was genuine. His Lordship rejected this argument, also at page 443, in the following terms:

“Another ground was pressed upon us, namely, that this certificate was delivered by Rowe in the course of his employment, and that delivery imported a representation or warranty that the certificate was genuine. He had not, nor was held out as having, authority to make any such representation or to give any such warranty. And certainly no such authority arises from the simple fact that he held the office of secretary and was a proper person to deliver certificates. Nor am I able to see how the defendant company is estopped from disputing the genuineness of this certificate. That, indeed, is only another way of stating the same contention. From beginning to end the company itself and its officers, with the exception of the secretary, had nothing to do either with the preparation or issue of the document.”

Lord Macnaghten, at page 444, said this:

“The thing put forward as the foundation of their claim is a piece of paper which purports to be a certificate of shares in the company. This paper is false and fraudulent from beginning to end. The representation of the company's seal which appears upon it, though made by the impression of the real seal of the company, is counterfeit, and no better than a forgery. The signatures of the two directors which purport to authenticate the sealing are forgeries pure and simple. Every statement in the document is a lie. The only thing real about it is the signature of the secretary of the company, who was the sole author and perpetrator of the fraud. No one would suggest that this fraudulent certificate could of itself give rise to any right or bind or affect the company in any way. It is not the company's deed, and there is nothing to prevent the company from saying so. Then how can the company be bound or affected by it? The directors have never said or done anything to represent or lead to the belief that this thing was the company's deed. Without such a representation there can be no estoppel.”

Lord Davey expressed much the same sentiments, at page 445:

“The appellants have no doubt been grossly defrauded, but the question is whether they can shift the loss on to the shoulders of the innocent. The company has done literally nothing in the transaction, and could do nothing, because in no stage of the transaction did it come before the board of directors, which alone was' entitled to speak and act for it. It is admitted that Rowe was the proper person to deliver certificates to those entitled to them. From this harmless proposition the appellants slide into another and a very different one, that it was the secretary's duty to warrant on behalf of the company the genuineness of the documents he delivered. There is no evidence that any such 'duty or power was, in fact, entrusted to Rowe, and it is too great a strain on my powers to ask me to imply it from the mere fact of his being the secretary or the proper person to deliver documents.”

It will be noted that the essential point which emerges from each of the above extracts which I have cited is that the respondent company had no involvement in the fraudulent transaction, from start to finish. All that the company secretary was authorised to do was to deliver certificates to those entitled to them. As such, there was no basis for saying that the secretary had given a warranty, on behalf of the respondent, that the share certificate was genuine.

The decision in Ruben must be read subject to the subsequent decision of the House of Lords in Lloyd v Grace, Smith & Co. [1912] AC 716 that an employer can be vicariously liable for a fraud committed by an employee in the course of his employment. Putting aside however the question of vicarious liability, I do not think that this subsequent decision affects the authority of Ruben on the question of whether a party can be held liable on a document which has been created by a forgery.

In the present case the question is not one of vicarious liability. Ms Lyne’s third argument was however that Ruben is authority for the proposition that the doctrine of ostensible authority cannot operate in a case involving a forgery. In the present case, it will be recalled, the Judge found that Fladgate had made the Representations with the ostensible authority of the Appellant. The Appellant was thereby bound by the representation that the Payment Agreement had been validly executed by the Appellant, notwithstanding that the required signature on behalf of the Appellant had been forged.

It seems to me that there are a number of difficulties which confront the third argument. The starting point is to identify what is meant by ostensible authority, as opposed to actual authority. The distinction was explained by Diplock LJ (as he then was) in Freeman & Lockyer v Buckhurst Park [1964] 2 QB 480. In his judgment Diplock LJ first considered the question of whether actual authority to employ agents had been conferred on the relevant party in that case; a Mr Kapoor. After concluding that there was insufficient to establish actual authority, Diplock LJ proceeded to consider ostensible authority. At page 503 Diplock LJ explained ostensible authority in the following terms:

“An " apparent " or " ostensible " authority, on the other hand, is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the '' apparent '' authority, so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract.”

It will be noted that ostensible authority rests upon an estoppel. The ostensible authority of the agent is founded upon the representation of the principal, to the other contracting party, that the agent has the required authority to enter into the contract on behalf of the principal.

As Diplock LJ went on to explain, at 503-504, the representation may take different forms:

“The representation which creates " apparent " authority may take a variety of forms of which the commonest is representation by conduct, that is, by permitting the agent to act in some way in the conduct of the principal's business with other persons. By so doing the principal represents to anyone who becomes aware that the agent is so acting that the agent has authority to enter on behalf of the principal into contracts with other persons of the kind which an agent so acting in the conduct of his principal's business has usually " actual " authority to enter into.”

Diplock LJ then went on to identify two further factors which are to be borne in mind when dealing with a case of ostensible authority. The first was that the capacity of a corporation is limited by its constitution; that is to say, in the case of a company incorporated under the Companies Act, the memorandum and articles of association. The second was that a corporation cannot do any act, including make a representation, except through its agent. It therefore followed that the person making the representation on behalf of the company which founded the ostensible authority did require the actual authority of the company to make that representation. Diplock LJ then stated, at 505-506, the following four conditions which would need to be satisfied before a contract could be enforced against the company which had been entered into by an agent for the company who had no actual authority to enter into such a contract:

“If the foregoing analysis of the relevant law is correct, it can be summarised by stating four conditions which must be fulfilled to entitle a contractor to enforce against a company a contract entered into on behalf of the company by an agent who had no actual authority to do so. It must be shown:

(1)

that a representation that the agent had authority to enter on behalf of the company into a contract of the kind sought to be enforced was made to the contractor;

(2)

that such representation was made by a person or persons who had "actual" authority to manage the business of the company either generally or in respect of those matters to which the contract relates;

(3)

that he (the contractor) was induced by such representation to enter into the contract, that is, that he in fact relied upon it; and

(4)

that under its memorandum or articles of association the company was not deprived of the capacity either to enter into a contract of the kind sought to be enforced or to delegate authority to enter into a contract of that kind to the agent.”

Pausing in my review of the authorities at this point, I do not find anything in the analysis of Diplock LJ in Freeman & Lockyer which seems to me to rule out the operation of the doctrine of ostensible authority in a case where the signature of a person on a contract, which purports to be the signature of a person signing the contract on behalf of a company, turns out to be a forgery. I can see that it would take a fairly unusual set of facts for the company to be bound by such a contract. The company would have had to have made a representation to the other party to the contract which founded an ostensible authority on the basis of which the other party was entitled to treat the contract as validly signed, notwithstanding the forgery. In theory however I cannot see that the doctrine of ostensible authority is excluded in any such case. It seems to me that the availability of the doctrine will depend upon the particular facts of the case, to which may be added the point that a fairly unusual set of facts would be required for the doctrine to be capable of operating in a case of forgery of a company document. One would expect most cases to resemble the facts of Ruben.

This seems to me to be borne out by the following extract from Bowstead & Reynolds on Agency (22^nd Edition), at 8-041 (underlining also added):

“Forgery

As under apparent authority generally, ²⁵¹ the company can be bound, though the agent effects a forgery in the sense of executing an unauthorised signature. But an actual counterfeit signature would simply be a nullity. ²⁵²There may, however, be an estoppel against setting up a forgery in either sense, if the elements of a holding out and reliance can be established.²⁵³ It has also been suggested, in relation to companies, that s.44 of the Companies Act 2006 might give effect to forged signatures. ²⁵⁴ In particular, s.44(5) provides: “[i]n favour of a purchaser a document is deemed to have been duly executed by a company if it purports to be signed in accordance with subsection (2)”. Forged directors’ signatures do purport to be official signatures. However, this would lead to the most surprising, and not very just, conclusion that a company could be bound by forged signatures that were placed on a document by persons who had no connection whatsoever with the company. It is difficult to believe that this outcome was contemplated by the section. ²⁵⁵”

I will need to come back to Section 44 in my discussion of Ground 2, but it will be noted that the editors of Bowstead & Reynolds express the view that there may be an estoppel against a company relying upon a forgery to say that it is not bound by a contract, where the signature of the relevant representative of the company has been forged.

Amongst the footnoted cases in this extract, Ms Lyne concentrated upon the decision of Davis J in Lovett v Carson Country Homes Ltd [2009] EWHC 1143 (Ch) [2011] BCC 789, which was referred to by the Judge, at some length, in the Decision. It is necessary to go through the case in some detail, in order to identify what Davis J decided, and for what reasons.

The issue in Lovett was whether the administrators of a company had been properly appointed. The administrators were appointed by a bank pursuant to a debenture which had purportedly been granted by the company to the bank. It was alleged that the signature of one of the company’s directors had been forged on the debenture, with the consequence that it was a nullity, as was the appointment of the administrators. At the relevant times the company had two directors, a Mr Jewson and a Mr Carter. Mr Carter’s evidence, which was accepted, was that he had known nothing about the debenture or a related guarantee. The judge found that his signatures on the debenture and related documents had all been forged. The judge however also made the following findings, at [55]:

“55.

My view, having regard to the evidence, was that in reality Mr Carter did not mind and was perfectly prepared to accept that Mr Jewson could sign documents in the name of Mr Carter provided that Mr Carter knew in general terms of the underlying transaction. It seems to me that Mr Carter must, for example, have known of the need of countersigned facility letters and other formal documents with regard to Barclays Bank. After all, he had initially signed one such for The Chapel property and he was content thereafter for Mr Jewson to do so on his behalf if that proved to be convenient. Likewise, for example, Mr Carter knew, as he accepted, of the need for a legal charge requiring two signatures in respect of the Mirfield transaction. I did not find his evidence that he assumed a solicitor had signed on his behalf convincing. I think that as before he simply was content, for the purposes of dealing with the bank, to leave the mechanics of signature entirely to Mr Jewson.”

The judge went on to consider Ruben. At [89] the judge summarised the effect of Ruben in the following terms:

“89.

The decision and approach in Ruben has, as it seems to me, to be set in the context of the subsequent well-known decision of the House of Lords in Lloyd v Grace, Smith & Co [1912] A.C. 716 to which, indeed, Lord Loreburn and Lord Macnaghten were themselves party. But whilst aspects of the comments of Lord Davey in his speech in Ruben were expressly disapproved in Lloyd v Grace, Smith, the decision itself was not; see also the comments of Diplock L.J. in Morris v CW Martin & Sons Ltd [1966] 1 Q.B. 716 at 737. Since that time, it seems to be the case that by and large Ruben has, nevertheless, been represented as setting out the general position that a forgery is a nullity which cannot be validated, albeit there may be circumstances in which a party may be estopped from disputing the validity of a forged document; see Halsbury’s Laws of England, 4th edn (London: LexisNexis), Vol.13, para.72. A particularly extreme version of the purported application of the decision in Ruben can be found in the case of South London Greyhound Racecourses Ltd v Wake [1931] 1 Ch. 496. There, even though the signatures of director and secretary on the certificate were valid and they had affixed the seal, and even though they had done so in order to defer proceedings threatened against the company, it was held that the fact that the board had not authorised the affixing of the seal rendered the certificate a forgery and a nullity: a decision which to my mind is very hard to sustain.”

As the judge went on to point out however, at [90], a forged corporate document may not be a nullity for all purposes:

“90.

No doubt a forged corporate document is a nullity in the sense that no one has actual authority on the part of a company to issue a forged document. But as the exception of estoppel shows, that does not mean that the forged document can in no circumstances have any effect whatsoever: just because circumstances can arise whereby the company may be estopped from disputing its validity. But once one accepts that, then, in my opinion, that immediately opens up the prospect that such a document cannot be sidelined as a nullity for all purposes in the case of apparent authority. Indeed, the principles of apparent authority are a broad reflection of the general principles of estoppel. That that may be so is borne out by Ruben itself in my view: for, admittedly in somewhat grudging terms, Shaw was not formally disapproved as a decision but instead was distinguished as being capable on its facts as connoting that the secretary was held out as having authority to warrant the genuineness of a certificate.”

The judge summarised his view of the position, at [91]:

“91.

Thus Ruben was to be distinguished, not in point of principle, of course, but in point of fact. In Ruben there was no ostensible authority vested in the secretary.”

On the basis of his analysis of the law, Davis J reached the following conclusions, at [94] and [95]:

“94.

In my view, that approach is the correct approach and gives the answer to the present case on the facts, finding as I do that the bank was a bona fide purchaser for valuable consideration. The question of the authority, both actual and ostensible, of a company secretary has unquestionably moved on since the days of Ruben, as a number of authorities show. Moreover, there may well be cases where an officer or employee of a company can in any event be authorised actually or ostensibly by the company to warrant that procedures have been properly complied with and that documents are genuine. Indeed, the realities of modern commerce can sometimes require as much. An example can be found in the court of Appeal decision in First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] B.C.C. 533.

95.

Moreover, in general agreement with the comments in Gore-Browne, I can see no reason in principle why some special approach should be grafted on in the case of forgery by reciting the mantra that a forgery is a nullity which is not to be grafted on in the case of fraud. After all, while not all frauds involve forgeries, all forgeries in their own way involve a fraud. No officer or servant has actual authority to commit a fraud any more than he has actual authority to commit a forgery. But it is clear ever since the decision in Lloyd v Grace, Smith, that a principal may in appropriate circumstances be bound by the fraudulent acts of his agent in circumstances where there is ostensible authority. True it is that in contractual terms fraud may make a contract voidable, not void, but the general point still remains that something which is done with authority, actual or apparent, is capable of binding the principal. Indeed, were that not so, I do not see how the House of Lords in Ruben could have approached the case of Shaw as they did or made the comments that they made on authority. Nor, were that not so, do I see how Sir Wilfred Greene M.R., could have stated the position as he did in the Uxbridge Building Society case.”

The judge then turned to the facts of the case before him, at [96]:

“96.

On the facts here, Mr Jewson was both director and secretary of CCH, as well as a shareholder in CCH both directly and indirectly through SGJ. But more than that, through the years of the company’s incorporation, and by consent of Mr Carter, he and he alone had had on behalf of CCH all dealings with the bank. This was not merely a self-appointed role on his part; this was the way he and Mr Carter, the other director, had on behalf of CCH agreed that things should be done. As Mr Jewson said and I accept, Mr Carter left all the bank dealings and documentation to him and was happy for him to look after it all. The bank itself had no reason to think otherwise. In matters of documentation, therefore, it was to Mr Jewson on behalf of the directors of CCH that Barclays Bank looked in its dealings with CCH, and Mr Carter had throughout been content that that should be so. Further, as I have said, on a significant number of occasions––not just with a separate bank, Denizbank, but also with the bank itself––Mr Carter had been content to leave it to Mr Jewson to communicate the appropriate signed formal documents to the bank when Mr Carter must have known that two signatories were required and that he himself had not signed and when he knew that Mr Jewson had been wont to sign bank documents using Mr Carter’s purported signature.”

The judge’s conclusion, at the end of [96], was in the following terms:

“In such circumstances, I conclude that Mr Jewson had been clothed by CCH with ostensible authority to warrant to the bank that all formalities relating to approval and execution of the debenture and guarantee had been duly complied with and that the signatures could be relied upon as genuine.”

The judge then turned to consider the effect of Section 44. I will need to come back to that part of the judgment, when I come to consider Section 44. It should be noted at this stage however that what the judge had to say about Section 44 was obiter, because the judge had already concluded that Mr Jewson had been clothed by the company with ostensible authority to warrant to the bank that all formalities relating to the approval and execution of the debenture and guarantee had been duly complied with and that the signatures could be relied upon as genuine.

Ms Lyne submitted that it was impossible to reconcile the reasoning in Lovett with the decision of the House of Lords in Ruben, with the consequence that the Judge should have followed Ruben, rather than Lovett.

I do not accept this submission. I have quoted from both Ruben and Lovett at considerable length because it seems to me to be quite clear, from an analysis of the facts and reasoning in each case, that there is no conflict between the two decisions. Starting with Ruben, and as their Lordships made clear, there was no room for the operation of ostensible authority in that case. The company in that case knew nothing of the fraudulent activities of its secretary, and had had no dealings with the plaintiffs, who had lent money to the secretary on the security of what they believed to be a valid share certificate. Nor was there any course of conduct in that case, by which the company could be said to have authorised the secretary to issue share certificates on his own initiative, bypassing the required formalities by forging the required signatures. In those circumstances the plaintiffs were left with the argument that they were entitled to assume that the share certificate had been validly issued, and that the forgery was an irregularity in the company procedures which did not affect them as they had no notice of the forgery, and no reason to make any inquiries in that respect. This argument did not work because, as their Lordships explained, the forged certificate was a pure nullity “from beginning to end” (Lord Macnaghten at page 444 of the report).

Turning to Lovett, the facts were significantly different. The key facts, as found by Davis J, were summarised at [96] in his judgment, which I have quoted above. On the basis of those facts, the judge decided that Mr Jewson had had the ostensible authority of the company, by reason of the previous conduct of the company in its dealings with the bank. As such, Mr Jewson had ostensible authority to warrant to the bank that the required formalities, including the required signatures, had been met in relation to the approval and execution of the debenture and guarantee. Leaving aside the judge’s obiter consideration of Section 44, to which I shall return, the judge’s actual decision in Lovett was made on the basis of ostensible authority, as that doctrine was explained by Diplock LJ in Freeman & Lockyer. The doctrine of ostensible authority was not available on the facts of Ruben, and thus played no part in the decision of their Lordships in Ruben.

In summary, I cannot see any conflict between the actual decisions in Ruben and Lovett. Nor can I see any basis for saying that the actual decision in Lovett was wrong. It seems to me that the actual decision in Lovett involved the application of a well-established doctrine, namely ostensible authority, to what may be said to have been the unusual facts of that case.

Ms Lyne also submitted that if Lovett states the law correctly, which in my view it does in the context of ostensible authority, and if Lovett can reconciled with Ruben, as I have decided it can, the Judge was still wrong to apply Lovett in the present case because the facts of that case are distinguishable from the present case. The ground of distinction, so Ms Lyne submitted, was that the forger in Lovett was a director of the company who had previously been engaged in all dealings with the bank. In the present case by contrast, so Ms Lyne contended, the forger (Mr Amitai) never had any role in the Appellant. Mr Amitai simply acted as agent of the Appellant, in the negotiations for the Surrender. This submission however seems to me to go back into the territory of Ms Lyne’s first argument in support of Ground 1, which was that the Judge did not make sufficient findings to support his conclusion that the Appellant was estopped from denying the validity of the Payment Agreement.

The Judge did however find that the Appellant had done sufficient to “clothe”, in the language of Lovett, Mr Amitai and Fladgate with the ostensible authority of the Appellant to represent that the Payment Agreement had been validly executed; see my analysis of Ms Lyne’s first argument in support of Ground 1. As such, it seems to me that the Judge was right to follow Lovett, and would have been wrong to distinguish the case.

One might think it surprising that the Appellant could have done sufficient to clothe either Mr Amitai or Fladgate with the ostensible authority of the Appellant to make representations to the effect that documents were validly executed by the Appellant in circumstances where, unbeknown to the Appellant, the signature of its director on the Payment Agreement had been forged. This however was a factual question for the Judge, to be answered on all the evidence before the Judge. This engages Ms Lyne’s second argument in support of Ground 1, which is that even if the Judge did make the required findings of representation and reliance, the facts of the present case fell well short of what would have been required to support a finding that Fladgate had actually represented, on behalf of the Appellant, that the Payment Agreement had been validly executed. I will come next to this second argument but, so far as the third argument is concerned, I can see no basis for the argument that the Judge should have distinguished the actual decision in Lovett, if it is assumed that the Judge was entitled to make the finding of representation and reliance which, as I have decided, the Judge did make in the Decision.

In conclusion, I reject Ms Lyne’s third argument in support of Ground 2. For the reasons which I have set out, I do not see any conflict between Ruben or the actual decision in Lovett. Nor do I see anything wrong in the actual decision in Lovett. In my view the doctrine of ostensible authority is capable of operating in a situation where the signature of a person purporting to sign a contract on behalf of a company turns out to have been forged. In such a case it seems to me that the doctrine of ostensible authority is capable of operating so as to produce the result that the contract falls to be treated as having been validly signed on behalf of the company. It may be said that a relatively unusual set of facts, such as occurred in Lovett, is required before the doctrine of ostensible authority can be relied upon in order to bind a party to a forged document, but in principle I cannot see that the doctrine of ostensible authority is excluded in such a case. As a matter of law therefore, it seems to me that was open to the Judge, at least in principle, to make a finding that Fladgate acted with the ostensible authority of the Appellant, in representing that the Payment Agreement had been validly executed, with the result that the Payment Agreement was binding upon the Appellant. Whether the Judge was entitled to find the facts required to support the application of the doctrine of ostensible authority, being the question raised by Ms Lyne’s second argument, is the question to which I now turn.

I can deal with Ms Lyne’s second argument much more shortly. As I have said, one might think it surprising that the Appellant could have done sufficient to clothe either Mr Amitai or Fladgate with the ostensible authority of the Appellant to make representations to the effect that documents were validly executed by the Appellant in circumstances where, unbeknown to the Appellant, the signature of its director on the Payment Agreement had been forged.

As however I have also said, the question of what ostensible authority Fladgate had when they exchanged the ostensibly executed copy of the Payment Agreement was a factual question for the Judge. The Judge read and heard all the evidence in the case, which was extensive. I did not. Ms Lyne did not seek to take me through the evidence which was before the Judge, for the purposes of explaining why that evidence was insufficient to support the findings made by the Judge. There was no transcript available of the cross examination of the witnesses before the Judge. I do not say any of this by way of criticism. Appeals on pure questions of fact are never easy to pursue, while taking an appeal court through excerpts of the evidence below is rarely a productive or useful exercise. Ultimately, it seems to me that there is no basis upon which I could safely conclude that the findings made by the Judge, in support of his conclusion that the Appellant was bound by the Payment Agreement, were findings which were not open to the Judge. I can see no basis for interfering with those findings.

I therefore conclude that Ground 1 fails. The Appellant has failed to establish that the Judge was wrong, either as a matter of law or as a matter of fact, in his conclusions (i) that the Appellant was estopped from denying that it had authorised the Payment Agreement in circumstances where that document had been forged, and (ii) that the Appellant was thereby bound by the Payment Agreement. It follows that the Decision stands, at least so far as the Judge decided that the Appellant was bound by the Payment Agreement.