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Commercial Law - Agency - Authority of agent - Apparent or ostensible authority - Relationship of principal and third person - Liability of principal to third person

Thursday, March 30, 2017 @ 8:00 PM  

Appeal by defendant Currie from an order overturning the dismissal of TD’s claim against him and finding TD and the Craigs were not entitled to a discharge of the mortgage. Currie lent money to the Craigs, secured by a mortgage. The initial financing and the mortgage was negotiated by Fuoco Holdings and Fuoco. The mortgage eventually matured and went into default. The Craigs paid money to discharge their mortgage. The funds were misappropriated by Fuoco, who was the sole contact dealing with the mortgage. Currie denied authorizing Fuoco to receive any payments directly on his behalf. The Master held that the Craigs’ lawyer had unwisely paid Fuoco, not Currie, the actual creditor. He further found that Fuoco had no actual or ostensible authority to receive the funds on behalf of Currie. He found Currie was not bound by the payout statement provided and the payout funds received by Fuoco, and he dismissed TD’s claims. The Master’s decision was reversed on appeal. The Chambers Judge held that Currie had held out Fuoco as his agent with authority to provide payout statements, and to accept payment of the funds. As a result, he held that Currie was bound by the payout statement and was deemed to have received the payout funds in full and in complete satisfaction of the mortgage. He ordered that the mortgage be discharged. He also found that the Master erred in dismissing TD’s claims against Currie.

HELD: Appeal dismissed. Fuoco was an agent with considerable actual authority with respect to the mortgage. The record demonstrated that Fuoco likely had actual authority with respect to the provision of payout statements as his address was on title and was the address at which payments were to be made. In addition, Currie knew that Fuoco was providing payout statements and did nothing to stop him, nor did he advise third parties that Fuoco was exceeding his authority. It followed that if Fuoco had the authority to issue payout statements, he had the authority to decide what would go in them. The Craigs and TD, as the recipient of the payout statement, were entitled to rely on it.