Law in Scotland surrounding agency law is not well explored the recent case of Gray v Braid logistics ltd 2017, Lord Bannatyne had opportunity to explore and resolve these ratification issues in Scots law.
The g v b case looked at the English case Bolton v Lambert. This case had only been discussed in two other Scottish cases prior to Gray v Braid . In either case the Scottish courts did not accept or reject the way in which ratification was dealt with in the cases, as authority to be used in scots law.
In Bolton versus Lambert the agent acted out with their authority to accept an offer from a third-party. He lacked capacity to do so on behalf of the principal. The offeror revoked his offer. However, the principal ratified A’s authority to act in the manner in which he did. The ratification had full retrospective effect. As it does not affect proprietary Interests of any third-party the court allowed the ratification as the act was not a total nullity and it could be ratified.
In gray v braid logistics ltd, Mr gray The pursuer was dismissed pending the investigation into the alleged misconduct of the missuse of a clients account, he had received this in writing from Shane Watson from the board of directors.
In clause 13.1 of Mr Gray’s employment contract it stated that if there was a material breach of employment contract then the board has the right to dismiss the employee for any behaviour the board determine to be detrimental to the company.
Also in clause 13.3 its stated that the pursuer can be suspended with full pay whilst an investigation has been carried out and entitled to have a disciplinary hearing. Clause 16 outlines the grievance procedure which states that the chairman of the board has the final decision however at the time the chairman was the pursuer.
First issue regarding agency related to the dismissal of pursuer in this case. It was argued that the act of dismissal was performed without any authority to do so and was not properly ratified in this case. From this rose the discussion of whether or not that patient had and platelet taken place. The representatives for the defenders argued that there was multiple applications by the defenders by means of possession taken by them and the various Litigations. Mr Gray is Council focused on the mechanics of the ratification itself. The defendant had not and any other pleadings stated to it or today is the act of dismissal the board were classed as acting as agents of the company and the company as a principal and therefore this offenders needed to identify the board meeting or meetings which the basis of the ratification was based off of.
The defenders counsel sought to argue that there was multiple ratification by the defenders via the position they took in the various litigations. The pursuers counsel focused on the way in which the ratification was carried out as the defenders had not stated who authorised the dismissal and if they had the authority to act. As the board were acting as the agents for the company (principal) they require to highlight which meeting(s) was the basis of the ratification.
The minutes from the board meeting that were produced by the defenders the pursuer had been forced to leave the meeting which is not a requirement of the articles of association. The defenders couldn’t not supply sufficient minutes that authorise the conduct of the litigation.
Expressed ratification: this is where the Bolton case comes in to play. The pursuer argued that that he resigned before the board dismissed him, so the dismissal would not stand. The fact that he resigned he believed he was entitled to his shares and benefits of resigning and would not be treated as a “bad leaver”. However, there was a dismissal that predated his resignation. Ratification operates retrospectively, it gives prior invalid acts validity. Thus the prior dismissal became valid which meant the resignation would not be valid due to ratification.
Lord Bannatyne stated that “·the Board resolution although it comes after the resignation relates back to the dismissal and therefore the resignation is inoperative. The dismissal was valid subject to ratification”
This is where Bolton is applicable “To have held the resolution ineffective would be to deprive it of its retrospective effect” Mr Gray lost on this point.