Estate agent – Property management – Employment contract implying term to act in good faith – Claimant alleging first defendant employee involved in conspiring to steal funds – Whether claimant establishing fraud on evidence – Whether first defendant breaching contract of employment – Whether defendants liable for money had and received – Whether defendants conspiring to cause damage by unlawful means – Claim allowed
The claimant was an estate agent, surveyor and property manager. It engaged the services of a variety of suppliers of goods and services in order to ensure that properties entrusted to it were properly maintained and repaired.
The management of a particular property was assigned within the company to a property manager, who was sometimes assisted by a facilities manager. Both managers would, from time to time, order appropriate goods or services for a property. The provider would render an invoice received, in the first instance, by the purchase ledger team (the team), which entered the details of the invoice onto the computer system. The original invoice would then be despatched to the relevant facilities manager or property manager for authorisation before the payment was made. A form of stamp was used, which included blanks for completion by signature of a facilities and/or property manager to indicate that the invoice should be paid. Once such approval had been given, the original invoice would be returned to the team for the approval to be entered on the system and for the invoice t be paid.
The claimant alleged that, between November 2005 and the termination of her employment in 2007, the first defendant had caused false invoices to be entered on to the system and paid to the second, third, fourth and fifth defendants, none of whom had a known connection with the claimant. The latter sought to recover losses totalling £158,925.87. The sixth, seventh and eighth defendants were banks that were joined in the action in order to obtain disclosure of relevant records in their possession. Following disclosure, none of them took any role in the proceedings.
The first defendant argued that she had not knowingly entered false invoices onto the system or caused such invoices to be paid. The fourth defendant contended that he had received cheques on behalf of the claimant and had paid them into a bank account as a favour to the third defendant, who was the first defendant’s boyfriend. The second and fifth defendants did not show any legitimate entitlement to the sums received.
Held: The claim was allowed.
(1) On the evidence, it was clear that the first defendant had set up new suppliers on the system knowing that they were not genuine. The purpose had been to facilitate the theft of money from the claimant by causing the system to accept invoices purportedly from those suppliers and to produce cheques ostensibly in payment of such invoices, but in fact expressed to be payable to the second, fourth and fifth defendants. Accordingly, the first defendant had breached the implied term of her contract of employment, namely to serve the claimant in good faith and with fidelity. The loss suffered by the claimant as a result of those breaches amounted to £158,925.87 and judgment would be given in favour of the claimant against the first defendant in that sum: Robb v Green [1895] 2 QB 315 applied.
(2) There was no evidence that the first defendant had derived any benefit from the fraud. A cause of action for money paid involved liability on the part of a defendant only if he or she had derived a benefit from the payment and the payment had been made at his or her actual or implied request. The circumstances in which a request would be implied appeared to be limited to a payment made under compulsion of law or in the course of intervention in an emergency. There was no evidence that the first defendant had, in any meaningful sense, requested the claimant to pay the various sums in question. Accordingly, the claim against the first defendant based upon money had and received, or paid, failed.
(3) However, on the evidence, judgment would be given in favour of the claimant against the second, fourth and fifth defendants for moneys had and received in the sums of £102,950.33, £39,805.23 and £6,000 respectively.
(4) On the evidence, the third defendant had induced the first defendant to breach her contract of employment. Liability for a breach of contract necessitated knowledge of inducement. It was not sufficient that a person knew that he or she was procuring an act that, as a matter of law or construction of the contract, was a breach; awareness of the effect was crucial. The third defendant must have known that he was inducing a breach because the acts in question were clearly dishonest and had amounted to breaches of the first defendant’s contract of employment. Consequently, there would be judgment in favour of the claimant against the third defendant in the sum of £158,925.87, as damages for inducing breaches of contract by the first defendant: OBG Ltd v Allan [2007] UKHL 21; [2007] 2 WLR 920 considered.
(5) It was also clear from the evidence that the first and third defendants had conspired to effect the theft of the money. Where unlawful means were employed by conspirators to achieve their object and that object involved causing harm to the victim, the intent to cause that harm did not have to be the predominant purpose of the conspiracy. The circumstances had to be such as to make the conduct sufficiently reprehensible to justify imposing on those who had brought about the harm liability in damages.
(6) third defendant’s inducement of the breaches of contract on the part of the first defendant, which she had willingly committed as a result of that inducement, amounted to a conspiracy to cause harm to the claimant by unlawful means. Each of them had been involved from the outset and, thus, the conspiracy between them antedated the operation of their scheme. However, the evidence did not justify the conclusion that the fourth defendant was liable for damages for conspiracy since it seemed that he was not party to some overarching conspiracy, but had been content to be of service on one occasion: HM Revenue & Customs Commissioners v Total Network SL [2008] UKHL 19; [2008] 2 WLR 711 considered.
Adam Solomon and Charlotte Davies (instructed by Michael Conn Goldsobel) appeared for claimant; Royln Seeboruth (instructed by PCD Yorke & Co) appeared for the first defendant; Genevieve Parke (instructed by Attiyah Lone) appeared for the fourth defendant; the second, third, fifth, sixth, seventh and eighth defendants did not appear and were not represented.
Eileen O’Grady, barrister
