In Nathan v Dollars & Sense Ltd [2008] NZSC 20 the New Zealand Court of Appeal decided a case involving a web of lies, forgery, and the boundaries of agency. The case centres around Rodney Nathan, who in seeking a loan from Dollars & Sense (D & S) forged his mother’s signature on a mortgage document. D & S, unaware of the deception, registered the mortgage. When repayment defaults, D & S attempted to sell the property, igniting a legal firestorm with Mrs Nathan.
The crux of the dispute was relating to Mrs Nathan’s claim – is the mortgage void due to Rodney’s fraudulent act. The court then considered agency law, specifically whether Rodney acted as D & S’s agent during the forgery, potentially rendering their title questionable. This brings us to the question: was Rodney merely a loan seeker or an extension of D & S?
The court meticulously dissected the events leading to the forgery, and carefully examined Rodney’s actions and his efforts to secure signatures for the loan, and the undeniable reality that without Rodney’s actions, D & S would not hold the mortgagee position.
The court further explored vicarious liability, and the scope of an agent’s authority and whether a principal can held responsible for their agent’s illegal act, even if it benefits the agent only. This then led to considering the “close connection” between the wrongful act and the authorised tasks and whether a deliberate criminal act by an agent can fall within the scope of agency. It is well established that there is a “fraud exception” in agency relationships where a principal can escape liability if their agent commits fraud solely for their personal gain.
Ultimately, the court concludes that Rodney’s forgery indeed fell within the scope of his agency for D & S. The act of obtaining signatures is also inseparable from the registration of the mortgage. This is based on similar legal principles in Canada where the creation of an agency inherently carries the risk of misconduct, and the principal bears the responsibility if those risks materialise.
Key Takeaway
This ruling sends a strong message that principals cannot reap the benefits of their agent’s actions while conveniently denying agency when faced with fraudulent behaviour. Our firm often sees companies reaping the benefits from use of unlicenced software, and then claim that the unlicensed software was installed by a rogue employee or contractor. This case sends a strong message to similar companies that if they are to benefit from unlicenced software, then they will also likely be found liable for the actions of its employees or contractors even if it was not within their roles or responsibilities. Simply diverting blame will not protect a company from the conduct of its agents and to prevent such liability more must be done by a principle to ensure that the infringement of copyright does not occur in the first place.
If you act in the licencing enforcement and compliance team and require more information, of if you have infringed upon copyright material, please contact our office for a free consultation on (02) 9262 5495, or subscribe to our newsletter by visiting https://mclp.com.au/publications/
About Us
MCLP acts for nearly a dozen software providers protecting their copyright material. Led by Damin Murdock and supported by Ms Jane Choi, Ms Bella Chang and Shiqi Cui, our team operates internationally and have the capacity to deal with intellectual property matters in English, Mandarin, Cantonese, Japanese and Malay In the past few years, our team has recovered in excess of $3 million for our clients.