Does Gordon Ramsay leave a bitter taste for principals?
Gordon Ramsay has been told he must honour a personal guarantee that was used to secure a pub in Regent's Park. This is despite the fact that Mr Ramsay did not physically sign the document, and tried to argue his father in law had effectively forged his signature on the guarantee.
The High Court held that Mr Ramsay was bound by the terms of guarantee entered into by his father in law, Mr Hutcheson, using a signature machine, as his agent. The court found that Mr Hutcheson had "sufficient authority" even though he did not have an "express authority" to enter into this particular guarantee and indemnity. The court made this decision based on the commercial relationship between Mr Ramsay and Mr Hutcheson. The court looked at both whether Mr Hutcheson had authority to bind, and whether he could bind Mr Ramsay using a signature machine.
Mr Hutcheson successfully argued that Mr Ramsay had entrusted him to act for his companies and also for him personally on business matters, of which the guarantee was one. In Morgan J's words, this trust was "very extensive, if not total" and the request to "look after me" conferred wide general authority on Mr Hutcheson. Committing Mr Ramsay to the guarantee was clearly within the scope of this authority and Mr Ramsay was therefore bound despite the absence of express authorisation for this specific document. The judge also commented that even if this was wrong, Mr Ramsay would have been estopped from denying the validity of his signature as against the defendant.
The parties accepted at the outset that a personal "wet ink" signature was not necessary on the guarantee and the signatures produced by the machine amounted to "signatures" within the legal sense. The court looked at the way the signature machine was used and it found that Mr Ramsay was well aware before the lease was entered into that it was used a lot, both for legal documents and cheques as well as publicity materials.
Key point to take away:
The case serves as a useful reminder for principals that they should create a clear record of the scope of their agents' authority in order to avoid and/or manage similar disputes. If they don't, they could be on the hook for more than they bargained for.
Joanna Keating, Trainee Solicitor