Celebrity chef Gordon Ramsay has lost a High Court case over whether he should be personally liable for the rent on one of his London pubs.
A 25 year lease was entered into in 2007 for the York & Albany pub near Regent’s Park which included a guarantee which made the chef personally liable for the £640,000 annual rent. The lease was entered into at a time when Christopher Hutcheson, Gordon Ramsay’s father-in-law, was business manager for the chef’s group of companies and who was wholly responsible for the management of the chef’s various businesses. Mr Hutcheson was sacked in 2010.
Mr Ramsay claimed that his signature was forged using a signature machine, he was unaware of the details of the lease and accordingly should not be held liable for the guarantee which had been given on his behalf. The chef claimed that he felt “like a performing monkey” while Mr Hutcheson managed the growth of his multimillion pound culinary empire.
Signature writing machines are often used by authors to sign books and photographs automatically but in this case, the machine was also used to sign legal documents on behalf of Mr Ramsay who claimed that he was unaware of the full extent of the use of the signature machine.
However, Mr Justice Morgan dismissed this claim as “entirely implausible”. The judge said that, “Mr Ramsay knew, long before the entry into the agreement for lease and the lease of the premises, that the machine was routinely used to place his signature on legal documents.”
“Mr Hutcheson did not routinely inform Mr Ramsay of matters of detail, even important matters of detail. Mr Ramsay did not expect Mr Hutcheson to keep him informed of such matters and Mr Ramsay knew that he was not being kept informed.”
“I find that when Mr Hutcheson committed Mr Ramsay to the guarantee in the lease of the premises, Mr Hutcheson was acting within the wide general authority conferred on him by Mr Ramsay at all times until Mr Hutcheson’s dismissal in October 2010.”
The facts of the case demonstrate the binding nature of acts by an agent on behalf of a principal, provided that the agent has the requisite authority. The long term relationship between Mr Hutcheson and Mr Ramsay was held to be one of total trust and one which was strengthened by the family ties. Mr Hutcheson, as agent, plainly had extensive authority to act on behalf of Mr Ramsay and had no express limitations on his ability to deal with business and contractual matters. Mr Hutcheson did not therefore exceed his authority and Mr Ramsay was bound by the contract.
This is a useful reminder for those using agents to ensure that a clear record of the scope of the agent’s authority is kept in order to avoid similar disputes. The case also serves as evidence of what can happen when business disputes arise between families and friends. In such cases, it is perhaps even more important to be clear on the terms of any arrangement, as the emotion involved can lead to a painful breakdown of the relationship.
If you would like to discuss any aspect of a commercial contract or commercial dispute, please give us a call on 0116 289 7000.
Michael Lam, Trainee Solicitor