Australasian Brokerage Ltd v Australia and New Zealand Banking Corporation Ltd

Australasian Brokerage Ltd. (the appellant) brought an action against Australia and New Zealand Banking Corporation Ltd. (the respondent) for deceit. The dispute arose from representations made by the respondent's chairman of directors concerning the subscription and allotment of the respondent's shares, which the appellant alleged induced it to enter into and perform an agreement. The case was heard in the High Court of Australia on appeal from the Supreme Court of New South Wales.

The legal issues before the court included whether the respondent was liable for the representations made by its director, the scope of that director's authority, and whether the term "over-subscribed" in the context of share offerings could encompass "underwritten." The court also had to determine if a claim for deceit could be founded on inducing a party to perform an existing legal obligation.

The court reasoned that the scope of an agent's authority is determined by the nature of the duties entrusted to them. Making representations about the number of shares already allotted and the terms of allotment was considered incidental to the negotiation of a brokerage agreement for selling shares. Therefore, the company could be held liable for false representations made by a director entrusted with such negotiations. The court found that directing the jury on the question of whether the director had sufficient authority to make false statements constituted a misdirection. Furthermore, the court held that inducing a party to a binding contract to perform that contract through false representations known to be untrue is not actionable as deceit, as no damage is suffered in such circumstances.

The High Court held that the jury had been misdirected regarding the scope of the director's authority. Consequently, a new trial was ordered for the first count of deceit, which alleged the appellant was induced to enter into the agreement. However, a new trial was not ordered for the second count, which alleged the appellant was induced to carry out its existing legal obligations, as this count disclosed no actionable deceit.