Brookhouse, Reginald Sydney v NSW Mutual Real Estate Fund Ltd

. .

Trade

P rac t i ces

- Misleading conduct

L i a b i l i t y o f

p r i n c i p a l

corpora t ion .

Trade Practices Act 1974,	ss.52,	82	and	€!b.
G No. 39 of 1978

Coram:

F r z n k i , S t .

John and

Ceane

JJ.

8 March 1973

syeney

I N THE FEDERAL CO’JqT OF AUSTRALIA

)

NEW SOUTH WALES DISTRICT

REGISTRY

G No. 39 of 1978

GENERAL DIVISION

I N THE YATTER

o f

the Trade Pract ices

A c t

1974

O R D E X

JUDGES XkKIP!G OTII)E2:

Franki , St. John ar?d Deaxe JJ.

DATE OF O?DE4:

8 March 1979.

WHERE

W 2 E :

Sydney.

THE COURT ORDERS TFAT:

1. The appea l be d!.x!:!Fsse.l.

The

a p g e l k n t s pzy

thz r e sponch l t l c

cos t s .

I N TFE

FPDERAL,

COUHT OF AUSTCALIA

mw SOUTH WALES DISTRICT m~-ISTEY

G No. 39 o f 1978

GENERAL DIVISION

IN	THE TXTTX? of t h e

Trade

P r e c t ~ c e s

Act 1974

BETWEEN :

C O W { :

Franki , St . John and Deane JJ.

a	Farch 1979

- 2 -

. N.S.W. Mutual

Loans

Agency Pty.

Limited

(f ' the

Agency

companyft). The Agency company was wound up on 8

February 1977.

The Fund company and t h e Management

company

have appealed against the judhment ordcrmg

t h e a p p e l l a n t s

and

t h e Agency

company,

i n t e r Elm,

t o pay the

sum of $8,050

t o the respondent togetper

with	c e r t a i n costs.

f a r as

i s relevan+, the proceedings were

based

an a l l ega t ion tha t du rmg Februa ry

1975

Mr.

Emdur, an employee o f t h e Agency

company

atxi a

Mr.

Ollis,

a t a l l re levant t lmes the

macager

o f

t h e

Agency

connpany

and a d i r e c t o r o f

t h e Mana3emer.t

compariy

and from January to October

1974 a d l r e c t o r of t h e

Fund conper,y, had represented

the respondent tha t

i r x e s t i n g $8,000

t h e Fund

connpmy

he would be

a b l e t o borrow

$30,000

from

t h e FWLd c o a p n y within

f o u r k e n t o s i x t e e n

weeks

a t what

was

very favourable

raTe

i n t e r e s t .

The claim was mad2 under s.@2 o f t h e Trade

Prec t i ces -

Act 1974 ("the Act") and

was based on s.52(1)

which,

a t

t h e r e l e v a n t t i m e , r e a d

c o r p o r d t l m

aiiel2.

c o t ,

I n

t radn

or commerce, er,gzgc- ;E cocduct tha t

is mislezdicg o r deccpzive. If

. .

. - 3 -

The

s u b s t a n t i a i a r m w e n t f o r

thc respondent

proceeded upon t h e basis t h a t Mr.

Ollls, as t h e

manager of t h e Agency cmpany, made a misleading o r

decept ive s ta tement

and that t h e Agency company was

a g e n t i n t h e r e l e v a n t s e n s e f o r t h e

Fund

company

and

t h e Management company and t h a t th i s statement: was therefore mis leading or deceptive conduct engaged In

by t h e Fund company and t h e Managanent company.

Sec t ion

8 4 ( 2 ) o f

the Act, which

was

a l s o

r e l i ed on , p rov ides

"Any conduct engage6 I n on

behalf o f a body cor?orzze by a

d i r e c t o r , q e n z

o r

servant of

t h e body ccr.=.sra:e

c:'

by 2.15'

other persori- a t

t h e

d l r e c t l o n

with the consent

o r a g r e m e n t

(%hether ?=ress

o r LXG;l ie?)

c f

d l r e c t o r , a g e n t

o r

servanz o f

t h e body

corpora te s h i l t e

deened,

f o r the pur7ozss

t h i s A c t , t o

have been

engzged

i n a l s o by

t h e body

corporare ."

It was also submit ted

f o r t h e rFspondent, thi,

Mr.

Ollis, as a d i r e c t o r o f t h e Pknagement company,

i n

making

the r e l evan t s t a t emen t

made

behalf of

t ha t

company and that t ha t company

was

the agen t o f t he

Fund

company

and

t h e r e f o r e b o t h t h e Fund

cor-pany and

the

Management company were	l l a b l e f o r the s ta tement	made
by Mr. Ollis.

- 4 -

The

bas l c f ind ing

o f

t he l ea rned

t r i a l judge

was :

"It was

i n the coarse

p e r f o r r i x g

t h e t a s k ass igned to

it by

t h e Fur-d

company and t h e Management company,

t h a t

i s ,

f i c d i n g p u r c h a s e r s f o r

shareholders who wlshed to s e l l

t h e i r s h a r e s i n t h e

-3md

company

t h a t t h e

Agency company by

i t s t.so

se rvan t s

Eade

t h e f a l s e r e p r e s e n T a t l o n

t o

t h e p l a i n t i f f .

Having

acted, as

I be l leve

it d l d , :nt:n_ir-

the

sco?e

of the au-chorlty cor?ferrec

~ 2 o n

by both the

rFmd corpanp 2nd Tile

Management company f o r :ne

perlormznce

o f

t h a t

task

tLose

ccr3anies

Ere

l i a b l e f o r

Its

conduct."

The na tu re of such an appeal

2s tkis was

considered by

t h e Full

Court of this Court

i n Y h l m C-ezk

Consolidated N.L.

v. Federal Ccrniss ioner

o f Taxatlon

(1977)

17 A.L.R.

421

a t p.426 where

a f t e r r e f e r r i n g

t;:

Edwards v.

Noble

(1971)

125

C.L.R.

296, the Court

~212:

"Before th i s

court w i l l r everse

such a

f i n d n g o f f a c t , l :

./c11

have t o be

coc-;incec!

t n a t t h e

t r i a l Judge CLCS t o a Jvrong

concluslon.

The Fund company was incorporated

1975.

purported t o provide l oans t o ho lders of

redeenable

preference shares

on favoura'r le

terns

a t a d a t e ~c 'ce

determined according to

a priority nuqber zssoclated

with thp pnrticu:---

n?cf.:--n-

- I - - -=-

L _ _ . Tke R-?

- 5 -

.company had

staff

and

is p e r f e c t l y c l e a r t h a t

the Management company,which was incorporated about

t h e

same

t ime,was au thor i sed to ac t

manager

f o r t h e

Fund

company.

M r .

Russell Eruce Klng

was

d l r e c t o r of

a l l t h r e e companies.

The

learned

tr ial

judge accepted the evidence

o f t he r e sponden t a s t o the r ep resen ta t ions

wiuch were

made and ne i ther	M-?. Ollis nor Mr.	Emdur were callee-
in ev idence .

The

respondent,

in about Fekruary

1975,

was

seeking t o borrow money t o p l r c h a s e

a hocse.

Ee sa:i

an advertisement i n a newspaper and v i s i t e d the

premises of the

Agency

conipany winch

a t t h a z t i z e

'::ere

also the premises

o f t h e Fmd a32 Vmagemefit

coc2az:ies

and

the re the r e l evan t r ep resen ta t ions

were

maze

t o him.

The respondent ' S 2rimr;r rite-est ir. resTorZin:

to the adve- t i senent

'was

to oSta l r ,

loan

a t a

f avoura5 le r a t e

i n t e r e s t t 3 ena j i e h l m t o purckase

the house

i n which he

was

t h e n l i v i c g i n t h e

Sydney

suburb of Cronulla.

The purchase of

was

Rot en

o b j e c t 111

i t s e l f .

It was

t h e means t o obtaln

such a

loan.

There

fie'rer

~ 2 s

any suggestion tn<?t

tho

l o a c

would be obtained

otherwise than frm t h e Fund con2any

ac tmg th rough the se rv ices

Its

manager,

t h e :4aneSe!zent

. ..

' . ' -:sises

1 ; J .

. L

::l-'

- - .

1 % )

Indica ted m

the advert lserpent ,

it ' a s ,

t o u se hj

L ::crdS,

t o i n q u i r e " a f t e r

loan to

buy

house".

- 6 -

The

bus iness of the

Fund

company

was

the naking

of loans.

The r ep resen ta t ion made to

the

respondent

was

t o t h e a v a i l a b i l i t y o f l o a n

monays

and

r e l a t e d

t o a c t i v l t y

o f

t h e

Fund. company

ac t lng through the

Management company. The respondent

borrowed $8,000

from

bank, the loan bemg guaranteed

h i s f a t h e r ,

and pa id th i s

morey

t o Mr.

Ollis

a t t h e Agency

c o q a n y

fo r t he pu rchase

from

exis t ing shareholders

two

pa rce l s

par t ly pa id redeemable preference shares in

t h e Fund

company.

I n t h e r e s u l t ,

which

i n a l l t h e

circumstances does not

seem

sur?r i s ing ,

money

was

for thconi rg	f r o m	t h e	P a d coT2ar.y	w i t k n t h e s t a t e d
per iod.

The first ques t ion t o be determined

is whether

coi?inced

t h a t t h e t r i a l j u d g e c a s e

t 3 a

m-crg

c o n c l u s ~ o n

i n holdlng

fnat

t h e r e p r e s e n t a t i o n , w k c h

was

c lear ly mis leading or dece? t ive ,

was

Eade by

t h e

Agency

cmpany within the scope of the authorl ty

c o n f e r x d u?or?	it by	t h e ik rd conn2.r;.	2x2 t h e Managenect
company.

1%.

King

gave

evidence,

lnter

a l i a ,

t h a t :

( a ) After

the incorpora t lon

o f

t h e Fund

company

t h e

Ageccy

campmy acted as

dea le r

ir. s e c u r l t l e s ,

introducing nev menbers into the

F u K d

compny

arld

a l s o

ar ranging transfers of

the sharehold ings

o f

var ious

members i n

t h e Fund company.

(b) For

introducing

comanv

new members i n t o t h e G d t h e Agency Company

received a commission

from

t h e Management company.

( c ) The Agency company conducted a business a s a

d e a l e r i n shares of the

Fund

company

and

its only

l i c e n c e t o d e a l i n s h a r e s

was

f o r t h e s h a r e s o f t h e

Fund company.

(d) He had no knowledge t h a t t h e

Fund

company

eve r au tho r i sed any pa r ty to o f f e r

loans

i ts

behal f , bu t tha t he regarded the

Fund

company

and the

Management

company

a s t h e s m e

th ing .

A prospec tus da ted

16 August

1973, w h c h

had been

r e g i s t e r e d by

t h e Fund

compacy wzth t i c

Corporate Affairs Conmission of :Jew South Vales,

f o r t h e i s s u e

of redeemable preference shares

was i n ev idence as was a prospectus dated

10 December

1974,

a l so r eg i s t e red .

I t wlth the Corpcrate

Affairs

Comnlssion

Mew

South

?:ales.

shs~es,

t h e

SUbJeCt

of this second prosTectus ,

were

eYer

a l l o t e d .

Both prospectuses however were signed

t h e

d i r ec to r s o f bo th

the

Fund

and Msnagenect companies.

The f lrst Frospcct-s

w e e r the hcadmg

tlAdditlonal Statutory Informazion"

i n cka l ing wi th

t h e i n t e r e s t s o f d i r e c t o r s , s e t o u t

t ha t

Mr.

King

- 8 -

was a director and shareholder

in t h e Agency conpany

"which

i n t e r e s t e d i n t h e

promQtion of the

Fund

company".

The	second prospectus contained the following

passage:

"TRANSFE2 OF SHAXES. Shares

can be t ransferred on a form

approved 3y the Drec tors

and

by paynent of Stamp Duty and

t h e prescribed t r a n s f e r f e e .

If	any shareholder des i res to

t r a n s f e r e r y

hTs

shzres they

should csnmcT Piezbers Mmagenent

P ty .

Ltc!.

Shares :.all be offered

f o r s a l e

Pty. Ltd . a s - ~ : e n ~ k c t a l o s s

by N. S. X. i<ut1AX Lczns A,,sen~y

may be :xur:-cc 1f s'llares ?.re

h e l d

f o r

s h o r t p?rio3c!.

broker.?: e : F P ~ ~ 1 - 7 -

'se ch?j-Eed

f o r t h l s s e r v i c e .

This

prospec tus a l so provlded

- 9 -

to be no ted tha t t he

Agency

company

s a i d t o have been appointed

the Management

company

i t s 'agent f o r the "promotion of

new

memberships

in to

the

fund . "

The prospec tus a l so

shows on

t h e same

page that employees

o f

t h e Agency

company

had various

s h a r e h o l d i n g s

i n

t h e

fund.

On the

page

under a

heading

I1Answers

to Impor tan t Ques t ions" appears the

f ollowlng

"Q. Can I s e l l my

shares?

A. Yes.

You car. do so yourse l f

a t any t n e .

Shculd

you

requzre

your sk . r e s s3ld by us :vc

can

ar range tins f o r you provldlng

you have b.?

in t h e fur:? fzr

twelve mcndls end. your c e l l s

a r e n o t

z r r e z r s .

Snares ~ 1 1 -

P S

c f fe rec i i c r

s a l e by N.S.Y.

Mutual Loans

Agency

Pty . L td . as asent

but

a l o s s 3 2.7 bc 1r.curre.a t f

sha res a re he ld fo r

s h o r t

per iod .

brclrer-3c-s I c e will

be charged

:or	t h i s s e r v l c e . I'

It i s t o 5ue

no ted tha t t ho

-,s:ords

UCP?

a r e llSlzould. you

require your shares

so ld

.I1

These words

i n d i c a t e t h a t t h e

Fund

ccnpariy

regarded the

Agency

company

i t s a g e n t f o r t h e s a l e

tine

shareholaer .

Under l lAdditloral

Stztutory

InformaTion"

re fcrence i s a l so made t o tkke .:pency

con,czcy being

I t . . . i n t e r e s t e d i n t!ie

proclotion

oZ t h e Fuxd"

2nd

s t a t e s t h a t it Ilhas been

p a d :?1%,2X3

a:,

cozmission

. .

- 1 0 -

* up to' 16 May, 1974 by Members Management

Pty. L l m i ted".

TWO r e c e i p t s

which

the respondent received

a t

the t ime of the purchase of the shares

were on

t h e

r e c e i p t

form of the

Agency

compeny

but contained the

nota t lon

"It

should be clear ly understood that any

moneys

p a i d f o r s h a r e s a r e n o t s u b j e c t t o

refund"

and

!IApplication of

... redeemable pref shares

$25.00

each

i n t h e N.S.W.

Mutual Real Estate

Fund

L t d " .

one

r e c e l p t a

f igu re o f

$8,000

was

e n t e r e d a g a i m t

th i s s eco rd no ta t ion .

A t the t ime

t h e Fclymen-r; o f

t h e money

t h e

respondent slgned a document 7;rn:lnlch was witnessed by

Mr.

O l l x r , ar,d

winxh

was

enzizled "Pros3ectus Accqsance

Acknowld,ment m-d Agrement

Purchase

Shares!!.

reads a s fo l lows

copy of the Prospectus

of N.S.W.

- 1 1 -

MUTUAL RFAL

ESTATE

FUXD

LIMITED,

DATED 16th August 1973.

2. I/We hereby authorise N.S.W.

MUTUAL LOANS AGENCY PTV LTD t o

bank

t h i s coney

I n y o u r Trus t

Account

and authorise t'nem t o

pay out

your Trust any

amount owmg upon such snares

whether b'y

way

o f

a r r e a r s ,

f i n e s o r otherwise and

FURTEZR

t o pay

varlous

amounts due and

payable

o r d e r t o e f f e c t t h e

purchase o f

such shares

Including

Transfer Fees

and Stamp Duty.

3. I);/e

reques t 1c.s.w. I.:utual

Loans Ag;er.cy PE? Lt2. t o XT on

my/our

behair^ t o a r range tne

t r a n s f e r of

said

shares and

to pay out

The Transfer ror the

Net

Purchase

Frlce

ar^ter

c a l c u l e t x z yxr

:'.,c:-rc:r'

C O ~ l S S i O n	2 s agreed by t h e
Transfer ror .

4. It i s hereby egrced t!la',

1I;;e

wal-rali t

c::ese

S I - G ~ ~ S

h1-e

purchased lri O c r c e ~ e

ana entered

i n	t h e s h a r e r e c l s t e l - i n t h e

- 1 2 -

Before l i s t i n g f o r

sale, these

shares must be

h e l d I n

name f o r

a per iod of

a t l e a s t 12 months

before asking

NEIBERS TWGACEFZNT

PTY LTD.,

o r t h e m AGENTS

t o list

them	f o r s a l e .

Shares can only be

transferred,

i f

s h a r e c a l l s a r e

Dald

t o d a t e

and Transfer fees

~ a h d

stamg duty

have been paid

t o

N.S.Y.

MUTUAL

FEAL ESTATE FUND LIMITFB.

9. I/We

aware and agree

that 13

t he case

o f a

s a l e made by YEPEERS

MANAGEENT PTY

LTD., o r t h e i r

AGENTS then I wlll he responslble

f o r a

deductlon of an agreed Agents

commission

OUT

t h e p r i c e o b t a l n e < . l'

The

words and

f i g u r e s shown

In brackets were hand,w>tten

i n	the docmen t .

Thls document, t o which Mr.

01 ITS had. ob tzmed

the

respondent 's

signature,

contained acknowledgrents

i n f a v o u r	o f both the Nanagezent	coirpany and	t!le	L?und
company.

Mr.

Ollis p l a i n l y spoke f o r t h e

Fund

company

asd

t h e

Kanagenent

compagy

when,

i n d i s c u s s i n g t h e c o n k a c t

purchase the house,

he i

formed the respondent

That

it was

unnecessary for

him

t o have a

s o l i c i t o r i n

re la t ion to the respondent ' s p ropcsed purchase for

t h e r e a s o n t h a t

Ifwe have

o u r

own

so l ic j . to r

who

will

look a f t e r

t he ma t t e r " .

would

seen t3

have

S?O%S'.

f o r t h e p r o s p e c t i v e

mortgagee

( t h e Fund

company

" ? v ? - +

b.- t k n Wl:;?-rr~~-~~

--.l

-.m-,)

,;h.pn L r > infor- ,+

- 1 3 -

the

respondent

tha t

va lua t ion of the subjec t

proper ty would he

necessary and

tha t " they had. a

fe l low who

l i v e d a t Brlghton

t o

c a r r y o u t t h e

va lua t ion t t .

would

seem t o have been

speahng

f o r t h e p r o s p e c t i v e l e n d e r ( t h e

Fuqd

company

managed

t h e Management company)

when

h e i n i t i a l l y

informed the respondent

that the loan

would be

l l through within fourteer . to s lxteen

weeks" and

t h a t t h e r e

was

no need

t o pay a depos l t llbecause

we	w i l l he paying the whole amomt on the exchange

cont rac ts t t .

would

see??

have

keen

zpeakmg

f o r t h e p r o s p e c t i v e

lender

~:klt?x, 12

ans- 51- t o

questior, by the scl1c; tor

for ?:e

verdor or' t h e

proper ty vhich

t'ne

respondent desdred

t 3 purc!:ase

as t o Ilhow long normally he requ;redlt

, he said

"s ix teen

weeks

the normal t ime requlred

process

app l i ca t lons

fo r

l oans t1 .

The Fu?d

ccrr.pzcy, t h e

Management company and t h e Agency company were

c l e a r l y a s s o c i a t e d

companies.

. .

- 1 4 -

and

i n t h e

every-day working reletionshlp

that

ex i s t ed

between

them

i n the performance

o f

t h o s e a c t i v i t i e s "

was

c lear ly warran ted

the evidence.

There was,

i n my

v iew, su f f i c l en t

basis

i n

the evidence to ground his Honour 's fmding

that

t h e

Agency company ac ted as agent f o r the Fund conpsny and f t s manager, t h e Management company, when it

procured. the responsent as

purchaser

o f

sheres

end.

col lec ted any ar rears of ins ta lments

2nd

f l n e s

Gwlng

the

tgoing

shareholder .

I therefore

consic',er

t ha t t he appea l shou ld

f a i l .

The Leaned tri2.l ;t:?.ge

a l s o e:q?r?ssed C:FC

views

upon

s . 8 4 ( 2 )

o f

t h e Act

whch he ind ica ted .

were unnecessary in view

o f the c o n c h s u n which i1e

had

reached

on the

questior,

o f agmcy.

Scctior.

€?L(?)

r a i s e s a

number

o f

d l f f i c u l t i e s a n d ,

i n n e w o f

t h e

conclusion to which

I have come, I do not consid.er

t h a t t h l s i s ar.

ap2ropr ia te cese t o $..iscuss t h e

s e c t i o n i n

any

d e t a i l .

I t 1s unnecessary

for

the

r e sponden t t o r e ly

upor,

t h i s s e c t l o n a n d i n a d h t i o n

t h e s e c t i o n

d l d no t

assume

gre&t 1mFortance

i n the

arguments presentee t o us.

The d.lfiictt'Ltj. v l t h it

m a n l y ar ises from t h e use c l thd words

Iton behalf

of".

c l e a r t h z t t h e s e c t l o n

does

Rot

cx tecd to

a l l

- 1 5 -

conduct

encaged

i n oy a

d i r e c t o r , a g e n t

o r a

servant

body

c o r p o r z t e o r

any other person

a t t h e

d i r e c b o n o r

with

the consent or agreement

( w h e t t e r

express

o r implled)

o f

d l r e c t o r a g e n t

o r se rvant

t h e

bociy

corpora te but tha t the re levant conduct

must be

engaged

i n "on behalf

t h e body corporz te .

It may be tha t t h e words

"on

behalf o f " i n s.S4(2)

not lend themselves

t o

any general statement

concerning the cases

b which they apply end thet

whether

eny cor.ducc

was engzged lr "cn bchalf

o f "

a body

corpora te must

depend upcr. thc c i rcuns tances

o f

t h e

p e r t i c u l a r

c a s e .

i s

c l i f f l c u l t

Y k d :

tha t the Leg i s l a tu re

il:ten:',e-L

s.c0;+(2) o f <:I-

!.cb

t o s p p l y

t o

?/hol ly unaurkorise2: but ~1sLczd1n5

o r decep t ive s t a t emen t ,

mace

j y s t z d e r wlzh

thc ix2 l ied consez t

o f

s~-v-i :nt ,-f a

c s r ; c r a t ~ a n

conducC,ing r e t a i l s t o r e s

who

was

c-~pl0;7cC: m1qT

a	t r u c k d r i v e r .

I propose t k h t t h c apsc-21 be

d;;;..:;sec?

and

t h a t t h e a p p e l l e n t s

o x i e r e l t c

pay

t h e

respondent ' S

cos t s .

CORAh!:

Frank1 , S t . Jchn

and

D?ane JJ.

8 t h

1;arck

1979

I have

read ~ i c

r e a s o n s f o r ~ u d g ~ n e n t of

Frank1

and

h l s

c o n c l u s i o n s .

T agrez wLth both

reasons

and cc~rl':.:;l;n:

and would dlsrnlss

the appeal w l t h c o s t s .

-2-

i n v o l v e d I n t h l s

case

c o u l d l e a d

t o t h c c o n c l u s l o n

t h a t t h e r c l a t i o n s h l p

was

s p x i a l . l y d e s l g x d

t h a t

t h e a s s e t s

t h e Management

company

and

t h e

Fund

company

would

n o t

available

t o

s a t l s f y ~ u d g m e n t s c o n s e q u e n t

upon falsc?

n u s l e a d i n g s t a t e m e n t s

made

exp loyces

or a g e n t s oE

t h e Agency

company.

I t

was

p a r t l y b s c h u s e

the

d l v i s l o n o f f u n c t l c n b e t w e e n t h e

Agency and

th?

:4a:-IacJe-

m e n t

company

vas

no t adhe re?

t o c h a t t h e

l a t t e r cox9any

became

l l z b l e .

It wlll

n e c e s s a r y

I n

t h e

f u t u r e

t.o

c o n s l d e r w h e t h e r

t h e

l e g i s l a t u r e

int2:idcd

S .

3 4 ( 2 )

t o C S

b e y o n d

t h e

o r d l n a r y

p r l n c l p l c s

a q e n c y .

Its

en;lc';r;cnt

w3uJ.d

seem, I n l t s e l f , t o bc a ZCroncJ a rgcxen t foj:

It to

I n t e r p r e t e d , b u t a g a l n ,

t h a t

ches nm>t

arlse f o r

d c c ~

slon.

I N TIIE

b:ATTFR

O C

t h e Trncic

P r a c t i c e s Act

1974

-2-

- 3-

sonality are however figments of the law.

A company cannot per-

form a positive act either of its own volitlon o r independently

of the actlons of those who conseltute its corporate organs o r

act as agent on Its behalf. Where the corporate organs of

shareholders in general meeting o r directors in meetlng are

involved, special principles of company law wlll ordlnarlly be

appllcable to determlne whether there has been effective corporat?

decislon or corporate action for the reason that those corporate

organs do not make declslons or act f o r the company they rna!ts

decisions and act as the company. Where such corporate orgms

are not involved, the ordlnary prlnclples of the law of agcncy

are appllcable to determlne corporate llab1llty for word o r a c e .

In applylng those prificlples however, It would bP unreallsxlc r n

be unconscious of the fact that ordlnarlly

a corporatlon m111

speak and act through an agent. Resolutlons of corporate organs

apart, the alternative to agency in the case of a corporztlon

is atrophy. Where the questlon 1s not whether express c: ;

;,:

authorlty has been conferred for a particular transactlon but

whether one purporting to act as an agent has acted withln

general implied authorlty, the inference of agency may * e l l b:

more readily drawn in a case where the alleged principal 1s a

corporatlon bhich cannot act independently of

others than in a

case where the alleged principal 15 a person who ordlnal’lly a c t s

fo r himself independently of the lnstrumentallty o r agcnc) G t

others. In both cases however, 3. flndlng of actual agency

cannot properly be made without a proper evidentiary bnsls.

-4-

-5-

is,

the

circumstanccs, u n n c c e s s n ~ - y

t b x t

express a n y view as to t he scope o r ef€cct of

the p r o r l s l o ~ ? s

of s.81(2) of the Trade Prnctlces Ac t 1974.

[1978] FCA 11

30 Mar 1978