Durban Roodepoort Deep, Ltd v Newshore Nominees Pty Ltd

[2005] WASCA 231

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT :   THE COURT OF APPEAL (WA)

CITATION:   DURBAN ROODEPOORT DEEP, LIMITED -v- NEWSHORE NOMINEES PTY LTD [2005] WASCA 231

CORAM:   STEYTLER P

MCLURE JA
MURRAY AJA

HEARD:   13 OCTOBER 2005

DELIVERED          :   6 DECEMBER 2005

FILE NO/S:   FUL 43 of 2004

BETWEEN:   DURBAN ROODEPOORT DEEP, LIMITED (ARBN 086 277 616)

Appellant

AND

NEWSHORE NOMINEES PTY LTD (ACN 067 099 616)
Respondent

ON APPEAL FROM:

Jurisdiction              :  DISTRICT COURT OF WESTERN AUSTRALIA

Coram  :FENBURY DCJ

Citation  :NEWSHORE NOMINEES PTY LTD AS TRUSTEE FOR THE COMMERCIAL & EQUITIES TRUST -v- DURBAN ROODEPOORT DEEP, LIMITED [2004] WADC 57

File No  :CIV 557 of 2001

Catchwords:

Contract of service - Sufficiency of evidence to prove quantum of claim - Whether agent had actual or apparent authority to bind principal - Scope of s 129 of Corporations Law - Turns on own facts

Legislation:

Corporations Law 1990 (Cth), s 9, s 128, s 129

Result:

Appeal allowed
Cross appeal and notice of contention dismissed

Category:    B

Representation:

Counsel:

Appellant:     Mr W S Martin QC & Mr D J Martino

Respondent:     Mr P G Clifford

Solicitors:

Appellant:     Allens Arthur Robinson

Respondent:     Richard O'Shannassy

Case(s) referred to in judgment(s):

Biggin v Permanite [1951] 1 KB 422

Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64

Crabtree‑Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72

Equiticorp Finance Ltd (In Liq) v Bank of New Zealand (1993) 32 NSWLR 50

Fink v Fink (1946) 74 CLR 127

Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480

JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237

Malec v J C Hutton Pty Ltd (1990) 169 CLR 638

Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451

Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768

Ratcliffe v Evans [1892] 2 QB 524

Rosser v Marine Ministerial Holdings Corp [1999] NSWCA 72

Case(s) also cited:

Briginshaw v Briginshaw (1938) 60 CLR 336

Burgundy Royale Investments Pty Ltd v Corporation of the City of Darwin, Unreported; BC8902910, 16 November 1989

Callaghan v William C Lynch Pty Ltd [1962] NSWR 871

CCC Films (London) Ltd v Impact Quadrant Films Ltd [1985] 1 QB 16

Hayman v Forbes and Bromell (1975) 13 SASR 225

Hoare v McCarthy (1916) 22 CLR 296

Nece Pty Ltd v Ritek Incorporation (1997) 24 ACSR 38

Reckitt v Barnett, Pembroke and Slater Limited [1929] AC 176

Sellars v Adelaide Petroleum NL (1994) 179 CLR 332

Von Arnim v Group 4 Correctional Services Pty Ltd (2002) 117 FCR 346

1. STEYTLER P:  I have read the judgment of McLure JA.  I agree with it and with her conclusion that the appeal should be allowed, that the cross‑appeal and notice of contention should be dismissed, that the orders made by the trial Judge on 31 March 2004 should be set aside and that we should hear further from the parties as to the balance of the orders to be made.

2. MCLURE JA:  The appellant (defendant) appeals from the decision of Fenbury DCJ awarding to the respondent (plaintiff) the sum of $38,305 pursuant to a contract for services between the appellant and the respondent made on or about 21 May 2000 (service agreement).

3. The appellant is a substantial publicly listed mining company incorporated in South Africa.  It has been a foreign registered company in this jurisdiction since February 1999.  DRD Australia Pty Ltd is a wholly owned Australian subsidiary of the appellant.  Mr Charles Mostert was at the material times a director of both the appellant and DRD Australia.  He was also the chief executive officer of DRD Australia.

4. The respondent is a trustee company through which Mr Roger Bryer, its managing director and chief operating officer, provided financial consultancy services.  Bryer also supplied such services through another company called Vista Blue Ltd (Vista Blue).

5. The trial Judge found that the service agreement was made by Mostert and Bryer on behalf of the appellant and respondent respectively and that Mostert had apparent authority from the appellant to do so.

6. There are 13 grounds of appeal, four of which (nos 4, 9, 10 and 11) were not pursued.  A number of others overlap.  The appellant challenges the trial Judge's decision on two primary grounds.  The appellant contends, firstly, that it was not open on the evidence for the trial Judge to make a finding on the quantum of the respondent's claim and, secondly, that Mostert had no authority to enter into the service agreement on behalf of the appellant.

7. The respondent cross‑appealed and filed a notice of contention. In its cross‑appeal it claims the trial Judge erred in failing to award the full amount of its claim ($238,200, alternatively $189,800) and all of the costs of the trial. The respondent also relies on ss 128 and 129 of the Corporations Law 1990 (Cth) as additional support for the trial Judge's finding that Mostert had authority to enter into the service agreement.

Background

1. The respondent's pleaded claim was that the service agreement was partly written, partly oral and partly implied.  It was also pleaded that the agreed daily rate for provision of the services was $3500 and that Bryer spent a total of 64 days working in the provision of services pursuant to the service agreement.  The claim for fees was thus $224,000, with an expense claim of $28,927.36. 

2. The respondent pleaded in the alternative that it was an implied term of the service agreement that the appellant would pay the respondent "reasonable remuneration in respect of the time spent by Bryer" in assisting the appellant.  A reasonable rate of remuneration was pleaded to be $3500 per day.

3. The written part of the service agreement is contained in a document signed by Mostert allegedly on behalf of the appellant and Bryer on behalf of the respondent.  It states:

   "It is herein agreed that Newshore will provide the company with services and introductions, make arrangements, conduct meetings and carry out initial negotiations for the company.

   It is further agreed that Newshore will seek arrangements with appropriate financial parties and/or individuals or institutions in order to construct agreements that give rise to placements of shares and or underwriting of shares in The Company.

   Both parties agree that Newshore will conduct itself on a best endeavour basis.

   Notwithstanding the final conclusion of all such negotiations it is agreed herein that The Company will pay to Newshore all of the expenses incurred by Newshore together with fees based on time spent in furthering such negotiations.

   Newshore to provide continuous reporting of the progress of each negotiation to management of The Company.

   This Agreement is to be for a period of Twelve Months form [sic] the date hereon, or until such time as the objects of this agreement have been finalised to the satisfaction of The Company."

4. The trial Judge aptly described the terminology as vague and open‑ended.  There is no clear description of the scope of the contractual services the respondent was to provide or the means of determining the amount of the remuneration payable to the respondent.

5. In August 2000 Mostert's roles with the appellant and DRD Australia came to an end.  When Bryer became aware of that fact, he rendered an invoice dated 8 August 2000 for the services the subject of the claim in the action.  The invoice states:

   "Please find enclosed our invoice for the period: Invoice No 08082000 rmb.drd/3
   20th, May 2000 to 30th July 2000

   Arranging appointments with Sun Hung Kai Group Hong Kong, negotiations, meetings throughout May and June.

   Further negotiations with Allied Group Hong Kong, May and June.

   Discussions meetings and presentations in Sydney, May and June.

   Hotel expenses, telephone, photocopying, meeting room hire, travel and transport out of pocket expenses. 

   Total for this period  $175,600.00

   Further negotiations in Sydney and Hong Kong, July together with expenses

   Total for this period   $ 14,200.00

   (GST included in this amount).

   Total   $189,800.00
     (GST inc.)"

6. The invoice does not disclose how the fee is calculated.  There is no indication of the quantum for fees and expenses respectively.  There are general assertions relating to work allegedly completed without reference to the time spent.

7. Bryer's evidence was that he worked 64 days of the 71‑day period the subject of the invoice.  He did not produce any written records to substantiate the claim.  Bryer said the respondent's usual practice was to charge $100,000 per calendar month, $25,000 per week or $3500 per day.  That equated to an hourly rate of $250 for a 14‑hour day and a 100‑hour week which, according to Bryer, was less than the number of hours he actually spent providing services under the service agreement.

8. The documentary evidence established that Bryer was in Hong Kong on 22 to 24 May and travelled to Sydney on 18 June, 22 June and 11 July 2000.  The question at trial was whether he performed contractual services whilst on these trips, whether or not he had already been compensated for them and how reasonable his claim was if he had not.

9. The respondent's case was that he had provided services to the appellant in the period from September 1999 up to the commencement of the provision of services under the service agreement pursuant to a separate oral agreement referred to as the "consultancy agreement".  The respondent relied on this background to support its claim of the implied term for reasonable remuneration and the daily rate of $3500 under the service agreement.

10. Prior to the August 2000 invoice the respondent issued, and DRD Australia paid on behalf of the appellant, four invoices.  They are as follows:

Date of Invoice	Period of Services	Amount
16 February 2000	26 January 2000 to 16 February 2000	$63,500
21 March 2000	17 February 2000 to 7 April 2000	$63,500
10 April 2000	September 1999 to 10 April 2000	$247,000
20 June 2000	10 May 2000 to 4 June 2000	$22,500

1. Vista Blue also invoiced the appellant for $250,000, plus expenses for work done in the period September to October 1999.  Vista Blue's invoices were also paid.  Thus, the appellant via its Australian subsidiary, paid to Bryer's companies the sum of around $646,500 for services rendered from September 1999.  The lack of detail in, and vagueness of, the August 2000 invoice is also a feature of the prior invoices.

2. The trial Judge found that the respondent's invoice dated 20 June 2000 ("the interim invoice") charged for services which overlapped with those the subject of the August 2000 invoice.  The interim invoice is in the following terms:

   "Liaison with Sun Hung Kai Group Hong Kong and related business; C.A.M Group and Durban Roodepoort Deep.

   Including two trips to Hong Kong within the period.

   Arrangements and liaison with various members of Sun Hung Kai Group initially by telephone and by personal representation.  Conferences meetings and discussions in Hong Kong over the period.  Introduction of parties.  Presentations and reviews.

   Hotel accommodation, transport, out of pocket expenses, meals, telephone costs.

   Herewith our invoice US$22,500.

   Less amount already received by Roger Bryer 16^th May 2000 US$20,000.  Balance outstanding US$2,500."

3. The respondent subsequently provided a break‑down of costs and fees in the following terms:

   "As requested please find attached our breakdown of costs and fees for the month of May 2000 together with copies of relevant receipts and statements.

   Hotel accommodation HK$9,916…   US$1,685

   Transport, meals, entertainment, courier and
   delivery charges, copying and out-of-pocket
   expenses   US$4,405

   Telephone and communication charges relevant         US$6,410

   Fees   US$10,000

   Total     US$22,500

   Less paid  US$20,000

   Balance outstanding   US$2,500"

4. The period during which work the subject of the interim invoice was performed overlaps by 15 days with the period in which work was allegedly performed pursuant to the service agreement.  Following an examination of the interim invoice the trial Judge concluded:

   "In my view the issues arising out of this invoice go further than a concern about double charging.  They suggest a systemic unreliability in Newshore's accounting which causes me disquiet about the reliability of Bryer's assertions concerning the number of hours he worked for each of which he seeks the sum of $250."

5. The circumstances surrounding the two invoices for $63,500 reinforced his disquiet concerning the reliability of Bryer's evidence.

6. Further, the trial Judge concluded that it was impossible to reconcile Bryer's evidence concerning the basis on which the respondent charged and the days he worked with the August 2000 invoice.  In relation to that invoice, the trial Judge concluded:

   "I am again left with a feeling of disquiet about Bryer's assertions that he has completed the hours of work he states.  Newshore's fees seem exorbitant, its claim exaggerated.  What Bryer actually did is difficult to know.  I would accept however that he did go to the places he says he did and expended some energies on behalf of [the appellant] but as to how much remains a mystery."

7. The trial Judge concluded that he was only prepared to accept Bryer's evidence on contentious matters where it was corroborated but not otherwise.  That assessment of Bryer's credibility and reliability is not challenged.

8. Mostert was the only other witness called by the respondent.  Mostert's evidence as to the method of calculation of fees was inconsistent with Bryer's.  He used as a rule of thumb what he believed was the value of the services to the appellant; that is, the fee was success based.  This approach was inconsistent with the respondent's pleaded case.

9. The trial Judge formed an adverse view of Mostert and concluded that he would not be prepared to accept his evidence on disputed matters unless it was supported by evidence not from Bryer.

10. The trial Judge concluded:

    "… I am not satisfied on the balance of probabilities that it was agreed that [the respondent] would be paid at any particular daily or hourly rate.  Further I do not accept the evidence that Mr Bryer worked the number of hours he says he did.  I am concerned that the number of hours claimed to have been worked is exaggerated and that Newshore and Vista Blue may have already been paid for some of the hours now claimed by Newshore.

    On balance, I think that [the respondent] is entitled to a judgment but in attempting to work out what hours Bryer worked, which have not been paid for, the evidence is unhelpful.  I am left with the choice of either dismissing Newshore's claim for want of evidence or attempting to arrive at a figure based on a reasonable approach, doing the best I can in the circumstances.  Not without some hesitation I shall attempt to arrive at a reasonable figure."

11. I infer from his reasons that the trial Judge accepted the respondent's alternative claim that it was an implied term of the service agreement that the appellant would pay the respondent reasonable remuneration in respect of the time spent by Bryer in performing the services the subject of the service agreement.

12. As a first step, the trial Judge determined what was a reasonable rate of remuneration.  In determining that question, he applied the contractually stated intention as reflected in the pleading of the implied term that the respondent be paid its expenses together with fees based on time spent.  He had already concluded that there was no agreed rate (either of $100,000 per month, $25,000 per week, $3500 per day or $250 per hour).

13. The respondent did not adduce any other evidence of what was a reasonable rate of remuneration for work of the general type the subject of the service agreement.  The trial Judge concluded:

    "There is really very little if any evidence to assist me in this regard.  Doing the best that I can, $250 per hour for an eight hour day is $2,000 per day, $10,000 per week and $500,000 per year excluding holidays.  That would be a handsome annual income for a professional person, perhaps not being a leading Queen's Counsel or medical specialist.  I find that $250 per hour would be a reasonable rate of remuneration."

14. The trial Judge then went on to assess the number of hours that Bryer worked in the period the subject of the August 2000 invoice.  He concluded that the interim invoice provided the only "arguable" basis upon which an assessment of hours could be made.  In doing so, he rejected Bryer's evidence that the fees the subject of the interim invoice were not his fees but those of third parties.  The itemisation of the interim invoice showed fees of US$10,000 for 20 working days which averaged at A$830 per day or A$4150 per week.  Dividing the daily rate of $830 by the hourly rate of remuneration of $250 produced average daily working hours of three and one third.  The trial Judge concluded that an average of three and one‑third hours of work per working day over the period the subject of the August 2000 invoice was a reasonable assessment in the circumstances.  Deducting for the overlap with the interim invoice, that resulted in a fees assessment of $33,200. 

15. The trial Judge assessed expenses at $5101.94, which included the sum of $1616.34 for an airfare to Sydney and return which the evidence established had already been paid by the appellant.  The respondent conceded that the trial Judge erred in including this amount in the judgment.

Legal Principles on Proof of Quantum

1. The appellant referred the Court to authorities concerning the principles applicable to proof of the fact and quantum of damages.  It is the case that the respondent in its prayer for relief claims "damages in the sum of $238,200" or alternatively "damages for breach of contract".  However, it is incorrect to characterise the action as one for damages for breach of contract.  It is an action for money payable by the terms of the contract:  see McGregor on Damages, 15th ed (1988) [1‑3].

2. The respondent failed in its primary claim that the parties agreed that the respondent would be paid $3500 per day.  The respondent's alternative pleaded claim was that the appellant would pay the respondent "reasonable remuneration in respect of the time spent" and that a reasonable remuneration was $3500 per day for 64 days.  Both parties accepted that the law relating to certainty in the assessment of damages applies by way of analogy to this alternative claim.  I will proceed on that basis.

3. The claimant has the onus of establishing both the fact and the amount of the damage it has suffered:  Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80; Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768 at [37].

4. However, it is often said that mere difficulty does not relieve a court from estimating damages as best it can (Fink v Fink (1946) 74 CLR 127 at 143) and that uncertainty in quantification does not prevent an assessment provided some broad estimate can be made or a broad‑brush approach taken (Rosser v Marine Ministerial Holdings Corp [1999] NSWCA 72 at [65]).

5. Those statements of general principle may have to be considered in the factual context in which they are made.  What is sufficient certainty in quantification may depend upon the nature of the loss and how it can be proven.  There is authority for the proposition that where precise evidence is obtainable, the Court expects to have it but where it is not, the Court must do the best it can:  Biggin v Permanite [1951] 1 KB 422 at 438 per Devlin J; Ratcliffe v Evans [1892] 2 QB 524 at 532‑33 per Bowen LJ. This statement was approved by Mason CJ and Dawson J in Amann at 83.

6. Further, it was referred to by Hayne J in Placer at [37] and [38] as follows:

   "…  It goes without saying that [Placer] had to prove [the fact and quantum of damage] on the balance of probabilities and with as much precision as the subject matter reasonably permitted.

   It may be that, in at least some cases, it is necessary or desirable to distinguish between a case where a plaintiff cannot adduce precise evidence of what has been lost and a case where, although apparently able to do so, the plaintiff has not adduced such evidence.  In the former kind of case it may be that estimation, if not guesswork, may be necessary in assessing the damages to be allowed.  References to mere difficulty in estimating damages not relieving a court from the responsibility of estimating them as best it can may find their most apt  application in cases of the former rather than the latter kind."

1. Cases of the former kind to which Hayne J referred would include claims where the loss was hypothetical or prospective:  see Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 643 per Deane, Gaudron and McHugh JJ. Cases where courts have awarded no, or only nominal damages, for insufficiency of evidence are collected and reviewed by the Court in JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237 at 241 ‑ 246. In general terms, that outcome results where the relevant events on which proof of damage depends occurred prior to trial and the damage can be proved with relative precision.

2. The test of certainty stated in McGregor on Damages, 15th ed, at [344] is that damage must be proved with reasonable certainty and the standard of proof only demands evidence from which the existence of damage can be reasonably inferred and which provides adequate data for calculating its amount.  That is a test of sufficient flexibility to accommodate the variety of circumstances that may arise.

3. In this case, the central question is whether it was open on the evidence for the trial Judge to make the assessment he did, or any assessment at all, of what was reasonable remuneration.  Before going to that question it is convenient to deal with the respondent's cross‑appeal on liability.

Cross‑Appeal on Liability

1. The grounds of the cross‑appeal are that the trial Judge erred in:

   (1)not allowing the respondent's claim in the sum of $238,000 because the essentially unchallenged evidence of Mostert was to the effect that the respondent's work had been successful and warranted a reward in an amount equal to 3.5 per cent of $10,000,000;

   (2)concluding that Mostert was a witness of suspect independence based merely upon the fact that the appellant was suing him.  The trial Judge ought to have accepted Mostert's evidence corroborating Bryer's evidence that the services were successfully performed and of a value at least equivalent to the sum claimed or alternatively invoiced.

2. In my view, the grounds are without merit.  Mostert's evidence as to the agreed contractual remuneration was inconsistent with that of Bryer's and inconsistent with the respondent's pleading of the express and implied term of the service agreement.  This negates the significance of the fact that the evidence was essentially unchallenged.  In addition, the trial Judge made a general adverse finding as to Mostert's credibility and reliability.  The general finding is not challenged.  The challenge is confined to the trial Judge's statement that Mostert could not be described as an independent witness.  That challenge is too narrow to alter the outcome.  In any event, the statement is supported by the fact that the appellant was suing Mostert for very substantial sums which I infer relates directly or indirectly to his roles with the appellant.  The statement is also supported by the trial Judge's finding that Mostert's conduct in accepting and paying the respondent's and Vista Blue's accounts reflected unfavourably upon him, given the office he held.

3. The only other ground of the cross‑appeal relates to costs.  In view of the outcome of the appeal, it is unnecessary to determine that ground.  Accordingly, I would dismiss the cross‑appeal.

The Sufficiency of the Evidence of the Work Performed (grounds 1, 2, 3, 5)

1. The appellant contends that, on the evidence and the trial Judge's findings, the only option for the trial Judge was to dismiss the respondent's claim for want of evidence or to award nominal damages and that the approach taken by the trial Judge based on the interim invoice involved guesswork that itself had no logical foundation.

2. Having regard to the content of the implied term, it was necessary for the respondent to prove the time Bryer spent in providing services to the appellant pursuant to the service agreement and what was a reasonable rate or total charge for the time spent.

3. It is apparent from the reasons that the trial Judge was satisfied that Bryer on behalf of the respondent had spent time and incurred expenses providing services to the appellant under the service agreement.  That is clear from the following (at [173]):

   "… there was no doubt Bryer … did indeed attend at Hong Kong and Sydney in relation to business concerning the [appellant], he attended meetings, he incurred expenses including travel and accommodation and thus, although the extent is contentious, he did expend his energies as he states".

4. It appears that as a result of at least one of these meetings, in August 2000, the appellant received an offer to provide finance of $10 million to enable it to refinance its purchase of a company called Dome Resources NL.  However, the trial Judge rejected Bryer's evidence as to the hours and days worked for which the respondent claimed it was entitled to be remunerated under the service agreement.  I infer from Bryer's evidence that the respondent's claim was for time spent in actually providing services under the service agreement, not for travelling and other unproductive or lost time as a result of the travel.  There was no documentary or other evidence itemising or detailing the work done or the time spent in doing it.  The evidence was at a very high level of generality.

5. Further, the interim invoice does not provide a rational or logical basis on which to make an estimation of the time spent.  The interim invoice was one of the grounds for the finding that the respondent's accounting was systemically unreliable.  The trial Judge rejected the evidence of Bryer both generally and specifically in relation to that invoice.  In these circumstances it provides no proper foundation for any inference or calculation as to the time actually spent by Bryer in carrying out contractual services in the period the subject of the August 2000 invoice.

6. That only leaves the trial Judge's conclusion that Bryer did go to Hong Kong and Sydney and expended some energies on behalf of the appellant "but as to how much remains a mystery".  That is an accurate summary of the position.  It was not suggested, and I am not persuaded, that it is possible to reliably determine a minimum figure for the time spent in providing the services.  In the circumstances, any conclusion as to the time spent is mere speculation.  Against the backdrop of the finding as to the unreliability of the invoices as a whole for the work done from September 1999, it was not open on the evidence for the trial Judge to assess what was reasonable remuneration.

Rate of Remuneration and Expenses (grounds 6, 12, and 13)

1. The appellant contends the trial Judge erred in finding that $250 per hour was a reasonable rate of remuneration on the ground that there was no pleading or evidence that the respondent had any professional qualifications or that the services he provided were equivalent to those provided by an experienced legal or medical practitioner.

2. There is no merit in the pleading point.  It was within the scope of the pleading to find a different and lesser rate of remuneration than that pleaded.  Further, there was evidence upon which it was open to conclude that $250 per hour was reasonable.  In broad terms, the respondent's brief was to assist the appellant to find a 'cornerstone (equity) investor' who would invest a minimum of US$40,000,000.  Bryer's evidence was that $250 per hour was the basis for his charge‑out rates.  We were not referred to any express challenge to the reasonableness of that hourly rate which in any event is supported by the nature of the financial services the respondent was retained to provide to the appellant.

3. The appellant also challenges the trial Judge's finding as to the expenses incurred.  As already noted, the respondent conceded that the trial Judge erred in relation to a return airfare to Sydney (ground 13).  Otherwise the appellant contends there was no finding that the expenses were incurred in connection with services performed pursuant to the service agreement.  This ground is without merit.  As already noted, the trial Judge expressly found that the expenses were so incurred and that finding was open.

Authority Finding (ground 8)

1. An agent may have actual or apparent authority to bind a principal.  Actual authority may be express or implied:  Equiticorp Finance Ltd (In Liq) v Bank of New Zealand (1993) 32 NSWLR 50 at 132.

2. The trial Judge found that Mostert was not expressly authorised to enter into the service agreement on behalf of the appellant. He made no finding on whether Mostert had implied actual authority, although observed that Mostert may have had such implied authority. There is merit in the appellant's submission that, having regard to the evidence relied on for the trial Judge's rejection of express authority, there was no proper basis for a finding of implied actual authority. However, it is unnecessary to determine that question because there is no notice of contention that the trial Judge ought to have found that Mostert had implied authority. The respondent seeks to uphold the trial Judge's finding of apparent authority and, by its notice of contention, relies on ss 128 and 129 of the Corporations Law.

3. On the subject of apparent authority the trial Judge said (at [166]):

   "I have already commented in great detail upon and dealt with the history of dealings between the parties.  The reality of the matter is, as I have set out, that Bryer for Newshore and Vista Blue performed various commissions on behalf of the DRD, rendered substantial accounts therefor, and was paid.  At all material times Bryer dealt with Mostert.  It was Mostert who, according to Bryer on behalf of DRD, engaged Bryer through his various companies to perform various works and it was Mostert who according to Bryer, and in fact, caused, directly or indirectly, Bryer's earlier accounts to be paid.  In my view it would have been apparent to Bryer that Mostert had authority given the history of their dealings and, again without going into the matter in any more detail, I am satisfied on the balance of probabilities that Mostert had apparent authority to bind the defendant."

4. The appellant contends the trial Judge erred in finding that Mostert had apparent authority because there was no finding (and no plea) that the appellant, or any person having its actual authority, represented to the respondent that Mostert had its authority to enter into the service agreement.

5. The distinction between actual and apparent (or ostensible) authority is helpfully analysed by Diplock LJ in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 at 502 ‑ 506. Actual authority and apparent authority are independent, although generally they co‑exist and coincide but either may exist without the other. Actual authority is a legal relationship between the principal and agent. Apparent authority, on the other hand, is a legal relationship between the principal and the third party created by representation, made by the principal to the third party, intended to be acted upon by the third party, that the agent has authority to enter on behalf of the principal into a contract of the kind within the scope of the apparent authority, so as to render the principal liable under the contract. The representation which creates apparent authority may take a variety of forms of which the commonest is representation by conduct, that is, by permitting the agent to act in some way in the conduct of the principal's business with third persons. Lord Diplock summarised the law by stating four conditions that must be fulfilled to entitle a third party to enforce against a company a contract entered into on its behalf by an agent who had no actual authority to do so. The four conditions are as follows:

   (1)that a representation that the agent had authority to enter on behalf of the company into a contract of the kind sought to be enforced was made to the third party;

   (2)that such representation was made by a person or persons who had actual authority to manage the business of the company either generally or in respect of those matters to which the contract relates;

   (3)that the third party was induced by such representation to enter into the contract; and

   (4)that under its constitution the company was not deprived of the capacity to enter into a contract of the kind sought to be enforced or to delegate authority to enter into such a contract.

6. No issue is raised in this case concerning conditions (3) and (4) or the reasonableness of the respondent's conduct.  The memorandum and articles of the appellant (or their equivalent) are not in the appeal books.  I assume they do not impact on capacity. 

7. Freeman & Lockyer was applied by the High Court in Crabtree‑Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72. The law on apparent authority was more recently considered by the High Court in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [36] ‑ [44]. That case concerns two letters of indemnity which were signed, or purportedly signed, by an Australian grain trader (NEAT) and the respondent bank (BNP) and addressed and delivered to the appellant (Pacific Carriers). NEAT had sold a cargo of legumes to an Indian grain trader (Royal). BNP was NEAT's banker and was financing the export transaction. Pacific Carriers was the time charterer of the vessel on which the cargo was carried. The letters of indemnity bore the signature of, inter alia, a bank officer (Ms Dhiri) who was the Manager of the Documentary Credit Department of BNP in Sydney.  Ms Dhiri applied the bank stamp to the letters of indemnity.  She had no actual authority to bind BNP to the letters of indemnity although she had actual authority to verify the signatures on the letters.  The letters were sent by NEAT to Ms Dhiri at the bank for signature by BNP.  They were not bank documents.  Pacific Carriers acted on the assumption that the bank officer had authority to bind BNP to the indemnities and the assumption was reasonable.  There was nothing to put Pacific Carriers on notice or inquiry as to her lack of authority.

8. The High Court identified the relevant question as whether the bank officer was held out by BNP as having the authority to bind BNP to the letters of indemnity.  The Court accepted that the holding out must be by the company, although it said the conduct of the agent is not irrelevant to the assessment.  Further, the Court appears to approve the application of the wider principle of estoppel in pais (which covers estoppel by representation, convention and acquiescence) in determining whether there was apparent authority. 

9. It concluded that the bank officer had apparent authority because Pacific Carriers' assumption that she had the authority to bind BNP was induced and assisted by the conduct of BNP in such a way that it would be unjust to permit BNP to depart from the assumption.  Pacific Carriers was induced and assisted by BNP's conduct in placing Ms Dhiri in a position which equipped her to deal with the letters of indemnity as requested by Pacific Carriers.  In particular, Ms Dhiri affixed the bank stamp to the document which gave an appearance of authenticity to documents to which it was applied.  Ms Dhiri was given the stamp by BNP without any instructions as to how she should use it.  The organisational structure of BNP in Sydney was such that Ms Dhiri was the bank officer to whom Pacific Carriers' request that the bank sign the indemnities would be and was communicated by NEAT.  She dealt with the request and communicated BNP's response to Pacific Carriers, which response carried her signature to the indemnities and the bank stamp.  She was placed by BNP in a position to sign and stamp the documents and send them to NEAT and Pacific Carriers without any internal check upon their final form and without any qualification or limitation of the capacity in which BNP was participating in the transaction.

10. Turning to the facts of this case, it is clear from the trial Judge's reasons that he did not consider the conduct of the appellant, or its duly authorised agents, or the effect of that conduct on the respondent when determining the issue of apparent authority.  The trial Judge focused solely on Bryer's course of dealings with Mostert, in particular, Mostert requesting and paying for the respondent's services.  He did not make the necessary factual findings to justify a conclusion that Mostert had apparent authority to bind the appellant to the service agreement.  The respondent's written submissions do not focus on the relevant question, namely what the appellant did to represent to the respondent, or induce or assist it to assume, that Mostert had authority to bind the appellant. 

11. In oral submissions, the respondent relied on Mostert's positions with the appellant and its Australian subsidiary and his course of dealings with Bryer from September 1999.  At the material times, Mostert was an executive director of the appellant, described as its finance director.  He was also in charge of the appellant's Australian subsidiary.

12. I infer the respondent's case to be that by appointing Mostert to his various roles, the appellant held Mostert out as having the usual authority associated with such a position, which included authority to bind the appellant to the consultancy and service agreements.  There was no specific evidence of the usual or customary authority of a finance director of a publicly listed mining company.  No doubt the scope of authority will be affected by inter alia, the type and scale of the appellant's business and the subject matter and scale of the contract in question.

13. The trial Judge made no express finding as to the particular matters within the respondent's brief.  However, he accepted that Bryer's role was to assist the appellant to secure its somewhat precarious financial position.  It seems that under the consultancy agreement, Bryer's role was to maintain the appellant's share price which, according to Bryer, meant engaging in activity which would see the share price remain stable in spite of other factors and events occurring which might cause its instability.  His brief the subject of the service agreement was to assist in securing a cornerstone equity investor to invest between US$40,000,000 to US$75,000,000 in the appellant as part of a plan to thwart a hostile takeover.  The appellant's capital structure and share market stability obviously go well beyond just Australian market considerations or transactions.  The service agreement was not a transaction within the scope of the usual (mining) business carried on by the appellant.  The evidence does not permit a finding that the service agreement was within the usual authority of a finance director of a mining company or the CEO of its subsidiary. To the contrary, the subject matter of the services, being the appellant's capital structure and share price stability, would in my view usually be for the Board rather than the finance director. 

14. As to the prior dealings, there is no finding that the appellant knew, or ought reasonably to have known, of Mostert's course of dealings with Bryer or Bryer's activities for the appellant.  The respondent does not formally contend that such a finding should have been made.  However, in the course of submissions it relied on the minutes of a directors' meeting of the appellant held on 25 July 2000.  Those minutes provide no support for any relevant knowledge and there is no other independent evidence to support such a finding.  Otherwise, there is nothing about the mere fact of a course of dealing that itself justifies a finding that the appellant held out Mostert as having the relevant authority.  I am satisfied the trial Judge erred in finding that Mostert had apparent authority to bind the appellant to the service agreement.

15. That leaves the notice of contention. The respondent relies on ss 128 and 129(3) of the Corporations Law as it stood at the relevant time. A person is entitled to make the assumptions in s 129 in relation to dealings with a company (s 128). Section 129(3) provided:

    "A person may assume that anyone who is held out by the company to be an officer or agent of the company:

    (a)has been duly appointed; and

    (b)has authority to exercise the powers and perform the duties customarily exercised or performed by that kind of officer or agent of a similar company."

1. Section 129(3) is analogous to the common law principle of implied usual authority whereby on appointment to a position of a standard kind, it is implied that the appointee has authority to do things usually done by a person in that position. This is an example of implied (actual) authority. However, if that usual authority is expressly limited as between the principal and agent and that limitation is unknown to the third party, the facts may still give rise to apparent authority. However, I have concluded that the service agreement was outside the usual or customary authority of a finance director.

2. In any event, ss 128 and 129 of the Corporations Law do not apply to registered foreign companies such as the appellant. Sections 128 and 129 concern dealings with a "company". "Company" is defined in s 9. The core of the definition is that it meant a company registered under the Corporations Law of the jurisdiction in question.  The term is also defined to include bodies other than registered companies but each enlargement of the meaning is only for the purposes of specified provisions of the Corporations Law. The appellant is a registrable body registered under Div 2 of Pt 5B.2 of the Corporations Law, in which event "company" includes a foreign registered company only in Ch 2K of the Corporations Law which deals with registration of charges.  For these reasons, I would dismiss the notice of contention.

Conclusion

1. The appellant has succeeded on its challenge to the trial Judge's finding on the quantum of fees payable to the respondent and on the issue of authority.  The respondent did not plead a claim for restitution as a cause of action.  If it had done so, it would be necessary to identify and value any benefit and determine whether its retention was unjust.  That is well outside the scope of the pleadings and was not addressed by the trial Judge. 

1. Accordingly, the appeal should be allowed and the orders made by the trial Judge on 31 March 2004 be set aside.  I would hear from the parties on the balance of the orders to be made.

2. MURRAY AJA:  I agree, for the reasons given by McLure JA, that the appeal should be allowed and the cross‑appeal dismissed.  The decision and orders of the trial Judge should be set aside and in lieu thereof it should be ordered that the respondent's claim be dismissed.  The appellant should have its costs of the appeal and the action, to be taxed.