Forrest v Cosmetic Co Pty Ltd - [2008] SASC 152

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
FORREST v COSMETIC CO PTY LTD & ANOR
[2008] SASC 152
Judgment of The Honourable Justice White
13 June 2008
CORPORATIONS - LEGAL CAPACITY AND RELATIONS WITH OUTSIDERS - EXECUTION OF DOCUMENTS
The plaintiff was the sole director of the first defendant ("Cosmetic Co") at the time of its incorporation. ASIC documents and company records apparently signed by the plaintiff indicate that she later appointed the second defendant as a director of Cosmetic Co and resigned her own directorship - the plaintiff acknowledged that she had signed all but one of the documents - finding that the plaintiff had also signed the remaining document - whether it was necessary for the plaintiff to intend subjectively to effect the appointment of the second defendant and her own resignation when signing the respective documents - whether evidence of the plaintiff's subjective intention was admissible.
Held: absent claims such as non est factum, mistake, misrepresentation or duress, evidence of the plaintiff's subjective intention was not required nor admissible before effect could be given to the documents she signed - in any event, the plaintiff did intend, when signing the documents, to appoint the second defendant as a director and to resign her own directorship - accordingly, the plaintiff is no longer a director of Cosmetic Co - the second defendant is a director of Cosmetic Co.
Corporations Act 2001 (Cth) s 201A, s 205B, s 1274, s 1274B, referred to.
Commissioner of Stamp Duties (Queensland) v Jolliffe (1920) 28 CLR 178; Frederick v State of South Australia [2006] SASC 165; (2006) 94 SASR 545; Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72; Jones v Dunkel (1959) 101 CLR 298; Owens v Lofthouse [2007] FCA 1968; Wilton v Farnworth (1948) 76 CLR 646, applied.
B & M Property Enterprises Pty Ltd (In Liq) v Pettingill [2001] SASC 75; Poliwka v Heven Holdings Pty Ltd (1992) 8 ACSR 747; Starr v Starr [1935] SASR 263; Wood v Smith [1993] Ch 90, distinguished.
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165; Tranchita v Retravision (WA) Pty Ltd [2001] WASCA 265; Turner v Wyndever [2003] NSWSC 1147, discussed.
Marks v The Commonwealth (1964) 111 CLR 549, considered.

FORREST v COSMETIC CO PTY LTD & ANOR
[2008] SASC 152
Civil

WHITE J The plaintiff and the second defendant (Mr Viscariello) are in dispute about the directorship of the first defendant (Cosmetic Co).
The plaintiff seeks a declaration that she is and has, at all material times, been a director of Cosmetic Co. She seeks a further declaration that Mr Viscariello has never been appointed a director of Cosmetic Co.
Mr Viscariello contends that he became a director of Cosmetic Co on 18 August 2005 and that he remains a director. Further, he contends that the plaintiff resigned her directorship on or about 15 September 2005 and has not been a director since that date.
Cosmetic Co has brought a counterclaim against the plaintiff. A master ordered that the questions raised on the plaintiff’s statement of claim be heard and determined before the hearing and determination of Cosmetic Co’s counterclaim. Accordingly, this decision concerns only the issues raised on the plaintiff’s claim.
The issues on the plaintiff’s claim became confined during the course of the trial. The plaintiff accepted, with one exception, that she had signed, on or about 18 August 2005, the documents appointing Mr Viscariello as a director (or evidencing that appointment), and that she had signed, on or about 15 September 2005, a notice of resignation as a director. She denied, however, that on either occasion she had intended to appoint Mr Viscariello as a director, or to resign her directorship. Absent such a subjective intention (or, as her counsel put it, “a subjective act of will”) it was submitted that neither the appointment nor the resignation were efficacious.
The Company Records and ASIC Documents
It is convenient to commence with a consideration of the records and ASIC documents which were tendered during the trial. They indicate that Cosmetic Co was incorporated on 24 June 2005. The documents for its incorporation were prepared by Luestner & Associates. Mr Nicolaou is a principal of Luestner & Associates. He is also a friend of Mr Viscariello. Luestner & Associates carry out accounting work for Mr Viscariello and for entities with which he is associated.
When Cosmetic Co was incorporated, the plaintiff was its sole director and secretary. Cosmetic Co had issued two $1.00 shares, one to the plaintiff and the other to J & L Developments Pty Ltd. J & L Developments is a company which acts as a trustee of a family trust of Mr Viscariello and his de facto wife Ms Viscariello.
There are four documents which are particularly relevant to the disputed appointment of Mr Viscariello as a director. The first is a document which, on its face, is the minutes of a meeting of the board of directors of Cosmetic Co held on 18 August 2005 (Exhibit D15). The signature under the certification of the accuracy of the minutes appears to be that of the plaintiff. This document records the appointment by the plaintiff on 18 August 2005 of Mr Viscariello as a director of Cosmetic Co. There is an issue about the plaintiff’s signature on this document to which I shall return.
The second is a document signed by Mr Viscariello and dated 18 August 2005 by which he consents to act as a director (Exhibit D23). The third is a Notice of Change to Company Details (ASIC Form 484). This is Exhibit D14. This Notice was signed by the plaintiff on 24 August 2005. By her signature, the plaintiff certified that the information on the form, ie, the appointment of Mr Viscariello as a director, was true and correct. The Notice was lodged with ASIC electronically on 25 August 2005 and forms part of its records. A copy of the Notice as lodged with ASIC is Exhibit P2.
On their face, these four documents evidence the appointment of Mr Viscariello as a director of Cosmetic Co on or about 18 August 2005. It was not suggested that Mr Viscariello has since resigned his directorship.
In relation to the disputed resignation as a director by the plaintiff, there are again four documents which are particularly relevant. The first is a notice of resignation signed by the plaintiff (Exhibit P12). The resignation is dated 15 September 2005 but the plaintiff believes that she signed it on 17 September 2005.
The second is a document which, on its face, is the minutes of a meeting of the board of directors of Cosmetic Co held on 15 September 2005 (Exhibit D18). This document records that the resignation of the plaintiff as a director was accepted. The minutes are signed by the plaintiff.
The third document is a Notice of Change to Company Details (ASIC Form 484). It is Exhibit D25. The Notice is signed by Mr Viscariello and notifies ASIC of the plaintiff’s resignation as a director. This Notice was lodged with ASIC electronically by Luestner & Associates. A copy of the document as lodged is Exhibit P4. It appears that the Notice was lodged with ASIC before the plaintiff had signed the notice of resignation (Exhibit P12) and probably before Mr Viscariello had signed Exhibit D25. However, even if that sequence did involve some irregularity (about which I express no opinion) nothing turns on it in these proceedings.
These four documents evidence, on their face, the resignation of the plaintiff as a director of Cosmetic Co. It was not suggested that there has been any subsequent appointment of the plaintiff as a director.
There is a further document which is relevant both to the disputed appointment and to the disputed resignation. Exhibit P1 is entitled “ASIC Historical Extract”. It relates to Cosmetic Co and was issued by ASIC on 26 September 2005. Amongst other things, it records the appointment of Mr Viscariello as a director on 18 August 2005 and the plaintiff’s cessation as a director on 15 September 2005. The document commences with a reference to s 1274B of the Corporations Act 2001 (Cth) and then continues:
This extract has been prepared by the Australian Securities & Investment Commission from information it obtained, by using a data processor, from the national database.
Section 1274B gives Exhibit P1 an evidentiary significance which will be considered later.
The Plaintiff’s Signature
It appears that at times during the interlocutory stages of these proceedings the plaintiff has denied, or at least not admitted, that signatures on certain documents which appear to be hers were authentic. However, during the course of her evidence, the plaintiff acknowledged (with one exception) that the signatures in question were hers. Further, a handwriting expert called by the defendant (Mr Talbot‑Wilson) expressed the opinion that all the signatures were genuine signatures of the plaintiff.
The exception not acknowledged by the plaintiff is Exhibit D15, ie, the document which purports to be the minutes of a meeting of the directors of Cosmetic Co held on 18 August 2005 at which the plaintiff, as the then sole director, resolved to appoint Mr Viscariello as a director. The plaintiff gave conflicting evidence about the signature on this document. Initially she said that she did not believe that the signature was hers. However, later in the cross-examination, after asserting that she had in fact previously acknowledged the signature on Exhibit D15 as her own, the plaintiff said that the signature looked similar to her own but could not say how the document had come into existence. She could not recall any circumstances in which she may have signed the document. In re-examination, the plaintiff asserted positively that the signature on Exhibit D15 was not hers and gave reasons why that was so.
As I have said, the defendants called a handwriting expert, Mr Talbot‑Wilson. I accept that Mr Talbot‑Wilson was appropriately qualified to give expert evidence concerning handwriting and the genuineness of signatures. Mr Talbot‑Wilson considered that the signature on Exhibit D15 is a genuine signature of the plaintiff. The plaintiff’s cross-examination of Mr Talbot‑Wilson did not seriously challenge his conclusion in that respect. In his final address, Mr Ower, who appeared for the plaintiff, did not submit that I should reject Mr Talbot‑Wilson’s evidence. Nor did he submit that I should find that the signature on Exhibit D15 is not a genuine signature of the plaintiff. In those circumstances, I do not consider that it is necessary to analyse Mr Talbot‑Wilson’s evidence in detail. I accept that a proper basis for his opinion has been disclosed and I accept his opinion that the signature on Exhibit D15 is a genuine signature of the plaintiff. I reject that part of the plaintiff’s evidence in which she did not acknowledge the signature as her own.
The effect of this is that I am satisfied that the plaintiff did sign each of Exhibits D14 and D15 relating to the appointment of Mr Viscariello as a director, and each of Exhibits P12 and D18 relating to her own resignation as a director.
The Effect of Documents Lodged with ASIC
A proprietary company such as Cosmetic Co must have at least one director.[1] When Cosmetic Co was incorporated, the plaintiff was its sole director. By r 110 of the Rules of Cosmetic Co’s Constitution, the plaintiff, as the sole director, had the power, subject to certain qualifications which are not presently relevant, “at any time and from time to time to appoint any person to be a Director either to fill a casual vacancy or as an addition to the existing Directors”. By r 106.5 of the same Rules, the office of director became vacant if the director resigned his or her office by notice in writing to the company. The Rules do not require a resignation to be accepted by the company before it becomes effective.[2]
[1] Corporations Act 2001 (Cth) s 201A(1).
[2] Cf Marks v The Commonwealth (1964) 111 CLR 549; Frederick v State of South Australia [2006] SASC 165 at [72]; (2006) 94 SASR 545 at 563.
By s 205B(1) of the Corporations Act, a company must lodge with ASIC within 28 days of the appointment of a director, a notice containing the personal details of the new director. By s 205B(5), a company must lodge with ASIC within 28 days of the resignation of a director, a notice of that resignation. Section 1274 of the Corporations Act requires ASIC to keep such registers as it thinks fit. This section also permits members of the public to inspect (with certain exceptions) documents lodged with ASIC.[3] The Corporations Act contemplates that ASIC will maintain a national companies database. Section 1274B gives evidentiary status to information extracted by data processor from the national database. It provides:
(1) In this section:
"data processor" means a mechanical, electronic or other device for processing data.
(2)In a proceeding in a court, a writing that purports to have been prepared by ASIC is admissible as prima facie evidence of the matters stated in so much of the writing as sets out what purports to be information obtained by ASIC, by using a data processor, from the national database. In other words, the writing is proof of such a matter in the absence of evidence to the contrary.
(3)A writing need not bear a certificate or signature in order to be taken to purport to have been prepared by ASIC.
(4) Nothing in this section limits, or is limited by, section 1274 or 1274A.
[3] Corporations Act 2001 (Cth) s 1274(2).
As noted earlier, Exhibit P1, the ASIC Historical Extract relating to Cosmetic Co, said that it had been prepared by ASIC, using a data processor, from the national database. The effect of s 1274B is that Exhibit P1 is prima facie evidence of the appointment of Mr Viscariello as a director on 18 August 2005 and of the resignation of the plaintiff on 15 September 2005. This Court is entitled to act on that prima facie evidence in the absence of evidence to the contrary.
The plaintiff submitted that in order for the challenged appointment and resignation to be effective, she had to have intended subjectively to make the appointment and to resign. If the Court was satisfied, as the plaintiff submitted it should be, that she did not intend subjectively either to appoint Mr Viscariello as a director or to resign herself as a director, then neither the appointment nor the resignation were effective. Proof that the plaintiff’s signatures to the relevant documents were not accompanied by “a subjective act of will” would be sufficient, it was submitted, to displace the prima facie position established by s 1274B.
A Requirement of Subjective Intention
Before considering the plaintiff’s submissions concerning subjective intention further, one matter can be put aside. The plaintiff did not seek to make out a case of non est factum, misrepresentation, duress or some kind of unilateral mistake of which Cosmetic Co or Mr Viscariello were aware and had yet taken advantage. The principles involved on pleas of that kind do not need to be addressed.
Returning to the plaintiff’s submission concerning subjective intention, there is an issue about whether such evidence is even admissible in the present circumstances. In contract cases the position is clear. Absent claims such as non est factum, mistake, misrepresentation or duress, the law does not take account of the actual intentions of the parties. In Codelfa Construction Pty Ltd v State Rail Authority of NSW[4] Mason J said:
… when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.[5]
Thus it was held in Codelfa that evidence of the actual intentions and expectations of the parties to the contract was not admissible. In ascertaining the intention of contracting parties, the law applies the objective theory of contract. It is not the subjective belief or understanding of the parties about the effect of their contract which determines their contractual relations. It is what each party, by words and conduct, would have led a reasonable person in the position of the other party to believe.[6]
[4] (1982) 149 CLR 337.
[5] Ibid at 352.
[6] Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 at [22]; (2004) 218 CLR 451 at 461-2.
This principle was recently re-affirmed by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd.[7] In that case Alphapharm’s agent had signed a credit application form without reading the conditions of the contract which were overleaf. It was held that his signature bound Alphapharm, there being no suggestion of fraud, mistake or misrepresentation. The High Court said:
… where a person has signed a document, which is intended to affect legal relations, and there is no question of misrepresentation, duress, mistake, or any other vitiating element, the fact that the person has signed the document without reading it does not put the other party in the position of having to show that due notice was given of its terms.[8]
Later, the High Court said:
The general rule … is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document.[9]
[7] [2004] HCA 52; (2004) 219 CLR 165.
[8] Ibid at [54]; 184.
[9] Ibid at [57]; 185.
The principle that a person is ordinarily bound by his or her signature is not confined to contracts. In Wilton v Farnworth,[10] the question was whether a gift by a beneficiary of his share in his late wife’s estate, under signature, should be set aside. Latham CJ first addressed the effect of a signature on a document more generally:
Where a man signs a document knowing that it is a legal document relating to an interest which he has in property, he is in general bound by the act of signature … . He may not trouble to inform himself of the contents of the document, but that fact does not deprive the party with whom he deals of the rights which the document gives to him. In the absence of fraud or some other of the special circumstances of the character mentioned, a man cannot escape the consequences of signing a document by saying, and proving, that he did not understand it. Unless he was prepared to take the chance of being bound by the terms of the document, whatever they might be, it was for him to protect himself by abstaining from signing the document until he understood it and was satisfied with it. Any weakening of these principles would make chaos of every-day business transactions.[11]
That passage was cited with approval in Toll v Alphapharm.[12] In Turner v Wyndever[13] Austin J, after referring to this passage in Wilton v Farnworth, said:
… if the parties, even in the family context, commit themselves to a transaction, they are bound by it, unless there are additional facts creating a vitiating circumstance.[14]
In a context more similar to the present, Owen J in Tranchita v Retravision (WA) Pty Ltd[15] referred to the above passage in Wilton v Farnworth and continued:
Although it appears that the appellant was keen to acquire the business, and in his haste did not read the document, the realm of equity will not always protect against such oversights. This is especially so considering the appellant was aware of the nature of the document. He had the document in his possession until “later” when he asked his wife to sign it. The information contained in the document was not withheld from him.[16]
[10] (1948) 76 CLR 646.
[11] Ibid at 649.
[12] [2004] HCA 52 at [47]; 219 CLR 165 at 182.
[13] [2003] NSWSC 1147.
[14] Ibid at [109].
[15] [2001] WASCA 265.
[16] Ibid at [69].

Mr Ower, who appeared for the plaintiff, referred to a number of authorities in support of the proposition that the subjective intention of the plaintiff was necessary for an effective appointment or resignation. Implicit in that submission was the proposition that regard could be had to the plaintiff’s own evidence about her state of mind at relevant times.
Mr Ower referred first to Poliwka v Heven Holdings Pty Ltd.[17] One issue in that case was whether a meeting at a coffee shop of two directors of a company was a meeting of directors at which two persons had been appointed as additional directors of the company. A signed minute purported to record that such an appointment had been made at the meeting. The trial judge held that the luncheon conversation between the two directors could not be characterised as an occasion upon which they had met to transact the business of the company. Even allowing for the latitude given to directors of private companies in the formalities which attend their corporate activities, the trial judge considered that “there must at least be an intention that the occasion be a directors’ meeting and an awareness by the persons present that they are concurring, in their capacity as directors, in the management of the affairs of their company”.[18] As the trial judge held that there had not been a meeting of directors, the minute purporting to record what had occurred at the meeting could be ignored. The conclusion of the trial judge was upheld on appeal.[19]
[17] (1992) 8 ACSR 747.
[18] Ibid at 761.
[19] Ibid at 761-2 per Rowland J, 775-7 per Franklyn J, 785-6 per Ipp J.
Mr Ower emphasised the passage in the trial judge’s reasons quoted above and referred also to the following passage in the judgment of Ipp J:
A valid resolution of directors can be taken at an informal meeting; there must, however, at least, be a demonstrable expression of will, on the part of the directors, approving of the resolution. …
Moreover, while it may not be necessary for a director consciously to apply his or her mind to the fact that the decision is being taken at a meeting of directors, the concurrence with the resolution must be expressed by each director in that capacity, and for the purpose of resolving, as a director, upon affairs of the company … .[20]
The submission was that this passage indicated that in addition to the signed minute, it had to be established that the directors had intended subjectively to make the appointment.
[20] Ibid at 785-6.
In my opinion, the decision in Poliwka has little to do with the present circumstances. The question being considered in that case was whether a particular meeting between two persons who happened to be directors of a company was a meeting of the directors of the company. If it was not, then the signed minute could not be regarded as recording a transaction effected at such a meeting. The status of the meeting was a question of fact to be determined having regard to all the surrounding circumstances, including the purpose for which the two directors had come together. In that regard, it was relevant for the Court to consider the directors’ own subjective appreciation of what was taking place while they were together. The question in the present case of whether the plaintiff is bound by her signature involves quite different considerations. Although I am satisfied that there was no formal “meeting” on 18 August 2005 attended by the plaintiff as sole director, such a formal meeting was not required in order that an appointment of an additional director could be made.[21]
[21] Rule 110 of the Rules of Cosmetic Co’s Constitution.
Next, Mr Ower referred to two trust cases in which evidence was admitted on the question of whether a document had been intended to operate as a binding declaration of trust: B & MProperty Enterprises Pty Ltd (In Liq) v Pettingill[22] and Starr v Starr.[23] These authorities were influenced by the doctrines of equity involved in the enforcement of a trust. It is well established that the existence of a trust is to be determined by reference to the subjective intention of the putative trustee.[24] However, I do not understand these cases to stand for some more general proposition that parol evidence is always admissible, even in the absence of a plea of some vitiating element, to establish that a signing party did not intend the transaction to which his or her signature stands witness. In any event, the present circumstances are more analogous to those arising in the contract cases than to those in the trust cases.
[22] [2001] SASC 75.
[23] [1935] SASR 263.
[24] Commissioner of Stamp Duties (Queensland) v Jolliffe (1920) 28 CLR 178; Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72; Owens v Lofthouse [2007] FCA 1968.
Finally, Mr Ower referred to Wood v Smith,[25] a decision concerning the question of whether a homemade will should be admitted to probate. The Court of Appeal accepted that evidence of a lack of intention by the deceased that the impugned document should be a will was admissible. That decision is referrable to the statutory requirements for a valid will, which include the requirement that it appears that the testator intended by his signature to give effect to the will.[26] In those circumstances proof of intention, or lack of intention, is specifically contemplated.
[25] [1993] Ch 90.
[26] Ibid at 111.
In my opinion, in the absence of a claim such as non est factum, mistake, misrepresentation or duress, effect should be given to the principle stated by Latham CJ in Wilton v Farnworth quoted earlier. There is no requirement for proof of the plaintiff’s subjective intention before her appointment of Mr Viscariello, or her own resignation, may be regarded as effective. Nor, in the circumstances described, is evidence admissible to establish that a subjective intention to appoint, or to resign, as the case may be, was absent.
The Evidence about Subjective Intention
In case I am wrong about the admissibility of the evidence, I will address the evidence and submissions of the parties concerning the plaintiff’s appointment of Mr Viscariello and of her own resignation.
The Oral Evidence at Trial
At the trial I heard oral evidence from three witnesses. The plaintiff gave evidence herself and the defendants led evidence from Mr Nicolaou and from Mr Talbot-Wilson. Mr Viscariello did not give evidence and nor did his de facto wife Ms Viscariello.
The plaintiff conducted a searching cross-examination of Mr Nicolaou. It was suggested to him that in material respects he had lied in his evidence for the purpose of supporting his friend Mr Viscariello in his litigation with the plaintiff. I have considered Mr Nicolaou’s evidence carefully. I consider that it is probable that in 2005 Mr Nicolaou did allow his friendship with Mr Viscariello to influence his actions in relation to Cosmetic Co. This explains Luestner & Associates lodging notices of changes in Cosmetic Co’s details with ASIC even before it had received signed documents confirming the changes in question. It also explains Luestner & Associates lodging the notice of appointment of Mr Viscariello as director without having spoken to the plaintiff, who was then the sole director of Cosmetic Co.
I have also taken account of the fact that neither Mr nor Ms Viscariello has given evidence. They could have given evidence on topics which corroborated Mr Nicolaou. The fact that Mr Viscariello chose to remain in the well of the Court is a matter to be taken into account. The inference can be drawn that the evidence of Mr and Ms Viscariello would not have assisted the defendants’ case.[27] But it does not mean that an inference can be drawn that if they had given evidence, facts unfavourable to the defendants’ case would have been exposed.[28]
[27] Jones v Dunkel (1959) 101 CLR 298; Frederick v State of South Australia [2006] SASC 165 at [36]-[43]; (2006) 94 SASR 545 at 555-57.
[28] Ibid.
However, even having regard to those matters, I do regard Mr Nicolaou’s evidence as being generally reliable. It is supported by contemporaneous documents and, in part, by the plaintiff’s own evidence. Having regard to the attack made on his evidence by the plaintiff, it is appropriate that I record my satisfaction that Mr Nicolaou has not engaged in a course of sustained perjury. Except where specifically indicated, I regard his evidence generally as providing a reliable basis for findings of fact.
Although, as will be seen, I do not accept the plaintiff’s evidence on significant matters, that does not mean that I consider her to have given false evidence deliberately. I detected a degree of retrospective rationalisation in her evidence. I have the impression that after a falling out with Ms Viscariello, the plaintiff came to a realisation of the vulnerability of her position in Cosmetic Co. Rightly or wrongly, she considered that advantage had been taken of her by the Viscariellos. The plaintiff came to regret the circumstances in which she had allowed that to occur and has since rationalised, unconsciously, those circumstances in her own mind. On that assessment of the respective witnesses, I make the following findings of fact.
The Plaintiff’s Background
In 2005, the plaintiff conducted her own beauty salon under the name “Essential Beauty”. The salon was operated as a franchise. It was one of 18 franchises operating under the name “Essential Beauty”. A company owned by the plaintiff and her husband, A & J Forrest Agencies Pty Ltd, operated the salon.
Prior to 2005, the plaintiff had had significant involvement in other proprietary companies and in businesses conducted using a business name. She has previously been a shareholder and a director in two companies engaged as wholesale distributors of fashion clothing. From time to time, the plaintiff has been a shareholder in and director of two other companies involved in the retail sale of clothing. The plaintiff has also been a shareholder and director of a company called Safe Sleeper Pty Ltd, a company established to distribute a device designed by her to prevent cot deaths. She has also conducted a business under the trading name of Stage One Fashions. The plaintiff obtained a real estate salesperson’s licence in 2003. At about the same time she became a director of System Real Estate Pty Ltd with the intention of working in the real estate industry. For a period of about 18 months before then, the plaintiff worked in a real estate agency.
I am satisfied that in 2005, the plaintiff had a reasonable amount of experience in the operation of a proprietary company and, in particular, was well accustomed to signing documents prepared by an accountant in relation to the conduct of a company such as annual returns, taxation returns, minutes of meetings and other formal documents for lodgement with ASIC.
The Establishment of Cosmetic Co
During 2005, the plaintiff came to know Ms Viscariello. They formed a strong friendship. A company controlled by Mr and Ms Viscariello, K.O.C. Pty Ltd, conducted a beauty salon under the name “Cosmetic Solutions”.
In the first half of 2005, discussions took place between Ms Viscariello and the plaintiff during which they agreed to go into business together to distribute a laser for use in beauty salons. Cosmetic Co was incorporated to be the vehicle by which they would conduct this business. Mr Viscariello, who is a legal practitioner, was involved in the discussions preceding the incorporation of Cosmetic Co. I am satisfied that there was agreement of a general kind that the laser distribution business would be conducted by Ms Viscariello and the plaintiff and that Mr Viscariello would assist by overseeing the accounting and legal aspects of the business.
The circumstances which led to the plaintiff being appointed the sole director when Cosmetic Co was incorporated were not explained in the evidence. It may have been due to her having contributed a capital sum for the operation of Cosmetic Co whereas Ms Viscariello did not.
The plaintiff described signing the documents for the incorporation of Cosmetic Co on 24 June 2005. These had been prepared by Luestner & Associates and were presented to her for signature by Ms Viscariello. The relevant pages requiring signature were tagged for easier identification.
Although the appointment of Mr Viscariello as a director of Cosmetic Co preceded the plaintiff’s notice of resignation, it is convenient to consider the latter first.
The Signing of the Notice of Resignation
After 24 June 2005 the plaintiff and Ms Viscariello engaged in a variety of activities promoting the sales of a particular item of laser equipment known as the iPulse I200 System (“iPulse”). Sale of the iPulse was promoted to Mr Maiello, the franchisor of the Essential Beauty chain of salons, and to members of that chain. There was the prospect of the Essential Beauty chain making a bulk purchase of iPulses. This would have been a valuable sale. However, on or about 15 September 2005 Mr Maiello learnt of the plaintiff’s involvement in Cosmetic Co. He voiced to the plaintiff his concern about her potential or actual conflict of interest in participating in decisions by the Essential Beauty chain about the purchase of iPulses from Cosmetic Co.
The plaintiff said that Mr Maiello first raised his concern about the conflict of interest on 16 September 2005. I think it likely, and so find, that Mr Maiello had raised that concern at least by Thursday, 15 September 2005. The plaintiff was concerned that her involvement in Cosmetic Co should not jeopardise the possible sale of iPulses to the Essential Beauty frachises. She spoke by telephone to Ms Viscariello who suggested that she should speak to Mr Nicolaou. On the basis of Mr Nicolaou’s evidence, I find that the plaintiff telephoned him on 15 September 2005 and told him that she wished to be removed as a director and shareholder of Cosmetic Co as a matter of urgency because of the conflict of interest with her franchisor. She told Mr Nicolaou that the conflict arose because of the discussions which Cosmetic Co was having in relation to the sale of iPulses to members of the Essential Beauty chain. Mr Nicolaou and the plaintiff discussed transferring the plaintiff’s own shareholding to a family trust so that her interest in Cosmetic Co would be held in a similar way to that of Ms Viscariello. Mr Nicolaou told the plaintiff of the information which he required in order to establish a family trust, namely, the full name and address of the appointor and the trustee, and other details such as occupation, date of birth, tax file number and so on. Mr Nicolaou told the plaintiff that her resignation as director could be effected that same day but her shareholding could not be transferred until the family trust was established.
I do not accept the plaintiff’s evidence to the effect that her conversation with Mr Nicolaou on 15 September 2005 was confined to the topic of establishing a family trust to hold her shareholding. I accept that the plaintiff may have considered before 15 September 2005 having her shareholding held by a family trust but I am satisfied that the impetus for her telephone call to Mr Nicolaou on 15 September 2005 was her desire to distance herself from direct ownership and management of Cosmetic Co so as not to jeopardise potential sales of iPulses to the members of the Essential Beauty chain.
Later on 15 September 2005 the plaintiff sent to Mr Nicolaou, by facsimile, the information which he had requested. A copy of the facsimile is Exhibit D26. The plaintiff provided her husband’s full name and address, date of birth, place of birth, tax file number and occupation. It is curious that Mr Nicolaou did not ask the plaintiff to confirm in that facsimile her resignation as director, but that does not cause me to doubt his evidence that that had been discussed.
Even before that facsimile was received, a staff member in Mr Nicolaou’s office had lodged electronically with ASIC the Form 484 notifying it of the plaintiff’s resignation as a director (Exhibit P4). Shortly before making the electronic lodgement, the staff member prepared a hard copy of the Form 484 for signature by Mr Viscariello, but it is improbable that Mr Viscariello had signed the notice before the electronic lodgement was made. The date and time when Mr Viscariello did sign the hard copy of the notice (Exhibit D25) were not disclosed in the evidence.
Mr Nicolaou also caused a staff member to prepare a typed notice of resignation for signature by the plaintiff and some minutes of a meeting of the directors of Cosmetic Co. The minutes purported to record a meeting held on 15 September 2005 attended by both the plaintiff and Mr Viscariello at which her resignation as a director was accepted. Mr Nicolaou could not say what was done with the notice of resignation or with the minute, save that normal practice was to post or deliver them to the client, or to leave them to be collected by the client. I am satisfied that both documents were delivered to, or collected by, either Mr or Ms Viscariello.
On Friday, 16 September 2005 the plaintiff and her husband were moving house. I gather that they were preoccupied with that moving on that day. The plaintiff did say, however, that she and Mr Maiello had had a meeting on that day in which Mr Maiello raised the question of conflict of interest. I am not able to make a finding as to whether or not that meeting did occur. Even if it did, I am satisfied that it was not the first occasion upon which Mr Maiello had raised the question of conflict.
On Saturday, 17 September 2005 the plaintiff worked in her beauty salon at Elizabeth. At about 11.00 am that day Ms Viscariello went to the salon. She had a number of documents which she asked the plaintiff to sign. The plaintiff said that she browsed them quickly and noted that several seemed to be financial documents in relation to the business of Cosmetic Co. She said that she signed the documents without reading them all closely. The plaintiff considered it likely that she signed the notice of resignation at this time. I think it probable, and so find, that it was on this occasion that the plaintiff signed her notice of resignation as a director as well as the “minutes” of the “meeting” on 15 September 2005 (Exhibit D18). The plaintiff gave the documents which she had signed to Ms Viscariello. The evidence did not disclose what happened to the documents thereafter but by some means they were returned to Luestner & Associates. This was not done by the plaintiff. I consider that it was done by either Mr or Ms Viscariello.
The notice of resignation bears the handwritten date 15 September 2005 but Mr Nicolaou acknowledged that that was his handwriting. He said that he probably added the date after the notice had been returned to him.
Despite her evidence to the contrary, I find that the plaintiff knew that she was resigning as a director of Cosmetic Co. She was prepared to do so in an attempt to avoid losing the potential valuable sale of iPulses to members of the Essential Beauty chain. While the plaintiff may not have read the notice of resignation carefully before signing it, I am satisfied that she was sufficiently experienced with the signing of documents relating to the operation of a company to know what she was doing. The notice of resignation gave effect to the intention which she had communicated to Mr Nicolaou on Thursday, 15 September 2005. I reject any suggestion that Mr Nicolaou prepared the resignation documents, or caused his staff member to prepare them, other than at the plaintiff’s request.
In the week commencing 20 September, for reasons which the evidence did not disclose, the relationship between the plaintiff and Ms Viscariello broke down. It is not necessary to make findings in relation to the events which then occurred. Once the relationship did break down, the plaintiff realised the vulnerability of her position in Cosmetic Co, as Mr Viscariello was then the sole director.

It is also not necessary to consider whether the plaintiff’s resignation was effective as at the date and time it was lodged with ASIC on 15 September 2005. At the latest, it became effective when the plaintiff signed the notice of resignation and delivered it to Ms Viscariello. As I have said, I find that that occurred on 17 September 2005.
The Appointment of Mr Viscariello as Director
Mr Nicolaou said that in August 2005 he was requested by Mr Viscariello to prepare the necessary documents to record his appointment as a director of Cosmetic Co. Following that request, he arranged for a staff member to prepare the necessary documents. These included a form for signature by Mr Viscariello consenting to act as a director, minutes of a meeting of the Board of Directors of Cosmetic Co resolving to appoint Mr Viscariello as a director, and a Notice of Change to Company Details to be lodged with ASIC (ASIC Form 484). Although Mr Nicolaou had no recollection of doing so, his office cost entries indicated that he had delivered those documents, under cover of a letter dated 18 August 2005, to the beauty salon conducted by Ms Viscariello at 141 Kensington Road, Norwood. Apart from the letter dated 18 August 2005, the three documents were later returned to his office. The consent to act as a director was signed by Mr Viscariello and the two other documents were signed by the plaintiff. The Notice of Change to Company Details was lodged electronically with ASIC on 25 August 2005.
The plaintiff denied having any discussion with either Mr or Ms Viscariello about appointing Mr Viscariello as a director. She denied that she had wanted Mr Viscariello to become a director. The plaintiff said that she could not recall the circumstances in which she signed the Notice of Change to Company Details to be submitted to ASIC. In the absence of evidence from Mr and Ms Viscariello, it is not possible to make a positive finding that the plaintiff did have discussions with either or both of them about Mr Viscariello being appointed a director.
Despite the plaintiff’s evidence, I am satisfied that she did intend to appoint Mr Viscariello as a director of Cosmetic Co. Although it is not possible to be certain about it, this was probably because of Mr Viscariello’s status as a lawyer and because the plaintiff recognised the desirability of the Viscariello interests being represented in the directorship of Cosmetic Co. I regard as significant the fact that the plaintiff felt able to resign her own directorship on 15 September 2005. If the plaintiff had not considered that there was at least one other director, she could not have felt able at that time to resign her directorship without first ensuring that someone else had been appointed as director. The plaintiff said that she had thought that Ms Viscariello had been a director since the inception of Cosmetic Co. I do not accept that evidence. The plaintiff did not point to any occurrence which would have provided a reasonable basis for that belief. It is contradicted by the documents, including the “minute” of the “meeting” held on 18 August 2005 which showed the plaintiff as the then sole director.
In relation to the plaintiff’s appointment of Mr Viscariello as a director, again I attach significance to the plaintiff’s experience in the conduct of proprietary companies. The plaintiff agreed that when she signed the original of the Notice of Change to Company Details (ASIC Form 484) concerning Mr Viscariello’s appointment as a director she knew that the document would be submitted to ASIC but claimed that she was not aware of the contents on the reverse side. I do not accept the latter statement. On my assessment, the plaintiff understood that the effect of the document was to notify ASIC of Mr Viscariello’s appointment and she signed it with that intention in mind.
Conclusion
Even if regard is had to the oral evidence bearing upon the plaintiff’s subjective state of mind, I am satisfied that she did intend both to appoint Mr Viscariello as a director on 18 August 2005 and later, to resign herself as a director. Accordingly the plaintiff’s claim is dismissed. I will now hear from the parties on arrangements for the hearing of the first defendant’s counterclaim.