Goway Travel Pty Limited v Critchley & Anor - [2024] NSWSC 2

Supreme Court

New South Wales

Medium Neutral Citation: GOWAY Travel Pty Limited v Critchley & Anor [2024] NSWSC 2
Hearing dates: 13, 14, 15, 16 & 17 February, 3 May, and 2 June 2023.
Date of orders: 15 December 2023
Decision date: 09 January 2024
Jurisdiction: Equity
Before: Slattery J
Decision:
Declaration made that from 15 March 2015 the defendants were not entitled to deal with the plaintiff on the basis that Ms Comito’s had ostensible authority to act on behalf of the plaintiff with respect to the Staff Family and Friends travel scheme. Orders made for the defendants to restore to the plaintiff the net benefits received by the defendants under the Staff Family and Friends travel scheme from 15 March 2015 and for account to be taken of those benefits. Directions made for the resolution of consequential issues.

Catchwords:
EQUITY – first limb of Barnes v Addy (1874) LR 9 Ch App 244 - the plaintiff sold international travel services to the defendants over a five-year period between 2013 and 2018 – some of the plaintiff’s travel services were sold through a “staff, family and friends” discounted travel scheme – defendants were offered discounted travel at rates substantially below market rates and below the likely wholesale cost of providing the travel services – the defendants were purchasers of those services – in July 2018 the plaintiff discovers that a rogue employee is responsible for irregularities in its staff family and friends travel scheme and that the plaintiff’s travel services have been marketed and sold through the scheme without its authority and in breach of its employee’s fiduciary duty to the plaintiff – the plaintiff seeks recovery of the cost of the travel services supplied to the defendants by the rogue employee – whether the defendants were aware that the rogue employee was selling them travel services without the authority of the plaintiff – whether the plaintiff is entitled on the pleadings to restitution from the defendants on the grounds the defendants made payments for the market value of the travel services supplied to or at the direction of the defendants by mistake or under a total failure of consideration – whether the defendants had the requisite level of knowledge that the rogue employee was acting in breach of her fiduciary duty to her employer, the plaintiff, to attract Barnes v Addy first limb liability – whether the defendants received all travel services from the plaintiff with some of them were supplied to other persons.

Legislation Cited:
Evidence Act1995, ss 128, 140

Cases Cited:
Baden v Société Générale pour Favoriser le Developpement du Commerce et de l’Industrieen France [1992] 4 All ER 161
Banque Commerciale S A (in Liq) v Akhil Holdings Ltd (1990) 169 CLR 279
Barnes v Addy (1874) LR Ch App 244
Break Fast Investments Pty Ltd v Rigby Cooke Lawyers [2022] VSCA 118
Briginshaw v Briginshaw (1938) 60 CLR 336
Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
Egyptian International Foreign Trade v Soplex Whole Supplies Ltd (The ‘Raffaella’) [1985] 2 Lloyd’s Rep 36
El Ajou v Dollar Land Holdings Plc & Anor [1994] 2 All ER 685
Farah Constructions Pty Ltd v Say-Dee Pty Limited (2007) 230 CLR 89
Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480
G v H (1994) 181 CLR 387
Grimaldi v Chameleon Mining NL & Anor (No. 2) (2012) 200 FCR 296
Hoare v McCarthy (1916) 22 CLR 296
Imobilari Pty Ltd v Opes Prime Stockbroking Ltd (in liq) [2008] FCA 1920
Jones v Dunkel (1959) 101 CLR 298
Kalls Enterprises Pty Ltd v Baloglow [2007] NSWCA 191
Moriah War Memorial College Association v Augustin Robert Nosti [2020] NSWSC 942
Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146
Orbit Travel Services Pty Ltd v Trustees - Travel Compensation Fund & Ors (unreported, 24 March 1998)
Orbit Travel Services v Travel - Compensation Fund [1999] NSWCA 63
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451
Payne v Parker [1976] 1 NSWLR 191
Rolled Steel Products (Holdings) Ltd v British Steel Corporation [1986] Ch 246
Schellenberg v Tunnel Holdings Pty Limited (2000) CLR 121
Smith v Peter & Diana Hubbard Pty Ltd [2006] NSWCA 109
Song v Ying [2010] NSWCA 237
Turner v O’Bryan–Turner (2022) 107 NSWLR 171
Wilhemsen Investments Pty Ltd v SSS Holdings Pty Ltd [2019] NSWCA 32

Category: Principal judgment
Parties: Plaintiff: GOWAY Travel Pty Limited ACN 002 767 839
First Defendant: Robert Critchley
Second Defendant: Lynette Tarbuck
Representation:
Counsel:
Plaintiff: A.E. Maroya, S. Scott
Defendants: M.P. Cleary
Solicitors:
Plaintiff: Richard Glover, Richard Glover Law Practice
Defendants: Gordon Grieve, Piper Alderman

File Number(s): 2020/188401
Publication restriction: No

Judgment

The Sydney-based company Goway Travel Pty Ltd (“Goway”) provides wholesale travel agency services to its related international travel agencies and provides limited local retail travel agency services. Goway brings these proceedings against the defendants, Mr Robert Critchley, and Ms Lynette Tarbuck, to recover from them the value of steeply discounted retail travel services (mainly for airfares, accommodation, and car hire) that Goway supplied to the defendants and their family members from 2013 to 2018, less the amount paid by the defendants to Goway for those services.
Goway alleges that Mr Critchley and Ms Tarbuck received these discounted travel services through an employee of Goway, Ms Lisa Comito, under colour of a Goway scheme entitled “Staff, Family and Friends” and later just “Family and Friends”. Goway accepts that it had a scheme so named but denies that Ms Comito was authorised under it to provide the defendants, or any customer, with such heavily discounted travel services as she supplied to the defendants.
Goway claims that Ms Comito offered Mr Critchley and Ms Tarbuck travel packages so substantially below their retail market value that they must have been aware when they took the benefit of those travel packages that Ms Comito could not have been acting in the course of her duties as an employee of Goway or in the interests of Goway, but that she was conducting an unauthorised operation within Goway in breach of her fiduciary duties to Goway and without Goway’s authority to supply those travel products to them or at their direction.
Goway claims that the defendants are liable to account to it under the first limb of the principle stated in Barnes v Addy (1874) LR 9 Ch App 244 (“Barnes v Addy”) for their receipt of the value of the services represented by these travel packages with the knowledge that they were provided to them in breach of Ms Comito’s fiduciary duty as an employee to Goway. And Goway brings a claim for restitutionary relief, on the basis that the defendants have been unjustly enriched at the expense of Goway by accepting Goway’s mistaken payment of unauthorised travel packages.
Mr Critchley and Ms Tarbuck deny Goway’s claim. They accept that they received the travel packages at a cost to them that was substantially lower than the market value of the packages. But they say that all relevant times they believed that Ms Comito was acting within her authority, and they deny that they knew or had reason to know she was acting in breach of her fiduciary duty to Goway in supplying the travel packages to them. They contend they are not liable to account to Goway, either on the first limb of Barnes v Addy, or in restitution. And they say that substantial parts of the travel packages were supplied to their daughters, not to them.
Goway claims that it paid a total of $561,228.36 for the travel products and services that supplied to the defendants. This is made up of $279,011.40 for services provided to the defendants themselves, $15,544.63 in respect of travel services provided to Mr Critchley’s daughter, Ms Jodi Storey and $266,672.33 in respect of travel services provided to Mr Critchley’s daughter, Ms Fryer, her husband and children. By virtue of the difference between money paid to Goway by the defendants and the cost to Goway of engaging third-party suppliers to provide the services, Goway says that the defendants have been unjustly enriched in the net sum of $377,133.89 and claims that sum either in restitution or based on Barnes v Addy recipient liability.
Though initially put in contest, it was conceded by the defendants during the trial that Ms Comito was acting outside her actual authority as an employee of Goway in supplying the services within these travel packages to the defendants. But the defendants’ case was that the supply of these services was always within her ostensible authority. Ms Comito’s services with Goway were terminated in December 2018 on the grounds of her unauthorised conduct. The central issues for trial were whether she had ostensible authority to supply the travel packages and whether the defendants had the requisite knowledge that Ms Comito was acting in breach of her fiduciary duty to Goway in arranging their supply so they would attract Barnes v Addy first limb liability.
Mr A. Maroya of counsel together with Ms S. Scott of counsel, instructed by Richard Glover Law Practice, appeared for Goway in the proceedings. Mr M. Cleary of counsel instructed by Piper Alderman appeared for Mr Critchley and Ms Tarbuck. In a case with a long chronology of relevant facts, strongly contested and at times perplexing evidence, the Court was much assisted by the thorough analysis and careful submissions from the legal representatives on both sides.
These reasons first set out a narrative of relevant events. This narrative represents the Court’s findings on the matters covered. For reasons of economy this narrative does not always refer to versions of the facts that have been rejected. The email correspondence between the parties was voluminous and detailed. It is not possible to include it all without making this judgment unreadably long. The Court has selected in these reasons the main communications and events which the Court regards as being of significance. Following the narrative of findings on the claim these reasons deal with legal issues presented by Goway’s claim.
The plaintiff’s case against each of the defendants maintains allegations of dishonest conduct. Mr Cleary’s submissions on the half of the defendants often correctly emphasised that because of the seriousness of the case made against the defendants that the Court must be comfortably satisfied about the material aspects of the case and the conclusions that it that draws: Evidence Act 1995, s 140 and Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 (at 361-2). The Court has taken that required approach to the assessment of the evidence in this case. That has required the Court to examine the detail of the evidence closely from the historical narrative between late 2013 in mid-2018 and to set out relevant parts of it in these reasons that bear upon the inferences drawn by the Court.
This narrative begins with a profile of the parties and the witnesses and makes some general comments about their credibility.

Mr Critchley and Ms Tarbuck Arrange Their Travel – 2013 to 2018

Profile of Goway and Mr Critchley’s Family

Goway called one witness in the proceedings, its former general manager, Mr Gregory Atkins. And only one of the defendants gave evidence, Mr Critchley. He called his two daughters, Ms Shari Fryer, and Ms Jodi Storey. Ms Tarbuck did not give evidence.
Goway and Goway North America. Goway is headquartered in Sydney. It is a subsidiary of Goway Travel Limited (“Goway North America”), which is incorporated in and operates out of Canada. Goway North America opened Goway in Australia to assist it to provide its North American customers with accommodation and tours in Australia and in later years, in New Zealand.
Goway had three directors at the times covered by the events in these proceedings. They were Mr Bruce Hodge, Goway North America’s founder, Mr Peter Lacy, Goway North America’s Chief Financial Officer and Mr Gregory Atkins, Goway’s general manager of its Australian business. Both Mr Hodge and Mr Lacy worked in Toronto, at Goway North America’s head office. Mr Atkins reported from Australia to Mr Lacy and Mr Hodge in Toronto.
Goway’s core business is the operation of a travel agency, booking travel services, including airfares, accommodation, and car hire throughout Australia and New Zealand to support the business operations of its Canadian parent company. In the ordinary course of Goway’s retail business, Goway books these services on behalf of its customers, pays the suppliers for the travel services, and charges the customer the cost of the travel services, together with an additional fee for the service provided by Goway. The plaintiff, Goway, provided travel services to the defendants.
Mr Gregory Atkins. Goway employed Mr Atkins as its general manager and the company secretary of its Australian business from 10 May 2006 until 12 December 2018. Mr Atkins’ role was to oversee the strategy and direction of Goway’s Australian and New Zealand businesses and in doing so to manage approximately 28 staff working within five departments named respectively Operations, Retail, Accounts, Products, and Groups and Incentives.
Mr Atkins was a puzzling witness. His evidence is replete with examples of failing to ask sufficient questions of Ms Comito, when confronted with transactions and behaviour on her part that objectively called for further inquiry on his part. But rather than question her, he kept accepting her word, apparently relying upon her authority within Goway as a trusted long-term employee. He says that despite her at times anomalous behaviour, he never lost faith in her commitment to Goway until the very end. He too left Goway not long after her employment was terminated.
But in the Court’s view, by about early to mid-2017, Mr Atkins knew there was something seriously financially wrong with Ms Comito’s administration of the Staff Family and Friends travel scheme, which warranted deep investigation and a suspension of judgment on his part as to whether he could trust her at all. But after mid-2017, he seemed to close his eyes to the constantly arising troublesome questions that her conduct raised for him. One of the curious puzzles of this case is that Goway asks the Court to infer that the defendants should have realised there was something seriously wrong with Ms Comito’s administration of the Staff, Family and Friends travel scheme. But Mr Atkins, who knew far more than the defendants about what should have been the proper operation of the scheme, states that he was accepting at face value Ms Comito’s false explanations about its anomalous operation under her management. The missing piece of this puzzle is that, quite surprisingly, Mr Atkins had, in the earlier years in question here, far less day-to-day contact than the defendants with the operation of the scheme.
Mr Atkins was mostly a reliable witness except in relation to events after mid-2017. From that time the Court cannot accept that as an experienced business executive, he could reasonably have believed what Ms Comito was telling him about the Staff, Family and Friends travel scheme. The evidence did not explore whether there was any secondary motivation for his failure to enquire of Ms Comito about the anomalies he observed in the scheme from mid-2017. But the Court does not accept that his failure to question Ms Comito once he was alerted to the scheme’s financial dysfunction, was because he did not think there was anything wrong with the scheme. He was at times evasive in his answers. Despite the Court’s doubts about him, his evidence was often preferred when it contradicts the evidence of Mr Critchley.
Ms Comito. Ms Comito did not give evidence. The Court was told that at the time of the hearing she would soon face criminal charges relating to her questioned conduct in the proceedings. Ms Comito’s motivation for acting outside her authority as an employee in conferring very substantial benefits through discounted travel packages on a small group of people associated with the Staff, Family and Friends scheme, such as the defendants, is obscure. Ms Comito did not solicit, and neither Mr Critchley nor Ms Tarbuck ever offer her, any consideration in exchange for the benefits they received through her from Goway. It is possible that Ms Comito was motivated by earning commissions on the travel benefits she was supplying to the defendants. But there is no direct evidence of this. So, in the end her precise motive remains an unexplained mystery.
But it is not necessary to investigate Ms Comito’s motive. In the absence of a clear motive two observations can be made. First, the lack of any demonstrable benefit passing from the defendants to Ms Comito to give her an incentive to engage in the conduct that she did makes the plaintiff’s case harder to prove. And in the earlier years when she was operating the Staff, Family and Friends scheme, her conduct at least won her the friendship and affection of those that she benefited and that she perhaps wanted to impress. Due to the criminal charges being brought against Ms Comito, the Court did not draw any Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference against any party for failing to call her.
Mr Robert Critchley. Mr Critchley was the only defendant to give evidence. Goway sought to make its case against Ms Tarbuck directly from her email correspondence with Ms Comito, her husband, Mr Critchley, and other persons and from surrounding circumstances.
Mr Critchley retired after an active and successful business career. He was 80 years old at the time of the hearing. He had attended the University of Adelaide, graduating with a Bachelor of Economics in 1969. He qualified as a certified practising accountant in 1970. He completed most of the units towards an MBA degree at the University of Melbourne. Between 1960 and 1986, Mr Critchley worked in the domestic and then the international banking industry, partly dealing in foreign exchange transactions. In 1986 he successfully started his own accounting firm, working until 1996 as the managing director of the practice entity Critchley and Associates Pty Ltd. The firm was subsequently restructured and renamed Critchley Wetterling O’Rourke.
Between 1990 and 1997, Mr Critchley worked as CEO and Chairman of DBM Australia Pty Ltd, an Australian franchisee of an international group, DBM Inc, in the business of assisting employees to transition to new roles. He was a major shareholder in this Australian franchisee company until he sold it back to its US licensor in 1995. Between 1997 and 2000, he worked as President of the Asia Pacific region for DBM Inc, based in Sydney but responsible for operations in 11 countries. Between 2000 and 2004, he worked as the International President for DBM Inc, based in Sydney but with responsibility for operations in 49 countries.
Since midcareer, Mr Critchley has had professional involvement through these DBM entities in the field of labour transition, a field often associated with corporate reconstructions. From the early 2000s, Mr Critchley authored three books on the principles and practice of labour transition including in association with corporate reconstructions. His broad banking, international and specialist labour related professional experience made him an attractive addition to boards in medium sized enterprises. He has been a member of the boards of some 18 such companies throughout his career.
As might be expected from his professional career, Mr Critchley was self-assured and confident in style when giving evidence. He had firm opinions about management, business behaviour and business ethics. He regarded himself as maintaining high standards of business conduct. Mr Critchley is a sophisticated businessman with a sound insight into finance, management, and the practical operations of many kinds of businesses and he showed just that expertise in his responses to questions.

Mr Critchley sets high performance standards for himself and expects them of others. He is used to navigating difficult business situations. He was not the least overawed by cross-examination, challenging counsel from time to time when he thought counsel’s questions were not formulated precisely enough for him to answer them.
Mr Critchley views his own conduct as righteous and ethical. He saw himself as an innocent deceived by Ms Comito all the way through from 2013 to 2018. This is indeed the correct analysis of his outlook for the first few years of his dealings with her. But he continued to see himself this way right to the end. As will be seen several factors, including the benefits he was receiving through her, blinded him to the accumulating signals from several directions that something was so seriously wrong with Ms Comito’s administration of Goway’s Staff, Family and Friends travel scheme that Ms Comito was probably running it as an unauthorised operation within Goway and misapplying its resources.
With some exceptions, Mr Critchley mostly gave credible answers that can be accepted when questioned about the period up to early 2015. But when being questioned about the period after then his answers often became evasive and less reliable. As a sophisticated businessman he was sometimes able to launch into a response which looked like an answer to a question but which he must have known did not engage with the real issue being put to him.
Mr Critchley’s affidavit evidence was presented throughout with the kind of detail that was fundamentally at odds with a witness who is trying to give evasive explanations of questionable conduct. He gave a franker affidavit in response to the plaintiff’s claim than do many defendants in his position. That may be attributed to his strong self-belief in his own innocence and the commendable thoroughness of his own lawyers in the well-presented case put on his behalf. He was keen to tell his side of the story to persuade the Court of his fundamental innocence in this affair. He did this plainly because of his belief that his position could be justified.
And as the Court’s analysis shows, for about the first 18 months until March 2015, it could be justified. But beyond that time his self-belief in the righteousness of his conduct and the generous benefits he was receiving from Ms Comito blinded him from critically evaluating some of Ms Comito’s conduct. As a result, he either downplayed or ignored increasingly clear signals that Ms Comito was probably conducting Staff, Family and Friends as an unauthorised operation inside Goway and misapplying its resources. As the evidence showed, eventually Mr Critchley was content deliberately to ignore this signals.
At times the Court was required to choose between conflicting evidence of Mr Atkins and Mr Critchley. Mr Atkins had his own credibility problems, and those choices are made on a case-by-case basis, sometimes Mr Critchley’s evidence being preferred but after mid-2017 quite often the Court prefers the evidence of Mr Atkins.
Mr Critchley was compellable to give evidence and was called to give evidence by Ms Tarbuck in her case and objected to giving evidence, rather than electing to give evidence in his own case. As a result of the taking of this course the Court granted him a certificate under Evidence Act1995, s 128 in respect of his affidavit evidence in chief, and his cross-examination avoiding the established restrictions upon the operation of that section: Song v Ying [2010] NSWCA 237.
Ms Lynette Tarbuck. Ms Tarbuck did not give evidence. At the time of the hearing, she and Mr Critchley had been together as domestic partners for about 13 years. She had known him before that, working for him in his business performing executive assistant functions. In this role, even before they became domestic partners, he came to respect and rely upon her judgment. The Court can infer from her email correspondence that while not having the business experience of Mr Critchley, she nevertheless appears to be highly efficient, collaborative, have good attention to detail and communicates with people and conveys information in a timely and organised way, including between Mr Critchley and other people. She was the main point of contact between the defendants and Ms Comito. She and Mr Critchley travelled extensively together around the world for business and leisure. In 2019 for example, just before the pandemic, she and he spent 16 weeks away from Sydney.
The parties contested what inference could be drawn from the unexplained failure of Ms Tarbuck, who was present in Court, to give evidence in her own case. The inference that the Court draws from her failure as a party to give evidence is that her evidence would not have assisted her case and the Court can make findings unfavourable to that party with greater confidence: Payne v Parker [1976] 1 NSWLR 191, at 201, G v H (1994) 181 CLR 387; [1994] HCA 48, at 391. Although there must be evidence that the party against them it is to be drawn is required to explain or contradict: Schellenberg v Tunnel Holdings Pty Limited (2000) CLR 121; [2000] HCA 18, at [51].
Ms Jodi Storey. Ms Storey is one of Mr Critchley’s daughters. She is a psychotherapist. She gave compelling and reliable evidence which the Court accepts. Her account of her interactions with her father about failed or failing travel arrangements organised through Ms Comito was starkly realistic. She had a good memory and could generally give a detailed account of events in which she had been involved.
Ms Storey’s introduction to the scheme came with her father’s imprimatur. She deferred to his superior experience in matters of business and finance. But she nevertheless had direct experiences of the failures of the Staff, Family and Friends scheme, which led her ultimately to discontinue its use. Faced with this disappointment, she commenced proceedings in the New South Wales Civil and Administrative Tribunal (“NCAT”) against Goway for the recovery of the money she had paid into the scheme.
Mr Critchley had a close relationship with both his daughters. Ms Storey came across to the Court in evidence as a warm person who had a close relationship to her father. This close relationship and her evidence indicated she shared with him the detail of her at times very unsatisfactory experiences with Ms Comito’s administration of the Staff Family and Friends travel scheme. The information that Mr Critchley’s daughters gave him is an important part of his overall knowledge bank about the scheme from mid-2017.
Ms Shari Fryer. Ms Fryer is Mr Critchley’s other daughter. Like her father Ms Fryer is accomplished in business. She gave evidence by AVL from Steamboat Springs in Colorado, USA where she lives and from where she conducts her business, which is also involved in the field of corporate reconstruction and labour transition.
She was well able to handle questions in cross-examination. She chose the words she used in her answers with the careful judgment of an accomplished businesswoman. She was quite conscious that words and anything imprecise or incorrect could disadvantage her. She took a more calculated approach to her evidence than her sister. The Court accepts her evidence of her interactions with her father and her dealings with the scheme. Like her sister, Ms Fryer has a good relationship with her father and that and her own evidence show she is likely to have shared with him the detail of all her adverse experiences with Ms Comito.
The combined knowledge of the, at times, alarming experiences that Ms Storey and Ms Fryer had with Ms Comito’s operations of the Staff, Family and Friends scheme from mid-2017 constituted an important addition to the burden of background knowledge that Mr Critchley brought to his dealings with Ms Comito.
In the end, Mr Critchley’s understanding of the Staff, Family and Friends scheme came through different knowledge sources: his own direct experience of Ms Comito, Ms Tarbuck’s experience and his daughters’ experience. To understand his state of mind at any time these knowledge sources must be aggregated.

Goway’s Business Structure and Ms Comito – 2006 to 2013

Goway’s core business was as an inbound tour operator. Most of Goway’s income came from coordinating the quoting, reservation, and confirmation of “ground” arrangements, that is the Australian land-based arrangements, for overseas based travel agents including Goway North America. Much of this core business was what is called in the travel industry Fully Independent Tours (“FIT”), which describes independent travellers who do not travel with groups, but rather who seek the assistance of agents to help them in designing their own itineraries and making the required accommodation and tour bookings. Goway’s largest non-related client was a German-based travel group, Best of Travel Group, which represented multiple travel agents in Germany, the Netherlands, Switzerland, Austria, and Belgium.
Goway first employed Ms Comito as a FIT travel consultant in February 2004. She was well liked within Goway, regarded as a hard worker, and became trusted by management. After 10 years, in October 2014, she was promoted to become Goway’s operations manager. The operations manager at Goway was responsible for its inbound tour operations including servicing its clients like Best of Travel Group. The operations manager supervised approximately 12 staff, who worked in the operations department of the business. In her capacity as operations manager, Ms Comito reported directly to Mr Atkins, the general manager, and was seated close to him in Goway’s Sydney office.
A relatively small part of Goway’s business operated as a retail travel agency, booking travel arrangements for members of the Australian public planning outbound travel from Australia. Goway did not have a retail shopfront and did not advertise its retail travel services. Reflecting its small component of Goway’s operations, the retail department consisted of the retail manager who reported to Mr Atkins. Usually only one retail travel consultant reported to the retail manager at any given time. Goway’s retail managers were Mr David Chipps between November 2008 and January 2016, and Ms Carrie Bell between January and December 2016. There was a gap in this position in the first half of 2017. Ms Comito was promoted to the position of retail manager in July 2017. Her primary role as retail manager was to maintain and expand Goway’s retail client base, and to supervise the retail travel consultants employed by Goway. She served in this role from July 2017 until December 2018, when her services with Goway were terminated.
In its retail operations Goway did not directly provide flights or accommodation to customers. Goway had relationships with third-party suppliers of hotels, tours, cruises, and flights. Mr Atkins instructed his retail staff to book services through these operators and, once that had been done, to enter those services into Tourplan, Goway’s enterprise software operating system. Mr Atkins required his retail staff, including Ms Comito, to invoice retail customers for the cost of the services together with a small commission and to collect payment before issuing tickets to them.

Goway’s Staff, Family and Friends Travel Scheme – 2006 to 2008

The Staff, Family and Friends travel scheme was not a fictitious creation of Ms Comito. It began as a genuine staff loyalty scheme to regularise previous informal arrangements within Goway and to take unnecessary pressure off the retail department in the booking of staff travel at discounted rates. As Mr Atkins’ own introductory internal email to staff on 11 August 2006 stated, Goway “need[ed] to put in place a policy for all staff, family and friends travel so it becomes more formalised as [the retail department] are extremely busy”.
Goway had been cementing staff loyalty and promoting staff retention with favourable travel arrangements for some time. But those arrangements had become administratively untidy, and Mr Atkins aimed to formalise them into a set of policy rules. Mr Atkins’ 11 August 2006 email went to all staff members under the heading “Staff, Family and Friends Travel Arrangements” and announced the following eight-point policy:

“1
   Staff are able to access our nett nett rates, except if paying by card

then fees need to be added.
2   Please request your travel through Sharon.
3   Payment should be received prior to travel for friends unless agreed to by the General Manager.
4   Payment for staff bookings need to be made by the end of the travel month, unless prior arrangements are made with the GM.
5   For any domestic air travel on Jetstar or Virgin, it is best for everyone to book and pay directly unless you are travelling on Goway business.
6   The published airfare is applicable for family and friends as there is only a 5% margin or less.
7   For hotels, tours, packages, cruises family are to be charged nett plus 5% and friends nett plus 10%.
8   Family and friends must pre-pay before tickets can be issued.”

Mr Atkins’ belief was that this was a reasonable scheme, given that Goway and the industry generally paid staff relatively low salaries and Goway’s staff members were interested in travel discounts. The cost of the scheme to Goway was clearly financially contained. It was anchored to published airfares, providing defined discounts to staff of 5% from those airfares. Mr Atkins explained that 5% was the maximum commission margin usually available from airlines on ticket bookings. Travel agencies have more margin available on ground arrangements such as accommodation and car hire. In this policy the discount on the ground arrangements was limited to nett plus 5% for family and net plus10% for friends.
In August 2006 Mr Atkins had a secretary working for him, by the name of Sharon, who would monitor which staff members were accessing the scheme. She would report back to Mr Atkins. Sharon later left Goway and the scheme’s administration was dispersed to the manager of the staff member who was seeking to access the scheme, generally either the operations manager or the retail manager. Those two managers in turn were expected to report to Mr Atkins from time to time about the operation of the scheme.
This change, taking the scheme away from Mr Atkins’ own close superintendence and decentralising it proved to be one of the scheme’s weaknesses. Over time, this weakness was ultimately compounded by other factors including, a lack of tight supervision of scheme usage by staff and of access to the scheme by friends and family members, a failure to rein in high scheme debt levels, and a lack of elementary fraud controls by a requirement for sign off on benefits by more than one person. But these problems did not emerge until later.
When Ms Comito became operations manager in 2014, by virtue of that position she had the authority to determine which of the staff members reporting to her and their family and friends could have the benefit of the scheme. From as early as 2013, she began to redesign the scheme to be far more generous than the original August 2006 eight-point policy, offering a range of travel services discounted below retail market value and below the discounts contemplated by the August 2006 eight-point policy.
In June 2008, Mr Atkins updated the procedures of the scheme to minimise its internal administrative burden on Goway staff and to ensure that Goway’s retail customers still had priority over staff, family and friends using the scheme.
The scheme later changed its name to “Family and Friends”, the change being of no special significance. For convenience in these reasons the various versions of the scheme are also often referred to by the acronym “SFF”. And the channel through which it appeared to be administered on behalf of Goway is often simply referred to as “staff travel”.

Mr Critchley meets Ms Comito – July 2008

Mr Critchley first met Ms Comito through his accountant, Mr Steven Waite. Mr Waite was a partner at the accounting firm, Crowe Horwath, which had provided accounting services to Mr Critchley since about 1983. Mr Critchley respected the quality of Crowe Horwath’s accounting work and had recommended the firm to many of his business acquaintances and friends over the years. Mr Waite became a partner of the firm in 2006 and undertook accounting tax and financial advisory work on Mr Critchley’s account with the firm.
By 2008, Ms Comito had become Mr Waite’s domestic partner. Mr Waite introduced Mr Critchley to her in July 2008 at a business function held by Crowe Horwath. From 2009, Mr Critchley and Ms Tarbuck became good friends with Ms Comito and Mr Waite, mixing socially with them, including over dinners and on sporting occasions. Mr Critchley and Ms Tarbuck were guests at Mr Waite’s and Ms Comito’s wedding in 2010.
Mr Critchley and Ms Tarbuck’s relationship with Mr Waite is important background to later events. Mr Critchley respected Mr Waite’s skill and judgment. He also knew that Mr Waite was familiar with Goway’s internal structures and practices through his relationship with Ms Comito. When Mr Critchley became puzzled about Ms Comito’s anomalous conduct, Mr Waite was one of the people to whom he turned for reassurance about her work at Goway, which Mr Waite gave.

Information Exchanged Between Mr Critchley and Ms Tarbuck

Much of the correspondence between Ms Comito and the defendants took place between her and Ms Tarbuck, who was not called to give evidence. Some but not all the correspondence was copied to Mr Critchley. But Ms Tarbuck and Mr Critchley were close collaborators on their travel plans, and in the Court’s view, she kept him informed of all her important communications with Ms Comito. As he explained, “she’d show me, definitely, if it was – she felt it was important”.
A strongly contested issue is whether Goway has proved Mr Critchley’s knowledge of communications that were made solely by Ms Comito to Ms Tarbuck. Even though Ms Tarbuck did not give evidence, the Court accepts Mr Critchley had an easy communicative relationship with her, in which he trusted her to arrange their joint travel and to inform him about all the important details. The defendants submit that Goway should be required strictly to prove that Mr Critchley saw each of Ms Tarbuck’s email communications with Ms Comito and unless that can be demonstrated, the knowledge in them cannot be attributed to him.
This is too artificial an approach. It does not acknowledge the reality of their relationship. Mr Critchley praised Ms Tarbuck’s organisational and communication skills and spoke of her with admiration, respect, and affection. The way he spoke about her gave the Court the impression that there was strong two-way communication within this couple who shared everything of importance to one another. He explained they long had, and continued having, access to one another’s emails due to a business arrangement they created, when she was working for him as his executive assistant. At one point he agreed that he and Ms Tarbuck “have nothing to conceal from each other”.
The Court can confidently infer from this evidence that Mr Critchley knew from his discussions with Ms Tarbuck and her showing him emails of significance from time to time, everything of importance about Ms Tarbuck’s communications with Ms Comito about their mutual travel arrangements, in which he had a strong interest. Goway does not have to prove that Mr Critchley was shown individual emails to establish his awareness of the contents of her communications with Ms Comito. The Court infers for example from the Court’s assessment of their relationship that Ms Tarbuck told Mr Critchley about the limits on communications of Ms Comito’s office with anyone else at Goway, indeed he followed the same practice. He was also aware from Ms Tarbuck and from what emails she showed him that Ms Comito preferred communications on her Hotmail email address, although he did use Ms Comito’s Goway email address from time to time.

This conclusion is not placed upon some theory of imputed knowledge or agency between the defendants. It is based on the Court’s findings as to the nature of their relationship, the number of Ms Comito’s and Ms Tarbuck’s emails copied to Mr Critchley, the fact that he had visibility of her emails if he wanted to and the extent to which Mr Critchley from time to time chooses to intervene directly in or take up communications with Ms Comito. The defendants were critical in final submissions of the limited cross examination of Mr Critchley about which emails were specifically drawn to his attention. He was taken to several sample emails in 2013 and 2014. It is possible he did not see some of these early emails in these years as he says. But in the later years from 2015 on he is using the travel obtained through Goway himself more often or it is being arranged for his daughters. The reasons for his interest in and therefore knowledge of Ms Tarbuck’s communications with Ms Comito becomes greater from 2015.

The Defendants Become Goway Retail Customers – 2013 to 2014

Mr Critchley and Ms Tarbuck enjoyed travel. They had long been avid travellers. Mr Critchley acquired a taste for international travel when he was a banker. This couple had a weakness for seeking out luxury holidays at the best discounts, flying business and first-class on upgrades, and using frequent flyer points to fund their leisure choices. They were members of the Chairman’s Lounge operated by Qantas, until they began to take up the flights offered by Ms Comito, which were often with other airlines. Mr Critchley’s credit was attacked by Goway based on evidence that he gave about the Chairman’s Lounge but that did not damage his credibility. The defendants were members of a club called Luxury Escapes, which offer discounted luxury resort accommodation. They were very interested in what Ms Comito and Goway had to offer them in travel discounts.
Prior to 2013, Mr Critchley and Ms Tarbuck had booked their travel services with Corporate Travel Management Pty Ltd (“CTM”), an independent all-inclusive travel booking and management service. But sometime in 2013 at a mutual social occasion, Ms Comito suggested to Mr Critchley that he and Ms Tarbuck “try our retail arm”. This conversation coincided with Mr Critchley and Ms Tarbuck’s booking contact leaving CTM. So, they decided to try booking their retail travel through Goway.
They quickly became Goway retail customers. Initially they dealt with Goway’s then retail manager Mr Chipps. They were frequent travellers and principally made their bookings through Mr Chipps until Ms Comito’s offerings largely displaced his services. Mr Chipps did not supply them with discounted travel services. But occasionally when he was away, Mr Critchley and Ms Tarbuck booked their travel through Ms Comito. Mr Chipps left Goway in 2016 and then they booked exclusively through Ms Comito.
Goway’s case contrasts the defendants’ bookings with Mr Chipps and Ms Comito. Goway contends in summary that the defendants’ dealings, mainly through Ms Tarbuck, with Mr Chipps during 2013 and 2014 were plain examples of the defendants making unremarkable international travel bookings with a travel agent at commercial rates in the ordinary and unremarkable course of travel agency business.
And there is much to be said for this. During this period the defendants booked through Mr Chipps international return flights from Sydney as follows: to Greece for two in October 2013 for $14,701.26; a return economy flight for one to Colorado in December 2013 for $3,835.88; a return premium economy flight to LA in March 2014 for $5,338; return business class flights to Thailand in August 2014 for $3,798.00 each; return business class flights to Italy in October 2014 for $16,624; and a return business class flight from to California in December 2014 at a cost of $9,087. The Court infers that their booking and use of these flights gave the defendants a realistic sense of both the market prices of such international flights being offered through Goway’s retail arm and a sense of the commercial practices that Goway ordinarily employed when customers were making bookings.
Those Goway commercial practices involved Mr Chipps doing the following: using Goway (@Goway.com.au) email addresses for communications; using Goway logos with invoices and correspondence; selling individual (single or return) tickets for specified journeys; issuing tickets immediately upon the payment of the price of the ticket; and offering tickets at publicly available prices which could be compared with the prices offered by other travel agents. The offers that Ms Comito began to make from late 2013 contrasted with these practices. She justified the differences in these practices on the basis that the offers she was making were not retail offerings but came through the Staff, Family and Friends travel scheme which she was administering.
One of the early questions to be addressed is whether her explanations of those differences should have been accepted by honest and reasonable persons in the position of the defendants or whether those differences would have indicated that she may have been acting against the interests of Goway. This involves examining the profiles of the offers that she began to make in 2013 and 2014. They show that Ms Comito was calculating, patient and often meticulous in cultivating her bond of friendship with Ms Tarbuck and the defendants’ weakness for fine travel at cheap prices.

Ms Comito Probes the Defendants – September 2013

Amid the defendants’ regular dealings with Mr Chipps, on 26 September 2013 Ms Comito offered them a “special” opportunity, through what she described as Goway’s “staff travel” section. The deal would permit the defendants to stay at the Wolgan Valley Resort in the Blue Mountains for Christmas in July 2014 for $250 per night. It was proposed that the defendants stay at the resort with Mr Waite and Ms Comito at a price that was a very significant discount on the commercial rates then being offered by this resort.
This introductory offer had a dual purpose from Ms Comito’s perspective. She was testing the defendants’ inclination to accept discounts through her private communication channels away from the supervision of Mr Chipps and the broader Goway retail structure. This first email had several features which were to repeat themselves over the coming years and which differed from the defendants’ dealings with Mr Chipps. It said:

“I have negotiated this special with Walgan directly as we are return guests. This is not through our Retail division at work this is separate and through our staff travel. If you were to book through Dave in retail they would charge you full rate so I have not told them that I am offering you this as you are one of their clients :) so appreciate if we keep this to ourselves.
If you and Bob would like to attend please let me know and I will hold your spot.
The only thing is you need to prepay now and you will only get a receipt until we pick the dates. The cost is $250pp per night as we are return stay guests. Steve and I will be going 3/9.
If you are interested let me know, if not no problems.
Just so you know I use this email as my work email is a central reservation that all staff can access so prefer my friends and close clients use this email.”

This initiating email was cleverly constructed to test the defendants and to set different expectations for their future communications with Ms Comito from what they had experienced with Mr Chipps. It explained why Ms Comito’s private Hotmail email address was being used because her work email was “a central reservation that all staff can access”, implying it was inconveniently used for general retail booking purposes. This email made quite explicit for this first transaction that (a) Ms Comito was deliberately concealing this offer from Mr Chipps – “so I have not told them that I am offering you this as you are one of their clients”, and (b) should the defendants choose to communicate about the offer with Mr Chipps they were likely to lose the advantage it conferred – “if you were to book through Dave in retail they would charge you full rate”. Communicating only with Ms Comito was the way to secure the attractive discount. The offer also set expectations of a lower standard of service where precise booking dates, the issuing of receipts and other formalities would be delayed because this was staff travel.
This 26 September 2013 email raises obvious questions: that if Ms Comito was legitimately sharing with the defendants a benefit that was available to her as a staff member of Goway, why did it need to be kept from Mr Chipps; and, Ms Comito’s work email did not look like a central reservations or other similar kind of generic email address because it actually used an abbreviation of her name followed by “@goway”.
The defendants did not see what Ms Comito was doing. This is understandable. They were the unsuspecting victims of Ms Comito’s wiles in playing upon their weakness for a good travel deal.
Goway submits that even at this early point that reasonable people in the position of the defendants would have had “immediate concerns” about Ms Comito’s authority on behalf of Goway. As will be seen in the legal analysis later in these reasons, the conduct of a reasonable person in the position of the defendants is the touchstone of whether they were entitled to rely upon Ms Comito’s ostensible authority to bind Goway.
Goway’s submissions expect far too much of human nature at this early point in the narrative. Customers of travel agencies are not detectives. They are not looking for potential fraud or anomalous behaviour when dealing directly with people held out as travel agency employees. Even when it appears anomalous, behaviour takes time to recognise, absorb, process, and then to be questioned amidst the general pace of life. Fraud often free rides on people’s desire for financial advantage. Reasonable people in the position of these defendants would be unlikely to have had sufficient reason to question at this early time that Ms Comito was not acting on Goway’s business.
Neither Mr Critchley nor Ms Tarbuck subjectively interpreted Ms Comito’s conduct up to this time in that way. It is not until later that they needed to bury their growing doubts about Ms Comito in rationalisations. The defendants' closing submissions also rightly point that this email should properly be construed as an email between friends, not some formal email between parties who do not know each other or have a business relationship. This is evident from the language used. Their submissions also contest a point said to be made by Goway commencing with this email, that what Ms Comito describes as "staff travel" was not legitimate. There was undoubtedly a staff travel operation within go away. The real question that arises later is whether Ms Comito's purported forwarding of emails from staff travel was real.
A realistic and objective view of the defendants’ circumstances at this time must also recognise the power of three implicit influences which reassured them for a time that they could rely upon Ms Comito’s communications being a legitimate part of Goway’s business and that they could rely upon Ms Comito’s integrity.
First, Ms Comito presented as a trusted, experienced, and long-term employee of Goway in a position of managerial responsibility. In that role, she appeared to operate the SFF which continued to deliver tickets and accommodation through Ms Comito’s apparent capacity to direct the resources of Goway. And in that role, Ms Comito put in strong effort on behalf of the defendants, requiring constant engagement with detailed travel booking arrangements. Her work only later showed signs of unreliability.
Second, Mr Critchley had years of experience in corporate restructuring and employee management. He was entitled to assume that the business and employee structure that Goway presented to him had, absent continuing unusual behaviour on Ms Comito’s part that was obviously contrary to Goway’s interests, well-developed internal fraud controls. And he was entitled initially to rely upon the integrity of the employees that Goway had judged fit to be appointed to represent it to him. His first thought from his corporate experience is not likely to have been that Goway’s customers, rather than Goway itself, should be scrutinising its employees for fraud. But over time his broad business experience should have sensitised him, or a reasonable person in his position to the anomalies that began to emerge with Ms Comito’s behaviour.
Third, Ms Comito was married to Mr Waite, who was a trusted long-term professional adviser of the defendants. Mr Critchley’s evidence revealed a comfortable but respectful professional relationship in which he placed deep financial reliance upon Mr Waite. He later reassured the defendants about Ms Comito’s role within Goway and with the SFF. A man who the defendants completely trusted with their financial affairs, to be precise, professional, and efficient, had himself expressed a public judgment that Ms Comito should be his life partner in marriage. His marriage to Ms Comito brought with it the deeper implication on which the defendants were entitled to act: that if they were prepared to accept his continuing judgment and advice in respect of their financial affairs, then they should also accept that he had probably deployed those same character traits in his choice of life partner. Taking advantage of that relationship, this first email from Ms Comito was copied to Mr Waite. But even despite this relationship, the defendants were astute enough to be aware that Mr Waite’s opinion of his wife was likely to be biased.
There is danger here of polluting the Court’s judgment of the reasonableness of the defendants’ conduct with the impermissible influence of hindsight. Their conduct should be assessed by how they were equipped at the relevant time to interpret what they knew. Goway’s submissions tended to overlook this feature at the early stages of this complex factual narrative.
Ms Tarbuck responded to this first email as well as Ms Comito could have hoped, replying as follows:

“All good here and thanks for your note and mums the word with regard to mentioning this to anyone. We’ll also be mindful of the personal email address.
How are you going this week?
Thanks for the kind offer and I am sure we will take it up. We’ll just have a chat to Bob this afternoon and come back to you. Thanks so much for including us.
I will revert.”

Mr Critchley explained in his affidavit that he and Ms Tarbuck questioned Ms Comito about the use of her Hotmail address. He explained that Ms Comito came up with “excuses” about using the Hotmail address on one occasion saying that she did not “want to get the family and friends specials muddled up with my commercial work”. Goway submits this evidence should not be accepted.
The Court does not find Mr Critchley’s evidence on this subject persuasive for at least four reasons. First, the tone and substance of Ms Tarbuck’s reply email is quite the opposite of Mr Critchley questioning Ms Comito’s use of the Hotmail address. Secondly, Mr Critchley’s cross-examination on the subject was not persuasive, as his memory of questioning Ms Comito about it was poor. Thirdly, none of the extensive email evidence supports Mr Critchley questioning Ms Comito’s use of the Hotmail address. Fourthly, Mr Critchley’s evidence is different from the excuse that Ms Comito uses in her email that the objective was to keep information away from Mr Chipps because he would not give the defendants a discount.
The defendants paid $1,500 for three nights at this resort. The Court does not accept the defendants did not know this was a significant discount on the market price of accommodation at the resort. Goway paid $3,330 for the defendants’ three night stay at the resort. The tone and substance of Ms Tarbuck’s reply shows an awareness of a steep discount. Ms Comito’s email had given a hyperlink to the resort’s website, where its market prices could be verified.
But despite these doubts about the defendant’s evidence, it was still too early for honest and reasonable people in the position of the defendants to get a sense that Ms Comito was working against the interests of her employer or was running her own unauthorised operation inside Goway. A general theory was open to satisfy honest and reasonable people that Goway could provide a quota of special benefits to staff, who could share those benefits with friends, provided the overall quantum of the benefits being enjoyed by the particular staff member did not exceed reasonable limits, causing further questions to be asked.
Mr Critchley justified his belief in the legitimacy of the SFF scheme by comparing it to travel schemes offered by large airlines to their staff. The Court accepts that the defendants had knowledge of these schemes and that these schemes could offer 90% discounts on the face value of airfares. The Court accepts that some of the defendants’ thinking at this early time was influenced by this knowledge and that even keeping some transactions away from Mr Chipps could be rationally explained as Ms Comito giving part of a limited quota of Goway’s available tickets out to the defendants and Mr Chipps potentially wanting to distribute the limited quota differently and having the power to do so. The defendants have not used this explanation overtly, but comparisons with these airline schemes were referred to by Mr Critchley in evidence and this logic was part of the background to their thinking. But this explanation can only go so far. When the benefits that the defendants were receiving became so large they could not possibly be explained by benefits related to kinds of travel scheme offered by airlines, or contained other anomalies, the circumstances called for honest and reasonable people in their position to start asking more questions.
Finally, the defendants’ closing submissions point out there is no evidence that Mr Critchley received the email of 26 September 2013. He is not a copy addressee, but Ms Tarbuck is likely to have discussed it with him.

Discounted Airfares to Europe – December 2013 to May 2014

On 17 December 2013, whilst emailing Ms Tarbuck further details about the Wolgan Valley Resort from her Hotmail address, Ms Comito began to seed another vaguely described “special” offer into her correspondence, saying “Staff travel head office sent a business class USA special and it prompted me to email re Wolgan and special. Let me know”.
Ms Tarbuck had a weakness for “special” offers. She replied to the email account addressing the details about the Wolgan Valley Resort, and then continuing, “Separately, are you able to send me the details (or ask David) re-those business class deals to the USA please?” This shows that at this stage Ms Tarbuck assumed that the deals were also known to Mr Chipps and that whatever exclusivity she was getting Mr Chipps was aware of it. This was a reasonable assumption at this time, given what Ms Tarbuck knew.
Following Ms Tarbuck’s email, she and Ms Comito discussed a business class airfares offer, the content of which may be inferred from an email Ms Comito sent to Ms Tarbuck on 20 December 2013 from her Hotmail address.

“As discussed this is not through your normal contact and you cannot pass the below info on.
This is a family/friend special and I am doing this for you if you wish to proceed as a friend.
The info I received for the special is USA Business Class and Europe Business class.
USA - $2000 per person not valid for travel until 01st July 2014 valid for 3 years (includes 2 internals) additional can be added for $100pp
Europe - $2200 per person not valid for travel until 01st September valid for 3 years (includes 2 internals)”

Ms Tarbuck replied to Ms Comito at her Hotmail address about this offer saying she was “very excited” by it.
Goway submits that as Ms Tarbuck did not give evidence that whatever she would have said about the conversation with Ms Comito that is referred to in this email, it would not have assisted her case. That can be accepted. But the Court is not persuaded by Goway’s submission that this email or the conversation associated with it put Ms Tarbuck on inquiry about whether Ms Comito’s authority to make this offer existed and should have caused Ms Tarbuck to contact Mr Chipps.
This email and Ms Tarbuck’s earlier email are consistent with the idea that Mr Chipps may have been aware of the general class of offer being made but that Ms Comito was including the defendants in her quota of friends in the staff scheme which Ms Comito wanted to keep as a limited class – “you cannot pass the below info on” – of her closest friends. The correspondence is consistent with the idea of some staff competition for a limited pool of such tickets.
The Court does not accept Goway’s submission that the defendants must have automatically been put on inquiry as to Ms Comito’s lack of authority from several features of this offer. Those features that Goway emphasised were the following: the steep discounts embedded in this offer for European business class airfares, the failure to immediately issue tickets but to delay them and to issue tickets for the same price over three years despite uncertain future changes in the air travel market, from the lack of public availability of such offers elsewhere, and from the lack of terms and conditions.
Goway’s submission expects too much vigilance at this stage from the honest and reasonable travel consumer in the defendants’ position. The pricing discount in these offers was generally consistent with the 90% discount available through airline staff travel schemes of which the defendants were aware. The unusual features of the offer the delayed issue of acquired tickets, ticket price consistency over three years and the lack of public availability of this offer were not so implausible that they demanded inquiry at this time. Mr Critchley himself said that he had experience pre-COVID of business class airfares to Europe and the USA for as little as $3000 on Fiji airlines, Korean Airlines and Asiana. Although he did concede that having five years to use them was new.
But the defendants were slowly being seduced into thinking that they were being admitted to an exclusive club run by Goway, where they could enjoy a quota of benefits available to a limited number of Goway staff, including Ms Comito, from the large turnover of Goway’s substantial wholesale and retail operations. The fact that the tickets were being offered in a manner different from tickets that were publicly available was not strongly inconsistent with the idea that Goway’s staff travel scheme had its own informal procedures and that Goway could probably purchase bulk wholesale airline tickets a long time in advance. The late issue of the tickets Ms Comito was flagging here, was also generally consistent with the possibility that Goway was still deciding which of the wholesale tickets it was going to sell by retail and which it was going to allow to be distributed through the staff travel scheme. Whilst this offer was still generally commercially plausible, it did not demand that the defendants make further inquiry of anyone else at Goway.
This conclusion is not disturbed at this time by Ms Comito’s next email on the subject of this offer sent to Ms Comito on 20 December 2013.

“I just stress to that you can’t pass on as I will get told off….
Also, you must be clear that you only receive a tax invoice from staff travel and a tax receipt and that is all you get until you book your trip.
…
Any questions that you have or may arise send me an email here and I will answer, if I do not know the answer I will email staff travel.
There is no flyer etc as the info is in our internal travel system.
These are through our head office ticket consolidator so not all travel staff at other organisations get these or airline staff get different benefits again. Just want to be clear on this too as our company encourages us not to discuss and WE definitely can not have people we sell them to on sell…”

In addition to reminding Ms Comito of the informal procedures of staff travel, this email emphasised the exclusivity and limited availability of the offer which meant that on sales were inconsistent with the scheme only applying to Ms Comito’s friends. But Ms Comito’s email did promise “a tax invoice from staff travel and a tax receipt”, an assurance of normal commercial behaviour that would later be tested in various ways.
The terms of Ms Comito’s offer of these discounted business class airfares to the USA and Europe evolved over the next few months. In February 2014 the three-year validity period being offered for the $2,000 business class airfares was extended to four years from January 2015, on the basis that a cruise would also be taken by the nominated staff traveller “this year”. Ms Tarbuck indicated to Ms Comito that she wished to reserve three European and three USA business class tickets for her and Mr Critchley. Then the validity period was extended to five years. Odd though these alterations were, to the objective observer and to the defendants, on their own at that point they did not add salient elements of inconsistency to Ms Comito’s overall story and the defendants noticed nothing amiss from the alterations.
Elements that tested the coherence of Ms Comito’s story began to emerge in April 2014. In that month the correspondence makes clear that Ms Tarbuck had already received a suggestion from Ms Comito that the staff travel scheme might allow the on selling of some of the discounted Europe/USA business class airfares on offer. On 11 April 2014, Ms Tarbuck emailed Ms Comito’s Hotmail address explaining she could assist in distributing additional discounted tickets:

“If there is no one else, we can probably do this for you to a reliable friend. We haven’t spoken to anyone yet but can do.”

Ms Comito responded confirming that she was prepared to include “friends of friends” to benefit from the SFF scheme:

“If you are happy to ask them and they understand how it works that would be nice of you. Just need to make sure they totally understand how it works and that they must book with me etc as I would put them under your nomination in my system. xoxo”

Goway submits that this was inconsistent with Ms Comito’s original restriction banning on-selling of these tickets. But reasonable people in the position of the defendants would not necessarily have seen the extension of the class to “friends of friends” as an arresting change from the original description of the discounted Europe/USA business class airfares offer. The defendants were only going to introduce people who would be “under your [the defendants’] nomination”, and reliable in not distributing information about the discounted Europe/USA business class airfares and thereby generating unnecessary competition with other staff for these attractive but limited availability tickets.
On 15 and 16 April 2014, some confusion as to whether the defendants would take up 12 or 16 of the discounted Europe/USA business class airfares was resolved in favour of 16 but no invoice had yet been issued. Nothing happened to advance the defendants’ acquisition of these tickets for another month. Then quite independently, on 26 May 2014, Mr Chipps quoted the defendants prices for return business class airfares to Europe ranging from $6,600 to $9,900. In response Mr Critchley (apparently using Ms Tarbuck’s email) thanked Mr Chipps and said to him, “we will digest and come back to you”.
This exchange appears to have prompted Ms Tarbuck to email Ms Comito with concerns that she had not yet received any invoice or other confirmation of their entitlement to the 16 discounted Europe/USA business class airfares, “I just thought I should let you know, I still haven’t received anything and know we have to pay by Friday”. Ms Comito responded on 28 May 2014 complimenting Ms Tarbuck, quickly apologising, and complaining about the pressure on her, in a pattern which would soon become far more frequent:

“Hi Lovely,
Sorry, just back in. Asked accounts to resend so you are definitely getting today from me.
They said you can have extension if you require.
Will confirmed by COB that you have received. Just off into meeting. X”

Ms Comito had a well-developed strategy to close off correspondence and prevent further queries by explaining that she was busy, stressed with a difficult business situation, or going into meetings. This strategy was usually crowned with expressions of close affection for her main point of contact, Ms Tarbuck. It is an early example of a dual pattern that was to persist in which (a) extensions, indulgences and waivers were offered subverting the conditions originally stipulated for by Goway, and (b) promises of confirmation or communication were made but not kept.
This was directly illustrated the next day. Ms Comito emailed Ms Tarbuck from her Hotmail address, explaining why Goway had not sent an invoice or other confirmation of the defendants’ purchase of the 16 tickets. Ms Comito’s email of 29 May 2014 was as follows:

“Hi Lovely,
Just my usual little follow-up email.
They have just sent an email to entire staff advising that all invoices will be sent from this afternoon up until tomorrow.
So, if I get before 5 pm today you will have, otherwise it will be tomorrow.
Due to the delay, they have given payment extensions… So, you can either pay next week or have an additional week.
This info will be on the email.
…
Lots of love (ps the accounting here is slack but the staff travel booking is a lot more reliable)
We have so much going on here of late…xoxo”

The next day, 30 May 2014, Ms Comito emailed Ms Tarbuck information about staff travel procedures with an emphasis that it “is really important” that the defendants “feel comfortable with booking with me as staff travel is very strict on this”. The reasonable consumer would perhaps have started to wonder why this was so strict as a matter of staff travel policy, as the plausible rationale for communicating only with Ms Comito was that she was seeking to husband her own quota of entitlements for the benefit of the defendants, without having other managers interfere, such as Mr Chipps. This could hardly be a matter of “staff travel policy”. Once again this was early days, and a realistic view of the defendants’ position would not have had them asking all these questions at the beginning. Nor would they or a reasonable person in their position necessarily have noticed that the author of the staff travel policy information was expressed to be “Retail Manager Staff Travel”, an unnamed and therefore an uncontactable person. Whilst the vagueness of this would not necessarily have leapt out at the defendants on 30 May 2014, it was information that would have added significantly to the concerns of an honest and reasonable person who was trying to understand Goway’s commercial rationale for its SFF scheme in early to mid-2014.
The defendants finally received a tax invoice from Ms Comito on 30 May 2014 for eight tickets to Europe for $2,000 and eight tickets to the USA for $2000. In hindsight the tax invoice was anomalous in many ways. Carrier information was missing. Whether the tickets were single, or return was not specified. The destinations they covered was unclear. But importantly the 20 December 2013 email had indicated that the discounted flights to Europe were $2,200 per person. But in a mistake favouring the defendants by $1,600, the invoice only billed flights to Europe at $2,000. The defendants did not query this error. But strangest of all for a commercial organisation, this invoice did not specify any payment details containing information about Goway’s bank account for payment. Nor did it set out or say where the reader could find the “Payment: Agreed Terms and Conditions” on the invoice.
But the Court accepts Mr Critchley’s evidence at least to this point as reasonable, that he was prepared at times to take the risk of acting without full paperwork as that is what he had done during his foreign exchange banking career when seeking to secure a good deal from a trusted counterparty.
The Court also accepts Mr Critchley’s evidence that he had a conversation with Ms Comito about the offering of these tickets, in which she explained that Goway had “purchased lots of business class airfares to Europe and the USA for wholesale but the buyer reneged on the purchase. Goway is now offering the discounted tickets to staff for $2,000 each ticket, but not everyone can afford it.”
Whilst it might have been wondered at the time why Goway did not resell the tickets that had been destined for the defaulting purchaser at their face value, promoting staff loyalty also makes commercial sense and was a plausible explanation for the availability of these tickets. But Ms Comito’s explanation of promoting staff loyalty only goes so far – to account for the availability of a limited number of discounted business class tickets to two general destinations.
Ms Comito finally issued an amended invoice for the 16 discounted business class airfares on 11 June 2014 including Goway’s payment details. And on 13 June Mr Critchley paid Goway. But Mr Critchley’s credit card was debited for only $30,000, not $32,000. Ms Comito explained this further error in the defendants’ favour as a Goway accounts error and that Goway would charge the defendants the additional $2000 shortly. But Goway did not soon follow up to demand the shortfall, an indication that such payment shortfalls arising under the SFF travel scheme were not being reconciled within a functioning accounts department. Mr Critchley eventually paid the remaining $2,000 in August that year.
These persistent errors in the defendants’ favour did not yet bespeak unauthorised business activity on Ms Comito’s part but they were cumulative anomalies. The Court does not accept Mr Critchley’s evidence that before 2020 he had seen business class airfares to Europe offered for as little as $3,000. Had that been true the Court expects that detailed objective evidence of that kind would have been led in the defendants’ case. But heavily discounted though these tickets were, they are still within the realm of the commercially plausible when framed as limited staff incentives, like the offerings airlines make to their staff.
But in growing tension with that possible rationale was Ms Comito’s increasing willingness to allow the defendants, and mostly Ms Tarbuck, to introduce other friends into the benefits of the SFF scheme. And once that was allowed it was very difficult to understand the rationale for what Goway was doing commercially through the SFF, if it did not also permit, indeed encourage, these “friends” to be the object of general contact with Goway sales personnel. They would have been prime targets for Goway marketing. Not much thought was required for a person as sophisticated as Mr Critchley to work this out. But Ms Comito had introduced him to SFF and the discounted business class Europe/USA package so cautiously and strategically that his lack of reaction was still understandable as the conduct of an honest and reasonable person dealing with Ms Comito as Goway’s agent.
Mr Critchley and Ms Tarbuck eventually used only eight of the 16 airfares from the discounted business class Europe/USA package. The defendants had a surplus of cheap travel options after Ms Comito offered the platinum travel pass to them in November 2015. In any final accounting a question will arise whether the $16,000 in respect of these eight unused airfares should be credited against any sums due to Goway. The Court concludes later in these reasons that all transactions that the defendants undertook at this time were acquired within Ms Comito’s ostensible authority. Goway was continuing to clothe Ms Comito with authority to act on its behalf. She continued to work at Goway apparently controlling a staff travel portfolio of functions in which she actually delivered airline tickets and other travel services apparently on behalf of Goway.

The Silverseas Cruise – December 2013 to March 2015

In parallel with the offering of the discounted business class Europe/USA package, on Christmas Eve 2013 Ms Comito first suggested to Ms Tarbuck that Goway could secure 70% discounts on cruises with Silverseas Cruises, an international cruise operator, with the offer commencing for cruises in 2015. Ms Comito provided little information on this offer from Silverseas. Ms Comito’s follow-up correspondence on the subject indicated this was apparently another staff travel opportunity.
As with the discounted business class Europe/USA airfare package, anomalies began to emerge about this Silverseas cruise offering. Ms Tarbuck wanted to book a cruise ex Vancouver. Ms Comito was slow to issue invoices and confirm a clear cruise date and timetable, so Ms Tarbuck had to chase her to arrange payment to take advantage of this offer and secure a definite booking, as the defendants were to travel from Vancouver departing 9 July 2015. Ms Tarbuck did have cruising experience and Ms Comito’s management of this booking was undoubtedly anomalous. The defendants did not have clear booking evidence showing their purchase of the cruise until a month out from the planned departure date.
The defendants made two more major travel commitments with Ms Comito before the end of 2014, one to Queensland and one to the Galapagos Islands. In June 2014, Mr Critchley and Ms Tarbuck accepted another special offer from Ms Comito on flights and accommodation at the Qualia Luxury Resort on Hamilton Island and on Hayman Island in the Whitsundays. On 24 September 2014, Mr Critchley paid a total of $4,400 towards this travel opportunity, which was said to be valid for two years from 1 September 2014 and was not expressly said to be on the SFF travel scheme. The defendants never took this holiday to the Qualia Resort before this travel opportunity expired.
On 19 September 2014, Ms Tarbuck received further correspondence from Ms Comito offering a discounted 25-day tour and cruise of South America and the Galapagos Islands which had been reduced by approximately 50 – 70%; as Ms Comito’s email said the price was “this tour is $15K per person but currently on sale from $4,000 pp upwards, some options $5,000pp”. This offer was clarified on 9 December 2014 to be “$4,000 pp (add on $1,000pp for Business class flight to South America only valid when purchased with tour)” and was at least implicitly being offered under the SFF travel scheme. Mr Critchley says that he purchased the discounted cruise for himself and Ms Tarbuck for $12,000 (being $6,000 each) in September 2015, although it is probable that in fact it was paid on Ms Tarbuck’s credit card for an amount of $8000 on 20 March 2015, being two $5,000 business class Galapagos packages, less as an email from Ms Comito explained on 19 March 2015, “a credit on your account for $2,000 for the Silverseas adjustment”.
Mr Critchley agreed that he did not know precisely on what basis the figure of $6000 had been reached, as he never saw the market value of this trip; he may have spoken to Ms Comito about it but could not remember. This is an early example of Mr Critchley being very relaxed about acquiring a travel opportunity and paying money upfront on the basis he knew he was getting a very good deal and that he did not need to concern himself with the details about how good the deal was as it appeared he was getting at least a 50% discount according to Ms Comito’s emails.
In hindsight it can probably be seen that Ms Comito was slowly testing the defendants to see how flexible and undemanding they were about the details of what they thought to be good travel deals. By now they were revealing to Ms Comito a willingness to take bold steps to acquire good deals for which they had a weakness. In the end, like the trip to Hayman Island and the Whitsundays, this holiday was ultimately never taken as the defendants had so many travel opportunities, they could not find a free month to take it.

Barnes v Addy Consideration

The defendants contended in their final submissions that Goway’s case only advances vague and scant evidence about Ms Comito’s breach of her fiduciary duty to Goway or the nature of her “fraudulent scheme”. It is true that there is little evidence in Goway’s case that throws light upon what Ms Comito was doing in the years in question. Her motivation remains a mystery. The criminal charges against her have only been the subject of oblique reference.
But the defendants’ submissions on this subject set the bar too high for Barnes v Addy recipient liability. It is not necessary for Goway to prove Ms Comito’s “fraudulent scheme”. That would be appropriate for Barnes v Addy second limb accessorial liability. It is sufficient for present purposes for Goway to prove that Ms Comito breached her fiduciary duty as an employee to Goway before going on to establish that the defendants had the requisite knowledge of that breach of fiduciary duty.
Goway has established that at least from 15 March 2015 Ms Comito had neither actual authority (the lack of which is admitted) nor ostensible authority (which the Court has found did not exist after that date) to provide the travel products and services she supplied to the defendants during this period under colour of the SFF scheme. Her supply of travel products and services to the defendants using Goway’s resources and at Goway’s expense and without authority from Goway is a breach of her pleaded (ASOC, 7A) fiduciary duty as its employee to Goway. That duty is to avoid conflicts of duty or interest with Goway and not to use her fiduciary position as an employee of Goway to effect an advantage for herself or for third parties. This inference is reinforced by the Court’s findings as to the investigations that Mr Atkins undertook to find out how Ms Comito was misusing her role in administering the SFF scheme and his conversations with Mr Critchley in June 2018.
It is not necessary for Goway to go further and try and prove her collateral purpose or to understand the obscurities of the scheme in which she was engaged. It is sufficient for Goway to prove, as it has, that she was in substance giving away to third parties her employer’s travel product inventory without authority. The evidence of Mr James Forno, a contractor engaged by Goway, proves the cost to Goway of the travel products and services that Goway provided to Ms Comito.
Most of the factors pleaded and particularised as showing breach by her of fiduciary duty (see the particulars to ASOC paragraph 13A) are made out in varying degrees. But as the Court’s findings and reasoning show, principal among these factors is the exceptionally low price of the travel packages offered and the continuing grossly improvident nature of the offers made by Ms Comito to the defendants.
The defendants’ knowledge about Ms Comito and Goway varied between September 2013 and July 2018, a period of just under five years. The parties principally invited the Court to consider the defendants’ liability on an all or nothing basis. But this is unrealistic. The defendants constantly acquired fresh knowledge about Ms Comito’s dealings over that period. The Court has undertaken a detailed analysis in the factual narrative from which conclusions can now be drawn about, if and when, the defendants gained knowledge which would attract Barnes v Addy liability.
Based on the findings in the factual narrative, the Court concludes that the requirements of Baden category (4) knowledge were established against the defendants from 15 March 2015. Baden category (4) is the threshold category of knowledge the plaintiff must make out to fix the defendants with Barnes v Addy first limb liability. Once that threshold was passed no conduct of the defendants, Ms Comito or Goway ever returned the defendants’ knowledge below the Baden category (4) threshold. Instead, the defendants’ constantly accumulating knowledge after mid-March 2015 continued to put an honest and reasonable person in each of their positions on notice of a real and not remote risk that Ms Comito was breaching her fiduciary duty as an employee of Goway continuing to supply Goway’s travel products and services through the SFF scheme.
The Court’s factual narrative reveals that not only did the defendants’ knowledge reach Baden category (4) level but that at various times after mid-March 2015 it would have satisfied more demanding Baden categories of knowledge. The times that these various levels of knowledge were acquired can be demonstrated from the findings in the factual narrative. Goway’s submissions pressed the Court to make findings of knowledge above Baden category (4) and the ASOC, paragraph [13C] alleged that they had such higher category knowledge. Moreover, it is a useful tool of analysis to examine the defendants’ accumulating knowledge against the standards of the various categories from Baden category (4) upwards.
Baden Category (4) – 15 March 2015. Ms Comito’s email of 9 March 2015 purports to forward an offer from staff travel to Ms Tarbuck of a “complimentary trip at another time as this was a staff error”. This spontaneous generosity was on top of Goway offering to “pay for these flights”. As the Court’s earlier analysis showed, this was a disproportionate response to the problem that had arisen for Ms Fryer. It should in the circumstances have caused an honest and reasonable person with the knowledge of these defendants to realise that this conduct was unlikely to be an authorised part of Goway’s business model.
It followed that it was likely that the benefits then being transferred to them by Ms Comito were unauthorised and there was real and not remote risk being applied by her in breach of her fiduciary duties to her employer. The response of an honest and reasonable person in this position would have been at this point, facing increasing levels of Goway generosity indicating such a breach of duty, to ask how this was possible. In the absence of a satisfactory answer an honest and reasonable person would have declined to be involved further. As the Court’s findings show this was not asked by the defendants, who were strongly incentivised by the benefits they were receiving not to ask such obvious questions.
And as the Court’s findings demonstrate, this level of Baden category (4) knowledge was confirmed less than three months later, on 2 June 2015, when Ms Tarbuck misled Mr Chipps. Her conduct in this respect is not consistent with the defendants believing that Ms Comito was acting in her employer’s interests.
From that time on, the case supporting the defendants having Baden category (4) knowledge only strengthens. In November 2015, another strong inflection point occurs, giving weight to the finding of Baden category (4) knowledge, when the platinum travel passes were offered and accepted. These passes were so uncommercial that they could not be accepted by honest and reasonable people in the position of the defendants, without assurance after inquiry that Ms Comito was providing benefits that were consistent with the commercial objectives of Goway. Otherwise, the prima facie indication to the defendants was that the benefits were an unauthorised application of Goway’s funds in breach of Ms Comito’s fiduciary duties to Goway.
What occurred then after November 2015 further strengthened this inference, as the defendants enjoyed the accumulating financial benefits from the platinum travel passes. Indeed, they were so valuable that the defendants were keeping a spreadsheet of the benefits they had enjoyed.
In the lengthy factual narrative earlier in these reasons, from time to time slightly different and looser language is inevitably used by the Court to indicate what knowledge the defendants held from 15 March 2015 from their experiences of Ms Comito’s conduct. But the test described in the language in this section of these reasons is the test applied by the Court to assess whether the defendants had the requisite Baden category (4) knowledge of Ms Comito’s breaches of fiduciary duty.
Baden Category (3) – 1 June 2017. The next major inflection point in the defendants’ state of knowledge occurred in May 2017, when their friend, Stephen (who had the authority of direct experience to speak on the subject) emphatically told them on 26 May 2017, if they had not realised it before, that whatever Ms Comito was offering, it was not a staff travel scheme of the kind offered by airlines but was some dysfunctional variant that Stephen could not understand or rationalise. That advice, together with the unbusinesslike inefficiencies that Ms Comito had begun to present more frequently to that point and Goway’s obviously accumulating SFF losses on its dealings with the defendants, directly confronted the defendants with the likelihood Ms Comito was running an unauthorised staff travel scheme within Goway. The call for further inquiries at this point was so strong that not to make them was a wilful and reckless departure from the conduct of what an honest and responsible person would do. Such a person would seek to understand from Ms Comito’s managers how they could be receiving these benefits. Their experiences during the use of their European travel between June and August 2017 further strengthened the need for them to make such inquiry.
Baden Category (2) – 1 January 2018. After the combined experience of both Ms Fryer and Ms Storey in the second half of 2017, together with their other knowledge the Court concludes that the defendants were wilfully shutting their eyes to the obvious. By 1 January 2018, Ms Storey was, with justification, calling Ms Comito “a liar” and communicating that opinion to the defendants. The defendants understood why Ms Storey was calling Ms Comito a liar. They must have appreciated she was justified in so doing. Not to go to Goway’s senior management from this point, meant the defendants had to dismiss the expressions of well-founded opinions that Ms Comito was dishonest. In the Court’s view from this time on they were wilfully shutting their eyes to the obvious and had crossed the threshold for Baden category (2) knowledge.
Baden Category (1) – 23 June 2018. Probably by 19 June 2018, in the phone call with Ms Comito, and certainly by no later than 23 June 2018, Mr Critchley (and therefore Ms Tarbuck who he would have fully informed about these conversations in which she had a great interest) both had no confidence whatsoever in Ms Comito. They knew that she was under investigation for running an apparently unauthorised and probably dishonest staff travel scheme using the resources of Goway without its knowledge. Ms Comito had been lying to Mr Critchley and his business associates about the funding and structure of that scheme.
By then the defendants had actual knowledge that any benefits that they were then receiving, including the Queen Victoria cruise had been applied in breach of her fiduciary duty as an employee to Goway. For the defendants to enjoy, without consulting directly with Goway, any benefits from staff travel after 19 June 2018 was not the conduct of honest and reasonable people in their position.

The Defence of Receipt by Third Parties

Finally, the defendants contend in answer to the Barnes v Addy recipient claim that they did not “receive” any of the travel products and services that were consumed by Ms Fryer and Ms Storey. The narrative of findings sets out the various circumstances in which Ms Fryer and Ms Storey took the benefit of discounted business class airfares, domestic airfares or travel passes. The relative amounts consumed by the defendants and Mr Critchley’s daughters are set out at the beginning of these reasons.
Those findings show that for all their airline travel and accommodation, Goway issued air tickets and accommodation vouchers directly to each of Mr Critchley’s daughters and they used them to travel or to be accommodated. The Court is not aware an example where airline tickets were issued in Mr Critchley’s name and used by either of his daughters. And the same applies in relation to accommodation vouchers: Goway issued them directly to Mr Critchley’s daughters, who then consumed them by flying or being accommodated.
There is some authority on this subject. In Say-Dee, a case involving the liability of members of a family, the High Court emphasised the need to prove receipt against each individual family member for them to be made liable under the first limb of Barnes v Addy. The Court emphasised (see [111], [116] and [119]) actual transfer to the claimed recipient, rather than notional receipt by someone on behalf of the claimed recipient.
In Turner (at [92]-[93]) the Court of Appeal described the receipt requirements of a Barnes v Addy recipient claim as follows:

“[92] Liability under either limb of Barnes v Addy is a personal liability although proprietary remedies may be available. A party liable under the first limb, for having received and been chargeable with property transferred in breach of fiduciary duty with requisite knowledge of the breach, may be liable to pay compensation even if he or she no longer holds the property, just as an accessory liable under the second limb of Barnes v Addy
may be liable to pay compensation. A third party’s personal liability under the first limb of Barnes v Addy should not depend upon the mechanism by which the property was transferred, but rather upon whether the third party received property that was trust property, or was transferred in breach of fiduciary duty, or was traceable to property so transferred, and, if so, whether the third party had the requisite knowledge (not merely constructive notice) of the breach of trust or breach of fiduciary duty so as to warrant the imposition of personal liability arising from the receipt.
[93] In El Ajou v Dollar Land Holdings plc (1994) 2 All ER 685, Hoffman LJ said, in relation to the requirements of liability for knowing receipt, “for this purpose the plaintiff must show, first, a disposal of his assets in breach of fiduciary duty. Secondly, the beneficial receipt by the defendant of assets which are traceable as representing the assets of the plaintiff; and thirdly, knowledge on the part of the defendant that the assets he received are traceable to a breach of fiduciary duty” (at 700).”

The reference to El Ajou v Dollar Land Holdings Plc & Anor [1994] 2 All ER 685 in Turner, makes clear that the receipt must be “beneficial” rather than nominal. The defendants argue with some force that the only beneficial receipt of the travel products and services consumed by Mr Critchley’s daughters was their receipt not his. This argument is persuasive. It is difficult to see how Mr Critchley or Ms Tarbuck received many of those services beneficially.
Mr Maroya answers this argument by emphasising that the defendants have taken a wilfully narrow construction of the word “received” and that the defendants understood the tickets purchased by them could be used by third parties, being nominated family, and that is what they chose to do.
A Goway counter argument also arises out of Court’s findings in the narrative that on several occasions Mr Critchley dealt directly with Ms Comito on his daughters’ behalf and paid Goway for aspects of his daughters’ travel and was later reimbursed by them, for example with the platinum travel passes.
But it is important not to import into the reasoning at this point the idea that Mr Critchley made a contract with Goway on behalf of his daughters to purchase platinum travel passes. As a result of the Court’s conclusions about Ms Comito’s ostensible authority, there was no contract ever made on or after November 2015 between Goway and Mr Critchley for the supply of platinum travel passes. There was only a payment by Mr Critchley to Goway and then Goway supplied travel products and services, without contract, directly to Ms Fryer and Ms Storey who consumed them. They were the sole recipients of those services directly from Goway.
But there are several cases mainly prior to 15 March 2015 with respect to the discounted business class airfares, for example, where Mr Critchley acquired and paid for tickets in what the Court has found were binding contracts with Ms Comito. After making binding contracts to acquire the discounted tickets Mr Critchley requested the tickets (and accommodation where relevant) be gifted onto his daughters and issued in their names. In so doing he was nevertheless disposing of his beneficial interest in what he had acquired, by a method of his own choice – namely by gifting them to his daughters. It does not matter whether he was the ultimate consumer of them or not. In those circumstances he was still a recipient because he exercised the powers of a beneficial owner over them as his own property. But the problem for Goway’s claim in this earlier period before 15 March 2015, is that although he may have received the tickets he did not receive them with the requisite knowledge, if they were issued before 15 March 2015.
It would appear therefore that there is some room for a finding that the defendants have Barnes v Addy recipient liability for some of the Goway travel products and services consumed by Mr Critchley’s daughters and their families. This would be for discounted business class airfares or like products that were acquired before 15 March 2015 but were only actually only issued, received, and disposed of by Mr Critchley to his daughters after that date.
The parties will need to examine this area of the defendants’ Barnes v Addy recipient liability for the cost of travel products and services consumed by Mr Critchley’s daughters. This can be done whilst the parties are undertaking the necessary quantum calculations based upon the Court’s findings. The parties may wish to agree upon a timetable for this and submit it to chambers.

Conclusion and Orders

Goway has submitted that whatever the outcome of these proceedings it wishes to contend that this proceeding should have been commenced in the District Court and that, although successful, Goway should not recover all its costs. The Court will hear submissions on this subject and any other application for a special costs order at the same time as the parties advance remaining submissions as to quantum.
Accordingly, the Court makes the following orders and directions:

Declare that in the circumstances that have occurred,

Ms Lisa Comito did not have, at any time after 15 March 2015, ostensible authority to act on behalf of the plaintiff to make binding travel and ancillary services bookings or contracts through a Staff, Family and Friends travel scheme (“the SFF scheme”) that she was purporting to operate on behalf of the plaintiff, and

the defendants were not entitled, after 15 March 2015, to rely upon any ostensible authority of the kind described in sub-paragraph (a).

Order the defendants to pay and restore to the plaintiff the value of all travel and ancillary services received by them at the expense of the plaintiff after 15 March 2015, less any amounts that it may be determined have been paid by the defendants to the plaintiff on account of travel and ancillary services received by them from the plaintiff after 15 March 2015.

Order that the account be taken of the amount ordered pursuant to (2).

Note that ordinarily costs should follow the event in these proceedings and that the Court would ordinarily therefore order that the defendants pay the plaintiff’s costs of the proceedings.

The Court will order in accordance with (4) in the absence of any application for a special costs order by either party, which should be filed by motion by 25 January 2024 and which may be made returnable on 2 February 2024 at 9:30 AM.

The proceedings are adjourned for mention to 2 February 2024 at 9:30 AM to give directions in relation to the holding of the account ordered in (3) and any issues of costs.

Grant liberty to apply.

**********

Decision last updated: 09 January 2024

Medium Neutral Citation:	GOWAY Travel Pty Limited v Critchley & Anor [2024] NSWSC 2
Hearing dates:	13, 14, 15, 16 & 17 February, 3 May, and 2 June 2023.
Date of orders:	15 December 2023
Decision date:	09 January 2024
Jurisdiction:	Equity
Before:	Slattery J
Decision:	Declaration made that from 15 March 2015 the defendants were not entitled to deal with the plaintiff on the basis that Ms Comito’s had ostensible authority to act on behalf of the plaintiff with respect to the Staff Family and Friends travel scheme. Orders made for the defendants to restore to the plaintiff the net benefits received by the defendants under the Staff Family and Friends travel scheme from 15 March 2015 and for account to be taken of those benefits. Directions made for the resolution of consequential issues.
Catchwords:	EQUITY – first limb of Barnes v Addy (1874) LR 9 Ch App 244 - the plaintiff sold international travel services to the defendants over a five-year period between 2013 and 2018 – some of the plaintiff’s travel services were sold through a “staff, family and friends” discounted travel scheme – defendants were offered discounted travel at rates substantially below market rates and below the likely wholesale cost of providing the travel services – the defendants were purchasers of those services – in July 2018 the plaintiff discovers that a rogue employee is responsible for irregularities in its staff family and friends travel scheme and that the plaintiff’s travel services have been marketed and sold through the scheme without its authority and in breach of its employee’s fiduciary duty to the plaintiff – the plaintiff seeks recovery of the cost of the travel services supplied to the defendants by the rogue employee – whether the defendants were aware that the rogue employee was selling them travel services without the authority of the plaintiff – whether the plaintiff is entitled on the pleadings to restitution from the defendants on the grounds the defendants made payments for the market value of the travel services supplied to or at the direction of the defendants by mistake or under a total failure of consideration – whether the defendants had the requisite level of knowledge that the rogue employee was acting in breach of her fiduciary duty to her employer, the plaintiff, to attract Barnes v Addy first limb liability – whether the defendants received all travel services from the plaintiff with some of them were supplied to other persons.
Legislation Cited:	Evidence Act1995, ss 128, 140
Cases Cited:	Baden v Société Générale pour Favoriser le Developpement du Commerce et de l’Industrieen France [1992] 4 All ER 161 Banque Commerciale S A (in Liq) v Akhil Holdings Ltd (1990) 169 CLR 279 Barnes v Addy (1874) LR Ch App 244 Break Fast Investments Pty Ltd v Rigby Cooke Lawyers [2022] VSCA 118 Briginshaw v Briginshaw (1938) 60 CLR 336 Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 Egyptian International Foreign Trade v Soplex Whole Supplies Ltd (The ‘Raffaella’) [1985] 2 Lloyd’s Rep 36 El Ajou v Dollar Land Holdings Plc & Anor [1994] 2 All ER 685 Farah Constructions Pty Ltd v Say-Dee Pty Limited (2007) 230 CLR 89 Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 G v H (1994) 181 CLR 387 Grimaldi v Chameleon Mining NL & Anor (No. 2) (2012) 200 FCR 296 Hoare v McCarthy (1916) 22 CLR 296 Imobilari Pty Ltd v Opes Prime Stockbroking Ltd (in liq) [2008] FCA 1920 Jones v Dunkel (1959) 101 CLR 298 Kalls Enterprises Pty Ltd v Baloglow [2007] NSWCA 191 Moriah War Memorial College Association v Augustin Robert Nosti [2020] NSWSC 942 Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 Orbit Travel Services Pty Ltd v Trustees - Travel Compensation Fund & Ors (unreported, 24 March 1998) Orbit Travel Services v Travel - Compensation Fund [1999] NSWCA 63 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 Payne v Parker [1976] 1 NSWLR 191 Rolled Steel Products (Holdings) Ltd v British Steel Corporation [1986] Ch 246 Schellenberg v Tunnel Holdings Pty Limited (2000) CLR 121 Smith v Peter & Diana Hubbard Pty Ltd [2006] NSWCA 109 Song v Ying [2010] NSWCA 237 Turner v O’Bryan–Turner (2022) 107 NSWLR 171 Wilhemsen Investments Pty Ltd v SSS Holdings Pty Ltd [2019] NSWCA 32
Category:	Principal judgment
Parties:	Plaintiff: GOWAY Travel Pty Limited ACN 002 767 839 First Defendant: Robert Critchley Second Defendant: Lynette Tarbuck
Representation:	Counsel: Plaintiff: A.E. Maroya, S. Scott Defendants: M.P. Cleary Solicitors: Plaintiff: Richard Glover, Richard Glover Law Practice Defendants: Gordon Grieve, Piper Alderman
File Number(s):	2020/188401
Publication restriction:	No