Heseltine v Investment Planners Australia Pty Ltd
[2008] WASCA 79
•8 APRIL 2008
HESELTINE -v- INVESTMENT PLANNERS AUSTRALIA PTY LTD [2008] WASCA 79
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2008] WASCA 79 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:48/2007 | 17 MARCH 2008 | |
| Coram: | WHEELER JA PULLIN JA NEWNES AJA | 8/04/08 | |
| 16 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed | ||
| B | |||
| PDF Version |
| Parties: | THOMAS OLMAN HESELTINE LILLY HEWITT McCRAE INVESTMENT PLANNERS AUSTRALIA PTY LTD |
Catchwords: | Corporations Corporations Law Whether holder of dealer's licence was liable for conduct of representative Representative held proper authority from principal Whether holder of dealer's licence liable under s 817 Reliance placed by plaintiff on presumption in s 820 Whether defendant entitled to rebut presumption when defence did not disclose any attempt to do so |
Legislation: | Corporations Law 1990 (Cth), s 9, s 88, s 92, s 93, s 94, s 780, s 817, s 820 Magistrates Court (Civil Proceedings) Rules 2005 (WA), r 10 |
Case References: | Deatons Pty Ltd v Flew (1949) 79 CLR 370 Morris v CW Martin & Sons Ltd [1966] 1 QB 716 New South Wales v Lepore [2004] HCA 4; (2003) 212 CLR 511 Newman v Financial Wisdom Ltd [2004] VSC 216; (2004) 183 FLR 164 Ryan v Ann St Holdings Pty Ltd [2006] QCA 217 Sandstone DMC Pty Ltd v Trajkovski [2006] NSWCA 205 Water Board v Moustakas (1988) 180 CLR 491 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : HESELTINE -v- INVESTMENT PLANNERS AUSTRALIA PTY LTD [2008] WASCA 79 CORAM : WHEELER JA
- PULLIN JA
NEWNES AJA
- LILLY HEWITT McCRAE
Appellants
AND
INVESTMENT PLANNERS AUSTRALIA PTY LTD
Respondent
ON APPEAL FROM:
Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA
Coram : COMMISSIONER ELLIS
Citation : HESELTINE & ANOR -v- INVESTMENT PLANNERS AUSTRALIA PTY LTD [2007] WADC 14
File No : APP 40 of 2006
(Page 2)
Catchwords:
Corporations - Corporations Law - Whether holder of dealer's licence was liable for conduct of representative - Representative held proper authority from principal - Whether holder of dealer's licence liable under s 817 - Reliance placed by plaintiff on presumption in s 820 - Whether defendant entitled to rebut presumption when defence did not disclose any attempt to do so
Legislation:
Corporations Law 1990 (Cth), s 9, s 88, s 92, s 93, s 94, s 780, s 817, s 820
Magistrates Court (Civil Proceedings) Rules 2005 (WA), r 10
Result:
Appeal allowed
Category: B
Representation:
Counsel:
Appellants : Mr M D Cuerden
Respondent : Mr A Hershowitz
Solicitors:
Appellants : Marks & Sands
Respondent : Butcher Paull & Calder
Case(s) referred to in judgment(s):
Deatons Pty Ltd v Flew (1949) 79 CLR 370
Morris v CW Martin & Sons Ltd [1966] 1 QB 716
New South Wales v Lepore [2004] HCA 4; (2003) 212 CLR 511
Newman v Financial Wisdom Ltd [2004] VSC 216; (2004) 183 FLR 164
Ryan v Ann St Holdings Pty Ltd [2006] QCA 217
Sandstone DMC Pty Ltd v Trajkovski [2006] NSWCA 205
Water Board v Moustakas (1988) 180 CLR 491
(Page 3)
1 WHEELER JA: I agree with Pullin JA.
2 PULLIN JA: The appellants appeal against a judgment of Commissioner Ellis who dismissed an appeal from a judgment of Magistrate Stewart. Her Honour had dismissed the appellants' claim against the respondent for $10,000.
3 This was a strange case, fought partly on the evidence and partly by reference to assumed facts which seemed to be contrary to some of the evidence, and fought by treating as a non-issue a legal proposition which might at least have seemed debateable. There was also apparent confusion in the minds of the parties about evidence which was or was not relevant. Perhaps arising out of all of the above there was also confusion about what was in issue.
Facts not in dispute
4 Some facts are not in dispute.
5 The events occurred in 1997 and the law involved provisions of the Corporations Law 1990 (Cth) as it stood in May 1997. It was not in issue that in May 1997 a Mr Mooney held a 'proper authority' from the respondent, within the meaning of s 88 of the Corporations Law, as a 'securities representative' of the respondent (see the definition of 'representative' in s 9 of the Corporations Law). A proper authority includes a statement that the representative is 'employed by, or acts for or by arrangement with, the principal'. See s 88. The respondent held a dealer's licence under s 780 of the Corporations Law, but the dealer's licence was not produced in evidence. Section 93 defines a securities business as the business of dealing in securities. 'Securities' are defined in s 9 and s 92 to mean, in general terms, shares, debentures, interest in registered managed investment schemes, or real or equitable interests or options in or over them. The respondent's dealer's licence authorised the respondent to conduct a securities business of some kind. Mr Mooney had previously held a proper authority as a representative of another entity not related to the respondent.
6 The appellants were clients of Mr Mooney when he was a representative of the other entity. After Mr Mooney received his proper authority from the respondent, he arranged for the appellants to establish a private superannuation trust fund. Mr Mooney arranged for the preparation of a complying superannuation fund trust deed showing the appellants as trustees. He arranged the opening of a Town and Country Bank account. This bank account was opened in the name of the
(Page 4)
- appellants and was styled 'Thomas Olman Heseltine & Lilly Hewitt McCrae 'ATF' TO Heseltine Superannuation Fund' ('Heseltine Account'). The address was shown to be care of Super Support Administrators, Post Office Box 332, West Perth, WA 6872. The appellants were the signatories to the Heseltine Account.
7 Mr Mooney arranged for the appellants to withdraw $200,000 from another source and arranged for the appellants to deposit the $200,000 into the Heseltine Account. That happened on 21 May 1997.
8 The appellants also signed an authority directed to the Town and Country Bank authorising 'Super Support Administrators … to deduct from my/our Account the relevant administration fees'.
Pleaded facts and other evidence
9 I now turn to some pleaded facts and to other evidence. The appellants appeared to consider that who held units in the unit trust was a material fact (when it was not). The particulars of claim state in para 3 that 'at all material times the (Respondent) was the holder of two units in the Super Support Administrators Unit Trust'. The particulars assert that the trustees of that unit trust carried on a business known as 'Super Support Administrators', without asserting who the trustees were.
10 It was not at all clear from the evidence who the trustees of the unit trust were. Mr Trezona, a director of the respondent, gave evidence that this business name was owned by the respondent and Safa Investments Pty Ltd which was a company controlled by a Mr Chong and that the respondent was a 'joint trustee' of the unit trust trading as 'Super Support Administrators'. However, a trust deed put into evidence revealed that Mr Trezona and a Mr Chong, were at some stage trustees of the unit trust. The learned magistrate found that Mr Trezona and Mr Chong were trustees of Super Support Administrators. The commissioner, on the other hand, said 'presumably the respondent replaced Mr Trezona' [8] and that the 'respondent appears to have been one of the Trustees of the SSA Trust' [60].
11 On 28 May 1997, a statement of the Heseltine Account shows a 'cash withdrawal' of $10,000. According to a letter from the respondent addressed to Mr TO Heseltine and dated 14 May 1999 (ie two years later) 'that amount' was deposited in another Town and Country Bank account. This second Town and Country Bank account was said in the letter to be an account of 'Super Support Administrators'. There was no evidence
(Page 5)
- about who the natural persons or corporate bodies were who owned this account.
12 According to both the commissioner and the magistrate, Mr Chong 'authorised a withdrawal' of the $10,000 from the Hesentine Account. This appears as a debit in the Heseltine Account on 28 May 1997. It was not suggested that Mr Chong had any authority to withdraw moneys from the Heseltine Account and so it may be assumed that what this means is that Mr Chong asked the Town and Country Bank to pay $10,000 out of the appellants' account in accordance with the authority signed by the appellants. The evidence is that the $10,000 was paid into the Super Support Administrators Town & Country Account on 28 May 1997. Notwithstanding this evidence, this court was informed by both parties that the case was fought below and that it was being fought on the appeal on the basis that 'the' $10,000 was paid by the appellants not to Super Support Administrators but to Mr Mooney. The Magistrate said 'Mr Alfie Chong authorised the withdrawal and the amount was deposited in the SSA account', then 'the entire sum was paid to Mr Mooney' and that Mr Chong paid it out as a commission'.
13 There was an issue before the magistrate about whether Mr Mooney was authorised to receive the $10,000 as a payment of fees. Clearly the written authority given by the appellants to Super Support Administrators did not provide authority for money to be deducted from the Heseltine Account and paid to Mr Mooney. It authorised certain payments to Super Support Administrators. The magistrate found that there was no 'written or verbal' authority authorising withdrawal of $10,000 from the appellants' account and 'payment to Mr Mooney'. That finding is not under challenge.
14 If the appellants had chosen to conduct the case on the basis of a claim for money had and received by the respondent and if it had been established that the respondent was the recipient of the $10,000, it would have been a much simpler case, but that was not the case advanced. In fact, counsel for the appellants informed the court that in view of the way the case was conducted that the appellants could not rely on such a cause of action to gain judgment against the respondent. In any case, there was no evidence that the respondent was a recipient of the $10,000 before it was paid to Mr Mooney.
15 The appellants instead chose to proceed by a much more complicated route and this court has been asked by both parties to proceed on the basis that it should ignore the evidence that the money was paid to the Super
(Page 6)
- Support Administrators and instead proceed on the basis of the assumed fact referred to above, namely that the money was paid by the appellants to Mr Mooney.
16 The appellants argued that Mr Mooney in 'retaining' the $10,000, engaged in 'conduct' as a representative of the respondent and that by reason of s 817 of the Corporations Law (as it stood in May 1997), the respondent was liable for that conduct.
17 Section 817 read:
Where a person engages in conduct as a representative of another person (in this section called the 'principal'), then, as between the principal and a third person (other than the Commission), the principal is liable in respect of that conduct in the same manner, and to the same extent, as if the principal had engaged in it.
- Section 817 did no more than state the rule of agency law to the same effect. See Newman v Financial Wisdom Ltd [2004] VSC 216; (2004) 183 FLR 164 [208].
18 The word 'representative' was defined in s 9 as follows:
(a) in Chapter 7 – a securities representative; or
(b) in Chapter 8 – a futures representative.
- Section 817 was in ch 7.
19 Section 94 read:
(1) Subject to subsection (2), a person is a securities representative of another person if and only if, the first-mentioned person:
(a) is employed by; or
(b) acts for or by arrangement with;
the other person in connection with a securities business or investment advice business carried on by the other person.
(2) Except for the purposes of paragraph 88(1)(b):
(a) a person who holds a proper authority from a securities licensee is a securities representative of the licensee; and
(b) a person who holds an invalid securities authority from another person is a securities representative of the other person.
(Page 7)
- (3) Subject to subsection (4), a person does an act, or engages in conduct, as a securities representative of another person if, and only if, the first-mentioned person does the act, or engages in the conduct:
(a) in connection with a securities business or investment advice business carried on by the other person;
(b) while the first-mentioned person is a securities representative of the other person;
(c) as employee or agent of, or otherwise on behalf of, on account of, or for the benefit of, the other person; and
(d) otherwise than in the course of work of a kind ordinarily done by accountants, clerks or cashiers.
(4) Except for the purposes of Division 4 of Part 7.3, a person who holds himself, herself or itself out to be a securities representative of another person does an act as a securities representative of the other person.
20 Section 820 read:
Presumptions about certain matters
(1) Where it is proved, for the purposes of a proceeding in a court, that a person (in this subsection called the 'representative') engaged in particular conduct, whether within or outside this jurisdiction, while the person was a representative of:
(a) only one person (in this subsection called the 'indemnifying principal'); or
(b) 2 or more persons (in this subsection called the 'indemnifying principals');
then, unless the contrary is proved for the purposes of the proceeding, it shall be presumed for those purposes that the representative engaged in the conduct as a representative of:
(c) the indemnifying principal; or
(d) as a representative of some person among the indemnifying principals;
as the case may be.
(2) Where, for the purposes of establishing in a proceeding in a court that section 819 applies, it is proved that a person did, or omitted to do, a particular act because the person believed at a particular time
- in good faith that certain matters were the case, then, unless the contrary is proved for those purposes, it shall be presumed for those purposes that it is reasonable to expect that a person in the first-mentioned person's circumstances would so believe and would do, or omit to do, as the case may be, that act because of that belief.
21 It is possible to conceive of an argument on the facts that Mr Mooney did not engage in any relevant conduct at all, but the parties agreed, and informed this court that it should proceed on the basis that there was no issue between them that by 'retaining' the $10,000, Mr Mooney 'engaged in conduct' within the meaning of s 817. The respondent contended that the issue was whether the conduct of Mr Mooney was 'as a representative' of the respondent.
The magistrate's reasons
22 The magistrate found that the $10,000 was paid to Mr Mooney; that it was Mr Chong who authorised the withdrawal from the Heseltine Account, and that there was no authority 'verbal or written' authorising the payment of the $10,000 to Mr Mooney. The magistrate therefore concluded that Mr Mooney did not have authority to retain the $10,000 'that belonged to the claimants'.
23 The magistrate then considered the question of whether the respondent was vicariously liable for Mr Mooney's 'actions'. The magistrate found that the transaction 'does not come within the Corporations Law' as 'the class of transaction in this case was the establishment of a self-managed superannuation fund. It is not a transaction in securities as defined by the Corporations Law'.
24 The magistrate continued:
In recommending the establishment of a self-managed superannuation fund, I find Mr Mooney was not involved in a securities business, or an investment advice business, as defined in the Act.
See the definition section, in section 9, and section 77, 93 and 94 of the Act.
I find that it does not necessarily follow that just because Mr Mooney held a proper authority from IPA, all of his work was on behalf of IPA, or in connection with their business. I accept the evidence of Mr Trezona, that setting up a self-managed superannuation fund was governed by what he described as the SIS Act, and I take it that he meant the Superannuation Industries Supervision Act 1993, which is a Commonwealth Act.
- The magistrate continued:
- I accept Mr Trezona's evidence that this transaction of establishing a self-managed superannuation fund was not scrutinised, as it was not IPA's business.
I find that the establishment of a self-managed superannuation fund cannot be seen as work on behalf of IPA, or in connection with IPA's business.
IPA held a security dealer's licence, that allowed IPA to advise in areas where a prospectus was issued, and I rely on Mr Trezona's evidence in that regard, and also chapter 7 of the Corporations Law, which I've read the relevant provisions.
IPA did not receive any benefit from this transaction. SSA was named as administrators of the trust fund, and they are a different legal entity. Mr Chong of SSA, authorised the withdrawal of the funds, and it was SSA, that gave the money to Mr Mooney.
…
It is a threshold issue, whether the particular conduct provided for by section 817 of the Corporations Law, is conduct in either securities business, or an investment's advice business.
I find that this has not been proven by the claimants.
25 The magistrate then noted that the appellants sought to rely on s 820 of the Corporations Act and said:
In this case, it has not been proved that Mr Mooney was engaged in particular conduct. So therefore, the factual basis that would give rise to the presumption does not exist.
26 The magistrate then concluded:
In this case, Mr Mooney's conduct … did not fall within the scope of his apparent authority from IPA, and occur in the course of his - - and did not occur, also, in the course of his employment with IPA.
As I have come to the view that the Corporations Law does not apply to this conduct, accordingly, IPA is not vicariously liable for the acts of Mooney.
Appeal to the commissioner
27 The appellants then appealed, contending:
(a) that the magistrate erred in finding that the respondent was not vicariously liable to the appellant;
(Page 10)
- (b) that the magistrate erred in finding that the appellants were not entitled to the benefit of a presumption under s 820 of the Corporations Law; and
(c) that the magistrate erred in finding that the respondent's dealers licence was a restricted licence and that the proper authority to Mooney related to limited activities when such a case was not pleaded nor 'properly litigated'.
The commissioner's reasons
28 The commissioner dismissed the appeal so he clearly dismissed ground 1.
29 The commissioner said that the magistrate's 'approach' was wrong when she proceeded on the assumption that the nature of Mr Mooney's conduct was either 'in' an 'investment advice business' or 'in' superannuation. The commissioner noted that the question was whether the conduct of a proper authority holder was conduct 'as a representative', having regard to the criteria set out in s 94(3) of the Corporations Law. The commissioner said that the magistrate did not consider this question and consequently erred.
30 The commissioner then noted that the magistrate held that the appellants were not entitled to rely on s 820 of the Act, on the basis that it was necessary to first categorise the nature of the transaction or conduct involved, and that if the transaction was a transaction in the securities business then s 820 would apply and, if not, then s 820 had no application. The commissioner said that the reference to 'particular conduct' in s 820 did not have to be shown as particular conduct 'in' connection with a securities business. The commissioner held that the magistrate erred in concluding that the appellants had to establish as a precondition that the particular conduct engaged in by Mr Mooney was conduct in the securities industry. Although the commissioner did not say so, he implicitly upheld ground 2.
31 As to the third ground of appeal, the commissioner noted the appellants' contention that the finding was not open because the respondent did not plead a positive case and noted the appellants' contention that s 820 of the Law cast the onus on the respondent of establishing that Mr Mooney's conduct was not conduct as a representative of the respondent. A reference was made to the pleadings. The commissioner noted that par 7A of the appellant's statement of claim asserted that the money was received and retained by Mr Mooney as a
(Page 11)
- representative of the respondent, and that this allegation was merely denied. The commissioner considered that the issue of the capacity in which Mr Mooney acted in retaining the money was an issue which was live at trial. Although the commissioner did not expressly say what his conclusion was on ground 3, it appears that he dismissed it.
32 However, having upheld ground 2, the commissioner went on to deal with the case on the basis that the resolution of the case did not involve an assessment of the credibility of witnesses. He said that it depended on uncontested evidence and because of the small amount involved it would be a deplorable result for the matter to be sent back to the Magistrates Court for a further trial.
33 His conclusion was that, on the facts, the conduct of Mr Mooney in retaining the money was not conduct 'connected with' (sic) the securities business of the respondent within the meaning of s 94(3)(a) and that the conduct was not conduct as an employee or agent or otherwise on behalf of the respondent within the meaning of s 94(3)(c). He therefore dismissed the appeal.
The grounds of appeal in this court
34 The grounds of appeal read:
1. The learned Commissioner erred in fact and in law in that, having held that the learned magistrate below had erred in finding that sections 817 and 820(1) of the Corporations Law (as it formerly was) did not apply, the learned Commissioner erred in inquiring into the question of whether the respondent had discharged the onus of proof on it under s820(1), whereas:
(a) there being no notice of contention before him, it was not properly open to him to so find;
(b) further and in the alternative, the learned Commissioner should have held that having regard to the respondent's pleading and its conduct of the trial, the question of whether the respondent had discharged the onus of proof on it under s820(1) was not an issue at trial nor otherwise open or properly litigated before the learned magistrate.
2. In the alternative, the learned Commissioner erred in fact and in law in finding that the respondent had discharged the onus of proof on it under s 820(1).
35 The appellants were seeking to establish that the respondent was vicariously liable for Mr Mooney's conduct in the unauthorised retention
(Page 12)
- of the $10,000. The appellants could do this by establishing it on the evidence by reference to the common law or, alternatively, by relying on the Corporations Law provisions assisted by the presumption in s 820.
36 Putting aside the Corporations Law provisions, the evidence did not support a finding of common law vicarious liability based on the evidence led at trial. The evidence did not prove that Mr Mooney's retention of the money was within the scope of his employment or agency and nor did it prove that the conduct had a sufficiently close connection with the type of conduct that Mr Mooney was engaged to perform. The principles concerning vicarious liability of an employer for an employee were considered in New South Wales v Lepore [2004] HCA 4; (2003) 212 CLR 511, the effect of which was summarised by Williams JA in Ryan v Ann St Holdings Pty Ltd [2006] QCA 217, when he said:
The critical test, in broad terms, involves a comparison between the intentional wrongful conduct and the type of conduct the employee was engaged to perform. If there was a 'sufficient connection' (Gleeson CJ at paras [40], [42], [52], [54], [67] and [74]), or a 'sufficiently close connection' (Kirby J at paras [315], [316], [319] and [320]), or a 'close connection' (Gaudron J at paras [131 and [132] and Gummow and Hayne JJ at para [213]), it will be open to the tribunal of fact to conclude that the wrongful act was done in the course of employment, albeit in an improper mode [18].
37 The commissioner also noted that the High Court did not overrule the traditional approach of cases reflected in Deatons Pty Ltd v Flew (1949) 79 CLR 370 which focused on whether an employee's conduct is in the course of his or her employment. See also Sandstone DMC Pty Ltd v Trajkovski [2006] NSWCA 205.
38 This was not a case like Morris v CW Martin & Sons Ltd [1966] 1 QB 716, where the employer was held vicariously liable because the evidence revealed that the conduct of a dishonest employee in stealing a mink stole occurred in the course of carrying out tasks as an employee in the employer's drycleaning business. It was proven that it was within the employee's scope of employment to handle customers' clothes on behalf of the employer. Here it was not proven that Mr Mooney had any duties involving the retention of money on behalf of the respondent. The absence of evidence on the point was fatal to a common law claim.
39 However, in the claim based on the Corporations Law, a claimant is assisted by the statutory presumption in s 820. If the statutory presumption applied, then lack of evidence in the area covered by the presumption was the respondent's problem and not that of the appellants.
(Page 13)
- For the appellants to prove the case, the appellants had to establish, via the interaction of s 94 and s 817 and relying on s 820, the following:
(a) that Mr Mooney engaged in conduct which made him liable to the appellant;
(b) that his conduct was as a representative of the respondent.
40 There was no issue about (a). The finding was that Mr Mooney was not entitled to retain the money because he had no authority to receive it. There was therefore 'conduct' by Mr Mooney within the meaning of s 817, namely the unauthorised retention of the $10,000. The parties to this appeal were in agreement about that.
41 The issue arose in relation to (b). There was no doubt that Mr Mooney was a securities representative of the respondent. Section 94(2) states, relevantly, that a person who holds the proper authority is a securities representative of the licensee. Mr Mooney did hold a proper authority from the respondent. So Mr Mooney was a representative of the respondent (who was the principal within the meaning of s 817).
42 The only remaining issue is whether this conduct of Mr Mooney was conduct 'as' a representative of the respondent. Section 820 raises a statutory presumption against the respondent if the conduct of Mr Mooney (the particular conduct in question) occurred 'while' Mr Mooney was a representative. The 'particular conduct' did occur 'while' Mr Mooney was a representative of the respondent.
43 Therefore the statutory presumption operated. That is, 'it shall be presumed [for the purposes of the proceeding] … that the representative engaged in the conduct as a representative of' the respondent.
44 The issues for determination on this appeal as raised by the two grounds are:
(a) was the respondent entitled to attempt to rebut the presumption; and
(b) in the alternative, if it were entitled to do so, then whether it had rebutted the presumption.
45 The commissioner noted that on the pleadings the issue was whether Mr Mooney's conduct was conduct 'as a representative'. He noted that par 7A of the statement of claim asserted that the money was retained by Mr Mooney 'as' a representative of the respondent within the meaning of
(Page 14)
- s 817. He noted that par 7 of the defence simply denied the allegation. The commissioner noted that r 10 of the Magistrates Court (Civil Proceedings) Rules 2005 (WA) (the commissioner erroneously referred to the Magistrates Court (Civil Proceedings) Act 2004 (WA) rather than the Rules) requires a defendant to file and serve a statement of defence and that the statement of defence must include 'a summary of the facts relevant to the defence', 'the legal basis for the defence' and 'basic contentions of the party'. It is not in dispute that this provision applied when the defence was filed. The respondent by its pleadings did not advance a positive case as to why Mr Mooney's conduct was not conduct 'as' a representative.
46 Nothing in the addresses of counsel suggested that the respondent was seeking to prove that Mr Mooney was acting in any capacity other than as a representative. It seems that in closing addresses the magistrate made an observation suggesting that it was in issue and that this observation was 'broader than the closing submissions of the respondent'. The commissioner noted cases such as Water Board v Moustakas (1988) 180 CLR 491, which state that, even if not pleaded, an issue may exist because of the way the case was conducted. Nothing referred to so far suggests that there was any issue. However, if evidence was led in the case without objection going to the issue of whether or not Mr Mooney's conduct was conduct 'as' a representative of the respondent, then that evidence had to be considered.
47 This is what the commissioner did. He considered all of the evidence and reached a conclusion that the evidence revealed that the conduct of Mr Mooney in retaining the $10,000 was not conduct 'connected with' the securities business of the respondent within the meaning of s 94(3)(a). He considered that the conduct was connected with the business of SSA. Furthermore, he considered that the conduct was not conduct by Mr Mooney as an employee or agent or otherwise on behalf of the respondent within the meaning of s 94(3)(c). He considered that the conduct was on Mr Mooney's own behalf. If these conclusions are correct, then the conduct of Mr Mooney was not conduct as a securities representative of the respondent because s 94(3) says that such conduct is conduct of the respondent 'if and only if' Mr Mooney engaged in the conduct in those respects.
48 I agree with the commissioner's conclusion that the conduct was not in connection with any securities business conducted by the respondent. Nothing that was done had any connection with securities or any aspect of any securities business the respondent conducted.
(Page 15)
49 However, in my opinion, the commissioner erred in his conclusion about s 94(3)(c). Mr Mooney was an agent of the respondent. There was no sufficient evidence about what the duties of Mr Mooney were. The magistrate referred to the evidence on the topic in this way. Her Honour said:
Mr Trezona could not recall how Mr Mooney was engaged in April 1997. A letter was sent to Mr Mooney pointing out the terms under which he could operate under a proper authority. He was asked what work Mr Mooney did for IPA, and he replied, 'Mr Mooney was licensed for about a 4 month period. My recollection is he wrote one small investment on an individual person. Mr Heseltine did not come under the IPA banner.'
He said that, 'Mr Mooney was given a licence to write business in limited securities, so he could write investments and manage funds, to place business with life insurance companies and we provided a facility to allow him to write investment business.'
In relation to the level of scrutiny that the company paid to Mr Mooney, he said, 'The only way that you could scrutinise, was to see the business that was coming in, and that required if there was an investment advice given, we would have expected him to have written out a report.'
50 The commissioner said:
Mr Trezona … gave evidence that the terms of Mr Mooney's engagement, which were set out in a letter addressed to him, were limited. Mr Trezona conceded that he still had … the letter [but this document was not] … produced in evidence or even discovered by the respondent.
51 The result of this evidence is that it could not be said whether Mr Mooney's conduct in retaining the money was or was not 'connected' to his duties as agent. However, the lack of that evidence was a problem for the respondent and not for the appellant. Because of the statutory presumption, it was for the respondent to lead evidence that the conduct was not conduct as a representative of the respondent. The commissioner said that the conduct was on Mr Mooney's own behalf, but that is not really to point. The same argument might have been advanced by the employer in the Morris case referred to above. The employee stole the mink stole and, of course, that was conduct on the employee's own behalf because the employee wanted the mink stole. However, the employer was held liable because the conduct of stealing the mink stole was in the course of acting as employee and was acting within the scope of employment because the employee's job included handling the customers' clothes on behalf of the employer. In this case, it is not possible to say on
(Page 16)
- the evidence whether Mr Mooney's conduct in retaining money after it was paid to him did or did not occur in the course of acting as an agent, or whether it was within the scope of his agency, or whether there was a sufficiently close connection between the conduct of Mr Mooney and the type of conduct he was engaged to perform. In the absence of any satisfactory evidence that Mr Mooney's conduct was not conduct 'as' an agent, the statutory presumption continued to operate.
52 The learned commissioner therefore erred in concluding that the conduct of Mr Mooney was not conduct as an agent of the respondent within the meaning of s 94(3)(c).
53 I would therefore uphold the appeal and, in particular, ground 2. I would therefore set aside the decision of the commissioner and the magistrate, and instead enter judgment for the appellants.
54 NEWNES AJA: I agree with Pullin JA.
0
7
2