Houghton & Anor v Arms - [2006] HCATrans 544

[2006] HCATrans 544

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M107 of 2006

B e t w e e n -
JAMES HOUGHTON AND JAMES STUDENT
Appellants
and
SIMON ARMS
Respondent

GLEESON CJ
GUMMOW J
HAYNE J
HEYDON J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 5 OCTOBER 2006, AT 10.04 AM

MR D.J. O’CALLAGHAN, SC: If the Court pleases, I appear with my learned friend, MR M.D. RUSH, for the appellants. (instructed by Deacons)

MR P.J. RIORDAN, SC: If the Court pleases, I appear with my learned friend, MR D.W. BENNETT, for the respondent. (instructed by Middletons)

MR D.R. WILLIAMS, QC: May it please the Court, I appear with my learned friend, MR S. BHOJANI, for the Director of Consumer Affairs of Victoria seeking to intervene. (instructed by Department of Justice)

GLEESON CJ: Mr Williams, we have read your written submissions and we notice that you are supporting the respondent. We thought that the course we would take is to hear argument from the appellant and the respondent and then we will deal with your application at that stage. Yes, Mr O’Callaghan.

MR O’CALLAGHAN: If the Court pleases, the issue in this appeal is the important question of statutory construction, namely, whether on its proper construction section 9(1) of the Fair Trading Act (Vic) and its equivalents in other States and the Territories renders employees, officers or directors of corporations liable, because of the fact of their employment relationship or directorship, without more, for conduct engaged by them as and on behalf of the company.

The Full Court below held, relying on some authorities, that a director or employee of a corporation who acts on its behalf in the course of trade or commerce also acts himself or herself in trade or commerce and if the corporation is liable under a State Fair Trading Act or the Trade Practices Act it will necessarily follow for their conduct the director or employee attracts what the Full Court said was primary liability under the Fair Trading Act.

HAYNE J: Why is any question to be expressed conditionally? Why is it to be expressed if the company is liable, what then? Why are there not simply two separate questions?

MR O’CALLAGHAN: Two separate questions whether ‑ ‑ ‑

HAYNE J: Namely, one, is the corporation liable under the TPA? Two, is this individual liable under the Fair Trading Act? Why is there some condition?

MR O’CALLAGHAN: We would not put it on the basis that it is condition, your Honour, but that the conduct of an employee – and if I could use the word “employee” without adding officer and director needlessly – if the conduct of the employee is on the facts of the case, as was the case here, only the conduct of the corporation, only the corporation can be the relevant person. So it is a question,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2006] HCATrans 544
Decision Date

CaseChat Overview and Summary

Houghton and another (appellants) appealed to the High Court of Australia against a decision of the New South Wales Court of Appeal, which had affirmed a judgment in favour of Arms (respondent). The dispute concerned the enforceability of a written agreement for the sale of shares in a company, where the purchasers (appellants) alleged that the agreement was void for uncertainty and/or was not binding due to a failure to satisfy a condition precedent.

The High Court was required to determine whether the agreement for the sale of shares was sufficiently certain to be enforceable, and if not, whether it was rendered binding by the conduct of the parties. Specifically, the court considered whether the terms relating to the "terms and conditions" of the sale were so vague as to render the agreement void, and whether the parties' subsequent actions indicated an intention to be bound despite any initial uncertainty.

The High Court held that the agreement was not void for uncertainty. The court reasoned that the phrase "terms and conditions" in the context of a share sale agreement, while broad, did not render the essential obligations of the parties unascertainable. Furthermore, the court found that the parties' conduct, including the execution of the agreement and subsequent steps taken towards completion, demonstrated a clear intention to be bound by the contract, thereby overcoming any arguable lack of certainty. The principles of contractual interpretation, focusing on the objective intention of the parties, were central to this reasoning.

The appeal was dismissed.

Orders