Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd

ely F

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 7366 of 2001

JOHNSON MATTHEY (AUST) LTD	Plaintiff
v
DASCORP PTY LTD	First Defendant
DAVID ANTHONY SECCHI	Second Defendant
JULIETTE SECCHI	Third Defendant
STONEPACK PTY LTD	Fourth Defendant

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JUDGE:	REDLICH J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	13, 14, 15, 18, 19 and 20 November 2002
DATE OF JUDGMENT:	8 August 2003
CASE MAY BE CITED AS:	Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd and Others
MEDIUM NEUTRAL CITATION:	[2003] VSC 291

CATCHWORDS Conversion – Defence of estoppel by omission - Negligence by owner – Whether sufficient to found estoppel - Ambit of s.27 Sale of Goods Act;
Liability of directors for tortious conduct of corporation or primary or secondary liability - Express or implied direction as to unlawful acts; Whether knowledge of unlawfulness or assumption of responsibility by director necessary - Scope of doctrine of limited liability – Limitation of rule in Said v Butt;
Rule in Brown v Dunne – Case management and procedural orders;
Time of conversion –Acquisition of plaintiff’s property in different condition to that when stolen - Value of goods converted – Measure of damages.

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M. Clarke	Mills Oakley
For the Defendants	Mr S. Horgan	Best Hooper

TABLE [L1]OF CONTENTS

The facts________________________________________________________________________ 3

The defendants' reliance upon s. 27 Sale of Goods Act 1958______________________________ 5

(a) Contributory negligence by the plaintiff_______________________________________ 6

(b) Stock control procedures___________________________________________________ 6

(c) The plaintiff's security system_______________________________________________ 8

(d) Extent to which public had access to gold lost in the plaintiff's processing_________ 10

(e) Failure of the plaintiff to notify AGE of the lost gold___________________________ 11

The defence of estoppel by omission/negligence________________________________________ 12

(a) Inadequate stock control procedures_________________________________________ 12

(b) Failure to take adequate measures to prevent theft_____________________________ 12

(c) Failure to notify gold dealers that its gold may be offered for sale_________________ 13

Ambit of the estoppel in s. 27 Goods Act 1958_________________________________________ 14

Was the plaintiff's conduct such as to preclude it from denying Mr Knight's authority to sell?__ 23

The Directors of AGE____________________________________________________________ 26

The company liable for conversion__________________________________________________ 29

Second and thirdnamed defendants sued as joint or primary tortfeasors or as Directors liable for the tortious wrong of the company____________________________________________________________ 30

The defences of the Directors_______________________________________________________ 31

Concurrent liability of company and director where the director performs the tortious acts____ 31

Conclusion as to primary liability of Directors________________________________________ 34

The state of mind of the Directors prior to October 1996________________________________ 34

State of mind of Directors from October 1996_________________________________________ 36

Failure to comply with the rule in Browne v Dunn in attacking the directors' credit_________ 37

When are Directors liable for the corporation's tortious acts?____________________________ 38

Where a Director induces breach of their companies contract____________________________ 41

Make the tort their own___________________________________________________________ 44

Direct or procure test_____________________________________________________________ 46

Where the tort involves mens rea____________________________________________________ 55

Conversion – a tort of strict liability_________________________________________________ 55

The assumption of responsibility test________________________________________________ 57

Does the doctrine of limited liability provide immunity for a Director?_____________________ 62

Effect of Corporations Law Regime_________________________________________________ 68

Directors' breach of duty of care and implied direction or procurement____________________ 70

Conclusion - as to director's secondary or accessorial liability____________________________ 73

When did the conversion occur?____________________________________________________ 77

The value of the thing converted____________________________________________________ 79

Endnotes_______________________________________________________________________ 85

HIS HONOUR:

The plaintiff is a large refiner of gold and other precious metals. Between 1994 and 1997 Mr Gaffney, a customer melter employed by the plaintiff at its refinery at Settlement Road, Thomastown, regularly stole small quantities of gold from the plaintiff's premises and through an accomplice, Mr Knight, sold this gold to the first named defendant trading under the business name Australian Gold Exchange (hereafter "AGE"). The second and thirdnamed defendants, David and Juliette Secchi, were at all material times the only Directors of AGE. The plaintiff seeks damages from each of the defendants for conversion of its gold. It sues each of the first, second and third named defendants jointly and severally as primary tortfeasors and, in the alternative, on a secondary or accessorial basis sues the second and thirdnamed defendants as Directors whom it contends are liable for AGE's conversion of the plaintiff's gold.

The plaintiff also sued the fourth named defendant for its negligence in providing security services to the plaintiff's business during the period that the gold was stolen. Interlocutory judgment for damages in default of appearance by the fourth named defendant was entered prior to the trial of the action and it played no part in this trial.

The plaintiff pleaded 65 separate conversions of its gold by each of the first, second and third named defendants between 30 August 1995 and 31 January 1997. At the trial, it was admitted that on each of the 65 occasions pleaded, the plaintiff was the owner of each of the quantities of gold as alleged, that such gold had been stolen by Mr Gaffney and that each parcel of such gold had subsequently been sold by Mr Gaffney's accomplice, Mr Knight, to AGE for the amount specified in the pleadings. On the final day of the trial, there being no objection by the defendants, I permitted the plaintiff to amend the form in which each of the conversions was pleaded. The amended form of each of the 65 conversions pleaded was the same. I have set out the way in which the first conversion was pleaded with the amendment underlined.

"5. The First Conversion
5.1The plaintiff is and was at all material times the owner of and entitled to 472.40 grams of gold stolen by Ty Gaffney and which AGE and/or the third defendant or the second defendant purchased for $5,196.00 and/or took physical control of on 30 August 1995.
Particulars
The sale is evidenced by a receipt numbered D03981 and dated 30 August 1995. The sum of $5,196.00 was paid as to $4,196.00 by cheque No 001138 and as to $1,000.00 in cash. A copy of the receipt will be provided after discovery.
5.2On a date which the plaintiff cannot specify save that it was subsequent to 30 August 1995, AGE and/or the third defendant and/or the second defendant sold the gold referred to in the preceding paragraph.
Particulars

Particulars of the sale are known to AGE and the third and second defendants and will be provided after discovery.
5.3In the premises AGE and/or the third defendant and/or the second defendant converted the said 472.40 grams of gold to their own use and wrongfully deprived the plaintiff thereof by reason whereof the plaintiff has suffered loss and damage.
Particulars
Value of the said 472.40 grams of gold $6,564.47"

The amendment was made by the plaintiff to support its submission that a finding should be made that the second and third named defendants were primary tortfeasors.
The facts

The plaintiff's principal activity is the refining and fabrication of precious metals including gold. During the period 1995 to 1997, the only other gold refineries in Australia were in Perth, they being the Perth Mint and the Golden West Refinery Group. The plaintiff occupied a refinery plant and administration offices at 339 Settlement Road, Thomastown, Victoria and its annual production of 99.99% gold known as "Four 9's Gold" was in excess of 100 tonnes. The main source of the plaintiff's unrefined gold was the Australian goldmining industry, whilst secondary sources included industrial recovery, jewellery and scraps. The unrefined gold received by the plaintiff came from most Australian States although the majority came from Western Australia.

In November 1994, the plaintiff commenced to change the refinery process from one of Aqua Regia Dissolution to one of Miller Chlorine. The Aqua Regia process was a batch process whereas the Miller Chlorine process was a continuous one. The change was completed in June 1995.

Ty Gaffney commenced employment as a customer melter with the plaintiff in April 1993. He commenced to steal small quantities of gold from the plaintiff in July 1994 by concealing it on his body when he left the plaintiff's premises at the completion of an afternoon shift. These thefts continued on a relatively regular basis without detection until early 1997. Following investigations and analysis, the plaintiff was able to identify over 100 occasions on which Mr Gaffney stole gold which varied in amounts on each occasion from between 150 net grams to in excess of 600 net grams of gold. In total, Mr Gaffney provided Mr Knight with in excess of 48 kgs of gold which was sold by Mr Knight to AGE.

During the period 1995 to 1997 the plaintiff was producing in excess of 110,000 kgs of refined gold per annum. The amount of gold stolen by Mr Gaffney represented less than 0.1% of the total pure gold refined in one year.

Mr Gaffney was responsible for melting and refining small pieces of gold received either directly from the customer or from the plaintiff's interstate offices. He worked independently within the melt room. A reconciliation of gold records revealed that none of the gold which he stole was from the area of operation in which he worked. It appeared that Mr Gaffney was able to steal cathode gold which was taken out of the cathode vault each day by others for the purpose of melting. Mr Gaffney would then melt some of this gold with silver and other base metals into the form of a button, wedge or blob prior to concealing the gold on his body at the end of his shift.

It was fortuitous that following a police investigation into Mr Knight, who was by late February 1997 seriously addicted to heroin, the police learned of Mr Knight's involvement in the sale of gold to AGE and his connection with Mr Gaffney. It was as a result of the police investigation that the plaintiff became aware of the theft of its gold by Mr Gaffney.

At all material times the plaintiff had a comprehensive inventory tracking system for its gold which recorded gold movements throughout the production process from receipt of the gold until its return to the customer. The plaintiff's capacity to efficiently maintain an inventory tracking system was made more difficult by the change in its refinery process.

The defendants' reliance upon s. 27 Sale of Goods Act 1958

AGE, having admitted that the plaintiff was the owner of each of the quantities of gold which it purchased from Mr Knight for the amounts alleged, contended that the plaintiff's conduct by virtue of s. 27 Sale of Goods Act 1958 precluded it from denying Mr Knight's authority to sell the stolen gold to AGE. That conduct as pleaded in the first named defendant's defence, although refined in submissions, was said to be:

(i)The failure by the plaintiff to take adequate measures to prevent or detect the thefts or to ensure that such measures were taken.
(ii)The failure by the plaintiff to implement adequate stock control procedures to enable detection of gold theft.
(iii)Failure by the plaintiff to alert buyers of alluvial gold in Melbourne to the fact that gold was disappearing from the plaintiff's premises and that such buyers, which would include the first named defendant, should take precautions.

AGE also denied that it sold the gold as alleged in each conversion pleaded in the statement of claim and in its defence pleaded that it exchanged the gold which it had purchased from Mr Knight for an equivalent value of gold processed by the Golden West Refinery, a large Western Australian refinery.
(a) Contributory negligence by the plaintiff

AGE claimed that the plaintiff had itself negligently caused or contributed to any loss or damage that it had suffered. Initially, AGE submitted that any liability of AGE for conversion was extinguished or reduced as a result of the plaintiff's contributory negligence. They relied upon in Lumsden & Co v London Trustee Savings Bank[i] and Souhrada v Bank of New South Wales.[ii] Prior to the conclusion of the hearing, Mr Horgan properly conceded that he could not maintain the argument that contributory negligence was a defence to an action for conversion having regard to the decision of Ormiston J. (as he was then) in Australian Guarantee Corporation Ltd v Commissioners of the State Bank of Victoria.[iii]

(b) Stock control procedures

In January 1996, the plaintiff conducted the first physical stock-take after the commission of a new processing plant. This stock-take was witnessed by an experienced gold stock-taker from the United States. The stock-take revealed a serious gold loss situation and the plaintiff became concerned about the adequacy of the stock-taking procedures, record-keeping and the accuracy of assays. The stock-take reconciliation, which took a number of months to complete, disclosed a gold loss of 240 kgs, significantly more than the processing losses that were anticipated with the introduction of the new process. As a result, the plaintiff undertook a further full stock-take in August 1996 which was again overseen by an experienced gold stock-taker from the United States. This reconciliation disclosed an unexplained gold loss of 310 kgs, an increase of 70 kgs from the stocktake reconciliation commenced at the beginning of the year.

In order to find the missing gold, the plaintiff commenced a re-melt of an inventory of 50 tonnes of silver. It thought that all or a proportion of the missing gold may have been left in the silver during the refining process. Between August 1996 and January 1997, the silver was re-melted and refined but the process resulted in a gold recovery of only 9 kgs, leaving unexplained a gold loss of 301 kgs. A further stock-take was then undertaken in January 1997 after the plaintiff had conducted an extensive re-evaluation of its inventories and its processes. This stock-take confirmed a total loss of gold in the period November 1994 to January 1997 of 256 kgs. It will be apparent from the aforementioned that the thefts by Mr Gaffney would account for less than one-fifth of that loss.

Following the commencement of the police investigation in early 1997, the plaintiff discovered that Mr Gaffney had been taking the refined cathode gold after it had been taken out of the vault and transferred each day to the foundry for melting down into gold grain. The plaintiff's gold inventory tracking system included weighing and checking the refined cathode gold before transferral to the foundry for melting and after melting. Mr Shepherd, a general manager of finance and administration of the plaintiff, examined these records following the receipt of information arising from the police investigation as to the source of the stolen gold. These records tended to support the information that Mr Gaffney had stolen the cathode gold at this point in the gold refining process. I accept however that the discrepancy between the weight of refined cathode gold before and after melting was of such a small order that it would only be with the benefit of additional information not discovered until the police investigation was under way that one would conclude that theft, rather than production losses, was occurring at this point in the refining process.

Following the January 1996 stock-take identifying a substantial gold and silver loss, the plaintiff undertook an examination of each stage of the refining process to eliminate each stage as a possible cause of the losses. This examination took in excess of 12 months and was nearing completion at the time the plaintiff received information regarding the police investigation into Mr Knight and Mr Gaffney.

(c) The plaintiff's security system

Between 1994 and 1997, the plaintiff had a security system in operation at the plant covering both the building and the movement of staff within the building. The plaintiff had a security manual which was a generic guide to the Company's standards at all operational sites. The manual was supplied to the security manager employed by the plaintiff at the Thomastown plant, who was responsible for establishing site security procedures and for liaising with the security contractors. At all material times the security contractor was the fourth named defendant. It supplied the security staff who were trained and supervised by the security manager with respect to security procedures that operated within the Thomastown plant.

The Thomastown refinery was not a metal-free environment and employees could enter the refinery wearing their own personal clothing and items that contained metal such as trouser belts, rings, medallions and zips. Although refinery employees were issued with standard working clothing, the staff room in which the staff changed into such clothing was situated immediately adjacent to the melt room. At the completion of a shift, the melt room staff would change into their personal clothing in the staff room and would then be required to walk through the plant to a security area where they were subjected to a security screening check. This check required workers to remove their shoes and empty their pockets. Only a hand-held metal detector was used to examine them. Although the security manual prescribed that employees should be asked to pass through an archway detector, such a device was not in operation during the relevant period.

It appears that Mr Gaffney would tape the wedge of gold onto his body underneath his belt near his groin. Following the commencement of the police investigation, Mr Gaffney was videoed on occasions passing through the security process. It appears that when the detector was activated Mr Gaffney would turn down the front of his jeans to reveal a metal stud on the inside of his pants which was accepted by the security guard as the explanation for the activation of the detector. The detector was neither further used nor was there any physical search or examination undertaken of Mr Gaffney’s person. Mr Shepherd acknowledged that the procedure followed by the security guards was less than satisfactory and was not in conformity with the security manual.

There were other aspects of the security system which were inadequate although the search area was monitored by video-tape. The security manager, who was required to view the videos, did not do so and it may be that the procedure which enabled Mr Gaffney to avoid detection was something of which the security manager was therefore unaware. The security manual also required that employees only be permitted onto the site during work hours, yet Mr Gaffney was given access to the melting room prior to the time at which he was required to commence work. It appears that it was during this period of time that he obtained access to the cathode gold which had been brought from the cathode vault for melting by other employees.

Mr Shepherd, the principal witness for the plaintiff, acknowledged that the security staff had not taken appropriate steps to ascertain why the detector was activated. They ought to have asked Mr Gaffney to remove his belt and, upon discovery of the metal stud, should have asked him to remove his pants and should have searched his body and the area of his waist again with the metal detector. Mr Gaffney's contract of employment included a term which required him to submit to a search if required.

The plaintiff, upon receipt of information following the police investigation, became concerned about the adequacy of the security process and as a consequence has introduced new security procedures following a thorough review. Metal clothing is now banned in the secured area and metal-free clothing is supplied to staff who are required to change into it before entering into the secured area. Staff are now subjected to both a metal detector search and walk through x-ray arch and all baggage is x-rayed.

It is unnecessary to further consider the evidence relating to the conduct of the security staff employed by the fourth named defendant. They adopted a security procedure which permitted Mr Gaffney to conceal gold on his body and leave the plaintiff's premises without detection on over 100 occasions. The plaintiff employed a security manager who was required to develop security procedures appropriate for the plaintiff's premises at Settlement Road, Thomastown. The plaintiff's security manager was responsible for all aspects of security at the plaintiff's premises and in particular was required to develop operating procedures and standing orders that were to be followed by the fourth named defendant's security staff. The security manager had available to him a number of monitoring screens which he could observe as the security guards were searching employees. The procedures that were prescribed were inadequate to properly detect employees who might attempt to remove gold from the premises and the procedures that were in place were not adequately enforced. The plaintiff did not have an adequate and properly monitored security system in place at its premises and in submissions, the plaintiff only faintly sought to resist such a conclusion.

(d) Extent to which public had access to gold lost in the plaintiff's processing

As a result of the stock-take reconciliations conducted by the plaintiff during 1996, it was ascertained that there had been a loss of some 240 kgs of gold which it believed was the result of processing problems. In cross-examination of Mr Shepherd who was, at the material time, the general manager of the finance and administration of the plaintiff, it was suggested that substantial amounts of gold must have been contained within the waste of the refining process and that persons outside the refinery could have come into possession of the gold. Mr Shepherd, whose evidence I generally accept, explained that the waste was discharged and used for landfill. The waste was in either liquid or sludge form. Any gold that was contained within the waste would be in small amounts within tonnes of sludge and leftover chemical materials from the process. The plaintiff during 1996 had gone through an extensive sampling of the waste and rigorous steps were taken within the refinery process to ensure a minimal loss of gold within the waste. The plaintiff did not regard it as a realistic possibility that gold lost through the waste process could get into public circulation. The plaintiff had reviewed all aspects of the process to ensure that there were no large losses of gold occurring at any particular stage of the process. Despite the magnitude of the gold lost the plaintiff had no reason to think that such gold might find its way into public circulation by being recovered within the waste discharged by the plaintiff. Furthermore, no evidence was placed before me to suggest that anyone could have recovered gold from the waste discharged by the plaintiff. I do not think that the plaintiff can be criticised for having failed to act upon a hypothesis which the evidence establishes to be remote.

(e) Failure of the plaintiff to notify AGE of the lost gold

In the course of his cross-examination, Mr Shepherd agreed that although the plaintiff did not deal extensively with alluvial or miner's gold, the plaintiff would have been aware that there were a small number of commercial traders in Victoria who would deal in gold of this description. In particular, he acknowledged that the plaintiff would have known how to notify such persons who trade in such gold and that once the plaintiff had discovered that there was a large amount of gold which was unaccounted for those persons could fairly easily have been notified that such gold might have been circulating in the market place. The plaintiff had not notified any dealers in the market place.

The second named defendant gave evidence that during the period 1995-1997 there were approximately 12 to 13 gold dealers listed in the Yellow Pages and there may have been a number of other dealers whose names were not so listed. In addition, there are a number of other persons who bought and sold gold such as prospectors who would come into the office of AGE from time to time. The second named defendant stated in evidence that it was very rare for information to be circulated between various gold traders and he had no experience of information being circulated amongst traders with respect to gold that was stolen despite the fact that the sale of stolen gold was an industry-wide problem. Cathode gold was not something that would normally be traded. Rather it would be used as part of the process of converting the gold into gold bars or granulated gold which would then be traded. The bullion traders were amongst the small number of dealers listed as gold dealers.

By contrast to her husband, the third named defendant swore that she did not think the gold was stolen because she would have expected the owner to have circulated the disappearance of the gold within the traders in the industry. The third named defendant gave evidence that the Australian Bullion Company, after it was robbed in 1997, circulated a notice to gold traders advising them to be on the lookout for bars and granules that had been stolen. She also said that from time to time people who had had jewellery stolen would send a letter to second-hand dealers advising them of that fact. She was not aware of any warning or notification being given by the plaintiff in relation to its stolen gold.

The defence of estoppel by omission/negligence
(a) Inadequate stock control procedures

The defendants allege that the plaintiff failed to properly monitor its stock during the production process. It is contended that inadequate stock control procedures resulted in the plaintiff being unable to determine how it was losing such substantial amounts of gold during the refinery process. Although, the evidence does not demonstrate any failing by the plaintiff in this respect, I shall assume for the purpose of the present argument that the defendants have established the plaintiff's failing as pleaded. Does such conduct support an estoppel?

(b) Failure to take adequate measures to prevent theft

According to the defendants, the plaintiff's procedure for searching its employees at the completion of a shift was inadequate to prevent the unlawful removal of gold from the secure area by its employees. This conduct is characterised as negligence by the defendants. The employment of the term “negligence” is apt to be misleading as estoppel by omission does not readily accommodate an unqualified transposition of principles of the tort of negligence.[iv]

The defendants in support of their claim that the plaintiff was negligent point to the absence of restrictions as to the clothing which employees could wear during the course of their shift; that the employees' change room was located within the secure area of the premises; that no x-ray arch or baggage search x-ray was in place despite the safety manual requiring such equipment be utilised; that the use of the hand-held metal detectors by the security guards was wholly inadequate that the security guards readily accepted Mr Gaffney's explanation of why the detector was activated and the failure by the plaintiff's security manager to oversee the safety procedures and ensure proper compliance by the staff and employees with such procedures. The plaintiff while denying such deficiencies did not seriously challenge such conclusions. I have concluded that the plaintiff did not maintain an adequate security system. Does such conduct support an estoppel?

It has been suggested that it is questionable whether the courts would characterise an employer's failure to adequately monitor employees as negligent for the purpose of estoppel despite the fact that forms of employee monitoring are becoming increasingly common.[v]

(c) Failure to notify gold dealers that its gold may be offered for sale

The defendants also submit that the plaintiff knew that if large amounts of gold were lost or stolen from its premises the likelihood was high that the gold would be sold in the market place to a limited number of persons who dealt in such gold. The defendants submitted that it was a simple matter for the plaintiff to notify such dealers in the market place that large amounts of its gold were unaccounted for and might be offered to them for sale. It was not disputed that the first named defendant, AGE, was a dealer in the market place which could be expected to deal in such gold. As I have already noted there were occasions when the plaintiff had followed such a course following a known theft of its gold. The defendants submit that as at January 1996 when the plaintiff could not account for 240 kgs of its gold or in August 1996 when a further reconciliation showed that 310 kgs could not be accounted for, the plaintiff ought to have notified those persons in the market place who were likely to deal in such gold. Does a failure to notify the first named defendant give rise to an estoppel?

Ambit of the estoppel in s. 27 Goods Act 1958

The defendants contend that the estoppel contained in s. 27 Goods Act 1958 arises on two discrete bases. The first is that the plaintiff, upon becoming aware of the quantity of gold that was lost, stolen or unaccounted for, had a duty to notify the small number of dealers that existed in the market place (and which included the first named defendant) that such gold belonged to the plaintiff. Having failed to notify AGE, the defendants argue that the plaintiff was precluded from denying Mr Knight's authority to sell its gold. The defendants accepted that the estoppel on this basis could not arise until the middle of 1996 when the plaintiff confirmed that a substantial amount of its gold was unaccounted for. It was conceded that no obligation to notify dealers in the market place could have arisen before this time because the plaintiff did not know its gold could not be accounted for. The second contended basis for the estoppel is that the plaintiff by its negligence in the manner in which it controlled and safeguarded its gold, breached its duty of care to the small number of dealers in the market place and permitted the seller (Mr Knight) to create an appearance of ownership in the gold. The defendant submitted AGE was thereby precluded from denying Mr Knight's authority to sell. It was said that the principles supporting these propositions could be derived from a line of authority commencing with the judgment of Lord Wilberforce in Moorgate Mercantile Co Ltd v Twitchings and which was followed in Thomas Australia Wholesale Vehicle Trading v Marac Finance Australia and Leonard v Ielasi.[vi]

Section 27 Goods Act1958 enshrines the aphorism, nemo dat quod non habet which continues to apply "unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell". This section and its counterpart in other States is recognised as doing no more than preserving common law principles of estoppel.[vii] Section 4(2) Goods Act1958 provides that the rules of the common law shall continue to apply unless they are inconsistent with an express provision of the Act.

At common law one may be precluded by either words or conduct from denying a particular state of affairs when such words or conduct cause or encourage another person to believe in that state of affairs with the result that such person alters their previous position.[viii] The present case is not concerned with estoppel arising where an owner, by reason of representations made that the seller is the owner of the goods, is estopped from denying the apparent ownership of the seller. The defendants rely upon estoppel by conduct. Where there is an obligation on the owner to disclose the true position, an omission to do so may have the same legal consequences as a representation.[ix]

The two bases for the estoppel upon which the defendant’s rely (see paragraph 33) appear to be drawn from a passage in Sutton's Sales and consumer law.[x] The author refers to two manifestations of estoppel by conduct:

"When a party upon whom is cast a duty to speak or act fails to do so, and estoppel by negligence where the true owner of goods is precluded from denying the seller's authority to sell because of his or her negligence in allowing the seller to create an appearance of ownership of the goods."[xi]

The defendants submitted that these propositions are to be derived from Associated Midland Corporation v Sanderson Motors Pty Ltd[xii] and Thomas Australia.[xiii]

Despite the defendants' claim that the estoppel could be founded on two discrete bases, it was acknowledged in the course of the defendants' oral submissions that the only conduct of the plaintiff which could support the estoppel, was the alleged failure of the plaintiff to notify AGE that its gold could not be accounted for. The plaintiff's inadequate stock or security procedures, properly viewed, could only provide a factual basis for the requirement that the plaintiff act or speak to prevent AGE from being misled.

Implicit in the defence submission is the claim that AGE is an innocent bona fide purchaser. The dictum of Ashurst J. in Lickbarrow v Mason[xiv] that:

"Wherever one of two innocent persons must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it."[xv]

is well recognised by authority and text writers as being too broad. Something more than mere imprudent conduct on the part of the owner is required before inaction or omission can give rise to an estoppel.[xvi]

There is much controversy about the propriety of the term ‘estoppel by negligence’. Some writers have argued that there is no such thing as estoppel by negligence.[xvii] Lord Pearson in Saunders v Anglia Building Society[xviii] expressed such a view. There appears to be consensus amongst the text writers that this estoppel, like all others, rests in the last resort on a representation, estoppel by negligence really being a representation through omission.[xix] Where the estoppel is by negligence, the representation is deemed by the courts to have occurred. This was expressed in unequivocal terms by Collins MR in Bell v Marsh:[xx]

"A man may act so negligently that he must be deemed to have made a representation which in fact he did not make, but because he has acted negligently he is deemed to have made it."[xxi]

Silence or acquiescence may in some circumstances have the same consequences as an expressed representation.[xxii] The representation must mislead another.[xxiii] In addition, the relationship of the owner to the party misled must be such that the owner has a duty to correct the misunderstanding and was negligent in not doing so.[xxiv]

In both Australia and England, negligence on the part of the true owner can only be raised as an estoppel in limited circumstances. It is generally recognised, that a true owner will not be precluded from denying the seller's authority to sell by virtue of his or her omissions to act unless it is established that the owner has a duty of care to the purchaser, and in breach of that duty was negligent. Such negligence must be the proximate or real cause of the buyer being induced to purchase the goods.[xxv]

In Big Rock Pty Ltd v Esanda Finance Corporation Ltd,[xxvi] Pidgeon J. referred to the different judicial approaches adopted in Australia relating to the question of duty discussed by the House of Lords' in Moorgate Mercantile Co. One such differing approach is to be found in the dissenting judgment of Kirby P. (as he then was) in Thomas Australia where His Honour observed that there was nothing contained within the section that demanded that a duty relationship be established. In the President's view the imposition of a duty of care constituted an unwarranted diminution in the beneficial protection provided by the section. His Honour construed the section free from what his Honour regarded as unnecessary encrustation by common law principles of estoppel. By contrast, both Glass and McHugh JJA. (as he was then) reinforced the requirement that the owner must owe a duty to the buyer or the class of persons to which the buyer belonged, a requirement long recognised in common law countries. The dissenting judgment of Kirby P. however was viewed as persuasive and would have been followed if it were necessary to do so in the judgment of Millhouse J. in Leonard v Ielasi.[xxvii]

For almost one and a half centuries the common law has recognised a duty of care as an essential requirement of estoppel by omission.[xxviii] It has been acted upon by courts of the highest authority.[xxix] It need not be a pre-existing legal duty.[xxx] As Glass JA. observed in Thomas Australia the owner's failure -

"….must be in breach of the duty to speak out. Unless the conduct of the taciturn owner is subjected to the litmus test of duty, I know of no way to discriminate between conduct which precludes and that which does not."[xxxi]

The generality of the words in s. 27 Sale of Goods Act 1958 does not facilitate the Court's task in determining the nature of the relationship which must exist between owner and buyer, nor do the decided cases provide clear guidance as to the circumstances in which a relationship will give rise to the duty.[xxxii] This case, counsel for the defendants contends, requires the application of a developing law to a novel set of circumstances.

In Mercantile Credit Co., the Court of Appeal held that a duty of care will exist where the owner furnishes the thief with documentation which enables the thief to give the appearance of having the power or authority to dispose of the goods where the owner knows the documents will be shown to third parties who will rely upon them.[xxxiii] This particular case assumes some importance for the defendant as it treated the nature of the duty of care as being the same as that which arises in the ordinary law of negligence.

The defendants accept that whilst a duty of care to the innocent converter is required, the wholesale importation of principles applicable to the tort of negligence is not appropriate.[xxxiv] Yet the defendants' second basis for supporting the estoppel depends upon conduct of the owner which is more reminiscent of a claim in negligence. The transportation of principles relating to the tort of negligence into the area of estoppel by omission would substantially broaden the scope of the estoppel. It would enable the contributory negligence of an owner to be raised by a buyer as a defence to a cause of action in conversion.[xxxv]

In cases where the duty of care that was found to exist bore a similarity to that of the tort of negligence, the owner had, by positive acts, placed the rogue in a position where he was able to give the appearance of being the owner or person authorised to dispose of the property so that the consequences were reasonably foreseeable.[xxxvi] Such circumstances are not present in this case. The most favourable view of the facts permit the defendants to say that the plaintiff's inadequate procedures resulted in Mr Gaffney being able to obtain and sell the plaintiff's gold without the plaintiff's knowledge.

By contrast with positive conduct or statement, inaction or silence is colourless. As Lord Wilberforce in Moorgate Mercantile Co predicated of conduct sufficient to found an estoppel:

"It cannot influence a person to act to his detriment unless it acquires a positive content such that that person is entitled to rely on it. In order that silence or inaction may acquire a positive content it is usually said that there must be a duty to speak or to act in a particular way, owed to the person prejudiced or to the public or to a class of the public of which he in the event turns out to be one."[xxxvii]

The decision of the House of Lords in Moorgate Mercantile Co is generally regarded as correctly enunciating the requirements of a duty and breach.[xxxviii] Their Lordships were concerned with the activities of a hire purchase organisation of which most finance companies and many motor dealers were members. It was a private body which kept a register of vehicles which were the subject of hire purchase agreements and any finance company which let a vehicle pursuant to such agreement could register the agreement with the organisation enabling a dealer to search the register when considering whether to purchase a vehicle. There was no obligation on finance companies to register agreements with the organisation, although, in practice, they generally did so and dealers in practice relied upon the information available. The plaintiffs had failed to register the hire purchase agreement and the defendants received a negative response when they enquired from the organisation whether any agreement had been registered. The plaintiffs sued the defendants for conversion and the defendants argued that the plaintiffs were estopped from asserting their title. The defendants claimed an estoppel by actual representation arose. The House of Lords rejected this on the basis that the body had merely said that no agreement had been registered, but they had not said that there was no such agreement in existence. The defendants also asserted an estoppel by failure to register. The majority of the House of Lords held that there was no such duty as membership of the body did not require members to register agreements.

Much subsequent judicial and academic opinion is to the effect that the dissenting judgments of Lord Salmon and Lord Wilberforce are more persuasive but the dissenting judgments do not differ from the other members of the Court as to the principles of law that should be applied. Lord Wilberforce's judgment is often cited as declaratory of the principles for which the case stands. Lord Wilberforce and Lord Salmon considered that, as the general practice in the industry was to depend heavily on registration of the hire purchase agreements, it was not unreasonable to hold that a duty to register arose. The defendants rely by analogy, upon Lord Wilberforce's and Lord Salmon's analysis of the facts as demonstrating AGE had an obligation to act. Atiyah says of the decision in Moorgate Mercantile Co that:

"If the case had been approached as though it were a simple negligence action in tort (rather as the Hamblin case was approached) it seems likely that a duty would have been imposed since the consequences were readily foreseeable."[xxxix]

Having put forward this contention, the learned author identified difficulties which would arise if common law negligence principles were applied.

Both the plaintiff and defendants have referred to the passage in the judgment of Lord Wilberforce in Moorgate’s case where his Lordship said:

"I think that the test of duty is one which can safely be applied so long as it is understood what we mean. I have no wish to denigrate a word which, to modern lawyers, has become so talismanic, so much a universal solvent of all problems, as the word "duty" but I think that there is a danger in some context of which this may be one, of bringing in with it some of the accretions which it has gained – proximity, propinquity, foreseeability – which may be useful, or at least unavoidable in other contexts. What I think we are looking for here is an answer to the question whether, having regard to the situation in which the relevant transaction occurred, as known to both parties, a reasonable man in the position of the acquirer of the property would expect the owner acting honestly and responsibly, if he claimed any title in the property, to take steps to make that claim known to, and discoverable by the acquirer and whether in the face of an omission to do so, the acquirer could reasonably assume that no such title was claimed."[xl] (emphasis mine)

His Lordship also observed, referring to the English section, the equivalent of s. 27 Sale of Goods Act1958, that the right of an owner to recover property from innocent persons remains, notwithstanding a greater willingness by the law to find a duty of care on the part of owners towards persons into whose hands their property comes. His Lordship observed that:
"The duty of care should not be stretched so widely as to make it a universal duty on the part of property owners to safeguard others against loss."[xli]

McHugh JA. (as he then was) in Thomas Australia considered as critical this requirement propounded by Lord Wilberforce that the buyer, having the same information about the transaction as the owner, would expect the owner to ensure that his title to the goods was made clear. It is the "situation in which the transaction occurred" and not the existence or interests of the parties which must be known to both parties.[xlii] McHugh JA. whilst stating that it was open to the courts to develop the law in the area of duty reiterated the warning of Lord Wilberforce that the duty of care should be confined.[xliii]

It has been suggested by Johnson J. in Leonard v Ielasi that the test is too narrowly stated by Lord Wilberforce because it would preclude a duty arising in cases where there were special facts known to the true owner which related to the fraudulent seller, but which could not be within the knowledge of the buyer.[xliv] Lord Wilberforce's test does not, in my opinion, require that the knowledge or understanding of the transaction by the owner and buyer must be identical. The cases referred to by Johnson J.[xlv] in his comprehensive analysis were all cases in which an estoppel arose on the basis of a knowledge special to the owner. Johnson J. thought a restatement necessary of Lord Wilberforce's test, to provide for matters peculiarly within the knowledge of the owner. Based on the special knowledge of the owner, Johnson J. propounded the following test:

"In my view the owner of goods of some substantial value who permits possession of those goods to remain with a person whom the owner knows to have acted dishonestly in relation to those goods will, except in special circumstances, owe a duty of care to others who might be minded to deal with that person in relation to the goods. The duty arises on the basis of the known dishonesty of the person in relation to those goods. The duty is not negligently to mislead others into acting to their detriment in relation to the goods."[xlvi]

Where the principal is aware of their agent’s misconduct, action is called for as part of their duty to speak out. A failure to act when possessed of knowledge of the agent’s wrongdoing deprives the innocent party of the opportunity of avoiding the detriment.[xlvii] An estoppel founded on silence or acquiescence will be sufficiently based, if the person against whom the estoppel is raised, if acting reasonably, honestly and responsibly would bring the true facts to the attention of the person known by them to be operating under the mistaken view of the facts or of their respective rights.[xlviii]

Carelessness without more has not been regarded as a sufficient basis to found a duty by the owner to the buyer although, where a duty otherwise exists, it may provide the basis for establishing a breach of that duty. Even where the true owner could reasonably foresee that their carelessness could lead the buyer to believe that the seller was the owner of the goods, in the absence of knowledge of the actual circumstances which affect their property, a duty will not arise. A knowledge of facts which would lead a reasonable owner to conclude that a reasonable buyer may be misled accords with the principle as expressed by Lord Wilberforce in Moorgate Mercantile Co Such knowledge would generally be necessary.

The owner of goods is under no duty to ensure the safety of their own belongings. Hence possession of goods is not regarded as a basis of ostensible authority.[xlix] The judgments of their Lordships in Moorgate Mercantile Co are to the effect that an owner does not owe a duty to the world to keep his goods safe. In the words of Lord Fraser:

"The owner of property is entitled to be careless with it if he likes, and even extreme carelessness with his own property will not preclude him from recovering it from a person who has bought it from someone who dishonestly purported to sell it."[l]

Similarly, Lord Wilberforce observed that English law does not require that a man who owns property is under any general duty to safeguard it and he may sue for recovery any person into whose hands it comes.[li] Farquharson Brothers v J King & Co Ltd[lii] is frequently cited to support this proposition. It makes plain that carelessness in the conduct of one's business will not preclude an owner from recovering property stolen from them.[liii] Farquharson Brothers was referred to at length in the judgment of Pidgeon J. in Big Rock Pty Ltd.[liv]

In Farquharson Brothers’ case, the plaintiffs had given their clerk express authority to send delivery orders for the timber to a dock company which was instructed to act on the clerk's delivery orders. The clerk had no authority to sell the timber himself, but he fraudulently transferred some of the timber by executing a delivery order to a fictitious person and the dock company, acting upon the delivery order, transferred the goods in accordance with the order. The clerk then sold the timber to the defendants under his assumed name and the plaintiffs having discovered the clerk's fraud brought an action for conversion. Each of the judgments in the House of Lords rejected the notion that an employer can be estopped from asserting title to goods stolen by their employee where they gave the employee no authority to dispose of the goods and the buyer had not acted on any representation by the owner concerning the authority of the clerk. As Lord Macnaghten stated:

"Nothing is better settled than this, that if a person buys a chattel and it turns out that the chattel was found by the person who professed to sell it, the true owner can recover his property unless there has been a sale in market overt. The right of the true owner is not prejudiced or affected by his carelessness in losing the chattel, however gross it may have been. If I lose a valuable dog and find it afterwards in the possession of a gentleman who bought it from somebody whom he believed to be the owner, it is no answer to me to say that he would never have been cheated into buying the dog if I had chained it up or put a collar on it or kept it under proper control. If a person leaves a watch or a ring on a seat in the park or on a table at a café and it ultimately gets into the hands of a bona fide purchaser, it is no answer to the true owner to say that it was his carelessness and nothing else that enabled the finder to pass it off as his own. If that be so, how can carelessness, however extreme, in the conduct of a man's own business preclude him from recovering his own property which has been stolen from him."[lv]

Since Farquharson Brothers,[lvi] the distinction between the circumstances of an owner who unwittingly assists in a fraudulent scheme and an owner who represents another as though the owner or as someone who has power to dispose of the goods has been maintained.

Was the plaintiff's conduct such as to preclude it from denying Mr Knight's authority to sell?

It follows from the authorities to which I have referred that the plaintiff was under no obligation to safeguard its gold. The evidence establishes that the plaintiff, at no material time, appreciated that its gold was stolen or accessible in the market place. Even if the plaintiff had been so aware, the evidence does not establish a custom, usage or trade amongst gold dealers that someone in the plaintiff’s position would take steps to notify gold dealers when its gold had been unaccounted for or stolen or that there was an expectation that it would do so. The plaintiff cannot be penalised for failing to follow a course that did not approach being one upon which dealers relied. I do not find that the plaintiff owed AGE a duty or that any omission by the plaintiff involved a breach of duty. Even if the nature of the duty was that for the tort of negligence and accommodating the view of Kirby P. (as he then was), in Thomas Australia that the rights of careless owners must be balanced against considerations of "conduct" within s. 27 Sale of Goods Act 1958, the relationship between the plaintiff and the first named defendant was not one which gave rise to a duty or created an obligation requiring the plaintiff to notify AGE that its gold was stolen or unaccounted for.

The evidence tendered in this case fell far short of establishing that there was a trade custom or practice within the market which gave rise to any expectation that an owner such as the plaintiff would notify gold dealers in the event that it discovered that its gold was stolen or unaccounted for. Even if, contrary to my view of the evidence, such an expectation did exist, the plaintiff did not become aware of the fact that its gold had been stolen until some time in 1997 following the last conversion claimed by the plaintiff. While the plaintiff was aware during 1996 that it was suffering substantial gold losses, it attributed those losses to its production process and did not regard it as likely that gold contained within production waste could be recovered and find its way into the market place. No facts were known to the plaintiff that should have led it to conclude that it should notify those in the market place. The defendants have failed to establish a factual foundation for an estoppel based upon the plaintiff's failure to notify AGE of its gold loss.

The defendants in the second way that they raise an estoppel, relied upon the plaintiff's negligence in relation to the monitoring and security of its gold. This they submitted formed a separate basis for founding an estoppel as distinct from its failure to notify gold dealers in the market place. Such conduct without more, as the authorities show, does not in law give rise to an estoppel which would preclude the plaintiff from asserting its title. The omission to act or speak by the plaintiff must be in breach of some duty owed to AGE, or at least the small number of gold dealers of which AGE was one.

The burden imposed upon the defendants to show that the plaintiff owed AGE a duty or was in breach thereof has not been discharged. The defendants have failed to show that there was any relevant conduct by omission by the plaintiff which enabled Mr Knight to hold himself out as entitled to deal with the goods. The buyer relying upon estoppel by negligence must establish a representation arising from a failure to act in circumstances where the owner had a duty to do so to ensure that the buyer was not misled. I am satisfied no representation arises from any negligent conduct on the plaintiff's part. It took no step to clothe anyone with the appearance of a right to sell its gold. It neither knew nor could it be said should have known that a large amount of its gold was likely to be offered for sale in the market place. As I observed earlier, I do not think the second basis for the estoppel relied upon by the defendants is a different one to the first. The plaintiff's omission upon which the defendants rely is the same, namely, its failure to notify AGE that its gold could not be accounted for. There is no injustice that I can detect in allowing the plaintiff to deny Mr Knight's authority to sell the gold.[lvii]

I leave open the question whether it must be established that the buyer has acted to his detriment upon the basis of the mistaken belief. Clarke J. in Associated Midland thought this was required as did Finkelstein J. in Matthews v Doctrieve Corporation.[lviii] Whilst reliance on a representation to one's detriment is necessary in order to plead estoppel by representation, I find it unnecessary to determine whether authority or principle necessitates the importation of such a requirement for estoppel by negligence. Where there is an absence of compelling evidence establishing that the buyer has relied upon the owner's failure to act and has thereby suffered detriment, the buyer will in most circumstances, and this is one of them, fail to establish that the owner's conduct was the proximate cause of the buyer's loss. What the defendants have failed to establish is that there was any duty, that the plaintiff breached its duty or that the plaintiff’s conduct was the effective, proximate and real cause of AGE being persuaded to purchase the gold thereby causing its loss.[lix]

For all of the foregoing reasons I conclude that the defendants have failed to establish any conduct by the plaintiff which would preclude it from denying Mr Knight's right to sell AGE the gold.

The Directors of AGE

The first named defendant trading as AGE bought and sold gold bullion, gold scrap, jewellery, diamonds and precious metals. Mr and Mrs Secchi have at all material times been the only Directors and during that period David Secchi has also been Secretary. The paid up capital of the Company is $2.00, one share being owned by David Secchi and the other share by his mother, Josephine Secchi. Both Mr and Mrs Secchi were paid a salary by AGE during the period 1994 to 1997 and the second named defendant's brother, Eddie Secchi, was also employed on a full time basis during this period. There were other employees who worked in the office of AGE at various times.

Mr Secchi had been involved in the trade of gold and other precious metals and jewellery since 1985. After her marriage in 1992, Mrs Secchi commenced to work for AGE. The Company frequently bought unrefined ingots or pieces of gold from the public. Such gold was often known as "prospector's gold", "alluvial gold" or "miner's dump". Prospectors often melted down and removed most of the significant impurities before presenting the gold in the form of alluvial blobs for sale. On average, AGE would purchase approximately 2 kgs of such gold material from the public each year.

Between July 1994 and January 1997, AGE regularly purchased small quantities of alluvial gold from Mr Knight including the 65 transactions each pleaded as separate conversions in the statement of claim.

Mr Knight first came to AGE's business premises on 27 June 1994 offering to sell it alluvial gold. He provided Mr Secchi with a piece of gold and Mr Secchi conducted an acid test to ascertain the approximate purity of the gold. This test involved taking a scrape onto a touchstone and applying various solutions of nitric acid to the scrape. The test indicated that the gold was of high purity. This was consistent with the gold's appearance as alluvial gold or miner's dump. Mr Knight told Mr Secchi that a number of alluvial nuggets had been melted down into a rough-looking wedge. The weight of the gold was approximately 100 grams. A price was agreed upon and according to Mr Secchi, he requested identification which was produced by Mr Knight in the form of a driver's licence. Mr Knight said in evidence that he was asked for identification but much later in his dealings with AGE. The question of when identification was requested from Mr Knight was one of the few matters in dispute between him and Mr Secchi. Mr Knight became seriously addicted to heroin during the period that he dealt with AGE, so his recollections must be viewed with some caution. Mr Secchi conceded during the course of his evidence that identification may have been produced by Mr Knight on a number of occasions. I can draw no conclusion about this issue save that I am satisfied that identification was produced on at least one occasion.

At one of Mr Knight's earliest visits to AGE he told Mr Secchi that he was involved almost on a full time basis prospecting for gold and was also purchasing gold from other prospectors so that he was acting as their agent. He told Mr Secchi of the areas in which he was looking for gold and that when he had collected sufficient to sell he would melt the gold down in his kiln.

On the first and most other occasions Mr Knight was paid by cheque and was also provided with some cash. A cheque, drawn on the account of AGE and generally signed by either Mr or Mrs Secchi as the two authorised signatories to the first named defendant's account, would be made out either to Mr Knight or to cash.

For each sale of gold to AGE, a receipt in its name was prepared in the name of Mr Knight and specifying the amount and the sale price of the gold purchased by AGE. The receipt would also specify the method of payment to Mr Knight and would contain the initials of the AGE employee who had conducted the transaction with Mr Knight.

Although the conversions, the subject of the plaintiff's claim, commenced on 30 August 1995 because, as I was told at the commencement of the trial, the earlier transactions were statute-barred, all of the available documentation pertaining to all of the transactions between AGE and Mr Knight prior to 30 August 1995 was also produced. Each of the parties produced various schedules which summarised the content of this documentation. The content of the documentation as summarised in the schedules was relied upon by each party to demonstrate the level of involvement of Mr and Mrs Secchi and Eddie Secchi in the transactions with Mr Knight.

The normal procedure followed was that upon Mr Knight bringing a wedge or button of alluvial gold into the AGE office, either the second or third named defendant or the second named defendant's brother, Eddie, would deal with Mr Knight. That person would test the gold for its content, weigh the same and advise Mr Knight as to the amount that would be offered by AGE for the gold. A cheque or cash or both would be used to pay Mr Knight. The receipt issued for each gold purchase recorded the name of Mr Knight, the date of the transaction, whether Mr Knight was paid by cheque or cash, the amount of alluvial gold purchased and the purchase price, and the receipt was initialled by the person recording the transaction.

In some cases the same person dealt with Mr Knight, tested the gold, completed the receipt, completed the cheque and cheque butt and signed the cheque. On numerous occasions, it is evident that more than one of those persons performed some role in the transaction. The AGE office was a small one and Mr Secchi was generally present and Mrs Secchi often present when Mr Knight attended. This was also the case when Eddie Secchi dealt with Mr Knight.

Throughout the 2½ years that Mr Knight dealt with AGE, the gold was always presented in a melted form with a purity of between 60% and 90% with some silver and base metals present. It was in a form consistent with alluvial gold found by prospectors. Mr Knight was generally paid approximately 20% less than the prevailing market price for the gold estimated to be present following the test conducted by one of the Secchis. Mr and Mrs Secchi did not attach any significance to the quantity of alluvial gold Mr Knight was producing as he consistently presented the explanation that it was obtained from prospecting by him and other prospectors for whom he was acting.

The gold which AGE purchased from Mr Knight between July 1994 and November 1994 was sent by AGE to the plaintiff's refinery where it was exchanged for refined gold. The defendants naturally point to the fact that the plaintiff, upon receiving the gold which AGE had purchased from Mr Knight, never queried the origins of the gold or the circumstances in which AGE had come into its possession. By 30 August 1995 however, being the date of the first conversion pleaded by the plaintiff, AGE was sending the alluvial gold purchased from Mr Knight to the Golden West Refinery and continued to do so for the balance of the period during which it purchased gold from Mr Knight.

On average Mr Knight attended at the AGE office and sold it gold on a fortnightly basis. During this time, each of the Secchis dealt with Mr Knight who would provide them with small amounts of information about where he or other prospectors were obtaining the alluvial gold and accepted the explanations which he proffered about the source of the gold.

Mr and Mrs Secchi maintained in evidence that it had never occurred to them that the alluvial gold being sold to AGE by Mr Knight was stolen and they accepted his account of how he had come into its possession.

The company liable for conversion

The evidence called at the trial conclusively established that it was AGE which purchased the gold and that the acts performed by Mr and Mrs Secchi resulted in the purchase of the plaintiff's gold by AGE. Each purchase was conducted at AGE's premises between Mr Knight and an employee of AGE. The receipt identifying the quantity of gold purchased and showing the purchase price was a document bearing the name of AGE. The funds used to acquire the gold were those of AGE. Each cheque used to pay Mr Knight was drawn on the operating account of the first named defendant. The gold purchased from Mr Knight, sometimes mixed with gold purchased by AGE from other customers, was exchanged with a refinery for refined granulated gold which was returned to AGE to the credit of AGE. Furthermore, Mr and Mrs Secchi's evidence was not challenged that throughout the entire period that they dealt with Mr Knight they were employees of AGE who were paid a modest salary, that they received no directors' fees, distribution of profits or other benefit from AGE and had no legal interest in the gold which AGE purchased from Mr Knight.

A necessary corollary of the nemo dat quod habet rule is that a buyer must give up the goods or pay damages to a true owner however innocently he came by them, conversion being an idiosyncratic tort both as to liability and the measure of the owner's loss.[lx]

As I have concluded that the plaintiff is not, by its conduct, precluded from denying Mr Knight's authority to sell the gold, I am satisfied that the first named defendant converted the plaintiff's gold on each of the occasions pleaded. The date on which AGE converted the plaintiff's gold was also put in issue and I shall subsequently deal with this question.

Second and third named defendants sued as joint or primary tortfeasors or as Directors liable for the tortious wrong of the company

As the final form of the amended pleadings reveals, the plaintiff puts its case against the defendants as joint or several primary tortfeasors on the basis that each of the defendants "purchased and/or took physical control" of each of the quantities of the plaintiff's gold the subject of each conversion pleaded. The evidence does not support the plaintiff's contention that the second or third named defendants were liable as primary tortfeasors for having "purchased" the plaintiff's gold. The plaintiff has failed to establish its case against the second and third named defendants on this basis, as AGE was the purchaser.

The plaintiff’s case is also that the second and third named defendants were liable as primary tortfeasors on the basis that they took possession or control of the gold. In the alternative, the plaintiff submits that the directors procured and directed each of the conversions and knew the gold was not lawfully in Mr Knight's possession or were recklessly indifferent as to whether the gold was stolen or had been converted. The plaintiff contends they are on this basis liable for AGE’s conversions. To establish these matters the plaintiff relied upon the close involvement of each of the Directors in the conversions pleaded.

The defences of the Directors

It was submitted on behalf of Mr and Mrs Secchi that at all material times they acted only as the employees and in their capacity as Directors, as agents of AGE. Their conduct, it was said, could not make them liable for any conversion committed by the company, nor could it attract personal liability, their acts being those of a mere employee or if the acts were those of a director, the acts being those of the company and not their acts. In the alternative, it was submitted that as the date of conversion by AGE was not the date of the purchase of the gold from Mr Knight but the date on which the gold was transferred into the possession of a refinery, the directors’ involvement in any acts associated with the conversion at that time had not been established, their role in purchasing the gold from Mr Knight being irrelevant to the conversion. It was submitted that directors of a corporation are not generally liable for procuring the corporation's unlawful interference with another's rights and that for directors to be held liable for a conversion innocently committed by the corporation would be an overreach of the policy considerations behind the nemo dat quod non habet principle. It was further submitted that merely directing or procuring a conversion without knowledge of wrong-doing could not subject them to liability. It was submitted that absent a knowledge that the gold being sold to AGE had been unlawfully obtained or reckless indifference to that fact, the defendants would not be personally liable.

Concurrent liability of company and director where the director performs the tortious acts

During the course of the nineteenth century, courts recognised that directors were liable for their tortious acts as the agents of corporations.[lxi] During the following century this approach continued to be applied by the courts. In Yuille v B&B Fisheries (Leigh) Ltd,[lxii] the captain of a ship sued the ship-owning company and the managing director for personal injuries caused by negligence when his ship ran aground alleging, inter alia, that the ship was unseaworthy. Wilmer LJ. held that where a director expressly directs or is party to the commission of the tort, the director will be liable and cannot in such circumstances rely upon the doctrine enunciated in Salomon v A Salomon & Co Limited.[lxiii] In reaching this conclusion, Wilmer LJ. referred to the judgment of Lord Buckmaster in Rainham Chemical Works Ltd (in liq) v Belvedere Fish Guano Co Ltd[lxiv] and observations in The Koursk [lxv] by Scrutton LJ.

Fairline Shipping Co v Adamson[lxvi] was a similar case where the company by contract had stored meat products belonging to the plaintiffs. The plaintiff’s meat was damaged when the refrigeration machinery became inoperative and, based on evidence that the managing director had become personally concerned with the storage of the goods as evidenced by a letter from him to the agents of the plaintiffs concerning the goods, the managing director was held personally liable, he having assumed a duty of care as a bailee.[lxvii]

If the director performs the acts which constitute the tort, the director will be personally liable for the tortious act they have committed whether alone or in conjunction with others.[lxviii]

In C. Evans & Sons Ltd v Spritebrand Ltd[lxix] Slade LJ. reaffirmed the liability of a director who commits the tortious act in the following terms:

"Mr Watson, as I understood his argument on behalf of the director, did not attempt to submit that a director of a company will escape personal liability to third parties for torts which he has personally committed by his own hand (or mouth) merely because he committed the tort in the course of carrying out his duties as director of his company. He can escape personal liability for such torts no more than can an employee acting in the course of his employment for a company, or an agent acting in the course of his agency for a company. I think it is important to emphasise these points lest it be thought that the argument in this case has cast doubts on these particular principles of the law of tort."[lxx]

In the case of O'Brien v Dawson,[lxxi] Jordan CJ. at first instance observed that:

"Directors of a company are however personally responsible for any torts committed by their company in the procuring of which they are personally implicated".[lxxii]

On appeal to the High Court, Stark J. stated to similar effect:
"that it does not follow that a director of a company would escape personal liability under cover of the company's responsibility if he himself became an actor and invaded the plaintiff's rights, as by trespassing on his land or seizing his goods and so forth."[lxxiii]

The plaintiff's counsel, in support of his contention that a company director may be liable as a primary tortfeasor, placed particular reliance upon the case of International Factors Ltd v Rodriguez.[lxxiv] The defendant was a director of a company which had assigned its book debts to the plaintiff. A term of the factoring agreement provided that any payment in respect of an assigned debt which was made directly to the company should be held in trust for the plaintiffs and immediately handed to them. In breach of that term, four cheques in respect of debts assigned to the plaintiffs were sent to the company and paid into the company's bank account on the instructions of the defendant. The plaintiff successfully sued the defendant for conversion and obtained judgment to the value of the cheques. The appeal was conducted on the basis that it is correct in law "that a director is liable for torts committed by him in connection with the affairs of a company".[lxxv] The appeal was concerned with the terms of the contract and whether the payment of the cheques into the company's bank account constituted a conversion of the cheques. In the course of their judgments, the Court of Appeal approved the trial judge's treatment of the defendant as a primary tortfeasor as the cheques were physically in the possession of or under the control of the defendant who applied them in a manner in conflict with the rights of the plaintiff. It was no defence that he was acting on behalf of the company.[lxxvi]

Counsel for the defendants sought to distinguish Rodriguez’ case and submitted that that the directors should not be regarded as primary tortfeasors as there was no evidence that either the second or third named defendant had taken possession of the plaintiff's gold or exercised physical control over it. The evidence relating to the degree of participation by each of the directors in the transaction in which the gold was purchased by AGE fell far short, counsel submitted, of establishing that either the second or third named defendant committed the tort of conversion in relation to any of the conversions pleaded.

Conclusion as to primary liability of Directors

The plaintiff claimed the second and third named defendants were liable as the primary tortfeasors pleading that they "purchased or took control" of the plaintiff's gold and thereby committed the acts constituting the tort of conversion. The focus of the evidence was on the level of involvement by Mr and Mrs Secchi in each of the transactions in which the gold was purchased by AGE. They did not purchase the gold. AGE was the purchaser. I am quite unable to say on the evidence what level of control either Mr or Mrs Secchi exercised in relation to each quantity of gold, the subject of a pleaded conversion. The question of control of the gold after AGE took it into its possession was not an issue in the trial until the plaintiff amended its pleading without objection, in the course of final submissions. The individuals who performed the act of conversion are unknown. In some instances, only Mr Secchi performed all of the steps required prior to the purchase of the gold from Mr Knight. On other occasions Mrs Secchi performed all of those acts and in many instances a number of persons participated in the steps prior to purchase of the gold. By virtue of the way in which the plaintiff pleaded its case and conducted the trial, I would be required to speculate to make any finding about who took possession or had "control" of the gold upon its purchase. It was not a matter that was explored during the course of evidence. I am therefore not satisfied that the directors are liable as primary tortfeasors.

The state of mind of the Directors prior to October 1996

Despite Mr and Mrs Secchi's denial that they entertained any suspicion that the gold being sold by Mr Knight came from any illegal source, Mr Clarke, who appeared for the plaintiff submits that I should find that Mr and Mrs Secchi knew that the gold they were purchasing came from an illegal source or at least suspected as much and were recklessly indifferent as to who the true owner of the gold might be.

Mr Clarke identified a number of pieces of circumstantial evidence which he submitted support the conclusion that the Secchis must have doubted that the gold came from a lawful source. The plaintiff relied upon the following matters. The volume of alluvial gold being purchased from the public by AGE increased by more than 16 kgs in 1995 and 18 kgs in 1996 as a result of the gold sold to it by Mr Knight. Each transaction with Mr Knight involved the purchase of a quantity of gold significantly larger than the usual quantities of gold which AGE purchased from other customers. Mr Knight rarely disputed the price at which AGE was prepared to purchase the gold notwithstanding that it involved a considerable discount from the market price and that a prospector was likely to obtain a better price if the gold was sold directly to a refinery. Frequently the cheque for payment of the purchase price was made out to cash rather than to Mr Knight. Mr Knight may have shown either Mrs or Mr Secchi his pensioner card as a form of identification during mid 1995. Although Mrs Secchi denied sighting such identification and Mr Secchi accepted that he might have seen it, each Director in substance said that had they discovered that Mr Knight was a pensioner their suspicion would not have been aroused. The second and third named defendants failed to write out the cheque for Mr Knight in his name so as to ensure that part of the purchase price was paid by way of a traceable cheque. This, Mr Secchi had acknowledged, would provide a deterrent to those who might otherwise seek to sell stolen property.

Mr Horgan submitted that much of the evidence relied upon by the plaintiff supported the defendants' claim that they saw nothing to arouse their suspicions. Mr Horgan points to the fact that Mr Knight was viewed as a regular customer and that AGE held personal details of Mr Knight including an address and phone numbers and a receipt for each transaction was written out in his name. In this sense, the transactions involving Mr Knight were traceable in contrast to the large volume of cash purchases of alluvial gold made by AGE from other members of the public where no record was held which would enable the Company to trace the identity of the seller. AGE also traded in a very substantial volume of trade bullion with the public much of which was transacted as cash business with no records enabling tracing to take place. During the same period that it purchased gold from Mr Knight, it purchased in excess of $10 million worth of gold bullion.

The evidence clearly established that the melted form of alluvial gold, mixed as it was with silver and base metal, was entirely consistent with melted prospector's gold or miner's dump and neither its form nor content warranted suspicion. Before Mr Knight would attend at the premises of AGE to sell further gold, he would often be instructed by Mr Gaffney as to what he should tell the person he dealt with. Consequently in the course of these transactions, Mr Knight would tell Mr or Mrs Secchi about such things as the procedures he adopted to melt the gold, the prospecting methods that he used to locate gold, the equipment that he had available to him, the gold he had for sale including gold of other prospectors who were content to have him sell their gold because he was able to obtain a fair price and save them a trip to the city and that at various times he prospected for and obtained gold in other States as well as Victoria. He made considerable efforts, with the assistance of Mr Gaffney, to present a convincing account to those he dealt with at AGE.

There is a global market for gold and the price is determined by reference to "refined" gold. The price can be accessed through Reuters which provides a continuous record of the movement of the price of gold. During the trial this was referred to as the "floor price". A number of markets exist which deal with gold in its different forms. There is the refiners' market in which the plaintiff operates and where the price of gold in its pure and granulated form is fixed by the refinery at the floor price with minor variations depending upon whether the gold is being bought or sold. Another market is the gold traders and wholesale merchants' market in which the first named defendant traded. This market deals with gold in a variety of forms including gold scrap, miner's or alluvial gold or gold "dump". In this market the price paid for such gold is also calculated by reference to the daily floor price but with a substantial discount in the amount offered.

Mr Gaffney would melt together the plaintiff's cathode gold, silver and other base metals in the form of a wedge or button which was then given to Mr Knight for sale to AGE. The plaintiff sues the defendants only for conversion of its gold and not for the silver which is of lesser value but which was also stolen from it. Thus, during the period whilst the plaintiff's gold was in the possession of Mr Gaffney, its form was altered so that it no longer remained gold in pure form. It is the gold in its altered form which the first named defendant converted. The plaintiff contends that the measure of its loss is to be calculated by determining the quantity of pure gold contained within the button or wedge and applying the floor price per gram of pure gold on the day of the conversion. The defendants argue that the measure of damage is the market price for the plaintiff's gold in the form of the button or wedge purchased by AGE.

The defendants produced a schedule (Exhibit D13) calculating the plaintiff's loss using the floor price on the day they contended that the conversion occurred, namely on the date when the gold was exchanged by AGE with the refinery for granulated gold.

No evidence was tendered as to the value which the refinery placed upon the gold exchanged by AGE for granulated gold from the refinery. Furthermore, the calculations in the table Exhibit D13 are incorrect as the defendants have used the gold price on the date on which AGE exchanged the gold with the refinery which is not, in my view, the date of the conversion. On proper analysis, I could not utilise the schedules produced by agreement of the parties as a correct method of calculating the plaintiff’s loss.

The principal witness for the plaintiff, Mr Shepherd, gave evidence that there was no market for the gold in the form in which it was sold to AGE and the only market was for the gold contained within it, if such an assertion were correct and the correct measure of damage was the floor price for granulated gold, he acknowledged that the cost associated with the assay and refining of the button or wedge had not been taken into account as part of the plaintiff's claim. I am of the opinion that there was a market for the gold in the form in which it was sold and the plaintiff’s measure of damage is not appropriate.

The plaintiff in its statement of claim relied upon calculations made by Mr Shepherd (Exhibit P33), which included as the plaintiff’s alleged damage, the value of both the gold and silver contained in the wedge or button sold by Mr Knight to AGE. For this reason alone the figures contained in the statement of claim and Exhibit P33 cannot be utilised. Similarly the conversion table (Exhibit P2) summarising each of the conversions and the loss of the plaintiff was also based upon Mr Shepherd's calculations which were not confined to the value of the gold contained in each wedge or button sold to AGE. Furthermore Mr Shepherd's calculations adopted in both Exhibit P2 and Exhibit P33 were based upon the incorrect view that there being no market for the blob the gold was to be valued by simply applying the floor price to the net weight of the gold contained in each wedge or button.

During the trial and in submissions, the parties focused on the question of whether there was a gold traders' market in which to value the plaintiff's gold. The evidence established that such a market clearly existed. In those circumstances should the plaintiff be entitled to recover from the defendants the original value of its gold before its transformation by Mr Gaffney or is the plaintiff confined to the value of the gold in the form in which it was converted by the defendants? Apparently the principle which underlies this particular issue has not been the subject of consideration in any reported cases in England or Australia. It may be that the principle is so obvious that it has received scant attention in those textbooks that are concerned with the issue.265 As Ormiston J. found in Furness v Adrium Industries Pty Ltd “it is perhaps easier to state the conclusion which should be reached than find direct authority for it.”266

The Victorian Full Court in Ley v Lewis267 held that an owner seeking damages for conversion is confined to the value of the property at the date of conversion "unless the party complaining can allege and prove further special damage arising from the wrongful act of which he complains".268 This statement followed an earlier decision of the Full Court in Haddow v The Duke Co (NL).269 In the absence of evidence that the defendants through their conversion of the plaintiff's gold have damaged or otherwise reduced its value, the normal rule appears to require that the goods should be valued in the form in which the defendant converted them.

A converter is entitled to credit for such improvements as they have made to the chattel. That this is so because the value of the chattel is to be determined as at the date of conversion.270 In Nash v Barnes,271 Salmond J. expressed the view that an owner is not entitled to the improved value of their goods, but was limited to their value at the date of conversion whether or not the person who had incurred expenditure on the converted goods was the original wrong-doer or some other person claiming under them. Any other rule would have worked injustice as the owner would have made a profit out of the injury inflicted on them. In Greenwood v Bennett,272 the Court of Appeal attached a condition to its order that the defendants should make specific restitution to the owner to the effect that the owner should compensate the defendant for the expenditure which he had honestly and innocently incurred in improving the value of the owner's motor car. Where an owner seeks the return of goods in specie pursuant to a conversion claim, a court will not order the defendant to return the goods in specie unless an allowance is made for compensation for improvements made by an innocent converter.273 Without such a condition the legal owner would obtain an unjust enrichment contrary to equitable principles. Greenwood v Bennett was subsequently followed by Young J. in McKeown v Cavalier Yachts Pty Ltd.274 These cases illustrate that the assessment must be as to the worth of the goods in their condition as at the date of conversion.

This is not a case where the owner of goods seeks damages from a defendant who has deprived the owner of part of its unsold stock by an act of conversion. Such a claim could probably have been maintained against Mr Gaffney in which case the damages would have been calculated by reference to the cost of replacing the stock of cathodic gold converted.275 By the date of the defendant's conversion of the plaintiff's goods they were in a different form to that when in the plaintiff's possession.

The evidence of both the second named defendant and an expert called by the plaintiff support the existence of a market amongst gold dealers for dump, miner's or alluvial gold in the form in which AGE acquired it. The plaintiff’s expert, Mr Alexander, gave evidence of his experience in Western Australia. His testimony supported that of the second named defendant that dealers would offer a substantial discount from the floor price based upon the estimated weight of gold following a scratch test. According to Mr Alexander a discount of 15 per cent and up to 30 per cent would normally be made on gold purchased in this form in Western Australia. The second named defendant's viva voce evidence was that AGE generally paid on average 70 per cent of the gold's volume although the amount paid by AGE to Mr Knight varied both above and below such a percentage discount. The second named defendant also testified that other gold traders in the industry would discount the gold they acquired by up to 50 or 60 per cent depending on the nature of the buyer's trade.

The second named defendant testified that a calculation was made by AGE of the purity of the gold of each wedge or button at the time of each purchase including an assessment of risk that the purity of gold inside the wedge or button may not be the same as that on the outer surface. That risk would be increased where there was a variation in the purity of the gold on different parts of the surface of the wedge or button. The higher the risk of a variation in purity within the blob, the lower the rate of payment per gram. I accept that this was the basis upon which AGE calculated the value of the gold in each wedge or button produced by Mr Knight.

There was a ready market for precious metals in the form in which AGE acquired them from Mr Knight and I am satisfied that the amount paid per gram for the gold by AGE reflects the market value per gram that could be obtained for such gold in that form in that market.

ENDNOTES

[i][1971] 1 Lloyd’s Rep 114 at 121.

[ii][1976] 2 LR 444 per Yeldham J., at 453. See also Tettenborn, Andrew (1993) ‘Damages in Conversion – the exception or the anomaly’, Cambridge Law Journal, 52(1), 128 at 138.

[iii][1989] VR 617 per Ormiston J., at 638.

[iv]Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890 at 903; Thomas Australia Wholesale Vehicle Tradingv Marac Finance Australia (1985) 3 NSWLR 452 at 467 and Leonard v Ielasi (1987) 46 SASR 495 at 507.

[v]McKendrick, Professor Ewan (ed.)(2000) Sale of Goods, London, LLP Publishing at 5-023.

[vi]See Moorgate Mercantile Co., Thomas Australia and Leonardv Ielasi Endnote 4.

[vii]Associated Midland Corp v Sanderson Motors Pty Ltd (1983) 3 NSWLR 395 per Clarke J., at 408.

[viii]Pickard v Sears (1837) 6 Ad&El 469 at 474.

[ix]Freeman v Cooke (1848) 18 LJ Ex 114 per Parke B., at 119; Cornish v Abington (1859) 4 H&N 549; Wester Moffat Colliery Co v Jeffrey & Co 1911 S.C. 346; Seton Laing & Co v Lafone (1887) 19 QBD 68 at 72.

[x]Sutton, K.T.C. (1995), Sales and consumer law (4^th ed.), North Ryde, NSW, LBC Information Services.

[xi]See Sutton Endnote 10 at paragraph 15.21.

[xii]See Associated Midland Corp Endnote 7 at 408.

[xiii]See Thomas Australia Endnote 4 at 467 and 469.

[xiv](1787) 2 Term Rep 63.

[xv]See Lickbarrow v Mason Endnote 14 at 63.

[xvi]See Sutton, Endnote 10 at paragraph 15.22; Guest, A.G. et al (eds.) Benjamin's Sale of Goods (1997) (5^th ed.), London, Sweet & Maxwell, at paragraph 7-007; Atiyah, P.S. (1980) The sale of goods (6^th ed.) London, Pitman, at 229; Farquharson Brothers Co v King & Co [1902] AC 325 per Lord Lindley, at 342; James v Waring & Gillow Ltd (1926) AC 670 per Lord Sumner, at 693; Wilson and Meeson v Pickering [1946] 1 KB 422 per Lord Greene, at 425.

[xvii]See Atiyah Endnote 16 at 224.

[xviii][1971] AC 1004 at 1038.

[xix]See Sutton, Endnote 10 at 448; see McKendrick, Endnote 5 at 5-032; see Guest et al (eds.), Benjamin Sale of Goods, Endnote 16 paragraph 7-014; see Atiyah, Endnote 16 at 224.

[xx][1903] 1 Ch 528.

[xxi]See Bell v Marsh Endnote 20 at 541.

[xxii]Thompson v Palmer (1938) 49 CLR 507 at 547 per Dixon J.; Matthews v Doctrieve Corporation Pty Ltd [2003] FCA 459.

[xxiii]Gator Shipping Corp v Trans-Asiatic Oil Ltd [1978] 2 Lloyd’s Rep 357 per Kerr J., at 376.

[xxiv]Swan v North British Australasian Co Ltd (1863) 2 H&C 175 per Blackburn J., at 182; Mercantile Credit Co Ltd v Hamblin [1965] 2 QB 242 per Pearson LJ., at 275.

[xxv]Mercantile Bank of India Ltd v Central Bank of India [1938] AC 287 at 298; Mercantile Credit Co Ltd v Hamblin see Endnote 24, at 271; Moorgate Mercantile Co see Endnote 4; Gator Shipping Corporation see Endnote 23; Cadogan Finance Ltd v Lavery and Fox [1982] Com LR 248; Associated Midland Corporation see Endnote 7 per Clarke J. at 410; Thomas Australia see Endnote 4 per Glass JA. at 467 and McHugh JA. at 470; Leonard v Ielasi see Endnote 4; Big Rock Pty Ltd v Esanda Finance Corporation Ltd (1992) 10 WAR 259 per Pidgeon J., at 268; International Alpaca Management Pty Ltd v Ensor (1995) 133 ALR 561 per Beaumont and Carr JJ., at 591.

[xxvi]See Big Rock Pty Ltd Endnote 25, at 268-9.

[xxvii]See Leonard v Ielasi Endnote 4 at 507.

[xxviii]See the cases referred to in Guest et al (eds.), Benjamin Sale of Goods, Endnote 16 at paragraph 7-015.

[xxix]See Thomas Australia, Endnote 4 per McHugh JA at 476.

[xxx]See Thomas Australia Endnote 4 per McHugh JA at 473; Matthews v Doctrieve Endnote 22 at paragraph 23.

[xxxi]See Thomas Australia Endnote 4, at 469.

[xxxii]Cook v Jenkins [1947] VLR 369; Chomley v Union Bank of Australia Ltd [1951] SASR 152; Central Newbury Car Auctions Ltd v Unity Finance Ltd [1957] 1 QB 371; SIMU Mutual Assurance Association v Whitwell [1959] NZLR 251; Motor Credits (Hire Finance) Ltd v Pacific Motor Auctions Pty Ltd (1962) 79 WN (NSW) 684; Mercantile Credit Co Ltd v Hamblin see Endnote 24.

[xxxiii]Compare Beverley Acceptance Ltd v Oakleigh [1982] RTR 417.

[xxxiv]Moorgate Mercantile Co. see Endnote 4, per Lord Wilberforce, at 903; Thomas Australia see Endnote 4 per McHugh JA., at 473; Leonard v Ielasi, see Endnote 4, at 514.

[xxxv]See Tettenborn, Endnote 2 at 138.

[xxxvi]See also Coventry Shepherd & Co v Great Eastern Railway Company [1883] 11 QBD 776; Car v London and North Western Railway Company [1875] LR 10 CP 307; Seton Laing & Co v Lafone Endnote 9.

[xxxvii]See Moorgate Mercantile Co., Endnote 4, per Lord Wilberforce at 903.

[xxxviii]Saltoon v Lake [1978] 1 NSWLR 52; see Thomas Australia Endnote 4, Leonard v Ielasi Endnote 4,; Big Rock Pty Ltd Endnote 25; International Alpaca Management Endnote 25.

[xxxix]See Atiyah Endnote 16 at 232.

[xl]See Moorgate Mercantile Endnote 4 at 903.

[xli]See Moorgate Mercantile Endnote 4 at 904.

[xlii]See Thomas Australia Endnote 4 at 474.

[xliii]See Thomas Australia Endnote 4 at 473.

[xliv]See Leonard v Ielasi Endnote 4 at 515.

[xlv]See Leonard v Ielasi Endnote 4 at 516-7.

[xlvi]See Leonard v Ielasi Endnote 4 at 517.

[xlvii]Klement vPencoal Limited & Ors [1999] QSC 90 per Derrington J.

[xlviii]Pacol Limited v Trade Lines Limited (the ‘Henrik Sif’) [1982] 1 Ll R 456, 465; Tradax (Export) v Dorada Compania Naviera SA [1982] 2 Ll R 140 at 157-8 per Bingham J.; see Matthews v Doctrieve Corporation Endnote 22 and Guest, A.G. et al (eds.) Endnote 16 para 7-001.

[xlix]Dyer v Pearson (1824) 3 B&C 38; Boyson v Coles (1817) 6 M&S 14; Johnson v Credit Lyonnais Co (1877-8) 3 CPD 32.

[l]See Moorgate Mercantile Co. Endnote 4 at 925.

[li]See Moorgate Mercantile Co. Endnote 4 at 903.

[lii]See Farquharson Brothers Endnote 16 at 325.

[liii]Thomas Australia Endnote 4 per McHugh JA at 472.

[liv]See Big Rock Pty Ltd Endnote 25 at 266.

[lv]See Farquharson Brothers Endnote 16 at 336.

[lvi]See Mercantile Bank of India Ltd Endnote 25, Central Newbury Car Auctions Ltd v Unity Finance Ltd see Endnote 32 and Eastern Distributors Ltd v Goldring [1957] 2 QB 600.

[lvii]See Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.

[lviii]See Associated Midland Corp Endnote 7 at 413 and Matthews v Doctrieve Endnote 22 at paragraph 23.

[lix]See Swan v North British Australasian Co Ltd Endnote 24; Union Credit Bank Ltd v Mersey Docks and Harbour Board [1899] 2 QB 205; Bell v Marsh Endnote 21, per Collins MR., at 542-3 and per Cozens-Hardy LJ., at 545 and Moorgate Mercantile Co. Endnote 4, at 919, 921 and 928.

[lx]See Tettenborn Endnote 2 at 128 and 137.

[lxi]See Stephens v Elwall (1815) 4 M&S 259, 105 ER 830; Weir v Bell (1878) 3 Ex D 238; Perkins v Smith (1752) 1 WILS 328, 95 ER 644.

[lxii][1958] 2 Lloyd's Rep 596.

[lxiii][1897] AC 22.

[lxiv][1921] 2 AC 465.

[lxv][1924] P 140.

[lxvi][1975] QB 180.

[lxvii]See also Edgington v Fitzmaurice (1885) 29 Ch D 459; Weir v Bell Endnote 61; Said v Butt [1920] 3 KB 497; Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1; Solloway v McLaughlin (1950) 67 RPC 178; Root Quality Pty Ltd v Root Control Pty Ltd (2000) 177 ALR 231 at 259.

[lxviii]See Edgington v Fitzmaurice Endnote 67, Weir v Bell Endnote 61; Said v Butt Endnote 67; Solloway v McLaughlin Endnote 67; Reitzman v Grahame-Chapman and Derustit Ltd (1950) 67 RPC 178; Wah Tat Bank Ltd v Chan Cheng Kum [1975] AC 507 and Salomon v A Salomon & Co Endnote 63.

[lxix][1985] 1 WLR 317.

[lxx]See C Evans & Sons Ltd Endnote 69 at 323.

[lxxi](1941) 41 SR (NSW) 295.

[lxxii]See O’Brien v Dawson Endnote 71 per Jordan CJ., at 307.

[lxxiii](1942) 66 CLR 18 per Stark J., at 32.

[lxxiv][1979] 1 QB 351.

[lxxv]See International Factors Ltd Endnote 74 at 356.

[lxxvi]See International Factors Ltd Endnote 74 per Sir David Cairns, at 356 and per Buckley LJ., at 360.

[lxxvii](1893) 6 R 67.

[lxxviii][1970] VR 840 per Newton J. at 846-7.

[lxxix](1977) 19 NLWLR 219 per Glass JA., at 224.

[lxxx](1984) 3 FCR 168 at 181.

[lxxxi](1993) 42 FCR 206 at 210.

[lxxxii]Heydon, J.D. (ed.) (2000) Cross on Evidence, (Australian edition), Butterworths, Sydney Vol. 1, at para 17445.

[lxxxiii]See R v Birks (1990) 19 NSWLR 677 per Gleeson CJ., at 690-1.

[lxxxiv]See Dugdale, Anthony (ed.)(1989) Clerk & Linsell on torts (16^th ed.) London, Maxwell & Sweet, at paragraph 2-55.

[lxxxv]See Morton-Norwich Products Inc v Intercen Ltd [1978] RPC 501 at 515-16; Thompson v Australian CapitalTelevision Pty Ltd (1996) 186 CLR 574 at 580; Patrick Stevedores Operations(No. 2) v Maritime Union of Australia (1998) 153 ALR 643 at 657.

[lxxxvi]See Yuille v B&B Fisheries Endnote 62; Fairline Shipping Corporation Endnote 66; Wah Tat Bank Ltd v Endnote 68; O'Brien v Dawson Endnote 71 and Rutherford v Poole [1953] VLR 130.

[lxxxvii]See The Koursk Endnote 65 at 155.

[lxxxviii]See The Koursk Endnote 65; Brooke v Bool [1928] 2 KB 578; T Oertli AG v EJ Bowman (London) Ltd [1956] RPC 1; MCA Records Inc v Charly Records Ltd [1996] EWJ 1306 (Ch). See generally Ford, H.A.J. (1995) Ford and Austin’s principles of corporation Law, Sydney, Butterworths; particularly Chapter 16, ‘Company's Liability for Civil and Criminal Wrongs’, at paragraph 16.080.

[lxxxix][1988] AC 1013; [1988] RPC 567.

[xc]See CBS Songs Ltd Endnote 89 at 607.

[xci]See CBS Songs Ltd Endnote 89 at 608-9.

92 (1987) 17 FCR 274 at 283.

93See W.E.A. International Inc. Endnote 92 at 283.

94See W.E.A. International Inc Endnote 92 at 283.

95Oakley Inc v Oslu Imports & Exports Pty Ltd [2000] FCA 700 per Finn J. See also Sales, Phillip, (1990) ‘The tort of conspiracy & civil secondary liability’, Cambridge Law Journal 491.

96See WEA International Inc. Endnote 92 at 283.

97(2001) 108 FCR 216.

98See Pioneer Electronics Endnote 97 at 233.

99 G M (North Melbourne) Holdings Pty Ltd v Young Kelly Pty Ltd (1986) 7 IPR 149 at 158.

100See Root Quality Endnote 67 (2000) 177 ALR 258.

101 See Oakley Inc Endnote 95.

102[1991] 2 Lloyd’s Rep 611.

103See Ridgeway Maritime Inc Endnote 102 at 624.

104See Root Quality Endnote 67, at 264, 266 and 268.

105Lumley v Gye (1853) 2 El and Bl 216; 118 ER 749; Jasperson v Dominion Tobacco Co (1923) AC 709 at 713; James v The Commonwealth (1939) 62 CLR 339 per Dixon J., at 370.

106(1952) 1 ChD 646 per Evershed MR., at 680-1.

107(2000) 18 ACLC 285.

108[2001] NSWSC 328 per Einstein J., at paragraph 22.

109(2001) 189 ALR 266; (2001) 54 IPR 515; [2001] NSWCA 9.

110(2002) 18 BCL 57; [2001] NSWSC 886.

111See O’Brien v Dawson Endnote 73.

112See Idoport Pty Ltd Endnote 108 at paragraph 28.

113See Idoport Pty Ltd Endnote 108 per Einstein J., at paragraph 63.

114Reynolds, F.M.B. (1996), Bowstead & Reynolds on agency (16^th ed.) London: Sweet & Maxwell, at 635.

115See Robert Flannigan, (2002) ‘The Personal Tort Liabilities of Directors’, Canadian Bar Review, Vol 81, 247 at 277.

116See Said v Butt Endnote 67, at 506.

117[2002] QSC 105.

118See Multinail Australia Pty Ltd Endnote 117 at paragraph 126.

119[1984] RPC 61 at 91.

120(1978) 89 DLR (3d) 195.

121See MentmoreManufacturing Endnote 120 at 202.

122See MentmoreManufacturing Endnote 120 at 203.

123 See MentmoreManufacturing Endnote 120 at 103.

124(1996) 71 FCR 231; (1996) 142 ALR 111; (1996) 36 IPR 225.

125See Rainham Chemical Works Ltd Endnote 64 at 476.

126See Performimg Rights Society Ltd Endnote 67 at 14.

127See Wah Tat Bank Endnote 68 at 514-515.

128 See C. Evans & Sons Endnote 69 at 329.

129See C. Evans & Sons Endnote 69 at 329.

130[1990] 1 Qd R 231; (1985) 5 IPR 213.

131See Kalamazoo Australia Pty Ltd Endnote 130 (1985) 5 IPR 213 at 241.

132(1990) 18 IPR 216.

133See Australian Performing Right Association Ltd Endnote 132 at 220.

134(1991) 100 ALR 358.

135See Martin Engineering Co Endnote 134 at 360.

136See Microsoft Corporation Endnote 124 at 244.

137(1996) 66 FCR 474.

138See King v Milpurrurru Endnote 137 at 480.

139See King v Milpurrurru Endnote 137 at 500.

140 See Multinail Australia Endnote 117 at paragraph 129.

141(1999) 46 IPR 339.

142See Autocaps (Aust) Pty Ltd Endnote 141 at 356.

143See Performing Rights Society Ltd Endnote 67 at 260.

144See G M (North Melbourne) Holdings Endnote 99 at 158.

145See Tsaprazis Endnote 107 at 288.

146(1998) 41 IPR 443.

147[1981] 1 NSWLR 491.

148See Polaroid Corporation Endnote 147 at 498.

149See Pioneer Electronics Endnote 97 at 234.

150[1992] 2 NZLR 517.

151(2000) 76 SASR 105.

152See Root Quality Endnote 67 at 259.

153See Root Quality Endnote 67 at 266.

154See Root Quality Endnote 67 at 268.

155[2003] SCA 41.

156See Oakley Inc Endnote 95 at paragraph 5.

157[2001] FCA 1838.

158(2000) 49 IPR 578.

159See Allen Manufacturing Co Pty Ltd Endnote 157 at paragraph 43. The differences between the two tests are in the circumstances of this case very real.

160[2002] FCAFC 157 at paragraphs 160-161.

161See Sydneywide Distributors Ltd Endnote 160 at paragraph 161.

162(1996) Australian Torts Reports 81-397 (SC/VIC) at 63519.

163[1982] 8 FSR 565.

164(1985) 8 IPR 250 at 265.

165See Private Parking Services (Vic) Pty Ltd Endnote162, paragraph 81, at 397.

166See the Canadian cases referred to by Flannigan, see Endnote 115 at 295-8.

167See Short v City Bank of Sydney (1912) 15 CLR 148 at 160; Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473; Northern Territory of Australia v Mengel (1995) 185 CLR 307 at 342; Root QualityPty Ltd Endnote 67at 264.

168National Australia Bank Ltd v Nemur Varity Pty Ltd (2002) 4 VR 252 per Batt JA., at 276.

169Marfani & Co Ltd v Midland Bank Ltd [1968] 1 WLR 956 per Diplock LJ., at 970-971.

170See National Australia Bank Ltd Endnote 168 at 277.

171[1996] 4 All ER 769 at 790.

172See Smith Newcourt Securities Ltd Endnote 171 per Lord Steyn, at 790.

173(1995) 7 NZ CLC 260 at 657.

174See King v Milpurrurru Endnote 137 at 350.

175Borrowdale, Andrew, (1998) ‘Liability of Directors in Tort – Developments in New Zealand’, Journal Business Law, January, 96; Grantham, Ross and Rickett, Charles, (1999), ‘Directors’ ‘Tortious’ Liability: Contract, Tort or Company Law?’, Modern Law Review, 62(1) January, 133 at 138; Farrar, Prof. J.H. (1999), ‘Bypassing the Corporate Veil’ Proctor, 19(2) March, 22; Griffin, S, (1999), ‘Company Directors Personal Liability in Tort 115 LQR 36; Borrowdale, Andrew, (1999), ‘Directors’ Liability in Tort’ New Zealand Law Journal, March, 51.

176[1998] NLJR 657; [1998] 2 All ER 577.

177See Trevor Ivory Ltd Endnote 150 at 523.

178See Trevor Ivory Ltd Endnote 150 per Cooke P., at 524.

179(1874) LR9 ChApp 244; See also Young, Swinburne & FAI General Insurance Co Ltd v Murphy& Allen [1996] 1 VR 279.

180See Oakley Inc Endnote 95 at paragraph 35.

181Trevor Ivory Ltd Endnote 150 per Cooke P. at 524, per Hardieboys J., at 527 and per McGechan J., at 530.

182See Trevor Ivory Ltd Endnote 150 at 530.

183(1994) 3 All ER 506. See also Burns v Shuttlehurst Ltd [1999] 2 All ER 27.

184[1964] AC 465.

185[2001] 1 All ER (Comm) 1; [2000] 1 Lloyd’s Rep 218.

186See Standard Chartered Bank Endnote 185 [2000] 1 Lloyd’s Rep at 235.

187[2000] EWCA 10 October (Case No: QBENI 2000/0064/A2).

188See SX Holdings Ltd Endnote 187 at paragraph 25.

189[2001] EWHC Ch 163 (24 July, 2001).

190See Edgington v Fitzmaurice Endnote 67.

191See reference to Noel v Poland Unreported (2001) June 14 per Toulson J at paragraph 40.

192See reference to Watts (2000) 116 LQR 525 at paragraph 40.

193See Daido Asia Japan Company Ltd Endnote 189 at paragraph 43.

194See Root Quality Endnote 67 at 266.

195[2001] VSC 241.

196See MLC Management Endnote 195 at 241-2.

197See Farrar Endnote 175 at 24; Walker, Gordon and Borrowdale, Andrew, (1995), “Directors’ Liability in Tort: Recent Developments’, Company &Securities Law Journal 13(6) at 400.

198[1984] 2 NZLR 548 at 594.

199See Morton v Douglas Homes Ltd Endnote 198 at 595.

200Peate v Federal Commissioner of Taxation (1964) 111 CLR 443 per Windeyer J.

201New World Alliance Pty Ltd. Re: Sycotex Pty Ltd v Baseler (1994) 51 FCR 425 per Gummow J., at 445.

202(2000) 201 CLR 603.

203See Spies v The Queen Endnote 202 at 637.

204[1972] AC 153.

205See Tesco Supermarkets Endnote 204 per Lord Reid at 170.

206National Mercantile Bank v Rymill (1881) 44 LT 767; Fowler v Hollins (1872) LR 7 QB 616 at 630.

207(1998) 40 IPR 543 at 579-80.

208See for example Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR 549 at 567 per Rogers AJA; Hallam v Ryan (1990) 5 NZCLC 66 per Smellie J; at 123; Bray v F. Hoffmann-La Roche Ltd (2002) 190 ALR 1; (2002) ATPR 41-865; [2002] FCA 243; Century Medical Inc v THLD Ltd [1999] NSWSC 731; Cotic v Cuscuna Nominees Pty Ltd [1999] 22 SR (WA) 81; Hadoplane Pty Ltd v Edward Rushton Pty Ltd [1996] 1 Qd R 156; James Hardie & Co Pty Ltd v Putt (1998) 43 NSWLR 554; Linfa Pty Ltd v Citibank Ltd [1995] 1 VR 643; Pope v DRP Nominees Pty Ltd (No 2) [2000] 207 LSJS 344; Commissioner of Land Tax v Theosophical Foundation Pty Ltd [1966] 67 SR(NSW) 70 per Herron CJ at 75; Farrar, Prof J. H. (1990), ‘Fraud, Fairness and Piercing the Corporate Veil’, 16 CBLJ 474 at 478; HAJ Ford, RP Austin & IM Ramsay (2001) Ford's Principles of Corporation Law (10^th ed.), at para. 4.4.

209See for example Finkelstein J. in Root Quality Endnote 67 at 265.

210Ramsay & Noakes, (2001) ‘Piercing the Corporate Veil in Australia’ 19 C&SLJ 250.

211Mitchell, C. (1999), ‘Lifting the Corporate Veil in the English Courts; An Empirical Study’ 3 CFILR 15.

212Thompson, R. (1991) ‘Piercing the Corporate Veil: An Empirical Study’ 76 Cornell Law Review 1036.

213Macleod v The Queen [2003] HCA 24.

214 [1990] 2 AC 418.

215[1991] 1 AC 187.

216[1924] 2 Ch 33; 24 All ER 294.

217See Rainham Chemical Works Ltd Endnote 64 at 475.

218See Kuwait Asia Bank Endnote 215 at 221.

219See Australian Performing Right Assoc Ltd Endnote 132.

220[1997] 1 BCLC 131.

221See Natural Life Health Foods Endnote 220 at 152.

222See Trevor Ivory Ltd Endnote 150 at 524.

223Farrar, Prof. J.H. (1997) ‘Personal Liability of Directors for Corporate Torts’, 9 Bond Law Review 102; see Grantham and Rickett, Endnote 175 at 139.

224See Root Quality Endnote 67 at 267 referring comments on Mentmore Manufacturing in Nourse J.’s decision of White Horse Distillers, see Endnote 119 at 92.

225Adga Systems International Ltd v Valcon Ltd (1999) 168 DLR (4^th) 351; [1998] 39 CCEL 163 at 196.

226See with respect to [2000] 1 Lloyds Rep 218 Endnote 185 at 231.

227See Grantham and Rickett Endnote 175, at 133.

228See Trevor Ivory Endnote 150 per Cooke P at 524; see Mahon v Crockett (1999) 8 NZCLC 262 per Gallen J; see Griffin S., Endnote 175, at 36.

229See Natural Life Health Foods Endnote 176 [1998] 2 All ER at 581.

230See Macleod v The Queen Endnote 213 at paragraph 28 and 75.

231See Macleod v The Queen Endnote 213 per Callinan J. at paragraph 128.

232(1995) 37 NSWLR 438.

233Section 232(4) of the Corporations Law, now s. 180(1).

234See also Permanent Building Society v Wheeler (1994) 11 WAR 187; (1994) 14 ACSR 109.

235See Daniels v Anderson Endnote 232 per Clarke and Sheller JJA.

236Section 199A(1) Corporations Act 2001.

237 Section 199A(2) Corporations Act 2001.

238Section 241A Corporations Law; now s. 199B.

239Barrett v State of South Australia (1994) 63 SASR 208; State of South Australia v Marcus Clarke (1996) 66 SASR 199; (1996) 19 ACSR 606; Mid Density Developments Pty Ltd v Rockdale Municipal Council (1993) 44 FCR 290; (1993) 116 ALR 460 at 468.

240Kyrou, Emilios (2000) ‘Director’s Duties Defences Indemnities ‘CSLJ (November) Vol. 18, 555 at 558.

241Section 365 of the Companies Act 1961, now s. 1318 of the Corporations Law.

242See Daniels v Anderson Endnote 232 per Clarke and Sheller JJA.

243Section 180(2) Corporations Law.

244See with respect to King v Milpurrurru Endnote 137.

245See King v Milpurrurru Endnote 137 at 485.

246See King v Milpurrurru Endnote 137 per Lee J.

247See King v Milpurrurru Endnote 137 per Lee J.

248See Briggs v James Hardie & Co Pty Ltd per Rogers AJA. Endnote 208 at 578-9.

249Jacob, I.H. (1975) Bullen and Leake and Jacobs’ Precedents of Pleadings in the Queen’s Bench Division of the High Court of Justice (12^th ed), London, Sweet & Maxwell, at 352.

250Rogers W.V.H. (1998) Winfield & Jolowicz on tort (15^th ed) London, Sweet & Maxwell at 588;
Todd, Stephen (2001) The Laws of Torts in New Zealand (3^rd ed) Wellington, Brookers at paragraph 11.3.1.

251Moorgate Mercantile Company Ltd v Finch & Read [1962] 1 KB 701; Caxton Publishing Co Ltd v Sutherland Publishing CoLtd [1939] AC 178.

252(1705) 6 Mod 212; 87 ER 964.

253See Baldwin v Cole Endnote 252 at 964.

254See Todd, Endnote 250 at 571.

255See at Todd, Endnote 250 at 570-571 discussing Marfani & Co. Endnote 169 and Unisys Canada Inc v Imperial Optical Co (1998) 43 CCLT (2d) 286, affirmed (2000) 49 CCLT (2d) 237 (Ont CA).

256Fleming, John (1998), The Law of Torts (9^th ed.), North Ryde NSW, LBC Information Services at 64.

257Martindale v Smith (1841) 1 QB 389; Fine Art Society Ltd v Union Bankof London Ltd (1886) 17 QBD 705 at 712; see Jacob, I.H. Endnote 249 at 353; See Whelan Kartaway Pty Ltd v GLC Weatherburn Pty Ltd [2002] NSWSC 677.

258Hillbery v Hatton (1864) 2 H & C 822.

259Consolidated Company v Curtis & Son [1892] 1 QB 495.

260McCombie v Davies (1805) 6 E 538; see Fine Arts Society Ltd Endnote 257 at 712; Union Credit Bank Ltd v Mersey Docks and Harbour Board [1899] 2 QB 205.

261[1983] 2 All ER 294.

262See Whelan Kartaway Pty Ltd v GLC Weatherburn Pty Ltd Endnote 257 per Spalding J. at paragraph 26.

263Mercer v Jones (1813) 3 Camp 477; France v Gaudet and Others (1871) LR V1 QB 199; The Arpad [1934] P 189; Solloway and Another v Mclaughlin [1938] AC 247; see Caxton Publishing Co v Sutherland Publishing Co Endnote 251; see Chubb Cash Ltd v John Crilley & Son (a firm) Endnote 261; Butler v Egg Pulp Marketing Board (1966) 114 CLR 185; Haines v Bendall (1991) 172 CLR 60; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64.

264[1996] 1 VR 668 per Marks J. at 674-6 and per Ormiston J. at 677-682.

265Cf McGregor, Harvey (1997), McGregor on Damages (16^th ed.), London, Sweey & Maxwell, paragraphs 1384 and 1396; see Fleming Endnote 256 at 76; see Todd Endnote 250, paragraph 11.3.4; see Dugdale (ed.) Clerk & Lindsell on torts, Endnote 84, at 614; paragraph 14-99; Waddams, S.M. (1991), The Law of Damages (2^nd ed.), Toronto, Canadian Law Book Inc, paragraph 1.1740.

266See Furness Endnote 264 at 677.

267[1952] VLR 119.

268See Ley v Lewis Endnote 267 at 121.

269(1892) 18 VLR 155 per Higginbotham CJ. at 173.

270Monroe v Willmott [1949] 1 KB 295; Greenwood v Bennett [1973] QB 195; Highland Leasing v Paul Field [1986] 2 CL 276.

271[1922] NZLR 303 at 311.

272See Greenwood v Bennett Endnote 270.

273Peruvian Guano Co v Dreyfus Bros & Co (1892) AC 166.

274(1988) 13 NSWLR 303 at 308.

275See Furness v Adriun Endnote 264 per Ormiston J. at 678.

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