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Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd

Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd

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Case Copied 13 August 1958 18 min read

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100 CLR 342

KEITH HENRY AND COMPANY PRO-

PRIETARY LIMITED

STUART WALKER AND COMPANY PRO-

PRIETARY LIMITED AND ANOTHER

DEFENDANTS,

ON APPEAL FROM THE SUPREME COURT OF

NEW SOUTH WALES Equity-Importing of goods-Plaintiff importer-Goods sold to defendant through

agency of plaintiff-Imported for defendant on licences held and made available by plaintiff-Change in import licensing procedure-New licences issued OR SYDNEY,

quota system in relation to imports over base period-Imports under plaintiff's May 2, 5,

licences included by both plaintiff and defendant in respect to totals for base 6, 7

period-Minister of Customs-Benefit of imports on plaintiff's licences given to Aug. 13.

defendant-Licences granted accordingly-Discretion of Minister in granting licences-Claim by plaintiff for equitable relief-Declaration sought that licences Dixon C.J.,

held in trust by defendant for plaintiff-Doctrine of Keech v. Sandford-Want of equity in plaintiff.

In November 1950 K.H., having been in communication with certain manufacturers of hog casings in Ireland, ascertained that a quantity of hog casings was available for importation into Australia. It offered this quantity to S.W., and S.W. said that it would take them. K.H. then obtained an import licence for the goods under the Customs (Import Licensing) Regulations 1939, and ordered the goods from the suppliers in Ireland. The goods were ordered for delivery direct to S.W., and S.W. established a letter of credit for the price. K.H., with the consent of the Department of Customs, made available to S.W. its import licence for the purpose of obtaining the letter of credit and later for the purpose of clearing the goods through the Customs The goods were invoiced to S.W. and cleared through the Customs by a customs agent employed by S.W., and delivery was made direct to S.W. Later the Irish suppliers paid to K.H. a commission on the transaction. A large number of transactions carried out in the same way took place between 1950 and 1955. In 1955 the policy of granting import licences was altered by the Department of Trade and Customs which thereafter proposed to issue licences for the importation of goods based upon the value of, in the instant case, hog casings imported during a base period of fifteen months ended 31st March 1955. Both

100 CLR 343

K. H. and S. W. sought licences in respect of hog casings and both claimed to include in the value of the hog casings imported during the base period the value of the hog casings cleared through Customs in the manner above men- tioned. K. H., knowing of the inclusion of the value of such hog casings in S.W.'s claim, demanded that S. W. exclude them but this S. W. refused to do. The department with knowledge of the facts allocated licences for the impor- tation of specified quotas of hog casings both to K. H. and S. W. upon the basis that S. W. was in fact the importer of the goods brought in under K. H.'s licences. K. H. then instituted proceedings in the equitable jurisdiction of the Supreme Court of New…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [1958] HCA 33
Decision Date: 13 August 1958

CaseChat Overview and Summary

The appellant, Keith Henry and Company Pty Ltd, appealed to the High Court of Australia from a decision of the Supreme Court of New South Wales. The dispute arose from a change in the Australian government's import licensing policy for hog casings. The appellant, an importer, had facilitated the importation of hog casings from Ireland for the respondent, Stuart Walker and Company Pty Ltd, by making its import licences available to the respondent. When a new licensing system was introduced, based on past import values, both parties claimed the value of goods imported under the appellant's licences. The appellant sought equitable relief, including declarations that the respondent held its allocated licence quota in trust for the appellant and an order for an account of profits.

The central legal issues before the High Court were whether the respondent held its import licence quota in trust for the appellant, and whether the respondent was liable to account for profits derived from that quota. The appellant contended that the respondent's actions in claiming the value of imports under the appellant's licences for the purpose of obtaining new licences constituted a breach of a fiduciary duty, invoking the equitable principle established in *Keech v. Sandford*. The court was required to determine if a fiduciary relationship existed between the parties and if the respondent had misused its position or the appellant's licences to gain an unconscionable advantage.

The High Court affirmed the decision of the Supreme Court, holding that the appellant had established no title to equitable relief. The Court reasoned that the parties were engaged in ordinary commercial transactions, dealing at arm's length, and no fiduciary relationship existed between them. The respondent's actions in applying for and accepting new import licences, even though based on the value of goods imported under the appellant's licences, did not constitute a misuse of the appellant's licences or a breach of any equitable duty. The licences had served their intended purpose of facilitating the import and clearance of goods, and the subsequent allocation of new licences was a matter of administrative discretion by the Minister, which the respondent was entitled to pursue.

Consequently, the appeal was dismissed with costs.

Orders