Kilcran v Peter James Gothard and Steven John Sherman as Receivers and Managers of Allco Finance Group Limited (In Liquidation)

[2014] HCATrans 168

[2014] HCATrans 168

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S52 of 2014

B e t w e e n -

STEPHEN KILCRAN

Applicant

and

PETER JAMES GOTHARD AND STEVEN JOHN SHERMAN AS RECEIVERS AND MANAGERS OF ALLCO FINANCE GROUP LIMITED (IN LIQUIDATION) ACN 077 721 129

Respondent

Application for special leave to appeal

FRENCH CJ
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 15 AUGUST 2014, AT 10.31 AM

Copyright in the High Court of Australia

MR A.J.L. BANNON, SC:   May it please the Court, I appear with my learned friend, MR R.M. FOREMAN for the applicant.  (instructed by Watson Mangioni Lawyers Pty Limited)

MR R.G. MCHUGH, SC:   May it please the Court, I appear with my learned friend, MR J.S. DARAMS for the respondents.  (instructed by Corrs Chambers Westgarth Lawyers)

FRENCH CJ:   Yes, Mr Bannon.

MR BANNON:   In brief outline, your Honours, this case presents a factual circumstance where the receivers communicated to the employees that they would be told the outcome of their employment situation by the usual means of communication.  Mr Mansfield communicated what his evidence indicates he understood to be the decision to the applicant, the effect of which was a termination decision.  The findings of the trial judge are such, which are not challenged, that that was a miscommunication – his evidence was a miscommunication and the question is whether he had authority, either actual or ostensible, to bind the receivers in that regard.  In terms of those brief factual matters, could I just identify within the application book at 44 firstly, in paragraph 15, there is a reference to the fact that:

At a meeting of AFG employees on or about 7 November 2008, the receivers informed the employees that their position as employees would be made more clear to them by the end of the month.

Then, at paragraph 16 there “was no dispute” that there was a document issued – “The circular” - last three lines - refers to the fact that:

the human resources processes within AFG remained the same –

in terms of communications.  Then in paragraph 70 of the Full Court judgment, which is at page 58, subparagraph (2), there is a reference to the fact that there was:

evidence given by Mr Sherman that in early November 2008 he said to AFG employees that any change in their employment would be communicated to them by the receivers or “through existing lines of communication” –

In paragraph 13 - I am sorry, I just have to go backwards - there was no debate – which is 43 of the application book at the foot of the page:

Mr Mansveld . . . was the chief executive officer of SIF with responsibility for its staff, including the appellant, and responsibility for communicating any decisions in relation to its staff to them.

The Full Court found or recognised perhaps, if one looks at paragraph 63 that:

Mr Mansveld had actual authority to communicate to his team what Mr Gothard had said –

the receiver –

at the meeting on 25 November 2008.

The debate which arose was – and similarly if one looks at paragraph 74 of the Full Court’s judgment where the Full Court says:

Mr Mansveld was authorised to pass on what Mr Gothard had said and we do not think his position added to his authority.

The way in which the Full Court addressed the “ostensible authority” argument, which really starts at 63 of the Full Court’s judgment at page 56, we respectfully submit devolves really to this.  What their Honours found or concluded was - and one can really see particularly from paragraph 73 - in addressing Colonial Mutual which was a case in which an insurance representative had authority to secure insurance but made defamatory statements and in that case it was said that was within his general authority, albeit the way he did it was not what was actually authorised and in a similar sense, if one looks at the way their Honours dealt with in paragraph 75 and over the top of page 60, the judgment in Australasian Brokerage - and within that passage there is a quotation from Justice Willes in Bayley v Manchester.  It says:

“A person who puts another in his place to do a class of acts in his absence, necessarily leaves him to determine, according to the circumstances that arise, when an act of that class is to be done, and trusts him for the manner in which it is done; and consequently he is held answerable for the wrong of the person so intrusted either in the manner of doing such an act, or in doing such an act under circumstances in which it ought not to have been done –

Earlier in that decision they quoted the direction to the jury - which they said was flawed which was to say you have got to decide did he have authority to authorise him to make incorrect statements.  The High Court said that was an inappropriate way of approaching it.  What we say cannot be in dispute here is Mr Mansveld was charged with the job of communicating and communicating the decision.  The question which arises – and he was going to be the vehicle for communication as advertised to the employees.  They did not specify in terms, there is no evidence the receiver specified in terms the words he was going to use.  So that task was entrusted to him.  It may be accepted on the evidence, on the findings, that he did not do it in a way which was specifically authorised ‑ ‑ ‑

KEANE J:   In relation to that, page 61, paragraph 78, their Honours say in the last sentence:

Mr Mansveld was authorised to pass on what they said –

That is what the receivers said –

no more and no less.

He did not.

MR BANNON:   That is right, but the issue which we say properly arises on ‑ ‑ ‑

KEANE J:   He was not authorised to communicate decisions.

MR BANNON:   Yes, that is right. 

KEANE J:   He was authorised to communicate what he had been told.

MR BANNON:   What the – he had been held out by reason of the circulars, the matters I have referred to, that as the person who would communicate what the receiver’s decision was and it may be accepted that they did not authorise him to say what he did say.  But so analysing that in that way, as your Honour has pointed out, means it is only actual authority. 

KEANE J:   There is something very artificial about this case, Mr Bannon, in the sense that it is a case that arises because your client effectively jumped the gun in treating himself as having been dismissed and so he found himself treated as having voluntarily resigned.  There is just something very artificial about this case in the sense that, to the extent that he was minded to stay or go and to organise himself accordingly, it just seems to me it would have been so easy for him to make an inquiry before he jumped ship.

MR BANNON:   The evidence is he did it on the basis of what he was told by Mr Mansveld and that issue ‑ ‑ ‑

KEANE J:   So the critical thing is what he was told by Mr Mansveld.  Do we have a finding as to what he was told by Mr Mansveld?

MR BANNON:   There is a debate whether we do or we do not.  Our friends say there is not ‑ ‑ ‑

KEANE J:   I think the problem with that debate - it is said against you that that finding was not made and that his Honour was encouraged to take that course and not make that finding by your side.

MR BANNON:   No, I think what they say is that his Honour has not made that finding and one can accept that there is a debate about that so I do not want to press that there is a finding.  He certainly did not reject that evidence and, in fact, he makes a statement to the effect that it may well be accepted that my client understood from what Mr Mansveld said - that is at 22 of the application book – sorry, 24, in paragraph 78 his Honour says at line 19:

No doubt it is the case that Mr Kilcran’s understanding that he was not providing services . . . was caused by Mr Mansveld’s inaccurate reporting of what Mr Gothard had said.

That is why we say it was put to the Full Court that his Honour had found that is what was said but if this Court was minded to grant special leave this Court could consider whether that was a finding or not.  What is absolutely clear, his Honour has not found that that was not said.  So if the worst outcome for us that were otherwise correct is we would have to go back for a finding, then so be it. 

We respectfully submit that should not be a reason not to grant special leave because if we are otherwise right it would mean we do not get a just outcome or a just consideration of the case simply because the trial judge has not made a finding in circumstances where not only it is clear he has not made a finding he has actually given an indication that he is likely to say that the finding was made – should be made.

KEANE J:   Paragraph 79 at page 24, first sentence:

Mr Kilcran’s case did not include any contingency for a finding that Mr Mansveld’s account of his conversation with Mr Gothard might be wrong.

MR BANNON:   That is the debate which was raised as to whether or not we ran the argument at first instance.  We have set this out in as much detail as we can in relation to how we say that was done but if I could just very briefly outline why we say it is.  The first is that – and it is really set out in our submissions at ASA 17 which is at 77.  We say the applicant pleaded in its statement of claim that:

Mr Mansveld’s communications to him on 25 November 2008 were made for and on behalf of AFG.  This was denied by the receivers who made a positive plea that Mr Mansveld did not have authority to make the statements.  In his reply, the Applicant pleaded that Mr Mansveld had “actual, or alternatively, ostensible, authority” –

Then we pleaded – there was a written opening submission which is the relevant parties which set out the next paragraph.  It was asserted that:

Mr Mansveld had actual – or, at the very least, ostensible - authority –

Then we set out the relevant part of the oral opening:

why do I need to worry so much about what Mr Gothard said?” to which the Applicant’s then counsel responded “We would submit your honour doesn’t but for more abundant caution we’re not going to leave any stone unturned.”

Then, in our reply submissions we set out in considerable detail and underlining the communications between – the statements made at trial, so at 95, what appears in those passages there and over the page and it is really over the top of the next page counsel says:

I don’t have that weakness because –

he was authorised to communicate, this is about line 10:

that even if it were to be held against me –

they are bound and to be fair the Full Court recorded that the – and this is at application book 57 in paragraph 67 of the Full Court’s judgment about 30:

The receivers accepted that the appellant did submit in closing that they would be bound by a miscommunication by Mr Mansveld.

So, I accept that it is – we have to deal with the way in which his Honour’s reasons read but the short point is we pleaded it.  There is clearly no express abandonment.  The parts we have referred to make it clear that we were raising the argument.  There is no other way you could treat ostensible authority.

KEANE J:   Looking at what the Full Court said at page 57, paragraph 67 from line 40:

If the alternative case of ostensible authority was not advanced before the trial judge, we would be disposed not to allow it to be advanced for the first time on appeal.  The question is what is in the interests of justice, and where an Appeal Court cannot be sure that all the evidence on the matter was advanced at trial it is not in the interests of justice to allow an appellant to advance the argument for the first time on the appeal.

MR BANNON:   Yes, and we are not seeking to challenge that but what we say is for the reasons we have indicated in our submissions, it was pleaded ostensible authority cannot mean anything else.  It was run and it was opened.  It was closed.  There are plenty of authorities to say unless you actually abandon something which is pleaded it is still there but it was certainly not abandoned orally.  It would be an unjust outcome for our client having regard to that fact merely because the trial judge had said that.  We have pored over everything and the transcript and our friends have advanced everything that they can put forward and we have responded in those submissions. 

We cannot put it any better than what appears there and it is quite clear it was run.  It was open and should have been determined by the primary judge and it is just regrettable it turned out that way.  So that is, I accept, a hurdle we have to overcome but we respectfully submit it is overcome and clearly overcome.  It would be an unjust outcome for our client to be left in that position, not have that part of the case heard.

The Full Court then went on to deal with ostensible authority.  We say the way they dealt with it is actual authority.  They did not actually consider the holding out.  The Colonial decision, the Australasian Brokerage Ltd v Australian & New Zealand Banking Corporation Ltd is an interesting case because the way it describes the issue where - in that case it was in relation to a communication.  It actually says that the task was entrusted to the agent to do certain things.  He did it in a way which was – this is in relation to selling shares, ANZ when they first came to this country, the way he did it was beyond authority but that did not mean it was not authorised because they trusted him to do it.  

Now, more modern authorities seem to treat that sometimes as ostensible authority but it is an interesting debate as to whether it is another way of looking at authority.  Is it actual implied authority, implied actual, and it is just a breach of the way which you would do the job or is it ostensible but either way, we say our case has not been properly considered by the Full Court and if it had have been properly considered – because

there is no, we respectfully – there cannot be any factual debate about the holding out for the matters I have referred to and then that leaves the question should the Full Court have found that they were bound and we say we have not yet had fair consideration of that case and we would succeed if this Court was to consider it. 

Secondly, it does - I do not want to have to say this, but it does raise the issue of just how you correlate the ANZ decision of this Court with the principles of ostensible authority.  Is it a variant of it?  Is it a subset of it or has it really been overtaken by perhaps more modern authorities in relation to ostensible authority.  For those reasons, we would submit that the Court should grant special leave.

FRENCH CJ:   Thank you, Mr Bannon.  We will just adjourn briefly.

AT 10.48 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.51 AM:

FRENCH CJ:   We will not need to trouble you, Mr McHugh.  I will invite Justice Keane to give the decision of the Court.

KEANE J:   The applicant was found to have voluntarily resigned from his employment.  He contends that his resignation was no more than an acceptance on his part of a decision to terminate his employment and on that footing he became entitled to certain benefits.  In fact, no decision to terminate his employment had been made.  On this application the applicant seeks to argue that he was informed by another employee, wrongly, that his employment was to be terminated and that he was entitled to rely on that erroneous information to act as he did by reason of the ostensible authority of his fellow employee.

This contention could succeed only if this Court were persuaded to make findings of fact favourable to the applicant as to what was said, which were either not made by the courts below or might be contrary to those findings.  That being so, this case is not a suitable vehicle for the agitation of the issues as to the scope of ostensible authority which the applicant seeks to pursue.  In addition, the applicant’s ultimate prospects of success are not such as to warrant the grant of special leave to appeal.  Accordingly, special leave should be refused with costs.

FRENCH CJ:   Special leave will be refused with costs.

AT 10.53 AM THE MATTER WAS CONCLUDED