Left Bank Investments Pty Ltd v Ngunya Jarjum Aboriginal Corporation

Case •

[2020] NSWCA 144

•

13 July 2020

Court of Appeal


Supreme Court


New South Wales

  • Summary available
  • Amendment notes
Medium Neutral Citation: Left Bank Investments Pty Ltd v Ngunya Jarjum Aboriginal Corporation [2020] NSWCA 144
Hearing dates: 12 May 2020
Decision date: 13 July 2020
Before: Bathurst CJ at [1]
Bell P at [2]
Gleeson JA at [3]
Decision:

(1)   Appeal dismissed.

(2)   Appellant to pay the respondent’s costs.

Catchwords:

CORPORATIONS – Aboriginal corporation – implied actual authority – where CEO of corporation not director – where CEO instructed solicitor to accept offer of new lease – where Board of Aboriginal corporation had not in fact accepted offer of new lease – where Board had not delegated authority to CEO to bind it to new lease – whether CEO had implied actual authority to bind Aboriginal corporation

CORPORATIONS – Aboriginal corporation – ostensible authority – whether CEO held out by Aboriginal corporation as having authority to accept offer of new lease – distinction between agent’s authority to communicate Board’s decision and authority to make decision – whether CEO had ostensible authority to bind Aboriginal corporation

Legislation Cited:

Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth), ss 99-1, 99-5

Corporations Act 2001 (Cth), ss 126, 127

Cases Cited:

Armagas Ltd v Mundogas SA (The Ocean Frost) [1986] AC 717

Boensch v Pascoe [2019] HCA 49; (2019) 94 ALJR 112

Brick & Pipe Industries Ltd v Occidental Life Nominees Pty Ltd [1992] 2 VR 279; 6 ACSR 464

Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72; [1975] HCA 49

Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317; [2003] HCA 51

Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50

First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] 2 Lloyd’s Rep 194

Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480

Gerard Cassegrain & Co Pty Ltd v Cassegrain (2013) 87 NSWLR 284; [2013] NSWCA 453

Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143

Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549

Jackson v Lithgow City Council [2008] NSWCA 312

Jiwunda v Trustees of the Travel Compe nsation Fund [2006] NSWSC 741

Kelly v Fraser [2013] 1 AC 450; [2012] 3 WLR 1008

Kilcran, In the matter of Allco Finance Group Limited (Receivers and Managers Appointed) (in liq) v Gothard [2014] FCAFC 6

Kuru v New South Wales (2008) 236 CLR 1; [2008] HCA 26

Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631

Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146; [1990] HCA 32

Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35

Sargent v ASL Developments Ltd (1974) 131 CLR 634; [1974] HCA 40

University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 59 ALR 68

Wilh.Wilhelmsen Investments Pty Ltd v SSS Holdings Pty Ltd [2019] NSWCA 32

Texts Cited:

Bowstead & Reynolds on Agency (19th ed, Sweet & Maxwell, 2010)

J D Heydon, Cross on Evidence (Online version, LexisNexis Butterworths)

Category:Principal judgment
Parties: Left Bank Investments Pty Ltd (Appellant)
Ngunya Jarjum Aboriginal Corporation (Respondent)
Representation:

Counsel:
M S Henry SC (Appellant)
A C Harding / J Braithwaite (Respondent)

Solicitors:
Heydons Lawyers (Appellant)
Stevens Vuaran Lawyers (Respondent)
File Number(s): 2019/344087
 Decision under appeal 
Court or tribunal:
Supreme Court of New South Wales
Jurisdiction:
Equity
Citation:

[2019] NSWSC 1352

Date of Decision:
9 October 2019
Before:
Darke J
File Number(s):
2017/300852

HEADNOTE

[This headnote is not to be read as part of the Judgment]

The appellant Left Bank Investments Pty Ltd (Left Bank) owned premises in Lismore which were leased to the respondent Ngunya Jarjum Aboriginal Corporation (the Corporation), an Aboriginal and Torres Strait Islander corporation incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth). The lease was for a term of 5 years commencing on 1 May 2012 and contained an option to renew (the 2012 lease). On about 31 March 2017, the ground floor of the premises was inundated by flood waters and the Corporation was forced to vacate the premises. A dispute arose as to whether the Corporation had validly exercised its option to renew the 2012 lease and; whether Left Bank or the Corporation was responsible for certain costs incurred in repairing the premises following the flood damage. On 20 June 2017, the Corporation vacated the premises and returned the keys.

Left Bank commenced proceedings against the Corporation alleging that the Corporation was bound by a new lease for a term of 5 years commencing 1 May 2017. This turned firstly on whether there was a concluded agreement for lease and secondly whether the Corporation was bound by what its Chief Executive Officer, Ms Lenore Marlowe, said and did.

The primary judge (Darke J) found that an email of 6 April 2016 from the Corporation’s solicitors sent on the instructions of Ms Marlowe constituted acceptance of Left Bank’s offer of a new lease. However his Honour found that Left Bank had failed to establish that, in April 2016, Ms Marlowe had either actual authority or ostensible authority to bind the Corporation to an agreement for lease. Therefore the Corporation was not bound by the new agreement for lease.

Left Bank appealed against the whole judgment below. The primary issues before the Court were:

whether Ms Marlowe had implied actual authority or ostensible authority to communicate the Corporation’s acceptance of Left Bank’s offer of a new lease; and

alternatively, whether Left Bank was entitled to rent under the 2012 lease said to be unpaid from 1 June 2017 to 20 July 2017.

Held, dismissing the appeal (per Gleeson JA; Bathurst CJ and Bell P agreeing):

As to issue (i):

Ms Marlowe had no implied actual authority to communicate the Corporation’s acceptance of the new lease. First, an agent cannot have implied actual authority to inform an offeror that an offer has been accepted where no decision has been made by the principal to accept that offer: at [67]. There was no direct evidence that the Corporation’s Board had in fact accepted the new lease proposal in the March emails: at [71]. Nor could the Corporation’s acceptance of a new lease be inferred from their undertaking of building work, a statement published on their website, their payment of monthly rent or a so-called “admission” in a 30 March 2017 board minute: at [88]. Second, and in any event, it could not be inferred from the conduct of the Corporation and Ms Marlowe that she had implied actual authority: at [96].

Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50;

Gerard Cassegrain & Co Pty Ltd v Cassegrain (2013) 87 NSWLR 284;

Northside Developments (1990) 170 CLR 146;

Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480;

Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549;

Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72;

Jackson v Lithgow City Council [2008] NSWCA 312;

Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317;

Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 140;

Brick & Pipe IndustriesLtd v Occidental Life Nominees Pty Ltd [1992] 2 VR 279; and

Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 considered.

As to ostensible authority, Ms Marlowe was not held out by the Corporation as having authority to communicate the Corporation’s acceptance of the new lease: at [111]. The evidence did not support a continuing representation by the Corporation that Ms Marlowe was a director of the Corporation: at [100]-[105]. A line of English authority which has applied the doctrine of ostensible authority to the communication of a decision, as distinct from the making of the decision, was inapposite to the present case: at [108]

First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] 2 Lloyd’s Rep 194;

Kelly v Fraser [2013] 1 AC 450 distinguished;

Kilcran, In the matter of Allco Finance Group Limited (Receivers and Managers Appointed) (in liq) v Gothard [2014] FCAFC 6; and

Wilh.Wilhelmsen Investments Pty Ltd v SSS Holdings Pty Ltd [2019] NSWCA 32 considered.

As to issue (ii):

The alternative claim for unpaid rent based on the Corporation holding over as a monthly tenant on expiry of the 2012 lease, and not giving one month’s notice before it vacated the premises was not pleaded or advanced at trial: at [120]. Left Bank should not be permitted to advance a new case on appeal and the alternative claim ought to be dismissed: at [121].

University of Wollongong v Metwally (No 2) [1985] HCA 28; and

Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 applied.

Judgment

  1. BATHURST CJ: I agree with the orders proposed by Gleeson JA and with his Honour’s reasons.

  2. BELL P: I agree with Gleeson JA.

  3. GLEESON JA: The appellant Left Bank Investments Pty Ltd (Left Bank) owned premises which were leased to the respondent Ngunya Jarjum Aboriginal Corporation (the Corporation), an Aboriginal and Torres Strait Islander corporation incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (the CATSI Act). The premises comprised the ground floor and first floor of a building in Molesworth Street, Lismore. The lease, which was registered, was for a term of 5 years commencing on 1 May 2012 and contained an option to renew (the 2012 lease). The permitted use of the premises was offices including training and conference rooms.

  4. The essential question in the proceedings below was whether the parties were bound by an agreement for lease of the premises for a further period of 5 years commencing 1 May 2017. That turned on two issues: whether there was a concluded agreement for lease and whether the Corporation was bound by what its Chief Executive Officer, Ms Lenore Marlowe, said and did.

  5. On the first issue, the primary judge found that an email of 6 April 2016 from the Corporation’s solicitors (the 6 April email) sent on the instructions of Ms Marlowe constituted acceptance of Left Bank’s offer of a new lease and, if sent with authority, would have bound the parties to a new lease. On the second issue, his Honour found that Left Bank failed to establish that, in April 2016, Ms Marlowe had either actual authority or ostensible authority to bind the Corporation to an agreement for lease. Accordingly, his Honour concluded that Left Bank had failed to establish that a binding and enforceable agreement for lease had been made between it and the Corporation: Left Bank Investments Pty Ltd v Ngunya Jarjum Aboriginal Corporation [2019] NSWSC 1352.

  6. By its appeal, Left Bank challenges the finding that Ms Marlowe lacked authority to communicate the Corporation’s acceptance of Left Bank’s offer of a new lease. The Corporation seeks to uphold his Honour’s finding on absence of authority, and also submits by way of notice of contention that the decision below should be affirmed on the ground that, contrary to his Honour’s finding, there was no concluded agreement for lease made by the parties on 6 April 2016.

  7. Alternatively to its claim based on a new lease, Left Bank claims rent under the 2012 lease from 1 June 2017 to 20 July 2017 said to be owing by the Corporation upon holding over as a monthly tenant upon expiry of the 2012 lease on 30 April 2017.

Factual background

  1. The factual circumstances giving rise to the proceedings below are described in the reasons of the primary judge at [7]-[55]. The following summary, largely taken from his Honour’s reasons, is sufficient to provide the context for this appeal.

2012 lease

  1. The CATSI Act, s 99-5(1), is in similar terms to s 127(1) of the Corporations Act 2001 (Cth), and provides that an Aboriginal and Torres Strait Islander corporation may execute a document without using a common seal if the document is signed by two directors of the corporation, or a director and a corporation secretary (if any) of the corporation, or if the corporation has only one director, that director.

  2. The 2012 lease was purportedly signed on behalf of the Corporation on about 14 May 2012 by Ms Lenore Marlowe and Ms Tiani Browning, each of whom was described in the attestation clause of the lease as a director of the Corporation. In fact, Ms Browning was a director, but Ms Marlowe was not; Ms Marlowe was Chief Executive Officer (CEO) of the Corporation, but was never a director.

  3. Mr John Maxwell, solicitor, who had acted for the Corporation in relation to the 2012 lease, attended to registration of that lease. The primary judge found that Mr Maxwell was the agent of Left Bank (or perhaps both parties) for the purpose of registration: at [85].

  4. On 31 July 2012, Mr Philip Kreutzer, a director of Left Bank, sent an email to Mr Maxwell noting that the National Australia Bank (NAB) had queried whether “the people who signed the lease had the authority to do so on behalf of the business”. Mr Kreutzer asked that Mr Maxwell clarify the situation and send appropriate evidence for him to pass to the NAB.

  5. On 10 August 2012, Mr Maxwell responded to Mr Kreutzer’s 31 July email and advised that the Corporation was incorporated under the CATSI Act, and attached a copy of s 99 of that Act relating to the execution of documents by an Aboriginal corporation. Mr Maxwell stated that, “I am instructed that the two signatories are a Director and a Corporation secretary”.

  6. On 11 September 2012, the following occurred:

  • Mr Maxwell received a requisition from Land and Property Information NSW (LPI) stating that the lease did not appear to have been executed in accordance with s 99-5 of the CATSI Act, in particular, according to the website of “ORAC”, Ms Marlowe was not shown as a director on the extract of information for the Corporation, she was shown only as a “contact person”. The reference to “ORAC” may be taken to be a reference to the Office of the Registrar of Indigenous Corporations;

  • Mr Maxwell obtained a search of the Register which showed that Ms Marlowe was neither a director nor a secretary of the Corporation;

  • steps were taken to have the 2012 lease executed by a director of the Corporation, Ms Virginia Paden, in place of Ms Marlowe: at [10]. Ms Marlowe’s name and signature were crossed out and replaced with the name and signature of Ms Paden;

  • Mr Maxwell sent the re-executed 2012 lease to his city agents for registration, who re-lodged the lease for registration on 13 September 2012.

  1. It is common ground that Mr Maxwell sent Mr Kreutzer only the front page of the 2012 lease as registered, not the execution page.

  2. The 2012 lease contained an option to renew for a further term of 5 years, which was exercisable during the period 1 December 2016 to 1 February 2017. The lease also provided for annual rent increases of 4 per cent. If the option to renew was exercised, the commencing rent under the new lease from 1 May 2017 would be reset to market rent and this would remain unchanged during the first two years of the new lease. Thereafter rent would increase annually at 4 per cent per annum.

The 2016 March emails and 6 April email

  1. In March 2016, some nine months before the option was due to be exercised, Mr Kreutzer sent a series of emails to Ms Marlowe enquiring whether the Corporation was willing to exercise the option (the March emails). Given the significance of the terms of the March emails and Mr Maxwell’s response in the 6 April email, it is convenient to reproduce in full his Honour’s summary at [16]-[24]:

  1. The first of the emails was sent by Mr Kreutzer to Ms Marlowe (referred to as “Minna”) on 14 March 2016. It was in the following terms:

    Thanks for making time to see me this afternoon.

    I confirm that if you can let me have a letter confirming that Ngunya Jarjum will be exercising the option for a second 5 year term commencing when the current lease ends in 2017, we will proceed on the basis that the 4% rent increment due in May of this year will not be applied and that the current rent will be the commencing rent for the first year of the new lease.

    Also, the internal adjustments you propose are acceptable to us.

    Finally, I confirm that we are now able to reactivate the disabled access proposal which I have already started with discussions with the lift supplier and builder.

  2. Mr Kreutzer sent a further email on 16 March 2016 in the following terms:

    Looking back at my email of a couple of days ago, I think I could have been clearer in expressing what I was proposing.

    I suggested that we would forego the rent increment due in May if Ngunya Jarjum wrote confirming that it will be exercising its option. I also said we would not seek any increase in rent for the first year of the new lease. As the increment we will be waiving amounts to $5,399.00 over the next year commencing May 2016, I should have made it clear that what I was proposing was an exercise of the option. Obviously a letter in the terms I used in my email might not amount to a formal exercise and any uncertainty about it might be against the interests of both us as owners and Ngunya Jarjum as tenant.

    Although the lease says that the option can be exercised in a certain time period (next December/January) the lessor can waive that requirement and accept an exercise of the option at any time.

    Please have a look at the matter and let me know whether my suggestion is acceptable.

  3. Mr Kreutzer sent a third email on 18 March 2016 in the following terms:

    Sorry to keep chasing you up on this. I have been able to get my financier to agree that if exercising the renewal option now is a problem, a letter confirming that you will be exercising the option later in the year will be good enough.

    Whichever way you go, it would help if the letter confirmed that the new lease will be for 5 years, which is what the agreement says anyway, and that the current rent of $134,983.00 will apply to next year and to the first year of the new lease.

    Let me know if there are any problems.

  4. On 1 April 2016 Ms Marlowe sent an email to Mr Kreutzer in the following terms:

    Sorry will get it to you ASAP. Too much happening!!!

  5. A short time later on 1 April 2016 Mr Kreutzer sent an email to Ms Marlowe in the following terms:

    Has there been any progress on the lease confirmation letter?

    Also, I asked our plumber, Peter Shearman, to give me a quote for replacing the toilet suites that have been playing up. Have you heard from him?

  6. On 5 April 2016 Ms Marlowe sent an email to Mr Kreutzer in the following terms:

    Just waiting for feed-back from our solicitor. Then we will confirm the 5 year option.

  7. Earlier on 5 April 2016 Ms Marlowe had sent an email to Mr Maxwell in which she sought “some advice regarding renewal”.

  8. On 6 April 2016 Mr Maxwell sent an email to Mr Kreutzer, copied to Ms Marlowe, in the following terms:

    Minna has referred your emails about the exercise of the option for renewal of the lease to me.

    I confirm that Ngunya Jarjum wishes to exercise its option for renewal in accordance with your emails of 15, 16 & 18 March namely on the basis that the rent for the balance of the existing term will not be increased and will also remain for the first year of the new term commencing on 1 May 2017.

  9. Later on 6 April 2016 Mr Kreutzer responded by email in the following terms:

    Thanks for the email. Will be in touch in due course regarding new lease documentation.

    1. The primary judge inferred that the 6 April email was sent by Mr Maxwell on the instructions of Ms Marlowe, given that the email was copied to her: at [62]. This email was not copied to any director at the Corporation.

Events after April 2016

  1. From May 2016 until May (or June) 2017, Left Bank invoiced the Corporation monthly rent of $11,248 plus GST which was based on the current annual rent as at April 2016 of $134,983 (excluding GST).

  2. Over the following months from June 2016 and into 2017, Mr Kreutzer and Ms Marlowe had further negotiations relating to the term of the new lease (5 years or 10), whether it would contain an option to renew and the quantum of rent increases (4 per cent or 3 per cent). The primary judge found that Mr Maxwell was acting for both parties during the course of these negotiations: at [34].

  1. In about August 2016, a copy of a quote obtained by the Corporation for proposed renovation works to the ground floor of premises for $166,203.92 was provided to Mr Kreutzer by Mr Lester Moran of the Corporation. Ms Browning said in her affidavit that the funding which the Corporation secured for renovations to the ground floor of the premises was not spent for that purpose. Whilst she adhered to her evidence on that topic in cross-examination, she accepted that before the flood which occurred in Lismore in March 2017, the Corporation installed some new wiring and also renovated the first floor of the premises by installing new partitions, repainting walls and redoing the floors by a combination of new carpet and polishing wood flooring.

  2. On 5 September 2016, Mr Kreutzer sent an email to Mr Maxwell instructing him to prepare and submit to the Corporation the new lease taking into account the number of changes, importantly, a term of 10 years with no option to renew and fixed 4 per cent rent increases. Mr Maxwell sent the first draft of the new lease to Mr Kreutzer on 7 September 2016. A further draft lease containing a 10-year term with fixed 3 per cent rent increases was prepared by Mr Maxwell, on instructions of Mr Kreutzer, and sent to Ms Marlowe on 28 September 2016, together with a tax invoice for legal fees for acting for the lessor and lessee.

  3. On 27 January 2017, Mr Kreutzer advised Mr Maxwell by email that he and Ms Marlowe had agreed that instead of a 10-year term, the new lease would be for a term of 5 years with an option to renew for a further 5 years. Mr Kreutzer requested Mr Maxwell to amend the draft lease and resubmit it to the Corporation.

  4. No new lease was ever signed. In early 2017, Ms Marlowe ceased employment with the Corporation. The minutes of the Board meeting held on 20 April 2017 noted that Ms Marlowe “withheld all information in relation to the negotiation of the draft lease of the Board becoming known”.

March 2017 – Board minutes

  1. In March 2017, the Board of the Corporation held a number of meetings at which the topic of a new lease was discussed. It is necessary to refer to the minutes of each of the meetings, because Left Bank relies upon what it says is an implied admission of the new lease in the Board minutes of 30 March 2017.

  2. On 2 March 2017, the Board minutes noted that an options paper was tabled, the Board discussed accommodation in Lismore, and Mr Maxwell stated that there had been a verbal agreement between the previous CEO and the landlord on a 5-year lease agreement for the same rental rates, with an option to renew for an extension for a further five years. The Board agreed to hold a special meeting to discuss the lease on 6 March 2017 and instructed the interim CEO to seek alternative legal advice and canvass other available building options in Lismore.

  3. It seems from the absence of any subsequent record of confirmation of Board minutes, that no special meeting was held on 6 March 2017.

  4. On 13 March 2017, the Board minutes noted that there was no further update on the lease matter and the Board was waiting to hear back from Universal Lawyers. It was also noted that the interim CEO was to secure legal advice from another firm and provide options to the Board out of session by email, including whether the landlord would accept a month-by-month agreement.

  5. On 16 March 2017, the Board minutes noted that there was no progress on securing alternative legal advice or representation and the interim CEO was to request Dawn Shepherd to secure legal advice for the next Board meeting on 30 March 2017.

  6. On 30 March 2017, the Board minutes noted the tabling of advice from Mr Graham, solicitor, concerning issues of conflict of interest, excessive rental charge and fee charge for drafting a lease. The Board resolved:

The Board instructed Keith Graham to progress negotiations with the landlord of [XXX] Molesworth Street, Lismore to address the concerns as noted in the correspondence and to attempt to negotiate out of the five-year lease. The Board also instructs Keith Graham to pursue proceedings against Parker & Kissane.

The flood – 31 March 2017 – and its aftermarth

  1. On about 31 March 2017, the ground floor of the Lismore premises was inundated by flood waters and the Corporation was forced to vacate the premises. A dispute arose between the parties as to who was responsible for replacement of the carpet and other damaged items. On 6 April 2017, the Board minutes noted that there had been a massive clean-up, the recovery work for the premises was still in progress, and that brief discussions had been held with the landlord in regards to the “carpet, etc”, which “[Mr Kreutzer] stated he is not responsible for”. The minutes noted that the matter was being reviewed by the Corporation’s current solicitor, Mr Keith Graham.

  2. On 19 April 2017, Mr Graham sent a letter to Mr Maxwell advising that his firm now acted on behalf of the Corporation. He noted that the current lease expired on 30 April 2017 and no new lease had been entered into. He referred to the recent flood and stated that the premises were unsuitable for occupation and that all first floor carpets had been inundated and needed replacement. The letter concluded by stating that the Corporation would not be renewing the lease past 30 April 2017.

  3. On 24 April 2017 at 1.15pm, Mr Kreutzer sent an email to Mr Graham complaining that the Corporation had not contacted him in relation to any issues or requests they might have regarding the building following the flood. He asserted that he had attended the premises with a number of volunteers on 2 April 2017 to clean the premises but could only clean the outside as there was no one present from the Corporation to give access to the building and that remained the situation the following day, Monday, 3 April 2017. Mr Kreutzer said he again attended the premises on Tuesday, 4 April 2017 and spoke with the acting CEO, Ms Kylie Jacky, who advised that the electrics were being checked and there was a discussion about the state of the carpet and the need for attending to cleaning and drying was now a matter of urgency. Mr Kreutzer said that he spoke to Ms Jacky on 7 April 2017, who confirmed that the carpet was not to be cleaned and the decision made to have it replaced, which Mr Kreutzer agreed was “sensible” because “it was clearly too late for cleaning of the carpet to be effective”. Mr Kreutzer noted that the decision to replace the carpet was entirely in keeping with the Corporation’s advice to him some months earlier that the carpet was to be replaced as part of a major office refit. Mr Kreutzer disputed the statement in Mr Maxwell’s 19 April letter that the building is unsuitable and that the flood was the cause of the Corporation relocating, noting the statement on the Corporation’s website that the move to Ballina is temporary pending “recovery” of the Lismore office.

  4. Ms Jacky responded to Mr Kreutzer by email on 24 April 2017 at 5.40 pm and referred to a conversation on 11 April 2017 in which he asked her whether the carpet was to be cleaned or replaced and her response that she was unsure of who is responsible for this within the current lease and that the Corporation has a new lawyer engaged and requested that all communications be directed to Mr Graham. The email continued:

I can confirm that Ngunya Jarjum is addressing the carpet and other flood related damage to the property that is required within the current lease.

  1. Mr Kreutzer responded by email to Mr Graham on 24 April 2017 at 9.45 pm referring to the email from Ms Jacky and asserted that their last conversation was on 7 April 2017. He noted his understanding that the cleaning and drying of the carpet, some six days after the flood having been exposed to much foot traffic was, in all likelihood, no longer a viable option.

  2. On 26 April 2017, Mr Graham sent a letter to Mr Kreutzer again noting that the lease had been terminated on 30 April 2017, that no new lease had been entered into and that the Corporation denied that there had been a valid exercise of the option to renew the lease. The letter contended that, in the event that it is found that there has been a valid exercise of the option, then the lease had been frustrated by the substantial damage to the premises, fixtures and fittings caused by the recent floods on 31 March 2017.

  3. Ms Browning gave evidence that after the flood, the Corporation arranged for new carpet and new partition walls to be installed on the ground floor. According to Mr Kreutzer, who inspected the premises on 19 and 29 May 2012, by those dates the 12 partitioned workstations and carpet had been removed and substantial building work was about to commence.

  4. The Corporation remained in occupation of the premises and continued to pay rent for the month of May 2017, but not June 2017. On 20 June 2017, the Corporation vacated the premises and returned the keys. Mr Kreutzer inspected the premises on that day and said in his affidavit that the carpet had been replaced, new workstations had been built in four large bays, including plasterboard walls and wooden tops, but the glass panelling on top of the work bays had not been installed.

  5. In October 2017, Left Bank commenced proceedings against the Corporation alleging that the Corporation was bound by a new lease for a term of 5 years commencing 1 May 2017. Left Bank claimed rent unpaid under the new lease, together with damages for alleged breaches of certain clauses of the 2012 lease. In 2018, Left Bank incurred expenses in replacing the carpet, interior painting, removal of rubbish and repairs and replacement of the wheel chair lift which was damaged in the flood. The total amount claimed at trial in respect of unpaid rent, damages and interest was $466,451.

Primary judge’s reasons

Concluded agreement

  1. After considering the terms of the March emails and the 6 April email, his Honour found that there had not been an exercise of the option to renew as contained in the 2012 lease, but rather there was an acceptance of the offer contained in Mr Kreutzer’s emails which amounted to the making of a concluded agreement for a different lease: at [64]-[65].

  2. His Honour considered that the communications between the parties objectively revealed a consensus on the rent that would apply at the commencement of the new term, that is, $134,983 per annum and that the initial rent would be subject to review in accordance with the existing rent review provisions: at [67].

  3. His Honour rejected the Corporation’s arguments that the parties’ intention was to be bound only upon exchange of a new lease, that the parties contemplated that a formal lease document would be prepared and executed, and that the continuing negotiations after April 2016 about the terms of the new lease were inconsistent with the parties having already reached agreement. His Honour concluded at [72]:

For the above reasons, it is my opinion that a concluded agreement for lease was made on 6 April 2016 in the course of the dealings between Ms Marlowe and Mr Maxwell on behalf of the defendant and Mr Kreutzer on behalf of the plaintiff. Viewed objectively, those dealings indicate not only the existence of consensus as to the terms necessary for an agreement for lease, but also an intention to conclude a binding agreement for lease through the exercise of an option to renew.

Authority

  1. His Honour commenced by finding at [81] that Ms Marlowe was not a director of the Corporation at any time, and accordingly the question of her authority was to be considered on the basis that she held the position of CEO, and was held out by the Corporation as such: at [86]. His Honour identified the question of authority as, relevantly, whether Ms Marlowe had authority to communicate acceptance of Mr Kreutzer’s proposal for the exercise of the option so that the Corporation was bound by the legal consequences of that communication: at [87].

(a) Actual authority

  1. No complaint is made in relation to his Honour’s summary of the principles with respect to actual authority at [88]:

It is trite that a principal (in this case the defendant) may confer authority upon an agent (in this case Ms Marlowe) to do certain things on its behalf. The conferral of authority can be express, or implied from the conduct of the parties. The relevant conduct can include the appointment of an agent to a certain office or position.

  1. His Honour summarised at [90]-[91] the evidence of Ms Browning, a director of the Corporation from 2012 to October 2017 and later from December 2018, concerning the absence of Board minutes in the period January 2016 to August 2016; and accepted that she could not recall any Board resolutions in that period to the effect that the Corporation would enter into a lease or exercise an option to renew the lease of the premises, or that the CEO was authorised to make or communicate any decision about whether the Corporation would exercise the option to renew the lease; she could recall no discussions between the directors, or between the directors and Ms Marlowe, about possible renewal of the lease prior to the second half of 2016; and she was not aware until early 2017 that Left Bank claimed that the Corporation had exercised the option to renew the lease.

  2. His Honour found at [92] that the evidence did not show that the Corporation’s Board ever passed a resolution that would authorise Ms Marlowe (or the CEO) to exercise any option to renew the lease or otherwise accept a proposal from Left Bank for a new lease of the premises.

  3. His Honour rejected Left Bank’s submission that the terms of the Corporation’s Delegation Manual amounted to an express conferral of such an authority, which included authority to communicate acceptance of Mr Kreutzer’s proposal: at [93], [100].

  4. As to the significance of Ms Marlowe’s role as the manager in charge of the planned refurbishment of the premises, his Honour found that it did not follow from that role that Ms Marlowe would have the authority to bind the Corporation to a new lease of the premises, giving the following reasons at [104]:

… It could reasonably be expected that if the plans were to be carried through the defendant would almost certainly want to have a new lease so as to be able to make use of the refurbished premises. But in early 2016, when the project became the subject of discussion between Ms Marlowe and Mr Kreutzer, the defendant had an existing option to renew that was able to be exercised in the period from 1 December 2016 to 1 December 2017. Given that the project was then at an early stage it is difficult to see why Ms Marlowe’s role as CEO in charge of the project would implicitly carry with it any authority to make decisions about a new lease that would commence after the expiry of the existing lease in about 12 months’ time.

  1. His Honour rejected Left Bank’s submission that there was an admission by the Corporation of the agreement for lease in the Board minutes of 30 March 2017, stating at [105]:

The reference in the board minutes of 30 March 2017 to attempting to “negotiate out of the 5 year lease” does not in my view amount to a recognition that Ms Marlowe actually had authority to exercise the option which the plaintiff was by that time asserting had been exercised. The statement was made in circumstances where the defendant had only recently obtained independent legal advice about the situation. I do not think that the apparent recognition that there was something to negotiate “out of” is tantamount to an admission that Ms Marlowe in fact had authority to bind the defendant to a new lease.

  1. His Honour concluded that actual authority had not been conferred upon Ms Marlowe to bind the Corporation to an agreement for lease: at [107]. He was also unpersuaded that actual authority should be implied from the conduct of the parties, stating at [108]:

… Whilst the defendant placed Ms Marlowe in the position of CEO, that position does not, of itself, ordinarily carry with it an authority to make agreements in the nature of agreements for lease. There is nothing about the particular nature or activities of the defendant that would call for a different conclusion in this case. Neither is there any evidence of a course of dealing whereby the defendant effectively allowed the CEO to make agreements of that nature (cf Equiticorp Finance Ltd v Bank of New Zealand (1993) 32 NSWLR 50 at 133-4).

(b) Ostensible authority

  1. No complaint is made in relation to his Honour’s summary of the principles with respect to ostensible authority at [111], citing the well-known authorities of Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 at 503; Armagas Ltd v Mundogas SA (The Ocean Frost) [1986] AC 717 at 777; Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 at 187; [1990] HCA 32; and Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 at [36]. It is convenient to reproduce his Honour’s summary in full at [111]:

It is again trite that a principal may be bound by the acts of an agent acting outside the bounds of their actual authority if the agent can be seen to be exercising an ostensible authority to perform the relevant acts on behalf of the principal. An ostensible authority can be bestowed upon an agent by means of a relevant “holding out” or representation by the principal. An ostensible authority operates as a kind of estoppel that precludes the principal from asserting, against a third party who relied upon the holding out or representation, that it is not bound by the acts of the agent. So, if a third party, acting in reliance upon the representation of authority enters into a contract with the agent, the principal is estopped from asserting that it is not bound by the contract. (Citations omitted.)

  1. His Honour did not accept that in 2016 Left Bank was relying upon any holding out by the Corporation that Ms Marlowe was a director: at [112]. In addition to finding at [83] that Mr Kreutzer did not give evidence that in 2016 he believed Ms Marlowe was a director of the Corporation, his Honour found at [85] that the knowledge Mr Maxwell obtained concerning Ms Marlowe’s position when acting for Left Bank in respect of registration of the 2012 lease, would be attributed to Left Bank because:

Mr Maxwell, who had acted for the defendant in relation to the lease and was acting for the plaintiff (or perhaps both parties) in respect of the registration of the lease, became aware from a search undertaken on 11 September 2012 that Ms Marlowe was neither a director nor a secretary of the defendant, but was designated as a “contact person”. Mr Maxwell also became aware that the lease had been signed by a director “in substitution for” Ms Marlowe. Mr Maxwell might not have actually passed this information onto Mr Kreutzer. But as the information was obtained by Mr Maxwell in the course of his acting for the plaintiff, knowledge of it would in any event be attributed to the plaintiff that in 2016 Left Bank was relying upon any holding out by the Corporation that Ms Marlowe was a director. …

  1. His Honour found that the relevant holding out by the Corporation was the holding out of Ms Marlowe as the CEO, which included that she was the manager in charge of the planned refurbishment of the premises whose duties extended to liaising with Left Bank about the project: at [112]. As to the later holding out, his Honour said at [113]:

I do not think that this holding out of Ms Marlowe amounted to a representation that she had authority to exercise any option to renew or otherwise bind the defendant to any agreements in the nature of agreements for lease. I have already stated that the position of CEO does not itself ordinarily carry with it an authority to make agreements of that nature. Moreover, I do not consider that Ms Marlowe’s role as the manager in charge of the planned refurbishment of the premises leads to a different conclusion. It may be accepted that pursuit of the project might have a bearing upon the defendant’s intentions in respect of the taking of a new lease, but the management of the project and decisions about entering into a new lease seem to me to remain essentially distinct in a practical sense. That is to say, they are not so closely inter-dependent that it would be reasonable to assume that Ms Marlowe as the CEO and manager of the project would have the authority to exercise the option to renew or otherwise bind the defendant to an agreement for lease.

  1. His Honour also found that there was no prior course of dealing in which the Corporation held out Ms Marlowe as its agent as having authority to give notice as to whether or not Left Bank’s offer of a new lease was accepted: at [114].

Authority

  1. In Northside Developments at 171-172, Brennan J said of the capacity of a person’s acts or omissions to bind a company:

A company, being a corporation, is a legal fiction. Its existence, capacities and activities are only such as the law attributes to it. The acts and omissions attributed to a company are perforce the acts and omissions of natural persons. A company is bound by an act done when the person who does it purports thereby to bind the company and that person is authorized to do so or the doing of the act is subsequently ratified. … Authority for the purpose is derived either directly from the constitution of the company or from some antecedent act (typically, a resolution of the governing body) which is itself binding on the company.

  1. Brennan J then addressed the concepts of actual and ostensible authority in conventional terms at 172:

As between a company and a party who deals with it, a company is bound by an act purporting to bind it not only when the person who does the act has the company's authority to bind it by that act but also when that person is held out by the company as having that authority and the party dealing with the company relies on that person's ostensible authority.

  1. His Honour continued at 172 observing that the foundation of ostensible authority is estoppel, as Diplock LJ pointed out in Freeman & Lockyer v Buckhurst Park Properties at 503, and that these principles equally apply to authority to bind a company by acts done purportedly on behalf of a company, citing Armagas Ltd v Mundogas SA at 732.

  2. Earlier in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72 at 78; [1975] HCA 49, the High Court accepted the principles stated by Diplock LJ in Freeman & Lockyer v Buckhurst Park Properties at 503:

An ‘apparent’ or ‘ostensible’ authority, on the other hand, is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the ‘apparent’ authority, so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract.

  1. Diplock LJ also observed at 503 that the commonest form of representation by a principal was by permitting the agent to act in the management or conduct of the principal’s business.

  2. It is well-established that the representation as to authority which creates the apparent or ostensible authority must be made by some person who has actual authority from the corporation to make such a representation: Freeman & Lockyer v Buckhurst Park Properties at 505; Crabtree-Vickers at 78; Northside Developments at 160 (Mason CJ), 172 and 174 (Brennan J), 198-199 (Dawson J).

  3. In the present case, s 99-1 of the CATSI Act, which is in similar terms to s 126(1) of the Corporations Act, is also relevant. It provides that an Aboriginal and Torres Strait Island corporation’s power to make, vary, ratify or discharge a contract may be exercised by an individual acting with the corporation’s express or implied authority and on behalf of the corporation. The power may be exercised without using a common seal.

(a) Implied actual authority

  1. While Left Bank accepted on appeal that Ms Marlowe did not have actual authority on behalf of the Corporation either to accept the terms of the agreement for lease contained in the March emails, or to execute the agreement for lease on behalf of the Corporation, it submitted that Ms Marlowe had implied actual authority to accept the terms of the agreement for lease on behalf of the Corporation.

  2. Implied authority is an aspect of actual authority. Actual authority requires a consensual agreement between the principal and agent and arises where a principal grants, and an agent accepts, authority for the agent to perform specific tasks on behalf of the principal: Equitcorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 at 132 (Clarke and Cripps JJA). Notwithstanding the absence of an express agreement, the parties “may conduct themselves in such a way that it is proper to infer that the relevant authority has been conferred on the agent”: Equiticorp Finance at 132; Gerard Cassegrain & Co Pty Ltd v Cassegrain (2013) 87 NSWLR 284; [2013] NSWCA 453 at [32] (Beazley P).

  3. The authority impliedly granted by the principal to the agent must be such as could be validly granted by express agreement, and in the context of a company, must be an authority whose existence is contemplated by the company’s memorandum and articles of association: Equiticorp Finance at 133. As Brennan J noted in Northside Developments at 173, this latter point was made by Diplock LJ in Freeman & Lockyer v Buckhurst Park Properties at 504-505.

  4. In Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549, Lord Wilberforce said at 586-587 that the implication of authority does not stop with the mere fact of the person holding the office, such as in that case director and chairman of the company, and that it is legitimate to consider what the actual circumstances of the relationship between the person and the board of directors may show.

  5. Clarke and Cripps JJA similarly remarked in Equiticorp Finance at 134 that whether authority is to be implied and, if so, the scope of such authority, is to be found in a close analysis of the evidence upon which the case for implication relies.

  6. There is an anterior question which needs to be addressed in a case like the present. An agent cannot have implied actual authority to inform an offeror that an offer has been accepted when no decision has been made by the principal to accept that offer: Crabtree-Vickers Pty Ltd at 77-78. There, the question was whether Peter McWilliam, who had authority to obtain quotations for the purchase of certain printing machines, had implied authority to communicate to those who gave quotes whether their quotes were accepted or not accepted. In rejecting the argument that it was only necessary to show that Peter McWilliam had actual authority to communicate decisions Gibbs, Mason and Jacobs JJ explained at 77:

This argument, so far as it relates to actual authority, is self-contradictory. Such a person may impliedly have such actual authority when the decision to purchase has been properly made but he can have no actual authority to inform an offeror that the offer has been accepted when no decision has been made by the principal to accept that offer. At the most, such a person might have ostensible authority and the submission should be considered under that question.

  1. Applying this principle, Left Bank accepted, correctly, that it must demonstrate two matters: first, the Corporation in fact agreed to accept the offer of a new agreement for lease on the terms of the March emails; and secondly, the Corporation conferred on Ms Marlowe authority to communicate that acceptance to Left Bank. The material terms of the new agreement for lease as found by the primary judge at [63] and [67], were that it was for a term of five years, commencing on 1 May 2017, the current rent of $134,983 would apply to the final year of the 2012 lease and the first year of the new lease, and otherwise the rent would be subject to review in accordance with the existing rent review provisions in the 2012 lease.

(1) Whether the Corporation agreed to be bound to a new lease?

  1. There is no direct evidence of any Board resolution or decision to accept the new lease proposal in terms of the March emails. That the Corporation was unable to find minutes of Board meetings in the period January to August 2016, does not assist Left Bank’s submission that the Board in fact determined to accept the new lease proposal in the March emails. It was open to his Honour to accept Ms Browning’s evidence on this issue: see [45] above.

  2. Further and importantly, whilst Ms Browning agreed with the negative proposition put to her in cross-examination that there was no record of a Board meeting to show that Ms Marlowe was not authorised to instruct Mr Maxwell to send the 6 April email, the affirmative proposition that the Board had approved the new lease proposal, was not put to Ms Browning. Nor was it put to Ms Browning that the Board had authorised Ms Marlowe to instruct Mr Maxwell to send the 6 April email. There was no evidence from which an inference could be drawn that the Board was aware of the new lease proposal contained in the March emails.

  3. Nevertheless, Left Bank pointed to four matters as supporting the inference for which it contended that the Board had in fact agreed to the new lease proposal contained in the March emails:

  1. the building work undertaken by the Corporation in May and June 2017, after the 2012 lease had expired;

  2. the statement published on the Corporation’s website in April 2017:

Due to the flood Ngunya Jarjum has relocated to 53 River Street Ballina on a temporary basis until recovery is finalised at the Lismore office.;

  1. the monthly rent invoiced and paid under the 2012 lease from May 2016 to April 2017 was not increased by Left Bank by 4 per cent as provided by the terms of the 2012 lease, but was maintained at the level of April 2016 consistent with the terms of the offer of the new agreement for lease in the March emails; and

  2. the Board minutes of 30 March 2017 contained an admission by the Corporation that a new 5 year lease had been agreed.

  1. Each of these matters involved circumstances occurring after 6 April 2016, but only the last matter was relied upon by Left Bank as an admission by the Corporation. The building work was said to be inexplicable, absent the Corporation having agreed to the new lease proposal in the March emails. The website statement and the payment of rent without any increase in the final year of the 2012 lease were said to be consistent with the Corporation having agreed to the new lease proposal offered in the March emails.

  2. The suggested inference is to be assessed in accordance with Jackson v Lithgow City Council [2008] NSWCA 312 at [12] where Allsop P (Basten JA and Grove J agreeing), said that “[t]he inference must be available and be considered to be more probable than other possibilities”. This does not mean more probable than any one other possibility, but more probable than not.

Building works

  1. Whilst substantial ground floor renovation work was planned by the Corporation in 2016, the work done in May and June 2017 was limited to replacing the ground floor carpet and installing new work stations which had been damaged in the 31 March 2017 flood.

  2. That the Corporation undertook this work in the absence of the Corporation having agreed to a new lease is explicable given the context of the dispute with Left Bank in early April 2017 as to who was responsible for replacing the damaged “carpet etc” and that the matter was being reviewed by the Corporation’s new solicitor, Mr Graham. Whilst the content of any legal advice obtained by the Corporation was not in evidence, there was evidence that the Corporation subsequently accepted responsibility to replace the ground floor carpets and work stations, as Ms Jacky had indicated in her 24 April 2017 email to Mr Kreutzer: see [34] above.

Website statement

  1. Left Bank submitted that the website statement contemplated a return by the Corporation on a permanent basis to the leased premises in Lismore, and this implied an acceptance by the Corporation that it had a legal right to do so which could only have flowed from the new agreement for lease.

  2. The difficulty with this submission is that Ms Browning gave unchallenged evidence that she did not know why the website statement contained the words “until recovery is finalised at Lismore office” and that the Corporation’s intention was not to return to the leased premises in Lismore but to find other premises. Her evidence on these matters was consistent with the Board minutes of 2 March 2017 which recorded the direction given to the interim CEO to canvass other available building options in Lismore (see [26] above). Her evidence was also consistent with the contemporaneous statements by the Corporation’s solicitor, Mr Graham, in his letters to Left Bank dated 19 and 26 April 2017. It will be recalled that those letters asserted that no new lease had been entered into by the Corporation and would not be renewing the lease past 30 April 2017.

  3. Left Bank characterised the solicitor’s statements as mere posturing. I do not agree. That is speculation and no such proposition was put to Ms Browning in cross-examination. No basis has been demonstrated for doubting that Mr Graham’s letters accurately reflected his instructions at the time that the Corporation would not be renewing the lease beyond 30 April 2017.

Monthly rent

  1. As landlord, Left Bank was not obliged to insist on imposing the 4 per cent rent increase under the 2012 lease in its final year. And it does not follow from the Corporation’s conduct in paying rent as invoiced in the final year of the 2012 lease that it accepted that the legal basis of its obligation to pay such was a term of the new lease, rather than that Left Bank had not insisted on increasing the rent under the 2012 lease. The former proposition was not put to Ms Browning in cross-examination.

30 March minute

  1. The submissions by Left Bank concerning the 30 March Board minute did not address the precise significance of the asserted admission concerning the “five-year lease”, or the admissibility and probative value of admissions about matters of law, or of mixed fact and law.

  2. A party may admit facts from which a conclusion of law may then be drawn: Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317; [2003] HCA 51 at [69] (Gummow J) at [40] and [177] (McHugh J and Heydon J agreeing). But that is not the terms of the 30 March Board minute.

  3. The admissibility of matters of mixed fact and law is controversial: see J D Heydon, Cross on Evidence (Online version, LexisNexis Butterworths) at [33470]. There is authority that admissions involving a conclusion which depends upon the application of a legal standard, such as breach of a duty of care, are not admissible: Dovuro Pty Ltd v Wilkins at [70]-[71] (Gummow J, McHugh J and Heydon J agreeing).

  4. The difficulties in relying upon conduct as admissions of the state of the parties’ rights were considered by Beazley P in Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 140 at [79]-[82]. Basten JA (Gleeson JA agreeing) said of such difficulties at [121]:

On the other hand, where it provides evidence of facts, the assertion of which is against the interests of one party, it may be admissible as an admission by that party. However, to the extent that the evidence reveals an opinion as to a question of law rather than fact, the admission may be irrelevant or valueless. (The relevant authorities were collected by Campbell JA in Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; 261 ALR 382 and in Lym International Pty Ltd v Marcolongo [2011] NSWCA 303.) Alternatively, the evidence may establish contextual facts in existence at the time the contract was executed.

  1. In the present case, the 30 March Board minute contained, at least, a statement of mixed fact and law, and if otherwise admissible, the statement concerning the instruction given to Mr Graham “to attempt to negotiate out of the five-year lease” is irrelevant or valueless.

  2. First, the statement does not identify the terms of the “five-year lease”.

  3. Second, when the statement is read in context with the other Board minutes, it is explicable. There is no acknowledgment in the 30 March minute that the Board itself had agreed to a five-year lease. The inference to be drawn from the statement is that the Board was concerned that the Corporation may be bound by what Ms Marlowe and Mr Maxwell had done in relation to a new lease, being something that the Board had not authorised. This is consistent with the Board’s conduct in relieving Ms Marlowe from her duties in early 2017 and the consideration given by the Board on 30 March 2017 to possible legal action against Mr Maxwell.

  4. The suggested inference that the Board in fact determined to bind itself to an agreement for lease on the terms contained in the March emails should be rejected.

(2) Whether the inference of authority should be drawn from the conduct of the Corporation and Ms Marlowe?

  1. In view of the above conclusion, the second question does not arise. Nevertheless, I will indicate my views.

  2. In writing, Left Bank contended that the inference of implied actual authority was to be drawn from the following conduct of the Corporation and Ms Marlowe:

  1. the Corporation appointed Ms Marlowe as its CEO;

  2. the Corporation’s delegation manual delegated, relevantly, to the CEO the “management of and signing off on leasing arrangements”;

  3. Ms Marlowe was the manager in-charge of a planned refurbishment of the leased premises.

  1. As to the first matter, Left Bank accepted in oral argument that as CEO, Ms Marlowe did not have delegated authority to decide whether to accept the lease proposal. That concession was properly made. The facts and circumstances of Ms Marlowe’s position as CEO of the Corporation are a long way from those of the managing director in in Hely-Hutchinson v Brayhead Ltd, or the dominant individual director having a controlling interest in a company in Brick & Pipe IndustriesLtd v Occidental Life Nominees Pty Ltd [1992] 2 VR 279; 6 ACSR 464 and Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143.

  2. Hely-Hutchinson v Brayhead Ltd involved the implied actual authority of Mr Richards, the chairman of a Board of directors arising not from the nature of his office, but from the conduct of the parties and the circumstances of the case – Mr Richards acted as de facto managing director of the company and was the chief executive who made the final decision on any matter concerning finance. Brick & Pipe Industries involved the implied actual authority of Mr Goldberg who was found to have authority to manage the business and to hold out a person as secretary who was not in fact the secretary. GPI v ANI involved the implied actual authority of Mr Yuill from the Board to conduct the business of GPI as he saw fit, that is, to exercise all powers relating to the conduct of the business of GPI as are exercisable by the directors. As McLelland AJA observed in GPI v ANI at 149, in each of Brick & Pipe Industries and GPI v ANI:

… the evidence revealed a course of conduct involving the exercise by a dominant individual director having a controlling interest in a company, of the significant decision-making functions of the company without prior reference to the company's board and with the acquiescence of that board.

The present case is not of that type.

  1. As to the second matter, his Honour found that the delegation in the Corporation’s delegation manual to the CEO of “management of and signing off on leasing arrangements” did not amount to an express conferral of authority upon Ms Marlowe as CEO to bind the Corporation to an agreement for lease: at [100]. Left Bank complained that this finding did not address whether the delegation manual authorised the CEO to communicate the Corporation’s acceptance of the terms of the agreement for lease on behalf of the Corporation. I do not agree.

  1. When the finding at [100] is read together with his Honour’s summary of Left Bank’s submission at [93] – that the terms of the delegation manual amounted to an express conferral of “such” an authority, which included authority to communicate acceptance of Mr Kreutzer’s proposal – it is plain that his Honour was also rejecting the narrower submission that Ms Marlowe had implied authority to communicate the Corporation’s acceptance of the terms of the agreement for lease, for the reasons given at [94]-[100]. No error has been shown in that reasoning.

  2. As to the third matter, the authority given by the Corporation to Ms Marlowe to deal with Left Bank in relation to the proposed renovation of the premises did not carry with it any authority to communicate acceptance of any new lease proposal.

  3. There was no error in his Honour’s finding on implied actual authority.

(b) Ostensible authority

  1. Left Bank submitted that his Honour erred in finding that it was not relying in 2016 upon any holding out or representation by the Corporation that Ms Marlowe was a director of the respondent essentially for two reasons:

  1. the Corporation held Ms Marlowe out to Left Bank as a director of the Corporation on two occasions in 2012 in connection with the execution of the 2012 lease;

  2. Mr Maxwell’s knowledge that Ms Marlowe was not a director of the Corporation should not be imputed, to Mr Kreutzer.

(1) Whether any relevant representation made to Left Bank

  1. The first representation relied upon by Left Bank involved the presentation of the original lease in May 2012 signed by Ms Marlowe purportedly as director. The second involved an email from Mr Maxwell to Mr Kreutzer of 10 August 2012 (10 August email) in which Mr Maxwell advised, in answer to a query from Mr Kreutzer:

I am instructed that the two signatories are a director and a Corporation’s secretary.

  1. To the extent that Left Bank criticised the primary judge for not referring to the 10 August 2012 email, the criticism is unfair. At trial, Left Bank did not rely on that email as containing or conveying any relevant representation by the Corporation.

  2. The primary judge found, correctly, at [8] that whilst the 2012 lease was originally signed by Ms Marlowe and Ms Browning, each purporting to be a director of the Corporation, the 10 August email clarified that only one of the persons who executed the lease was a director and the other was a secretary, but the email did not state which of Ms Marlowe or Ms Browning was not a director. In these circumstances, the 10 August email cannot be reasonably construed as holding out Ms Marlowe as a director. Nor could it be said after the 10 August email that the presentation of the 2012 lease as originally executed in May 2012 was a continuing holding out by the Corporation of Ms Marlowe as a director.

(2) Whether Mr Maxwell’s knowledge should be imputed to Mr Kreutzer?

  1. Mr Maxwell became aware from a search of the Register undertaken on 11 September 2012 that Ms Marlowe was neither a director nor a secretary of the Corporation, but was designated as a “contact person”. The primary judge imputed Mr Maxwell’s knowledge to Mr Kreutzer because the information was obtained by Mr Maxwell in the course of acting for Left Bank on registration of the 2012 lease: at [85].

  2. The finding of imputed knowledge was made applying the well-known principles stated by Mason J in Sargent v ASL Developments Ltd (1974) 131 CLR 634; [1974] HCA 40 at 658-659:

As against a third party the law imputes to a principal knowledge gained by his agent in the course of, and which is material to, a transaction in which the agent is employed on behalf of the principal, under such circumstances that it is the duty of the agent to communicate it to the principal.

  1. It is not to the point, as Left Bank submitted that Mr Maxwell was not employed by Mr Kreutzer to act as Left Bank’s solicitor in respect of the 2012 lease. As his Honour found, there was a subsequent agency relationship between Left Bank as principal and Mr Maxwell as agent with respect to registration of the 2012 lease. Contrary to the submissions of Left Bank, that agency did not expire on the lodgement of the document for registration; the scope of the agency was the registration of the 2012 lease, and thus the agency continued until the lease was registered.

  2. It was in the course of this agency that Mr Maxwell received the requisition from the LPI concerning the discrepancy in the capacity stated for “Lenore Marlowe” in signing the 2012 lease. As noted, the search obtained by Mr Maxwell on 11 September 2012 confirmed that Ms Marlowe was not a director or secretary of the Corporation. There was no error in his Honour’s finding imputing this knowledge of Mr Maxwell to Mr Kreutzer.

  3. Given that there was no continuing representation by the Corporation in 2016 that Ms Marlowe was a director, the primary judge correctly rejected Left Bank’s submission, which was repeated on appeal, that the Corporation represented that Ms Marlowe was authorised to participate in both the decision as to whether the Corporation should make an agreement for lease and execution of such an agreement for lease. His Honour also correctly rejected Left Bank’s further submission, which was also repeated on appeal, that “in those circumstances [Ms Marlowe] also had authority to communicate the said decision to [Left Bank]”.

  4. Left Bank referred to a line of English authority which has applied the doctrine of ostensible authority to the communication of a decision, as distinct from the making of the decision: First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] 2 Lloyd’s Rep 194; and Kelly v Fraser [2013] 1 AC 450; [2012] 3 WLR 1008, but cf the criticism of the decision in First Energy in Bowstead & Reynolds on Agency (19th ed, Sweet & Maxwell, 2010) at pp 369-370. In Kelly v Fraser, Lord Sumption JSC said at [15]:

It is clear from the judgments in First Energy that the Court of Appeal regarded their approach in that case as being wholly consistent with the law stated by Lord Keith in Armagas Ltd v Mundogas SA [1986] AC 717. In the Board’s opinion, they were right to regard them as consistent. Lord Keith’s speech remains the classic statement of the relevant legal principles. An agent cannot be said to have authority solely on the basis that he has held himself out as having it. It is, however, perfectly possible for the proper authorities of a company (or, for that matter, any other principal) to organise its affairs in such a way that subordinates who would not have authority to approve a transaction are nevertheless held out by those authorities as the persons who are to communicate to outsiders the fact that it has been approved by those who are authorised to approve it or that some particular agent has been duly authorised to approve it. These are representations which, if made by some one held out by the company to make representations of that kind, may give rise to an estoppel. Every case calls for a careful examination of its particular facts.

  1. This passage by Lord Sumption was referred to without disapproval in Wilh.Wilhelmsen Investments Pty Ltd v SSS Holdings Pty Ltd [2019] NSWCA 32 at [85] by Beazley ACJ.

  2. It has been said that the principle is very fact-sensitive: Kilcran, In the matter of Allco Finance Group Limited (Receivers and Managers Appointed) (in liq) v Gothard [2014] FCAFC 6 at [78] (Besanko, Forster and Farrell JJ). I agree. Assuming the correctness of the distinction drawn in First Energy, I do not consider that the First Energy principle applies here.

  3. In distinguishing Jiwunda v Trustees of the Travel Compensation Fund [2006] NSWSC 741, his Honour found that there was no prior course of dealing in which the Corporation held out Ms Marlowe to Left Bank as having authority to give notice as to whether or not Left Bank’s offer of a new lease was accepted: at [114]. There is no error in that finding.

  4. The holding out of Ms Marlowe as a director of the Corporation when presenting the original lease in May 2012 did not continue after the 10 August email, and was corrected by the knowledge obtained by Mr Maxwell on 11 September 2017 which is imputed to his principal at the time, Mr Kruetzer. Further, Mr Kreutzer’s evidence does not support any relevant holding out by the Corporation of Ms Marlowe as a person authorised to communicate acceptance of the offer of new lease. His evidence was that the usual subject matter of his dealings with Ms Marlowe included proposals for minor alterations to the building and maintenance issues.

  5. In the circumstances, it is not necessary to consider the Corporation’s further submissions concerning the absence of evidence of detrimental reliance by Left Bank on the alleged holding-out of Ms Marlowe: see the discussion in Wilh-Wilhelmsen Investments Pty Ltd v SSS Holdings Pty Ltd at [125]-[141].

  6. There was no error in his Honour’s finding on ostensible authority.

Notice of contention

  1. I have considered whether the issue raised by grounds 1 and 2 of the Corporation’s notice of contention should be resolved, although unnecessary to the outcome of the appeal: Kuru v New South Wales (2008) 236 CLR 1; [2008] HCA 26 at [12]; Boensch v Pascoe [2019] HCA 49; (2019) 94 ALJR 112 at [8], [101]. These grounds contend that his Honour erred in finding that there was a concluded agreement. Given that this issue is only raised defensively by the Corporation, I am satisfied that good reason exists not to deal with this issue.

Alternative claim by Left Bank for unpaid rent

  1. In its amended notice of appeal (par 4), Left Bank claimed relief in the alternative that the Corporation should be ordered to pay unpaid rent from 1 June 2017 to 20 July 2017 in an amount of $24,081.52.

  2. Left Bank submitted that, if the Corporation is not bound by the agreement for lease, it remained bound by the 2012 lease and upon expiry of that lease on 30 April 2017, the Corporation became a monthly tenant. The submission continued that the Corporation was obliged to give one month’s written notice to terminate the monthly tenancy, and that such notice was first given on 20 June 2017 when the Corporation vacated the premises.

  3. In support of this alternative claim, reference was made to cl 12.4 of the 2012 lease which provided that if the lessor allows the lessee to continue to occupy the property after the end of the lease period (other than under a new lease), then the lessee becomes a monthly lessee and must go on paying the same rent and other money in the same way that the lessee had to do so under the lease just before the lease period ended, apportioned and payable monthly, and either the lessor or the lessee can end the monthly tenancy by giving, at any time, one month written notice to the other expiring on any date.

  4. It is not in dispute that the Corporation paid the monthly rent until the end of May 2017: at [52]. According to the submission, allowing one month’s notice to terminate the monthly tenancy from 20 June 2017, Left Bank was entitled to unpaid rent from 1 June 2017 to 20 July 2017.

  5. The primary judge did not deal with this alternative because he was not asked to do so. The Corporation objected to Left Bank advancing this alternative claim on appeal which it submitted was not pleaded or argued at trial and was first mentioned after judgment had been handed down, in the context of submissions by Left Bank of the question of costs.

  6. Left Bank responded that the claim for rent was pleaded, referring to par 19(a) of the amended statement of claim and was included in the damages schedule that was handed up at trial.

Decision

  1. The claim for rent pleaded in the amended statement of claim from 1 June 2017 to 30 June 2018 of $123,738 was based on the alleged new agreement for lease commencing on 1 May 2017. The damages schedule relied upon by Left Bank at trial was to the same effect, albeit the claim for unpaid rent of $123,738 was said to relate to the period 1 June 2017 to 31 March 2018.

  2. No alternative claim was pleaded or advanced at trial for unpaid rent based on the Corporation holding over as a monthly tenant on expiry of the 2012 lease, and not giving one month’s notice in writing before it vacated the premises on 20 June 2017. If such a claim had been made, a question may have arisen as to whether either of the letters sent by Mr Graham to Mr Kreutzer on 19 April and 26 April 2017 constituted one month’s notice of the Corporation’s intention to terminate the monthly tenancy.

  3. In my view, Left Bank should not be permitted to advance a new case on appeal which, whether deliberately or by inadvertence, it failed to put during the hearing when it had an opportunity to do so: University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 60 ALR 68; Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 at 647 (Mason P, Gleeson CJ and Priestly JA agreeing).

Conclusion

  1. The appeal has failed and there is no reason why costs should not follow the event: UCPR, r 42.1.

  2. Accordingly, I propose the following orders:

  1. Appeal dismissed.

  2. Appellant to pay the respondent’s costs.

**********

Amendments

14 July 2020 - [79] - insertion of the word "not" in last sentence.

Decision last updated: 14 July 2020

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