Minlabs Pty Ltd v Assaycorp Pty Ltd - [2001] WASC 88

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: MINLABS PTY LTD -v- ASSAYCORP PTY LTD & ORS [2001] WASC 88

CORAM: ROBERTS-SMITH J

HEARD: 12, 13 & 14 MARCH 2001

DELIVERED : 4 APRIL 2001

FILE NO/S: CIV 1765 of 1999

BETWEEN: MINLABS PTY LTD (ACN 083 202 037)
Plaintiff
AND
ASSAYCORP PTY LTD (ACN 052 982 911)
First Defendant
CHEMWORTH PTY LTD (ACN 073 547 207)
Second Defendant
ANTHONY CHARLES WILKINSON
Third Defendant

Catchwords:

Corporations - Company secretary - Also director of other companies - Fiduciary obligations - Payments to the other companies - Payments to third parties in discharge of liabilities of those other companies - Whether breach of common law and statutory duties

Legislation:

Corporations (Western Australia) Act 1990

Result:

Judgment for the plaintiff

Representation:

Counsel:

Plaintiff:     Ms G S Pitt
First Defendant             :     No appearance
Second Defendant         :     No Appearance
Third Defendant           :     In person

Solicitors:

Plaintiff:     Williams & Hughes
First Defendant             :     No appearance
Second Defendant         :     No appearance
Third Defendant           :     In person

Case(s) referred to in judgment(s):

AWA Limited v Daniels t/as Deloitte Haskins & Sells (1992) 2 ACSR 759
Boardman & Anor v Phipps [1967] 2 AC 46
Canadian Aero Service Pty Ltd v O'Malley et al (1973) 40 DLR (3d) 371
Chan v Zakaria (1984) 154 CLR 178
Circle Petroleum (Queensland) v Greenslade (1998) 16 ACLC 1577
Daniels v Anderson (1995) 37 NSWLR 438
Gamble & Mann v Hoffman (1997) 24 ACSR 369
Green & Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1
Hospital Products Limited v United States Surgical Corporation & Ors (1984) 156 CLR 41
Re Morvah Consols Tin Mining; McKay's case [1875] 2 Ch D 1
Smith v French [2000] VSC 381
Vrisakis v The Australian Securities Commission (1993) 1 WAR 395

Case(s) also cited:

Breen v Williams (1995) 186 CLR 71
Australian Innovation v Petrovsky (1996) 21 ACSR 218

ROBERTS-SMITH J: This is a case about alleged misuse of a corporation's money by a company secretary.
The plaintiff ("Minlabs") is a company formed on 30 June 1998 by the first defendant, Assaycorp Pty Ltd ("Assaycorp") and Leonora Laverton Assay Laboratories Pty Ltd ("LLAL"). The directors of Minlabs were Mr Tony White, Mr Sid Pond and Mr Ray Wooldridge. The secretary was Mr Anthony Wilkinson, the third defendant. The two shareholders of Minlabs were Assaycorp and LLAL.
Minlabs was formed to purchase the assets of another company Minculture Pty Ltd (In Liq) ("Minculture") of which Pond was the sole director.
Minlabs was essentially a joint venture between Assaycorp and LLAL, both of which provided analytic services to the mining community. The ultimate purpose of the joint venture was to absorb the Minculture work into the LLAL facility at Kalgoorlie. Minlabs did not in fact do any assaying or analytical work itself. It sold assay services, but subcontracted its clients' work to LLAL for a fee of 15 per cent of the amount of the total invoice charged to the customer. That fee was payable by LLAL to Minlabs.
In practice, the arrangement was that Minlabs would receive payment from the customer and would account to LLAL for 85 per cent of the value and retain the remaining 15 per cent.
White was the sole shareholder and director of LLAL. The directors of Assaycorp were Wooldridge and Wilkinson, who were also the sole directors of another relevant company, Chemnorth Pty Ltd (In Liq) ("Chemnorth").
Wilkinson conducted his business from premises at Toodyay. White was in Kalgoorlie. Pond was in Perth. Woodridge was usually in Pine Creek or Darwin.
Minlabs had a cheque and a Debtors Financing Account with the National Australia Bank ("NAB"). As company secretary of Minlabs, Wilkinson also had physical custody of the Minlabs' accounts and chequebook. He had electronic access to the accounts from his premises at Toodyay. None of the directors had such access.
There were no special directions given to Wilkinson by the board of directors about his authority to make payments out of Minlab accounts. The assumptions and expectation of White and Pond were that he would do so to defray expenses or liabilities properly incurred by Minlabs in the ordinary course of business.
At some point (probably around late February 1999) White became concerned that LLAL was not being paid in a timely manner for work done by it for Minlab customers. He was concerned about this as a director of both Minlabs and Assaycorp. He could see no immediate reason why this should be so because Minlabs was banking money regularly and should have had the capacity to make timely payments to Assaycorp. So he spoke to Wilkinson and asked him why Minlabs was not able to pay. The explanations given were that Minlabs was paying bills but was using a factoring account and it was all just a matter of timing. He was not satisfied with this response and sought more information. He understood Wilkinson was preparing monthly profit and loss statements for Assaycorp. He testified Wilkinson had undertaken to do the same for Minlabs from the outset, so White asked for them. Wilkinson told him they were not ready.
White approached the bank directly. He obtained copies of the Minlabs' bank statements. Seeing those, he thought there was a lot less money in the account than there should have been and there were a lot more debits against it than there should have been, for a company set up to operate as Minlabs had.
White expressed his concerns to Pond and they both decided to make further inquiries. There were heated conversations with Wilkinson but no response from him sufficient to satisfy their concerns.
Ultimately there was a meeting of the three of them at the office of an accountant, Mr Paul Kruining in South Perth (a reading of the minutes of the board meeting of 16 April 1999 suggests this was probably on or around 12 March 1999) at which Wilkinson handed over to them the Minlabs' financial records.
White and Pond asked Kruining to review the records and report on his findings.
They attempted to have a board meeting on 9 April 1999. Present at that meeting were White, Pond, Ms G Pitt, a solicitor, and Kruining. The last two were there by invitation. Three attempts were made to contact Wooldridge (who was at Pine Creek) by telephone. They were unsuccessful, so the meeting commenced. A few minutes later Wooldridge rang back. He said that as he had received the notice of meeting agenda and information pack only that morning on his return from a location some 1500 kms away, he had not had an opportunity to read the material and could not participate in the meeting. He moved that the meeting be deferred for one week. A resolution to close the NAB Debtors Financing Account was discussed but Wooldridge formerly moved an adjournment and it was agreed to adjourn the meeting to the following week. Pond invited Wooldridge to attend in person, but he declined, saying he would attend by telephone conference call again.
A notice of shareholders' general meeting was subsequently issued over Wilkinson's hand as company secretary, notifying a meeting to be held on 15 April 1999. Agenda items included, inter alia, the discussion and consideration of drafting a shareholder agreement, the drafting of changes to the memorandum and articles of Minlabs, the appointment of alternate directors for Wooldridge, the freezing of the company's bank accounts at the NAB and in the event of an ongoing dispute, consideration of an application to the courts for an orderly resolution of the shareholder's dispute or alternatively the liquidation of Minlabs.
It is not entirely clear on the evidence but as I apprehend it, no such meeting was held.
There was however, a meeting of directors on 16 April 1999, again attended by Pitt and Kruining by invitation. Contact was made with Wooldridge by telephone. He said he considered the meeting had not been properly called and was only an informal one. There was some dispute about that. There was also lengthy discussion and dispute about a range of issues, essentially as between White and Pond on the one hand and Wooldridge on the other. The minutes suggest a degree of acrimony and (inter alia) complaints by Wooldridge that Assaycorp had received nothing but costs out of the joint venture and that only LLAL and Minculture were getting benefits. It is not necessary at this point to further consider what happened at this meeting other than that the appointment of Kruining as company director was confirmed, Williams & Hughes were formally appointed as the company's solicitor, the electronic banking facility and National Debtors Financing Account with the NAB was cancelled, Wilkinson was removed as company secretary, White was appointed in his place, and it was resolved that the accountant and solicitors be asked to further investigate the company's financial records.
On this it was noted in the minutes that Wooldridge claimed that payments made by Minlabs to Mr Price, Assaycorp and Chemnorth, which were of concern to the other directors, were properly justified expenses.
On 19 April 1999, Kruining wrote to Wilkinson advising that at the board meeting the previous Friday, he had been removed as company secretary and replaced by White. He informed Wilkinson that the board had asked him to further investigate payments made from company accounts as well as other invoices received but not yet paid. He requested Wilkinson to provide information and documents with respect to a list of transactions set out in a schedule to his letter. Put broadly, the information he was requesting was who on behalf of Minlabs had authorised the work on the invoices and the payment for it. The documents sought included any primary supporting documentation or other relevant documents.
Wilkinson agreed in evidence that he did not respond to that letter. He first said that was because it was a busy time for him. He was involved in the administration of the other two companies, Assaycorp and Chemnorth, and was preparing to hand over the Minlab books anyway. On further cross‑examination by Ms Pitt for the plaintiff, he had to concede that Kruining already had the Minlabs' books at that stage because they were what had been used to generate the query. He said reconciling that list of queries would have required a large amount of work, but he offered no other explanation for not responding.
On 13 May 1998, Williams & Hughes wrote to Wilkinson (TD 173). The letter began:
"We act for Minlabs Pty Ltd.
We have been instructed by Minlabs to investigate whether its funds have been improperly used to pay debts not incurred by Minlabs. We understand that the company's accountant, Mr Kruining had already written to you on 19 April 1999 and has not received any response.
We annex, for your information, a copy of part of the schedule which we understand Mr Kruining enclosed with his letter of 19 April. We comment that -
1.it appears that the bulk of the payments which are queried were to Assaycorp Pty Ltd and to Chemnorth Pty Ltd - we note that you are a director and secretary of both of those companies;
2.the amount involved is substantial - $142,670.42."
The solicitors then referred to various provisions of the Corporations (Western Australia) Act 1990 ("the Corporations Law") concerning the duties of an officer of a corporation and other aspects of legal liability. They concluded by saying they did not understand.
… why you have failed to respond to Mr Kruining's enquiries. In the absence of a full explanation, it is probable that Minlabs will commence proceedings against you for breach of fiduciary duties and pursuant to the Corporations Law in respect of the payments contained in the schedule annexed hereto. That is a matter which the board of directors will consider at the next directors meeting, to be held on Friday the 21st of May 1999. If you are in any doubt about the nature and extent of your obligations as former company secretary, the type of explanation which is required, or the consequences of a failure to provide an explanation, we strongly suggest that you seek legal advice."
The solicitors also wrote to the company secretary of Assaycorp and Chemnorth by letters of the same date, annexing in each instance a list of Minlabs payments made to the respective company and seeking an explanation. Again, Wilkinson agreed in cross‑examination that at that time he was the company secretary also of each of Assaycorp and Chemnorth and that he had not responded to those letters.
I turn now to the particular payments made which are the subject of this action.
They fall into three categories. The first is payments to Assaycorp ("the Assaycorp payments") totalling $63,238.29 and which are set out in par 4 of the statement of claim as:
"4.112th November 1998-               $1,410.00
4.24th December 1998-                $25,000.00
4.310th December 1998-              $25,000.00
4.416th February 1999-                  $6,154.87
4.525th February 1999-                  $5,673.42
$63,238.29"
The second category is payments to Chemnorth ("the Chemnorth payments") totalling $21,480 and set out at par 9 of the statement of claim as:
"9.112th October 1998-                   $8,300.00
9.212th November 1998-               $4,000.00
9.33rd December 1998-                 $5,180.00
9.46th Janury 1999-  $4,000.00
$21,480.00
The third category is payments which the plaintiff alleges were in fact made by Wilkinson to persons or entities to discharge debts owed to those persons or entities by Assaycorp or Chemnorth ("the third party payments") and totalling $57,889.13. They are set out in par 14 as:
"14.117th November 1998: to John Price-           $11,549.29
14.214th December 1998: to John Price-           $13,111.77
14.321st December 1998: to American Express-    $5,305.52
14.47th January 1999: to John Price-                   $5,000.00
14.528th January 1999: to American Express-     $2,113.95
14.61st February 1999: to John Price-                  $5,000.00
14.75th March 1999: to John Price-  $5,000.00
14.814th December 1998: to Horwaths-               $9,508.60
14.929th December 1998: to Allied Pickford-      $1,070.00
14.1018th February 1999: to ASIC -  $230.00
$57,889.13
At trial Ms Pitt conceded no documentation could be found in respect to item 14.5 and that was accordingly not being pursued.
As to the Assaycorp and Chemnorth payments, the plaintiff alleges that they were respectively made without the knowledge or authority of the board of directors of Minlabs and without consideration and that they were known by Wilkinson to be made without the knowledge or authority of the Minlabs board and without consideration.
It is further pleaded that Wilkinson's knowledge is the knowledge of Assaycorp and Chemnorth and his knowledge is to be attributed to them.
Additionally and alternatively, it is pleaded the payments were made pursuant to a mistake of fact, namely that Minlabs was obliged to make them and that Assaycorp and Chemnorth have received the payments to the use of Minlabs.
As to the third party payments, again it is pleaded that they were made without the knowledge or authority of the board and without consideration and that they were payments which Minlabs was not obliged to make and were not payments made for the benefit of, or for, or on behalf, of Minlabs. Again it is pleaded that Wilkinson's knowledge is the knowledge of Assaycorp and/or Chemnorth and must be attributed to them. There are further pleadings of breach by Wilkinson as company secretary of Minlabs of his fiduciary duties to the company and/or breaches of s 232(4) and (6) of the Corporations Law (failure to exercise care and diligence and making improper use of his position to cause detriment to Minlabs).
In their defence, the defendants do not admit the payments alleged and deny the allegations as to the circumstances in which the plaintiff pleads that they were made. At par 4 the defendants plead that at all material times Minlabs' directors knew or ought reasonably to have known of any payments made by Wilkinson.
By notice dated 11 August 1999 the plaintiff sought further and better particulars from the third defendant of this last pleading. By those particulars, the third defendant pleaded that the directors claimed to have known of the payments were Woodridge, White and Pond and further stated that all payments made by the plaintiff during the period 30 June 1998 to 25 March 1999 were made by Wilkinson on behalf of Minlabs. In the particulars he stated that meetings were held between all or at least a majority of the Minlabs' directors at which Wilkinson was present and that at those meetings the organisation of Minlabs' business was discussed and:
"[1.4.1]
… the third defendant was allocated the responsibility for attending to all payments of company debts on behalf of the plaintiff."
The particulars state these were meetings in Darwin and in Perth prior to incorporation of Minlabs and in Perth either at the Sebel Hotel, the LLAL offices in Subiaco or the Indiana Restaurant in Cottesloe after the incorporation of Minlabs.
The particulars further relevantly recite:
"… the matters giving raise (sic) to the debts payable by the plaintiff were discussed by the plaintiff's directors with the third defendant insofar as the third defendant made arrangements for services to be rendered to the plaintiff the directors of the plaintiff orally approved on the third defendant incurring such liability on behalf of the plaintiff. (Par 1.4.4)
At all material times the bank records, books of account and all accounting documentation of the plaintiff were available for inspection by the directors of the plaintiff at 924 Julimar Road, Toodyay …
… the third defendant was available to the directors of the plaintiff to respond to any questions in regard to payment made or to be made. (para 1.5.1)
… the plaintiff's directors ought reasonably to have known of any payments made by the third defendant by reason of the director's compliance with the provisions of section 232(4) of the Corporations Law of Western Australia." (para 1.5.2)
Given the pleadings the area of contest on the hearing was surprisingly narrow.
Assaycorp and Chemnorth are now in liquidation and proceedings as against them have been stayed. In the proceedings before me then, Minlabs is proceeding only against Wilkinson.
Although Wilkinson had earlier had solicitors acting for him, he represented himself at trial.
At the commencement of the trial Wilkinson expressly admitted the making of each of the payments alleged.
The plaintiff called White and Pond. Wilkinson gave evidence himself and was the only witness for the defence.
Subject to only some qualifications (which I will address separately below) White and Pond testified in relation to each payment that they were not aware of it when made, that they knew of no proper basis on which it could have been made by Minlabs and that Wilkinson was not authorised to make it.
White gave only very brief evidence about the formation of Minlabs. Thereafter, his testimony was directed to the specific transactions complained of. Having regard to the evidence later given by Wilkinson about his understanding of the nature and extent of his authority to make payments on behalf of Minlabs, it is convenient at this point to say something about the involvement of Mr Price, although the payments to him fall within the category of the third party payments and I will deal with them specifically when I come to that. For the moment I refer to White's explanation of Price's involvement with the parties.
As White explained it, Price was introduced to him at the first meeting he had with Assaycorp representatives in Darwin early in 1998. The meeting was attended by White, Wilkinson, Wooldridge, Price and another employee of Assaycorp, Alistair Inglis. It was White's understanding that Price was a consultant working for Assaycorp. His role was to pull together a group of investors to work towards floating a company. The purpose of the meeting was to see whether LLAL would be party to a joint float. At the time, White agreed to a proposition that they should work towards that goal. There was also a discussion at the meeting about whether there was any prospect of business out of what he described as the Minculture group, which was then teetering on the brink of going into liquidation (which it subsequently did). He testified that the Darwin meeting was all conjecture about what may or may not happen in the future. Price, he said, was never employed by Minlabs, the Minlabs' board never authorised Price to do any work for Minlabs and never agreed to pay Price any money either by way of fees or out of pocket expenses.

Concerning the formation of Minlabs, White said in cross‑examination that both shareholders (Assaycorp and LLAL) agreed to start the company off by each contributing $50,000 by way of seed capital. He said these were not loans and were certainly not expressed as loan funds. The two amounts of $50,000 were paid into the Minlabs' account in July 1998 and the $100,000 was subsequently put into the NAB account. The money was to be used to enable Minlabs to carry out its affairs as an assaying company.
According to White (t 65) there were also apparently at that time, discussions between Price, (representing Assaycorp) and he, in which the proposal ranged from a simple joint venture new company in the form of Minlabs to LLAL being approached to sell out to a new float company - though apparently based on or involving certain tax advice. He was clear however, that at no time was that being bought as a service, and even if it could be deemed that, the bill should have gone to LLAL not Minlabs.
Apparently as part of the joint venture arrangements, the operational part of Minculture was absorbed into, and became part of the ordinary day to day operation of LLAL. Thus, Minculture's instruments and equipment and Minculture's staff came over to LLAL. Minlabs itself had no employees (t 73). The idea was that Minlabs would take over the Minculture clients and then arrange for LLAL to do the work.
In his evidence, Pond made it clear that as he saw it, he had no part to play in the day to day business of Minlabs: he was there primarily to look after Minculture's interests and in particular to ensure that payments due to Minculture (which he described as royalties) were properly made (t 81, 95). Although the evidence on this was not at all clear, it seems that of the 15 per cent payments to be received by Minlabs, 7 per cent was to go to Minculture (t 81). (The terms of the joint venture agreement were never established in evidence because although at one point Ms Pitt sought to tender the joint venture agreement, the document had not been stamped and so the tender was withdrawn and the parties were not permitted to refer to it.)
In his evidence, Wilkinson conceded in respect of each payment not only that he had made it, but that he sought no approval to make the payment, the Minlabs' board did not approve it nor did they know about it.
As to the operation of the Minlabs' account and his authority to operate it, Wilkinson's evidence was (t 107) that there was no meeting at which the direction was specifically given as to his authority. According to his recollection, the closest it came to that was a discussion about what signatories would be authorised for the bank account. He never went to the board for approval of payments because it was his belief he did not need to (t 108). He testified his understanding was that the discussions between all the parties about the formation of Minlabs and the purpose and conduct of the joint venture gave him a general authority to run Minlabs and that:
"… along the lines that we were continually discussing about the overall group, the merging of the companies. That was my understanding - that it was part of that process. So the activity that was going towards that process - and I thought that that authority existed, yes" (t 113).
The articles of association of Minlabs (Ex P1, p 5‑39) contained provisions in the usual form vesting responsibility for managing the business in the directors (cl 70) and stipulating that all cheques and other negotiable instruments and all receipts or releases were to be signed by any two directors or in such manner as the directors determine (cl 72).
I am satisfied there was no express discussion by the Minlabs board about the scope and extent of Wilkinson's authority as company secretary to make payments on behalf of Minlabs. The only discussion was about the authority to sign cheques and operate the company bank accounts. Wilkinson was given that authority. Under these circumstances I find that Wilkinson had authority to make payments of invoices or accounts for goods or services provided to Minlabs or to discharge liabilities properly incurred by it in the ordinary course of Minlabs' business. I bear in mind here, of course, that Minlabs had no operational role and its activities were confined to dealing with customers requiring assaying or analytical work and subcontracting that work to LLAL.
I turn now to a brief consideration of the legal duties and obligations to which Wilkinson was subject.
As company secretary of Minlabs - particularly in circumstances in which for all practical purposes he had sole access to, and control of the accounts and financial records of the company - Wilkinson was a senior executive officer and owed fiduciary duties to Minlabs: see Canadian Aero Service Pty Ltd v O'Malley et al (1973) 40 DLR (3d) 371; Re Morvah Consols Tin Mining; McKay's case [1875] 2 Ch D 1 at 7; Smith v French [2000] VSC 381; Hospital Products Limited v United States Surgical Corporation & Ors (1984) 156 CLR 41 at 96‑97.
In the circumstances those fiduciary duties included:
(a)not to prefer the interests of Assaycorp or Chemnorth to Minlabs' interests;
(b)to act with reasonable care in the discharge of his duties as company secretary;
(c)not to place himself in a position where his duty to Minlabs and his duty to other conflicted (nor where there was a real possibility of such conflict)": Boardman & Anor v Phipps [1967] 2 AC 46 at 123; Chan v Zakaria (1984) 154 CLR 178 at 198‑9.
He also owed certain duties under the Corporations Law. Section 232 of the Corporations Law applies to a company secretary (s 232(1)(a)). Section 232(4) requires an officer of a corporation to exercise the degree of care and diligence that a reasonable person in a like position in a corporation would exercise in the corporation's circumstances. Section 232(6) prohibits an officer of a corporation from making improper use of his or her position as such an officer to gain, directly or indirectly, an advantage for him or herself or any other person or to cause detriment to the corporation. Section 232(4) is in very similar terms to the current s 180(1) of the Corporations Law (part of the new chapter 2D inserted by No 156 of 1999, Sched 1, item 1, which came into effect on 13 March 2000): see "Ford's Principles of Corporations Law", 8.305 at p 8146‑7.
In determining whether an officer has breached the statutory standard of care and diligence, a court will have regard to the company's circumstances and the particular officer's position and responsibilities within the company - see AWA Limited v Daniels t/as Deloitte Haskins & Sells (1992) 2 ACSR 759.
In Gamble & Mann v Hoffman (1997) 24 ACSR 369, Carr J found directors to be in breach of their obligations to take reasonable care in the performance of their office as directors and also to be in breach of their common law duty to exercise reasonable care, by causing Tallimba Pty Ltd, a company of which they were the only shareholders and directors, to make payments of debts on behalf of Sunhaven Nominees Pty Ltd, another company in which they were the only shareholders, in circumstances where there was no prospect that money could be recovered by Tallimba.
In considering the content of the directors' duty, Carr J noted that the legal principles upon which the issue of negligence should be decided were explained in Daniels v Anderson (1995) 37 NSWLR 438 in which Clarke and Sheller JA of the Court of Appeal of New South Wales explained (at 505):
"A person who accepts the office of director of a particular company undertakes the responsibility of ensuring that he or she understands the nature of the duty a director is called upon to perform. That duty will vary according to the size and business of the particular company and the experience or skills that the director held himself out to have in support of appointment to the office. None of this is novel. It turns upon the natural expectations and reliance placed by shareholders on the experience and skill of a particular director. The duty is a common law duty to take reasonable care owed severally by persons who are fiduciary agents bound not to exercise the powers conferred upon them for private purpose or for any purpose foreign to the power and placed, in the words of Ford & Austin, 'Ford's Principles of Corporations Law', 6th Ed, (1992) at 429, at the apex of the structure of direction and management. The duty includes that of acting collectively to manage the company. Breach of the duty will found an action for negligence of the suit of the company."
His Honour also referred to the observation by Ipp J in Vrisakis v The Australian Securities Commission (1993) 1 WAR 395 at 451 that the ambit of the duty and the standard of care depend upon the particular circumstances, however the test is essentially objective.
In considering the decision of the directors in that case to make payments by Tallimba to defray Sunhaven's debts, Carr J considered that their duty of care required them to take the following steps (supra 373‑374), namely to assess what benefit, if any, Tallimba would derive from making the payments on behalf of Sunhaven and secondly, if there were any benefits so to be derived by Tallimba, then to assess whether there was any reasonably foreseeable prospect of detriment to Tallimba. His Honour added (374 ibid):
"If there was a reasonable prospect of detriment to Tallimba the court has to decide whether that prospect of detriment outweighs the likely benefit to the company to the extent that making the payments amounted, in all the circumstances, to negligence? I adopt, respectfully, the approach along these lines suggested by Ipp J (with whom Malcolm CJ agreed) in Vrisakis at 449‑50. At the core of this question was the prospect of recovering the money."
His Honour found no benefit to Tallimba but substantial detriment.
Gamble was a case (unfortunately not all that unusual in this respect) in which the guiding force of both companies was a man who regarded the assets of both companies as belonging to him and being interchangeable between them.
The objective nature of the test to be applied here was reiterated in Circle Petroleum (Queensland) v Greenslade (1998) 16 ACLC 1577.

The Assaycorp payments

The first payment was $1,410 on 12 November 1998. Wilkinson said this was made up of $1,310, being the cost of incorporating Minlabs, together with $100 solicitor's fees in connection with the NAB Debtor Finance facility. These amounts were, he said, paid by Assaycorp.
In cross‑examination he conceded the Minlabs board did not approve the payment and indeed did not even know about it. There is no supporting documentation in respect of it. This was on the face of it a pre‑incorporation expense. It was an expense that might properly have been approved by the Minlabs board depending upon the circumstances of the agreement between Assaycorp and LLAL, but there is no suggestion that was in fact the basis of the payment and it was not for Wilkinson to approve such payment without authority of the board - which I find he did not have.
Minlabs made two payments of $25,000 to Assaycorp on 4 and 10 December 1998 respectively. According to Wilkinson, those payments were for reimbursement of expenses to do with Price. There were no vouchers or other supporting documentation in Minlabs' records in relation to these expenses which he said were incurred between May and November 1998 - part of which period of course pre‑dated Minlabs' incorporation on 30 June 1998. Wilkinson admitted that Minlabs never agreed to pay for that work (t 126). The directors were not aware of the transfers and did not authorise them. Although on other occasions Wilkinson received actual invoices or lists of expenses from Price (the payments in respect of these appear in the category of third party payments below), that was not so in relation to these two payments of $25,000. What does appear on the Minlabs' general ledger account activity details report for the period 1 July 1998 to 31 December 1998 (Ex P1, p 83) is a list of expenses in the handwriting of Wilkinson's assistant. They include, for example, an amount of $21,3393.55 for accommodation, $2735.30 for taxis and buses, $11,992.60 for air fares and $2012 for entertainment, amongst others. Wilkinson said he did not receive any accounts or hotel vouchers or any documentation of that kind and it was just a matter of the list of expenses as noted. When asked how he knew the expenses claimed were correct, he said he simply made that assumption (t 127). Cross‑examined by Ms Pitt, who pointed out that $50,000 is a "neat" figure for a series of air fares and other expenses and queried whether it was the actual amount expended, Wilkinson said he thought that in their working out, it was close to the $50,000 and from memory a little bit below. Later on he agreed when counsel put to him the actual total of the handwritten figures was $47,689.22 not $50,000 (t 134) and so even on that material, Minlabs had paid to Assaycorp $2310.78 more than the cost of the expenses actually listed. Wilkinson could give no reason for this (t 128).
I am satisfied on the balance of probabilities that Price was never engaged by Minlabs to do any work on its behalf and nor did the board of directors approve either reimbursement of expenses or other fees in relation to Price to be paid to Assaycorp and Wilkinson had no authority to make these payments. In making them he was preferring the interests of Assaycorp to those of Minlabs and he was in breach of his duty to act with reasonable care to ensure that the payments were properly made, in terms of both his common law and statutory duties.
There was a payment of $6154.87 to Assaycorp on 16 February 1999. This was a payment on two Assaycorp invoices, namely IC.00061 and IC.00062. The former related to a cost of $850 for transporting Annette Larwood's personal goods from Pine Creek to Kalgoorlie via Wesfarmers; the second simply charged two amounts, namely $2730.70 and $2574.17 for "sales system lease payments" with the dates "20/12/98" and "4/2/99", the total being $5304.87. There was no further itemisation nor supporting documentation in respect of either invoice.
I should also pause here to observe that it was Wilkinson's evidence that he prepared the invoices for each of Minlabs, Assaycorp and Chemnorth; consequently it was he who prepared these invoices for Assaycorp and then in his capacity as company secretary for Minlabs, it was he who paid them out of Minlabs' account to Assaycorp.
Accordingly to White, Annette Larwood was a chemist who worked for Assaycorp. In late 1998 the chemist working for Minlabs and who had been taken over from Minculture as a result of the joint venture, decided to leave. There were discussions between White and Wooldridge, not only in their capacity as directors of Minlabs, but as directors of their respective companies (LLAL and Assaycorp) about the need to replace that person quickly. They agreed that Assaycorp would approach one of its employees to move from Assaycorp to LLAL. Annette Larwood was consequently flown to Kalgoorlie from Pine Creek for discussions about the possibility of her taking the appointment at LLAL. She then returned to Pine Creek and subsequently accepted the position after which she transferred to LLAL as the new chemist. White said there was no reason why Minlabs should be paying for the transportation of Larwood's goods. She was certainly not going to work for Minlabs; Minlabs had no employees. In further elaboration White testified that at the time of his discussions with Wooldridge, it was put to him that this transfer was something that Assaycorp would contribute as part of its shareholding in Minlabs because LLAL was contributing much more than just receiving 85 per cent of the face value of its invoices. In his view Assaycorp was going to bear the cost of Larwood's transport and transfer - but if Assaycorp did not want to bear the cost of that, if it were to be invoiced anywhere else, it should have been LLAL, not Minlabs.
In his evidence‑in‑chief Wilkinson said (t 106) that his understanding of the position was that:
"Authority was not needed to make payments out of that account and it's also my understanding that Minlabs' vehicle was part of the merger process between the two groups. That was the vehicle that had the common shareholding and it was to be the vehicle - not the vehicle but it was a key instrument in the cooperation between the two groups with regard to the ultimate aim of public listing. The other matters that are touched on with regards to the use of Mr Price, with regard to the use of Ms Larwood was my consideration that those expenses were to the benefit of the group, the joint operation between the two companies and that was my reasoning for reimbursement of the expenses that Assaycorp had involved itself in."
I am satisfied that the expenditure in relation to Larwood had nothing to do with Minlabs, that Minlabs received no benefit from it, that Wilkinson had no authority to make the payment and it was not approved by the board. The making of the payment was a breach of Wilkinson's fiduciary duty in that it operated to the benefit of Assaycorp and the detriment of Minlabs in circumstances in which his duty to those two companies conflicted. In failing to ascertain whether there was any benefit to Minlabs in making this payment or any obligation upon it to do so, Wilkinson failed to act with reasonable care in the discharge of his duties as company secretary and likewise was in breach of his obligation to exercise due care and diligence in accordance with his statutory obligations. His approval constituted an improper use of his position as an officer of Minlabs to cause detriment to that company.
The sales system lease payments were different again.
In his evidence, White said that Assaycorp had a sales system but neither Minlabs nor LLAL did. He explained (t 45) that prior to Christmas (1998) Price initiated discussion of a proposal to put together a very expensive computer software sales system for the electronic sharing of information, but neither Minlabs nor LLAL used a sales system and neither the Minlabs' board nor LLAL as a shareholder agreed that Minlab funds could be used to purchase such a system, nor finance, nor make repayments for it. According to Pond (t 84) this was to be a system for the client base of LLAL, Assaycorp and Minlabs, but so far as either of Minlabs or LLAL were concerned, it never got beyond that point and certainly neither ever used such a system. In cross‑examination Wilkinson agreed that Minlabs' board did not approve the payment, nor did they even know about it (t 124). When asked if Minlabs ever used the sales system, Wilkinson said (t 124) it was put together in December 1998 and did not get off the ground for anybody because the first meeting to implement it was in January 1999:
"And that was the breakdown of the association between the three companies."
There was then the following exchange:
"Assaycorp bought the sales system, didn't it?---Yes.
When did it buy the sales system?---In December 98, something like that.
LLAL objected to it?---It's my interpretation that LLAL gave approval to the purchase of the sales system.
What do you mean it was your interpretation of it?---Because as I have stated, the opposite - we wouldn't have committed to getting that sales system in if there wasn't agreement that the group was going to use it in the future because Assaycorp and Chemnorth have less of a need for it by themselves.
The fact remains that Minlabs has never used it. Is that right?---No, Minlabs didn't use it.
LLAL never used it?---No.
Did the board of directors of Minlabs approve payment of lease payments in respect of the sales system?---No, they didn't.
Did they even know about it?---No, they didn't."

The issue was revisited later in Wilkinson's cross‑examination (t 137). Ms Pitt referred Wilkinson to an Assaycorp invoice dated 16 February 1999 (TD p 87) and an invoice from Price dated 30 January 1999 charging for consulting fees in that month which (according to Wilkinson) included his attendance at the first meeting that put the sales system together. Wilkinson conceded the relationship between the parties had not broken down in January 1999, but said he should have said it was the beginning of the breakdown.
He said he never invoiced LLAL for the sales system. When asked why not, he said (t 138):
"Because it was my understanding that the sales system was going to be placed in the Minlabs joint venture, the company that was in between the two parties as a middle ground. Instead of, like, a salesman going between the clients of all three entities, it was one piece of - one set of hardware that was going to be used by all three."
He was then asked by Ms Pitt who was going to use it (t 139-141):
"Let me come back to the sales system for a moment, Mr Wilkinson. You have said that you didn't invoice LLAL for the sales system. Who was going to use the sales system?---It was going to have access from all of the laboratory locations involved in the group. So all the Kalgoorlie laboratories would have terminal access.
When was the system bought?---Sometime in December 98.
Who used the system?---It was installed and set up by a company from Melbourne.
Yes. Who used the system?---It didn't get used.
By anybody?---No, because the January meeting was the first time to configure the database of clients.
Assaycorp didn't use it?---No. No information got - no specific information from any of the bases was input because we never got past the first meeting in January.
But it was intended, wasn't it, that Assaycorp, LLAL and Minlabs would use it?---Yes; all the information.
All three companies would use it?---Yes.
Minlabs was invoiced for it, LLAL was not. Was Assaycorp? Did Assaycorp pay for it?---Assaycorp paid for it, yes.
So Assaycorp paid - when you say Assaycorp paid for it, Assaycorp bought it?---Assaycorp set up the finance required for it, yes.
Answer the question. Assaycorp bought the system?---Assaycorp bought it, yes.
Assaycorp did so with a loan?---Yes.
When you invoiced Minlabs, was that the entire cost of the lease payment for the month?---Yes. Those two payments there are the lease payments, the first two lease payments.
The entire payments for the month?---Yes.
So Assaycorp wasn't going to contribute and neither was LLAL?---No."
I am satisfied the payments to Assaycorp by Wilkinson on behalf of Minlabs were not proper payments, were not authorised and were not made for any benefit of Minlabs but solely for the benefit of Assaycorp. This was, in any view, a detriment to Minlabs. In making the payments, Wilkinson was in breach of his fiduciary duties to Minlabs, in breach of his statutory duty to exercise care and diligence and it was, further, an improper use of his position so as to cause detriment to Minlabs.
The next payment was one of $5673.42 to Assaycorp on invoice IC0058 for the removal of equipment at Malaga. According to Pond, the equipment was owned by Minculture but was subject to an agreement with Minlabs for its purchase. There is some dispute on the evidence regarding its removal. Wilkinson said the equipment was removed into a holding yard in Malaga because Minculture needed the premises in which it was then stored. When it was initially put to him that the Minlab directors did not know he was moving this equipment, he responded that the Minlabs' directors did "because they requested it" (t 125). When that was queried, he qualified the answer by saying that was in as much as Pond was a director of Minlabs. He also suggested that to his knowledge White knew about the removal of the equipment, although he conceded he would not have known that Minlabs was going to pay for it and he did not authorise the payment for it. He also agreed that Pond did not authorise the payment of the removal cost by Minlabs. When it was put to him again, he agreed that in fact neither of them were aware of it (t 126).
In his evidence, Pond said that Wooldridge (who was of course a director of Minlabs, Assaycorp and Chemnorth) asked him if the equipment could be removed because Assaycorp needed it for work in the Tamami desert. In cross‑examination he elaborated on this by saying the equipment was initially moved so Minculture could dispose of, or rent out the building and Assaycorp was to go through the equipment to see what was needed by it and to refurbish any equipment that could go to the Northern Territory to the Assaycorp operation. White's evidence was that he discussed the removal of the equipment with Wooldridge and Wilkinson who wanted to remove it to the Northern Territory for use by Assaycorp. As I understand Wilkinson's evidence, it was in effect that the initial removal was paid by Assaycorp as a matter of convenience and he authorised reimbursement by Minlabs to Assaycorp:
"… because it was equipment that was part of the Minlabs' agreement and at that stage we weren't getting any benefit out of it. It was Minlabs' responsibility in my opinion" (t 125).
As to this I am satisfied that the equipment belonged to Minculture and that it was removed to Malaga at Minculture's request. Whether Assaycorp initially paid for the cost of that or not, there was certainly no obligation on Minlabs' part to do so and Wilkinson had no authority from the Minlabs' board to make the payment. I am satisfied this too was a payment in breach of his fiduciary and statutory duties as company secretary of Minlabs. That brings me to the Chemnorth payments.

The Chemnorth payments

The first was an amount of $8300. By invoice IC36 dated 31 August 1998 (TD 111) Chemnorth charged Minlabs an amount of $4300. The only description on the invoice of what that was for was:
"Selling and promotional services for the month of August 98".
There was a similar invoice dated 30 September 1998 charging $4000 (TD 112) for selling and promotional services for the month of September 1998, another also for $4000 dated 31 October 1998 for similar services in that month and another for $4000 dated 31 December 1998 for services said to be provided in December.
The $8300 was paid by way of $4300 on 25 August 1998 and $4000 on 11 September 1998. The $4000 for October 1998 was paid on 13 October - that is before the date of the invoice (see TD 115 and TD 76). The amount on the invoice dated 31 December 1998 was paid on that date (TD 121 and TD 78).
In his evidence, Wilkinson said that Alexander Davidson was employed as a salesman by Chemnorth at the beginning of August, possibly about 5 August. There had been some discussion prior to that between the Minculture people and those from LLAL, Assaycorp and Chemnorth at the end of July. He said he was referring to White, Pond, Wooldridge, himself and possibly a Mr Underwood from Minculture. Wilkinson explained that Davidson was actually an employee of Chemnorth, which was why the invoices came from Chemnorth for reimbursement of his expenses. He said the reason the invoices were all round numbers was because the cost incurred for Davidson was basically around $12,000 a month including wages, superannuation, air fares, telephone and other expenses. He said that each month the expense was totalled in the Chemnorth books, rounded off and divided by three; LLAL, Assaycorp and Minlabs were each paying one‑third. Wilkinson added that was irrespective of whether Davidson spent more time on LLAL, Minlabs or Chemnorth work. The agreement was the total cost of the salesman was to be one‑third each, regardless of where he actually spent most of his time in any month.
For his part, White acknowledged (t 47‑50) that there had been discussions about taking on a salesman and there had been a meeting with Alex Davidson. The proposal was that he would "come on board" and represent all three companies, Assaycorp, LLAL and Minlabs and would further the sales and marketing individually of those companies. This discussion occurred in the context of the wider discussions that eventually these three companies would all be combined in the float of one entity. He said LLAL agreed to pay for Davidson's services at about the level of $4300 per month and he could recall that Davidson spent a couple of months dealing with both LLAL and Minlabs' client issues. He said he could not recall being aware that Minlabs was actually paying for this service, although he knew that LLAL was because he was authorising the invoices and seeing they were paid to Assaycorp and to Chemnorth. He could not recall seeing any Minlabs invoices and nor could he recall ever authorising Minlabs to make a payment to Chemnorth. Asked whether he would have had a problem with it had he known at the time, he said he thought the value of it seemed somewhat out of kilter with the value of what Davidson was being paid for his overall remuneration package; it would seem that Minlabs and LLAL were basically picking up the entire cost for the sales representative who was a direct employee of Assaycorp. He thought at the time that LLAL and Assaycorp were sharing Davidson's costs between them as subsequently he discovered there were third payments of some $4000 a month coming from Minlabs. He said that he did not know about, or authorise the payments by Minlabs to Chemnorth in respect of Davidson's activities.
The payment of $5180 was made on invoices IC48 and IC52, both dated 30 November 1998. The first purported to be for "airfare: A Larwood, Darwin to Kalgoorlie" and was for an amount of $880. The second was again simply "selling and promotional services for the month of November 1998" and was for an amount of $4300. The Larwood payment was probably for her second flight from Darwin to Kalgoorlie. LLAL had paid for the first one. White said he was not aware of the payment for Chemnorth on invoice IC52 and had not approved it.
For his part, Pond's testimony amounted really to no more than repeatedly saying that he had no idea of what selling and promotional services were being referred to. He was not aware of payments on these invoices and he did not authorise any of them. He did not know who A Larwood was and was not aware of the invoice relating to her and did not authorise payment of it.
The situation in relation to the payments to Davidson is not as clear as it is with respect to the other payments complained of by the plaintiff. Clearly there was some discussion between representatives of Minlabs, Assaycorp and Chemnorth about utilising Davidson's services as salesman; clearly enough too Davidson did do some relevant work pursuant to whatever arrangement may have been arrived at as a consequence of which White thought it appropriate to approve payments to him on behalf of LLAL. Be that as it may, Wilkinson was not able to demonstrate any specific authority given to him to make any payments on behalf of Minlabs in respect of Davidson's services. Further, the accounts received and on which he did pay were totally deficient of any sort of justification and were not invoices which under the circumstances it would have been within his implied authority to pay as representing ordinary and usual expenses incurred in the running of Minlabs' business. Wilkinson had a fiduciary duty to take reasonable care and diligence and to ensure that no payments were made from Minlabs' funds unless pursuant to some particular authority, for services which he could properly be satisfied were appropriately and reasonably incurred and in discharge of liabilities which were either incidental to the normal running of the business or had been expressly approved by the Board. These payments did not fall into either of these categories and Wilkinson failed to exercise due care and diligence. He was in breach of his duty as a company secretary under s 232(4) of the Corporations Law and of his corresponding common law duty to Minlabs.

The third party payments

More than half of these payments were made to Price. The payments to him claimed at par 14 of the statement of claim (less that at par 14.5 abandoned by Ms Pitt) totalled $39,661.06. A payment to American Express on 21 December 1998 in respect of his expenses brings that to $44,966.58.
I have already discussed Price's role and involvement with the parties. I reiterate that I am satisfied that he was a consultant hired by Assaycorp, he was never engaged by Minlabs, the Minlabs' board never authorised Price to do any work for it and nor did it agree to pay for Price's services or expenses either directly or as part of any cost sharing arrangement.
The first payment identified is one of $11,549.29. The payment is shown on the Minlabs' general ledger report for the period 1 July 1998 to 28 February 1999 (TD 73) as a payment made on 17 November 1998. The description is simply "JP payment". The Minlabs' NAB bank statement dated 16 December 1998 shows that payment on that date. As is characteristic of the supporting documents with respect to claims for Price's fees and expenses, the documentation on this payment is brief in the extreme or indeed non‑existent. It is a list of expenses (TD 126) totalling $6549.29 and is set out as follows:
"John E Price
Expenses as at 3 November 1998           Actual    Remarks
1Taxi Airport to Manly  $80.00
2Entertainment  $78.00
3Printing & Binding  $85.00
4Courier  $24.00
5Parking City  $35.00
6Taxi Manly to City  $30.00
7Taxi City to Manly  $34.00
8Accommodation Manly to
3 November 98  $2,850.00
9Communications  $2,773.89
10Melbourne - Sydney -
Melbourne (2100 km)                $579.40 Claim return air
Total$6,549.29"
On that document is the endorsement:
"+ $5000 Consulting
(no invoice included)
No Amex Invoices supplied for
$5305.52
$2113.95"
In cross‑examination Wilkinson said he had no other information about the claim. Regarding item 8, that of accommodation at Manly, he did not know what hotel that was, nor for how long Price had stayed there, nor what Price was doing. He said he assumed it was something to do with the business, the joint venture. It is plain Wilkinson paid out on the strength of this invoice, together with what must have been no more than a verbal request for payment of the $5000 monthly consulting fee. There was no supporting documentation for the expenses claimed and Wilkinson had no knowledge whatsoever of what Price had been doing, nor why, nor for whom and absolutely no justification for making this payment.
The next payment was one of $13,111.77 to Price on 14 December 1998. It was paid on an undated unsigned expense list (in the same form as the previous one) claiming "expenses as at 8 December 1998" in a sum of $8111.77. On this occasion there was also an unsigned invoice from John E Price dated 8 December 1998, claiming $5000 as "fees incurred relating to November 98". Neither document was accompanied with any form of supporting documentation. Expense items claimed included three "return air fare Melbourne Sydney Melbourne - $579.40" (no dates, flight details or purpose were given); Accommodation Manly to 8 December 1998: $6650; various claims for "entertainment"; $982.97 for "telephone" and amounts for taxi fares in Manly, Sydney, Melbourne, Adelaide and Perth. Again, in cross‑examination (t 133-4) Wilkinson said he did not know any details of any of these expenses. He said he assumed they were all to do with work for the joint venture but he did not ask and nor did he ask for any explanation of any of the claims.
I make the same findings in respect of this payment as in respect of that made on 17 November 1998 and as I do in respect of the payments listed in the statement of claim at par 14.4 ($5000), par 14.6 ($5000) and par 14.7 ($5000).
There was a payment of $5305.52 to American Express on 21 December 1998. Wilkinson said (t 121) that would have been a payment for expenses incurred by Price who had an Assaycorp American Express card. There was no supporting documentation. This payment too falls in the same category as the Price payments discussed above.
Paragraph 14.8 of the statement of claim refers to a payment of $9508.60 to Horwath (Vic) Pty Ltd on 14 December 1998. There is an invoice number 40254 (TD 135) dated 31 July 1998 addressed to Mr Tony Wilkinson, Assaycorp Pty Ltd and claiming that amount. The description given is simply "services as requested including air fares and accommodation". No other details are provided and there is no supporting documentation.
In cross‑examination Wilkinson said that Assaycorp obtained the services of Horwath in June and July and that as part of the agreement between Minculture and Minlabs, Horwath were going to be the auditors of Minlabs. He said this particular invoice was for a partner of Horwath, Mr McVeigh. Mr McVeigh's involvement in organising tax advice and advice with regard to the movement of companies into what was going eventually to be a publicly listed company. He said his recollection was that this was mainly organised between Price and McVeigh, although at times he thought there was some direct involvement of White over the particular corporate structure that he had in place. He said he knew what the invoice was for just because the activity at the time meant the taxation implications for the two existing businesses were something that had to be covered very carefully. He knew that activity of that kind was going on. He knew McVeigh had come to Perth to discuss the start of Minlabs and the involvement in "that agreement". He said he though McVeigh's advise was taken on the way the agreement was structured. Further cross‑examined, he said the advice was sought by Assaycorp and was provided to both Assaycorp and LLAL. He conceded the Minlabs board of directors did not agree to pay for this, he did not seek specific authority to pay for it, and he did not tell anybody that he had.
In his evidence, White said that at that early stage there were many discussions between Price (who represented Assaycorp) and himself. The propositions went from a simple joint venture company in the form of Minlabs to one whereby LLAL was being more approached to sell out to this purported or a new float company. He said those discussions did involve certain tax advice but at no time was that being bought as a service and if it could be deemed that, the bill should have gone to LLAL and not to Minlabs. He was not aware of tax advice coming from Horwath - his only understanding of Horwath's involvement was advice about how they then became appointed as the receiver/managers of Minculture which was already in liquidation. That had certain mechanical advantages to the deal (which White said he still did not understand) but in his view it was again nothing to do directly with either Minlabs or LLAL; it was to do with the business of Assaycorp moving towards being floated.
I am satisfied this liability was that of Assaycorp not Minlabs. There was no proper basis on which Wilkinson could properly have authorised payment of it out of Minlab funds. Minlabs had received nothing for it and the payment was wholly unauthorised. Not only did it constitute a failure on Wilkinson's part to act with reasonable care in the discharge of his duties as company secretary (both at common law and statute) but he placed himself in a position where his duty to Minlabs and Assaycorp conflicted and he made improper use of his position as an officer of Minlabs to cause detriment to that corporation by making a payment to Horwath which it was under no obligation to make.
The amount of $1070 the subject of par 14.9 of the statement of claim was a payment made on 29 December 1998 to Allied Pickford. Wilkinson said (t 117‑8) that this was a payment for the removal of Ms A Larwood's effects from Pine Creek to Kalgoorlie. He said Ms Larwood was to be employed in Kalgoorlie by LLAL and the Minlabs' board did not agree to pay the cost of removal of her personal effects and he did not believe he had told them about it.

This payment falls into the same category as the payment of the Assaycorp invoice IC61 (TD 86) which was part of the amount referred to at par 4.4 of the statement of claim and I make the same findings in respect of it.
The final amount complained of in par 14 of the statement of claim is one of $230 made to ACIC on 18 February 1999. According to Wilkinson, this was a payment for the registration of an issue of Assaycorp shares. The shares were to go to the Minculture receiver. When it was put to him that Minlabs was not going to get any benefit from the issue of those shares, Wilkinson said it was part of the Minlabs-Minculture agreement (this apparently was the agreement which could not be tendered). Be that as it may, Wilkinson agreed that Assaycorp was not holding those shares in trust for Minlabs and was not intending to pay Minlabs any profits arising from them. Wilkinson said they would be held and replaced with shares in the public listed company at a later date to the value of $500,000. However, the Minlabs' board did not know he was paying that amount to ASIC and he asked no‑one's approval to do so. I accept there is no logical reason why Minlabs should pay for the registration of an issue of shares from Assaycorp to Minculture. The Minlabs' board did not authorise the payment and indeed did not even know of it. It was certainly not a payment in the ordinary course of Minlabs' business. I find Wilkinson had no authority to make it and that once again in this regard he was in breach of his common law and statutory duties, placed himself in a position of conflict as between his duties to Assaycorp and those to Minlabs, and made improper use of his position to cause a detriment to Minlabs by making a payment which it had no obligation to pay.

Conclusion

It follows from my findings above that the plaintiff's claim has been made out and that Wilkinson must repay the sums improperly disbursed from Minlabs' account (see Boardman & Anor v Phipps (supra); Chan v Zakaria (supra) and Green & Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1.
The plaintiff also claims interest. I do not consider this to be a case in which interest should be allowed at the commercial rate as claimed (10.5 per cent per annum) but I would allow it pursuant to s 32 of the Supreme Court Act 1935 (WA) at the rate of 6 per cent per annum from the date of the particular payment to the date of judgment.