Pembroke Antiques Pty Ltd & Ors v S.p.A. Property and Investment Company Pty Ltd

[1994] HCATrans 336

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No B62 of 1993

B e t w e e n -

PEMBROKE ANTIQUES PTY LTD

First Applicant

and

PAUL MICHAEL GEORGE and TRACY

FRANCES GEORGE

Second Applicants

and

S.P.A. PROPERTY AND INVESTMENT

COMPANY PTY LTD

Second Respondent

Application for special leave

to appeal

BRENNAN J
DAWSON J

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 13 MAY 1994, AT 10.48 AM

Copyright in the High Court of Australia

Pembroke 1 13/5/94

MR I.D.F. CALLINAN, OC:  May it please the Court, I appear

with MR K.S. HOWE, for the applicant. (instructed

by Murphy Podmore & Associates)

MR R.N. CHESTERMAN, OC:  May it please the Court, I appear

with MR P.E. HACK, for the respondent. (instructed

by W.T. Purcell Chadwick & Skelly)

MR CALLINAN: 

Your Honours, this application is in respect

of a decision of the Court of Appeal in which,
unusually, only two members of the court sat, the

President His Honour Mr Justice Fitzgerald and

His Honour Mr Justice Pincus, and in which,

although Their Honours reached the same

conclusions, they made different and, we would

submit, quite critically different findings of
fact.

The President found, at pages 44 and 45 of the

book, that the respondent lessor accepted the agent
as agent on 26 July 1989 at a meeting of all of the

parties; that at that meeting the lessor held out

the agent as his ostensible agent, and that that

agency was confirmed in writing on 27 July 1989.

His Honour Mr Justice Pincus, however, on this

factual matter, reached a different conclusion.

After setting out some of the evidence, at page 57

and page 58 - may I ask Your Honours to go to

page 58 of the application book - at about line 18,

His Honour in the plural said:

We reject that contention.

The contention being that Jeanes, who was the

lessor, had agreed that there had been a meeting

and a discussion in which the agent was appointed

as agent. His Honour Mr Justice Pincus said:

We reject that contention.

And then, His Honour discussed the evidence, which I will not repeat, and at the top of page 59 said:

Insofar as the word "confirms" in

Exhibit 6 -

Your Honours, Exhibit 6 was the agreement to lease which was signed by the lessor in due course, and

the lessee initially. The lessee offering to lease

and subsequently the lessor accepting that offer,
but containing in it also an acknowledgement of the

appointment of the agent, indeed a confirmation of

the agent.

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With great respect, it is obscure what

His Honour Mr Justice Pincus means when His Honour

says at the top of page 59:

Insofar as the word "confirms" in

Exhibit 6 implies the occurrence of some

earlier appointment of Max Christmas Pty Ltd

as agent, it is, as it seems to me, merely

evidentiary.

So, we have the situation in which His Honour

the President held that the appointment of agency

had occurred on 26 July. His Honour

Mr Justice Pincus - there being only two judges

sitting - holding, on the other hand, that the

appointment of the agent did not occur before

27 July.

His Honour Mr Justice Pincus goes on to say,

at page 61 at about line 27:

If the respondents are to hold the judgment it must be on the basis that there was a period after the appointment of -

the agent -

as agent in which it was in the position

described by Lord Tucker -

in Briess v Woolley -

that of agent with authority to make

representations for the purpose of inducing a

contract.

Now, by contrast, His Honour the President

held that there was a period between the completion

of the contract, that is to say the offer to lease

on the 27th and the appointment of the agent on

the 26th. So that - - -

GAUDRON J: But, did not Mr Justice Pincus find to the same

effect by reference to the special condition that

there was in fact a period?

MR CALLINAN:  I did not read it that way, Your Honour. Your Honour referring, may I inquire, to the Is

condition with respect to approval by the solicitor

by 31 July?

GAUDRON J: Yes, so that there were, in effect, still

four days of agency.

MR CALLINAN: With great respect, I read His Honour

Mr Justice Pincus to be saying in respect of that that there was a conditional contract by the 27th,

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that is by the date of the acceptance of

confirmation of the agency on the 27th, that all

that happened was that there was a condition which

if not fulfilled might have entitled the parties to terminate the contract, but there none the less was

at least a conditional agreement. Of course, our

point, Your Honours, is that on any view of the

matter at all once the agent is appointed as agent,

whether he has made the fraudulent representations

before the formal appointment or not, he is under a

duty to disabuse or correct any misrepresentations

that have been made.

BRENNAN J:	Now, when do you say the agency commenced?
MR CALLINAN:	Your Honour, we say that the agency either, or rather both, at common law and in terms of
section 84 of the Trade Practices Act, commences at a time when the principal - the lessor - says, "If
you bring along suitable tenants we will give
consideration to leasing the premises to them."
Now, that is the most extreme position, but we
would submit that that is an available position,
certainly under section 84 of the Trade Practices Act.

However, we do not need that. It is

sufficient for our purposes that on	the finding of
His Honour the President the agency	certainly came
into effect on 26 July.

BRENNAN J: Well now, if it came into effect on 26 July,

what was the scope of the agency so far as the

securing of tenants or the making of

representations was concerned?

MR CALLINAN:  Your Honours, we thought, with respect and we

would submit, that it is settled law that if an

agent has authority to find tenants or purchasers

of property then he does have authority to describe

and speak about the property. Indeed, in Briess v

Woolley there are numerous passages - - -

BRENNAN J: That may well be so, but as at 26 July what was

the scope of the authority?

MR CALLINAN:  Your Honour, with great respect, I do not want

to avoid the question, I will come back to it, but

that is not, we would submit, the right question,

with respect. The right question is should he have

corrected any misrepresentations that he had made

before then, bearing in mind that his status may

have been uncertain before the 26th, but as and
from the 26th he is the agent of the principal, and
he is then bound to correct any misrepresentations

that he has made. If I come back to Your Honour's

question, however, which I understand to be - - -

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BRENNAN J: Let me rephrase it in the light of your last

submission.

MR CALLINAN:  Yes, Your Honour.

BRENNAN J: Must the question not be whether as on and from

26 July the agent had any authority from the

principal to make any representations in relation

to the acquisition of a tenant?

MR CALLINAN:  We would submit, yes. The authority being the

ordinary authority with which any agent is clothed

to lease property. To talk about - - -

BRENNAN J:  But, the property had on that hypothesis been

leased.

MR CALLINAN:  Not on the 26th, Your Honour, it was not leased until the 27th. Indeed, on one view of it

perhaps, as Your Honour Justice Gaudron may have

suggested when Your Honour asked me about the

condition in relation to 31 July, it may not have

been that there was any formal or final agreement

until that date but, indeed, at the very earliest

there was no agreement until the 27th. But,

Your Honours, what Their Honours in the Court of

Appeal have done is really, in our respectful

submission, they have done two things which we

would, by way of submission, question. First, they

have treated the matter as one of authority, and it

is not, with great respect. The question is

whether representations having been made, whether

within authority or not, after the agent is

appointed as agent he is bound to correct or

not - - -

BRENNAN J:  That can hardly be the question since the agent

was not the party. The question must surely be as

between the parties to the litigation.

MR CALLINAN:  Yes, but the law is settled law, as we

understand it, that in the case of fraudulent

misrepresentation the principal is vicariously
bound, whether there was actual authority or not,

to make the particular representations. Indeed, in

most cases, no agent will ever be clothed with

authority to make fraudulent misrepresentations,

and that is the point, with great respect, that

the Court of Appeal missed. The Court of Appeal

seemed to think that in order to make
representations there had to be a specific

authorization with respect to particular matters.

That is not the law, with great respect. The law

is that if a person is authorized as an agent to

deal with the property on behalf of the plaintiff,

that is to say, to find a purchaser or a lessee,

then he is impliedly clearly authorize to describe

Pembroke 5 13/5/94

the property, and if he fraudulently misdescribes

it, then the consequence follows that the principal

is vicariously libel for his fraudulent

misrepresentations.

BRENNAN J: That is no doubt so if one looks at the question

of the agent's authority from the principal. You

see, it does not really answer the present problem,

does it, to say that he became the agent or was

recognized as the agent. Leaving aside your first

extensive proposition about the agency going back

to whenever the agent chose to involve himself in

the exercise - - -

MR CALLINAN: With great respect, at the instigation - or if

not at the instigation certainly with the

knowledge and at least the acquiesence of the

principal, but I beg Your Honour's pardon, I did

not mean to interrupt.

BRENNAN J: No, not at all. I understand completely that

general proposition which seems to me to be one of

fact and one which would not by itself justify a

grant of special leave, but if one focuses on the

events of the 26th and 27th and 31st, it seems to

me that the problem is not solved by saying, "He

became or was recognized as the agent." The

question is what was the authority of the person so

recognized as at that time? Your submission, as I

understand it, is that he had authority as at that

time to correct the representations that he had

made at an earlier time.

MR CALLINAN:  We do not put it in terms of authority, we put

it in terms of legal obligation flowing from well

settled principles of common law - - -

BRENNAN J:  But, you put it on the basis of well settled

principles which affect the person who makes the

representation.

MR CALLINAN: Yes.

BRENNAN J: And that does not get you home. What has to get

you home is the authority of the party represented

by the agent.

MR CALLINAN: Well, it is at least to introduce tenants to

the lessor, it is at least that. We would submit

it is also to give such descriptions of the

property or, indeed, to say such things about the
property, as will induce the lessee to take a lease

of the property.

BRENNAN J: Is not the question this, Mr Callinan: had the

agent exhausted whatever authority he had at the

moment when he was recognized as an agent?

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MR CALLINAN:	No, with great respect.
BRENNAN J:	Why not?
MR CALLINAN:	Because up until that time - I am sorry,

Your Honour is really asking me about the period

after that time. I am sorry, I keep on repeating

myself, it is not a question of exhausting his

agency. Until - - -

BRENNAN J: Exhausting his authority.

MR CALLINAN:  Our submission is that it does not turn upon

authority. One cannot say that simply because the

agent has done enough to earn his commission his

authority is exhausted and, indeed, the real

question in the case is up until what stage, after

he becomes an agent, up until what stage is he

bound to make corrections. Now, we would submit

that that is very much a special leave question.

GAUDRON J: But, why is he bound to make corrections? It

can only be on the basis of authority, and to bind

the principal. Whichever way you look at it, you

have got to come back to authority, actual or

ostensible, do you not?

MR CALLINAN: Well, Your Honour, no, in my respectful

submission, not, because at any time - can I put it

this way? Up until any stage at which, we would

respectfully submit, the harm may be undone the

agent is under a continuing duty to correct the

misapprehensions. Let me put it this way,

Your Honours, the acknowledgement on the 27th

merely entitles the agent to his commission, but he

is not paid his commission simultaneously with the

acknowledgement of the agency. So, there is still

a benefit, as it were, for him to receive.

BRENNAN J: Did he become entitled to the commission then?

MR CALLINAN: Well, he could certainly sue on the

acknowledgement, yes, Your Honour, yes.

BRENNAN J: Could you just restate for us what you regard as

the special leave principle~ the principle for

which you would contend if special leave were

granted, and demonstrate that it is a principle of

sufficient importance in itself to justify the

grant.

MR CALLINAN:  Your Honours, we would submit that the special

leave principle is the question as to the occasion

upon which, or the time at which, the agent ceases

to be under a duty to correct any fraudulent

misrepresentations that he has made. That is the

way we would formulate it, and we would submit that

Pembroke 7 13/5/94

it has importance under the Trade Practices Act in

view of the language of section 84 which refers to

actions done by - and I am paraphrasing - a

participating party on account of somebody else.

BRENNAN J: And you would contend that that duty, as you

have expressed it, persists until when?

MR CALLINAN:  We would submit that there are a range of

periods but, ideally, up until such a time as the
harm done by the fraudulent misrepresentations may

be undone. Alternatively, up until - - -

BRENNAN J:  Now, that raises a problem in this case, does it

not, because depending upon what happened on the

27th and 31st, that time might have been reached?

MR CALLINAN: That is one position. Yes, Your Honour, I

accept what Your Honour says, with respect.

BRENNAN J: Well now, therefore, is it a suitable vehicle?

MR CALLINAN:  I was going to put it another way,

Your Honour.	I was in the course of saying that is
one formulation.	The other formulation is up until

such time as the contract becomes unconditional.
we would submit that that is an appropriate period

which accords with fairness and, indeed, in this

case, is a question that precisely arises because

of the special condition to which Your Honour

Justice Gaudron referred.

Your Honours, there is another point, if I can pass very quickly to it. I immediately acknowledge it was not taken below. That was the point whether

the principle expounded by the

Vice-Chancellor Megarry in Tito v Waddell has

application here, that is to say whether, having

got the benefit of the transaction, that is the

transaction of the inducement and the introduction

by the agent, the principal should bear the burden,

that is to say, the consequences of any fraudulent

misrepresentations that may have been made to

create that inducement.

Now, that is an important principle, we would

submit.	It has never been considered by this
Court.	We have referred in our outline to a number

of cases in which it has been discussed and,
indeed, doubted. Your Honours, as we read our

learned friends' arguments on the other side, it is

not suggested that there were any new facts that

are required to have that point ventilated because

there are precise findings in the court at first

instance with respect to inducement, fraud and the

like.

Pembroke	13/5/94
BRENNAN J	But it is the fact that no consideration to that

question has been given by either of the judgments

below?

MR CALLINAN:  No, Your Honours, the point is raised entirely

for the first time here. Your Honours, there is,

we would submit, the further difficulty for the

applicants in this case or the further disadvantage

that they suffered in this case and that is to say

that they had the benefit of only two members of

the Court of Appeal who seemed to have disagreed on

a quite critical matter. Those are our

submissions, Your Honours.

BRENNAN J: Thank you, Mr Callinan. Yes, Mr Chesterman.

MR CHESTERMAN:  Your Honours, in our respectful submission,

the Court of Appeal was quite right to distinguish

Briess v Woolley. There is no material difference

in the approach taken by the President and by

Mr Justice Pincus. They both found that when the

agent was appointed he was appointed only for the

purpose of confirming his right to receive

commission and not for the purpose of making any
statements or negotiating on behalf of the

respondent.

The point is made clear, may it please

Your Honours, in the judgment of the President at

page 47 of the application book. The passage

starts at line 20. His Honour said:

However, so far as can be told from such

evidence as there is, Chesser had neither
expressed nor implied authority, at the

meeting or afterwards -

that is the meeting of 26 July, may it please

Your Honours -

to make statements to the respondents

concerning the property or its attributes.

His appointment as the appellant's agent, and

its written confirmation of that appointment,

concerned only Chesser's completed activity in

introducing the parties. The appointment and

the confirmation in writing were merely

necessary formalities to ensure Chesser's

entitlement to commission. His function was

exhausted by or at the time when he was

appointed.

So, His Honour the President held that Chesser's

appointment was a formality to entitle him to

commission. It was not an appointment as agent to

make any statements or to negotiate on behalf of

the respondent.

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Mr Justice Pincus found to the same effect

although His Honour seems to have found that the
appointment as agent occurred only on the execution

of exhibit 6, the document which confirmed the

appointment.

BRENNAN J: Where is that?

MR CHESTERMAN:  Your Honours, it starts really at page 61 in

the application book, the passage our friend read,

starting at line 25. His Honour said:

Thus, the important factual difference

between this case and Briess v Woolley is that

here the appointment of Max Christmas Pty Ltd

as agent took place at the same time as the

transaction was agreed to. If the respondents

are to hold the judgment it must be on the

basis that there was a period after the

appointment of Max Christmas Pty Ltd as agent

in which it was in the position described by

Lord Tucker - ie that of agent with authority

to make representations for the purpose of

inducing a contract.

His Honour then discusses the evidence and

concludes that there was no such authority.	He
said at page 62, at about line 17:

Almost certainly, the only purpose of that confirmation was to bring into existence an

engagement or appointment in writing for the

Auctioneers and
purposes of s 70(l)(c) of the commission in the absence of such an

appointment. That the confirmation of

appointment did not import any obligation on

the part of Max Christmas Pty Ltd to take any

further steps towards negotiation of the deal

is consistent with the existence of the

promise to pay commission - - -

BRENNAN J:  We need not trouble you further on that issue,

Mr Chesterman. What do you have to say about the

Tito v Waddell point?

MR CHESTERMAN: Only this, Your Honour, that it fails for

the same reason as the agency point. If the

respondent is to be obliged to carry the burden, it

can only be on the basis that it was a burden

undertaken by his agent. If Chesser was not agent,

then there can be no burden imposed upon the

respondent.

We would say, with respect, that the point

simply does not arise in a case of this kind. No

authority is pointed to by our friend and we can

Pembroke 10 13/5/94

find none in which representations wholly collateral

to a contractual transaction have been held to be a

burden in respect of its terms. But we submit that

the fact that it has not been argued before nor

clearly identified for the purposes of this

application would be sufficient to make it not an

appropriate point for special leave. Those are our

submissions, may it please Your Honours.

BRENNAN J:  Thank you, Mr Chesterman. Mr Callinan.

MR CALLINAN:	I have nothing in reply, Your Honours.
BRENNAN J:	If the principle of law which the applicant

seeks to raise is of sufficient importance to

justify a grant of special leave, the facts of this

case do not make it a suitable vehicle for raising

that point.

It is not appropriate to grant special leave

to raise the question, based on Tito v Waddell

(No 2) [1977] 1 Ch 106, when it has not been

considered in the courts below. Accordingly,

special leave will be refused.

MR CHESTERMAN:  May it please the Court, I would ask for the

costs of the application.

BRENNAN J: You have nothing to say about that, Mr Callinan?

MR CALLINAN:  No, Your Honours.

BRENNAN J: Special leave will be refused with costs.

AT 11.12 AM THE MATTER WAS ADJOURNED SINE DIE

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