Sky Airborne Solutions Pty Ltd v Digital Mapping Australia

[2009] VCC 73

IN THE COUNTY COURT OF VICTORIA Revised

(Not) Restricted

AT MELBOURNE
COMMERCIAL LIST

GENERAL DIVISION

Case No. CI-08-03042

SKY AIRBORNE SOLUTIONS PTY LTD	Plaintiff
v.
DIGITAL MAPPING AUSTRALIA PTY LTD	Defendant

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	12 and 26 February 2009 (delivered orally and revised)
DATE OF JUDGMENT:	26 February 2009
CASE MAY BE CITED AS:	Sky Airborne Solutions Pty Ltd V. Digital Mapping Australia Pty Ltd
MEDIUM NEUTRAL CITATION:	[2009] VCC 0073

REASONS FOR JUDGMENT

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Catchwords:  Practice and procedure – Application to strike out plaintiff’s claim – Alleged that proceeding issued without the authority of the plaintiff company – Implied authority of the managing director – Application dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J. Barber	Harrick Lawyers
For the Defendant	Mr C. Madder	Hardham Dalton Sondberg
HIS HONOUR:

1     This proceeding is fixed for trial on 11 March 2009. The defendant, by summons dated 4 February 2009, sought an order that the proceeding be struck out on the basis that it was brought without the authority of the plaintiff. I am satisfied that when the proceeding was issued by writ date 29 July 2008, the plaintiff had authorised the commencement of the

proceeding. The engagement of solicitors was done upon the instructions of the
managing director of the plaintiff, Mr Luke Hilbert. The argument before me was whether
Mr Hilbert had authority to take that step on behalf of the plaintiff company.

2     Since that time, the action has proceeded with the filing of an appearance on the part of the defendant on 18 August 2008, by the parties seeking (by consent) a trial date and interlocutory directions which culminated with orders made by me on 7 October 2008, and later the parties consented to varying the interlocutory orders, which resulted in a further order by me on 5 November 2008 and confirmation of the trial date of 11 March 2009. It is not appropriate, however, to determine the present application on the basis that the application was made late in the day, shortly prior to trial, or that there had been acquiescence by the defendant in the steps that have been taken in the proceeding including the setting of the trial date and the carrying out of various interlocutory steps.

3     The plaintiff was incorporated on 26 March 2008. There are two directors and shareholders of the company, Mr Hilbert and Dr Holger Eichstaedt. In an affidavit, Mr Hilbert says that “the reason for which the plaintiff was incorporated was to provide aircraft services to the defendant”, and that “the plaintiff’s business was to provide an aircraft and pilot to fly the defendant’s staff wherever they wished to go to take aerial photographs”, as part of the defendant’s business, which was the “creation of digital maps and aerial photographs [for] local authorities and mining companies”.

4     Although some services were provided by the plaintiff to the defendant before a written agreement was entered into, the plaintiff says that the relationship between the parties was governed by a written agreement between them dated 9 April 2008. A copy of the written agreement is exhibited to Mr Hilbert’s affidavit. The agreement is signed by Mr Hilbert as managing director of the plaintiff and signed by Dr Eichstaedt as CEO of the defendant. The witness to the signatures is Mr Bruce Mason, who is the only other

director of the defendant. The only shareholder in the defendant is Dr Eichstaedt.

5     The defence filed by the defendant on 25 November 2008 admits that “the plaintiff supplied services to the defendant from 19 March 2008”. The defence admits the execution of the agreement dated 9 April 2008 and specifically admits certain terms,

although there appears to be a disagreement about the fees that were to be paid for the
services provided. The plaintiff has invoiced the defendant sums totalling $337,596.09 for
the supply of the aircraft services. These invoices primarily covered the months of April
through to July 2008. The defence admits that the defendant received those invoices.
The defence admits payment of a total of $40,000 and admits further payments totalling
$122,393.89 to third parties, which the plaintiff conceded should be set-off against the
amounts invoiced to the defendant.

6     In Mr Hilbert’s affidavit, he refers to and exhibits numerous documents, in which his role with the plaintiff is described as either “managing director” or as “general manager”. These documents include the agreement dated 9 April 2008, a business proposal – application for finance approval, dated 1 May 2008 and email communications including with representatives of the defendant. In addition, Mr Hilbert sets out the tasks which he performed as part of his responsibilities as managing director, including the responsibilities for the day to day operation of the plaintiff and for the financial administration of the plaintiff, particularly in its dealings with the defendant.

7     The question of whether Mr Hilbert, as managing director of the plaintiff, had authority to engage solicitors to bring the present proceeding is a question of fact. A number of authorities have been referred to me. These were Nece Pty Ltd v Ritek Incorporation (1997) 24 ACSR 38 (Lehane J), Hawksford v Hawksford [2005] NSWSC 463 (Campbell J), Hely Hutchinson v Brayhead Ltd & Anor [1968] 1 QV 549 (Court of Appeal), Mitchell & Hobbs (UK) v Mill (1996) 2 BCLC 102 (A Machin QC) and Snorkel Elevating Work Platforms Pty Ltd v The Nominal Defendant (2007) ACTCA 14 (Court of Appeal).

8     Each case must depend upon its facts and by reason of the matters I have referred to, in my view, the plaintiff has established that Mr Hilbert, as managing director, had appropriate authority (implied from the circumstances of the functions he was performing prior to that time) to bring the proceeding. Defendant’s counsel, Mr Madder, has referred to events which occurred after the writ was issued, in which Mr Hilbert sought to call a meeting of the board of the plaintiff to be held on 1 August 2008. The meeting could not proceed because of the absence of quorum. One of the purposes of the meeting was to ratify the bringing of the proceedings. In my view, the fact that this could not occur, because the meeting was not attended by the second director Dr Eichstaedt, does not affect the validity of the issue of the proceeding by Mr Hilbert, acting with the implied authority of the plaintiff.

9     Mr Madder also submitted that the appropriate course in this case was for Mr Hilbert to make application pursuant to Part 2F.1A of the Corporations Act for leave of the Court to bring the proceeding because of the disagreement between the two directors as to whether the proceeding should be brought. The Act sets out the processes that can be put in place if leave is granted, including the giving of directions about the conduct of the proceedings, including requiring mediation and the ordering of investigations by an independent person who could then report to the Court. In my view, the need for such an application by Mr Hilbert or before the Court to either the Supreme Court or the Federal Court for leave is unnecessary for the reasons I have previously stated.

10 The defendant’s application by summons, dated 4 February 2009, will be dismissed.

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Certificate

I certify that these 3 pages are a true copy of the reasons for decision of His Honour Judge

Anderson delivered on 26 February 2009.

Dated: 26 February 2009

Caroline Dawes

Associate to His Honour Judge Anderson