183 Eastwood Pty Ltd v Dragon Property Development & Investment Pty Ltd

Court of Appeal (NSW)|2023-02-17|Before: Bell CJ, Ward P, Leeming JA

Background

The factual background to the dispute between the parties is set out by the primary judge from [5]ff, many of the facts not being in dispute.
On 29 August 2016, the Eastwood Unit Trust (Unit Trust) was declared and settled with 100 Units. LCC Property Development Pty Ltd, of which Mr Chan was the sole director and shareholder, held 46 of the 100 units ([5]). The appellant was appointed as trustee of the Unit Trust on the day it was established. On the same day, Mr Eric Naijing Lin and Mr John Tak Ching Lau were appointed as the directors of the appellant and Mr Steve Zuohong Ju was appointed as the company secretary. Mr Lin and Mr Lau each held 50% of the shares in the appellant company ([6]). The primary judge noted at [7] that at all material times Mr Lin, Mr Lau and Mr Ju were the true officeholders of the appellant.

Primary judgment

In the course of summarising the respondent's claim (from [28]ff), the primary judge noted that the respondent had expressly disavowed reliance on the statutory expression of the "Indoor Management Rule" (in ss 128(1) and 129(2)-(3) of the Corporations Act 2001 (Cth) (Corporations Act) because the actions of Mr Chan were not a "dealing" with the appellant company and the information he placed on the ASIC register was not provided by the company (and hence it was not necessary to consider whether the respondent could in fact have relied on those statutory assumptions). The respondent does not here depart from that position.
Her Honour noted that, instead, the respondent claimed that the appellant (through the true officeholders) had failed to amend the ASIC record and had thus armed Mr Chan with the means to represent to the world that he was the sole director and secretary; and able to sign documents in its name (i.e., a claim of ostensible authority).
Her Honour recorded the appellant's submission in that regard as being that the ostensible authority principles could not apply in light of the operation of ss 128 and 129 of the Corporations Act, on the basis that a company could only be liable to a person such as the respondent where there has been a "dealing" between them; that the appellant did not owe the respondent a duty to correct the ASIC register and therefore it could not be said that there was any relevant representation by the appellant; and that it was also submitted by the appellant that there was no evidence of reliance on the ASIC register by the respondent in entering into the Deed and no loss had been proved (see at [31]).
After setting out the general principles concerning ostensible authority, the primary judge addressed three submissions of the appellant at the outset. First, her Honour noted that the appellant did not suggest that the respondent was put on enquiry in its dealings with Mr Chan and that the appellant had conceded in closing submissions that there was nothing that the respondent could have done to protect itself from Mr Chan's fraud ([46]). Second, that, contrary to the appellant's submissions, the general law principles of ostensible authority were not ousted by the Corporations Act ([47]). Third, her Honour did not accept the appellant's submission that the appellant had no "duty" to correct the ASIC record outside the very narrow circumstance of ASIC's annual review of the company pursuant to ss 354A, 346A and 346C of the Corporations Act (a submission in respect of which her Honour noted that no authority had been identified).
As to the third of those submissions, her Honour considered that if the appellant's submission as to there being no duty were to be correct then it would be unnecessary for the company secretary to notify ASIC of changes to company details as they arose during the year and that such a conclusion was plainly contrary to other provisions in the Corporations Act (referring to ss 205B and 349A by way of example). Her Honour also noted that the ASIC documentation included a warning on its documentation, which would otherwise be unnecessary or would provide express reference to a review date, for ASIC to be advised of any error or omission that might be identified (see [48]).
As noted above, the primary judge found that the appellant held Mr Chan out as possessing authority to bind the company to contracts such as the Deed and that it did so by its failure to do anything to remove Mr Chan's ability to use the false ASIC register to mislead the respondent prior to its execution of the Deed in April 2018 ([50]).
The primary judge referred to the evidence of Mr Ju and Mr Lin, noting at ([54]) that they accepted that they knew that a sole director was able to sign on behalf of a company and bind it to contracts with third parties. Her Honour said that they both had knowledge between 26 February and 24 April 2018 that Mr Chan had acted fraudulently in relation to third parties (by representing that he was the sole director and shareholder of the appellant, by changing the ASIC register and by mortgaging the company's property), and that, therefore, objectively of the potential misuse that Mr Chan could make of the false information on the register.
Her Honour said that neither Mr Lin nor Mr Ju considered that he ought to have taken any step to have the register corrected before June 2018 for various reasons (see [55]-[61]). The primary judge had earlier referred to the fact that Mr Ju sought advice from Mr Ip on 15 February 2018 when the true officeholders were notified of the caveat on the title to the Eastwood Property (see at [13]) and that there was a meeting on 1 March 2018 with Mr Ip at which time the handwritten note referred to above was made (recording "ASIC search - no change currently") ([17]).
Her Honour concluded that it appeared that the unitholders were prepared to sell their units and leave the company in Mr Chan's control if he in fact paid for their units as agreed and that it was only when he did not do so that they sought to resume control of the company ([62]). The primary judge said at [63] (and this is the subject of challenge by the appellant by ground 1): I accept that the true officeholders sought advice on correcting the register in June 2018. However, I do not accept that such advice was sought before that time. For example, there is no objective evidence that any advice was sought on correcting the register earlier than June 2018.
The primary judge also noted (but considered that it did not matter) hearsay evidence from Mr Lin and Mr Ju that Mr Lau had contacted ASIC and the second hand hearsay that Mr Lau was told that ASIC could not assist in having the register corrected. Her Honour noted that there was no documentary evidence of such an approach and said that such an approach to ASIC before June 2018 would seem inconsistent with the approach taken by unitholders (of whom Mr Lau was one) of delaying reporting Mr Chan's conduct to ASIC and the police pending payment by him for their units (and hence was unlikely) ([64]-]65]). Her Honour was prepared to draw a Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference in this regard and said that without Mr Lau giving evidence she did not accept that there was a basis for concluding that Mr Lau had contacted ASIC before 24 April 2018.
The primary judge considered the more likely situation to be that the true officeholders, on instructions from the unitholders, decided not to report the false register to ASIC or the police until June 2018 (when they in fact took such steps) ([67]).
The primary judge then turned to the issues as to reliance (from [68]) and loss/damages (from [74]), concluding that the respondent relied on the information in the ASIC register in deciding to enter into the Deed (noting that the respondent took actual notice of the ASIC record because it was explained to the respondent by its solicitor). Having accepted that purchase price was a basis for quantifying expectation loss, particularly where the Deed was a commercial arm's length transaction, her Honour noted that reliance loss is appropriate where it is not possible to calculate expectation loss and would be based on the amount expended in reliance on the contract which, if applicable, would here also be the contract price.

Grounds of Appeal

The appellant raised a number of grounds of appeal though it did not press all of those grounds at the hearing of the appeal. Those which were pressed are as follows: 1. The trial judge erred in finding that before June 2018, the Appellant's true officers (Mr Lin, Mr Lau and Mr Ju) did not seek legal advice in relation to what they should do about the false information kept by ASIC. PARTICULARS "False information" is information provided by Scott Chan when he lodged the Form 484 with ASIC on 23 January 2018 to notify ASIC that Mr Lin and Mr Lau had resigned as directors and Mr Ju had resigned as secretary of183 Eastwood and he became its sole director and secretary. Mr Lin, Mr Lau and Mr Ju did not resign in January 2018. 2. The trial judge erred in finding that, apart from its duty to correct any wrong information relating to itself during its annual review conducted by ASIC under sections 345A, 346A and 346C of the Corporations Act 2001 (Act"), the Appellant also had a duty to 'monitor the correctness of ASIC's register' and to promptly correct [sic] the "false information" kept by ASIC, although: a) the false information was provided to ASIC by Scott Chan fraudulently, without the knowledge and approval of its true officers, b) the Respondent had disavowed reliance on the assumptions in section 129(2)-(3) of the Act, c) its true officers were still waiting for legal advice from their former Solicitors, GEA Lawyers on what they should do in relation to the false information, d) its true officers were unaware of the existence of the Respondent at the material time, and e) its true officers were unaware that the Respondent would enter into the Deed with Scott Chan and pay him $1,672,000 on 24 April 2018 without obtaining a transfer of the 19 Units to itself. 3. The trial judge erred in finding that the Appellant's true officers ought to have corrected the false information kept by ASIC, although: a) the false information was provided to ASIC by Scott Chan fraudulently, without the knowledge and approval of its true officers. b) the Respondent had disavowed reliance on the assumptions in section 129(2)-(3) of the Act, c) they were still waiting for legal advice from their former Solicitors, GEA Lawyers on what they should do in relation to the false information, d) they were unaware of the existence of the Respondent at the material time, and e) they were unaware that the Respondent would enter into the Deed with Scott Chan and pay him $1,672,000 on 24 April 2018 without obtaining a transfer of the 19 Units to itself.. 4. The trial judge erred in finding that because "the Appellant failed to amend the ASIC record, it "armed" Scott Chan with the "means to represent to the world that he was its sole director and secretary and able to sign documents in its name," despite the provisions in sections 128(1), 128(4), and 129(2)-(3) of the Act. 5. The trial judge erred in finding that 'Scott Chan was "held out" by the Appellant as possessing authority to bind the company to contracts like that with the Respondent because of its failure to do anything to remove Scott Chan's ability to use the false ASIC register to mislead the Respondent prior to the execution of the Deed in April 2018,' although: a) the false information was provided to ASIC by Scott Chan fraudulently, without the knowledge and approval of its true officers, b) the Respondent had disavowed reliance on the assumptions in section 129(2)-(3) of the Act; c) Scott Chan was never in fact appointed as its sole director and secretary ('non-existent" as opposed to "defective" appointment). d) its true officers were still waiting for legal advice from their then Solicitors, GEA Lawyers on what they should do in relation to the false information, e) its true officers were unaware of the existence of the Respondent at the material time, f) its true officers were unaware that the Respondent would enter into the Deed with Scott Chan and pay him $1,672,000 on 24 April 2018 without obtaining a transfer of the 19 Units to itself, and g) based on the false information kept by ASIC, the only person who could have "lawfully" done so, would be the purported "sole director'' of 183 Eastwood, Scott Chan himself, who did not have lawful authority to do so. 6. The trial judge erred in finding that the false information kept by ASIC 'has been a relevant "representation" to the Respondent by the Appellant through its failure to correct the ASIC register', although: a) the false information was provided to ASIC by Scott Chan fraudulently, without the knowledge and approval of its true officers, b) the Respondent had disavowed reliance on the assumptions in section 129(2)-(3) of the Act, c) its true officers were still waiting for legal advice from their former Solicitors, GEA Lawyers on what they should do in relation to the false information, d) its true officers were unaware of the existence of the Respondent at the material time, and e) its true officers were unaware that the Respondent would enter into the Deed with Scott Chan and pay him $1,672,000 on 24 April 2018 without obtaining a transfer of the 19 Units to itself. 7. The trial judge erred in finding that the Respondent could rely on the false information, although the Respondent had disavowed reliance on the assumptions in section 129(2)-(3) of the Act and the false information was provided by ASIC by Scott Chan fraudulently, without the knowledge and approval of the Appellant's true officers. PARTICULARS The trial judge's finding was based on the Respondent's alleged reliance on the false information provided by Scott Chan to ASIC, which was not corrected by the Appellant before the execution of the Deed, although its true officers knew about the false information on 26 February 2018. 8. The trial judge erred in finding that the Appellant had submitted that, "ostensible authority principles cannot apply in light of the operation of ss 128 and 129 Corporations Act, on the basis that a company can only be liable to a person such as the plaintiff where there has been a "dealing" between them." PARTICULARS The Appellant submitted that it owed a duty to correct wrong information it provided to ASIC, only to the class of persons who were entitled to rely on the assumptions under section 129 of the Act. [Court Transcript from page 84, Line 45 to page 85, Line 4] 9. The trial judge erred in finding that the Appellant is estopped from denying that Scott Chan was its sole director and secretary and had the ostensible authority to enter into the Deed, although: a) the false information was provided to ASIC by Scott Chan fraudulently, without the knowledge and approval of its true officers. b) the Respondent had disavowed reliance on the assumptions in section 129(2)-(3) of the Act, c) Scott Chan was never in fact appointed as its sole director and secretary, d) its true officers were still waiting for legal advice from their former Solicitors, GEA Lawyers on what they should do in relation to the false information, e) its true officers were unaware of the existence of the Respondent at the material time, and f) its true officers were unaware that the Respondent would enter into the Deed with Scott Chan and pay him $1,672,000 on 24 April 2018 without obtaining a transfer of the 19 Units to itself. 10. The trial judge erred in finding that the Appellant is estopped from denying that it is bound by the Deed although any detriment the Respondent may have suffered, was not caused by its entering into the Deed, but was caused by: a) its failure to ensure that, when it paid the full purchase price on the execution of the Deed, the 19 Units in the Unit Trust were transferred to it, or it received a duly executed Transfer for the 19 Units, or b) its failure to obtain a transfer of the 19 Units even after 24 May 2018, or c) Scott Chan's bankruptcy on 21 May 2019, or d) its long delay in terminating the Deed on 6 September 2021 to claim damages. 11. Not pressed. 12. Not pressed.
What clearly emerges from the above is that there is a large degree of overlap in the complaints raised by the appeal grounds. In written submissions, the appellant identified the main issues in the appeal as being those summarised by Meagher JA on an earlier stay application in relation to the primary judge's judgment (see 183 Eastwood v Dragon Property at [7]-[9]; [16]), namely: whether the primary judge erred in concluding that the appellant held Mr Chan out as possessing authority to bind it to contracts such as the Deed by permitting the ASIC register to continue to record, incorrectly, that Mr Chan was the sole director and secretary of the company; whether by allowing the register to remain uncorrected the appellant did any more than permit the respondent to have the benefit of ss 128(1) and 129(2)-(3) of the Corporations Act (if those sections applied); and whether the assumptions made by the respondent in relying on the statements in the ASIC register were reasonable and assisted by the respondent's conduct.
Of those issues, the appellant in its submissions has treated the fundamental issue as being the first, i.e., the finding that it was estopped from denying that Mr Chan had the ostensible authority to sign the Deed on the appellant's behalf solely because its true officers did not promptly correct the false information when they became aware of it.
Given the overlap between various of the grounds, it is convenient to deal with grounds 2-9 collectively, after first dealing with ground 1 (which challenges a single factual finding), and then turning to ground 10, which goes to the question of detriment and amounts, in effect, to a complaint as to the finding of causation.

Ground 1 - challenge to finding that true officers did not seek legal advice before June 2018 in relation to what they should do about false information kept by ASIC

Ground 1 (set out at [48] above) challenges what is said to be the finding of fact made by the primary judge (at [63]) as to the time at which the true officeholders sought legal advice "in relation to what they should do about the false information kept by ASIC". However, the way in which this ground is phrased does not in my view accurately paraphrase her Honour's finding. What the primary judge there twice referred to was advice "on correcting the ASIC register". There appears to me to be a pertinent distinction here between advice "on correcting the ASIC register" (a focused enquiry of the kind that was not explicitly made even on the evidence to which the appellant now points) and advice as to what the true officeholders or unitholders should do "about the false information kept by ASIC" (as phrased in this ground of appeal) or even more general advice as to what they should do at all (a request that might reasonably be understood to be as to what should be done about the situation that had arisen; not as to a particular means of rectifying the situation). That distinction is of no little import in the context of the complaint that the appellant here makes to the effect that her Honour overlooked evidence (that the appellant maintains was unchallenged) as to advice having been sought by the true officeholders. If, as her Honour has framed the finding, the focus was on advice sought as to correction of the register, there is no error in the conclusion that there was no objective evidence of such an enquiry before June 2018.
The appellant also says that her Honour found that, because the appellant's solicitors advised the unitholders to resolve their dispute with Mr Chan by selling their units to him, they did not seek legal advice about the false information and did nothing to correct it until June 2018 (referring to [13], [59], and [63]-[67] of the primary judgment). Presumably, the appellant is here referring collectively to that enumerated list of paragraphs from her Honour's reasons, as I do not read [13] and [59] of the primary judgment themselves as encapsulating any such finding. Paragraph 13, as noted above, simply records the fact that Mr Ju forwarded the email about the caveat to Mr Ip for advice. Paragraph 59 is addressing the evidence of Mr Ju and Mr Lin (which her Honour accepted) that they did not know how to correct the register and required professional assistance, her Honour there going on to say that: … the thrust of Mr Ju and Mr Lin's evidence was not that a delay in correcting the register was because they were waiting for advice about changing the ASIC record, but rather because the unitholders were prepared to give Scott Chan time to pay for the units. Paragraph [63] of the primary judgment is where the finding as to the timing of the seeking of advice is to be found and, as noted above, her Honour was there clearly focusing on the lack of objective evidence that any advice was sought "on correcting the register" earlier than June 2018. That is not inconsistent with the evidence that advice had been sought first as to what to do in relation to the caveat, and then as to what to do more generally about the situation.
Paragraphs [64]-[67], as noted above, deal with the hearsay evidence as to Mr Lau contacting ASIC, her Honour's conclusion at [67] being to the effect that the more likely situation was that the true officeholders, on the instructions, of the unitholders decided not to report the false register to ASIC or the police until June 2018 when they in fact took such steps. This conclusion deals in terms with when the decision was taken to report the matter; not when advice was sought as to that issue. There is thus not a clear finding that the reason that legal advice was not sought as to the correction of the register was because legal advice was received to resolve the dispute with Mr Chan.

Appellant's submissions

The appellant, however, submits that, in making a finding on the issue of seeking legal advice, the primary judge overlooked the evidence referred to below from Mr Lin and Mr Ju. In reply submissions, the appellant submits that the primary judge did not have sufficient time to reflect upon the evidence (as to the issue of legal advice) and to draw conclusions from it, on the basis that the judgment was delivered one day after a two day trial and submissions. That submission is to my mind a bold submission to make, not least because the evidence on this issue was in short compass and one would have thought easily reviewable during the course of, and immediately after, the hearing. The evidence so identified was as follows.
First, as to Mr Ju, the appellant points to Mr Ju's evidence in cross-examination, when questioned as to why he did not advise ASIC after receiving the ASIC search in February 2018 with the false information, to the effect that "we are average investment people" and (after seeming to suggest that the proposal to buy the unit "of us" [sic] was the reason) that "[w]e - and also, too at the same time, GEA Lawyers still haven't advised us what we, what we're going to do until then". There was then the following exchange: Q. What did they [GEA Lawyers] say? A. Well, that's, that's why the meeting's coming there. That's why the meeting is held in March. We tried to resolve the problem to minimise the, the loss. Q. But why not change the ASIC record? It's only a short and easy form, isn't it? A. Don't know. We didn't get advice to change.
It is also noted that, when asked about who he thought the ASIC record was for (he said "for the company, who owns it") and questioned about anyone else who might deal with the company, Mr Ju gave evidence to the effect that he had no experience in these [matters] and that he had never come across this [presumably the false recording of information on an ASIC register] in his life.
Second, as to Mr Lin, reference is made to his evidence in cross-examination at to the effect that they (presumably, he, Mr Lau and Mr Ju) were no longer the director and secretary so they could not do everything and that "then we, we - next time we seek the legal advice from the GEA solicitor and accountant"; that they had asked GEA Lawyers to find out what had happened; and that this was the first time it had happened in his life. In the course of that evidence, there was the following exchange: Q. Just stopping you there for a moment. When you said you couldn't do anything because you, John Lau and Steve Ju had been kicked out of the company, what do you mean by kicked out? Was it by- A. WITNESS: Changed the company detail, okay? So we are not anymore the director, not anymore of the secretary and we, so we don't know what happening!. This first time happen to, in my life, so we were surprised. We don't know we, how to do it. We just want to say Scott Chan, "Okay, get the money back, okay, as soon as possible" and he say yes, yes, but they never, okay, deliver it. … Q. So you asked GEA Lawyers to find out what happened? A. WITNESS: Yeah.
The appellant also refers to Mr Lin's evidence that: Q. Did it not concern you as a director of 183 that Scott Chan was being recorded as a person who could execute documents on behalf of 183? A.WITNESS: We don't know how to, how to do it, so we seek a, okay, the professional advice from the, okay, GEA, GEA solicitor, and other, okay? INTERPRETER: Sorry, he said in Chinese that. "We were shocked after first hearing Scott Chan's fraudulent behaviour."
The appellant emphasises that it was not put to Mr Ju or Mr Lin in cross-examination that before 24 April 2018 they did not seek legal advice on what they should do "about the false information"; and the appellant places weight on the above evidence of Mr Lin and Mr Ju in cross-examination not being challenged by the respondent's counsel. The appellant complains that the primary judge in effect "simply brushed aside" the above evidence of Mr Lin and Mr Ju.
In reply submissions, it is suggested that it would have been open to the respondent (or the primary judge) simply to ask the witnesses whether it is true that they did not seek legal advice prior to 24 April 2018 but that this question was not put to them. The appellant emphasises that when Mr Ju said, when cross-examined as to why he did not change the ASIC record, that "[w]e did not get advice to change", it was not put to him that he only sought advice in June 2018; nor was it put to Mr Lin, when he said that he sought advice from GEA Lawyers, that he sought legal advice in June 2018. The appellant argues that, had this simple question been put to Mr Lin and Mr Ju, there would have been no necessity for her Honour to draw the inference, from the fact that the unitholders agreed to give Mr Chan time to pay, that they did not seek legal advice prior to 24 April 2018 (referring to [59]-[62] of the primary judgment).
The appellant further argues that, just because the unitholders were advised to attempt "to resolve" the wrong that Mr Chan had committed against them, it does not necessarily follow that the appellant's true officeholders did not seek legal advice from GEA Lawyers before 24 April 2018 (the date of the Deed) as to what they should do "about the false information". That is no doubt true as a matter of logic but it does not undermine the finding here the subject of challenge, which was that advice on correcting the register was not sought before June 2018 (there being no objective evidence that such advice was sought earlier than that time).
The appellant relies on the evidence extracted above from Mr Lin and Mr Ju for the submission that it is clear that they had sought legal advice from GEA Lawyers after becoming aware of the false information on or about 26 February 2018 but that GEA Lawyers did not advise them to correct the false information before 24 April 2018 (the relevant date, since that is the date of execution of the Deed).
The appellant maintains that it is highly probable that its true officers sought legal advice as to what they should do regarding the false information shortly after they knew about it in February 2018 but that they were advised by GEA Lawyers to attempt to resolve the dispute with Mr Chan amicably and that it was only in June 2018 that they were advised by GEA Lawyers to correct the false information. It is submitted that, in view of ss 345A, 346A and 346C of the Corporations Act (which provide, relevantly, for the review date for companies and an obligation to respond if a particular in an ASIC extract of particulars is incorrect), the action of the appellant's true officers was reasonable and proper. The appellant contends that the issue here to be decided is whether it is reasonable for officers of a company to seek legal advice before acting or deciding, and not to act or decide contrary to legal advice received by them.

Respondent's submissions

The respondent says that the finding here challenged was informed by: her Honour's findings as to credit in respect of Mr Lin and Mr Ju (at [52]-[53]); the lack of objective evidence to establish when any advice was sought; and the positive finding that the thrust of Mr Lin and Mr Ju's evidence was that the delay in correcting the register was not caused by them waiting to receive legal advice but, rather, because an agreement had been reached for Mr Chan to purchase units from unitholders, and the unitholders were prepared to give Mr Chan time to pay for their units ([59]-[62]).
In that regard, the respondent emphasises the standard of satisfaction required to set aside a finding of fact based on conclusions as to credit or reliability (i.e., the need for satisfaction that the finding is contrary to incontrovertible fact or uncontested testimony, is glaringly improbable or is contrary to compelling inferences - see Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 (Fox v Percy)), the respondent referring by way of example to Mt Pleasant Stud Farm Pty Ltd v McCormick [2022] NSWCA 191 at [56]-[58] per Kirk JA (with whom White and Brereton JJA agreed) and the authorities there cited. It is submitted that, in the absence of any objective evidence supporting a contrary inference, the primary judge was entitled to form a view, based on her assessment of the evidence given by Mr Ju and Mr Lin, as to whether she believed that the directors had sought advice prior to June 2018; and that the appellant has not identified any basis for interference with the primary judge's findings of fact.
I note that, in reply submissions, the appellant appears to draw comfort in this regard on the fact that the respondent has made no submissions to challenge the appellant's submissions (at [57]-[61]) as to the "uncontested testimonies" of Mr Lin and Mr Ju. The appellant submits that there is no credit issue here, noting that the primary judge found that Mr Ju was not dishonest, although he appeared to seek to avoid difficult questions and lacked precision in his answers ([52]) and that Mr Lin was honest but also vague on detail ([53]). The appellant also offers an explanation for the vague or imprecise answers as being "mainly" because English is not the first language of those witnesses, the appellant noting that Mr Lin was directed to give his evidence in English, with only some assistance from a Cantonese interpreter and that Mr Ju gave his evidence in English (whereas Mr Feng gave his evidence through a Cantonese interpreter).
Returning to the respondent's submissions, it is said that even if there was an error as to this impugned finding, it would not affect the disposition of the appeal. The respondent maintains that, even if legal advice had been sought by the directors of the appellant prior to 24 April 2018 (the date the Deed was executed), this would not undermine the uncontroverted fact upon which ostensible authority was based, namely that the true officeholders were aware that Mr Chan had been registered as the sole director, secretary and shareholder of the appellant and did nothing to correct that misrepresentation of the true position.
In answer to the respondent's proposition that an error as to the timing of the seeking of legal advice was not dispositive, the appellant takes the technical point that Mr Chan was never "registered" as the appellant's sole director, secretary and shareholder (on the basis that lodgment of a Form 484 with ASIC does not make anyone an officer or shareholder of a company and that, unlike the Registrar of Titles, ASIC is not a registering authority). With all due respect, it is difficult to see what assistance the appellant gains from this proposition. Whatever infelicity of expression in the respondent's submissions, what is clear is that the true officeholders were aware in February 2018 that Mr Chan had been recorded on the ASIC register as the sole officeholder and shareholder of the appellant and that they did nothing before June 2018 to correct that misrepresentation of the correct position.

Determination

I cannot accept the appellant's criticism of the speed with which the primary judge reached her conclusion on the issue as to when legal advice was sought by the true officeholders as to the correction of the register nor do I accept that there was some improper "haste to deliver an ex-tempore judgment". The commendable speed with which the primary judge delivered her reasons was consistent with the overriding purpose stated in s 56 of the Civil Procedure Act 2005 (NSW), namely the facilitation of the just, quick and cheap resolution of the real issues in dispute, and cannot fairly be criticised in this way. The real issue here is whether the finding itself was in error (and, to the extent that the finding is informed by conclusions as to credit, which in this case would extend to concerns as to the reliability of the evidence that was given, whether the finding is glaringly improbable or contradicted by incontrovertible facts).
The appellant has emphasised in its submissions the need for this Court to conduct a "real review" of the trial (invoking the admonition of the plurality in Fox v Percy at [25] per Gleeson CJ, Gummow and Kirby JJ and that of Callinan J at [146]; and referring to what was said by the plurality in Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [56] (per Bell, Gageler, Nettle and Edelman JJ, with whom Kiefel CJ agreed). The appellant's admonition is unnecessary but in any event I confirm that I have, as urged by the appellant, "truly review[ed]" the transcript of the evidence given by Mr Lin and Mr Ju.
The finding here challenged (as already noted) was a finding as to the seeking of legal advice on the topic of correcting the register (as opposed to the seeking of legal advice more generally as to what the true officeholders should do "about the false information"). The way in which ground 1 is framed seems to me to conflate the two.
The chronology of events has been set out above. It was not until 26 February 2018 that the true officeholders became aware that the company details recorded in the ASIC register had been falsely changed. Shortly prior to that, advice had certainly been sought from Mr Ip as to matters going to the caveat that had been lodged on the title to the property (details of the caveator, what to do about the caveat, and any cause of action for damages as a result of delay by reason of the existence of the caveat). However, after the discovery of the false information in the ASIC register, there is nothing in the contemporaneous email correspondence to show that any advice was sought, or consideration given, to the rectification of the ASIC register prior to the 1 March 2018 meeting.
The highest that the documentary evidence goes as to the 1 March 2018 meeting is the handwritten note (thought to be that of Mr Ip) recording the words "no change currently" in relation to the ASIC search. That entry is itself ambiguous in that it might mean that there had been no change as at the date of the meeting (i.e., currently) in relation to the information of which they had become aware as at 26 February 2018 or it might mean that at the meeting a decision was taken that there should be no change (say, pending negotiations with Mr Chan as to the purchase of the unitholders' units). Mr Ip was not called to give evidence to shed light on what was meant by the note. Thus, it is by no means clear that the note records a discussion responding to a request for advice on correcting the register; and the oral evidence of Mr Lin to the effect that he was still waiting for advice from the solicitor and accountant (see as extracted at [60] of her Honour's reasons) suggests that there was no such advice given at that meeting.
Thereafter, there was no suggestion of any advice sought or obtained in relation to the correction of the ASIC register prior to June 2018.
There was thus no error in the primary judge referring to a lack of objective evidence that any advice was sought on correcting the register earlier than June 2018. Rather, what the appellant here places weight on is the oral testimony of Mr Lin and Mr Ju. However, that testimony goes no further than that they sought legal advice (precisely what advice was sought was not made clear) and that they were not advised that the ASIC register should be corrected (though whether they were positively advised not to do so is also not clear).
Insofar as the appellant's submission is that it is highly probable that its true officers sought legal advice as to what they should do "regarding the false information" and were advised by the solicitor to attempt to resolve the dispute amicably, there is no doubt that Mr Ju asked for advice prior to 26 February 2018 as to what could be done about the caveat that had been lodged (and had foreshadowed legal action against the caveator) but there is nothing to suggest that Mr Ju (or Mr Lin for that matter) directed his mind after 26 February 2018 to the correction of the register. Rather, the evidence of both Mr Ju and Mr Lin leads to the conclusion that any request for advice would most likely have been about what to do about the situation in which the company was then placed (with a mortgage and caveat on title and the need to progress the construction loan) rather than focusing on the correction of the register (since both were unfamiliar with this kind of event occurring); and that is consistent with the instructions that Mr Ip apparently received at or following the meeting of 1 March 2018 (namely, to draft a unitholders agreement for the acquisition by Mr Chan's company of the units).
Thus, I am not persuaded that ground 1 is made good. In any event, even if an error had been established - i.e., that her Honour did overlook evidence of the earlier request for advice "about the false information" - it does not undermine the finding that the appellant, through its true officeholders, was aware of the false information on the register and that it was information that was publicly available; and did not take action to correct it until June 2018. The nub of the appellant's argument on this ground 1 appears to go to the proposition for which the appellant here contends, namely that it was reasonable for the true officeholders to act in accordance with (and not against) the legal advice that was obtained. The difficulty with that proposition is that it is by no means clear what advice was obtained in relation to correction of the register; and it does not ultimately assist the appellant in its challenge to the finding of ostensible authority.

Appeal Grounds 2-9 - finding of ostensible authority

Grounds 2-9 (see at [48] above) challenge various aspects of the finding that the appellant was bound by the actions of Mr Chan by reason of the application of the principles of ostensible authority. There appears to be no dispute as to the analysis by the primary judge at [32]-[41] of the principal judgment as to the applicable principles; rather, the complaint is as to the application of those principles in the present case.

Appellant's submissions

Relevantly, the appellant emphasises that ostensible authority is founded on the principle of estoppel (the appellant here focusing on the elements of representation, reliance and detriment). The appellant maintains that what was required to be established in the present case (where the representation found to have been made arose from silence or inaction by the appellant's true officeholders) was that the appellant owed a duty to the respondent. (The appellant here cites, by way of authority, Thompson v Palmer (1933) 49 CLR 507; [1933] HCA 61 (Thompson v Palmer) at 520; 546; Thomas Australia Wholesale Vehicle Trading Co Pty Ltd v Marac Finance Australia Ltd (1985) 3 NSWLR 452 (Thomas v Marac) at 470; 474; Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890 (Moorgate Mercantile) at 902-904, Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146; [1990] HCA 32 (Northside Developments) at 172 and 174; and Greenwood v Martins Bank Ltd [1933] AC 51 (Greenwood v Martins Bank).
The appellant maintains that there was no duty on the part of the directors of the appellant to tell the world (or even ASIC) about the knowingly incorrect information on the ASIC register (T 3.40-49); that the only duty was a duty owed to the company and to the class of persons able to rely on the statutory assumptions under ss 128 and 129 of the Corporations Act; and that the duty is only owed in relation to information provided by the company to ASIC rather than, as here, provided by the fraudster (T 4.1-5). As to ASIC, the appellant says that the only duty in relation to the incorrect information was to inform ASIC of this during the company's annual review (referring to ss 345 and 346 of the Corporations Act). Again, the appellant contends that it was reasonable for the directors to seek legal advice and not to act against that advice.
In summary, appeal ground 2 goes to the proposition that there is no duty to correct false information nor provided by the appellant to ASIC until the period permitted during an annual review of ASIC; grounds 3-5 go to the proposition that no duty was owed by the appellant to the respondent because relevant facts (essentially, the existence of the respondent and the proposed transaction between the respondent and Mr Chan and its subsequent implementation) were not known to the appellant; ground 6 goes to whether failure to correct the register amounted to a relevant "representation" to the respondent; ground 7 goes to the proposition that the respondent (though not within the class of persons who could rely on the statutory assumptions in ss 129(2)-(3) of the Corporations Act) could rely on the false information where that was not provided to ASIC with the knowledge and approval of the appellant's true officers; ground 8 challenges the accuracy of a submission recorded in the primary judgment as being a submission of the appellant; and ground 9 goes to the ultimate conclusion as to ostensible authority.
The predicate for much of the appellant's submissions on these grounds is that the appellant owed no duty to the respondent to correct the false information (or, as emphasised in its submissions, "absolutely no duty") and, as noted above, it is said that the appellant did not have a duty to correct the false information until its annual ASIC review in October 2018 (the appellant having been incorporated on 29 August 2016, its annual review would be in the period of 2 weeks from 29 August every year and it would have 28 days to notify ASIC of any errors in the extract provided to it by ASIC - referring to ss 345A, 346A and 346C of the Corporations Act).
The appellant says that in the present case both it and the respondent are victims of Mr Chan's fraud; and that there must be a finding of a duty owed by the appellant to the respondent and some neglect by the appellant which caused the respondent's loss before the respondent's loss can be attributed to the appellant. Further, the appellant says that there must be a relevant representation from the appellant's board of directors (comprising Mr Lin and Mr Lau) as to the false information and that here there was no such relevant representation (i.e., there was no holding out by the board of directors but simply by Mr Chan; the appellant's board of directors did not represent to the respondent that Mr Chan was its sole director; and the false information was not traceable to the authority of the appellant's lawful board of directors - the appellant here citing Wood v Inglis [2008] NSWSC 1147 (Wood v Inglis) at [93] per Barrett J, as his Honour then was). Finally, (which is addressed in ground 10), the appellant says that for an estoppel to arise grounding the application of ostensible authority principles, there must be detrimental reliance on the representation.
In relation to the existence of a duty in the present case, the appellant notes that mere silence cannot amount to representation but that, when there is a duty to disclose, deliberate silence may become significant and amount to a representation (referring to Thompson v Palmer at p 520, per Rich J). The appellant emphasises the caution noted by Wilberforce LJ in Moorgate Mercantile at 904 that "the duty of care should not be stretched so widely as to make it a universal duty .... to safeguard others against loss" (citing Moorgate Mercantile at 904), arguing that if the duty of care is stretched to the extent that persons who are not within the class who are entitled to rely on the s 129 presumptions can also rely on the information kept by ASIC, which is not provided by the company, to raise an estoppel against the company, then ss 128(1) and 129(2)-(3) of the Corporations Act are redundant (though I note that the appellant now expressly disavows any suggestion that the statutory provisions oust the general law principles relating to ostensible authority). The appellant submits that the respondent's concession that it is not within the class of persons who are entitled to rely on the s 129 assumptions ought to dispose of the respondent's claim (because no duty is owed by the appellant to the respondent to correct the false information, particularly where the false information was not provided by the appellant to ASIC).
The appellant invokes the factors relevant to the determination of whether a duty exists as between the parties, as explained in Thomas v Marac (at 467-468; and at 474, where McHugh JA, sitting in this Court as his Honour then was, emphasised the words "[facts] as known to both parties" in the test for formulation of a duty). Thus, the appellant says that the full extent of the transaction relied on must be known to both parties, not just the respondent (emphasising that, here, the appellant did not know the existence of the respondent nor the contemplated transaction between the respondent and Mr Chan).
Indeed, after judgment on the appeal was reserved, the appellant referred the Court to a further authority (Haines Bros Earthmoving Pty Ltd v Rosecell Pty Ltd (2016) 92 NSWLR 47; [2016] NSWCA 112 (Haines Bros Earthmoving) at [64]-[75] per Barrett AJA, Beazley P, as Her Excellency then was, and Sackville AJA agreeing) for the proposition that, when considering the circumstances in which silence or inaction would be sufficient to give rise to a duty for the purposes of an estoppel by omission, there is a need for equivalence of factual knowledge (in that case, shared knowledge that the owner's silence had caused the purchaser to believe that a particular state of affairs regarding the relevant property existed).
I note that, at [72]-[73], Barrett AJA pointed to a "possible qualification" to this proposition drawn from the reasons of Johnston J in Leonard v Lelasi (1987) 46 SASR 495. While Barrett AJA rejected the suggestion that a duty of the kind relevant to estoppel could arise merely from the owner's knowledge that a dishonest person is in possession of their goods and therefore in a position to make a sale if minded to do so, his Honour nonetheless accepted that "knowledge that a dishonest person is in possession of the goods and has taken steps to portray himself to a possible buyer as the owner of them" could give rise to a duty, because "it deals with knowledge of a state of affairs of the kind relevant to estoppel" (emphasis added).
The appellant also raises issues as to whether, if there was a duty owed to the respondent to correct the false information, the appellant had to act promptly to correct the false information and whether the appellant's true officers (if they had sought legal advice in relation to the false information before 24 April 2018) had a duty to correct the false information although they were still waiting for legal advice as to what they ought to do regarding the false information.
In relation to ground 2, it is submitted that her Honour erred when making the finding at [48] that: Apart from its duty to correct any wrong information relating to itself during its annual review conducted by ASIC under sections 345A, 346A and 346C of the Act, the Appellant also had a duty to 'monitor the correctness of ASIC's register' and to promptly correct the "false information" kept by ASIC.
The appellant contends that there is no statutory duty on officers of companies to "monitor the correctness of ASIC's register" and promptly to correct false information kept by ASIC, and that if this had been the intention of the legislature then such a duty should be clearly specified in the legislation. To the extent that her Honour relied on ss 205B and 349A of the Corporations Act to support that finding (see at [48]), the appellant notes that the Corporations Act provides that a company must notify ASIC of changes in the company (ss 205B and 349A) or errors in the annual extract provided to it by ASIC (ss 345A, 346A, 346C), failing which the company will be guilty of an offence; and that failure to comply with these sections will lead to a penalty (see ss 205B(7), 346C(6), and 349A(2) of the Corporations Act), contrasting this with the absence of such a provision in relation to monitoring the correctness of the register as such.
Insofar as the primary judge relied upon the note included in an ASIC search extract (stating "Please advise ASIC of any error or omission which you may identify") to support the finding at [48], the appellant takes issue with the description of this as a warning and says that it is a "polite request". The appellant argues that the reason that there is no provision in the Corporations Act making it mandatory for anyone discovering an error or omission in an ASIC extract to notify ASIC, followed by a penalty if anyone fails to comply, is because it would be impossible to enforce or regulate compliance with such an obligation. Further, it is noted that the ASIC search extract did not state when this "advice" must be given to ASIC. The appellant thus argues that there is no basis to rely on this request in an ASIC extract of a company to find that the appellant had a duty promptly to notify ASIC of any error or omission in an ASIC search extract.
The appellant thus contends that, at the material time, the appellant did not owe a duty to the whole world to correct any error in the record kept by ASIC in relation to itself; that it only owed a duty to the class of persons who are entitled to make the assumptions in s 129 of the Corporations Act, although it accepts that it had a statutory obligation to notify ASIC of any errors in an ASIC annual extract under ss 345A, 346A and 346C in October 2018 (referring to Moorgate Mercantile, per Wilberforce LJ at 903[E-F]; 906[B-C]).
As to the lack of a representation from the true officeholders, the appellant says that, based on the false information kept by ASIC, the only person who could lawfully have "held out" Mr Chan would be the purported sole director of the company (Mr Chan himself); and that Mr Chan did not have lawful authority to do so. Reference is made to Northside Developments (at 173-174), per Brennan J, his Honour there citing with approval the judgment of Diplock LJ in Freeman & Lockyer [1964] 2 QB 480 (Freeman & Lockyer) at pp 504-505. The appellant maintains that any "holding out" was by Mr Chan and not by the appellant's true officers because the false information was provided to ASIC by Mr Chan (also here referring to Wood v Inglis at [94-95]). Thus, the appellant says that the respondent could not be heard to say that the appellant's true officers "held out" Mr Chan because the false information showed that its true officers were removed as its officers (citing Freeman & Lockyer at p 492).
The appellant argues that the primary judge erred when relying on Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35, Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ (BNP Paribas) (at [38]-[39]) to find that the appellant "armed Mr Chan" with the "means to represent to the world that he was its sole director and secretary and able to sign documents in its name". (In this regard the appellant cites [29] and [37] of the primary judgment, the former of which does not refer to that case at all, and the latter of which refers only to the respondent's (as opposed to the primary judge's) reliance on that case; indeed, at [38] the primary judge is at pains to distinguish BNP Paribas from the facts of the present case.) The appellant points out that in BNP Paribas, the High Court cited Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72; [1975] HCA 49 (Crabtree-Vickers), where the Court spoke of the representation that might flow from supplying a particular person with "a blank order form, thus arming him with a document which, when he signed it, would bear the hallmark of authenticity"; and that in BNP Paribas, the bank employee was armed with a chop or stamp without clear guidelines as to its use.
Reliance is placed on the statement in Crabtree-Vickers at 78 by Gibbs, Mason and Jacobs JJ as to representations made by an "agent" regarding his authority: There are circumstances where the actual representation of authority may be made by the agent but in such cases it will be found that the relevant representation is made by the principal (or by the person to whom the principal has given actual authority) either by a previous course of dealing or by putting the agent in a position or by allowing him to act in a position from which it can be inferred that his actual representation of authority in himself is in fact correct. It is therefore always necessary to look at the conduct of the principal (or the person to whom he has actually delegated authority).
The appellant says that in the present case at the material time: the appellant's true officers did not know what Mr Chan did and did not arm him with any insignia of authority as in BNP Paribas and Crabtree-Vickers; there was no previous dealing between the appellant and the respondent; and the appellant did no more than to permit the respondent to refer to the "false information" provided by Mr Chan to ASIC "without the benefit of" ss 128(1) and 129(2)-(3) of the Corporations Act.
The appellant submits that Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd [1992] 2 VR 279 (Brick and Pipe), to which the respondent has referred, is distinguishable on the basis that there the relevant director was aware of the circumstances in which the transaction was entered into and was present when an employee gave an assurance as to the authority of the signatory in question, whereas in the present case the appellant's true officers did not know of the respondent's existence nor that the respondent was negotiating with Mr Chan in relation to the transaction that occurred in relation to the units.
It is said that Mr Chan represented to the respondent that he was the appellant's sole director and secretary, and he had no actual authority to do so (Northside Developments at 174); and that only the appellant's true directors (Mr Lin and Mr Lau) collectively (not alone) had the actual authority to make the representation that Mr Chan had the authority to sign the Deed on the appellant's behalf. Insofar as there was reference in Crabtree-Vickers, to whether there was a previous course of dealing either with or known to the company which might support any apparent authority (see Crabtree-Vickers at pp 80-81), the appellant says that in the present case, there was no previous course of dealing between the appellant and the respondent that could possibly ground a representation and there is no evidence of any representation made by Mr Lin and Mr Lau to Mr Feng that Mr Chan had the authority to sign the Deed on the appellant's behalf. It is noted that the Form 484 to notify ASIC of the false information was lodged by Mr Chan without the knowledge or approval of Mr Lin and Mr Lau. The appellant says that there was no resolution approved by Mr Lin and Mr Lau to appoint Mr Chan as the appellant's sole director and sole secretary and to lodge the Form 484 with ASIC.
Addressing ground 6, the appellant says that the primary judge erred when holding that the false information kept by ASIC was a relevant "representation" by the appellant to the respondent through the appellant's failure to correct the ASIC register (see at [39]-[41] of the primary judgment). The appellant maintains that the false information is not a "representation" under the common law, which could be relied on to ground an estoppel against the appellant. It is submitted that, to constitute an estoppel, a representation must be clear and must clearly state the fact which, ultimately, the maker is to be prevented from denying (reference being made to Moorgate Mercantile at 902 [A-B] per Lord Wilberforce, at 918 [D-E] per Lord Edmund-Davies, at 923[B-D] per Lord Fraser of Tullybelton.
In this context, the appellant says that estoppel is "only a rule of evidence" and that a cause of action cannot be founded on estoppel (a somewhat surprising submission given the doctrines of proprietary and promissory estoppel; and, in respect of estoppel by representation, I note that in JD Heydon, MJ Leeming, PG Turner, Meagher, Gummow and Lehane's Equity: Doctrines & Remedies (2015, 5th ed, Lexis Nexis Butterworths) at p 533, the authors suggest that estoppel by representation is not merely a rule of evidence but also has operation outside legal proceedings). The appellant argues that, insofar as estoppel lies to prevent someone denying the truth of something that has been said (see Low v Bouverie [1891] 3 Ch 82 at 105, per Bowen LJ), the issue is what "truth" the appellant is here meant to be estopped from denying (emphasising that the appellant did not provide the false information to ASIC).
The appellant says that, without ss 128 and 129(2)-(3) of the Corporations Act, the false information kept by ASIC could not constitute "representations" by the appellant for the following reasons: the false information was not provided by the appellant; no duty was owed by the appellant to the respondent to correct the false information or to correct it promptly; ASIC does not and cannot warrant that the information in its database is accurate; the ASIC extract requests the user to "advise ASIC of any error or omission which the user may identify", which it is said is a clear indication that the information extracted from its database may not be accurate; ASIC relies on the public to provide information it records in its database and this information may be provided by fraudsters and not the true officers of the company; and, except for the annual review conducted by ASIC pursuant to ss 345A, 346A, 346C of the Corporations Act, there is no legislative procedure to ensure that the information recorded by ASIC is current and correct.
Further, the applicant says that the record kept by ASIC merely states the particular facts as at the date of lodgment of the information with ASIC (and hence disputes that a subsequent company search can reliably be relied upon for the accuracy of the information at that later date). The appellant again says that the respondent was not entitled to make the assumptions under ss 129(2)-(3) of the Corporations Act and it would be unreasonable for the respondent to do so.

Respondent's submissions

The respondent contends that none of the factors relied upon by the appellant in its submissions as relevant factors undermines the primary judge's critical finding of ostensible authority.
As to the fact that the false information was provided to ASIC fraudulently without the knowledge and approval of the true officeholders, the respondent maintains that what is relevant is that those officeholders then became aware of the true position and the finding of ostensible authority was based upon their failure to correct the register from that time onwards.
The respondent accepts that it disavowed reliance on the assumptions in s 129 (2)-(3) of the Corporations Act but points out that her Honour found that the principles of ostensible authority applied outside of that statutory provision (see at [47]) and that this finding is not challenged.
As noted earlier, the respondent says that even if (contrary to the primary judge's finding) the appellants true officeholders were still waiting for legal advice on what they should do in relation to the false information, this does not undermine the finding that, once the officeholders were aware of the true situation, Mr Chan continued to be held out as the sole director and therefore entitled to bind the company; and they did nothing to correct that misrepresentation.
As to the fact that the true officeholders were unaware of the existence of the respondent (and of the contemplated transaction) at the material time, the respondent notes that the finding of ostensible authority was as to Mr Chan's ability to bind the company generally rather than only by reference to the respondent (referring to the discussion at [35]-[40] of the principal judgment); and that the intentions of the respondent in relation to the transaction (i.e., the fact that the respondent would enter into the Deed with Mr Chan and pay him $1,672,000 on 24 April 2018 without obtaining a transfer of the 19 Units to itself) are not relevant.
Insofar as the appellant submits that, based on the false information kept by ASIC, the only person who could have lawfully rectified the register would be the purported "sole director" of the company (Mr Chan), who did not have lawful authority to do so, the respondent notes that ostensible authority operates to bind the company in precisely the context of Mr Chan not having actual lawful authority to do so. Further, as to the fact that Mr Chan was never in fact appointed as its sole director and secretary ("non-existent" as opposed to "defective appointment"), the respondent notes that ostensible authority operates in the context of both a non-existent and a defective appointment.
On the issue as to whether there was a duty to correct the register, the respondent emphasises the distinction between a duty to act in the context of cases dealing with an estoppel by silence and a broader duty of care such as one finds in cases of negligence. The respondent says that the critical question (referring to what was said by Dixon J in the passage in Thompson v Palmer extracted in the primary judgment at [37]) is whether it is unjust for there to be a departure from the assumption adopted the respondent as to the position and authority of Mr Chan. In that regard, the respondent says that it is the part played by the appellant in that state of affairs and the assumption adopted by the respondent that is key.
The respondent notes that in Tobin v Broadbent (1947) 75 CLR 378; [1947] HCA 46 at 40 (applied by the High Court in BNP Paribas at [40], Dixon J said that: Broad general grounds of estoppel are sometimes invoked such, for instance, as the rule of policy so often repeated, to the effect that, where one of two innocent parties may suffer, the loss should fall on him by whose indiscretion it has been occasioned. Upon this approach to such questions, I have expressed my opinion in Thompson v Palmer (1933) 49 CLR 407 at 545-547 and I shall not repeat myself here. See, further, Newbon v City Mutual Life Assurance Society Limited (1935) 52 CLR 723 at 734-735 and Grundt v Great Boulder Goldmines Pty Limited (1937) 59 CLR 641 at 67 4-677. In the end an assumption on the one side must be induced or assisted and on the other side the conduct of the party to be precluded must be such that he ought not to be permitted to depart from that assumption.
In reply submissions, as to the respondent's submissions based on the passage cited from Dixon J's judgment in Thompson v Palmer, the appellant says that this was in the context of the parties having entered into contractual or other relations; and the appellant reiterates its position that in the present case at the material time it did not know of the respondent's existence, nor of the contemplated transaction; that it was only obliged to correct the false information in early October 2018; and that, by not correcting the false information, the appellant did no more than to permit the respondent to refer to the false information without the benefit of ss 128(1) and 129(2)-(3) of the Corporations Act. The appellant says that the statement in Thompson v Palmer at p 545, by Dixon J (that where "one of two innocent persons must suffer, that party shall suffer who by his own acts and conduct has enabled the other to be imposed upon") is not itself a rule of law, noting that his Honour went on to say at p 546, that "warnings have often been given of the danger of applying it literally as a rule of law, and more than once attention has been recalled to the need of a duty and some neglect of it before the occasioning of the loss can be correctly attributed to the party sought to be made responsible".
The respondent also says that an analogy can be drawn from cases dealing with statutory misleading and deceptive conduct by silence, referring to Miller and Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 (Miller) at [20], French CJ and Kiefel J, as her Honour then was, referred to "a reasonable expectation of disclosure as an aid to characterising non-disclosure as misleading or deceptive".
The respondent maintains that the position here is not a simple failure to act to correct a misapprehension but, rather, a failure to act in the context of a positive misrepresentation (constituted by the contents of the ASIC register) holding out to the world at large that Mr Chan was the sole director of the appellant. The respondent says that, although Mr Chan had caused the state of affairs, in effect it became a state of affairs adopted by the appellant once the officeholders became aware of the situation. Reference is made to the observation of French CJ and Kiefel J in Miller: Reasonable expectation analysis is unnecessary in the case of a false representation where the undisclosed fact is the falsity of the representation. A party to precontractual negotiations who provides to another party a document containing a false representation which is not disclaimed will, in all probability, have engaged in misleading or deceptive conduct.
The respondent says that, in the context of a positive misrepresentation by the ASIC register, the appellant having the power to correct the misrepresentation and a legal requirement to do so at least in certain circumstances, there was a reasonable expectation that it would do so or a duty (in this sense); and that its failure to do so not only induced or assisted in causing the respondent to assume a false state of affairs, but directly caused it. The respondent says that this is reinforced by the uncontroverted evidence of the officeholders, as found by the primary judge at [54] (see above).
In reply submissions as to the reliance placed by the respondent on Miller, the appellant says that this is distinguishable, noting that the case was concerned with "silence and misleading or deceptive conduct" and that the High Court held that in the circumstances of that case, silence did not constitute a misleading or deceptive conduct (referring to [25] and [26]). Again, the appellant says that there was no positive representation of Mr Chan's authority to act for the appellant traceable to the authority of the appellant's lawful board of directors. The appellant says that it cannot be said that the appellant adopted the false information just because its board of directors knew of it and did not correct it and that the observation by French CJ and Kiefel J in Miller is in the context of parties having a contractual relation and where there was a positive false representation.
Finally, insofar as the appellant suggests that ostensible authority should be limited to benefit only those entitled to take advantage of the provision of the Corporations Act, the respondent says that there is no justification in law or principle for such a limitation; and that insofar as a submission may have been misinterpreted by the primary judge (see ground 8), which the respondent does not accept, the respondent maintains that this of itself cannot found a successful appeal.

Appellant's reply submissions

In reply submissions, the appellant confirms that it accepts that the general principles of ostensible authority are not ousted by the Corporations Act but emphasises that the foundation of ostensible authority is estoppel. The appellant disavows any submission that ostensible authority should be limited to the class of persons entitled to rely on the assumptions under s 129 and disavows having made any submission that "a company can only be liable to a person such as the plaintiff where there has been a "dealing" between them". The appellant's complaint in this regard is that what it submitted was that it owed a duty to correct wrong information it provided to ASIC only to the class of persons who were entitled to rely on the assumptions under s 129 of the Corporations Act and that the respondent is not such a person.
The appellant invokes the Cambridge Dictionary definition of "ostensible" (but noting that it is not disputed that the fraudster did not have actual authority to act for the appellant in the sale of the Units in the Unit Trust, or to make any representation on the appellant's behalf) and maintains that the respondent did not discharge its onus of proof that the appellant is estopped from denying that Mr Chan had ostensible authority to execute the Deed on its behalf, to receive the $1,672,000 or to do anything on its behalf.

Determination

The principal complaint is in effect the ultimate finding as to ostensible authority (ground 9) and it is convenient to dealt with that first. In my opinion, her Honour did not err in that finding.
As noted above, at first instance there was no dispute as to the general law principles concerning ostensible authority (see primary judgment at [32]). It is also accepted by the appellant (as previously noted) that the general principles of ostensible authority are not ousted by the Corporations Act (see appellant's reply submissions at [2] and [11]). Insofar as the appellant contends that, by allowing the ASIC register to remain uncorrected, it did no more than to permit the respondent to refer to the false information provided by Mr Chan to ASIC without the benefit of ss 128(1) and 129(2)-(3) of the Corporations Act, I do not accept that contention. It is tantamount to saying that the general law as to ostensible authority is ousted by those statutory provisions (a submission which the appellant has expressly disavowed).
Of the three elements required to establish ostensible authority, only the first (whether a representation was made to the contractor that the agent had the company's authority to enter into a contract of the kind sought to be enforced) and the third (whether the contractor was induced by such representation to enter into the contract, that is, that he in fact relied upon it) were in issue in the proceedings below.
In BNP Paribas, the plurality made clear that (at [36]): … It is not enough that the representation should come from the officer alone. Whether the representation is general, or related specifically to the particular transaction, it must come from the principal, the company. That does not mean that the conduct of the officer is irrelevant to the representation, but the company's conduct must be the source of the representation. In many cases the representational conduct commonly takes the form of the setting up of an organisational structure consistent with the company's constitution. That structure presents to outsiders a complex of appearances as to authority. The assurance with which outsiders deal with a company is more often than not based, not upon inquiry, or positive statement, but upon an assumption that company officers have the authority that people in their respective positions would ordinarily be expected to have. In the ordinary case, however, it is necessary, in order to decide whether there has been a holding out by a principal, to consider the principal's conduct as a whole. [Emphasis added]
At [38], their Honours spoke of corporate administrative procedures under which an officer is armed with a document to which he or she can, by signature, impart an appearance of authenticity, the reference to which is a reminder of the wider principle of estoppel which may be relevant to a question of ostensible authority and noted that "[t]he holding out might result from permitting a person to act in a certain manner without taking proper safeguards against misrepresentation".
In the present case, the "holding out" by the company lies in the failure of its true officeholders to correct the false information in the ASIC register within a reasonable time after they became aware of it.
The appellant has argued that there is no duty to correct the ASIC record in the present case; and that any such duty is not universal, in the sense that the duty ought not be extended so as to be owed to members of the public and ought to be confined to circumstances in which the third party is known to the title holder (here the appellant), citing Thomas v Marac at 470 per McHugh JA (sitting in this Court as his Honour then was) who agreed with Glass JA, and the prior English decision Moorgate Mercantile (there in dissent). Pausing here, these cases concerned a statutory estoppel created by s 26(1) of the Sale of Goods Act 1923 (NSW) and the Sale of Goods Act 1893 (Imp), respectively, with respect to which the requirement of a duty had long been recognised. To the extent that the appellant relies upon McHugh JA's judgment to argue that a duty cannot arise in respect of the general public, this fails to take into account that his Honour (at 473) expressly recognised that the duty could arise in respect of the general public, and noted that it was not a precondition to the recognition of a duty that the actual existence or interests of the parties was or were known to each other: … Lord Wilberforce held that there was a duty (at 905) because a man who knows that others rely on a particular source of information, which derives that information from him, may surely be under a duty to supply that information if he has it, even though transmission of the information makes the seeker of it less than 100 per cent secure. Lord Salmon, applying the conventional neighbour test of duty also held that a duty was owed. Of the majority, Lord Fraser said (at 926) that the buyer knew that all finance companies were not members of the registration scheme and took the risk with respect to them. If they owed no duty to the buyer, he did not think that a member could be in a worse position if he failed to register. The reasoning of Lord Edmund Davies and Lord Russell of Killowen seems to be based on similar considerations (at 919-920, 929-930). I doubt that the use of Lord Wilberforce's test would have brought about a different result in Moorgate. In the formulation of Lord Wilberforce's test of duty, the words as known to both parties are of critical importance. However, it is the situation in which the transaction occurred which must be known to both parties, not their actual interests or existence. The duty may be owed to the general public if the other conditions are fulfilled. In Mercantile Bank of India Ltd v Central Bank of India Ltd Lord Wright, speaking for the Judicial Committee, expressly approved a passage in the judgment of Blackburn J in Swan v North British Australasian Co (Ltd), where his Lordship had said that the duty may be owed to the general public of whom the person is one. That passage was also approved by Lord Sumner in R E Jones Ltd v Waring and Gillow Ltd [1926] AC 670 at 693. Nothing in the majority or minority speeches in Moorgate Mercantile Co Ltd v Twitchings indicates any disapproval of what Lord Wright had approved in the Mercantile Bank of India Ltd. Indeed, the speeches of their Lordships, who constituted the majority, must have proceeded upon the basis that a duty might be owed to the buyer simply because he was a member of the same organisation as the owner. Otherwise, the appeal could have been disposed of upon the ground that the owner was not aware of the existence of the buyer. I think that the proper test of duty is that formulated by Lord Wilberforce in Moorgate read against the Judicial Committee's approval of the dictum of Blackburn J. [Emphasis added]
In Haines Bros Earthmoving, to which the appellant here points, Barrett AJA referred (at [70]) to the critical importance recognised by McHugh JA in Thomas v Marac (at [58]) of the words "as known to both parties" in the formulation by Lord Wilberforce in Moorgate Mercantile of the requirement that the situation in which the relevant transaction occurred must be known to both parties, Barrett AJA there noting that this is a reflection of the fact that the issue there was one of estoppel which, of its nature precludes denial of a particular state of facts (his Honour there referring to what was said by Dixon J in Grundt v Great Boulder Proprietary Gold Mines Ltd (1937) 59 CLR 641; [1937] HCA 58 as to estoppel in pais being founded on the principle that "the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purposes of their legal relations").
Here, the situation known to both parties in which the relevant transaction occurred was that the ASIC record (which was publicly accessible) disclosed that Mr Chan was the sole director and shareholder of the appellant company; and thus in a position to bind the company to transactions involving its assets. The fact that the true officeholders did not know of the actual existence or interests of the respondent (or that the respondent was negotiating with Mr Chan to acquire the units in question - let alone the terms of that transaction) is not to the point. They knew that Mr Chan was held out to the world via the ASIC register, and particularly to the class of persons who might consult the register in order to confirm the authority of a person to deal on behalf of the company, as the person with authority to bind the company; and they knew that Mr Chan had already taken steps to portray himself as in a position to bind the company (since he had done so in relation to the mortgage which was registered on the title of the Eastwood Property). It is in that sense that the present case can be seen to fall within the situation recognised by Barrett AJA in Haines at [72]; i.e., this is not a case where there was simply a foreseeable risk of unauthorised conduct - rather, this is a case where the state of affairs is such that there was knowledge that a dishonest person had (in their words) "hijacked" the company and had engaged in conduct with third parties portraying himself as able to bind the company.
True it is, that in Haines the fact that there was no knowledge that the person in question was even treating with the buyers or intending to do so was significant (see at [73]). However, the requirement of equivalence of factual knowledge (central to Lord Wilberforce's formulation of the duty) is in my opinion met in the present case by the knowledge on the part of the true officeholders that Mr Chan was indeed acting so as to represent himself to third parties as in a position to bind the company.
In those circumstances, I consider that a reasonable person in the position of the respondent (or of a member of the class of persons who might have reference to the ASIC register in order to confirm the status of the person purporting to represent the company) would expect that if the true officeholders were aware of the false information and that the rogue had indeed already acted upon the false representation of his authority conveyed by the information in the ASIC register, then those true officeholders would act within a reasonable time of that discovery to correct the information on the public register. The fact that there may at that stage have been no statutory requirement or duty to do so is immaterial.
There is some force in the submission by the respondent that describing the test in terms of a duty tends to distract from the critical question of whether it is unjust for there to be a departure from the assumption adopted by the respondent as to the position and authority of Mr Chan (see respondent's submissions at [17]-[19]). In Thompson v Palmer, Dixon J, as his Honour then was, went on to say at 547 (as cited with approval by the High Court in BNP Paribas at [39]): The object of estoppel in pais is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment. Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. He may be required to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations, such as bailment; or because he has exercised against the other party rights which would exist only if the assumption were correct, … or because knowing the mistake the other laboured under, he refrained from correcting him when it was his duty to do so; or because his imprudence, where care was required of him, was a proximate cause of the other party's adopting and acting upon the faith of the assumption; or because he directly made representations upon which the other party founded the assumption. [citations omitted; emphasis added]
Relevantly, in Essington Investments Pty Ltd v Regency Property Pty Ltd [2004] NSWCA 375, Hodgson JA (with whom Sheller JA agreed, McColl JA dissenting) considered the nature of a representation by silence, as distinguished from representation arising from conduct, at [45]: In my opinion, one circumstance in which it may be said that representations are permitted to be made is where a principal knows that an agent engaged on the principal's behalf is making representations as to the agent's authority, is able to prevent such representations being made or countermand them, but does not do so. There is arguably, in these circumstances, something like a representation by silence: the circumstances call for some action by the principal to ensure that persons are not misled by the agent, and the principal does not take that action. [emphasis added]
Hodgson JA's reasoning at [45] was affirmed by McKerracher J in United Group Resources Pty Ltd v Calabro (No 5) [2011] FCA 1408, there in the context of determining whether an admission was made with authority pursuant to s 87 of the Evidence Act 1995 (Cth).
In Law of Agency (4th ed, 2020), Professor Dal Pont observed at 467 that the case of BNP Paribas serves to reveal "the possible ambit of factual situations where a failure by the principal to take proper safeguards may amount to a representation for the purposes of ostensible authority", citing Whelan J in Flexirent Capital Pty Ltd v EBS Consulting Pty Ltd [2007] VSC 158; (2007) 14 ANZ Ins Cas 61-732 at [195]. Professor Dal Pont went on to say at 469: The law of estoppel by conduct nonetheless generally recognises - independent of any negligence-type inquiry - that the force of an existing representation can be bolstered by subsequent inaction or silence by the representor. Representations for the purposes of ostensible authority often involve acts and omissions to act on the part of the principal, even if the acts involve no more than placing an agent in a position or giving an agent access to a document. The failure to clarify to third parties the boundaries of the agent's authority is the omission that serves to bolster the force of the original representation. In this context courts have spoken of a principal's duty to speak rather than remain silent where he or she knows that the third party 'was in fact acting or proceeding with its course of conduct on the basis of the mistaken belief' fostered or at least acquiesced in by the principal.
The observations of Lord Wilberforce at 905-906 in Moorgate Mercantile in respect of the registration system of hire purchase agreements (and applied by McHugh JA in Thomas Australia as cited above) are apposite: … it is the fact, known to dealers, that the registration system is not 100 per cent. complete - there are the non-members, and there is always the possibility that notifications or hire purchase agreements may be in the pipeline at the time of inquiry. … But can it be said that because the system was not 100 per cent. watertight, and known not to be so, the finance companies were under no "duty" to supply such information as they had? In my opinion this does not follow. A man who knows that others rely on a particular source of information, which derives that information from him, may surely be under a duty to supply that information if he has it, even though transmission of the information makes the seeker of it less than 100 per cent. secure. The dealer may know that a residual risk remains in every case, but still be entitled to assume that all steps necessary to reduce his risk down to that residue have been taken. Concretely, he is entitled to assume, as if he had been told so in terms, from the absence of any entry with H.P.I. that none of the major finance companies has any interest in the car he is buying. [emphasis added]
As noted above, it is clear that the appellant (and, to the extent relevant, the unitholders) knew that members of the public relied upon the ASIC register as a source of commercial information. As the primary judge observed at [54], the appellant had knowledge that between 26 February and 24 April 2018 Mr Chan had acted fraudulently in relation to third parties by representing that he was the sole director and shareholder of the appellant, by changing the ASIC register and mortgaging the appellant's property. Irrespective of whether the test as to a representation by silence is framed as requiring "the existence of duty", "an unjust departure from an assumption" or "circumstances which call for action", in my opinion the primary judge was correct to find that a representation was made in the appellant's failure to take steps to correct the ASIC register.
To the extent that the appellant argues that an obligation to correct the ASIC register only arises pursuant to ss 345A, 346A, and 346C of the Corporations Act, this is contrary to the concession made by the appellant that the principles of estoppel are not ousted by the Corporations Act and does not accord with other provisions of the Corporations Act which by contrast emphasise the importance of maintaining the correctness of the register. Other than the provisions referred to by the primary judge, it is relevant to note that under s 175 of the Corporations Act, an applicant may apply to the Court to have a register kept by a company corrected if the directors of the company or the scheme do not agree to the correction sought. Pursuant to s 175(3), if the Court orders a company to correct its register, and the company has lodged a list of its members with ASIC, the company must lodge notice of the correction with ASIC. The case law suggests that proceedings for correction should be taken promptly on discovery of the matter complained of, although a lack of awareness of the facts entitling a person to relief may justify a failure to act (see, for example, Re Scottish Petroleum Co (1883) 23 ChD 413; Commonwealth Homes Investment Co Ltd v Smith (1937) 59 CLR 443; [1937] HCA 73 per Dixon J at 463; Re Jermyn Street Turkish Baths Ltd [1970] 3 All ER 57 at p 68). One reason for this is that delay in complaining may induce innocent shareholders, interested holders, creditors and others to alter their position.
Turning then to the preceding grounds of appeal (2-8) which focus on aspects of the ultimate finding of ostensible authority, the first is ground 2 (the finding complained of (at [48]) being as to the duty to monitor the correctness of the ASIC register). This was clearly not a reference by the primary judge to a statutory duty as such; rather, it must be understood as noting the statutory provisions in relation to the information required to be provided to ASIC and that, in those circumstances, there would fall upon a director or officeholder a duty to act such that there was compliance with a statutory duty. In any event, the determinative finding in the present case turns on the fact that the appellant's true officeholders were aware from 26 February 2018 that there was false information recorded on a register that was available to be accessed by members of the public and that there had been unauthorised dealings involving the company's assets.
In those circumstances, a finding by the primary judge that (outside of any statutory review or reporting obligations) there was a duty (or reasonable expectation) that the officeholders would correct the register (being a duty owed to that class of persons who it would be reasonable to expect could consult the register to confirm that they were dealing with an authorised officeholder of the company) was in my opinion clearly correct.
The matters set out at grounds 2(a)-(e) do not undermine that conclusion. As the respondent submits, what is relevant is not that the information was provided to ASIC fraudulently and without the knowledge of the true officeholders, it is that they did nothing (until June 2018) to correct that register and thus allowed the false state of affairs to remain on the ASIC record.
Nothing turns on the respondent's disavowal of reliance on s 129(2)-(3). I do not accept that the class of persons to whom a duty of the kind here found is owed is limited by s 128 or s 129 of the Corporations Act, nor do I consider that it renders otiose the statutory assumptions for there to be a finding of ostensible authority in the present case. As to the lack of awareness of the existence of the respondent and the transaction that ultimately occurred, the finding of ostensible authority is to Mr Chan's ability to bind the company generally and the relevant issue is not what the respondent's intentions were at the time.
Ground 2 is not made good. Ground 3 suffers from the same difficulties as ground 2 and is also not made good.
Ground 4 again invokes the provisions of ss 128 and 129 and is not made good. As already noted, it is accepted by the appellant that the statutory provisions do not oust the general law principles of ostensible authority.
Ground 5 in effect repeats the previous grounds but adds the circumstance that Mr Chan as purported sole director would be the only person who could lawfully bind the company to the contracts. This to my mind involves a degree of circularity of reasoning. It is the fact that Mr Chan did not have actual authority which makes the issue of ostensible authority relevant. Ground 5 is not made good.
Ground 6 goes to the question whether the relevant representation could arise through failure to correct the register. For the reasons given by the primary judge, I consider that it could. Ground 6 is not made good.
Ground 7 again raises the disavowal by the respondent of reliance on the assumptions in s 129(2)-(3) of the Corporations Act and relies on the lack of knowledge of relevant facts. This raises the complaint as to equivalence of factual knowledge, which has been dealt with in the discussion as to ground 9 above.
Ground 8 is a complaint as to the recording by her Honour as to the appellant's submissions (not a finding as such) and nothing turns on this. Relevantly, in the present case the outcome is the same, in that the appellant is denying that it owed a duty to the respondent and is maintaining that it owed a duty to correct the wrong information it provided to ASIC only to the class of persons who were entitled to rely on the s 129 assumptions. Ground 8 thus goes nowhere.

Ground 10 - reliance/causation

Ground 10 raises the issue as to whether the respondent has suffered loss or detriment in reliance on the alleged representation.

Appellant's submissions

The appellant refers to what was said in Greenwood v Martins Bank per Lord Tomlin at 57, as cited with approval by Rich J in Thompson v Palmer, at 520; and also to what was said in Thompson v Palmer as to the requirement for detriment at 547 per Dixon J, and at 559 per McTiernan J.
The appellant says that the primary judge erred in finding that the respondent lost the sum of $1,672,000 because it relied on the false information to enter into the Deed (see at [68]-[73]). Rather, the appellant says that the respondent's loss was not caused by its entering into the Deed but was caused by one or a combination of the following matters (albeit accepting that not all of those matters were the subject of findings by the primary judge).
First, the appellant says that the respondent was convinced by Mr Chan to sign the Deed and pay the purchase money on 24 April 2018 in return for a promise of the transfer of title to the 19 units in the Unit Trust ([1], [21]; [23]-[24]).
Second, the appellant refers to the deletion from the pleading of various paragraphs ([7]-[8], [20]-[21], [25]-[26]) on 20 October 2021, those containing allegations that the respondent entered into the Deed in reliance on Mr Chan's "wealth representation" and "liability representation"); and to pp 75-76 of Exhibit SJ-1 to Mr Ju's affidavit affirmed on 26 September 2022 in which Mr Chan represented he had substantial assets. It is noted that this was not the subject of a finding by her Honour.
Third, the appellant says that at [13]-[20] of Mr Feng's affidavit affirmed on 30 August 2019 Mr Feng deposed to the "wealth representation" and "liability representation" made by Mr Chan to him, which induced him to execute the Deed on 24 April 2018 and that at [23]-[25] Mr Feng alleged that the "wealth representation" and "liability representation" were not true and he suffered loss (the appellant here referring to documents in the trial court book that were not before the Court). The appellant accepts that these also were not subject of findings by her Honour.
Next, the appellant points to the respondent's failure to obtain a transfer of the 19 Units even after 24 May 2018, although the appellant says that the respondent could have done so. It is noted in this context that Mr Chan, who was the guarantor under the Deed, was adjudicated a bankrupt on 21 May 2019 ([3]). The appellant also says that there was a long delay in the respondent terminating the Deed on 6 September 2021 to claim damages (referring to [26] of the primary judgment). Finally, although again not the subject of a finding by her Honour, the appellant complains of the respondent's tardiness in prosecuting the claim at first instance.
The appellant notes that the foundation of estoppel is the change of position to the prejudice of the party relying upon it, and that the burden of proving the issue lies upon that party (citing Thompson v Palmer at p 549 per Dixon J). The appellant thus submits that the respondent failed to discharge its onus of proof that it could rely on the false information "to make the s 129(2)-(3) assumptions" and that it lost $1,672,000 by entering into the Deed.

Respondent's submissions

The respondent says the relevant detriment in the context of an estoppel is the detriment if the assumption is not fulfilled. In the present case, the respondent says that the assumption was that Mr Chan was the sole director of the appellant and thus possessing the authority to bind that company when that was in fact not the case, pointing out, as is obvious, that if the assumption of that authority was not fulfilled, then the appellant would not be bound by the Deed. The respondent says that the detriment of entering into a deed with a party not bound by it is obvious.
In response to this submission, the appellant maintains that, for there to be an estoppel against the appellant, the respondent's action must be induced by a relevant representation and the loss claimed must be caused by this action; and the appellant maintains its contention that the respondent's loss was not caused by its entering into the Deed but was caused by one or a combination of the matters set out in the appellant's submissions in chief.

Determination

Ground 10 is not made good. It is sufficient for there to be a finding that there was reliance on the false information on the ASIC register to establish detriment in the present case, even if there were other matters on which the respondent also relied. The only reasonable inference available from the respondent's solicitor seeking the information that was requested as to the appellant is that this was information to be relied upon in advising the respondent as to the transaction. That is sufficient to provide the necessary detriment in order to ground the estoppel required for a finding of ostensible authority in the present case.

Conclusion

For the above reasons, the appeal should be dismissed with costs.
LEEMING JA: I agree with Ward P that the appeal must be dismissed, and I agree with her Honour's reasons. I add the following by way of elaboration on two aspects of the appeal.
First, Mr Lim confirmed at the hearing that he pressed his written submission that this Court should "review an ex-tempore [sic] judgment delivered 1 day after a 2-day trial and submissions. The learned Judge did not have sufficient time to reflect upon the evidence and to draw conclusions from it. Fox v Percy (2003) 214 CLR 118 at 126-126 [23]."
The submission is factually wrong. The primary judge heard a short trial over part of Monday 4 July 2022 and the morning of Tuesday 5 July 2022. The parties had supplied a court book (to which there was no objection) and brief written submissions of 3 and 7 pages in advance of trial. The primary judge indicated at the outset that she had read the submissions. The evidence of the three witnesses completed in less than a day. Her Honour acceded to the parties' joint request that addresses be delayed until the second of the two days allocated for hearing. This occurred without occupying all of the Monday, as is clear from the fact that her Honour said at the conclusion of the hearing on that day that "If [we're] finishing now you [will] probably get [the transcript] earlier than ordinarily is the case". The parties addressed, briefly, on Tuesday. It is not clear when her Honour reserved judgment. However, Tuesday's transcript occupies only 30 pages (compared with 71 pages on the Monday which finished early), and there is no indication of an adjournment for lunch or the mid-morning break.
The primary judge did not deliver an ex tempore judgment after a two day trial. Her Honour delivered a reserved judgment, after a trial that occupied part of a Monday and less than half of a Tuesday.
The unstated premise in the submission is that there was insufficient time to determine relatively straightforward issues, principally turning on whether Mr Scott Chan had ostensible authority to bind the company, notwithstanding her Honour's ability to read the court book and the parties' submissions before, during and after a hearing which far from fully occupied the two days set down for it. The premise is absurd. There was a time when most judgments in most superior courts were not reserved. Sir George Jessel MR is said never to have reserved when sitting at first instance, and only twice when sitting on appeal (on both occasions at his colleagues' request). Hamilton J in his brief period in the King's Bench Division followed the same course. So too did many less distinguished judges. More judgments are reserved, and reserved for longer periods of time, today than before, but even so a very large number of hearings in this Court, and in other New South Wales courts, are resolved as promptly or more promptly than that conducted by the primary judge. Most applications in the Bails List, and many applications in the Real Property List and the Corporations List and the Commercial List and the Possession List, are dealt with by an oral ex tempore judgment, or in a matter of days thereafter. And some final hearings (typically, in relatively straightforward matters) receive the same treatment. All this accords with the overriding purpose in s 56 of the Civil Procedure Act 2005 (NSW), and the certainty that delay will itself produce cost, and may produce injustice, and will not necessarily produce a better result.
If there were merit in the submission that the primary judge had failed to have regard to aspects of the evidence in ways that were material, then that submission would stand or fall by reference to the evidence and her Honour's reasons. As Ward P has demonstrated, the submission lacks merit. But meritless or otherwise, the submission is unaffected by the commendable efficiency of the primary judge.
Secondly, the principal challenge in this appeal was to the primary judge's conclusion concerning ostensible authority, and in particular, her Honour's failure to make findings that a "duty" was owed to correct the information in the ASIC register. The appellant submitted that before there could be any finding of ostensible authority, it was necessary to find a duty which was breached. Thus it was said that "[t]here must be a finding of a duty owed by the Appellant to the Respondent and some neglect by the Appellant which caused the Respondent's loss before the Court can attribute the loss to the Appellant". True it is that there are statements to that effect in authorities in a range of contexts. Many of those relied upon by the appellant were in cases concerning the sale of goods, notably Thomas Australia Wholesale Vehicle Trading v Marac Finance Australia (1985) 3 NSWLR 452, which turned on the construction of s 26(1) of the Sale of Goods Act 1923 (NSW), and in which the Court was divided as to whether that legislation incorporated the pre-existing general law.
I am inclined to doubt that there is any great utility in an analysis framed in that way. That observation is far from original. Some of the leading authorities that have considered this point have emphasised that "duty", in this context, if it be relevant at all, bears a special meaning. The modern starting point is the dissenting speech of Lord Wilberforce in Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890 at 903. After acknowledging the authorities stating that a duty was necessary, Lord Wilberforce made it clear that he regarded it as problematic: My Lords, I think that the test of duty is one which can safely be applied so long as it is understood what we mean. I have no wish to denigrate a word which, to modern lawyers, has become so talismanic, so much a universal solvent of all problems, as the word "duty", but I think that there is a danger in some contexts, of which this may be one, of bringing in with it some of the accretions which it has gained - proximity, propinquity, foreseeability - which may be useful, or at least unavoidable in other contexts. What I think we are looking for here is an answer to the question whether, having regard to the situation in which the relevant transaction occurred, as known to both parties, a reasonable man, in the position of the "acquirer" of the property, would expect the "owner" acting honestly and responsibly, if he claimed any title in the property, to take steps to make that claim known to, and discoverable by, the "acquirer" and whether, in the face of an omission to do so, the "acquirer" could reasonably assume that no such title was claimed.
McHugh JA in Thomas Australia Wholesale Vehicle Trading at 473 agreed with the remarks of Lord Wilberforce "that the tests for duty in other fields are not wholly appropriate", and agreed with the test reproduced above. I think a fair reading of the concluding remarks of the other member of the majority, Glass JA, was to substantially the same effect, when stating at 469 that there must be a breach of a duty to speak out, and that "[u]nless the conduct of the taciturn owner is subjected to the litmus test of duty, I know of no way to discriminate between conduct which precludes and that which does not". More recently, this Court has applied the test formulated by Lord Wilberforce reproduced above: Haines Bros Earthmoving Pty Ltd v Rosecell Pty Ltd (2016) 92 NSWLR 47; [2016] NSWCA 112 esp at [35], [61] and [75] (Barrett AJA, Beazley P and Sackville AJA agreeing).
I favour the view that "duty" - a concept which is scarcely well-defined - may be a distraction in this context. The issue is whether there is ostensible authority, thereby giving rise to an estoppel. The availability of estoppels in this context is not circumscribed by the existence of a duty. One reason for this is the variety of estoppel that may sustain the conclusion of ostensible authority, as Dixon J illustrated in Thompson v Palmer (1933) 49 CLR 507 at 547; [1933] HCA 61.
But let it be assumed, favourably to the appellant, that a duty must be established. Applying the test applied by this Court in Thomas Australia Wholesale Vehicle Trading and Haines Bros Earthmoving it is plain that this is a case where there was a "duty" on the part of those who knew the ASIC register had been falsified to speak out. Further, the statutory context is relevant, and indeed one strand of the appellant's submission turned on the express obligations in ss 346A and 346C of the Corporations Act to provide correct information about company officeholders and shareholders once each year; the appellant said that that obligation meant what it said, and that there could be no obligation to correct an ASIC register known to be false any earlier. But regard must be had to the entirety of the statutory regime, which includes the serious offence in s 1308(2) in providing false or misleading documents to ASIC, the entitlement of members of the public to obtain access to ASIC registers pursuant to s 1274 and the obligation in s 180 upon directors and officers to exercise their powers and discharge their duties with reasonable care. In those circumstances, it is no great step to conclude that there is a duty upon company officers who have actual knowledge that the ASIC registers are false and that an offence under s 1308(2) has been committed to speak out.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 April 2023

(Imp) Sale of Goods Act 1923(NSW)

Thompson v Palmer (1933) 49 CLR 507; [1933] HCA 61 Tobin v Broadbent (1947) 75 CLR 378; [1947] HCA 46 United Group Resources Pty Ltd v Calabro (No 5) [2011] FCA 1408 Wood v Inglis [2008] NSWSC 1147 Texts Cited: JD Heydon, MJ Leeming, PG Turner, Meagher, Gummow and Lehane's Equity: Doctrines & Remedies (2015, 5th ed, Lexis Nexis Butterworths) Professor Dal Pont, Law of Agency (4th ed, 2020) Category: Principal judgment Parties: 183 Eastwood Pty Ltd (Appellant) Dragon Property Development & Investment Pty Ltd (Respondent) Representation: Counsel: F Lim (Solicitor) (Appellant) AP Cheshire SC with A Rizk (Respondent)

Solicitors: Francis Lim Barristers & Solicitors (Appellant) Lexsons Law Firm (Respondent) File Number(s): 2022/00214958 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2022] NSWSC 910 Date of Decision: 6 July 2022 Before: Peden J File Number(s): 2019/00067418

As to Issue (2): (1) The situation known to both parties was that the publicly accessible ASIC register disclosed that Mr Chan was the sole director and shareholder of the appellant and thus in a position to bind the appellant to transactions involving its assets. The fact that the true officeholders did not know of the actual existence or interests of the respondent is not to the point. To the extent that equivalence of factual knowledge is required, this is met by the knowledge on the part of the true officeholders that Mr Chan had already taken steps to portray himself in a position to bind the company since he had done so in relation to the mortgage which was registered on the title of the Eastwood property. In those circumstances, a reasonable person in the position of the respondent would expect that if the true officeholder were aware of the false information and that the rogue had acted upon it, then that officeholder would act within a reasonable time of that discovery to correct the public register: [1] (Bell CJ); [128]-[130] (Ward P); [160] (Leeming JA). Haines Bros Earthmoving Pty Ltd v Rosecell Pty Ltd (2016) 92 NSWLR 47; [2016] NSWCA 112; Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890; Thomas Australia Wholesale Vehicle Trading Co Pty Ltd v Marac Finance Australia Ltd (1985) 3 NSWLR 452; Thompson v Palmer (1933) 49 CLR 507; [1933] HCA 61 applied. (2) Irrespective of whether the test as to a representation by silence is framed as requiring "the existence of a duty", "an unjust departure from an assumption" or "circumstances which call for action", the primary judge was correct to find that a representation was made by reason of the appellant's failure to take steps to correct the ASIC register. Nevertheless, assuming that a duty must be established, it is plain that this is a case where there was a duty on the part of those who knew the ASIC register had been falsified to speak out. The fact that there may at that stage have been no statutory obligation to do so is immaterial. When regard is had to the entirety of the statutory regime of the Corporations Act, it is no great step to conclude that there is a duty upon company officers who have actual knowledge that the ASIC registers are false to speak out: [1] (Bell CJ); [130]-[137] (Ward P); [170] (Leeming JA).

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