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[1998] QSC 172
General information, not legal advice.
Supreme Court of Queensland
1998-08-31
Mr J, Muir J
Original judgment source is linked above.
This matter, although the subject of some evidence in chief and in cross-examination, was not developed by Mr Cooper in argument. No doubt, that was because there was no evidence to support it. The evidence did not support any conclusion that it was commercially unwise for the plaintiff not to have pursued the acquisition of Promco's business or that there was any offer made by Promco in relation to the acquisition of its business which merited acceptance by the plaintiff.
The alleged lack of standing on the part of the plaintiff
"The directors of the company at the time the action was commenced did not make the decision to sue and did not know who did. Given that the articles confer control of the company's affairs upon the directors, this is simply unbelievable.
Perhaps the action was commenced upon the instruction of an employee of Ampol or an employee of Pioneer. But there is simply no evidence that it was an authorised officer of the plaintiff.
An action brought in the name of a company by a person, not for the benefit of the company but for the benefit of that person or another, and without the company's authority, must be dismissed.": Old Welshman's Reef Company v Bucirde [1881] VicLawRp 27; (1881) 7 VLR (E) 115.
The matter was not raised by the defendant on the pleadings. If it had been, and if there was substance in the defendant's submissions, there would have been no obstacle to the plaintiff's ratifying the conduct of its agents. Any such ratification would have taken effect retrospectively. 1(2) Halsbury's Laws of England 4th ed. (Reissue) paragraphs 72 and 84. Accordingly, I find no substance in this contention.
Circle Petroleum (Qld) P/L
Greenslade [1998] QSC 172
And, as Rowland J said in Poliwka v Heven Holdings Pty Ltd [1992] ACSR 747 at 751 -
In this case it is not necessary to consider the extent, if at all, to which director's duties generally have increased beyond those expressed in In Re City Equitable Fire Insurance Co. The extent of a director's duty depends on "the particular function he is performing, the circumstances of the specific case and the terms on which he has undertaken to act as director". Gould v Mt Oxide Mines Ltd (in liq) [1916] HCA 81; (1916) 22 CLR 490 at 531. The defendant was an executive director employed full time as managing director. The defendant had a duty to exercise that degree of skill required of a person in the position which he held. That is a matter calling for assessment on an objective basis. State of South Australia v Marcus Clark [1996] SASC 5499; (1996) 19 ACSR 606 at 628-9; AWA Ltd v Daniels (1992) 7 ACSR 759 at 867 and Lister v Romford Ice and Cold Storage Co Ltd [1956] UKHL 6; [1957] AC 555. Furthermore, the defendant had very extensive experience in that part of the petroleum industry in which the plaintiff was engaged. He was well aware of the risks of not maintaining tight credit control. Indeed, he had been instrumental in ensuring that that plaintiff had had very little in the way of bad debts since it commenced operations. He was also aware that Promco was trading in a high risk industry, that it had experienced difficulty in obtaining supplies of petroleum products and that failure on its part to obtain such supplies would result in its failure. I will put to one side, for the moment, the events prior to the meeting of 23 January 1990. They give rise to considerations of a different nature to those which arise after 23 January. At least by the end of that meeting -
(f) the rationale underlying the parole evidence rule as expressed in Gordon v Macgregor [1909] HCA 26; (1909) 8 CLR 316 at 323-4 coupled with the provisions of article 48 and the course of conduct of the directors made the minutes conclusive evidence of what occurred at board meetings.
"All the circumstances of the case" obviously includes the way in which the default or breach has occurred: Advance Bank of Australia Ltd v FAI Insurances Australia Ltd (1987) 12 ACLR 118 at 143-4 and The Duke Group Ltd (in liquidation) v Pilmer & Ors [1998] SASC 6529; (1998) 27 ACSR 1 at 327-9.
The defendant argued that if found liable he was entitled to an indemnity under this provision. The article is quoted earlier in these reasons. The defendant cannot succeed on this basis because the article expressly provides that there is no entitlement to any indemnity under the article "in respect of (the defendant's) own negligence, default, breach of duty or breach of trust". There is some authority, as noted earlier, for the proposition that breach of duty is sufficiently broad to accommodate breach of contract. In any event, the word "default" is a word of wide enough meaning to extend to breach of contract. See Woolworths Ltd v Crotty [1942] HCA 35; (1942) 66 CLR 603 at 620 and 623.
(1988) 13 NSWLR 315
(1993) 9 WAR 395
(1995) 37 NSWLR 438
(1916) 22 CLR 490
(1909) 8 CLR 316
(1942) 66 CLR 603