Agency
21 The third to sixth defendants submitted that the material facts in relation to agency are not pleaded to support the assertions that the second defendant had authority to and therefore was acting on behalf of the third defendant, let alone the fourth to sixth defendant. As the defendants rightly point out, the agency must be constituted either by actual authority conferred by the alleged principal on the agent, or by conduct of the principal that rationally permits the plaintiff to proceed on the basis that the alleged agent has been authorised by the principal to act on the principal's behalf in relation to the relevant matter.
22 According to the third to sixth defendants the absence of any pleading as to how the agency was constituted is embarrassing because neither the origins of nor the scope of the agency is known. Hence, it is not known whether the transaction pleaded is or is not within the scope of the actual or implied authority.
23 Agency is pleaded in paragraph [23] in respect of Walsh's Seeds, paragraph [38] in respect of Harold Schiller and Lorraine Schiller and paragraph [53] in respect of Jacqueline Schiller. It is pleaded that at all material times, Colin Schiller was a director of Walsh's Seeds and authorised to act on Walsh's Seeds behalf [ASC 23]. In about May 2003 Colin Schiller was authorised to and did act on behalf of Mr and Mrs Schiller in respect of communications with Combined Rural regarding a proposed acquisition of the shares by them and a proposed injection by them of capital into Walsh's Rural for the purposes of facilitating an acquisition by Walsh's Seeds of the Toowoomba business [ASC 38]. Colin Schiller was authorised to and did act on behalf of Jacqueline Schiller in communications with Combined Rural in respect of the manner of application of the net proceeds of sale of the property she and Colin Schiller jointly owed at 879-879A Ruthven Street, Toowoomba [ASC 53]
24 The third to sixth defendants referred to Ford's Principles of Corporations Law 9th ed at [13.080] where the learned authors state that "In any company, whether public or proprietary, with several directors a director acting individually had no usual authority to bind a company: Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 at 205; 93 ALR 385 at 425; 2 ACSR 161 at 201; 8 ACLC 611; Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd [1992] 2 VR 279 at 303; (1990) 3 ACSR 649 at 672; 9 ACLC 324 on appeal [1992] 2 VR 279 at 361; (1991) 6 ACSR 464 at 476; 10 ACLC 253. See also Re Haycraft Gold Reduction and Mining Co [1900] 2 Ch 230." Ostensible or apparent authority has not been specifically pleaded.
25 The third to sixth defendants further submitted that the fact that a person is a director of a company does not as a matter of law, without anything further result in the conclusion that the person's act is the act of the company or an act for the company.
26 In Northside Developments at 205 Dawson J stated:
"Nor does an ordinary, individual director of a company have any ostensible authority to bind the company. A managing director may have wide powers, actual or ostensible. In Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd it was held that a person who had assumed the powers of a managing director of a property company with the company's approval had apparent authority to engage architects on the company's behalf, this being within the ordinary ambit of the authority of a managing director of a company of that kind. And even ordinary directors may have quite significant functions entrusted to them by the company, although usually these are of a more or less formal nature, such as affixing the company seal to documents which the company requires to be executed: see Lennard's Carrying Company Ltd v Asiatic Petroleum Co Ltd, at 715. But the position of director does not carry with it any ostensible authority to act on behalf of the company. Directors can act only collectively as a board and the function of an individual director is to participate in decisions of the board. In the absence of some representation made by the company, a director has no ostensible authority to bind it."
27 In Brick and Pipe at 303 Ormiston J stated:
"…The fact that the general law denies that directors can determine any matter except by way of a meeting imposes no restriction on a company's powers, only a restriction on the powers of those who are appointed directors of the company. As Dawson J. restated recently, "Directors can only act collectively as a board and the function of an individual director is to participate in decisions of the board": Northside Developments Pty Ltd v Registrar General (1990) 170 CLR 146, at p. 205; 64 ALJR 427, at p. 452. It would be remarkable if this well-recognised rule should have been abolished by s68, for it is fundamental to an understanding of the manner in which directors are obliged to act."
28 And McGarvie, Marks and Beach JJ at 361 stated:
"It may be accepted, as was explained by Dawson J. in Northside, that persons merely holding the office of director are not thereby authorised to commit the company to contracts. At p. 245, Dawson J. observed that an ordinary individual director of a company does not have ostensible authority to bind the company. However, the decision of the learned judge rested on his finding that Goldberg was more than an ordinary director. By virtue of his control of Arnsberg which owned all the shares in Brick and Pipe, Goldberg assumed the role of managing director with the acquiescence of the members of the board of directors who regarded him as the "owner" of Brick and Pipe."
29 It is my view that Combined Rural Traders has properly pleaded "agency". What was said between the directors of Walsh's Seeds and Ozchem about whether or not Colin Schiller has authority to act as their agent are facts which is peculiarly within their knowledge. It may be that Colin Schiller as in Brick and Pipe assumed the role of managing director. This depends on the factual circumstances which are matters ascertained at trial.