Was the letter of 30 July 2003 effective to terminate the agreement?
13 I have set out above all that is known concerning the retainer of Bilbie Dan Solicitors. There is no suggestion that at any stage those solicitors were given express authority by the applicants to accept service of the notice of termination and that any notice of such authority was given to the franchisor or its solicitors.
14 The applicants relied substantially on a decision of the Full Court of the Supreme Court of Queensland in IVI Pty Limited v Baycrown Pty Limited (2005) QCA 205 ("IVI"). Those proceedings arose out of negotiations between parties involving solicitors for the purchase of real estate. The question arose as to whether a withdrawal of an offer to purchase forwarded to a solicitor was effective. At first instance the trial judge had concluded that the solicitor did not have actual authority to receive a withdrawal of the offer and a communication of the withdrawal of the offer was therefore ineffective. This was because the solicitor concerned had not been engaged to act on behalf of that particular party in the negotiation of the contract for purchase, nor was otherwise engaged to communicate with the other party in the pre-contractual stage, but there had been no duty on the solicitors to communicate the revocation email to their client and there could be no imputed knowledge of the email by which the revocation occurred on the basis that the solicitors were the "alter ego" of the client in respect of that communication. The judge at first instance had determined that there was "no implied authority to accept communications withdrawing offers" because the solicitors had no actual authority to represent their client in the contractual negotiations or to communicate with the other party.
15 These conclusions were upheld on appeal. Keane JA, in discussing relevant principles and in discussion authorities in this area, said:
"[33] There is no basis in principle or authority for the proposition that one party may successfully revoke an offer to another party by giving notice of that revocation to the solicitor for the other party in the absence of an express conferral of authority on the solicitor to receive such communication. In this regard, in Singer v Trustee of the property of Munro & Anor (bankrupts) [1981] 3 All ER 215 at 218, Walton J said:
"It is, of course, a common fallacy to think that solicitors have an implied authority on behalf of their clients to receive notices. They may have express authority so to receive them, but in general a solicitor does not have any authority to accept a notice on behalf of his client."
[34] Reference may also be made to the statement of James LJ in Saffron Walden Second Benefit Building Society v Rayner (1880) 14 Ch D 406 at 409:
"I have had occasion several times to express my opinion about the fallacy of supposing that there is such a thing as the office of solicitor, that is to say, that a man has got a solicitor not as a person whom he is employing to do some particular business for him, either conveyancing, scrivening, or conducting an action, but as an official solicitor, and that because the solicitor has been in the habit of acting for him, or been employed to do something for him, that solicitor is his agent to bind him by anything he says, or to bind him by receiving notices or information. There is no such officer known to the law. A man has no more a solicitor in that sense than he has an accountant, or a baker, or butcher. A person is a man's accountant, or baker, or butcher, when the man chooses to employ him or deal with him, and the solicitor is his solicitor when he chooses to employ him and in the matter in which he is so employed."
Similar views were also expressed in that case by Baggallay and Bramwell LJJ at 413 and 415.
[35] A solicitor is a professional person capable of performing a range of services on behalf of a client, but he or she need not necessarily perform across that entire range with respect to any one transaction. That position is to be distinguished from, to use the example given by McPherson JA in Victoria Park Golf Club Inc v Brisbane City Council [2001] QCA 528 at [17]; "an office like that of managing director of a trading company in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Limited [1964] 2 QB 480, of which the incidents and powers are well known". The managing director takes his or her powers or authority from the position that he or she holds under the corporate constitution. The distinction is supported by the observation of Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ in Pacific Carriers Limited v BNP Paribas [2004] HCA 35 at [36]; that:
"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."
[36] The decision in Saffron Walden has recently been applied by Powell JA, in a judgment with which Hodgson JA and Hamilton J agreed, in White v Illawarra Mutual Building Society Limited [2002] NSWCA 164, where his Honour said that:
"The fact that a client might be accustomed to retain the services of a particular solicitor or firm of solicitors in matters of a particular type does not constitute that solicitor or that firm of solicitors the client's standing agent to receive notice of material facts ( Saffron Walden Second Benefit Building Society v Rayner (1880) LR 14 Ch D 406)."
[37] In Midland Bank plc v Serter & Anor [1995] 1 Fam Law R 1034 at 1046 - 1047, Glidewell LJ, with whom Pill and Aldous LJJ agreed, commented that:
"Mr Salter reminds us of the general principle of law that a solicitor, like any other agent, may be instructed specifically to act for a party for one particular purpose in relation to a transaction, but not to act for him generally for other purposes. Thus it is only knowledge which he acquires when carrying out that part of the transaction in which he is instructed to act as agent which is to be imputed to the party who for that purpose is his principal ... "".
16 His Honour rejected any suggestion that, in the circumstances of those proceedings, communication through the solicitor "was an authorised means of communication".
17 His Honour also dealt with an allegation that the solicitor concerned had ostensible authority to receive documents which might adversely affect the rights of the client of that solicitor. In this regard his Honour discussed the relevant principles and authorities in the following manner:
"[42] As a matter of legal principle, the boundaries of the ostensible authority of an agent are drawn according to what the principal represents, whether implicitly or explicitly, about the authority of the agent and the extent to which these representations have been relied upon by the third party.
[43] In Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Limited & Anor [1964] 2 QB 480 at 503 Diplock LJ said:
"An 'apparent' or 'ostensible' authority ... is a legal relationship between the principal and the contractor created by the representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the 'apparent' authority, so as to render the principal liable to perform any obligations imposed upon him by such contract."
[44] Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said recently in Pacific Carriers Limited v BNP Paribas [2004] HCA 35 at [36]:
"In Crabtree-Vickers Pty Limited v Australian Direct Mail Advertising & Addressing Co Pty Limited, and in Northside Developments Pty Limited v Registrar-General, this court followed and applied Freeman & Lockyer v Buckhurst Park Properties (Mangal) Limited as to the general principles concerning the apparent or ostensible authority of an officer of a company dealing with a third party. Where an officer is held out by a company as having authority, and the third party relies on that apparent authority, and there is nothing in the company's constitution to the contrary, the company is bound by its representation of authority. 'The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract.' 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."
[45] The appellant's attempt to make out a case of ostensible authority fails to show that there was a relevant holding out of the agent by the principal, or reliance by the third party on that holding out".
18 Keane JA held that there was no evidence of any words or conduct on the part of the client, by which it represented to the other party or anyone acting for the other party, that the solicitor represented it in relation to the receipt of communications concerning the conclusion of negotiations. Accordingly, it could not be said that there was any relevant ostensible or implied authority to accept the notice.
19 Counsel for the franchisor submitted that the factual situation which applies in the context of these proceedings is materially different from that which occurred in IVI. He also submitted that the franchisor's solicitors were bound by ethical considerations to forward the notice to the solicitors who had purported to represent the applicants rather than to forward it to them personally because they were on notice that those solicitors had been retained in the matter. In my opinion, whether or not there were ethical considerations involved in the franchisor's solicitors writing direct to the applicants as franchisees is irrelevant to a determination as to whether or not the solicitors Messrs Bilbie Dan had ostensible or implied authority to receive a notice of termination. This would need to be determined by reference to the principles and authorities referred to in IVI.
20 I respectfully adopt and accept the approach of the Supreme Court of Queensland in IVI, especially as this judgment is at appellate level. By analogy, although it is clear that Messrs Bilbie Dan were retained and instructed to communicate the position of the applicants with respect to the notice of termination, there is no suggestions that those solicitors were empowered to do anything other than on the instructions of their clients. Nor was there any indication of any kind that the solicitors were authorised or otherwise empowered to receive formal notices issued by the franchisor under the franchise agreement. In these circumstances there is certainly no actual power or authority to receive any notices, nor am I prepared to imply that such a power or authority existed. For these reasons I conclude for the purpose of the determination of this notice of motion that the letter from the franchisor's solicitor dated 30 July 2003 was ineffective to terminate the franchise agreement.