MLC Ltd v J&W Management Services Pty Ltd [2001] VSC 241 - VSC 2001 case summary — Zoe

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MLC Ltd v J&W Management Services Pty Ltd [2001] VSC 241

[2001] VSC 241

Supreme Court of Victoria|2001-07-24|Before: McDonald J

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At a glance

Source facts

Court

Supreme Court of Victoria

Decision date

2001-07-24

Before

McDonald J

Source

Original judgment source is linked above.

Judgment (35 paragraphs)

[1]

For the reasons previously expressed from the time that the first defendant first became the agent of Capita on 26 May 1989 and the deceased ceased to be the agent of Capita, in the circumstances of this case no duty of care was owed by the deceased to Capita or the plaintiff and by his acts or omissions he did not act in breach of s. 11 of the Fair Trading Act. Therefore it follows that with respect to the events that occurred on and after 17 May 1990 no act or omission of the deceased gave rise to a cause of action whereby the deceased and thereby the second defendant was liable in damages to the plaintiff.

[2]

As I have referred to in the course of this judgment that the plaintiff has alleged that with respect to events which occurred before 17 May 1990 and during the course of the deceased acting as an agent for Capita he had acted in breach of his agency agreement, he had acted in breach of the duty of care owed by him to Capita, as implied as a matter of law in his agreement with Capita and that he had acted in a manner which contravened s. 11 of the Fair Trading Act. Assuming for the purpose of argument that these matters are established by the plaintiff, it is my view that such breaches and contravention considered separately and together were not a cause of the plaintiff suffering loss and damage in the circumstances of this case. The acts and omissions which caused the plaintiff to suffer loss and damage in the circumstances of this case were those of the first defendant which occurred on and after 17 May 1990.

[17]

The letter of Capita dated 17 May 1990 was addressed to Cash Resources care of the deceased at the business address of the deceased being the business address of the first defendant. As I have previously referred to, that letter had it been received by Cash Resources would have constituted notice pursuant to s. 59 of the Insurance Contracts Act and it would have had the effect of cancelling the policy of insurance. The letter itself was addressed to Cash Resources care of the deceased. I am satisfied that as a probability it was received by the deceased as agent for the first defendant at his business premises, that being the business premises of the first defendant. It was the failure of the first defendant, the agent of Capita at the time to forward that letter to Cash Resources which resulted in the contract not being cancelled by Capita. Clearly by its contents and address the letter was directed to Cash Resources. It was reasonable for Capita to expect such an important letter, when regard is had to its contents, to be furnished, by its agent, the first defendant, to the insured. Capita did not need to instruct the deceased or the first defendant that it required the letter to be forwarded to Cash Resources. It was entitled, in my view, to rely on its agent, the first defendant, to send the letter on to Cash Resources and it was not at fault in not enquiring of the first defendant as to whether the letter had been forwarded to Cash Resources. The letter on its face informed the deceased, the first defendant, and Cash Resources, had it been delivered, that Capita regarded the policy to have lapsed and be no longer on foot. Having received the sum of $2,880 in June 1990, it was appropriate for it to be deposited, in the superannuation fund in which it was so deposited. Further, having regard to the payment of the sum of $1,696.50 in April 1994 accompanied by the "With Compliments" slip, it was appropriate for the plaintiff to credit that sum to the superannuation fund held in the name of Roberts. In my view, on the receipt of each of those sums there was no fault on behalf of either Capita or the plaintiff. In my view, in the circumstances of this case there was no contributory negligence on the part of Capita or the plaintiff which should cause damages which the plaintiff is otherwise able to recover in these proceedings to be reduced nor does there exist any matter which should reduce the damages that the plaintiff is entitled to recover under s. 82 of the Trade Practices Act by operation of s. 87(1) of that Act.

Parties

Applicant/Plaintiff:

# MLC Ltd

Respondent/Defendant:

J&W Management Services Pty Ltd \[2001\] VSC 241

Legislation Cited (7)

Life Insurance Act 1945(Cth)

Land Act 1962(Qld)

Practices Act 1974

Trading Act 1985

(Agents and Brokers) Act 1984

Contracts Act 1984

Wrongs (Amendment) Act 2000

Cases Cited (7)

"An agent is in general personally liable for his own tortious acts: Bowstead on Agency (15th Ed, 1985) at p. 490. But one cannot from that conclude that whenever a company's liability in tort arises through the act or omission of a director, he, because he must either be an agent or an employee, will be primarily liable, and the company liable only vicariously. In the area of negligence, what must always first be determined is the existence of a duty of care. As is always so in such an enquiry, it is as a matter of fact and degree, and a balancing of policy considerations. In the policy area, I find no difficulty in the imposition of personal liability on a director in appropriate circumstances. To make a director liable for his personal negligence does not in my opinion run counter to the purpose and effect of incorporation. Those purposes relevantly include protection of shareholders from the company's liabilities, but that affords no reason to protect directors from the consequences of their own acts and omissions. What does run counter to the purpose and effect of incorporation is a failure to recognise the two capacities in which directors may act; that in appropriate circumstances they are to be identified with the company itself, so that their acts are in truth the companies acts. Indeed I consider that the nature of corporate personality requires that this identification normally be the basic premise and that clear evidence be needed to displace it with a finding that a director is acting not as the company but as the company's agent or servant in a way that renders him liable. ---------- ... Essentially, I think the test is, or at least includes, whether there has been an assumption of responsibility, actual or imputed. That is an appropriate test for personal liability of both a director and an employee. It was the basis upon which the director was held liable in Fairline Shipping Corporation v Adamson [1975] QB 180 (see p. 189), where the assumption of responsibility was virtually express. It may lie behind the finding of liability in Centrepac Partnership v Foreign Currency Consultants Ltd (1989) 4 NZCLC 64, 940. Assumption of responsibility may well arise or be implied where the director or employee exercises particular control or control over a particular operation or activity, as in Adler v Dickson [1995] 1 QB 158 (although their the issue did not arise, as it was a pre-trial decision on a different point of law). Yuille v B & B Fisheries (Leigh) Ltd [1958] 2 Lloyd's Rep 596 is another illustration. This is perhaps more likely to arise with a large company where there are clear allocations of responsibility than a small one. It arose however in the case of a small company in Morton v Douglas Homes Ltd [1984] 2 NZLR 548, 593 ff; but not in a case to which I have made reference in my judgment in Morton, namely, Callaghan v Robert Ronayne Ltd (Auckland, A 1112/76, 17 September 1979) a judgment of Speight J. It may be that in the present case there would have been a sufficient assumption of responsibility had Mr Ivory undertaken to do the spraying himself but it is not necessary to consider that possibility."

(1935) 52 CLR 137

(1999) 197 CLR 1

(1996) 71 FCR 231

(1992) 39 FCR 31

(1992) 37 FCR 526

(1993) 177 CLR 485