Plaintiff v Defendant [2012] VSC 452 | Case summary

Supreme Court of Victoria|2012-09-28|Before: VICKERY J

For the reasons set out in the affidavit of Cynthia Lahiff sworn 2 August 2012, we consider that, in his capacity as General Manager of Capital Projects at VicTrack, Mr Ian Davidson has, since his appointment on 29 November 2010, the authority to issue show cause notices for and on behalf of VicTrack pursuant to clause 44.2 of Contract VT0796 dated 7 December 2011 ("Contract"). In this regard we refer to Item K of the VicTrack Empowerment (Delegations) Policy.
We understand that in the Supreme Court Proceeding No S CI 2012 03916, the Plaintiff alleges that Mr Davidson did not have authority to issue, among other things, suspension notice dated 5 June 2012 (Attachment 1) and show cause notices dated 5 June 2012, 7 June 2012 (again enclosed under cover of letter dated 12 June 2012 (Attachment 2) and 23 August 2012 (Attachment 3) for and on behalf of Victorian Rail Track under the Contract.
For the avoidance of doubt, if Mr Davidson did not have the requisite authority to issue the documents referred to in the preceding paragraph for and on behalf of Victorian Rail Track under the Contract (which is denied), we hereby ratify that at material times, Mr Davidson had authority to issue the said documents referred to in the preceding paragraph on behalf of Victorian Rail Track.

25 Under Clause 44 of the Contract, RSS was required to show cause in response to the 23 August Notice by no later than 5 September 2012. However, RSS did not do so by this time. RSS contended that the 23 August Notice was invalid.

26 On 10 September 2012, in open court at the hearing conducted on that date, VicTrack, by its counsel:

(a) abandoned reliance upon its Show Cause Notices dated 5, 7 and 12 June 2012 purportedly issued under the Contract. This was undertaken on the proviso that the facts underpinning these Show Cause Notices were not abandoned by VicTrack and it continued to rely upon the 23 August Notice;

(b) undertook to not hereafter take any point under the Contract that any response to the 23 August Notice is out of time.

27 On 10 September 2012, and again on 21 September 2012, in open court at the hearings conducted on those dates, RSS, through its counsel, disputed that any of the Show Cause Notices issued by VicTrack raised any safety issues and undertook, if the Suspension Notice issued by the Superintendent dated 5 June 2012 is lifted, immediately to rectify any defects in the works notified by the Superintendent.

28 By letter dated 20 September 2012, RSS has purported to show cause under Clause 44.3(c)of the Contract in response to VicTrack's 23 August Notice. VicTrack is presently restrained from taking any action in reliance upon that notice.

29 By Order made on 13 September 2012, the Court ordered pursuant to Rule 47.04 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) that there be a preliminary trial of the following questions be tried at a one day hearing fixed for 21 September 2012:

(a) Did Ian Davidson ("Davidson"), in his capacity as General Manager of Capital Projects at VicTrack, have authority under exhibit MS-21(b) and s 170 of the Transport Integration Act 2010 to issue the show cause notice dated 23 August 2012 (the "23 August Notice") on behalf of the defendant (the "Davidson Authority Question 1")?

(b) If no to question (a), was any lack of authority validly ratified by the circular resolution dated 6 September 2012 by the Board of Directors of VicTrack[1] ("the Resolution") (the "Ratification Question 2").

(c) If yes to question (b), what is the effect on the Resolution of the defendant's abandonment on 10 September 2012 of each of the show cause notices issued 5th, 7th and 12th June 2012 (on the proviso that the facts underpinning the show cause notices issued 5th, 7th and 12th June 2012 are not abandoned) as referred to in the Resolution (the "Abandonment Resolution Question 3")?

(d) What is the effect on the validity of the Notice of the defendant's abandonment on 10 September 2012 of each of the show cause notices issued 5th, 7th and 12th June 2012 (on the proviso that the facts underpinning the show cause notices issued 5th, 7th and 12th June 2012 are not abandoned) as referred to in the Notice (the "Abandonment Notice Question 4")?

30 The present position is that, if the interlocutory injunction restraining VicTrack from taking action under Clause 44.4 of the Contract in reliance upon the 23 August Notice is lifted, VicTrack will take the work under the Contract out of the hands of RSS (in whole or in part) pursuant to Clause 44.4(a) if it considers that RSS has not shown cause by its response dated 20 September 2012.

31 Work on four of the level crossing sites (Lesters Road, Bubgaree; Wescotts Road, Wallace; Wallace Road, Wallace, and Old Melbourne Road, Wallace) remain incomplete and are yet to be commissioned. Work under the Contract remains suspended by operation of the Suspension Notice issued by the Superintendent, Davidson, dated 5 June 2012.

32 This judgment provides the answers of the Court to the four preliminary questions formulated for its consideration pursuant to Rule 47.04 and the reasons for these answers.

Scheme of the Transport Integration Act 2010

33 The essential scheme of the TIA which provides for the legal personality and functions of VicTrack is as follows:

(a) VicTrack is defined as both a "Transport body" and a "Transport corporation" under s 3;

(b) Under s 142(1) as a "Transport Corporation" VicTrack is a legal person;

(c) Under s 143(3) VicTrack's Board is responsible for the management of its affairs and may exercise the powers of a "Transport Corporation";

(d) The functions of VicTrack are defined in s 120;

(e) The powers of a Transport Corporation are provided for by s 152;

(f) A Transport Corporation by instrument may delegate to any person any power, duty or function of the transport Corporation under any Act or regulations including the power of delegation, as provided by the terms of s 170.

34 Pursuant to s 119(1) of the TIA a primary object of VicTrack is to act as the custodial owner of the State of Victoria's transport-related land, infrastructure, and assets consistently, inter alia, with the transport system objectives provided for in the Act.

35 The transport system objectives are provided for in Part 2 Division 2 of the TIA. By way of example, included are the safety and health and wellbeing objectives provided for in s 13, which are in the following terms:

(1) The transport system should be safe and support health and wellbeing.

(2) Without limiting the generality of subsection (1), the transport system should -

(a) seek to continually improve the safety performance of the transport system through -

(i) safe transport infrastructure;

(ii) safe forms of transport;

(iii) safe transport system user behaviour;

(b) avoid and minimise the risk of harm to persons arising from the transport system;

(c) promote forms of transport and the use of forms of energy which have the greatest benefit for, and least negative impact on, health and wellbeing.[2]

36 Section 143(1) of the TIA requires a Transport Corporation to have a Board of Directors. The Board is required to be constituted in accordance with s 143(2) and have between three and nine Board members. Section 143(3) then defines the functions of the Board in the following terms:

(3) The board of directors of a Transport Corporation -

(a) is responsible for the management of the affairs of the Transport Corporation;

(b) may exercise the powers of the Transport Corporation.[3]

37 Pursuant to s. 120(1)(d) of the TIA, one of the designated functions of VicTrack was to "manage and support access to transport-related land, infrastructure and assets".[4]

38 VicTrack was given the specific power under s. 126(1) of the Act to "enter any land and do all things necessary and convenient for constructing, maintaining, altering and using any works supporting any rail signalling system".[5]

39 The powers of a transport corporation are further set out in s 152 of the TIA, and, subject to some limitations in s 152(3) which are not relevant to the present matter, provide:

(1) A Transport Corporation has power to do all things that are necessary or convenient to be done for or in connection with, or as incidental to, the achievement of the object of the Transport Corporation and the performance of its functions.

(2) Without limiting the generality of subsection (1), a Transport Corporation may -

(a) enter into any agreement or contract;

(b) enter into any lease or licence;

(c) participate in the formation of a corporation, trust, partnership or other body;

(d) subscribe for or otherwise acquire, and hold and dispose of, shares in, or debentures or other securities of, a corporation;

(e) become a member of a company limited by guarantee;

(f) subscribe for or otherwise acquire, and hold and dispose of, units in a trust;

(g) acquire, and hold and dispose of, an interest in a partnership or other body;

(h) enter into partnership or into any arrangement for sharing of profits, union of interest, co-operation, joint venture, reciprocal concession or otherwise, with any person or body carrying on or engaged in, or about to carry on or engage in, any business or transaction whether within or outside Victoria relating to, or connected with, any function of the Transport Corporation;

(i) make any land or other property vested or managed by the Transport Corporation or any person employed by the Transport Corporation available for use or engagement by any other person;

(j) engage in any business, undertaking or activity incidental to the performance of its functions;

(k) engage consultants, contractors or agents;

(l) act as trustee;

(m) act as an agent of another person.[6]

40 Section 152 is expressed in high level terms appropriate for a corporation with the statutory responsibilities of a Transport Corporation under the TIA. A further hallmark of the section is the breadth of the powers which can be exercised, as illustrated by s 152(1).[7] This is reinforced by s 152(5) which provides that the generality of the section is not limited by "any other provision of this Act or any other Act which confers a power on a Transport Corporation".[8]

41 Section 147(1) of the TIA enables the Board of Directors of a Transport Corporation, with the approval of the responsible Minister and the Treasurer, to appoint a person as the Chief Executive Officer of the corporation.[9]

42 Section 147(7) of the TIA empowers the Board of Directors of a Transport Corporation to employ any persons it considers are necessary for the performance of its functions.[10]

43 The functions of VicTrack are set out in s 120, which provides:

(1) The functions of Victorian Rail Track are -

(a) to release in a timely and cooperative manner to the Secretary or the Public Transport Development Authority for nominal consideration any transport-related land, infrastructure and assets required for the transport system and related matters;

(b) to act as the custodian and asset manager of the non-operational transport-related land, infrastructure and assets and any other land, infrastructure and assets identified by the Minister;

(c) to provide or enable access to the nonoperational transport-related land, infrastructure and assets where this supports the transport system, including -

(i) for walking and cycling;

(ii) for tourist and heritage rail operations;

(iii) through the granting of leases for business or community purposes consistent with the object specified in section 119;

(d) to manage and support access to transport related land, infrastructure and assets;

(e) without limiting paragraph (b), to ensure that in managing non-operational transport related land, infrastructure and assets -

(i) graffiti, vandalism and litter are managed to reasonably improve public safety and amenity;

(ii) fuel build up is managed to reasonably reduce the likelihood of fire;

(iii) a program of land remediation is undertaken to improve the condition of land and facilitate its future use;

(f) to ensure, in collaboration with the Secretary, that transport-related land, infrastructure and assets which are registered as heritage infrastructure and assets in the Victorian Heritage Register are protected and maintained whilst ensuring that reasonable access is provided for public enjoyment and historical appreciation and that support is provided to tourist and heritage operators;

(g) if directed to do so by the Minister by Order published in the Government Gazette -

(i) operate rolling stock for transport system purposes;

(ii) operate services ancillary or incidental to operating rolling stock for transport system purposes;

(h) to provide strategic advice and assistance to the Department and other persons in relation to the environmental aspects of sustainable land management and the use of land for specific projects and initiatives related to transport;

(i) to develop its telecommunications network and telecommunications services and other information systems and project management services to support the transport system;

(j) to maintain accurate and accessible data in respect of transport-related land, infrastructure and assets;

(k) subject to section 125, to promote the sustainable development of land vested in Victorian Rail Track which is not required for the future development of the transport system;

(l) any other functions or duties conferred on Victorian Rail Track by any other Act or any regulations under any other Act.

(2) In performing the functions conferred on Victorian Rail Track, Victorian Rail Track must -

(a) where relevant, engage with stakeholders so as to ensure better outcomes for all Victorians;

(b) conduct research and collect information relating to the performance of those functions and the operation of the transport system so as to enable Victorian Rail Track to meet the object of Victorian Rail Track;

(c) efficiently deal with any complaints relating to the performance of its functions.

(3) Victorian Rail Track may, with the approval or at the direction of the Minister, cease to perform all or any of its functions. [11]

44 A statutory corporation such as VicTrack is a corporation created by statute.

45 As such, the corporation can do only those things that the constituting act of a statutory corporation contemplates be done by it. The statute may contain express statements with respect to the purposes, objects, functions, powers and duties of the corporation. Those express statements, together with the necessary implications to which they give rise, are the source of the corporation's authority and capacity and define the limits of its powers.[12]

46 As noted by Barrett J in Darkinjung Pty Ltd v Darkinjung Local Aboriginal Land Council and Ors[13] this principle has been applied by courts in Australia of the highest authority to a wide variety of corporations created by statute for public purposes.[14]

47 An early authoritative statement is to be found in Baroness Wenlock v River Dee Co where Bowen LJ observed in the course of distinguishing between a corporation created by statute and one having the characteristics of what was described as a "common law corporation":

What you have to do is to find out what this statutory creature is and what it is meant to do; and to find out what this statutory creature is you must look at the statute only, because there, and there alone, is found the definition of this new creature. It is no use to consider the question of whether you are going to classify it under the head of common law corporations. Looking at this statutory creature one has to find out what are its powers, what is its vitality, what it can do. It is made up of persons who can act within certain limits, but in order to ascertain what are the limits, we must look to the statute. The corporation cannot go beyond the statute, for the best of all reasons, that it is a simple statutory creature, and if you look at the case in that way you will see that the legal consequences are exactly the same as if you treat it as having certain powers given to it by statute, and being prohibited from using certain other powers which it otherwise might have had. [15]

48 Also on point are the observations of Nicholson J in Re Honey Pool of Western Australia (No 2) where it was held:

The general rule with respect to the powers of a statutory corporation is stated as follows in Halsbury's Laws of England (4th ed) p 779, para 1333:

"The powers of a corporation created by statute are limited and circumscribed by the statutes which regulate it, and extend no further than is expressly stated therein, or is necessarily and properly required for carrying into effect the purposes of its incorporation, or may be fairly regarded as incidental to, or consequential upon, those things which the legislature has authorised. What the statute does not expressly or impliedly authorise is to be taken to be prohibited".[16]

When the powers of a statutory corporation are known, there is long-standing authority that the doctrine of ultra vires should be applied not unreasonably: City of Winnipeg v The Canadian Pacific Railway Co [1953] ADC 618 at 619 applying The Ashbury Railway Co v Riche (1875) LRR 7 HL 653 and Attorney-General v The Great Eastern Railway Co (1880) 5 App Cas 473 at 478. The basic question, however, is to identify the relevant powers. In Attorney-General v Smethwick Corpi [1932] 1 Ch 562 at 576-7 reliance was placed upon what was said in Great Eastern Railway, supra and also on a portion of the speech by Lord Watson in Baroness Wenlock v River Dee Co (1885) 10 App Cas at 362 (relied upon Lord Cave in Deuchar v Gas Light & Coke Co [1925] AC 691 at 695) to the following effect:

"Whenever a corporation is created by Act of Parliament, with reference to the purposes of the Act, and solely with a view to carrying these purposes into execution, I am of opinion not only that the objects which the corporation may legitimately pursue must be ascertained from the Act itself, but that the powers which the corporation may lawfully use in furtherance of these objects must either be expressly conferred or derived by reasonable implication from its provisions".

These authorities and principles have been recognised in Civic Co-operative Permanent Building Society Ltd v Registrar of Co-operative Societies and Agents (1974) 2 ACTR 49. [17]

49 A further principle of importance to the present case is the related issue of the means by which a statutory corporation carries out the various purposes, objects, functions, powers and duties assigned to it by statute. For this the corporation relies upon natural persons to supply it with both a corporate "mind" and the physical capacity to undertake its assigned functions and exercise its powers and duties.

50 In Lennard's Carrying Company Limited v Asiatic Petroleum Company Limited Viscount Haldane LC said:

[A] corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation. [18]

51 The principle was stated by Bryson JA in North Sydney Council v Roman in the following terms:

Corporations can only have knowledge and they can only function through persons within their organisations: legislation ... which treats a corporation as having actual knowledge can only be understood as attributing to the corporation the actual knowledge of the person within its organisation who relevantly functions as the corporation. [19]

52 Findings as to the person who is the directing mind and will of the corporation for a particular purpose and who may be authorised to carry out certain of its functions are factual matters. They call for an analysis of both the organisation of the corporation and the particular function being carried out or the power or duty being exercised and any other matters relevant to ascertaining "of what individual it can fairly be said that his act or omission is that of the company itself".[20]

53 The persons or person whose acts are taken to be that of the company itself are not confined to its board of directors or to individual directors. In Bolton (HL) Engineering Co Ltd v TJ Graham & Sons Ltd Denning LJ, after drawing a distinction between those in a company who would be servants and agents who did the work, and of those who were directors and managers who represented the mind and will of the company, stated that whether the intention of such directors or managers was the company's intention, "depends on the nature of the matter under consideration, the relative position of the officer or agent and the other relevant facts and circumstances of the case".[21]

54 Thus, on occasions it will be only the board of directors acting as such or an officer near the top of the corporation's organisation who will be identified with the corporation itself, such that the state of mind or the acts of the organisation will be taken to be that of the board collectively or that of the senior officer. On other occasions someone lower, and perhaps much lower, in the corporate hierarchy will suffice.[22]

55 This approach is consistent with that adopted by the High Court in Krakowski v Eurolynx Properties Ltd in identifying persons within a corporation who may be regarded as possessing the mind of the organisation for a particular purpose. [23] In the course of considering a factual context quite different to the present, namely a transaction involving the elements of fraud in a commercial setting, Brennan, Deane, Gaudron and McHugh JJ[24] cited with approval the observations of Bright J in Brambles Holdings Ltd v Carey where it was said:

Always, when beliefs or opinions or states of mind are attributed to a company it is necessary to specify some person or persons so closely and relevantly connected with the company that the state of mind of that person or those persons can be treated as being identified with the company so that their state of mind can be treated as being the state of mind of the company. This process is often necessary in cases in which companies are charged with offences such as conspiracy to defraud. [25]

56 In the case of a statutory corporation, the founding or enabling statute may prescribe functions to be carried out, or powers or duties to be exercised, which are required to be undertaken by a defined person or persons within the organisation of the corporation. More commonly, however, the legislation will be silent on these matters. In these cases the search will be resolved by pursuing the factual analysis earlier described.

Application of the Common Law to Statutory Corporations

57 A statutory corporation, being a legal person, continues to enjoy the benefits, is subject to the duties and incurs the liabilities imposed by the common law, unless by statute or subordinate legislation these benefits, duties and liabilities are modified in some way or abrogated entirely.

58 Although the former rule expounded by O'Connor J in Potter v Minahan can no longer be regarded as good law, [26] and no weight can now be attributed to the principle that Parliament is presumed not to intend to abrogate common law rights,[27] nevertheless if the general law is to be modified or rendered inapplicable by a statute, it must make provision for this, either expressly or by implication as revealed after applying the usual rules and principles of statutory construction. The TIA did no such thing in relation to the common law which is applicable to the present matter, namely the general law of agency.

59 The TIA, rather than modifying or qualifying the application of the common law to a Transport Corporation such as VicTrack, in fact reinforces its force and effect in relation to such bodies. Being a body corporate under the TIA carries with it the normal incidents of legal personality. It has all the rights, protections, privileges, responsibilities, and liabilities under law, just as natural persons do. For example, it may sue and be sued (s 142(1)(c)). This in turn carries with it, by implication, the notion that it has legal rights which may be enforced at law. It also incurs legal duties which equally may be enforced against it. Indeed the TIA expressly recognises that a Transport Corporation "may do and suffer all acts and things that a body corporate may by law do and suffer" (s 42(1)(c)).

60 For this reason the common law of agency, which applies to any legal person, applies with equal force to a statutory corporation created under the TIA. Indeed the common law principles of agency are a natural adjunct to the exercise by VicTrack of its statutory powers and functions, such as the power to enter into any agreement or contract pursuant to s 152(2)(a) of the Act.

61 Two principles of agency law are applicable in the present case: the 'Carltona Principle'[28] and the principle which relates to the ratification of earlier but unauthorised conduct of an agent purportedly undertaken on behalf of a principal. These principles are discussed below.

62 However, RSS took a different position. It contended that common law principles as to the retrospective ratification of an agent's acts do not extend to an "arm of Government". By way of support it placed reliance on the decision of Einstein J in State of New South Wales v Bovis Lend Lease Pty Ltd (formerly Civil & Civic Pty Ltd) (the "Bovis Lend Lease case").[29]

63 In that case a statutory corporation, the Sydney Olympic Park Authority ("SOPA"), brought proceedings purportedly representing the Crown in right of New South Wales and in the name of the State of New South Wales against Bovis Lend Lease Pty Ltd (Bovis Lend Lease) and Lend Lease Corporation Limited (Lend Lease). The claims arose out of a contract between the Minister for Public Works as principal and Bovis Lend Lease and Lend Lease for the construction by Bovis Lend Lease of the Sydney Aquatic Centre at Homebush in anticipation of the staging of the 2000 Olympic Games in Sydney. It was claimed that the aquatic centre suffered from significant defects. The proceedings were referred to a referee for inquiry. Bovis Lend Lease sought to challenge SOPA's notice of motion that the Court adopt the referee's report.

64 An issue was SOPA's capacity to sue for the claimed relief. SOPA brought the proceedings pursuant to s 4 of the Crown Proceedings Act 1988 (NSW). SOPA was a successor to the Homebush Abattoir Corporation, a statutory corporation in which the land on which the Aquatic Centre was constructed vested at the material time.

65 In the view of Einstein J SOPA did not establish any entitlement to bring the proceeding for the enforcement of the contract. It was found that the Minister of Public Works did not enter the contract as agent of SOPA's predecessors in title to the site and that no contractual rights devolved to SOPA under its incorporating Act or otherwise. The incorporating Act did not entitle SOPA to bring the proceedings in the name of the State of New South Wales involving the subject matter of the contract. Similarly, the Sydney Olympic Park Authority Act 2001 (NSW) provided no basis to validate SOPA's institution of the proceedings on behalf of the Crown under the contract. Further, it was found that there was no statutory vesting of any right in SOPA to sue under the contract on behalf of the Crown.

66 In the course of his reasoning, Einstein J referred to the common law principles of agency. It was concluded that the Minister for Public Works could not have contracted as agent for SOPA. This was for the reason that SOPA did not exist at the time when the contract was either made or performed.[30] At common law an agent may contract on behalf of an undisclosed principal but not on behalf of a non-existent principal.[31] This is an application of a well established rule of agency,[32] as noted in Dal Pont's Law of Agency (citing Trident General Insurance Co Pty Ltd v McNiece Bros Pty Ltd ("Trident"[33]): "A principal who lacked the capacity to enter a contract at the time when it was made cannot ratify the contract".[34]

67 Einstein J also referred to the evidentiary difficulty in placing reliance on principles of agency which may apply to private transactions which are "not apt to be applied to contracts involving various arms of Government" ... because, "unlike in the case of private entities, it would not necessarily be assumed that a Minister, when entering a contract would be acting as agent for a statutory corporation ....".[35] This observation, however, fell short of the proposition contended for by RSS that in the Bovis Lend Lease case Einstein J expressly rejected the proposition that common law principles as to the retrospective ratification of an agent's acts extend to an "arm of Government". Indeed, his Honour accepted the common law principle that an agency relationship could be established by subsequent ratification by the principal of acts done on its behalf, although on the facts this did not apply to the case at hand because the principal, namely the statutory corporation SOPA, did not exist at the time of the commission of the acts purportedly done by the Minister of Public Works on its behalf.

68 The difficulties faced by SOPA in the Bovis Lend Lease case are not shared by VicTrack in the present.

69 As VicTrack did exist at the time of the issue and service of the relevant contractual notice on RSS comprising the 23 August Notice, at common law, Davidson was in a position to undertake the exercise on its behalf as its agent.

70 Further, there being no statutory impediment in its path, at common law, VicTrack in turn was in a position at a later time to ratify Davidson's earlier conduct in carrying out these tasks, should it need to do so.

71 For these reasons the submission made by RSS to the effect that the common law principles as to retrospective ratification can have no application, cannot be accepted. The principles plainly do have application.

72 The common law maxim: delegatus non potest delegare requires that one who is vested with a particular statutory power must exercise it personally, rather than delegate it. The rationale for the maxim is to be found in the legislative intent reflected in the constituting statute that a person who is conferred with a power, duty or function is taken to be the person who is intended by the legislation to exercise the power or carry out the duty or function.

73 A strict application of the principle had the potential to cause inconvenience, for example where a multitude of powers are vested by various statutes in a single person such as a Minister or senior departmental official. For this reason, legislation which confers powers, duties and functions on a person or body often incorporates an express delegation provision permitting the defined delegate or class of delegates to exercise the power or perform the duty or function.[36]

74 The power to delegate is limited and defined by the scope of the delegation provision as delineated by its terms.

75 Section 170 of the TIA provides a facility for VicTrack as a Transport Corporation to delegate to any person any of its powers, duties or functions under any Act or regulations. It provides:

(1) A Transport Corporation by instrument may delegate to any person any power, duty or function of the Transport Corporation under any Act or regulations including, subject to subsection (3), this power of delegation.

(2) A delegation under this section may be made -

(a) in relation to a person or class of persons specified in the instrument of delegation; or

(b) in relation to the holder, or the holder from time to time, of an office specified, or of each office in a class of offices specified, in the instrument of delegation.

(3) A person to whom a power, duty or function has been delegated under subsection (1) may, subject to and in accordance with the instrument of delegation under subsection (1), by instrument delegate to another person that power, duty or function.

(4) Sections 42 and 42A of the Interpretation of Legislation Act 1984 apply to a sub-delegation under subsection (3) as if it were a delegation. [37]

76 Sections 42 and 42A of the Interpretation of Legislation Act 1984 provide as follows:

(1) Where the discharge, exercise or performance by a person of a responsibility, power, authority, duty or function under an Act or subordinate instrument is dependent upon the opinion, belief or state of mind of that person in relation to a matter and the responsibility, power, authority, duty or function is, in accordance with the Act or subordinate instrument, delegated, the delegate may, unless the contrary intention appears, discharge, exercise or perform the responsibility, power, authority, duty or function upon the delegate's own opinion, belief or state of mind (as the case requires) in relation to that matter.

(2) Subsection (1) applies in relation to a delegation made under an Act or subordinate instrument, whether the delegation was made before or after the commencement of this Act. [38]

42A. Construction of power to delegate

(1) If an Act or subordinate instrument confers on a person or body a power to delegate the discharge, exercise or performance of a responsibility, power, authority, duty or function under that or any other Act or subordinate instrument, then, unless the contrary intention appears-

(a) the delegation does not prevent the discharge, exercise or performance of the responsibility, power, authority, duty or function by the person or body;

(b) the delegation may be made subject to such conditions or limitations as the person or body may specify; and

(c) a responsibility, power, authority, duty or function so delegated, when discharged, exercised or performed by the delegate, shall, for the purposes of the Act or subordinate instrument, be taken to have been discharged, exercised or performed by the person or body.

(2) If an Act or subordinate instrument confers power to delegate to the holder of an office or position, then, unless the contrary intention appears, a delegation may be made to any person for the time being acting in or performing the duties of that office or position. [39]

77 The following is the scope of the delegation provision as provided for in s 170 of the TIA and the companion provisions of the Interpretation of Legislation Act 1984 (Vic):

(a) The delegator is a statutory corporation being a "Transport Corporation", which includes VicTrack. The delegator is not the holder of an office or position within the corporation, nor does the delegator comprise the board of directors of the corporation, although commonly it will be through the board that the corporation will act in exercising the delegation power;

(b) The means by which the delegation is effected is by an instrument;

(c) The delegate may be "any person". Under sub-section (2) this is further defined to include (a) a person or class of persons specified in the instrument of delegation; or (b) the holder, or the holder from time to time, of an office specified, or of each office in a class of offices specified, in the instrument of delegation;

(d) The subject matter of the delegation is "any power, duty or function of the Transport Corporation under any Act or regulations" including, subject to subsection (3), the power of delegation;

(e) The delegate may, subject to and in accordance with the instrument of delegation, by a further instrument delegate to another person that power, duty or function;

(f) The delegate's state of mind may be applied to the exercise of a delegated power, duty or function where relevant to the exercise of that power or the performance of a duty or function;

(g) The delegation does not prevent the discharge, exercise or performance of the responsibility, power, authority, duty or function by the delegator (in this case VicTrack);

(h) A responsibility, power, authority, duty or function so delegated when discharged, exercised or performed by the delegate, shall, for the purposes of the Act (in this case the TIA), be taken to have been discharged, exercised or performed by VicTrack as the delegator.

78 RSS submitted, that as the Board of VicTrack had not delegated the task of preparing and serving the 23 August Notice to Davidson by any instrument under s 170 of the TIA, the purported exercise of giving notice to show cause by Davidson was ineffective because it had not been given by the Principal as required under Clause 44.2 of the Contract, namely by VicTrack, or its validly appointed delegate.

79 In answer to VicTrack's purported ratification by the later Resolution of 6 September 2012, RSS contended that under s 170 VicTrack could delegate to any person any power, duty or function of the Transport Corporation. However it submitted that there is no express provision in s 170 which permitted a "retrospective delegation". The Resolution, it said, amounted to just that, and was therefore not permitted by the TIA, could not be relied upon by the statutory corporation it established and governed, and was ultra vires and ineffective. In support it was submitted that the provisions of s 170(4) which apply ss 42 and 42A of the Interpretation of Legislation Act 1984 (Vic) to a sub-delegation under s 170(3) strongly suggests that any delegation under s 170 can only operate prospectively. Thus it was put that on its plain construction, s 170 only contemplated and provided for the prospective delegation of power by Transport Corporations. The purported ratification therefore was of no force or effect.

80 However, the submission advanced by RSS presupposes that a delegation to Davidson was necessary in the first place to enable him to prepare and serve a valid Notice to show cause on behalf of VicTrack under the Contract. In my opinion a delegation was not necessary for this purpose.

81 Section 170(1) of the TIA provides a power for VicTrack by instrument to delegate to any person any power, duty or function of the Transport Corporation under any Act or regulations including, subject to subsection (3), the power of delegation. The use of the word "may" in the sub-section underlines the fact that this is a power which the corporation may exercise, but is not required to do so.

Show Cause Notice Effective Without Delegation- the Carltona Principle

82 Section 170 of the TIA, and any instrument of delegation which may be issued pursuant to its terms, do not have any application to the issue by Davidson of the 23 August Notice to show cause.

83 This is because, as submitted by VicTrack, the issuance of the 23 August Notice by Davidson was a step taken by him on behalf of VicTrack under the provisions of Clause 44 of the Contract. This was an administrative step undertaken in the exercise of a contractual power conferred under the Contract. It was not the exercise of "any power, duty or function" of the defendant "under any Act or regulations ...". As such it was not a process which could be the subject of a valid delegation under s 170 of the Act. There was simply no power to delegate the function in question.

84 It is well accepted that in certain circumstances the powers, duties or functions to be carried out on behalf of the person or body vested with them under a constituting statute may be carried out by appropriately authorised agents of that person or body without the need for delegation. The authorisation may be express or implied. Where the principle operates, the act which is undertaken by the agent will in law be regarded as the act of the principal, being the relevant person or body vested with the power, duty or function, and not that of the individual agent acting in a personal capacity. This is known as the "Carltona Principle" after the case which authoritatively pronounced the concept.[40]

85 In Carltona Ltd v Commissioners of Works ("Carltona") Lord Greene MR described the necessity in modern government for the shared performance of duties short of delegations. [41] His Lordship said:

It cannot be supposed that this regulation meant that, in each case, the minister in person should direct his mind to the matter. The duties imposed upon ministers and the powers given to ministers are normally exercised under the authority of the ministers by responsible officials of the department. Public business could not be carried on if that were not the case. Constitutionally, the decision of such an official is, of course, the decision of the minister. The minister is responsible.[42]

86 Carltona was approved by Denning LJ in Metropolitan Borough and Town Clerk of Lewisham v Roberts where he said:

Now I take it to be quite plain that when a minister is entrusted with administrative, as distinct from legislative, functions he is entitled to act by any authorized official of his department. The minister is not bound to give his mind to the matter personally. That is implicit in the modern machinery of government: see Carltona Ld. v. Commissioner of Works (3), and an article by Professor Willis in 21, Canadian Bar Review, at p. 257.[43]

87 Carltona has also been accepted by the High Court as having application in Australia. In O'Reilly v State Bank of Victoria Commissioners Wilson J noted that the logic of the principle took it beyond being confined to Ministers of the Crown. [44] His Honour said in this regard:

The defendants make two submissions in answer to the plaintiffs. They would dismiss the English authorities to which I have referred as dealing with the relationship of Ministers of the Crown to their departments. It is true that the emphasis in the cases is primarily expressed in that way. Yet I find the logic of the principle equally persuasive in its application to the head of any large government department, and, a fortiori, to a Deputy Commissioner of Taxation responsible within a State for the implementation of the Commonwealth's laws with respect to taxation. No permanent head of a department in the Public Service is expected to discharge personally all the duties which are performed in his name and for which he is accountable to the responsible Minister. I share the view expressed by Sachs J in Comrs of Customs and Excise v Cure & Deeley Ltd [1962] 1 QB 340 at 371:

"The Commissioners are in a position parallel to that of the Ministers referred to in the judgment of Lord Greene in the Carltona case [1943] 2 All ER 560 at 563, in that their functions are so multifarious that they could never personally attend to them all, and the powers given to them are normally exercised under their authority by responsible officials of the department.[45]

88 However, the Carltona Principle will not operate in all situations. Its application is governed by the nature of the power, duty or function to be exercised. Mason J explained the position in Minister for Aboriginal Affairs v Peko-Wallsend in the following terms:

The cases in which the principle has been applied are cases in which the nature, scope and purpose of the function vested in the repository made it unlikely that Parliament intended that it was to be exercised by the repository personally because administrative necessity indicated that it was impractical for him to act otherwise than through his officers ...[46]

89 Where the statutory context points to the nature, scope and purpose of the power being of central or strategic importance, or where the exercise will have significant consequences, the more likely it will be that its exercise was intended by the Legislature to be undertaken by the person or body vested with the power and no other, unless it is validly delegated pursuant to any delegation power provided under the enactment. In these cases, the power may only be validly exercised by the person or body expressly conferred with the power under the relevant statute.

90 On the other hand, where the power, duty or function to be exercised is of an administrative or managerial character, with no significant repercussions beyond a limited framework, the principle will be more readily applied.

91 Pursuant to the Carltona Principle an authorised agent acts on behalf of the person or body vested with a particular power. The authorisation may be express, as provided for example in a written instrument of authorisation, or it may be implied from the context and circumstances. As Mason J said in Minister for Aboriginal Affairs v Peko-Wallsend:

The presence of an express statutory power of delegation does not necessarily exclude the existence of an implied power to delegate or, to express it more accurately, to act through the agency of others. [47]

92 Thus even if VicTrack had the power in the present case to delegate the function of issuing the contractual 23 August Notice, for example as an incident of its function to enter into any agreement or contract,[48] it was not necessary for VicTrack to utilise the statutory facility of delegation. The relevant function could be undertaken by VicTrack itself acting through a person within its organisation who was authorised, expressly or impliedly, to act as agent for the corporation for this purpose.

93 As earlier observed, a Transport Corporation, which included VicTrack, also has the powers referred to in s 152 of the TIA. Of immediate relevance is the power of a Transport Corporation under s 152(1) to "do all things that are necessary or convenient to be done for or in connection with, or as incidental to, the achievement of the object of the Transport Corporation and the performance of its functions".[49]

94 Further, under s 152(2(a), and without limiting the generality of subsection (1), a Transport Corporation is given the power to "enter into any agreement or contract".

95 It is clear that under these provisions of the TIA VicTrack had the power to enter into the Contract in question, which involved the provision of design and construction services to VicTrack for rail signalling systems in connection with level crossings in Victoria. So much was expressly authorised by the Act.

96 Further, having entered into the Contract in question, VicTrack was empowered, as a matter of reasonable implication, to do all things necessary to administer and carry into effect the Contract, not only to fulfil its own contractual obligations, but also to enforce the agreement to achieve the objects it had bargained for. These matters may fairly be regarded as incidental to, or consequential upon, the things which the legislature expressly authorised.

97 Included within the implied powers permitted by the TIA in this case was the power for VicTrack to issue a show cause notice as the Principal directed to the Contractor RSS pursuant to Clause 44.2 of the Contract.

98 In order to undertake this exercise, VicTrack did not need to delegate the power to any other person pursuant to s 170. It could equally carry out the activity itself, acting through any of its employees who undertook the task within the scope of their duties.

99 The fact that VicTrack chose to proceed by way of the Instrument of Delegation annexed to the Policy, which defined the authority of its officers and employees and set limits to that authority, may have been an exercise in prudent governance, but it was not required under s 170 of the TIA to operate in this way.

100 It is to be noted that pursuant to s 42A(1)(a) Interpretation of Legislation Act 1984 (Vic) the fact that Davidson was delegated to perform this duty or function did not prevent VicTrack from discharging the same duty or performing the same function, as there is nothing to the contrary prescribed in the TIA.

Davidson's Implied Authority to Issue the Notice

101 In my opinion, Davidson in preparing the 23 August Notice and serving it upon RSS was acting within the scope of his duties with VicTrack which he was authorised to undertake. He carried out these tasks for and on behalf of his employer. In this way VicTrack, as the Principal, gave the Contractor, RSS, a written notice to show cause under Clause 44.2 of the Contract.

(a) Davidson was a senior executive of VicTrack. He was General Manager, Capital Projects, reporting to the Chief Executive of VicTrack. He was a person near the top of the corporation's organisation. He is able to be readily identified with the corporation itself.

(b) Further, his particular role as the Superintendent appointed by VicTrack under the Contract, lends weight to the conclusion that he was acting within the scope of his duties with VicTrack in issuing and serving the 23 August Notice on RSS. In his capacity as Superintendent appointed by his principal VicTrack, Davidson was given a central role in administering the Contract. For example, he was given express contractual power to issue suspension notices to the contractor under Clause 34.1. A natural and practical extension of his express contractual powers involved him being authorised to exercise the further power on behalf of his employer, namely the capacity to issue a show cause notice under Clause 44.2.

(c) The terms of the 23 August Notice itself further supports the finding that Davidson was acting within the scope of his authority in issuing it to RSS. As noted earlier, the notice was written under the letterhead of VicTrack and was signed by Davidson in his stated capacity as: "General Manager Capital Projects Victorian Rail Track".

(d) The consequences of the issuance of a show cause notice under the Contract had an important, but nevertheless limited effect. It placed the contractor in the position of having to provide an answer the notice within the time prescribed, failing which the work under the Contract could be taken out of the hands of the contractor or the Contract could be terminated. Termination of the Contract was therefore not an inevitable consequence of the service of a show cause notice.

(e) The task undertaken by Davidson in issuing the 23 August Notice to RSS was administrative in nature. It was part of his role in managing the Contract on behalf of VicTrack.

103 In my opinion, arising from these circumstances, Davidson was impliedly authorised by VicTrack to act as its agent in issuing and serving the 23 August Notice on RSS. As such, Davidson's conduct in relation to the 23 August Notice was the conduct of VicTrack and did not require any delegation to be effective as a show cause notice under Clause 44.2 of the Contract.

104 Further, and in any event in my opinion, Davidson was validly delegated by VicTrack under a section 170 instrument of delegation to prepare and serve the 23 August Notice under the Contract.

105 Exhibit MS-21(b), which is referred to in Question 1, comprised a policy and procedure described as the "VicTrack Corporate Policy - Empowerment (Delegations) Policy" (the "Policy"). Pursuant to this instrument, which is stated to have an effective date of 12 April 2012, VicTrack recorded in written form the functions, powers and authorities of each of its officers and employees to undertake the functions and responsibilities assigned to each upon appointment within the organisation. This was recorded in a document described as the "Formal Instrument of Delegation of Authority" (the "Instrument of Delegation") which was annexed as Appendix 2 to the Policy.

106 Under s. 170 of the TIA, VicTrack formally delegated to its officers and employees the levels of authority specified in the Instrument of Delegation. The delegation operated in accordance with its terms, if it was necessary for VicTrack to rely upon it.

107 The Instrument of Delegation appended to the Policy commences with the following introduction:

VICTORIAN RAIL TRACK (VicTrack) ABN 55 047 316 805 is a corporation established under section 8 of the Rail Corporations Act 1996 and it continued under the Transport Integration Act 2010 (the Act) and has the functions, powers and authorities conferred on it by or in accordance with the Act.

For the purposes of, and in accordance with, section 170 of the Act, VicTrack hereby delegates to the officers and employees and/or classes of officers and employees the levels of authority specified in the Financial Authorisations Register.

108 Then follows in the Instrument of Delegation, after specifying a delegation to the Chief Executive, what is described as a "General Delegation to Officers and Employees" which is in the following terms:

1.2 General Delegation to Officers and Employees

VicTrack delegates to each officer and employee or class of officer or employee, appointed to, or authorised to perform a role, all of those functions, powers and authorities that are reasonably required to undertake the functions and responsibilities of that role, within the financial limits and subject to the restrictions, qualifications and comments stated in the Financial Authorisations Register.

2. Authorisations specified in the Financial Authorisations Register

Without limiting the generality of the delegations specified in clause 1 above, VicTrack delegates to each officer and employee appointed to, or authorised to perform his or her role, each of those functions, powers and authorities specified in the Financial Authorisations Register that are applicable to the empowerment levels attributable to that role, within the financial limits and subject to the restrictions, qualifications and comments stated in the Financial Authorisations Register.

109 A further document called the Financial Authorisations Register (the "Register") was annexed as Appendix 1 to the Policy. Various categories of expenditure are set out in the Register for each level of officer and employee within the hierarchy of the organisation (described as an "Empowerment Level"), with various limits of expenditure or revenue generation assigned to each category.

110 Also included in the Register are various categories of activities and undertakings for each level of officer and employee within the hierarchy of the organisation. Included in such activities and undertakings were "Execution of Document" and "Transactions Without Financial Impact".

111 Davidson was an officer and employee of VicTrack and had the standing of a General Manager described in the Register as a "level 1 manager".

112 There are five levels of empowerment under the Register. Relevantly, a General Manager, such as Davidson, has the second highest level of empowerment designated as "E1". He reports directly to the Chief Executive Officer.

113 In my opinion, Davidson had delegated authority pursuant to s 170 of the TIA under the instruments comprising the Policy and its two appendices to issue and serve the 23 August Notice on behalf of VicTrack, for the reasons which follow.

114 The Instrument of Delegation provided for general delegations in Clauses 1.2 and 2, which have been earlier referred to.

115 Section K2 (Execution of legally binding documents on behalf of VicTrack) of the Register and the Notes applicable to K2 provide:

Authority to execute documents as an Authorised Signatory on VicTrack's behalf applies to:

Any Director with the approval of the Board;
CE [Chief Executive] or any employee categorised as El-E4 where the document is one which the person holding that Empowerment Level may authorise under this Financial Authorisations Register.

116 The Notes applicable to Item L of the Register (Transactions with no financial impact) provide:

All transactions with no financial impact, for example, section 173 agreements, infrastructure lease agreements, memorandums of understanding and revisions or extensions of agreements, should be referred to the division GM for guidance. Legal Counsel should be consulted if transactions are of an unfamiliar or non-standard nature.

117 The issuance of a show cause notice under a contract is not specifically addressed in the Instrument of Delegation or the Register. Nevertheless, Davidson was sufficiently empowered by the Instrument of Delegation in the general delegation Clauses 1.2 and 2 and Section K2 (Execution of legally binding documents on behalf of VicTrack) of the Register to undertake this task. A show cause notice is a document of the character which Davidson as General Manager of VicTrack and the Superintendent under the Contract should, in a practical sense, be authorised to issue on its behalf in the course of his duties.

118 Further, the financial limitations provided for in sections A1 to A4 of the Register have no express or implied application to the issuance of a show cause notice under the Contract. A show cause notice issued under the Contract is not a document that has a financial limit ascribed to it. This may be contrasted with a termination notice which may be impliedly subject to the financial limits prescribed in sections A1 to A4 of the Register, where Davidson was subject to a limit of $1 million in respect of "entering into contracts ... for purchase of goods and services". Section K2 of the Register has therefore no effect on Davidson's power to issue the show cause notice in this case.

119 Further, section L of the Register authorises Davidson to execute documents with "no financial impact". The notes to section L of the Register provide that:

All transactions with no financial impact, for example, section 173 agreements, infrastructure lease agreements, memorandums of understanding and revisions or extensions of agreements, should be referred to the division GM for guidance. Legal Counsel should be consulted if transactions are of an unfamiliar or non standard nature.

120 In my opinion, a show cause notice under Clause 44.3 of the Contract could not have any "financial impact" in the sense described in the notes to section L of the Register. Clause 44.3 of the Contract requires a contactor served with a notice to show cause in writing why the principal should not exercise a right referred to in Clause 44. Those rights are limited to taking the whole or part of the work remaining to be completed under the Contract out of the hands of the contractor or the termination of the Contract. The exercise by a principal of a right under Clause 44.4 could have "financial impact" in the relevant sense, however, the issuance of a show cause notice under Clause 44.3 could not in the accepted sense. Although it is conceivable that a contractor may go to some expense in responding to a show cause notice, the thrust of section L is to consider any financial impact on the principal, not on the contractor. For these reasons, Davidson was authorised under section L of the Policy to issue the 23 August Notice.

122 In the light of the answer to question 1 it is strictly unnecessary to answer Question 2. However, for completeness I will proceed to answer the question.

123 The central argument advanced by RSS under this question was that the provisions of the TIA do not enable ratification of a show cause notice, which it said had already expired. The 23 August Notice required RSS to show cause by "no later than 5:00 pm on 5 September 2012 or seven clear days after this Notice is received by the Contractor, whichever is the later." The Resolution of the board of VicTrack was made on 6 September 2012.

124 However, the question is not whether the 23 August Notice expired, but whether Davidson had the authority to issue it in the first place. If he did, the 23 August Notice, excluding for the moment any other challenges to its validity, would operate under the Contract in accordance with its terms. A failure on the part of RSS to show cause by the due date would have the effect of enlivening the rights in favour of VicTrack to take work out of the hands of RSS or to terminate the Contract. Following the passing of the due date, the notice would have effect according to the Contract and it remain on foot for this purpose. The fact that the ratification took place after the period allowed to RSS for showing cause is therefore irrelevant.

125 In my opinion, if Davidson did lack authority to issue the 23 August Notice at the time when it was served on RSS, it was validly ratified by the circular Resolution dated 6 September 2012 by the Board of Directors of VicTrack. Any lack of relevant authority on the part of Davidson has been retrospectively overcome following the ratification of authority by the Resolution.

126 If there is any doubt as to the position of Davidson in acting as the agent of VicTrack in issuing and serving the 23 August Notice on RSS, his agency for this purpose was ratified by the Board of VicTrack by the passing of the Resolution earlier described.

127 The Resolution was not a delegation under s 170 of the TIA which purported to have retrospective effect. If it was, the contention of Mr Robins who appeared for RSS to the effect that a retrospective delegation is not countenanced by the statutory power may well have force.

128 Rather, the Resolution did something quite different. It declared that at all material times, Davidson had authority to issue the documents referred to, including the 23 August Notice, on behalf of Victorian Rail Track. In so doing, it merely ratified his position that at the earlier time when he issued and served the notices, he did so in his capacity as agent for VicTrack.

129 As earlier discussed, the TIA did not have the effect of abrogating or qualifying the exercise of the common law power of a legal person such as VicTrack to ratify the acts of its agent which have been undertaken on its behalf at an earlier point in time.

130 As a general rule, ratification will have a retrospective effect so as to operate to validate conduct and the product of that conduct which occurred or arose prior to the exercise of ratification. An example of the application of this principle is Trident where McHugh JA considered the question of ratification in the context of an insurance claim.[50] His Honour, after considering the authorities on point,[51] determined that, like the accepted position with a policy of marine insurance,[52] other contracts of insurance may also be ratified after the occurrence of the loss. McHugh JA reasoned as follows:

It is true that a principal cannot ratify a contract unless he had the capacity to enter into the contract at the time when it was made: Kelner v Baxter (1866) LR 2 CP 174. It is also true that a person cannot enter into a contract of insurance when he is aware that the loss has already taken place. But it does not follow that after loss the principal cannot ratify a policy which was made before loss. Ratification is equivalent to original authority: Union Bank of Australia Ltd v Rudder [1911] HCA 39; (1911) 13 CLR 152 at 163 per Griffith CJ. The insurer's bargain in this class of case is made with an assumed principal. He acts on the basis that the agent has authority and, if he has not obtained proof of the agent's authority, takes the risk that the agent has no authority. No one doubts that the policy can be ratified before loss. Why should it make any difference that it is ratified after loss?[53]

131 Provided the principal itself had the power to engage in the relevant conduct at the time of its unauthorised performance by another person, once the act of the other person is adopted by the principal, the effect of the adoption will be governed by the maxim: Omnis ratihabitio retro trahitur et mandato aequiparatur (every consent given to what has already been done, has a retrospective effect and is equivalent to a command given at the outset).[54]

132 I would only add that any ratification must occur within a reasonable time of the originally unauthorised act. What is a reasonable time depends upon the particular circumstances of each case, and definitive measure is neither possible or desirable. In Forge v Australian Securities and Investments Commission McColl JA said (with whom Handley and Santow JJA agreed):

It is a requirement of effective ratification that it must occur within a reasonable time of the unauthorised act: Hughes v N M Superannuation Pty Ltd (1993) 29 NSWLR 653 at 665 per Sheller JA (with whom Kirby P and Meagher JA agreed), referring to Re Portuguese Consolidated Copper Mines Ltd; Ex parte Badman; Ex parte Bosanquet (1890) 45 Ch D 16 at 31; Lifesavers (A'asia) Ltd v Frigmobile Pty Ltd [1983] 1 NSWLR 431 at 438; Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1987) 8 NSWLR 270 at 282; affirmed [1988] HCA 44; (1987) 165 CLR 107 ; 80 ALR 574. Hutley JA pointed out in the Lifesavers case (at 438E) that "a rigid rule as to what is reasonable cannot be laid down". [55]

133 On any view, the Ratification in this case took place, which occurred on 6 September 2012, within a reasonable time of the act in question, namely the issue and service of the 23 August Notice on that date, a period of some 14 days.

134 I accept that VicTrack had the capacity to issue the 23 August Notice at the time when it was served on RSS. I also accept that the Resolution passed by the Board of VicTrack on 6 September 2012 operated to confirm Davidson's authority to issue and serve the notice. It also operated to confer authority upon him in the event that Davidson earlier lacked the requisite authority, with the result that the Ratification was equivalent to him having original authority to issue and serve the 23 August Notice.

136 Central to the submission of RSS as to the effect of the abandonment of the earlier notices to show cause, namely those dated 5, 7, and 12 June 2012 (the "Earlier Notices") was that this introduced an element of uncertainty into the Resolution to such a degree that the instrument became ineffective in its terms to operate as a ratification of Davidson's earlier conduct in issuing the 23 August Notice.

137 Although Paragraph 2 of the Resolution refers to five notices, I do not accept that any uncertainty was introduced into the Resolution so as to deprive it of its intended effect.

138 The factual underpinnings of the Earlier Notices have not been abandoned. The abandonment was expressly made upon this basis. VicTrack is not precluded from relying on the facts underpinning the Earlier Notices such that abandonment of any of the Earlier Notices could have effect on the operation of the Resolution. It is not the case that the text of the Resolution or its intended effect as revealed by its terms was such that if one or more of the Earlier Notices is abandoned, the Resolution will no longer be binding.

139 The answer to Question 3 is "The defendant's abandonment of the Earlier Notices has no effect on the Resolution".

140 A similar argument was advanced in relation to the abandonment of the Earlier Notices to show cause, that this introduced an element of uncertainty into the 23 August Notice to such a degree that it too became ineffective in its terms to operate as a show cause notice under the Contract.

141 Again I do not accept that any such uncertainty was introduced into the 23 August Notice so as to deprive it of effect.

142 As observed above, the facts underpinning the Earlier Notices have not been abandoned.

143 Two references are made in the 23 August Notice to the Earlier Notices.

144 The first (contained in the first paragraph) is as follows:

I refer to previous show cause notices issued to Rail Signalling Services (RSS) on 5, 7 and 12 June 2012.

145 By this reference, VicTrack does not seek to rely on the Earlier Notices.

146 The second reference (contained in the final paragraph) is as follows:

For the avoidance of doubt, this Notice is given in addition to and without derogation from the Principal's show cause notices dated 5 June 2012, 7 June 2012 and 12 June 2012 under the Contract and its show cause notice dated 28 June 2012 under the Heads of Agreement.

147 The 23 August Notice was therefore "given in addition to ..." the Earlier Notices.

148 The terms of the 23 August Notice are clear and give rise to no uncertainty.

149 The answer to Question 4 is that "The abandonment of the Earlier Notices has no effect on the validity of the 23 August Notice".

"MS-21(a)" Terms and conditions of employment - Ian Douglas Davidson ("Davidson")

"MS-21(b)" Policy and Procedure - VicTrack Corporate Policy, effective 12 April 2012, incorporating Formal Instrument of Delegation of Authority

"MS-2" Heads of Agreement and Design and Construct Contract incorporating AS 4300-1995 Amended General conditions of contract for design and construct

"JM-1(a)" Circular resolution dated 6 September 2012 executed by the members Board of Directors of VicTrack

"JM-1(b)" Suspension notice letter dated 5 June 2012 from Davidson to Rail Signalling Service Pty Ltd ("RSS")

"JM-1(c)" Show cause notice letter dated 5 June 2012 from Davidson to RSS

"JM-1(d)" Show cause notice letter dated 7 June 2012 from Davidson to RSS

"JM-1(e)" Show cause notice letter dated 23 August 2012 from Davidson to RSS and attached ARS Report #1.

[12] Darkinjung Pty Ltd v Darkinjung Local Aboriginal Land Council and Ors (2006) 203 FLR 394 [72] per Barrett J.

[13] Darkinjung Pty Ltd v Darkinjung Local Aboriginal Land Council and Ors (2006) 203 FLR 394 [71].

[14] See: Williams v Hursey [1959] HCA 51; (1959) 103 CLR 30; Kathleen Investments (Australia) Ltd v Australian Atomic Energy Authority [1977] HCA 55; (1977) 139 CLR 117; Hazell v Hammersmith & Fulham London Borough Council [1992] 2 AC 1; Humphries v Proprietors Surfers Palms North Group Titles Plan [1994] HCA 21; (1994) 179 CLR 597; and Sanpine v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 365.

[15] Baroness Wenlock v River Dee Co (1883) 36 Ch D 675 at 685.

[16] Re Honey Pool of Western Australia (No 2) (1988) 14 ACLR 621 at 622.

[17] Re Honey Pool of Western Australia (No 2) (1988) 14 ACLR 621 at 624-625.

Plaintiff v Defendant

At a glance

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Judgment (239 paragraphs)

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Legislation Cited (7)

Cases Cited (19)