Richardson & Wrench (Holdings) Pty Ltd v Ligon No 174 Pty Ltd

Federal Court of Australia|1996-06-06|Before: Sundberg JJ

REASONS FOR JUDGMENT THE COURT: A Judge of the Court, having upheld a claim brought against a corporation under s.52 of the Trade Practices Act 1974, went on to consider, but dismissed, an associated claim against a director brought in reliance upon section 75B of the Act. An appeal was lodged against the imposition of liability upon the corporation, and a cross-appeal followed against the refusal to impose liability upon the director. At the hearing, counsel for the appellant withdrew the appeal, which was accordingly dismissed with costs, including reserved costs. The respondent, which had prepared the appeal books when it became apparent that the appellant would not be able to do so in time for the hearing, sought also a special order in respect of the costs of their preparation. The Court reserved the question whether such an order should be made, for consideration after the hearing of the cross-appeal. The cross-appeal then proceeded. The issue raised by the cross-appeal is a very narrow one. However, an understanding of it requires some brief outline of the facts. The cross-appellant (Transpacific) purchased a fishing trawler, "Sovereign", from the cross-respondent (Westbay). The vessel was furnished with a permit under the Commercial Vessels Act 1979 (NSW), s.8 of which required that she be "used in accordance with the authority conferred by the permit". In this case, a term of that authority imposed: "[a]dherence to the conditions of loading in the approved stability book."

If these conclusions of fact were open to the Judge, his rejection of Transpacific's case against Mr Lonie was plainly justified. That is because it is settled upon the authorities that nothing less than actual knowledge of the essential facts constituting a contravention of s.52 will suffice for a finding of liability against a person alleged to have been involved in the contravention within the meaning of s.75B. The authorities are fully discussed in Richardson & Wrench (Holdings) Pty Ltd v. Ligon No 174 Pty Ltd (1994) 123 ALR 681 at 692-695. As is there noted, the law has been stated in the unreported Full Court decision Butt v. Tingey (Davies, Neaves and Beazley JJ, 5 August 1993), as well as in several decisions at first instance. In a different context, another Full Court accepted, citing Richardson & Wrench (Holdings) Pty Ltd v. Ligon No 174 Pty Ltd, that "'reckless indifference' and 'wilful blindness' are not synonymous with 'intention' or 'knowledge'": Allstate Life Insurance Company v. Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 at 37, per Lindgren J, with whom Lockhart and Tamberlin JJ agreed. Counsel for the cross-appellant argued that Mr Lonie must have appreciated his own lack of authority to promise that Westbay would perform the work in question, and must have appreciated that the company, not having authorized him to make that promise, did not intend to carry it out. He was a director of the company, the fishing manager, and the manager of its day-to-day operations. He negotiated the sale of the vessel, but obtained the authority of Westbay's board of directors before concluding it, not having the right to enter into such a contract without the prior approval of the managing director or the board.

Had the learned trial Judge inferred the necessary knowledge and intentional participation in Westbay's misleading conduct, it may well be that Mr Lonie would have had difficulty in appealing against an adverse decision. But whether he actually knew is a question of fact upon which, where oral evidence is given, the credit of the witness and the judge's assessment of him are all important. This witness was seen and heard and, although in some other respects he was not accepted, the judge was unable to make a finding of knowledge against him. Nor does it follow logically that a person who enters into an engagement in the character of an agent for another, when his authority does not extend so far, must be conscious at the time of his lack of authority. In this case, Mr Lonie was not cross-examined as to his understanding, when the promise was made, on the question of his authority to say what he said. If the case now sought to be established on appeal was intended to be pressed, cross-examination on that subject was necessary. The cross-appeal should be dismissed with costs. That leaves the question of the preparation of the appeal book. In all the circumstances, the costs orders made in the appeal and the cross-appeal should not include the costs of the

preparation of the appeal book, which seems to have been prepared in order that the cross-appeal might proceed. I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment of the Court. Associate: Date: 6 June 1996.

Commercial Vessels Act 1979(NSW)

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