[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[2]
Judgment
THE COURT: The appellant (referred to in both these reasons and the Court's earlier reasons as "the Company") seeks leave to re-open the appeal in which judgment was given on 9 September 2014: Russell Gould Pty Ltd v Ramangkura [2014] NSWCA 310. As the Company views matters, the Court did not make a finding essential to the conclusion it reached, being a finding that Mr Gould had the authority of the Company to cause $227,820.71 of the Company's money to be expended in satisfaction of indebtedness of the Company to Mr Gould.
In the light of submissions made by both parties on the motion to re-open, the appropriate course is that the Court should proceed to deal expressly with the issue regarded by the Company as both essential to the determination of the appeal and at this point undetermined.
The Court found that, according to their correct characterisation, the events of 12 April 2010 entailed receipt of money by the respondent from Mr Gould who received equivalent money from the Company by way of reduction of indebtedness of the Company to him which was payable on demand; and that, as against the ANZ Bank, Mr Gould had the Company's authority to withdraw from the Company's bank account the money that he applied in paying the respondent.
The Court referred to the Company's contention that, even if Mr Gould was entitled to demand payment of money owing by the Company to him and the Company was bound to meet the demand, Mr Gould had no authority to act for the Company in causing it to meet the demand if the relevant money was required by Mr Gould for the purpose of "transactions of any substance" or outside the "ordinary course of business" as referred to in the evidence of Mr Vanda Gould. The Court made no express finding on that matter, which is the issue the motion seeks to have determined.
The issue was addressed and dealt with by the primary judge at [122] to [126] of his judgment:
"A key factual inquiry in the proceedings is whether, on 12 April 2010, Mr Gould Senior (in particular) had, as an officer of the plaintiff, the company's authority to withdraw from the company's bank account the sum of $227,820.71 in reduction of the greater sum standing to his credit in the loan account of the company.
In my judgement, that question should be answered in the affirmative. Mr Gould Senior was authorised by the plaintiff, vis á vis its bank, to withdraw the disputed sum; there is no suggestion that, vis á vis the bank, the transaction was irregular. He (and his wife) had regular, liberal access to funds of the plaintiff. He (and his wife) had custody of the banking records of the plaintiff, and a general authority to operate the company's bank accounts.
Although Mr Gould Junior may have harboured private reservations about what his parents should do without his express approval, in my estimation he deliberately acquiesced in his father exercising authority, without fetters, over the disposition of company funds. Revealing in that regard is his considered statement (in the letter dated 26 July 2011 he addressed to the defendant): 'You will appreciate that because of my love for my father I have permitted him to operate and act as if he were a man of substance [Emphasis added].'
Mr Gould Junior may, privately, have harboured a hope, or an expectation, that his father would not do anything outside the ordinary course of business of the plaintiff as he may have perceived it; but he did not establish that as a limitation on his father's authority, either within the management structure of the plaintiff or with his parents personally.
I find that Mr Gould Senior had, at least, implied actual authority (with or without the acquiescence of his wife) to effect the transaction effected in favour of the defendant, on 12 April 2010, as a part-repayment to him of the debt owed to him by the plaintiff (or, equally, as a part-repayment to him and his wife of the debts owed to them respectively by the plaintiff): Hely-Hutchinson v Brayhead Limited [1968] 1 QB 549 at 583-584, 586-587 and 592-593; Corporate Affairs Commission (NSW) v Transphere Pty Limited (No 2) (1985) 9 ACLR 1005 at 1009; Brick and Pipe Industries Limited v Occidental Life Nominees Pty Limited [1992] 2 VR 279 at 361-362."
The primary judge thus made findings as follows: Mr Gould was held out by the Company to the ANZ Bank as having unlimited authority to operate the Company's bank accounts; Mr Gould had regular, liberal access to funds of the Company; Mr Gould had custody of the Company's banking records; Mr Vanda Gould deliberately acquiesced in Mr Gould's exercising unfettered authority over the disposition of the Company's funds; Mr Vanda Gould explicitly stated to the respondent after the event that he had "permitted" Mr Gould "to operate and act as if he were a man of substance"; and any privately harboured hope of Mr Vanda Gould that Mr Gould would not do anything outside the scope of what Mr Vanda Gould perceived to be the ordinary course of the Company's business did not establish any such ordinary course as a limitation on Mr Gould's authority either within the management structure of the Company or with his parents personally.
His Honour concluded that, on the facts as he found them, the Company as plaintiff had not discharged the burden of proof that lay upon it.
The Company filed in this Court a document in which it advanced challenges to findings of fact made by the primary judge. None of the matters just mentioned was referred to in that document. The Company's submissions on the matter of authority were confined to matters of law, the basic contention being that the facts, as found by the judge, did not support the ultimate finding of authority of Mr Gould to cause the Company to pay to him money that the Company was legally bound to pay to him upon his demand. The legal principles are not controversial and, as extracted from cases to which the Company drew attention (including, in the High Court, Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd [1975] HCA 49; 133 CLR 72), are to the effect that one of several directors of a company has implied authority to act for the company in a particular way only if the directors as a whole have acquiesced in a course of dealing in which the director has committed the company in the relevant way. The respondent did not take issue with the submissions of the Company as to the applicable legal principles.
The Company's contention, on this aspect of its appeal, was that the directors of the Company - Mr Gould, Mrs Gould and Mr Vanda Gould - had not acquiesced in any course of dealing involving Mr Gould causing the company to pay money to the extent of $227,820.71 out of its bank account to Mr Gould in response to a demand for payment that the Company was bound to meet. Such a payment, it was said, had no precedent in the history of the Company and was "manifestly incongruous with" the sort of action that Mr Gould had previously taken with the concurrence of the other directors.
The respondent submitted that, in the particular factual context, the relevant act of Mr Gould fell within a course of dealing in which the directors had acquiesced. The sum involved was greater than that which had been the subject of any like dealing in the past, but the parameters of the course of dealing were not confined by monetary amount.
The submissions of the respondent should be accepted and the Court should confirm (consistently with the finding of the primary judge) that Mr Gould had authority to cause the Company to pay $227,820.71 to him on 12 April 2010 by way of reduction of the Company's on-demand indebtedness to him at that date and to effectuate that payment by drawing on the Company's account with the ANZ Bank.
The evidence showed a course of dealing over several years in which Mr Gould regularly obtained funds from the Company's bank account for his own use, which were accounted for as reductions in the Company's on-demand indebtedness to him (or sometimes as "salary" or "wages"). By arming Mr Gould with authority, as against the bank, to operate its bank accounts at will, the Company facilitated his obtaining funds from the Company in that way. The funds obtained by Mr Gould from time to time were used for various personal purposes of himself and his wife in accordance with decisions he made. The funds that Mr Gould had on deposit with the Company after 30 June 2007 exceeded $400,000 and represented his share of proceeds of sale of the family home that would otherwise have been expected to be deposited in a bank. Mr Gould had, on a few occasions, spoken to Mr Vanda Gould before making particular withdrawals from the Company's bank account for his own use but the evidence did not support any finding that, according to some established course of dealing, permission of Mr Vanda Gould was either sought or required on those (or any) occasions; and Mr Vanda Gould never challenged or questioned any payment that Mr Gould had caused the Company to make to himself until the payment that gave rise to the proceedings. The Company had cash assets of $1.27 million at 30 June 2009. Mr Vanda Gould wished to see Mr Gould operate and act as if he were a man of substance. A man of substance accustomed to acting in the way that Mr Gould had acted over a substantial period and who, in effect, had more than $400,000 on at-call deposit with the Company would not need someone else's permission to cause the Company to pay to him money that he was entitled to receive on demand made at any time.
The Company has made it clear that if, as it has now done, this Court finds against it on the matter of Mr Gould's authority, it cannot contend for any substantive outcome on appeal other than that announced on 9 September 2014, that is, that the appeal be dismissed.
The Company says, however, that the order that it pay the respondent's costs in this Court should be set aside because the respondent's success was on a basis not raised by her. Given that the Court has now made (although adversely to the Company) the finding that the Company said was essential but lacking and that that has caused the substantive result to remain unaltered, the costs order should also remain. As to the costs of the motion to re-open, the appropriate outcome is that there should be no order as to costs.
There should therefore be orders as follows:
1. Grant leave to the appellant to re-open.
2. Confirm the orders made on 9 September 2014.
3. Make no order as to costs in respect of the appellant's notice of motion filed on 24 September 2014.
[3]
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Decision last updated: 16 February 2015