CONSIDERATION
22 As noted above, in the statement of claim the applicant has refrained from categorising the alleged agency of Nexus on behalf of Osaka Gas as one relating to a disclosed principal or an undisclosed principal (or disclosed agent or undisclosed agent). Rather, it seeks, in effect, to keep its powder dry as to what legal conclusions in that regard should be drawn. It says, that its only obligation is to plead material facts from which relevant legal conclusions may be drawn, and it has done that.
23 Ordinarily, what the applicant contends is correct. The primary obligation on a pleader is to lay out those material facts (not evidence) on which it relies and which it will prove by evidence at trial in order to satisfy the elements of a recognised cause of action which entitles it to a particular remedy.
24 In this case, the applicant seeks to advance its case against Osaka Gas on the basis that Nexus, at material times, acted on behalf of Osaka Gas, that is to say, was its agent and that it did so with the actual authority of Osaka Gas.
25 When it comes to agency there really are only two options. If an applicant seeks to hold a respondent party liable for an act done by a third party on the basis that the other party was its agent, then the third party will either be the disclosed agent of that respondent party or its undisclosed agent, if it is found to have acted as an agent.
26 The importance of the distinction between a disclosed agent and an undisclosed agent primarily is that, where an agent contracts on behalf of a disclosed principal, it is the principal alone who can sue and be sued on the contract. Ordinarily the agent cannot be liable under the contract. Where, however, the agent acts for an undisclosed principal, then either the agent or the principal can be sued on the contract. In this, the doctrine of the undisclosed principal defies the basic requirement of privity in contract. It, however, has long been justified on the basis of commercial convenience. See generally Goodhart AL and Hamson CJ, "Undisclosed principals in contract" (1932) 4 CLJ 320-356; Dal Pont GE, Law of Agency (2nd ed, LexisNexis Butterworths Australia, 2008) [19.28]-[19.33].
27 That aside, the question of how a pleading should be cast in a proceeding where agency is alleged, does not on the face of it require an applicant to elect to plead that the relevant respondent was a disclosed principal or an undisclosed principal. That terminology, which is conclusory, is not required to be adopted.
28 In Dominus, BW Ambrose J suggested, at [52]-[54], that:
In any proceeding where it is a material fact whether one person was the actual or ostensible agent of another, that material fact is to be determined upon the evidence. The pleading must not plead the evidence but it must plead the fact or facts to be proved by the evidence to be led.
The authorities establish that where agency is in issue based upon acts or omissions on the part of the alleged agent, the applicant may not establish agency by relying upon what the alleged agent has asserted contemporaneously with those acts or omissions.
Thus the applicant must establish agency by what the alleged principal has said or done or omitted to say or do with respect to the acts or omissions of the alleged agent for which it is sought to hold the principal responsible.
29 In Dominus, the Court, at [59], concluded that a bare allegation of the fact of agency pleaded a legal conclusion and it does not plead the facts upon which a conclusion might properly or arguably be reached. The Court confirmed its view that the material fact of agency properly particularised must specify every material act or omission of the principal with respect to its time, place and persons involved and in respect of which the applicant would seek to lead evidence upon trial and indeed in respect of which all parties must disclose documents to support or refute the inference that one party acted as agent for the other.
30 In Eastern Insurance at 207, Lord Lloyd of Berwick, who delivered the judgment of the Privy Council summarised the law in relation to undisclosed principals in five points:
(1) An undisclosed principal may sue and be sued on a contract made by an agent on its behalf, acting within the scope of its actual authority.
(2) In entering into the contract, the agent must intend to act on the principal's behalf.
(3) The agent of an undisclosed principal may also sue and be sued on the contract.
(4) Any defence which the third party may have against the agent is available against its principal.
(5) The terms of the contract may, expressly or by implication, exclude the principal's right to sue, and its liability to be sued. The contract itself, or the circumstances surrounding the contract, may show that the agent is the true and only principal.
31 The Eastern Insurance case concerned point (5). Ultimately the Privy Council held that there was nothing in the terms of a proposal form or the policy, which related to an insurance policy, which expressly or by implication excluded the right of a person to sue as undisclosed principal.
32 The applicant contends it is unnecessary for it to categorise the agency it alleges as disclosed or undisclosed. The applicant simply says that Nexus had actual authority to enter into the drilling contract on behalf of itself and Osaka Gas as the participants in the joint venture, or perhaps more importantly, as the holders of the permit. So it had actual authority to do so, and when it did, it did so as agent for both. Accordingly, not only was it authorised to do what it did, it in fact did it. If there is actual authority to bind a principal then the case is made out. It is not necessary for the applicant to say whether or not the agency was disclosed at the time. Rather, it is enough to show actual authority and that the contract was entered into as agent.
33 Addressing, in any event, the five points made in Eastern Insurance in relation to an undisclosed agency, the applicant contends that point (1) is satisfied on the pleading because the applicant sues Osaka Gas on a contract made by its agent, Nexus, on its behalf and it alleges that the agent acted within the scope of its actual authority.
34 As to point (2), senior counsel, as I understand his submission, contends the applicant pleads that the relevant agreements were executed by the first respondent as operator of the Crux Joint Venture within its actual authority invested in it by the joint operating agreement on its own behalf as participant and as agent of the second respondent as participant and thereby has sufficiently pleaded intention.
35 Senior counsel submits that in this case points (3) and (4) are not relevant.
36 As to point (5), senior counsel says there is nothing, apart from the submission made on behalf of Osaka Gas that Osaka Gas is not named as a party in the drilling contract, to suggest that the contract has excluded the principal's liability to be sued. In any event that is a matter for the defence if relevant.
37 In the result, I consider the strike out point is not to be determined by ascertaining whether the applicant has expressly elected in the statement of claim to sue Osaka Gas as a disclosed principal or an undisclosed principal. Rather, the important thing is to examine the pleading to see whether material facts have been pleaded from which agency alleged can arguably be proved by evidence. I accept the submission of the applicant that, having regard to the [3A] to [3E], [19A] and [16], sufficient is pleaded to establish an arguable case to be advanced that, at material times when the drilling contract and the co-operation agreement were executed by Nexus, Nexus acted as the agent of Osaka Gas and with actual authority to do so. This is not a case in which apparent or ostensible authority is relied on by the applicant.
38 Osaka Gas plainly contends insufficient has been pleaded to enable the Court to conclude, even arguably, that Nexus was its authorised agent with actual authority to execute the drilling contract and the co-operation agreement on its behalf. In my view, sufficient is pleaded in this regard. The pleading in [19A] of the statement of claim makes it plain, especially when one takes into account the other paragraphs of the pleading referred to, that the applicant says Nexus intended to execute the drilling contract and the co-operation agreement in its capacity as agent for Osaka Gas, as well as on its own behalf. The circumstances pleaded in [3A] to [3E] and [16] raise such an arguable case. Whether the plea is ultimately accepted is a matter for trial.
39 Other issues were raised in the written submissions and in the course of oral argument about the extent to which the provisions of the joint operating agreement bear upon the alleged agency. Some of those have been outlined above in relation to the first of the "insuperable" difficulties identified on behalf of Osaka Gas. In my view they are all matters for defence. For example, it is open to Osaka Gas to take issue with matters pleaded in the statement of claim, such as the allegations:
(1) In [3D], that the participants agreed not to engage in any activity in the permit area except as authorised by the joint operating agreement.
(2) In [3E], that Nexus was appointed "operator" with authority to enter into contracts on behalf of both participants.
(3) In [16(c)], that Osaka Gas' approval was a condition precedent for entry into the drilling contract.
(4) That Nexus entered into the drilling contract ([19A]) in relation to the operations in the permit area ([21]).
40 Similarly, I accept the submission made on behalf of the applicant that if Osaka Gas wishes to assert by way of defence that Nexus was not its agent or that Nexus acted beyond the scope of its authority, it may do so.