Williams Group Australia Pty Ltd v Crocker

Primary judgment

1. The primary judge found that Mr Crocker's signature was placed on the guarantee by access to the HelloFax system from the Murwillumbah office ([8]) at which time it was not contested that Mr Crocker was not in Murwillumbah. Her Honour was not persuaded that Mr Crocker gave his authority to any person, expressly or by implication, to place his signature on the guarantee using the HelloFax system ([16]) and accepted Mr Crocker's evidence that, on the occasions when his signature was applied to documents electronically with his knowledge, that was done by him personally in response to a request from the company's administration manager ([18]).
2. At [19], her Honour considered it significant that the signature placed on the guarantee appeared not to have been one of the two signatures uploaded by Mr Crocker on 26 June 2012 but a third one uploaded from Murwillumbah on the same day it was applied to the guarantee - something that suggested to her Honour an absence of discussion between Mr Crocker and whoever had applied his signature to the guarantee.
3. The primary judge held that the claim based on actual authority (if, as to which she considered there to be some ambiguity, it was in fact pressed by Williams) must fail for those reasons ([22]).
4. As to the claim based on ostensible authority, her Honour concluded that none of the elements of such a claim was established ([39]); there being no assumption by Williams that another person was authorised to place Mr Crocker's signature on the guarantee and no evidence that Williams had acted on the strength of any such assumption. Her Honour went on (at [39]) to say that: Mr Crocker's failure to change his HelloFax password did not amount to representational conduct such as to place Mr Brooks or any other person in a position to represent to the outside world that he or she had authority to place Mr Crocker's signature on the guarantee.
5. In so concluding, the primary judge accepted submissions put on behalf of Mr Crocker to the effect that failure to change his password was not a communication in any form to Williams and that Williams had simply assumed the genuineness of Mr Crocker's signature on the guarantee and did not rely on any representation of Mr Brooks' authority ([23]).
6. Her Honour distinguished Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35, on which Williams had placed reliance, on the basis that in the present case what was sought was to impose liability on an individual pursuant to a personal guarantee whereas the BNP Paribas case was concerned with the principles concerning the apparent or ostensible authority of an officer of a company dealing with a third party, where the representational conduct of the institution was the critical consideration ([28]). In particular, her Honour noted that the content of the holding out in the BNP Paribas case was a representation that the agent acted with the authority of the principal ([30]). Her Honour considered that in the present case what was represented (by an unknown person) to Williams was that Mr Crocker had in fact signed the guarantee, that being the only reasonable inference from the representation that his signature had been witnessed by the administration manager ([31]).
7. At [35], the primary judge accepted that in theory a case could fall within the principles applied in BNP Paribas where the representation of authority arose without there being any express communication by the principal (here, Mr Crocker) to the representee (here, Williams) but emphasised that there "must be some representational conduct on the part of the principal".
8. At [38], rejecting a submission for Williams made by way of analogy with the decision of Palmer J in Heperu Pty Ltd v Morgan Brooks Pty Ltd (No 2) [2007] NSWSC 1438, the primary judge said that Mr Crocker had not put in place any organisational structure to give the appearance that others had authority to bind him contractually and had done nothing to arm Mr Brooks or any other person with the external appearance of having authority to apply his signature to the guarantee.
9. As to Williams' alternative claim that Mr Crocker had ratified the guarantee, the primary judge accepted that, subject to one qualification, it would be enough for Williams to establish that Mr Crocker was on notice of the guarantee (not necessarily that he had read it) and knew that it comprised a credit application and a guarantee, by the directors, of IDH's obligation to pay for goods purchased on credit ([41]). The critical qualification to that proposition, in her Honour's view, was as to whether Mr Crocker knew that he personally had been committed to the guarantee.
10. While accepting that the application of the principle in Rowe v B&R Nominees Pty Ltd [1964] VR 477 at 482-483 (that a forgery which does not profess to be executed by a person as agent cannot be ratified by the alleged principal) appeared to be a sufficient basis for rejecting Williams' ratification argument ([45]), the primary judge preferred to determine the issue by reference to the question of Mr Crocker's knowledge ([45]).
11. Her Honour was not persuaded that Mr Crocker became aware of the guarantee ostensibly given by him at any point during the trade relationship between Williams and IDH ([47]). Her Honour did not consider that the evidence supported an inference that the administration manager had called and requested Mr Crocker to sign the document ([48]) and said that the evidence did not establish that, as at 2 July 2012, the HelloFax system sent emails to the signatory confirming the signature of a document; nor that Mr Crocker in fact received emails sent by the HelloFax system earlier than the date on which he synchronised his iPad to receive emails from his Google account (5 July 2012) (see [50]).
12. At [51], the primary judge said that she was prepared to proceed on the assumption that emails were sent to Mr Crocker's email address (confirming the signature of a document) but said that, even if they were, she accepted Mr Crocker's evidence that he did not in fact ever see any such email and said that, on the question of knowledge for the purpose of ratification, this was critical.
13. At [52], in a passage which Williams contends contains an error of law, her Honour said: It would not be enough for [J]H Williams merely to establish that an email was sent to Mr Crocker's email address (and did not go to the spam folder). In order for him to be taken to have ratified a guarantee committing him to substantial personal liability, it would be necessary to establish that he read the email, opened the attachment, absorbed its contents and made himself aware of the terms of the salient features of the contract to which he had been committed without his actual authority … her Honour also noting that if Mr Crocker received such emails they may well have described the document to be signed as a credit application without reference to any guarantee.
14. Her Honour said that there was no evidence to establish that Mr Crocker had, prior to the conclusion of the trade credit agreement, accessed a list of the documents he had signed (though Mr Crocker accepted that such a list was available to him at some point) and considered that the probability of his poring over the list of executed documents on HelloFax before the conclusion of the trade credit agreement was not so compelling as to prompt the rejection of his evidence that he did not become aware of the terms of the guarantee until the commencement of the proceedings ([54]).
15. The primary judge found Mr Crocker to be a frank and careful witness ([55]); rejected the submission that the placement of purchase orders with Williams by Mr Crocker on behalf of IDH (which Mr Crocker had denied) would constitute ratification of the guarantee if Mr Crocker was not aware of it ([58]), saying that knowledge of the trade credit agreement and obtaining of goods on credit in accordance with that agreement would say nothing to ratify a personal guarantee; and rejected the submission that an adverse inference should be drawn from the fact that Mr Crocker did not call Mr Brooks as a witness ([59]).
16. As to the issue of estoppel (pleaded at [18] of the further amended statement of claim by reference to the conduct pleaded at [16]-[17]), her Honour had considered that this alternative contention had not been addressed in final submissions and treated it as "evidently abandoned" ([12]).

Appeal

1. Williams does not challenge the primary judge's finding that Mr Crocker did not give actual authority to Mr Brooks or anyone else at IDH to place his signature on the credit application or guarantee using the HelloFax system on 2 July 2012. Rather, it challenges the conclusions reached by the primary judge on the questions of ostensible authority and ratification. It also seeks to maintain a claim based on estoppel. I will deal with the 22 grounds of appeal, as they were argued in the appeal, as falling within one or other of those three issues: ostensible authority, ratification and estoppel.
2. IDH in turn has filed a notice of contention seeking to affirm the primary judge's decision on two grounds: one relating to the proposition that a forgery cannot be ratified (invoking the principle discussed in Fry v Smellie [1912] 3 KB 282) and the other relating to the adoptive act necessary to amount to ratification. Those grounds are framed as follows: 1. That the respondent did not ratify the guarantee purported to have been given by him to the appellant because a forgery cannot be ratified by the alleged principal. 2. That the respondent did not ratify the guarantee purported to have been given by him to the appellant because he did not engage in any conduct that clearly and unequivocally adopted the guarantee.

Ostensible authority - appeal grounds 1-13

1. Grounds 1-13 of the further amended notice of appeal are grouped under the heading "Ostensible Authority (or estoppel based on ostensible authority)": 1. Her Honour erred in not holding, and should have held, that the Appellant was entitled to rely for the purpose of extending credit to IDH Modular Pty Ltd (the first defendant below) on the JH Williams credit application and guarantee document bearing the signatures of all three directors of IDH Modular Pty Ltd (as required by the Appellant) in their capacities as directors of, and as guarantors for, IDH Modular Pty Ltd. 2. Her Honour erred in not holding, and should have held, that the Respondent was estopped from denying that he was bound by the guarantee. 3. Her Honour erred insofar as her Honour held that the decision in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 ("Pacific") was to be distinguished on the basis that the Appellant seeks to impose liability on an individual rather than a corporation. 4. Her Honour erred insofar as her Honour held that the decision in Pacific was to be distinguished on the basis that in this case there was no "institutional context" or "organisational structure" equivalent to a bank (in that case) arming an individual (in that case) with the bank's stamp or chop. 5. Her Honour erred in not finding, and should have found, that when the Appellant received from IDH Modular Pty Ltd the completed and signed application for commercial credit and deed of guarantee and indemnity, that document: 5.1 bore the signatures of all three directors including the Respondent, in their capacities as directors and as guarantors; and 5.2. had the appearance of authenticity. 6. Her Honour erred in not finding, and should have found, that in 2010 the Appellant received and relied upon a credit application and guarantee signed by the same three directors in their capacities as directors of, and guarantors for, an associated company, Image Designer Homes Pty Ltd. 7. Her Honour erred in finding that the Respondent did not (whether alone or with his fellow directors of IDH Modular Pty Ltd) put in place any organisational structure to give the appearance that contracts which bore his electronic signature were authorised by him. 8. Her Honour should have found that the use of the HelloFax/HelloSign system by the directors of IDH Modular Pty Ltd, including the Respondent, in their capacities as directors of, and as personal guarantors for, that company, was an equivalent "institutional context" or "organisational structure" to that in Pacific to give the appearance that contracts which bore the electronic signature of the Respondent were authorised by him. 9. Her Honour erred in not holding, and her Honour should have held, that the Respondent's failure to take proper safeguards (here by not ensuring that the password enabling his use of the HelloFax/HelloSign system was protected and able to be used only by him or his authorised agents) was a representation that, where a genuine signature of his was affixed to a guarantee by using the HelloFax/HelloSign system, his signature had been placed there with his authority and could be conveyed to the beneficiary of the guarantee. 10. Her Honour should have found that the representation of authority from the Respondent (sufficient to establish ostensible authority) came from each of: 10.1 his permitting a fellow director or any other person with access to the Respondent's HelloFax/HelloSign password to access his signature on the HelloFax/HelloSign system, apply it to contracts, including the guarantee, and convey it to the beneficiary of the guarantee, without the Respondent taking proper safeguards against unauthorised use of his signature; and 10.2. the findings that her Honour should have made as set out in grounds 18 and 19 below 11. Her Honour erred in holding that the Respondent's failure to change his HelloFax/HelloSign password to a unique password for his use of the HelloFax/HelloSign system did not amount to representational conduct such as to place his fellow director, Mr Brooks, or any other person in a position to represent to the outside world that he or she had authority to place the Respondent's signature on the guarantee. 12. Her Honour should have found that the Respondent's failure to change his HelloFax/HelloSign password to a unique password for his use of the HelloFax/HelloSign system amounted to representational conduct such as to place a fellow director or any other person with access to the Respondent's HelloFax/HelloSign password in a position to represent to the outside world that he or she had authority to place the Respondent's signature on the guarantee. 13. Her Honour should have found that the receipt by the Appellant in 2010 of a credit application and guarantee signed by the Respondent in his capacity as a director of, and as a guarantor for, Image Designer Homes Pty Ltd was relevant to the reasonable reliance by the Appellant on the guarantee bearing the actual signature of the Respondent (though uploaded by someone else using the HelloFax/HelloSign system) contained in the 2012 credit application to the Appellant of the associated (to Image Designer Homes Pty Ltd) company, IDH Modular Pty Ltd, of which the Respondent was also a director.

Williams' submissions

1. In summary, Williams' argument is that whoever affixed Mr Crocker's signature on the guarantee and forwarded it to Williams was cloaked with ostensible authority to do so (T 6.36-50; T 7.11-15) by reference to the setting up of the HelloFax system by Mr Brooks and the failure of Mr Crocker to change his password and ID (coupled with Mr Crocker's use of the system on 26 June 2012 to upload his electronic signature) (T 4.26-34; T 4.49-5.5). In essence it argues that the establishment/utilisation of the HelloFax system is akin to the putting in place of an organisational structure within the company which, by analogy with the BNP Paribas case, amounts to a holding out to trade creditors that electronically signed documents have been authorised by the relevant signatories.
2. Williams submits that there were five errors in the primary judge's application of the key points to be drawn from the BNP Paribas case.
3. First, it is submitted that her Honour erred in suggesting that the references in BNP Paribas to "organisational structure" required that there be a company rather than an individual (or, in other words, applied only to the liability of a company not an individual). It submits that the HelloFax system used by the directors supplied a "sufficient institutional context or organisational structure" for Mr Crocker as an individual to be liable as a principal (T 4.49-5.5).
4. Further, it argues that the fact that in BNP Paribas (at [34]) the Court treated as an unconvincing distinction the fact that a facsimile (rather than the original) of the indemnity had been forwarded provides support for the proposition that electronic signatures are not materially different to original signatures. It points out that in the present case there was a genuine signature uploaded (albeit without actual authority).
5. Williams argues that Mr Crocker, as a director of IDH, was "part of the institutional context and organisational structure that he participated in through the HelloFax system so that his signature was to be applied to documents both of the company and to the directors' guarantees provided in support of the company in a regularised and systematic way" (at [57]).
6. Second, Williams submits that her Honour erred in failing to deal with the relevance of the fact that in 2010 Mr Crocker had both signed the earlier credit application and guarantee as a director of Image and had permitted an officer of Image to deliver that credit application and guarantee to Williams by facsimile transmission.
7. The significance Williams draws from this is that it maintains that, by early 2012, not only did Mr Crocker know that his email address and password could be used to affix his uploaded signatures to guarantees incurred for the benefit of IDH, but he also knew that he had earlier been required as a director to provide a guarantee in support of a credit application by Image to Williams.
8. Insofar as the primary judge (at [56]) appears to have rejected Williams' submission that Mr Crocker knew or ought to have known in July 2012 that Williams would not have granted trade credit without a guarantee from each of the three directors, Williams complains that the primary judge did not in her reasons acknowledge that Mr Crocker had admitted that in early July 2012 he knew that Williams had granted a credit application to Image and that, in respect of that credit application, he had given a guarantee in 2010 (T 85:10-17). (Pausing there, this does not in my opinion rise to the height of an admission that Mr Crocker was aware that it was a requirement of Williams that the guarantee be given by all directors in 2010; rather, the evidence to which Williams points seems simply to have been that he was aware that all of the directors had given a guarantee to Williams in support of the credit application in 2010 - also see transcript on the appeal T 8.12-20.)
9. Third, it is submitted that the primary judge failed explicitly to consider the reasonableness of the reliance by Williams on the electronic signature of Mr Crocker.
10. In that regard, Williams argues that it "plainly" relied upon the guarantee as being signed by all three directors (at [54]) and submits that it was "entirely reasonable" for it to regard the guarantee as containing the genuine signature of Mr Crocker. In support of this proposition, Senior Counsel for Williams referred in oral submissions to a decision of the Utah District Court in which an employee of the putative principal company, who had been provided with a user ID and password to the company's account with an application service provider, was held to have ostensible authority to accept certain electronically accessible terms of service and thereby bind the principal to an agreement, and that the other party to the agreement had acted reasonably in having relied on the agent's acceptance of the terms of service (Hugger-Mugger, LLC v NetSuite Inc 2:04-CV-592 TC, 2005 US Dist). Williams further notes that electronic signatures have been referred to as "a fact of modern commercial life" (Stuart v Hishon [2013] NSWSC 766 at [34] per Harrison J).
11. Williams submits that there was nothing to put it on notice or inquiry that Mr Crocker's signatures on the credit application and guarantee were applied using the HelloFax system by someone who lacked authority from him to do so. It submits that the reasonable assumption that Mr Crocker had signed the guarantee was "induced and assisted" by Mr Crocker placing Mr Brooks (or whoever did put the electronic signature on the guarantee) in a position which equipped him (or that person) to place Mr Crocker's signature on the guarantee. Pausing there, there is no suggestion by Williams that Mr Crocker gave his password to anyone or gave anyone permission to use it. Rather, the submission that Mr Crocker so "equipped" Mr Brooks (or whoever did place his signature on the document) rests entirely on Mr Crocker's failure to change the password that Mr Brooks had given him.
12. Williams further argues that the reasonableness of its assumption that Mr Crocker had signed the guarantee was accentuated by the conduct of Mr Crocker in 2010 in relation to the earlier credit application, namely that he had "entrusted" staff employed by Image to transmit to Williams the earlier application which he had physically signed. From this, it is said that Mr Crocker was aware that trade creditors (such as Williams) would rely on documents provided by staff of companies of which he was a director that contained directors' guarantees. Williams also argues that Mr Crocker was aware "from his successful placement [on 26 June 2012] of his electronic signature on a director's guarantee", i.e., the Hayes Steel guarantee, that prospective trade creditors of IDH might well require director's guarantees from him and that his signature could from then on be placed electronically through the HelloFax system on any directors' guarantee by use of the user ID and password provided to him by Mr Brooks (since he had taken no steps to change his password to a new unique password known only by him or his authorised agents).
13. Fourth, it is submitted that her Honour erred in failing sufficiently to consider the relevance of the failure of Mr Crocker to take proper safeguards against misrepresentation; i.e., his failure to change the password. This is described by Williams in its written submissions as a critical issue on the question of ostensible authority.
14. Fifth, it is said that her Honour replicated the error that the High Court identified as having been made in BNP Paribas, namely the suggestion that there could be no direct relevant representation from the putative principal because there was no direct communication from Mr Crocker to Williams. Williams argues that the principles articulated in BNP Paribas are properly to be understood as more generally applicable to the situation where the representation relied on did not come from a principal (whether an individual or a corporation) directly communicating to the other party, as this would be evidence of actual, rather than ostensible, authority (referring to what was said by Griffiths CJ in International Paper Co v Spicer (1906) 4 CLR 739; [1906] HCA 75 at 747 to that effect).
15. Williams submits that Mr Crocker's failure to take proper safeguards amounts to a representation for the purposes of application of the principles relating to ostensible authority (referring to G E Dal Pont, Law of Agency (3rd ed, 2014, LexisNexis) at [20.22]). It argues that this is a case where Mr Crocker (the principal) held out the "agent" who affixed his signature using the HelloFax system "by equipping or arming the agent with a document or thing which enabled the agent to assert authority with the hallmark of authenticity" and particularly by "equipping or arming the agent, or by a failure to take proper safeguards against misrepresentation by the agent" (referring to Flexirent Capital Pty Ltd v EBS Consulting Pty Ltd (2007) 14 ANZ Ins Cas 61-732; [2007] VSC 158).
16. Williams argues that the required representation of authority from Mr Crocker came from him "permitting a person to act in a certain manner [including affixing his electronic signature, as well as permitting that person to deliver the document containing the necessary three signatures] without taking proper safeguards against misrepresentation" (to adopt the language used in BNP Paribas at the end of [38]). Williams submits that what occurred in the present case (i.e., the failure to change his password) was equivalent to Mr Crocker supplying whoever affixed his electronic signature with a "blank order form" (as also referred to in BNP Paribas at [38]).
17. Williams invokes the reasoning of the High Court in BNP Paribas at [44], namely that: The assumption made by Pacific, found by the trial judge to have been reasonable, upon which Pacific acted to its detriment, was induced and assisted by the conduct of BNP in placing Ms Dhiri in a position which equipped her to deal with the letters of indemnity as requested by Pacific. It would be unjust to permit BNP to depart from the assumption.
18. It argues that in the present case it would be unjust to permit Mr Crocker to depart from the assumption, reasonably made by Williams and induced and assisted by Mr Crocker's conduct, that he had signed the guarantee.
19. Williams thus argues that, Mr Crocker having manifestly failed to take "proper safeguards", by failing to ensure that he alone had access to a unique password with which to apply his signature to documents though the HelloFax system, Mr Crocker should be found to have provided ostensible authority to the person who placed his genuine signature on the guarantee (and forwarded it to Williams) so as to bind Mr Crocker to the guarantee in favour of Williams.

Mr Crocker's submissions

1. Mr Crocker notes that the pleaded ostensible authority case was founded on the same factual basis as the actual authority claim (as noted by the primary judge at [23]). He notes that, unlike the concept of actual authority, ostensible authority involves a legal relationship between principal and contractor, to which the agent is not a party (referring to Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 at 502; and see Bruce Harvey v State of New South Wales [2006] NSWSC 1436 at [59] per Johnson J).
2. As to grounds 1 and 5, Mr Crocker argues that the reasonableness of reliance by Williams (on its assumption that the signature was genuine) is irrelevant to the question of ostensible authority. He submits that a contracting party's entitlement to rely on the ostensible authority of an agent depends upon the party proving that the principal made a representation that the agent had its authority to do the relevant act; and that an agent cannot represent his own authority so as to bind the principal (much less do so by the very act for which the agent has no authority, namely the placement of an electronic signature on the guarantee).
3. As to grounds 3, 4, 7 and 8, which relate to the use of the HelloFax system coupled with Mr Crocker's failure to change his password, Mr Crocker points out that neither of those matters was something communicated by him to Williams (as noted by the primary judge at [31]). Mr Crocker further argues that Williams did not rely on those matters as the basis for assuming that his signature on the guarantee was authorised; rather, he maintains that Williams simply assumed the signature was genuine from its appearance of authenticity (referring to the primary judge's finding at [23]).
4. Mr Crocker submits that the primary judge correctly distinguished BNP Paribas as a case involving a representation about the authority of an employee arising from the institutional trappings conferred on that employee by her company employer and made known to the contracting party; whereas the present case was one where Mr Crocker (the putative principal) made no representation to Williams (whether by conferring organisational trappings on the unknown person who placed his electronic signature on the document and making them known to Williams or otherwise).
5. As to the significance of the 2010 guarantee (raised by grounds 5 and 13), Mr Crocker argues that the 2010 guarantee formed no part of Williams' pleaded ostensible authority case at trial (it being pleaded instead as part of the ratification claim) (referring to [17(a)] and [17(o)] of the further amended statement of claim). Mr Crocker further submits that the fact that he signed a guarantee of a different party's obligations and provided it to Williams in March 2010 has no relevance to whether he represented to Williams that the unknown person who applied his signature to the Williams guarantee on 2 July 2012 had his authority to do so. Similarly, it is submitted that Mr Crocker's awareness (or otherwise) that trade creditors might rely on documents containing guarantees provided by staff of companies of which he is a director has no relevance to whether he made a representation to Williams that an unknown person was authorised to apply his signature to the guarantee.
6. As to the failure to change his HelloFax password (raised by grounds 9-12), Mr Crocker argues that it cannot be said that he provided "permission" to Mr Brooks, or some other unknown person, to use HelloFax to apply his signature to documents without his express approval. Secondly, he submits that Williams' submission on this issue does not address the central question of whether he (the principal) made a representation to the other party (Williams) concerning the authority of the alleged agent. Mr Crocker argues that the mere failure to take safeguards against misconduct by a putative agent does not confer ostensible authority on that person.
7. Mr Crocker points to the emphasis placed by the High Court in BNP Paribas at [36] on the essence of ostensible authority being a representation from the principal and submits that nothing in what was said in that case at [38] (as to the kind of representation made by way of arming someone with a "blank order form") detracts from the central requirement that there be a representation. He argues that the misrepresentation to which the High Court there referred was the principal holding out that the putative agent had an authority which he or she in fact lacked; it was not a representation arising from the unauthorised act itself (here, the placing of the signature on the guarantee). He points out that, in BNP Paribas, the holding out was the bank's description of the relevant employee as the Manager of its Documentary Credit Department and the bank's conduct in permitting her to apply the bank's "chop" to letters of indemnity and to send them to customers, even though she lacked actual authority to issue letters of credit; and that in Heperu, the holding out by the principal was its description on its website of the employee as manager; its authorising him to trade using its name, logos and livery; and its requirement that he use letterheads and business cards prominently showing its name.
8. Mr Crocker contends that he made no representation of that kind to Williams and argues that the fact that, by changing his password prior to 2 July 2012, he might have prevented Mr Brooks or whoever it was that applied his signature to the guarantee from misusing his password, does not amount to any representation of authority by him.

Determination

1. In BNP Paribas, Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said at [36] and [38] (footnotes omitted): … It is not enough that the representation should come from the officer alone. Whether the representation is general, or related specifically to the particular transaction, it must come from the principal, the company. That does not mean that the conduct of the officer is irrelevant to the representation, but the company's conduct must be the source of the representation. In many cases the representational conduct commonly takes the form of the setting up of an organisational structure consistent with the company's constitution. That structure presents to outsiders a complex of appearances as to authority. The assurance with which outsiders deal with a company is more often than not based, not upon inquiry, or positive statement, but upon an assumption that company officers have the authority that people in their respective positions would ordinarily be expected to have. In the ordinary case, however, it is necessary, in order to decide whether there has been a holding out by a principal, to consider the principal's conduct as a whole. … A kind of representation that often arises in business dealings is one which flows from equipping an officer of a company with a certain title, status and facilities. In Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd, for example, the court spoke of the representation that might flow from supplying a particular person with 'a blank order form, thus arming him with a document which, when he signed it, would bear the hallmark of authenticity' ((1975) 133 CLR 72 at 80; 7 ALR 527 at 533). The reference to corporate administrative procedures under which an officer is armed with a document to which he or she can, by signature, impart an appearance of authenticity is a reminder of the wider principle of estoppel which may be relevant to a question of ostensible authority (Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 at 200; 93 ALR 385 at 422; 2 ACSR 161 at 198 per Dawson J, CLR 212; ALR 430-1; ACSR 206-7 per Gaudron J). The holding out might result from permitting a person to act in a certain manner without taking proper safeguards against misrepresentation.
2. That passage makes it clear that, for there to be a finding of ostensible authority in the present case, it would be necessary for the putative principal (Mr Crocker) in some fashion to have held out to Williams that whoever placed his electronic signature on the relevant documents (and forwarded them to Williams) was authorised by him to do so. The representation need not have been communicated by Mr Crocker to Williams directly (and there is force in the submission that a direct communication would have established actual authority). It could, in an appropriate case, arise out of some omission on his part. However, there needs to have been a representation of authority by Mr Crocker (not the agent who applied the electronic signature), on which Williams relied when supplying goods to IDH on credit, for Mr Crocker to be bound by the guarantee.
3. Once the need for such a representation (in order to found a claim based on ostensible authority) is appreciated, the difficulties in Williams' argument become apparent.
4. First, Mr Crocker did not himself put in place within IDH (or Image for that matter) the HelloFax system; he simply participated in its use. Therefore the reliance by Williams on the "institutional system", represented by the adoption of the HelloFax system, and the analogy sought to be drawn with the organisational structure considered in BNP Paribas, is problematic. The distinction drawn by the primary judge in that regard was not, as I see it, between whether the putative principal was a corporate entity or an individual; rather, it lay in the difficulty of attributing to Mr Crocker (as an individual who did no more than use the system on occasions, albeit having omitted to change his password) a relevant representation to Williams that use of the HelloFax system amounted to his authorisation of some other person to affix his electronic signature to documents forwarded by the company so as to bind him personally to the obligations imposed by those documents. Grounds 3, 4, 7, and 8 are not made good.
5. Second, it is not suggested that Williams had any knowledge that the documents received by it had been signed by use of the HelloFax system in any event (this much was accepted in submissions at T 15.50); so how it is that Williams could have placed reliance on the adoption of that institutional system as amounting to a representation that the placement of Mr Crocker's signature on the document had been authorised by him is difficult to see. Williams, it appears, simply assumed that the signature on the document was a genuine one (without turning its mind to how it had been placed on the document). The reasonableness of Williams' reliance on the signatures on the credit application is not to the point in the absence of relevant representational conduct by Mr Crocker. That said, it is to be noted that what Williams appears to have relied upon was not a representation that someone else was authorised to append Mr Crocker's electronic signature to the guarantee; rather, it appears to have relied on an assumption that the signature was genuine (in the sense of it having been applied to the document by Mr Crocker himself). Grounds 1 and 5 are not made good or not to the point.
6. Third, the "organisational structure" in the present case was, relevantly, no more than that Mr Crocker was a director of the company. He did not "arm" anyone at IDH with a document which, when signed, would bear the hallmark of authenticity (as the bank did of its office manager in the BNP Paribas case). Nor did he, in any positive sense, "arm" anyone at IDH with the means of affixing his signature to documents. True it is that his failure to change the password meant that in a practical sense others were enabled to access the system. However, that failure did not amount to a "holding out" of authority to Williams because it did not convey any relevant representation to Williams. This is not, in my opinion, akin to providing someone in the organisation with a blank order form, or blank cheque, which when signed would appear to be an authentic document. Grounds 9-12 are not made good.
7. Matters of the kind referred to in BNP Paribas at [42], namely the form and contents of the application, the signature of a person who appeared to be an officer of the company, and the fact that the application was sent to Williams by IDH, may well have amounted to a representation by IDH, or an officer or employee at IDH, that Mr Crocker was authorised to bind the company to the credit application. They do not amount to a representation by Mr Crocker to Williams (directly or otherwise) of anything, let alone that someone else was authorised to append his signature to a personal guarantee. Similarly, the reliance placed by Williams on the making of the earlier 2010 credit application, in respect of which Mr Crocker provided a guarantee, goes nowhere to establishing a representation by Mr Crocker that someone else was authorised to append his electronic signature to the guarantee accompanying the 2012 credit application. Grounds 6 and 13 are not made good.
8. Insofar as the ostensible authority case is based on an estoppel arising from Mr Crocker's use of the HelloFax system (for other applications) and failure to change his password, which as I apprehend it is the issue raised by ground 2 of the grounds of appeal, this fails on the findings as to the lack of a relevant representation by Mr Crocker.
9. The challenges to the primary judge's findings on the issue of ostensible authority are not made good.

Ratification - appeal grounds 14-21

1. Under the heading "Ratification or estoppel", grounds 14-21 of the further amended grounds of appeal are as follows: 14. Her Honour erred in holding that it would be necessary for the principle of ratification to apply, or for the Respondent to be estopped from denying that he was bound by the guarantee, to establish that Respondent read the email informing him that he had signed the JH Williams credit application and guarantee, opened the attachment, absorbed its contents and made himself aware of the terms of the salient features of the contract to which he had been committed without his actual authority. 15. Her Honour should have held that the Respondent shut his eyes to the obvious, namely, that his signature had been applied to a second JH Williams credit application and guarantee, this time on behalf of IDH Modular Pty Limited. 16. Her Honour did not hold, and should have held, that the Respondent adopted the JH Williams credit application and guarantee. 17. Alternatively, her Honour should have held that the Respondent was estopped from denying that he was bound by the guarantee. 18. Her Honour erred in finding that the evidence did not establish that: 18.1 the Respondent in fact received emails sent earlier than 2 July 2012, whereas the Respondent admitted that on his iPad on 5 July 2012 he received every email that had been sent to him at [XXX]@idh.net.au on or before that day, although he could not recall whether he saw emails sitting there as having been received; and 18.2 the Respondent accessed the list of documents which the system showed as having been signed by him prior to the conclusion of the trade credit agreement with JH Williams in May 2013. 19. Her Honour did not find and should have found that: 19.1 the HelloFax/HelloSign system routinely emailed the Respondent to [XXX]@idh.net.au (and his fellow directors and guarantors) requesting him to sign a document; 19.2 the HelloFax/HelloSign system routinely sent the Respondent by email to [XXX]@idh.net.au a reminder three days and seven days after the first request for signature was sent if he had not applied his electronic signature to the document; 19.3 the HelloFax/HelloSign system routinely sent the Respondent an email to [XXX]@idh.net.au confirming that he had signed, once the Respondent's electronic signature had been applied to a document for which his signature had been requested by the system; 19.4 in respect of the JH Williams credit application and guarantee document, the HelloFax/HelloSign system on 28 June 2012 sent to [XXX]@idh.net.au an email to the Respondent requesting him to sign, and on 1 July 2012 sent to [XXX]@idh.net.au an email to the Respondent reminding him to sign, and on 2 July 2012 sent to [XXX]@idh.net.au an email to the Respondent confirming that he had signed that document; 19.5 not later than 5 July 2012, the Respondent received the emails identified in paragraph 19.4 on his iPad; 19.6 when the Respondent logged on to the HelloFax/HelloSign system website on 4 July 2012 (and then on 21 subsequent occasions prior to 9 May 2013 when he logged on to that website): (a) he could do so either to upload, or to sign, or to view documents; (b) on 10 of those 22 occasions, he did not upload or sign documents; and (c) he became aware that the system showed him as having signed 7 documents (including the JH Williams credit application and guarantee document) by 4 July 2012 whereas on the Respondent's evidence he had only signed two of them; and 19.7 the Respondent knew that he had in 2010 signed a JH Williams credit application and guarantee signed by the same three directors in their capacities as directors of, and guarantors for, an associated company, Image Designer Homes Pty Ltd which had been provided by Image Designer Homes Pty Ltd to the Appellant and that the Appellant had relied upon such document as having been signed by the Respondent. 20. Her Honour did not find, and should have found that the Respondent represented to 5 creditors of IDH Modular Pty Limited that the Respondent, together with his fellow directors, had provided personal guarantees to other suppliers to IDH Modular Pty Limited and either nominated the Appellant as a trade reference or major supplier and in doing so the Respondent knew or must have known that the Appellant would only be a supplier to IDH Modular Pty Limited if it had received a guarantee by all three directors, including the Respondent, of IDH Modular Pty Limited. 21. Her Honour should have found that it was common ground that the Respondent's signature on the guarantee was not a forgery.

Williams' submissions

1. Williams argues that the key error made by the primary judge on this issue was in concluding (at [52]) that it would not be sufficient for Williams to establish that an email was sent to Mr Crocker asking him to sign the Williams document (and then telling him that it had been signed), which Williams submits the evidence established, but, rather, that it would be necessary for Williams further to establish that Mr Crocker "read the email, opened the attachment, absorbed its contents and made himself aware of the terms of the salient features of the contract to which he had been committed without his actual authority".
2. In that regard, Williams argues that the test was correctly stated by her Honour at [41], namely that what was required was "full knowledge of all the material circumstances", and then goes on to argue that the requirement for knowledge was satisfied by reference to the principle that a "principal cannot deny knowledge to which he or she would have been privy had the principal not closed his or her eyes to the obvious" (referring to Dal Pont's Law of Agency at [5.19] and the authorities there cited).
3. Williams submits that the primary judge should have held that Mr Crocker had ratified the guarantee on the basis that there should have been a finding (by reference to the communications that the HelloFax system generated to Mr Crocker during 2012 by email and by what was disclosed whenever Mr Crocker "logged in" to the HelloFax system) that Mr Crocker had "closed his eyes" to the obvious information that he was shown as having signed a completed application with Williams in July 2012.
4. Williams argues that support for a finding of ratification can be found in the facts that: Mr Crocker acknowledged that Williams was a major supplier to IDH; Williams accepted purchase orders bearing the signature of Mr Crocker; and Williams continued to extend credit to IDH from 6 July 2012 until 31 May 2013 (see Joint Statement of Agreed Facts at [8]).
5. It submits that the evidence summarised by the schedules referred to at [13] above demonstrates that by at least the end of 2012 (if not by 4 July 2012 when Mr Crocker signed a BlueScope Lysaght credit application on his iPad or 6 July 2012 when he signed a Harvey Norman credit application using his Salisbury office computer), Mr Crocker must have been on sufficient notice from the workings of the HelloFax system (which at that time showed someone who logged into the system what documents had been signed and which would send an email itemising the documents that had been signed) to be held to have ratified the guarantee.
6. Williams submits that on any login by Mr Crocker to the HelloFax system shortly after 2 July 2012 (by which time Mr Crocker says he had only signed two documents - those signed on 26 June 2012), such as on 6 July 2012 when he signed the Harvey Norman credit application from the Salisbury office, what would have been revealed was that Mr Crocker had "completed" the signature on 2 July 2012 of a further five documents that, on his evidence, he must have known he had not signed.
7. Williams complains that the primary judge did not in her reasons deal with the submissions it made at the hearing based on the observation by Rein J in Vitek v Estate Homes Pty Ltd [2013] NSWSC 1764 at [42] to the effect that, when the contract which has purportedly been entered into by a person is a guarantee, there is not much scope for "adoptive acts" by way of ratification of the guarantee.
8. Williams submits the relevant "material terms" in the present case were that Mr Crocker's signature had been appended to the IDH credit application to Williams, which it submits Mr Crocker must have known (from his signing the 2010 Image credit application and guarantee) would again include guarantees from all the IDH directors.
9. As to grounds 18 and 19, Williams refers to two 30 July 2012 HelloFax generated emails. It argues that (referring to ground 19.6) if, as at 4 July 2012, Mr Crocker had not received an email requesting him to sign the BlueScope Lysaght application (which he did sign), then he could not have clicked on the email to sign it. It submits that what follows from this is that Mr Crocker must have logged on to the documents page on the HelloFax system, in order to be able to sign the BlueScope Lysaght document electronically.
10. Williams points to the evidence before the primary judge that the following had been uploaded prior to 4 July 2012 (and were shown by the HelloFax system as signed by Mr Crocker on 2 July 2012) and argues that necessarily these must have been listed on the webpage in addition to the BlueScope Lysaght application: DuluxGroup (Australia) Pty Ltd, first uploaded on 26 June 2012; Tweed Coast Glass Pty Ltd, first uploaded on 28 June 2012; Williams, first uploaded on 28 June 2012; BlueScope Lysaght, first uploaded on 28 June 2012; and Barmour Park Pty Ltd trading as Solomon's Flooring Tweed Heads South, first uploaded on 29 June 2012.
11. Williams argues that the inference which follows is that when Mr Crocker logged into the system on 4 July 2012 to sign the BlueScope Lysaght documents he must have viewed the above list of documents in order for him to find the BlueScope Lysaght documents to sign.
12. Williams points out that Mr Crocker accepted that well before 22 February 2014 he knew that he could see a list of documents bearing his signature on the HelloFax server and download any of them (T 143:31-36).
13. Thus it is submitted that this Court can reliably infer that Mr Crocker viewed the list and saw the reference to the Williams credit application (which Williams says must have contained the guarantee) as among those documents to which Mr Crocker's signature had been applied in July 2012; and that he did so on a number of occasions by August 2012. It is submitted that if he did not open and read the guarantee, he nevertheless sufficiently closed his eyes to its existence to be held to have ratified it.
14. Ground 20 relates to the finding that it is said the primary judge should have made arising from various representations made to trade creditors of IDH to the effect that Mr Crocker knew "or must have known" that Williams would only be a supplier to IDH if it had received a guarantee from all three directors of IDH. The representations in question arise from the content of credit applications to which Mr Crocker accepted he had affixed his electronic signature (including the BlueScope Lysaght application, which referred to the directors having given personal guarantees; the Gillie Electrical Pty Ltd application on 24 August 2012, which referred to Williams as a major supplier which currently provided IDH with a credit account; the Plasta Masta application on 28 August 2012, which referred to Williams as one of IDH's two largest industry related suppliers; and the Coates Hire application.

Mr Crocker's submissions

1. Mr Crocker submits that the correct test for ratification is, as her Honour found (at [41]), that the principal must have full knowledge of all the material circumstances (referring to Taylor v Smith (1926) 38 CLR 48; [1926] HCA 16, approved in Petersen v Moloney (1951) 84 CLR 91; [1951] HCA 57 at 101). He submits that the knowledge required to satisfy the test for ratification is actual knowledge, though accepting that actual knowledge may be demonstrated by closing one's eyes to the obvious (referring to Morison v London County and Westminster Bank Ltd [1914] 3 KB 356 at 385; Dal Pont's Law of Agency at [5.19]).
2. Mr Crocker contends that the case run by Williams at trial was not that he had shut his eyes to the obvious, but rather that he actually knew that someone else had signed the guarantee for him. He points to the fact that there was no direct evidence as to how the HelloFax system operated other than that provided by himself. Further, he submits that the primary judge's factual finding concerning Mr Crocker's knowledge was founded heavily on her Honour's positive assessment of his credit.
3. As to the case run at trial, Mr Crocker again notes that the allegation of actual authority (which was pleaded) was not abandoned until late in the trial (as noted in her Honour's reasons at [60]; see the concession, after the evidence had closed, that "given the evidence, it cannot be pressed".
4. It is submitted that such a case is in contradistinction to the case Williams now seeks to maintain on appeal, namely that Mr Crocker shut his eyes to the possibility that someone else had placed his signature on the guarantee, and that this Court should not permit Williams to make out that different case on appeal (referring to Chilcotin Pty Ltd v Cenelage Pty Ltd [1999] NSWCA 11) (see also Water Board v Moustakas [1988] HCA 12; 180 CLR 491).
5. As to the submissions now made about the operation of the HelloFax system, Mr Crocker notes that the only evidence adduced by Williams in that regard was the tender of documents obtained from his HelloFax account, emails received by him, and a "Legality Statement" and "Frequently Asked Questions" document, the latter two documents having been printed from the HelloFax website by Williams' solicitor on 18 November 2014. Mr Crocker submits that the primary judge correctly treated the evidence from Williams' solicitor as to how the HelloFax system worked (see the affidavit of Mr Kipps dated 28 November 2014 at [16], [20]-[29]) as submissions only.
6. Mr Crocker gave evidence as to how the HelloFax system worked (in his 2December 2014 affidavit at [10], [14], [17]-[35]) and was cross-examined on that evidence. It is submitted that it was thus open to the primary judge to accept Mr Crocker's evidence about the communications he received from HelloFax and the documents he saw on the HelloFax site when he logged in.
7. Mr Crocker notes that Williams bore the evidential burden of establishing that his evidence that he did not know that he personally had been committed to the guarantee (the critical issue identified by the primary judge at [41]) was false; and that Williams sought to do so by asking the trial judge to draw inferences from a number of events in respect of which Mr Crocker was cross-examined at length. He points out that in relation to each such event the primary judge either found that it did not occur or found that it did not result in him having the relevant knowledge.
8. Those events were as follows. First, that the administration manager had asked Mr Crocker to sign the guarantee, an event that the primary judge found (at [48]) had not occurred (which finding is not challenged).
9. Second, that Mr Crocker had seen one or more emails sent on or prior to 2 July 2012 that confirmed that he had been asked to sign and had signed the guarantee, which the primary judge held was not established on the evidence ([49]). Mr Crocker points out that her Honour found that the evidence did not establish that such emails had been sent but said that, even if they had been sent, she accepted his evidence that he had not seen them ([49]-[52]).
10. Third, that Mr Crocker had read the guarantee when he logged into the HelloFax system and accessed a list of signed documents. In that regard, her Honour found that there was no evidence, and considered it improbable, that Mr Crocker had accessed the list of documents prior to the conclusion of the trade agreement in May 2013 ([53]-[55]).
11. Fourth, that Mr Crocker had signed credit applications to other trade creditors, naming Williams as a trade reference, from which Williams argued it could be inferred that Mr Crocker knew that he had guaranteed IDH's debt to Williams because trade creditors generally required guarantees from directors and Williams had obtained guarantees from all the directors of Image in 2010. Mr Crocker notes that the primary judge found that many suppliers had provided credit to IDH without a guarantee from Mr Crocker ([57]), so that the premise upon which this submission was based was incorrect.
12. The fifth event on which Williams' submission was based was that Mr Crocker had placed purchase orders on behalf of IDH with Williams. Mr Crocker submits that the primary judge appears to have accepted that he did not do so ([58]) but argues that in any event it can have no bearing on his knowledge about the guarantee.
13. Mr Crocker argues that Williams' challenge, on this appeal, to the finding of lack of knowledge, insofar as it is based on a challenge to the findings as to the emails, access to listed documents on login in to the HelloFax system, and representations to other trade creditors, should be rejected.
14. As to the findings that Williams contends should have been made as to the receipt of two emails from HelloFax asking Mr Crocker to sign the guarantee (grounds 19.4 and 19.5), Mr Crocker submits that this is based on the surmise that the HelloFax system sent an original email and two follow up emails to each person who had been asked to sign an uploaded document (grounds 19.1-19.2).
15. Mr Crocker maintains that there was no evidence that HelloFax sent such emails concerning the guarantee to his email address prior to 2 July 2012; the emails not being in evidence and the "Frequently Asked Questions" document, printed in November 2014, which suggested that such emails would or may have been sent, not providing satisfactory evidence as to how the HelloFax system operated in July 2012.
16. As to the findings for which Williams contends as to receipt of an email from HelloFax confirming that Mr Crocker had signed the guarantee (grounds 19.3-19.5), Mr Crocker notes that the email was not in evidence and again submits that there is nothing in the "Frequently Asked Questions" document which suggests that as at 2 July 2012 the HelloFax system sent emails to the signatory confirming that the signatory had signed a document. Mr Crocker notes that emails confirming that an IDH Custodia Share Transfer had been signed by other directors at the request of Mr Crocker were sent to him on 19 and 20 July 2012. He submits that those were apparently sent to him as the person who uploaded the document but that they do not show that emails were sent to the person whose signature was placed on the documents.
17. Mr Crocker emphasises that there was no evidence that any emails concerning the guarantee were received at his email address or read by him. He points out that any such emails must have been sent on or prior to 2 July 2012, because by that time his signature had been applied to the guarantee, but that his laptop was first synchronised to the Google email address on 5 July 2012. He did not know whether, and there was no evidence that, any emails sent prior to the synchronisation of the laptop to the Google account were automatically downloaded when the synchronisation first occurred and pointed out that the emails may have ended up in a spam folder (referring to the "Frequently Asked Questions document"). His evidence was that he did not check his spam folder.
18. As to the significance attached by Williams to the fact that Mr Crocker logged into the HelloFax/HelloSign system on 22 occasions between 4 July 2012 and 9 May 2013 (grounds 18.2 and 19.6), Mr Crocker argues that Williams has failed to identify any evidence to support the submission that he "became aware that the system showed that he had signed the guarantee". He admitted that a list of previously executed documents was available in HelloSign, but points out that this was a separate system to HelloFax. His evidence in cross-examination was that he did not know when the list first became available or when he first looked at it.
19. Mr Crocker submits that it was open to the primary judge from that evidence to form the view that there was no evidence that Mr Crocker had accessed the list of documents prior to May 2013 ([54]), let alone discovered the application of his signature to the guarantee prior to the time at which he deposed to having done so.
20. As to the significance placed on the trade references (see grounds 19.7 and 20), Mr Crocker submits that the primary judge was justified in rejecting (at [56]-[57]) the submission that, from those, it should be inferred that Mr Crocker knew or must have known that a guarantee of IDH's obligations had been signed by all three directors, including him. Mr Crocker submits that none of those matters supports a finding of knowledge or of shutting one's eyes to the obvious.
21. The representations relied upon to BlueScope Lysaght and other trade creditors are said to say nothing about whether Mr Crocker had provided a guarantee to Williams. Mr Crocker notes that his evidence was that he had paid little attention to the details which had been inserted on the credit applications by others and that, to the extent that he did consider the matter, he took the view that they identified businesses with which IDH either had or proposed to trade and did not relate them to credit arrangements. It is submitted that, whether his understanding was correct, Mr Crocker was correct in confirming those businesses as firms with which IDH traded.
22. As to the reliance placed by Williams on common knowledge that trade suppliers required guarantees from all directors, Mr Crocker points to the primary judge's observation that the evidence was that there was no general practice of creditors requiring guarantees from directors ([57]) and his evidence that he did not know whether other IDH directors had given guarantees to suppliers.
23. As to whether Williams had required a guarantee from all directors for the Image account in 2010, Mr Crocker points out that he was not asked in cross-examination whether he was conscious, in 2012 and 2013, of the fact that he had guaranteed Williams' earlier credit arrangement with Image in March 2010 and submits that there is no reason to think he would have been.
24. As to whether ratification should be implied from adoptive acts by Mr Crocker, he accepts that ratification may be implied if the conduct of the principal shows he adopts the contract but submits that ratification can only be implied from clear adoptive and unequivocal acts (referring to Turner v Webb (1941) 42 SR (NSW) 68 at 73; Petersen at 101; Leybourne v Permanent Custodians Ltd [2010] NSWCA 78 at [131]-[134]).
25. Mr Crocker submits that, to the extent that the primary judge addressed the question of implied ratification (at [58]), this was in the context of the rejection of the proposition that obtaining goods on credit for IDH in accordance with the trade credit agreement would say anything to ratify a personal guarantee.
26. Insofar as Williams criticises her Honour's failure to consider Rein J's observation in Vitek at [42] that there is not much scope for adoptive acts in the case of a guarantee (in its written submissions at [74]-[77]), Mr Crocker argues that such criticism is misplaced, noting that Rein J went on to observe (at [42]) that ratification is a question of fact in each case.
27. It is submitted that Williams did not prove any adoptive conduct at trial and has not identified any on appeal. In this regard, to the extent necessary, Mr Crocker relies on ground 2 of his notice of contention as a further basis upon which to affirm the decision below.
28. Mr Crocker notes that Williams had pleaded two acts of ratification: first, that he had signed credit applications to seven suppliers in which the respondent was named as a trade reference ([17(b)-(h)]) and, second, that he had placed purchase orders, on behalf of IDH, with Williams in November 2012 ([17(j)]).
29. As to the first, Mr Crocker argues that signing a credit application is neither an adoptive nor an unequivocal act. He submits that in each case Williams was identified on the credit application as an organisation which either provided IDH with a credit account or with which IDH traded; and that provision of that information to other suppliers says nothing about whether any credit obligations owed to Williams had been guaranteed; nor as to the adoption by Mr Crocker of any such guarantee.
30. As to the second, Mr Crocker points out that he denied placing any orders with Williams ([17(j)]); that the primary judge made no express finding on that question of fact; and that Williams has not challenged her Honour's failure to make a finding in this regard.
31. Mr Crocker points out that the proposition that he had placed orders was based on his signature appearing on two order requests and a notation on an invoice issued by Williams that certain goods had been "picked up by Lee". Mr Crocker's evidence in cross-examination was that the order requests were documents he had given to IDH's purchasing officer; that he did not nominate the supplier on the order requests; that this was done by the purchasing officer; and that he could not recall ever picking up goods from Williams. He submits that neither is an unequivocal act adopting the guarantee.

Determination

1. The first point to note is that, contrary to Williams' submissions, the primary judge did not err in the application of the test of knowledge when considering the case based on ratification.
2. As both parties accept, her Honour correctly articulated the test (at [41]) as being whether there was "full knowledge of all the material circumstances". Her Honour cited Petersen at 101 for that proposition. Reference could also be made in that regard to Savery v King (1856) 5 HL Cas 627; Taylor v Smith at 59 per Higgins J; and Turner v Webb at 73 per Nicholas CJ in Eq.
3. Professor Dal Pont argues that mere constructive knowledge in the principal is arguably insufficient as this would absolve the agent from the unauthorised act merely upon proof that the principal ought to have had knowledge but did not have it (and did not close his or her eyes to it) (Law of Agency at [5.19]).
4. In Taylor v Smith, Knox CJ accepted (at 54) that, in the case of an agent exceeding its authority, ratification may be implied from silence or acquiescence of the principal. However, Higgins J, agreeing with Knox CJ, emphasised (at 59) that: … it is also, necessary, for ratification that at the time thereof the alleged ratifier should have full knowledge of all the material circumstances under which the act was done (Bowstead on Agency, 7th ed., p. 57, and cases cited) ...
5. More recently, this Court has said (in Leybourne at [134] per Giles JA, Tobias JA and Sackville AJA) that: There must be full knowledge of all the material circumstances in which the act was done, unless the principal intends to ratify and take the risk whatever the circumstances (for example, Bremner v Sinclair NSWCA, 3 November 1998; (2001) ANZ Conv R 29 at [32] per Campbell J). The extent of knowledge necessary depends on the particular facts. It should be enough knowledge to decide whether or not to adopt the unauthorised act (Bremner v Sinclair at [32]).
6. Therefore, if the statement by the primary judge (at [52]) to the effect that it would be necessary to establish that Mr Crocker had opened the relevant email and its attachment, absorbed its contents and "made himself aware of the salient features of the contract", were to be read as expanding the requirement for full knowledge of all the material circumstances, then I would have accepted that her Honour had erred in the application of the relevant test. However, what the primary judge was addressing at [52] was the proposition that Mr Crocker was on notice of the fact that his signature had been electronically appended to a guarantee (for the purpose of fixing him with the requisite knowledge) on the basis that it should be inferred that he had received an email which, if opened, would have listed the Williams credit application as a document signed electronically by the HelloFax system.
7. Having regard to the facts (and particularly that the HelloFax/HelloSign printout relied upon by Williams not only did not itemise the 2 July 2012 documents but also did not indicate on its face whether there was a guarantee signed as part of a particular credit application), what her Honour was clearly pointing out was that in order to fix Mr Crocker with notice of the guarantee it would be necessary to do more than establish the listing of an application to Williams on the email attachment. There was nothing on the face of that document to indicate that any guarantee had been signed, let alone one by Mr Crocker. Read in that context, there is no error demonstrated on the part of the primary judge in this regard.
8. The question whether Mr Crocker should be fixed with knowledge because he had shut his eyes to the obvious was the subject of much debate on the appeal. Professor Dal Pont argues that a principal cannot deny knowledge to which he or she would have been privy had the principal not closed his or her eyes to the obvious (Law of Agency at [5.19]), there referring to what was said by Phillimore LJ in Morison at 385: … it is unnecessary to decide what inference should be drawn when a principal knows so much that it is a policy of an ostrich to know no more.
9. Professor Dal Pont suggests, for example, that, in circumstances where the principal has signed a document that reveals the true state of affairs, the law should not countenance a claim of lack of knowledge, at least in the absence of grounds to vitiate consent; this being consistent with the contract law principle that subjects a person who signs a document to the terms of that document, whether or not he or she has read them (L'Estrange v F Graucob Ltd [1934] 2 KB 394; Toll Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52). Professor Dal Pont also notes that, as with any inquiry in which legal responsibility rests in knowledge, the relative sophistication of the parties is relevant.
10. Insofar as the ratification case was based on the submission that Mr Crocker had shut his eyes to the obvious, there is a tension with the finding by the primary judge (not challenged) that there was no actual knowledge on his part of the guarantee until the claim was made, since shutting one's eyes to the obvious is a means by which actual knowledge can be established. In any event, the facts did not in my opinion sustain a claim that Mr Crocker had so shut his eyes. Even accepting that when Mr Crocker had access to the HelloFax system in the period after the Williams documentation was completed he would have seen a list of documents previously completed using that system (in the form of the printout that was in evidence), he would not have seen any reference to a "guarantee"; simply to an application. For it to be said that he was shutting his eyes to the obvious it would be necessary to establish more than that there was reference to a "credit application".
11. Similarly, the fact that other trade creditors had required guarantees from one or more of the directors of the company, or that he had in the past provided a director's guarantee to Williams, does not persuade me that Mr Crocker was aware that there was a requirement by Williams on the present occasion for such a guarantee from him, such that he should be taken to have understood from the reference to a credit application on a list of completed documents utilising the HelloFax and/or Hello Sign systems that his electronic signature had been applied to a personal guarantee in favour of Williams. Nor does the fact that other credit applications were made (electronically signed by Mr Crocker) in which reference was made to the giving of guarantees to other trade creditors, or the fact that Williams was named as a trade reference, since nothing there identifies Mr Crocker as having given a personal guarantee to Williams.
12. As to the reference to Vitek and the complaint that her Honour did not deal with the proposition that there is not much scope for an adoptive act when one is dealing with a guarantee, the adoptive act relied upon is the placement of further continuing orders (T 29.50). There was no link between the placement of orders and any recognition or awareness by Mr Crocker that this was on the basis of a personal guarantee given by him. There was no error by the primary judge in this regard.
13. Accordingly, grounds 14-20 are not made good and the challenge to her Honour's findings on ratification fails.

Forgery - appeal ground 21

1. The issue as to whether Mr Crocker's signature was a forgery arises in relation to Williams' contention that her Honour should have found that it was common ground that Mr Crocker's signature on the guarantee was not a forgery (ground 21 of its grounds of appeal) and Mr Crocker's contention that it provided another basis on which her Honour's decision should be affirmed (ground 1 of the notice of contention). The primary judge did not find it necessary (nor was it preferable) to decide the case on this ground. I am of the same view.
2. Williams points to the cross-examination of Mr Crocker where he agreed that he was not alleging that his signature was a forgery. Reliance is also placed on the admission by Mr Crocker in his amended defence (at [12]) of the allegation at [12] of the further amended statement of claim that his signature was placed on the guarantee electronically using the HelloFax/HelloSign system.
3. Williams argues that the fact that a "genuine signature" was placed on the document (albeit without actual authority) distinguishes the present case from one involving a forgery (referring to the acceptance by the primary judge at [42]-[45] of the submission that Rowe would prevent any finding of ratification on the basis that there was a forgery).
4. Mr Crocker maintains the argument he made at first instance, namely that a forgery cannot be ratified. He argues that the challenge made by Williams to her Honour's acceptance of the submission involves the making of a distinction without a difference.
5. Mr Crocker argues that the essence of forgery is to imitate the genuine article without permission. He submits that, in Rowe, Gillard J recognised that the essence of forgery is the lack of authority to apply the relevant signature (at 481.40-47). Mr Crocker submits that a person who places a "genuine" signature on a document using a keyboard and electronic signing facility without the signatory's authority commits a forgery no less than if the person had done so with a pen. (Pausing there, it is difficult to see how a person could place another person's "genuine" signature on a document with a pen.)

Determination

1. There is some authority that would support the conclusion that the placement of a "genuine" electronic signature on a document without authority could amount to forgery at common law.
2. In Brott v The Queen (1992) 173 CLR 426; [1992] HCA 5 at 430-432, Brennan J (as his Honour then was) set out a comprehensive explanation of the elements of forgery at common law indicating, relevantly, that there will be no forgery when a signature is placed on a document by a person having the purported signatory's authority to do so. Conversely, the placement of a person's signature on a document without authority to do so might well be capable of amounting to forgery, provided there was the necessary intent to defraud. At 432, citing R v Forbes (1835) 7 C & P 224; R v Beard (1837) 8 C & P 143; R v Parish (1837) 8 C & P 94; and R v Beardsall (1859) 1 F & F 529; 175 ER 839, his Honour said: … not every document which contains a false statement is a forgery. In Ex parte Windsor (1865) 10 Cox C.C. 118 at 123., Blackburn J. said: "Forgery is the faIse making of an instrument purporting to be that which it is not; it is not the making of an instrument which purports to be what it really is, but which contains false statements. Telling a lie does not become a forgery, because it is reduced into writing." Therefore, to prove the actus reus of forgery at common law, it is necessary to prove not only the "making [of] an instrument containing that which is false ... but [the) making [of] an instrument which purports to be that which it is not" (to adopt his Lordship's words in Reg. v. Ritson). Dr. Kenny said that "a forgery is a document which not only tells a lie, but tells a lie about itself". His pithy and accurate phrase has been adopted by the House of Lords. In the usual case of forgery, the falsehood is to be found in the signature to the document or in an alteration of the text of a genuine document but, as Lush J. said in Ritson, the falsehood may "consist in the name or in any other matter". In Ritson and in Wells a falsehood consisting in the insertion of a false date of execution sufficed to establish the document as a forgery. Whatever the falsehood may be, its appearance in the document must convey a false statement as to the nature or content of the document or as to its execution or authentication.
3. In that case, McHugh J also provided a comprehensive review of the authorities on common law forgery, including the observation (at 447) that: In the paradigm case of forgery, the offence consists in signing another person's name, real or fictitious, to an instrument with intent to defraud. However, it is forgery for a person to sign his or her own name to an instrument with intent to defraud if the surrounding circumstances show that the document would be understood as being the instrument of another person of the same name. It is also forgery to add to or alter material in a document with intent to defraud if the effect of the addition or alteration is to represent that the person who signed or acknowledged the original had signed or acknowledged the addition or alteration. Furthermore, it is forgery for a person to complete a document in an unauthorised manner. … The foregoing discussion shows that the general rule of the common law was that forgery consisted in a person, with intent to defraud, making, altering or adding to an instrument so that the instrument contained a false representation that another person had signed or acknowledged the instrument or some part of its contents. If the document contained no more than a false representation by the person who signed or acknowledged the instrument or part of its contents, no forgery occurred. But this general rule has a notable exception: inserting or acknowledging a false date or time in an instrument with intent to defraud is forgery if the date or time is material.
4. That said, it is not necessary, having regard to the conclusions I have reached on the ostensible authority/ratification grounds of appeal, to determine the question whether the placement of an electronic signature on a document is a "forgery" in the common law sense for the purpose of the application or otherwise of the principles in Rowe's case. Nor is it desirable in circumstances where no submissions were directed to this issue. As the primary judge herself concluded was preferable, this case can be determined on other grounds.

Estoppel - appeal ground 22

1. The final ground of appeal raises a pleading issue and seeks to overturn the primary judge's finding on the basis of an estoppel. It is framed as follows: 22. Her Honour erred in stating that the estoppel ground pleaded in paragraph 18 of the statement of claim was abandoned and, even if the principle of ratification did not apply, her Honour should have held that the Respondent was estopped from denying that he was bound by the guarantee.
2. Williams concedes that the allegation of estoppel (which was pleaded as an alternative to the claim that Mr Crocker had ratified the guarantee) "was not heavily pressed in submissions" but says that it was never abandoned. It argues that, if this Court were to conclude that there was both a relevant forgery and that Rowe would for that reason prevent any finding of ratification, then Mr Crocker should nevertheless be held to be bound by the guarantee on the estoppel ground pleaded at [18] of the further amended statement of claim. That pleading was as follows: 18. Further and in the alternative to paragraph 17 [the ratification allegation], the third defendant [Mr Crocker] is estopped from denying that he is liable under the Guarantee, by way of the reliance specified in paragraph 16(d) and the conduct specified in paragraphs 15(a)&(b), and either paragraphs 16(a)-(c) or paragraph 17.
3. Paragraph 16(d), to which reference was made at [18] of the pleading, alleged reliance by Williams on the guarantee as having been duly signed by Mr Crocker (that reliance being the sale of goods on credit terms to IDH).
4. Paragraphs 15(a) and (b) and 16(a)-(c), to which reference was made in [18], alleged the registration or adoption by Mr Crocker of an account with the HelloFax/HelloSign system and his accessing of the account and uploading of his signature on 26 June 2012 ([15(a)-(b]); and the authorisation by Mr Crocker, or his holding out as authorised, of either Mr Brooks or the administration manager or an employee of IDH to place his signature on the guarantee electronically ([16(a)]); Mr Crocker having done so by leaving Mr Brooks with his email address and password ([16(b)]; and Mr Crocker either approving an authorised person applying his signature to the guarantee or leaving an authorised person with his email address and password, thus in a position to use the signature and transmit the guarantee to Williams, knowing that Williams would rely on the guarantee as having been duly signed by him ([16(c)]).
5. Mr Crocker points out that the estoppel ground was not addressed in Williams' Outline of Submissions provided to the primary judge; nor was there any response in its Reply Submissions to the submissions that he had addressed on that topic ([66]-[71]) other than a short response on the question of reliance ([79]). Mr Crocker notes that, in oral submissions at the hearing before the primary judge, Williams' counsel identified two "categories of issues" and referred to estoppel as "as a type of ratification", making no separate submissions on the topic.
6. Mr Crocker argues that Williams should not now be permitted to pursue this ground but, in the event that it is permitted to do so, then he relies on his submissions at trial on the topic (at [66]-[71]). In essence, Mr Crocker there argued that, other than the allegation of placing orders with Williams (which he denied), none of the matters relied upon in the pleading as giving rise to the estoppel (using HelloFax on 26 June 2012 - [15(a),(b)], or the acts relied on as supporting the implied authority case - [16(a)-(c)] - or ratification case - [17]), was capable of founding a representational estoppel.
7. In the submissions at trial, Mr Crocker argued that (apart from the placing of orders, which Mr Crocker denied) none of the matters relied upon was a matter which came to the knowledge of Williams or was capable of constituting a representation by Mr Crocker to Williams concerning the genuineness of Mr Crocker's signature or the adoption of the guarantee by him. He noted that there was no evidence from Williams as to what its sales staff relied on to make the sales to IDH.
8. It was accepted by Mr Crocker that if he had become aware that his signature had been forged and had failed to bring that to Williams' attention then that might give rise to an estoppel against him but he emphasised that his evidence was that he did not become aware of his electronic signature on the guarantee until the commencement of the proceedings.
9. Mr Crocker pointed to the evidence of the credit controller employed by Williams, Ms Williams (in her affidavit dated 16 May 2014 at [37]), that if she had become aware that Mr Crocker had not applied his signature to the guarantee then she would have referred the matter to management to consider whether IDH's account should be placed on hold and that no evidence was called from the persons she had identified. Hence it was submitted that it could not be inferred that Williams' decision would have been to place IDH's account on hold in that situation.

Determination

1. It is not necessary to determine this issue on a pleading point. The evidence did not establish a representation by Mr Crocker as to the genuineness of his signature on the guarantee or as to his authorisation of anyone else to place his electronic signature on the guarantee. In those circumstances, the claim based on estoppel must fail, even leaving aside the difficulty for Williams in establishing that it had relied on any such authorisation (since it was not established that it was aware of the use of the HelloFax system). What was represented to Williams (by IDH, not Mr Crocker) was that Mr Crocker's signature was on the guarantee. That representation was conveyed by the purported witnessing of his signature by the company's administration manager. That representation, accepting that it may be inferred it was relied upon by Williams in extending credit to IDH, does not give rise to an estoppel precluding Mr Crocker from denying personal liability on the guarantee.

Conclusion

1. For the above reasons, the appeal should be dismissed with costs.
2. SIMPSON JA: I agree with Ward JA.
3. PAYNE JA: I agree with Ward JA.

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