1

MLL215 – Commercial Law

Proscribed Cases for

Each Topic

2

Contents Page

Topic 1 – Creation of Agency Relationship

Beazley v Seed & Grain (1988)

Boulas v Angelopoulos (1991) 5 BPR 11 477

Combulk v TNT Management Pty Ltd (1992)

Cumming v Sands [2001] NSWSC 2

Equiticorp Finance v Bank of New Zealand (1993) 32 NSWLR 50:

Egyptian International Foreign Trade Co v Soplex Wholesale Supplies Ltd (The ‘Raffaella’) [1985] 2

Lloyd’s Rep 36

Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480

Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1968] AC 1130

Hely-Hutchinson v Brayhead Limited [1968] 1 QB 549

International Harvester v Carrigan’s (1958)

Northside Developments Pty Ltd v Registrar-General (1990)

Norwich Fire Insurance Society Ltd v Brennans (Horsham) Pty Ltd [1981] VR 981

Overbook Estate v Glencombe (1974) 3 All ER 511

Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451

Prospect Industries v Anscor [2003] QSC 296

Topic 2 – Ratification of Agent’s Authority

Bolton Partners v Lamber (1889) 41 Ch D 295

Boulas v Angelopoulos (1991)

Chaudhry v Pradhakar [1989] 1 WLR 29

Collen v Wright (1857) 120 ER 241.

Fullwood v Hurley [1928] 1 KB

Heytesbury Pty Ltd v Kelly

Keighley, Maxted and Co v Durant [1901] AC 240

Kelner v Baxter (1866) LR 2 CP 174

3

Kidderminster Corporation v Hardwick (1873) LR 9 Ex 13

Lintrose v King [1995] 1 VR 574

LJ Hooker Ltd v WJ Adams Estates Ltd (1977) 138 CLR 52

Mahesan v Malaysia Government Officers’ Co-op Housing Society Ltd [1978] 2 All ER 405

Northaus Trading Company Ltd v State of Qld (1995)

Peterson v Moloney (1951) 84 CLR 91

Siu Yin Kwan v Eastern Insurance [1994] 2 AC 199

Topic 3 – Sale of Goods

Aristoc Industries v Werham Builders (1965) NSWR 581

Brooks Robinson v Rothfield [1951] VLR 405

Collins Trading v Maher [1969] VR 20

Deta Nominees v Viscount [1979] VR 167

Hewett v Court (1983) 149 CLR 639

Lee v Griffin [1861] 1 B & S 272

Robinson v Graves (1935) 1 KB 579

Topic 4 – Transfer of Property

Allied Mills Ltd v Gwydir Valley Oilseeds Pty Ltd [1978] 2 NSWLR

Bodilingo Pty Ltd v Webb Projects (1990) ASC 56-001

Car and Universal Finance Co Ltd v Caldwell [1965] 1 QB 525

Carlos Federspiel & Co SA v Charles Twigg & Co Ltd (1957) 1 Lloyd’s Rep 240

Central Newbury v Unity Finance [1957]

Eastern Distributors v Goldring (1957) 2 QB 600

Gamer’s Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd (1987) 163 CLR 236

Kirkham v Attenborough (1897) 1 QB 201 (Inconsistent Act)

Leonard v Lelasi (1988) 46 SASR 495

Lowther v Harris (1926) 1 KB 393

4

Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890

Pacific Motors Auctions Pty Ltd v Motor Credit (Hire Finance) Ltd (1965) 112 CLR 192

Poole v Smith’s Car Sales (Balham) Ltd [1962] 1 WLR 744 (Reasonable Time)

Underwood v Burgh Castle Brick (1922)

Weiner v Harris [1901] 1 KB 285 (Sale of Return or Agent?)

Topic 5 – Implied Terms

Ashington Piggeries v Christopher Hill [1972] AC 441

Beale v Taylor [1967] 1 WLR 1192

Dowdell v Knispel Fruit Juices Pty Ltd [2003] FCA 851

Elder Smith Goldsborough Mort v McBride [1976] 2 NSWLR 631

Grant v Australian Knitting Mills [1936] AC 85

Harlingdon and Leinster Enterprises v Christopher Hull [1990] 3 WLR 13

Henry Kendall & Sons v William Lillico & Sons [1969] 2 AC 31

LG Thorne v Borthwick (1956) 56 SR (NSW) 81

Microbeads A-G v Vinhurst Road Markings Ltd [1975] 1 WLR 218

Niblett v Confectioners’ Materials [1921] 3 KB 387

Patten v Thomas Motors (1925) 66 SR (NSW) 459

Rowland v Divall [1923] 2 KB 500

Steinke v Edwards (1935)

Varley v Whipp (1900) 1 QB 513

Topic 6 – Australian Consumer Law

ACCC v CG Berbatis Holdings Pty Ltd [2003] HCA 18

Commercial Bank of Australia v Amadio (1983) 151 CLR 447

5

Topic 7 – Statutory Unconscionability

ACCC v Keshow (2005) ATPR (Digest) 46-265

ACCC v Lux Distributors Pty Ltd (2013) ATPR 42-429

ACCC v Radio Rentals Ltd (2005) ATPR 42-077

ACCC v Samton Holdings (2002) 189 ALR 76

ACCC v Simply No-Knead (2000) 178 ALR 304 (Small Business Case Study)

ACCC v Zanok Technologies [2009] FCA 1124

ASIC v National Exchange Pty Ltd (2005) 148 FCR 132

Blomley v Ryan (1956) 99 CLR 362

Bridgewater v Leahy (1998) 194 CLR 457

Hurley v McDonalds Australia Ltd [1999] FCA 1728

Kakavas v Crown Melbourne (2013) 298 ALR 35

Topic 8 – Unfair Contract Terms

ACCC v ByteCard Pty Ltd (Federal Court, 24 July 2013, VID310/2013)

CA Vic v Backloads.com [2009] VCAT

Director of CA Vic v AAPT Ltd [2006] VCAT

Topic 9 – Consumer Guarantees

Bunnings Group Ltd v Laminex (2006) 230 ALR 269

Carpet Call Pty Ltd v Chan (1987) ATPR (Digest) 46-025

6

Topic 10 – Insurance Contracts and Formation

21st Maylux Pty Ltd v Mercantile Mutual Insurance (Australia) Ltd [1990] VR 919

Advance (NSW) Insurance Agencies Pty Ltd v Matthews (1989) 85 ALR 161

Ayoub and Anor v Lombard Insurance Co (Aust) Pty Ltd (1989) 5 ANZ Ins Cas 60-933

Baden Delvaus and Lecuit v Societie General [1983] BCLC 325

Burns v MMI-CMI Insurance Ltd (1995) 8 ANZ Ins Cas 61-287

CGU Insurance Ltd v AMP Financial Planning Pty Ltd (2007)

Medical Defence Union Ltd v Department of Trade (1979) 2 WLR 686, 690

Stealth Enterprises Pty Limited trading as The Gentleman's Club v Calliden Insurance Limited [2015]

NSWSC 1270

Topic 11 – Insurance Construction and Performance

Antico v CE Heath Casualty & General Insurance Ltd (1996) 38 NSWLR 681/Antico v CE Heath Fielding

Australia Pty Ltd (1997) 188 CLR 652

FAI General Insurance Co Ltd v Australian Hospital Care Pty Ltd (2001) 204 CLR 641

FAI Insurance v Perry (1993) 30 NSWLR 89

Ferrcom v Commercial Union Assurance (1993) 176 CLR 332

Forbes v AAMI (1990) 6 ANZ Ins Cas 61-015

Legal & General Insurance v Eather (1986) 6 NSWLR 390

Leyland Shipping Co v Norwich Union Fire [1918] AC 350

Manufacturers Mutual v Star Gifts (1984) 3 ANZ Ins Cas 60-615

Moltoni Corporation Pty Ltd v QBE Insurance (2001) 205 CLR 149

To v Australian Associated Motor Insurer Ltd (2001) 3 VR 279

7

Topic 1 – Creation of Agency Relationship

Beazley v Seed & Grain (1988)

Facts

- An agent, authorised to sell certain land, prepared a written record of an oral agreement between vendor and purchaser and sent copies to both the purchaser and the vendor.

- Vendors argued the written record constituted a written memo signed by them.

Issue: Was there an enforceable contract?

Held

- It is never sufficient to say of a person that he is an agent. - One must always ask for what purpose the person concerned was appointed agent, and

one must always look to see whether the particular act was being done by the agent as agent or in some other capacity.

- At the time he sent the letter, the ‘agent’ was not actually an agent for this aspect of this particular transaction.

Boulas v Angelopoulos (1991) 5 BPR 11 477

Facts: Angelopoulos (P) engaged auctioneer (A) to sell property at auction

Boulas (T) made the highest bid ($226 000):

- Bid was below the ‘reserve’ - Auctioneer A asked P if he would remove the reserve - A mistakenly believed P had agreed to do so (‘stay on the market) - A asked for bid again and eventually knocked down property to T for $226 000 - P refused to sign the contract of sale - T sued P for specific performance (and A for breach of warranty of authority)

Legal Issues

- No actual authority to sell below reserve - Was there apparent authority: was there a: representation? Reliance on the representation?

Held: No actual authority

Apparent authority: what was alleged representation?

- Remaining silent when actioneer re-started auction - Obiter (this may constitute a relevant representation - Did not rely on representation (why?)

8

Combulk v TNT Management Pty Ltd (1992)

“The TP cannot rely on the ostensible authority of the A where the TP knows that the A is without

authority or is negligent in relation to this matter or where she acts fraudulently in relation to the

matter.”

Cumming v Sands [2001] NSWSC 2

Facts

- Ms Cumming was employed by Dr Brand and the two formed a sexual relationship - Cumming did favours for Brand’s mother (bought house) - Mother died and Dr Brand and Sands (his sister) executors to will and held equal shares to

house - Cumming rented house at market rate and agreed to maintain it - Cumming did extensive renovations to house - Dr brand died leaving his share of the house to Cumming - Cumming claimed cost of renovations from Sands, argued Dr Brand was Sand’s agent - Was there agency?

Held

- There was implied agency - Sands encouraged improvement to house through action of Dr Brand

Equiticorp Finance v Bank of New Zealand (1993) 32 NSWLR 50

Basic Concepts of Actual Express Authority

- P must grant, and A must accept, authority to perform certain tasks for P - Must be consensual agreement (consent the basis) - Can be created by written contract or spoken words

Principal Agent (Actual authority) = Consensual agreement

Principal Third Party = Binding contract

Agent Third Party (Act – no contract)

Concepts of Implied Authority

- “Where the question is whether the agent has implied authority to act in a particular way, the court directs its attention to the conduct of the parties in order to decide whether the inference of authority should be drawn.”

Authority of Agent

- Constructive authority - Apparent/Ostensible authority

9

Has P made a representation to T that A has the necessary authority?

- A need not be aware of the representation - A must not purport to make the agreement as P - Representation, when acted upon, creates an estoppel

Principal Agent (Apparent) = No actual authority

Principal Third Party = Binding contract (Representation A is their agent)

Agent (Apparent) Third Party (Act)

Egyptian International Foreign Trade Co v Soplex Wholesale Supplies Ltd (The ‘Raffaella’)

[1985] 2 Lloyd’s Rep 36

- 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 (Browne-Wilkinson LJ)

Important rule: An agent cannot self-authorise (Armagas Ltd v Mundogas SA [1986] AC 717).

Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480

Facts

- Kapoor and Hoon formed a company, Buckhurst, to buy and resell land - Kapoor and Hoon, and two others were appointed directors but no managing director was

appointed - Kapoor entered into contract with architects, Freeman & Lockyer (F & L), other directors

were not consulted - F and L completed architectural and survey work but were not paid - F and L sued Buckhurst (the company) and Kapoor (director) - Trial judge found Buckhurst liable, Buckhurst appealed, claiming only Kapoor liable

Court of Appeal

- Kapoor acted as if he was a managing director in relation to the sale of the company’s property even though he was not the managing director, and the Board was aware of this

- Board estopped from denying that Kapoor had the authority to enter the contract to employ a firm of architects

Diplock LJ

Distinguished between actual and apparent:

- May co-exist (but one may exist without the other) Third party normally relies upon apparent authority

10

Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1968] AC 1130

Facts

- Allied (supplier) contracted for supply ($193/t) with Garnac - Garnac contracted supply of (195/t) to HMF - HMF contracted for supply ($197/t) with Allied - Was there agency between Allied and HMF?

Held

There was no agency:

- HMF did not enter into the contract with Garnac on behalf of Allied - There were two separate contracts (HMF purchased from Garnac; HMF sold to Allied)

Lord Pearson:

“The relationship of principal and agent can only be established by the consent of the principal and

the agent. They will be held to have consented if they have agreed to what amounts in law to such a

relationship, even if they do not recognize it themselves and even if they have professed to disclaim

it…”

Hely-Hutchinson v Brayhead Limited [1968] 1 QB 549

Facts

- Richards (A) was director of Brayhead Ltd (P) - Acted as de facto MD (often made decisions without Board of Directors’ consent but would

inform Board afterwards - Board failed to discipline A - Ne day, A entered into transaction P did not want - Argued A lacked authority

Held

- The trial judge found for Hely-Hutchinson on the grounds of ostensible authority - In the Court of Appeal, it was found that Richards had actual implied authority. The Court

said that he did have authority because of his past dealings. - In this case the Board of Directors had acquiesced to Richards committing the company to

contracts without checking with the board and later just informing the Board at meetings. This created the actual implied authority.

- They therefore impliedly authorised him to do all such things as fall within the usual scope of that office

11

Lord Denning MR: “…actual authority may be express or implied…it is implied when it is inferred

from the conduct of the parties and the circumstances of the case, such as when the board of

directors appoint one of their number to be managing director.”

“Applying these principles here…he had authority implied from the conduct of the parties and the

circumstances of the case…”

Findings

- The judge finds that Mr Richards acted as de facto managing director of Brayhead - He was the chief executive who made the final decision on any matter concerning finance - He often committed Brayhead to contracts without the knowledge of the board and

reported the matter afterwards

Consequences of the Case

- This case illustrates the issue of a court of past dealing - History of dealings determines authority for future dealings - If a board of company directors has allowed one of its directors to continually act as if he has

a certain level of authority and to sign certain contracts, then they might find that they are bound by future agreements that he signs.

International Harvester v Carrigan’s (1958)

Facts

- Carrigan visited IH’s hay baler exhibit at show - IH said it could be purchased from HK - Sale between Carrigan and HK (Machinery and general agents) - HK went broke after sale - Machinery broke down

Issue

- Does calling someone an ‘agent’ make them an agent? - Can C sue IH for the faulty hay baler

Held

- If HK = IH’s agent, then yes - If HK = independent contractor, then no - Not agent of IH despite description - Just calling someone an ‘agent does not make them an agent

12

Northside Developments Pty Ltd v Registrar-General (1990)

Facts

- Northside owned land (the only major asset) - Mr. S, a director of Northside, took a loan from Barclays Bank for personal purposes, and

used land as security - Northside is the guarantor - Thus, transaction was outside its usual operations

Held: No one can rely on a representation as to authority if circumstances under which the

representation was made should reasonably have put them on inquiry

Norwich Fire Insurance Society Ltd v Brennans (Horsham) Pty Ltd [1981] VR 981

Facts

- Norwich (P) Insurance co (negotiating contract with Brennans (TP) - Brennans (TP) told to deal with Norwich’s agent - Brennans paid agent and signed contract - Agent went bankrupt, no monies passed to Norwich - Was there actual implied authority for agent to collect money?

Held

- The court held that the agents had actual implied authority - The court at trial focused on what could be implied for the conduct of the parties - The implication that the agent had actual authority to receive payment on behalf of Norwich

was derived from the suggestion that the Brennans deal with the agents on the matter of insurance

- The concept of ‘dealing’ in this context clearly covered signing the contract and paying the money

Overbook Estate v Glencombe (1974) 3 All ER 511

Facts

- Auctioneers Willmotts (A) offered Overbrooke’s (P) property for sale - Pamphlets stated A was not authorised to make representations - Property was knocked down to Glencombe (T) - T sought to avoid: Claimed sale induced by misrepresentation made by A - P sought to enforce the sale

Held

- Any ostensible authority A has is ‘diminished to the extent of the publicised limits that are placed on it’

- Either: T know or T should have know that A had no authority to make a representation in relation to P’s property

13

Pacific Carriers v BNP Paribas

Facts

- Ms. Dhiri was a manger in BNP working in the credit documentation department - She signed a credit guarantee document which she was not authorized to sign - When the question arose, the Bank refused to honour the guarantee on the ground that she

did not have any authority

Prospect Industries v Anscor [2003] QSC 296

Facts

- Woodrow (A) was a representative of Count (financial advisers) (P). - Contract permitted advice regarding Count’s (P) recommended investments

A provided advice to Prospect (T):

- Handed Count’s (P) business card to Hope (director of Prospect) - Court found that A stated he was not acting on behalf of P in relation to the dealings - Alleged P responsible for A’s ‘misleading’ and ‘negligent’ investment advice

Held

Actual Authority: Woodrow did not have actual authority from Count to provide financial advice.

Apparent Authority

- Was there representation? Only possible representation was Woodrow’s use of business cards which showed he was a representative of P (Count)

- Was there reliance? In any event, there was no reliance by T on Count’s involvement (card was used more for contact details)