Business law [Third edition.] 9780409341546, 0409341541

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Business law [Third edition.]
 9780409341546, 0409341541

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LexisNexis Case Summaries

Business Law 3RD EDITION • Brendan Pentony A concise summary of the key cases in business law LexisNexis Case Summaries - Business Law provides a concise summary of the key cases in business law. The design of this popular book highlights catchwords, and the facts, issue and decision in each case so that the principles can be readily understood and

memorised . The cases have been selected to align with current teaching in business law in all Australian jurisdictions. An excellent study and revision resource for students, this book is a great quick reference for anyone wanting to understand the case law in this area.

Related LexlsNexls Titles • Fitzpatrick. Symes, Veljanovski & Parker, Business and Corporations Law, 2nd ed. 2014 • Graw, Parker, Whitford, Sangkuhl & Do, Understanding Business Law, 7th ed. 2015 • Parker & Veljanovski, LexisNexis Stud.} Guide - Business Law, 2nd ed, 2013 [email protected] .au

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LexisNexis LexisNexis Butterworths 475-495 Victoria Avenue, Chatswood NSW 2067 On the internet at: LexisNexis Argentina, BUENOS AIRES LexisNexis Verlag ARD Orac GmbH & Co KG, VIENNA LexisNexis Latin America, SAO PAULO LexisNexis Canada, Markham, ONTARIO LexisNexis Chile, SANTIAGO LexisNexis China, BEIJING, SHANGHAI Nakladatelstvi Orac sro, PRAGUE LexisNexis SA, PARIS LexisNexis Germany, FRANKFURT LexisNexis Hong Kong, HoNo KoNo HVG-Orac, BUDAPEST LexisNexis, NEW DELHI Dott A Giuffre Editore SpA, MILAN LexisNexis Japan KK, Tmao LexisNexis, SEOUL LexisNexis Malaysia Sdn Bhd, PETALINO JAYA, SELANOOR LexisNexis, WELLINGTON Wydawnictwo Prawnicze LexisNexis, WARSAW LexisNexis, SINGAPORE LexisNexis Butterworths, DURBAN Staempfii Verlag AG, BERNE LexisNexis, TAIWAN LexisNexis UK, LONDON, EDINBURGH LexisNexis Group, New York, NEwYoRK LexisNexis, Miamisburg, Omo

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National Library of Australia Cataloguing-in-Publication entry Author: Title: Edition: ISBN: Notes: Subjects: Dewey Number:

Pentony, Brendan. LexisNexis Case Summaries: Business Law. 3rd edition. 9780409341546 (pbk). 9780409341553 (ebk). Includes index. Commercial law -Australia. 346.9407.

© 2015 Reed International Books Australia Pty Limited trading as LexisNexis.

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First edition 2000; Second edition 20 I 1. This book is copyright. Except as permitted under the Copyright Act 1968 (Cth), no part of this publication may be reproduced by any process, electronic or otherwise, without the specific written permission of the copyright owner. Neither may information be stored electronically in any form whatsoever without such permission. Inquiries should be addressed to the publishers. Typeset in Goudy and Helvetica.

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Case Name Alati v Kruger Allied Express Transport Pty Ltd v Hill Allied Mills Ltd v Gwydir Valley Oilseeds Pty Ltd Arab Bank Ltd v Ross • • Armory v Delamirie Ashby v Tolhurst Atari Corp (UK) Ltd v Electronics Boutique Stores (UK) Ltd Australia & New Zealand Bank Ltd v Ateliers De Constructions Electriques De Charleroi Australian Capital Providers Pty Ltd v Wakelin Australian Casualty Co Ltd v Federico Australian Competition and Consumer Commission v Vanderfield Pty Ltd Australiar Competition and Consumer Commission v Visy Industries Holdings PtyLtd(No3) Australian Finance Direct Ltd v Director of Consumer Affairs Victoria Australian Securities and Investments Commission,y Adler Australian Securities and Invest~ents Commission v Healey Australian Securities and Investments Commission v MacDonald (No 11) Australian Securities and Investments Commission v Plymin Australian Securities and Investments Commission v Rich Australian Securities and Investments Commission v Vines Australian Securities and Investments Commission v Vizard Baltic Shipping Co (The Mikhail Lermontov) v Dillon

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Case Name Barnett v Chelsea & Kensington Hospital Management Committee Baumgartner v Baumgartner Beckingham v Port Jackson & Manly Steamship Co Benda! Pty Ltd v Mirvac Project Pry Ltd Bernstein v Skyviews and General Ltd Bevington and Morris v Dale and Co Ltd Blackwell v Wadsworth Bodilingo Pty Ltd v Webb Projects Pty Ltd Bollinger v Costa Brava Wine Co (No 2) Bolton v Stone Bonnington Castings Ltd v Wardlaw Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) Brambles Holdings Ltd v Bathurst City Council Breen v Williams Bridges v Hawkesworth Bugge v Brown Bulun Bulun v R & T Textiles Bunnings Pry Ltd v Laminex Group Ltd Burnie Port Authority v General Jones Pty Ltd Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd Byrne v Hoare Campomar Sociedad, Limitada v Nike International Ltd Canny Gabriel Castle Jackson Advertising Pry Ltd v Volume Sales (Finance) Pry Ltd Carlos Federspiel & Co SA v Charles Twigg & Co Ltd Central London Property Trust v High Trees House Ltd Century Insurance Co Ltd v Northern Ireland Road Transport Board Chairman, National Crime Authority v Flack Chaplin v Dunstan Ltd iv

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Case Name Clode v Barnes Codelfa Construction Pty Ltd v State Rail Authority ofNSW Coggin v Telstar Finance Company (Q) Pty Ltd Commercial Bank of Australia v Amadio Commonwealth Bank of Australia v Smith Commonwealth Trading Bank v Reno Auto Sales Pry Ltd • • Commonwealth Trading Bank of Australia v Sydney Wide Stores Pty Ltd Cook v Deeks Cork v Kirby Maclean Ltd Couturier v Hastie Cribb v Korn Cuisenaire v Reed Davis v Davis Deatons Pty Ltd v Flew Denby Hamilton Ltd v Barden Derrick .. Cheung Desktop Marketing Systems Pty Ltd v Telstra Corp Ltd Dockside Fitness Pry Ltd v Woods Dominion Natural Gas Co Ltd v Collins and Perkins • Donoghue v Allied Newspapers Ltd Donoghue v Stevenson Dulhunty v JB Young Ltd Eastern Distributors Ltd v Goldring Edwather Grazing Pty Ltd v Pincevic Nominees Pry Ltd Eley v Positive Government Security Life Assurance Elwes v Brigg Gas Co Evans Deakin Pty Ltd v Sebel Furniture Ltd Folkes v King Ford by his Tutor Watkinson v Perpetual Trustees Victoria Ltd Glasgow Corp v Muir v

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LexisNexis Case Summaries

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Case Name Graham v Voight Graham Barclay Oysters Pty Ltd v Ryan Grant v Commissioner of Patents Green and Clara Pty Ltd v Bestobell Industries Pty Ltd Greenwood v Martins Bank Ltd Greenwood v Municipal Council of Waverley Grigsby v Melville Guthrie v Metro Ford Pty Ltd Haley v London Electricity Board Hamlyn v John Houston & Co Harris v Smith Harriton v Stephens Harvey v RG O'Dell Ltd Healy v Howlett & Sons Hedley Byrne & Co Ltd v Heller & Partners Ltd Hickman v Kent or Romney Marsh Sheep-Breeders Association Hilder v Associated Portland Cement Manufacturers Ltd Hill v Chief Constable of West Yorkshire Hoffmann v Boland Hollis v Vabu Pty Ltd Hollywood Silver Fox Farm Ltd v Emmett Houlahan v Australia and New Zealand Banking Group Ltd HRH Prince of Wales v Associated Newspapers Ltd Hughes Aircraft Systems International v Airservices Australia Hutchins v Australian Grand Prix Corp Imbree v McNeilly Indian Oil Corp Ltd v Greenstone Shipping SA (Panama) Industrial Development Consultants Ltd v Cooley Interstate Parcel Express Co Pty Ltd v Ttme-Life International (Nederlands) BY vi

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Case Name Jackson v Cochrane Jackson v Horizon Holidays Jetstar Airways Pty Ltd v Free John Dorahy's Fitness Centre Pty Ltd v Buchanan Johns Period Furniture Pty Ltd v Commonwealth Savings Bank of Australia Johnson v Buttress Johnson v Unisys Ltd Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd Kelly v Kelly Kirkham v Attenborough Knightley v Johns Leaf v International Galleries Lee v Lee's Air Farming Ltd Legal & General Insurance Australia Ltd v Eather Lewis v Averay Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd LG ThoJie & Co Pty Ltd v Thomas Borthwick & Sons (A'asia) Ltd Lindley v Silverbrook Research Pty Ltd London Bank of Australia v Kendall Lowe v Lombank Macaura v Northern Assurance Co Ltd Malik v Bank of Credit and Commerce International Sa (in liq) Mann v Hulme March v E & MH Stramare Pty Ltd McLaughlin v Darcy McManus v Fortescue McRae v Commonwealth Disposals Commission Mc William's Wines Pty Ltd v McDonalds System of Australia Pty Ltd Mendelssohn v Normand Ltd Microbeads AG v Vinhurst Road Markings Ltd Milpurrurru v Indofurn Pty Ltd Mitchell v Valherie




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LexisNexis Case Summaries

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Case Name Mogul Steamship Co Ltd v McGregor, Gow & Co Morgan v Russell & Sons Morris v CW Martin & Sons Ltd Moukataff v British Overseas Airways Corp National Australia Bank Ltd v Hokit Pty Ltd National Research Development Corp v Commissioner of Patents North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd Oanh Nguyen and A-N-T Contract Packers Pty Ltd t/as A-N-T Personnel and Thiess Services Pty Ltd t/as Thiess Services Olley v Marlborough Court O'Sullivan v Williams Overseas Tankship (UK) Ltd v Miller Steamship Co Pty Ltd (The Wagon Mound (No 2)) Pacific Carriers Ltd v BNP Paribus Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd Paris v Stepney Borough Council Parker v British Airways Board Paul v Cooke Pearson v North Western Gas Board Penfolds Wines Pty Ltd v Elliott Perre v Apand Pty Ltd Peso Silver Mines Ltd v Cropper Pignataro v Gilroy Pivovaroff v Chernabaeff Polkinghorne v Holland & Whitington Pollard v Trude Polo/Lauren Co LP v Ziliani Holdings Pty Ltd Poole v Smith's Car Sales (Balham) Ltd Reardon v Morley Ford Pry Ltd Redowood Pty Ltd v Mongoose Pty Ltd Riverwood International v McCormick Rootes v Shelton Ross v Allis-Chalmers Australia Pty Ltd Rowland v Divall viii

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Case Name Royal Botanic Gardens and Domain Trust v South Sydney City Council RV Ward Ltd v Bignall Salomon v Salomon & Co Ltd San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 Savings Bank of South Australia v W:?llman Sayers v Harlow Urban District Council Scala Ballroom (Wolverhampton) Ltd v Ratcliffe Schellenberg v Tunnel Holdings Pty Ltd Shaddock and Associates v Parramatta City Council (No 1) Shell-Mex Ltd v Elton Cop Dyeing Co Ltd Sibley v Kais Smith v Elders Rural Finance Ltd Smythe v Thomas Statewide Tobacco Services Ltd v Morley Stovin v Wise Sullivan v Moody Taco Co of Australia v Taco Bell Pty Ltd Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd Tame v New South Wales Taylor v Johnson Tesco Supermarkets Ltd v Nattrass Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Aust) Pty Ltd Thompson v Bankstown Corp Tma Motors Pty Ltd v ANZ Banking Group Ltd Tottenham Investments Pty Ltd v Carburettor Services Pty Ltd Tournier v National Provincial and Union Bank of England Trade Practices Commission v Sharp Corp of Australia Pty Ltd Turnbull v AH Mouy Twentieth Century Fox Film Corp v South Australian Brewing Co Ltd ix

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Case Name Twine v Bean's Express Ltd Underwood Ltd v Burgh Castle Brick and Cement Syndicate United Dominions Corp Ltd v Brian Pty Ltd University of Western Australia v Gray Valamios v Demarco Van Den Esschert v Chappell Vine v Waltham Forest London Borough Council Vital Finance Corp Pty Ltd v Taylor Waltons Stores (Interstate) Ltd v Maher Wardar's (Import & Export) Co Ltd v W Norwood & Sons Ltd Watt v Hertfordshire County Council Waverley Borough Council v Fletcher Westminster Bank v Hilton Williams v MacMahon Mining Services Pty Ltd Wilson v Rickett Cockerell & Co Ltd Withers v Perry Chain Co Ltd Woods v Multi-Sport Holdings Pty Ltd Woodward v Johnston

s Law

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[1) ALATI v KRUGER (1955) 94 CLR 216; BC5500350 High Court of Australia Contract- Fraud- Recission- Sale of business- Deterioration of business after sale - Eventual abandonmetlt~of premises by purchaser - Closure of business - Equitable remedy FACTS Alati induced Kruger to buy his fruit business on the representation that the average takings were £100 per week. When he took over the business after the contract was made in June, Kruger found that the takings figure did not and had not reached £100 per week. Kruger rescinded the contract and sought to recover the price paid. The trial took place at the end of September, during which time Kruger kept the business running. By the time judgment was given in December the business had closed.


ISSUE Did Kruger have the right to rescind on the basis of the had operated the business? Had Kruger lost misrepresentation after the right to recission by discontinuing business before judgment was given?


DECISION According to common law, Kruger could not have rescinded the contract. Equity, however, assists him. Equity has always regarded as valid the disaffirmance of a contract induced by fraud even though precise restitution to he original position is not possible. Equity can do what is practically just between the parties, and by so doing restore them substantially to the status quo.

Kruger was under no duty to go on running the business indefinitely, working for nothing and incurring losses, especially after the lower court judge had announced findings of fact in his favour. Alati had ample opportunity to protect his interests. A defrauded purchaser can seek from a court exercising equitable jurisdiction a declaration that the transaction was void ab initio, and is entitled to rescind the purchase.


LexisNexis Case Summaries

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[1997] NSWSC 57; BC9700342 Supreme Court of New South Wales

[ 1952] 2"'ThB 216 Court of Appeal, Civil Division (England and Wales)

Contract - Statements made during negotiations or representational


FACTS Hill and Allied Express Transport entered into a contract for the delivery of goods to towns in the Riverina area. During negotiations, Allied Express' representative stated that the payment of $1000 would be for an average of 800 km travelled per week. When Hill asked what was paid on all kilometres over 800, the representative replied: 'There won't be any'. Hill found when performing the contract that he was travelling significantly more than 800 km per week. ISSUE Were the statements made during negotiations promissory in nature or merely representational? Was a definite statement made at the time that the parties were considering the terms of the contract?

Promissory notes 'regular on their face'

ISSUE Were the two documents with that indorseln.ent 'regular on their face'? DECISION Even though the indorsements were valid, the omission of the word 'Co' gave rise to a reasonable doubt about whether the payees and the indorsers were necessarily the same. As a result, the notes were not complete and regular on their face and the bank was not a 'holder in due course'.

[5] ARMORY v DELAMIRIE (1722) 1 Stra 505; 93 ER 664 Court of King's Bench (UK) Ownership -

[1978] 2 NSWLR 26 Supreme Court of New South Wales (Court of Appeal) Sale of goods Liability

Failure to deliver -

Destruction of goods -

FACTS The parties contracted for the sale and purchase of linseed meal. The agreement stipulated that property in the goods was to pass to the buyer on the making of the contract. The seller then deliberately and wrongfully failed to deliver the goods and they were destroyed by fire while they were still in its possession. ISSUE Were the goods still at the buyer's risk or was the seller responsible? DECISION The goods were at the seller's risk and it was liable to compensate the buyer for the additional $30 per tonne that it had to pay to buy replacement meal elsewhere.

Notes not

FACTS Two promissory notes in the name of'Fathi and Faysal Nabulsy Co' were indorsed simply, 'Fathi and Faysal Nabulsy'.

DECISION Allied Express' words constituted a promise that for $1000 per week Hill would be required to travel no more than 800 km averaged over each week of the delivery period. Allied Express was in breach of contract and required to pay damages.


lndorsements incomplete -

Possession -

Evidence of title

FACTS Armory, a chimney sweeper's boy, found a piece of jewellery and took it to the defendant's shop to find out what it was and whether it was worth anything. The apprentice to whom he gave the jewellery removed the stone from the setting and returned the setting by itself. When the sweep sued to recover the stone or its value, the defendant argued that the sweep did not own the stone and that his physical possession of it, as the 'finder', was not enough to give him a cause of action. ISSUE

Who had the better title to the stone?

DECISION The sweep's possession was evidence of ownership and that, accordingly, as possessor, he was entitled to the stone unless the true owner claimed it.

[6] ASHBY v TOLHURST [1937] 2 KB 242 Court of Appeal, Civil Division (England and Wales) Misrepresentation Defendant's dealing not intentional Defendant not liable in conversion FACTS The defendants owned a car park. One of their employees mistakenly allowed a thief, who had misrepresented himself as the



Business Law

LexisNexis Case Summaries plaintiff's friend, car park. ISSUE


drive the plaintiff's motor vehicle away from the

Were the defendants liable in conversion?

DECISION While the defendants may have dealt with the car in a manner inconsistent with the plaintiff's rights to immediate possession of it, they had not done so intentionally. As a result, they were not liable in conversion.

[7] ATARI CORP (UK) LTD v ELECTRONICS BOUTIQUE STORES (UK) LTD [1998] QB 539; [1998] 1 All ER 1010 Court of Appeal, Civil Division (England and Wales) Supply of goods - Delivery on 'sale or return ' basis notice of rejection valid


FACTS Electronics Boutique Stores bought computer games from Atari under a contract providing for 'Full sale or return until 31 January 1996'. On 19 January 1996, it wrote to Atari, advising that it would cease stocking some of the goods and that it would return the unsold stock so that a detailed list of returns could be prepared. Atari disputed the defendant's right to return the goods. ISSUE

Had there been a valid notice of rejection?

DECISION Where goods are delivered on a sale or return basis, the 'buyer' holds them as a contractual bailee and any notice of rejection given before the time fixed for their return is sufficient. The critical consideration is whether there had been a clear notice of rejection before the date fixed for the goods' return: there had been and Atari had to accept return of the goods.

[8] AUSTRALIA & NEW ZEALAND BANK LTD v ATELIERS DE CONSTRUCTIONS ELECTRIQUES DE CHARLEROI [1967] 1 AC 86; (1966) 39 ALJR 414 Privy Council Agency - Authority - Cheques drawn in foreign principal's favour indorsed by agent - Irregular indorsement

ISSUE Did the agent have authority to indorse cheques made in favour of the principal and pay them1nto its own account? DECISION The agent had authority to indorse the cheques and pay them into its own account. Normally it is wrong for an agent to pay cheques in favour of a principal into its own account. In this case, however, the court must prefer a practical commercial, rather than a technical legalistic, view. In the circumstances, the proper inference was that there was implied actual authority from the principal for the agent to indorse the cheques and pay them into his accourit

[9] AUSTRALIAN CAPITAL PROVIDERS PTY LTD [2009] QSC 167; BC200905403 Supreme Court of Queensland Loan contract induced by false statement contract unconscionable


Default -


FACTS Wakelin defaulted on a loan. Australian Capital Providers provided Wakelin with a short-term loan to pay out that loan, provide a small al)lount of additional capital and pay the interest for the term of the loan. This loan was not repaid. Australian Capital Providers commence~ proceedings to recover the outstanding debt and possession of the security. The loan contract provided for the payment of an interest rate annualised to 132%, reducible to 84% annualised if the borrower was not in default. ISSUE Was the credit contract unconscionable or unjust at the time it was entered into because of the interest rates, or could it be enforced? DECISION In considering whether relief should be granted, the court was entitled to have regard to the conduct of the parties in relation to the contract formation and performance. In particular, the loan was induced by a false statement by the borrower; the finance was not the only finance available; and the borrower had been independently advised. Regardless of this, the interest rate exceeded what was justifiable, and the contract was unjust.

[1 OJ AUSTRALIAN CASUALTY CO LTD v FEDERICO (1986) 160 CLR 513; 66ALR 99; BC8601440 High Court of Australia Insurance - General insurance caused by work accident

Disability insurance -


FACTS The agent of an overseas principal indorsed cheques payable to the principal and paid the cheques into its own account. When the agent went into liquidation it became clear that the agent had not transferred to the principal the money it had received on its behalf.

FACTS Federico was, for practical purposes, illiterate in English. He purchased a policy from Australian Casualty Co Ltd the primary



LexisNexis Case Summaries

Business Law

benefit of which was the payment of a 'monthly indemnity' in respect of 'total disability' resulting from 'injury ... or ... sickness'. The cover varied according to whether the 'total disability' resulted from 'injury' or from 'sickness'. If it resulted from 'injury', the liability to pay the indemnity continued for so long as total disability continued.

• not to compete with each other for the supply of Hino trucks to customers located in Brisbane,ibowoomba and the Gold Coast.

The policy was in force in April 1978, when Federico suffered a lesion caused by a central disc prolapse while he was working as a tiler. The treating surgeon described the cause of the prolapse as 'a significant traumatic event' - Federico was moving a sand and cement mixture while his spine was bent, which involved 'tremendous pressure ... through the lumbar disc system': at ALR 106. ISSUE


Did the arrangement amount to price fixing?

DECISION The arrangement did amount to price fixing. Under the then appropriate law (Trade Practices Act 1974 (Cth) ss 45(2), 45A) the agreements amounted to price fixing. That legislation has since been repealed and the conduct would be regarded as a cartel provision under s 44ZZRD(l) and (2) of the Competition and Consumer Act 2010 (Cth) . • •

The executives who entered into the agreements were each fined .

Was Federico's condition an injury or a sickness?

It is necessary to consider what the words of the policy convey, as a matter of contemporary language read in the context of the whole policy, to a reasonable non-expert in Australia. The relevant policy definition was: "'Injury" means bodily injury of the Insured caused by an accident ... '.

[12] AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v VISY INDUSTRIES HOLDINGS PTY LTD {No 3) (2007) 244 ALR 673; [2007] FCA 1617; BC200709371 Federal Court of Australia

As a matter of ordinary language in Australia, an 'accident' is something that happens without intention or design. When used with reference to something which causes injury, it means an unexpected and unintended mishap.

Anti-com etitive conduct - Cartel behaviour - Price fixing and market sharing - Level of penalty for companies and executives


[11] AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v VANDERFIELD PTY LTD [2009] FCA 1535; BC200911936 Federal Court of Australia Restrictive Trade Practices -

Price fixing -

Cartel conduct

FACTS Vanderfield and Sci-Fleet, Hino truck dealers, were competitors for the supply of Hino trucks in South-East Queensland. Each had a non-exclusive prime marketing area (PMA) that was contiguous but not overlapping with the other.

In February, June and November 2005 they made an arrangement by which they agreed: • not to compete with each other for the supply of a Hino truck to a particular customer located in Vanderfield's PMA; • not to compete with each other for the supply of Hino trucks to customers located in South-East Queensland; and


Yisy and Amcor were competitors in the corrugated fibreboard packaging (CFP) market; between them they held over 90% of the market. From 2000 to 2004, the value of the CFP market was between $1.8 and $2 billion per annum. The goods packaged in CFP covered a wide range of consumables and there were no suitable packaging substitutes available. FACTS

ISSUE The Australian Competition and Consumer Commission alleged, and the parties admitted, that the parties had agreed not to deal with each other's customers and had fixed prices. DECISION This was cartel behaviour, which is extremely destructive of competition in a free-market economy. Price fixing and market sharing are deliberate offences. Australian consumers paid more for packaged goods as a result of the price fixing.

A penalty was imposed of $36 million to be paid by Visy and $500,000 and $1.5 million to be paid by individual executives of the company.


LexisNexis Case Summaries

Business Law

[13] AUSTRALIAN FINANCE DIRECT LTD v DIRECTOR OF CONSUMER AFFAIRS VICTORIA (2007) 234 CLR 96; 241 ALR 67; BC200710769 High Court of Australia

Corporations Act 2001 (Cth) ss 181 and 182 by acting dishonestly and misusing his position as an officer.

Loan agreement - Debtor must be fully informed of amount of debt and details of payment FACTS A number of people who wished to attend investment seminars but who did not wish, or were unable, to pay the fees for the seminars in cash, entered into a loan agreement with a credit provider. The loan was repayable in 48 instalments. Borrowers were not told that the credit provider retained a portion of the seminar fee. ISSUE Was it necessary to disclose the identity of the credit provider and other details of the payment? DECISION It was necessary to disclose the identity of the credit provider and other details of the payment. The object of Consumer Credit Code s 15(B)(a)(ii) is to ensure that the debtor is fully and accurately informed of the amount of the deferred debt, the details of the person or persons to whom the credit provider is to pay the advance, and the amounts payable to each such person. Section 15 regulates not only certain aspects of the contract between the credit provider and the debtor but also the information that is to be furnished to the debtor.

[14] AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v ADLER (2002) 41 ACSR 72; [2002] NSWSC 171 Supreme Court of New South Wales Directors' duties -

Acting dishonestly and misusing position

FACTS The Australian Securities and Investments Commission (ASIC) brought action against Adler, who was a non-executive director of HIH Insurance and an officer of HIHC, an HIH subsidiary. Adler, in his capacity as an officer of the subsidiary, organised a loan from the subsidiary to another associated company, PEE, which he controlled. PEE used the money to buy shares in HIH and boost the market price of those shares. Loan money was used to buy shares in Adler's own company and further funds were lent indirectly to Adler himself.

[15] AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v HEALEY [2011] FCA 717; BC201106546 Federal Court of Australia Corporations - Directors and officers- Duties -.i=xtent to which directors entitled to rely on judgment and advice of management and experts - Duty to read and understand financial statements - Duty to apply background knowledge to review of financial statements FACTS Healey, the non-executive Chairman, the Chief Executive Officer and the non-executive directors of Centro Properties Limited were charged with breaches of the Corporations Act in that they failed properly to disclose details of the company's liabilities. These amounted to $1.5 billion of short-term liabilities and guarantees of short-term liabilities ~fan associated company of about US$1.75 billion. ISSUE Had the directofS breached their duty of care by relying on annual reports prepared by accounting staff and a favourable report from auditors? DECISION As directors they failed to take all reasonable steps required of them, and acted in the performance of their duties as directors without exercising the degree of care and diligence the law requires of them. They had the required accurrtUlated knowledge of the affairs of Centro, based upon the documents placed before them and discussion at board meetings. Directors need to formulate their own opinions and apply them to the task of approving the financial statements.

[16] AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v MacDONALD (No 11) (2009) 71 ACSR 368; [2009] NSWSC 287; BC200903649 Supreme Court of New South Wales Directors' duties -

Duty of diligence and care

DECISION Adler breached a number of statutory duties, such as the giving of financial assistance. In particular, Adler breached the

FACTS James Hardie Industries Ltd was the holding company for a group of companies against which there were significant claims for compensation for asbestosis suffered by former employees. The company sought to re-register in the Netherlands, but in order to do so needed to convince the authorities that they would provide for all future



ISSUE Did Adler breach his duty by using his position to transfer company money for his own benefit or that of a subsidiary company?

LexisNexis Case Summaries

Business Law

medical claims. The company established a foundation that would hold funds sufficient to meet future claims; the directors, both executive and non-executive, assured the Australian Securities Exchange, the Government and claimants that this arrangement would meet all future contingencies. In fact, the foundation was significantly underfunded and could not meet future claims, and company management knew, or should have known, that this was the case.

[18) AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v RICH (2003) 44 ACSR 341; [2003] NSWSC 85; BC200300433 Supreme Court of New South Wales

Had the James Hardie directors breached their duty of diligence and care under s 180( 1) of the Corporations Act? ISSUE

DECISION The non-executive directors had breached their duty under s 180(1) - their assurances were not diligent and careful, and their statements were false, deceptive and misleading and a breach of s 1041H(l) of the Corporations Act.

[17) AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v PLYMIN (2003) 46 ACSR 126; [2003] VSC 123; BC200302080 Supreme Court of Victoria Whether Corporations Whether companies insolvent directors aware of reasonable grounds for suspecting insolvency - What debts were incurred and what resulting loss and damage was suffered by creditors FACTS Plymin was the Managing Director and Elliott a non-executive director of Water Wheel Mills Pty Ltd and Water Wheel Holdings Limited. Insolvent trading was alleged to have commenced on or about 14 September 1999. ASIC alleged that Plymin and Elliott contravened s 588G of the Corporations Law with respect to the insolvent trading of the companies on and after the date of their insolvency.

To what extent were the directors liable for trading while the companies were insolvent? ISSUE

Both Plymin and Elliot were aware throughout the time that each of the debts was incurred of reasonable grounds for suspecting that the company incurring the debt was insolvent. A reasonable person in their position in the circumstances would have been aware of reasonable grounds for suspecting that the companies were insolvent. DECISION

Directors' duties -

Duty of diligence and care

FACTS ASIC brought an action against the chairman of One.Tel, alleging that by not informing the management of the company of its poor financial health he had breached the obligatiQn.of diligence and care under the Corporations Acts 180(1). ISSUE Does a director with considerable experience have a duty, and liability, to inform management about the financial state of the company? DECISION Considering his responsibility and skills, the chairman should have properly informed the board of the company's financial situation.

[19).AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v VINES (2005) 55 ACSR 61.7; [2005] NSWSC 738; BC200507884 Supreme Court of New South Wales Officers' duties -

Duty of diligence and care

FACTS ASIC proceeded against particular officers of GIO Insurance who were resisting a takeover bid by AMP. Vines was an officer of GIO and failed to inform the boerd of pending company losses due to a hurricane and, as a result, the board made untrue statements about the profitability of the company. ISSUE Will officers be liable for a breach of duty if they do not reveal new and detrimental information to potential investors? DECISION Vines had failed under s 180(1) of the Corporations Act to exercise an adequate duty of diligence and care, which is judged by objective standards of each officer's skills, experience and expectations of the office held.

Both Plymin and Elliott contravened s 588G of the Corporations Law - a civil penalty provision - on each occasion when the debts were incurred. They failed to establish any of the defences provided for under the law. 10


LexisNexis Case Summaries

Business Law

(20) AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v VIZARD (2005) 145 FCR 57; 219ALR 714; BC200505352 Federal Court of Australia

[22) BARNETT v CHELSEA & KENSINGTON HOSPITAL MANAGEMENT1COMMITTEE (1969] 1 QB 428 Queen's Bench Division (England and Wales)

Directors' duties -

Fiduciary duty

FACTS ASIC brought an action against Vizard, a non-executive director of Telstra, who used information gained while he was a board member to buy and sell assets in order to make a gain personally. ISSUE Has a director breached his or her fiduciary duty if he or she makes profits from information gained while a director?

Negligence - Failure to diagnose condition to diagnose condition was cause of death

Whether failure

FACTS Barnett's husband presented at the hospital complaining of vomiting. He was sent home and told to see his own clQi'.tor the next day. A few hours later he died of arsenic poisoning. Barnett sued the hospital, alleging that her husband's death had been caused by the negligence of its medical staff.

DECISION Vizard had breached the Corporations Acts 183. The court imposed civil penalties and banned him as a company director.

ISSUE Had the hospital's failure to diagnose and treat the husband's condition 'caused' his death? Was the death inevitable and not contributed to by a failure to properly examine the patient?

(21) BALTIC SHIPPING CO (THE MIKHAIL LERMONTOV) v DILLON (1991) 22 NSWLR 1 Supreme Court of New South Wales (Court of Appeal)

DECISION Although the hospital had not met the required standard of care and had been negligent in failing to examine the husband, that negligence.did not cause his death. Even ifhe had been seen and treated, he would !till have died because the effects of the poison could not have been reversed.

Contract -

Formation -

Whether limitation clauses binding

FACTS Dillon made part-payments for a cruise aboard the Mikhail Lermontov to New Zealand. On 6 January 1986, she paid the balance of the fare and she received her ticket on 24 January. The ticket contained terms limiting the shipping company's liability for personal injury and loss of personal effects which had not been previously disclosed. The ship sank as a result of negligent navigation. Dillon suffered physical injury and nervous shock. The shipping company sought to rely on the limitation clauses contained in the ticket. ISSUE When was the contract formed, and were the limitation clauses sufficiently drawn to Dillon's attention prior to that formation? DECISION The contract of carriage was already made when Dillon received the ticket. She would only be bound by the terms printed on the ticket if they had been sufficiently drawn to her attention before she received the ticket. This meant that Dillon was not bound by the limitation clause and could recover damages.


[23) BAUMGARTNER v BAUMGARTNER (1987) 164 CLR 137; 76ALR 75; BC8701827 High Court of Australia Trust - Constructive trust - Unmarried persons pooling incomes for living expenses and fixed commitments - Purchase of house in man's name as home for parties - Whether constructive trust in favour of wife. FACTS The appellant, Leo Baumgartner, and the respondent, Frances Baumgartner, lived together in a de facto relationship. Frances had changed her name by deed poll to Baumgartner. The appellant banked the respondent's pay each week as part of a pooling arrangement. During the period of cohabitation the respondent contributed approximately 45% of the amount pooled. The appellant bought land on which the couple's home was to be built in his own name. The respondent sought to be acknowledged as co-owner of the property and was told that the loan was in the appellant's name and the mortgagee would not accept both names on the title deeds because the parties were living in a de facto relationship only.


LexisNexis Case Summaries

Business Law

ISSUE In the absence of a formal acknowledgment of her contribution, did the respondent have a legally-recognised interest in the property?

[25] BENDAL PTY LTD v MIRVAC PROJECT PTY LTD (1991) 23 NSWLR°4B4; 74 LGRA406 Supreme Court of New South Wales

DECISION The respondent did have a legally-recognised interest in the property. It would be unreal and artificial, and there is no evidence, to say that she intended to make a gift to the appellant of so much of her earnings as were applied in payment or mortgage instalments. The parties had pooled their earnings for the purposes of their joint relationship. Their contributions, financial and otherwise, were on the basis, and for the purposes, of that joint relationship. The appellant's assertion that the property, which was financed in part through the pooled funds, was his sole property to the exclusion of any interest on the part of the respondent amounts to unconscionable conduct, which attracts the intervention of equity and the imposition of a constructive trust at the suit of the respondent.

[24] BECKINGHAM v PORT JACKSON & MANLY STEAMSHIP CO (1957) 57 SR (NSW) 403 Supreme Court of New South Wales Partnership -

Does sharing the proceeds from a business undertaking amount

to a partnership?

DECISION This was not a partnership. The agreement was more like a licence to use the wharf property.


Trespass above surface -

Air space

FACTS The defendant was building a multi-storey office building on land adjoining the plaintiff's property. Its safety screens encroached into the plaintiff's air space and even though the screens ll~d no immediate danger and did not interfere with the plaintiff's use of its property, the plaintiff sought an injunction to stop the incursion. ISSUE Was the incursion an unlawful trespass to the plaintiff's property? DECISION The injunction was granted. The plaintiff could use the space or license others to use it for building work such as the defendant was undertaking and it was therefore entitled to protect that right and to force the defendant to negotiate, and pay for, using the air space. >

[26] BERNSTEIN v SKYVIEWS AND GENERAL LTD [1978] QB 479; [1977] 2 All ER 902 Queen's Bench Division (England and Wales)

Sharing profits

FACTS A syndicate purchased a submarine to use as a tourist attraction. It made an arrangement with Manly Steamship Co, which owned the wharf where the submarine was to be moored. Under the arrangement the public would be allowed to enter the wharf and Steamship Co would receive a 40% share of profits from the sale of tickets as well as a rental fee. During a storm, Steamship Co arranged to tow the submarine away from the wharf, to avoid damage. The submarine was damaged and the business venture came to an end. The syndicate sued Steamship Co for the loss of its property. Steamship Co argued that there was a partnership with the syndicate, so that the syndicate was not entitled to sue as a fellow partner, and referred to a sharing of profits arrangement between the parties as proof of a partnership. ISSUE

Trespass to land Injunction

Tort -

Trespass to land

FACTS The defendants had flown over Lord Bernstein's land to take photographs which they intended to sell to him. Bernstein objected and demanded that the negative and prints be handed over or destroyed. The defendants refused and Bernstein sued, alleging that by entering the air space above his property the defendants had been guilty of trespass. ISSUE

Did the overflying of Bernstein's property constitute trespass?

DECISION An owner's rights to the air space above his or her land are not unlimited; they are restricted 'to such height as is necessary for the ordinary use and enjoyment of his land and the structures upon it and ... above that height he has no greater rights in the air space than any other member of the public': at QB 480. Here the overflying was at a height above that which Bernstein needed for 'the ordinary use and enjoyment of his land and the structures upon it': at QB 480. Therefore, it did not constitute an actionable trespass.


LexisNexis Case Summaries

Business Law



(1902) 7 COM CAS 112

(1990) ASC 56-001; BC9001953 Supreme Court of New South Wales (Court of Appeal)

Sale of goods agreement

Property passes on delivery -


FACTS The seller delivered furs to the buyer 'on approval'. The furs were stolen and the seller alleged that they were at the buyer's risk, even though property had not then passed. ISSUE Were the furs at the buyer's risk even though property had not passed? DECISION Because there was a long-established custom in the fur trade that goods 'on approval' were at the buyer's risk, the buyer was liable. The parties had, by their implied contrary agreement, overridden the general rule.

(28) BLACKWELL v WADSWORTH (1982) 64 FLR 145; AIPC 90-016 Supreme Court of New South Wales Copyright -

Use of commissioned work in advertisements

FACTS Wadsworth and his colleagues commissioned Blackwell to do a drawing of 'The London Tavern Hotel' which Blackwell understood they intended to hang in the hotel. When Wadsworth and his colleagues were selling the hotel two years later, they used the drawing in a number of advertisements. Blackwell sued, arguing that, by reproducing his drawing without his permission, Wadsworth and his colleagues had infringed his copyright. ISSUE

Did the artist still own the copyright?

DECISION While Wadsworth and his colleagues owned the physical drawing, they did not own the copyright, which remained with the artist. Therefore, they could not reproduce the drawing without Blackwell's permission.


Sale of goods of goods

Payment in instalments -

Default -


FACTS The seller agreed to sell $360,000 worth of office equipment with the price to be paid in 10 monthly instalments. After five instalments had been paid, the buyer defaulted and. tile seller tried to reclaim the equipment. ISSUE buyer?

Did the seller still own the goods or had property passed to the

DECISION The contract had been an 'unconditional contract for the sale of specific goods in a deliverable state' (at 2), the sellers had not reserved title and, therefore, property had passed to the buyer.

[30) .BOLLINGER v COSTA BRAVA WINE CO {No 2) " [1961] 1 All ER 561; [1961] 1WLR277 High Court, Chancery Division (England and Wales) Passing off- Geographical name - Implied production in region of high reputation - Whether calculated to deceive FACTS Costa Brava Wine Co produced and marketed a sparkling wine as 'Spanish Champagne'. ISSUE Did the term 'champagne' have such public recognition that sections of the public could be misled as to the wine's provenance? DECISION In the public's mind, the word 'champagne' was intimately connected with wine produced in the Champagne district of France - wine that had an established reputation and following, and which Bollinger produced in that region. When Costa Brava used the word to describe their wine they did so to benefit from that reputation and in the hope that the public would not understand the difference. They were ordered to stop.


Negligence -

LexisNexis Case Summaries

Business Law

[31] BOLTON v STONE [1951] AC 850 House of Lords (UK)


Likelihood of injury

FACTS Miss Stone was injured when she was struck by a cricket ball that had been hit out of the defendant's cricket ground. The ball had been hit approximately 90 metres and had cleared a protective fence that was approximately five metres above the level of the cricket pitch and located about 72 metres from the batsman. ISSUE

Had the defendant failed to meet the required standard of care?

DECISION Although there was a risk that balls would be hit out of the ground - six had been hit out of the ground in the previous 28 years - that risk, and the risk that someone would be struck, was so minimal that no-one had ever been hit before, and the steps the defendants had taken to avoid the danger were reasonable in the circumstances. The defendants had met the required standard of care and were not liable. [32) BONNINGTON CASTINGS LTD v WARDLAW [1956] AC 613 House of Lords (UK)

Negligence -

Causation -

Substantial cause

Evidence Act - Client legal privilege - Deliberate destruction of documents - Fraud - Ethical conduct

FACTS Mowbray, a cigarette smoker since 1946, wo\ked for Brambles as a motor mechanic and in that job worked on asbestos brake pads. Mowbray died of lung cancer. In a negligence action against Brambles, it was alleged that the cancer was caused by the asbestos fibres contained in the brake pads. Brambles asserted that the smoking of cigarettes was also a cause of Mowbray's cancer, and asked for contribution from British American Tobacco Australia Services (BATAS) to any award of damages. The evidence established that: • BATAS knew from its own research of the addictive and harmful nature of cigarettes; it deliberately concealed this research and had cjenied to the public that cigarette smoking was addictive or harmful; and • BATAS destroyed dq,cuments which contained research evidence explaining that this was part of document retention policy. ISSUE Did BATAS lose the protection of client legal privilege because of its document destruction policy?

FACTS Wardlaw, a steel dresser, contracted pneumoconiosis by inhaling silica dust at his place of work. Inhalation of dust from a pneumatic hammer was inevitable given the technological standards of the time. The danger could have been lessened had his employer kept the dust extraction ducts on its swing grinders free from obstruction, as the relevant safety regulations required.

DECISION BATAS in 1985 drafted or adopted the document retention policy for the purpose of a fraud within the meaning of s 125 of the Evidence Act. Thus, it lost the protection of client legal privilege.

ISSUE Was the employer's failure to keep the dust extraction ducts on the swing grinders clear the 'cause' of Ward law's injury?

[34) BRAMBLES HOLDINGS LTD v BATHURST CITY COUNCIL (2001) 53 NSWLR 153; (2001] NSWCA61; BC200101184 Supreme Court of New South Wales (Court of Appeal)

DECISION On the balance of probabilities, inhaling the dust from the swing grinders had caused or had materially contributed to Wardlaw contracting the disease. That 'cause' could have been removed if the employer had kept the extraction ducts clear, and its failure to do so had therefore 'caused' Wardlaw's injury. The employer was liable.

Contract -

Implied acceptance

FACTS The parties agreed that Brambles would manage Bathurst City Council's solid-waste disposal depot. Part of the fee charged for the service was shared with the council. Brambles began accepting liquid waste, but retained all fees from that source. A new contract for the management of 'general commercial waste', on similar terms to the original contract, was formed. Subsequently, the council told Brambles in a letter that the

LexisNexis Case Summaries

Business Law

fee charged for liquid waste should be increased and that the additional income should be placed into a special fund. Brambles increased the fee but continued to retain all income for liquid waste. The council sued for its portion of the income collected from the liquid waste.


ISSUE Did the exchange of letters and Bramble's conduct give rise to an implied acceptance of the terms contained in the letter ? DECISION There was no express acceptance, but the conduct was 'of such character as necessarily lead to the inference on the part of [the council) that the agreement had been accepted by Brambles, and was to be acted upon by them': at 195. Here, an implied acceptance had arisen from the exchange of letters and the conduct of the parties.

[1843-60] All ER Rep 1°22; (1851) 21 LJQB 75 Court of Queen's Bench (UK) Bailment - Gratuitous bailment true owner

FACTS Bridges found a parcel of banknotes on the floor of Hawkesworth's shop. He handed it to Hawkesworth and asked him to keep the notes until the owner claimed them. The¥ lfere not claimed and, three years later, Bridges asked for the money. Hawkesworth refused to hand it over. ISSUE

[35] BREEN v WILLIAMS (1996) 186 CLR 71; 138 ALR 259; BC9604086 High Court of Australia Contract -

Terms -

Implied terms

DECISION There were no such implied terms. Although the doctor-patient relationship is contractual, given the informal nature of the relationship there are few express terms. The law would imply into a contract between the parties terms that the doctor agreed to advise and treat the patient with reasonable skill and care, that the patient would pay the doctor and that the patient would submit to the treatment proposed, because such terms reflect what the parties intended. There were no implied terms because the contract was operative and effective without them: they were neither necessary to give business efficacy to the contract nor so obvious that they went without saying.


Who had better title to the banknotes?

DECISION As the finder, Bridges had the better claim to the notes. Hawkesworth had not known that the parcel had been dropped and, therefore, he had not, in any sense, exercised control over it - the banknotes had never been in his custody or 'within the protection of his house'. Bridges was entitled to the money.

FACTS Ms Breen had silicone implants inserted into her breasts. She was interested in joining the litigation being pursued in the United States against the manufacturers of the implants. She consulted Dr Williams about problems that had developed with her implants and later sought access to her medical records, which access Dr Williams refused. ISSUE Were there implied terms of the contract between Ms Breen and Dr Williams that she had a right of access to the medical records?

Rights of finder against all but

[37] BUGGE v BROWN (1919)'26 CLR 11 O; BC1900039 High Court of Australia Damages - Fire damage caused by employee employer vicariously liable


FAG.TS An employee who had been told to cook his midday meal in a hut m which there was a fryil'fg' pan chose instead to cook it in the open - something which his employer had forbidden. The fire escaped and a neighbour's property was damaged. ISSUE

Was the employer vicariously liable?

DECISION The employer was vicariously liable because he had not forbidden the employee to light a fire; he had simply forbidden him to light it outside the hut. Consequently, what the employee had done was an authorised act performed in an unauthorised way. Therefore, it was still 'within the course of his employment'.


LexisNexis Case Summaries

Business Law



(1998) FCR 1082; 157 ALR 193; BC9804472 Federal Court of Australia Copyright - Aboriginal artwork original work

Unauthorised reproduction of

FACTS R & T Textiles imported cloth containing an unauthorised reproduction of an aboriginal painting. The artist sued for infringement of copyright - as did the Ganalbingu Aboriginal people - on the grounds that the painting incorporated subject matter that they regarded as sacred.

Did the Ganalbingu people have any claim to copyright in the


painting? The Copyright Act does not recognise copyright in other than 'authors'. Therefore, the Ganalbingu people did not have any copyright in the work which was capable of being protected. DECISION

[39] BUNNING$ PTY LTD v LAMINEX GROUP LTD (2006) 230 ALR 269; (2006] FCA 682; BC200603965 Federal Court of Australia Goods - Whether of a kind ordinarily acquired for personal, domestic or household use or consumption - Price not relevant FACTS In respect of thermal insulation products marketed as Sisalation 496, Sisalation 498 and Permastop 496 that were used in the construction of 20 Bunnings Warehouses, Bunnings alleged that the products were defective and claimed compensation for breach of its consumer rights. ISSUE Were the products goods of a kind ordinarily acquired for 'personal, domestic or household use or consumption' within the meaning of the Australian Consumer Law? Did the high cost of the goods and their usual use in commercial building preclude them from being goods ordinarily acquired for household use? DECISION Where goods were so closely similar to goods ordinarily acquired for household use or consumption, special features or high cost would not prevent them being classified as of the type of goods acquired for household use.


(1994) 179 CLR 520; 120 ALR 42; BC9404607 High Court of Australia Negligence -

Duty of care -

Standard of care

FACTS The Burnie Port Authority had allowed especially flammable insulating material to be stored on its premises in close proximity to where welding was being done. The material ignite~, set fire to the building and destroyed three cold rooms full of the plaintiff's frozen vegetables. ISSUE

Was the Port Authority liable?

DECISION Given the real and foreseeable risk of fire that having such highly flammable material on the premises posed, the Port Authority should have taken special precautions to ensure that it was not ignited. It had not taken those special precautions and, therefore, it had not exercised the standard of care that was required of it in the circumstances, and was liable for what occurred. >

[41] BUTLER MACHINE TOOL CO LTD v EX-CELL-0 CORP {ENGLAND) LTD [1979] 1 All ER 965; (1979] 1 WLR 401 Court of Appeal, Civil Division (England and Wales) Contract -

Formation of contract -

Offer and acceptance

FACTS The Butler Machi~ Tool Company quoted for supply of a machine, using its own quotation form which had terms printed on its back, one of which was a price variation clause. Ex-Cell-O Corp placed an order for the machine at the quoted price, but used its own order form, which did not include a price variation clause. At the foot of the order form was a tear-off slip which stated: 'We accept your order on the terms and conditions stated thereon .. .'.This was signed and returned by Butler Company, which claimed an extra payment under the price variation clause. ISSUE

Which form was the offer accepted by the other party.

DECISION The quotation was an offer by Butler Company. The order by Ex-Cell-O, since it was not in the same terms as the offer, was a counter-offer and therefore a rejection of the original offer. The return of the tear-off slip by Butler was acceptance of the counter-offer. The contract did not contain the price variation clause.


LexisNexis Case Summaries

Business Law

[42] BYRNE v HOARE [1965] Qd R 135 Supreme Court of Queensland

'NIKE SPORT FRAGRANCE' product was in some way promoted or distributed by Nike International itd or with its consent and approval. Thus, Campomar Sociedad's conduct was deceptive.

Finding by employees -

Finding in performance of duty -


FACTS A police constable performing special duty directing traffic at a drive-in theatre - outside of his working hours - found a gold ingot near the theatre's exit. The Crown claimed the ingot, arguing that the constable had found it in the course of his employment. ISSUE Who had the better title to the gold: the constable or his employer? DECISION The constable had not acquired possession of the ingot by reason of the fact that he was a constable or in the performance of his duties - he was not required to look for lost property - and the fact that he was on duty when he found it was merely coincidental. He was, in effect, in exactly the same position as any casual passer-by. The constable had not found the ingot 'in the performance of his duty' and so he acquired title by finding - a title good against the whole world except the true owner.

[43] CAMPOMAR SOCIEDAD, LIMITADA v NIKE INTERNATIONAL LTD (1999) 202 CLR 45; 169 ALR 677; [2000] HCA 12 High Court of Australia

Trade Marks - 'NIKE' -Appellants and respondents registered identical trade marks in respect of different products -Appellants intended to take advantage of respondents' goodwill Application to expunge appellants' trade marks - Trade practices - Misleading or deceptive conduct - Significance of 'erroneous assumption' FACTS Campomar Sociedad and Nike International both used the trade mark 'Nike' but in respect of different classes of goods. Campomar Sociedad's use was in respect of fragrances, in particular 'Nike Sport Fragrance'; Nike International used the term in respect of sporting goods and clothing. ISSUE Was Campomar Sociedad being deceptive in using the term 'Nike' in the promotion of its products? DECISION The placing of the 'NIKE SPORT FRAGRANCE' product in the same area of pharmacies with other sports fragrances was likely to mislead or deceive members of the public into thinking that the



Partnership and joint ventures partnership

Intention of parties -

lndicia of

FACTS A company promoted concert tours of Australia by two popular entertainers. To finance the tour, the company borrowed from Volume Sales (Finance) Pty Ltd and entered into a contract which described the company and Volume Sales as joint venturers. Volume Sales later entered into a finance agreement with Canny Gabriel, which held as security a claim on the box office receipts. ISSUE Was the business organisation between the concert promoters and Volu~e Sales a partnership or a joint venture? DECISION The contra'*t exhibited all the indicia of a partnership except that it did not describe the parties as partners. There was, however, a partnership because:

• the parties had joined in a commercial enterprise with a view to profit; • the parties had agreed to share profits; • disputes were to be decided by arbitration; and • there was to be mutual agreement on the particular enterprise. [45] CARLOS FEDERSPIEL & CO SA v CHARLES TWIGG & CO LTD [1957] 1 Lloyd's Rep 240 Queen's Bench Division, Commercial Court (England and Wales)

Sale of Goods property - Risk

Appropriation to the contract -

Passing of

FACTS The parties contracted for the sale of bicycles, tricycles and accessories. Carlos Federspiel & Co, a merchant in Costa Rica, paid for them and the sellers prepared them for shipment, even marking the boxes with the port of destination and the buyer's name. The bicycles were never shipped because the sellers went into liquidation. The buyers


LexisNexis Case Summaries

Business Law

claimed the goods, arguing that they had been 'unconditionally appropriated' to the contract and that, therefore, property had passed under the Sale of Goods Act.

negligently threw the lighted match away. A fire started, there was an explosion and the petrol tanker, a car nd some surrounding houses were either substantially damaged or destroyed.



Had property passed to the buyers?

DECISION Property had not passed. There was no 'unconditional appropriation' of the goods. The sellers could have changed their mind and used those goods for some other contract or used some other goods for the contract in question. Also, because it was a free on board (f.o.b.) contract - under which the seller bears the risk until the goods are on the ship - the parties had not intended property to pass until shipment.

[46) CENTRAL LONDON PROPERTY TRUST v HIGH TREES HOUSE LTD [1946] 1 All ER 256; [1947] KB 130 High Court, King's Bench Division (England and Wales) Lease - Rent reduced during wartime recover - Rise of equitable estoppel

Attempt by landlord to

FACTS During World War II, many residences were empty. The landlord of one block of flats agreed to accept one half of the rent due on the block. After the war, people returned to live in London and it was no longer necessary to charge the low rent. The landlord then put the rent back to full price and sued to recover the full amount of rent for the war years. ISSUE

Could the landlord break his promise to reduce the rent?

DECISION At common law, since there had been no consideration given to the landlord for the lowering of the rent, it was due to the landlord. In the circumstances of this case, however, the landlord was not able to recover his rent because of the promise to accept half the rent, and the law, while not enforcing that promise, would not allow a departure from it.

[47) CENTURY INSURANCE CO LTD v NORTHERN IRELAND ROAD TRANSPORT BOARD [1942] AC 509 House of Lords (UK) Damages - In the course of employment vicariously liable

Whether employer

FACTS Davison, the driver of a petrol tanker and employed to deliver petrol to service stations, while at a service station lit a cigarette and


Was Davison acting 'in the course of his employment'?

DECISION Even though smoking cigarettes was not part of Davison's job, the smoking had occurred in the course of his work, in the sense that it was an accepted part of his daily routine while at work. It was, therefore, 'reasonably incidental' to the way in which the work was performed. Consequently, the employer was vicariousl~ liable.

[48) CHAIRMAN, NATIONAL CRIME AUTHORITY (1998) 86 FCR 16; 156 ALR 501 Federal Court of Australia Property -

Rights of occupier -


Residential premises

FACTS In the course of searching Flack's home for evidence of drug offences suspected of having been committed by Flack's son, National Crime A.ithority (NCA) investigators found a locked briefcase containing $433,000. Flack denied all knowledge of the briefcase and its contents, and no-one elsef~aimed ownership. Flack subsequently sought return of the money. The NCA refused to return it to her, and she sued. ISSUE Was Flack, as the lawful occupier of the premises on which the money was found, entitled to it? DECISION As the lawful occupier of residential premises, Flack had clearly intended to exercise the necessary 'manifest control' or 'dominion' over her property• and everything on it. Therefore, she was entitled to the money.

[49) CHAPLIN v DUNSTAN LTD [1938] SASR 245 Supreme Court of South Australia Negligence - In the course of employment vicariously liable

Whether employer

FACTS Sennett, a truck driver who had then been working for approximately nine hours and who still had around an hour's driving to do before he finished for the day, made a short detour from his route to get a drink at a nearby hotel. In doing so, he collided with and injured motorcyclist Chaplin.


Business Law

LexisNexis Case Summaries ISSUE

Did the incident occur 'in the course of his employment'?

DECISION Because the deviation was reasonably incidental to Sennett's employment, he was still acting in the course of his employment. Therefore, the employer was vicariously liable for the injuries sustained by the motorcyclist.

[50) CLODE v BARNES [1974] 1 WLR 544 High Court, Queen's Bench Division (England and Wales) Partnership -

Liability for partner's wrongdoing

FACTS One of two partners in a firm of car dealers, without the authority of the other partner, advertised a car in a way that breached the United Kingdom law on advertising ISSUE Can a partner be liable for a fellow partner's wrongdoing, even though they have no knowledge of the wrong, nor gave approval for their partner's actions? DECISION The court found both partners guilty because it was in the ordinary course of the firm's business, despite the fact that one partner had no knowledge of, and had given no approval to, the crime.

[51) CODELFA CONSTRUCTION PTY LTD v STATE RAIL AUTHORITY OF NSW (1982) 149 CLR 337; 41 ALA 367; BC8200083 High Court of Australia Contract -

Implied terms -


The contract was terminated by frustration because: • • • •

the injunction was a supervening event; the injunction radically altered contractual rights and obligations; neither party to the contract had instigated the injunction; based on the legal advice, the injunction was not foreseeable; and • it was manifestly unjust to keep the parties to the contract because Codelfa would suffer a penalty. • • [52) COGGIN v TELSTAR FINANCE COMPANY (Q) PTY LTD (2006) ATPR 1[42-107; [2006] FCA 191; BC20060117 Federal Court of Australia Unconscionable conduct -

Meaning of 'unconscionable'

FACTS Coggin used his fishing boat, which had been valued at over $200,000, as collateral for a loan of $65,000 from Telstar to finance the purchase oja franchise business by his de facto son-in-law and his friend, who were connected with a director of Telstar. He signed contracts for the sale of the boat at $65,000 and an option to repurchase. At the time, Coggin's judgment ~as affected by a spider bite he had suffered and by the desire to help his daughter and her partner. Coggin received no independent legal and business advice and Telstar imposed an excessive level of interest. The loan commitments were not met and Telstar sold Coggin's boat for $95,000. ISSUE Was the transactiOQ. unconscionable within the meaning of the Trade Practices Acts 51AC (now Australian Consumer Laws 22)?

DECISION The court was not satisfied that it went without saying that the parties would have agreed to an implied term if they had foreseen the possibility of an injunction. It was not necessary to give business efficacy to the contract.

DECISION The transaction was unconscionable, in favour of Coggin. The court noted that s 5 IAC( 4) provided some 13 factors which the court 'may have regard to' in determining whether the conduct in question was unconscionable. This list was not exhaustive. The notion of unconscionability ins 51AC (now Australian Consumer Laws 22) was wider than that of 'unconscionable within the meaning of the unwritten law ... of the States and Territories' (at [57]) ins 5 IAA (now Australian Consumer Law s 20). For conduct to be regarded as unconscionable, serious misconduct or something clearly unfair or unreasonable must be demonstrated. Whatever 'unconscionable' meant in ss 51AB and 51AC (now Australian Consumer Law ss 21 and 22), the term carries the meaning given by the Shorter Oxford English Dictionary, namely, actions showing no regard for conscience, or that are irreconcilable with what is right or reasonable. Telstar saw the opportunity presented by



FACTS Codelfa contracted with the State Rail Authority (SRA) to construct tunnels in Sydney. The contract price envisaged a 24 hours per day, seven-day working week. Each party had received legal advice that the contract would be immune from injunction. Codelfa was injuncted not to carry out work at night or on weekends. Consequently, it could not complete the contract on time or for the agreed price. ISSUE Could a term be implied to give business efficacy to the contract? Did the injunction frustrate the contract?

LexisNexis Case Summaries

Business Law

the serendipitous combination of the business plans of Coggin's de facto son-in-law and his friend and the availability of the vessel as being too good to miss, and took advantage of it.


[53) COMMERCIAL BANK OF AUSTRALIA v AMADIO (1983) 151 CLR 447; 46 ALR 402; BC8300072 High Court of Australia Unconscionable disadvantage

conduct -





FACTS In 1977, Giovanni and Cesira Amadio believed their son Vincenzo to be a successful businessman. When Vincenzo asked them to help him with a temporary financial problem by mortgaging their land for up to six months for a maximum of $50,000, they agreed. However, Vincenzo had not told them the whole truth - his business was insolvent and his bank knew it. His parents were not aware of their son's true financial state and they were never told - not even when they signed the mortgage documents in front of the bank manager. A few months later, Vincenzo's company collapsed and the bank wanted to enforce its mortgage.

(1991) 42 FCR 390; 1021\LR 453; BC9103389 Federal Court of Australia Negligence -

FACTS A branch manager of the Commonwealth Bank gave negligent financial advice to one of the bank's long-standing customers in relation to the customer's purchase of a hotel. The vendor was indebted to the bank and the branch manager's advice about the vaJ~ of the property was influenced by his concern that the price received would be enough to allow the vendor to repay that indebtedness. ISSUE Was the bank liable to its customer for the resulting overpayment? DECISION The bank was liable. Where a bank gives negligent financial advice, the customer has a number of possible causes of action against it: in negligence, for breach of fiduciary duty or for breach of contract. ,#

[55] COMMONWEALTH TRADING BANK v RENO.AUTO SALES PTY LTD [1967] VR 790 Supreme Court of Victoria

Did the bank act in a manner contrary to good conscience by taking advantage of the Amadios' lack of knowledge as to the true state of their son's finances? ISSUE

DECISION Because the Amadios were operating under a special disadvantage - their lack of commercial knowledge and their language disability (their understanding of English was limited) - the court invoked its equitable jurisdiction and set aside the transaction. The High Court set out the following test for unconscionable conduct (ALR at 417): (I]f A, having actual knowledge that B occupies a position of special disadvantage in relation to an intended transaction, so that B cannot make a judgment as to what is in his own best interests, takes unfair advantage of his (A's) superior power or bargaining position by entering into that transaction, his conduct in so doing is unconscionable. And if, instead of having actual knowledge of the situation, A is aware of the possibility that that situation may exist or is aware of facts that would raise that possibility in the mind of a reasonable person, the result will be the same.


Liability for negligent financial advice

Cheque -

Payment without authority -

Liability of bank

FACTS Gassler, a Commonwealth Bank customer, paid a deposit on a car by cheque and then changed his mind about the purchase. His wife rang the bank and told a typist that her husband wanted the cheque held until he came in to the bank to cancel it. The typist misunderstood the message and believed that the husband would call in later that day to sign a stop payment direction, and did not inform anyone else in the bank. When the cheque was presented, it was paid.


Was the bank liable for paying the cheque without authority?

DECISION The bank was not liable because there had been no effective countermand. Countermand meant notifying, in an unambiguous way, a relevant person in the bank who could be expected to either make or supervise payment.


LexisNexis Case Summaries

Business Law

[56] COMMONWEALTH TRADING BANK OF AUSTRALIA v SYDNEY WIDE STORES PTY LTD (1981) 148 CLR 304; 35 ALR 513; BC8100089 High Court of Australia

[58] CORK v KIRBY MacLEAN LTD [1952] 2 All ER 402 Court of Appeal, Civil Division (England and Wales)

Cheque -

Payment by bank -

Duty of customer to prevent fraud

FACTS Sydney Wide Stores had drawn a number of cheques in favour of a firm called 'Computer Accounting Services' and had made them payable to 'CAS or order'. An employee then fraudulently added the letter 'H' to the abbreviation 'CAS', so that the cheques appeared to be payable to 'CASH', and presented them for payment. The Commonwealth Bank paid them even though they were for large sums and were marked 'Not Negotiable A/c Payee Only'. When Sydney Wide Stores discovered the fraud, it sued the bank. ISSUE Had the bank acted negligently in paying the cheque or was Sydney Wide Stores at fault because it had drawn the cheques in a way that allowed fraud?

Negligence -

Causation -

FACTS Mrs Cork sued the company following the death of her husband who fell 20 feet to his death from a painting platform after he had an epileptic fit. The platform did not comply with the statutory safety regulations and was unsafe. Mr Cork had alsQ een negligent in not informing his employer that his doctor had forbidden him to work at heights because he could suffer a fit and fall. ISSUE Was the employer's failure to maintain the platform the 'cause' of Cork's death? DECISION Cork's death was caused, in equal measure, by his own negligence in not informing his employer of his medical condition and the employer's negligence in not complying with the required safety standards.

DECISION Customers have a duty to take all usual and reasonable precautions to prevent their cheques being fraudulently altered if those alterations could cause loss to the bank. Whether a customer has adopted all usual and reasonable precautions is a question of fact that has to be determined on the merits of each case.

[57] COOK v DEEKS [1916] 1AC554 Privy Council Directors - Fiduciary duty to company own interests

Use of voting power in

FACTS Two majority shareholders, in their capacity as directors of Toronto Construction Company, organised a contract for another company of which they were directors. Realising the potential profits to be made, they formed another company and transferred the valuable contract into that company. The directors then used their majority voting power to approve of the scheme. ISSUE Were the directors in breach of their fiduciary duty to the company by using their voting power in their own interests? DECISION The directors had misused their majority position for their own personal gain, to the detriment of the company and its shareholders, of which Cook was one, and this was a breach of their duty to the company.


Contributory negligence