Martech International Pty Ltd v Energy World Corporation Limited [2006] FCA 1004

FEDERAL COURT OF AUSTRALIA

Martech International Pty Ltd v Energy World Corporation Limited [2006] FCA 1004

CONTRACT – variation – termination – interpretation – managing director of company – service contract with his private company – annual fee payable – company in financial difficulty – unilateral temporary reduction in fee by managing director – whether variation of service contract – entitlement to recover shortfall – change in status of managing director to executive director – change of duties – whether service contract terminated – whether termination fee payable – implied term – reasonable duty of care – whether breach by managing director authorising payment by company on advice from senior officer where company not liable to make payment CORPORATIONS - directors – duties – statutory duty – common law duty – fiduciary duty – reasonable care and due diligence – reasonable reliance on advice of officer – no breach of duty TRADE PRACTICES - misleading or deceptive conduct – representation of intention to enter into service contract – alleged representations by silence – no representations made – no misleading or deceptive conduct – managing director of company authorising payment by company on erroneous belief – whether constitutes misleading or deceptive conduct by managing director's private company to the company of which he is managing director – no misleading or deceptive conduct WORDS AND PHRASES 'terminate' – 'termination' Corporations Act 2001 (Cth) Federal Court of Australia Act 1976 (Cth) s 51A Trade Practices Act 1974 (Cth)

Foakes v Beer [1884] 9 App Case 605 cited Vanbergen v St Edmunds Properties Ltd (1933) 2 KB 223 cited Australia & New Zealand Banking Group Ltd (ACN 005 357 522) v Ringrong Pty Ltd (ACN 005 496 855) [1995] FCA 722 cited Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110 cited Brambles Nationwide Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 cited Nationwide Produce Holdings Pty Ltd v Linknarf Limited (2005) Aust Contract Reports 90-424 cited Vroon BV v Fosters Brewing Group Ltd (1994) 2 VR 32 cited British and Beningtons, Limited v North Western Cachar Tea Co Ltd [19232] AC 48 cited Morris v Baron & Co [1918] AC 1 cited Williams v Moss Empires [1915] 3 KB 242 cited United Dominions Corporation (Jamaica) Ltd v Shoucair [1969] 1 AC 340 cited Tallerman & Co Pty ltd v Nathan's Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93 cited Dan v Barclays Australia Ltd (1983) 46 ALR 437 cited Permanent Building Society (In Liquidation) v Wheeler (1993) 10 WAR 109 cited Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520 cited Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567 cited Federated Mutual Insurance Co of Australia Ltd v Sabine [1920] SALR 284 cited Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 cited Bridge v Campbell Discount Co Ltd [1962] AC 600 cited R v Social Services Secretary, Ex parte Khan [1973] 1 WLR 189 cited Paal Wilson & Co v Partenreederei Hannah Blumenthal [1983] 1 AC 854 cited Re HIH Insurance Limited (In Prov Liq); Australian Securities Commission v Adler and Others (2002) 41 ACSR 72 cited Darvall v North Sydney Brick and Tile Co Ltd (1989) 16 NSWLR 260 cited Carter on Contracts (Butterworths, 2002) MARTECH INTERNATIONAL LTD ACN 009 022 799 v ENERGY WORLD CORPORATION LIMITED ACN 009 124 994 WAD 65 OF 2004 FRENCH J 3 AUGUST 2006 PERTH IN THE FEDERAL COURT OF AUSTRALIA