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Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O'Donnell [2011] NSWCA 389. Allsop P.

170 Before turning to the evidence it is appropriate to say something of the ultimate issue that is being addressed.

The word agency is one apt to cause difficulty, in significant part, because of its broad usage in business: Kennedy v De Trafford [1897] AC 180 at 188; Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd [1931] HCA 53; 46 CLR 41 at 50Scott v Davis [2000] HCA 52; 204 CLR 333 at 338 [4], 408 [227] and 435 [299]. It is a common business expression with a potentially wide and varying meaning.

171 The core conception of agency as a legal concept was expressed by the High Court in International Harvester Co of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Co [1958] HCA 16; 100 CLR 644 at 652:

 "Agency is a word used in the law to connote an authority or capacity in one person to create legal relations between a person occupying the position of principal and third parties. But in the business world its significance is by no means thus restricted."

The relevant question in that case was whether the manufacturer of goods (or its Australian subsidiary) was a party to a contract for sale of equipment sold through one of its distributing "agents", so-called.

The question was whether the so-called agent had capacity to make the manufacturer (or its local subsidiary) a party to the contract for sale of goods, and so bind its interests.

The answer was, no.

The distribution agent was a business in its own right, not in any way acting on behalf of the manufacturer in the sale transaction in question.


HomeSec Finance Express Pty Ltd v Richardson [2012] NSWSC 1375. Button J.


171. I was helpfully referred by counsel for the plaintiffs to the discussion regarding agency of Allsop P (with whom Bathurst CJ and Campbell JA agreed) in Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389. I am content to rely upon [176] of that judgment as follows:

"It is appropriate to set out the whole of Art 1 from Bowstead and Reynolds on Agency (19 th Ed) at 1 [1-001] since Art 1(4), in particular, posits a form of agency of some relevance here - one in which the agent has no power to create or affect legal relations:

 "(1) Agency is the fiduciary relationship which exists between two persons, one of whom expressly or impliedly manifests assent that the other should act on his behalf so as to affect his relations with third parties, and the other of whom similarly manifests assent so to act or so acts pursuant to the manifestation. The one on whose behalf the act or acts are to be done is called the principal. The one who is to act is called the agent. Any person other than the principal and the agent may be referred to as a third party. 

(2) In respect of the acts to which the principal so assents, the agent is said to have authority to act; and this authority constitutes a power to affect the principal's legal relations with third parties. 

(3) Where the agent's authority results from a manifestation of assent that he should represent or act for the principal expressly or impliedly made by the principal to the agent himself, the authority is called actual authority, express or implied. But the agent may also have authority resulting from such a manifestation made by the principal to a third party ; such authority is called apparent authority. 

(4) A person may have the same fiduciary relationship with a principal where he acts on behalf of that principal but has no authority, and hence no power, to affect the principal's relations with third parties. Because of the fiduciary relationship such a person may also be called an agent."










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