FEDERAL COURT OF AUSTRALIA

Rogers v MHM Metals Ltd [2015] FCAFC 67

THE COURT ORDERS THAT:

1.    The appeal be dismissed with costs.

2.    The notice of contention be dismissed.

3.    Each party pay their own costs of the notice of contention.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT

1    This is an appeal from an order of a single judge of this Court by which the appellants were ordered to pay compensation to the respondent (“MHM”) pursuant to s 1317H of the Corporations Act 2001 (Cth) (“Act”) in the sum of $548,581.00: MHM Metals Ltd v Rogers [2014] FCA 1006. The sum of $548,841.00 comprises amounts spent by MHM to purchase and refit the yacht “Ocean Voyager” although, her Honour found, property in the yacht never passed to MHM. The primary judge found that the compensation was payable by the first appellant (“Mr Rogers”) for contraventions of ss 181, 182 and 183 of the Act involving the misappropriation of MHM’s funds, and by the second appellant (“Rogers Southern”) as it was “knowingly concerned” in Mr Rogers’ misconduct.

Background

Parties and witnesses

2    MHM was formed in 2007 to conduct mining exploration and smelter waste extraction in Tasmania. The company was listed on the Australian Stock Exchange in December 2007.

3    Mr Rogers was a director of MHM between April 2007 and August 2012 and its managing director from April 2007 to July 2012.

4    The primary judge did not accept Mr Rogers as a witness of truth. Her Honour also found that Mr Rogers had not been candid to the board of MHM and had misled the board.

5    Mr Rogers’ long term friend and business associate was Mr Joseph Psereckis (“Mr Psereckis”). The primary judge also did not accept Mr Psereckis as a witness of truth.

6    Mr Psereckis’ accountant was Mr David Jones (“Mr Jones”), who operated a company called Tasmanian Adventure Cruises Pty Ltd (“TAC”). The primary judge found that the evidence of Mr Jones “on some key factual issues was implausible and unreliable”.

7    Rogers Southern is a company owned and controlled at all relevant times by Mr Rogers. It was the trustee of Mr Rogers’ family trust (“family trust”), having been appointed in November 2004. The previous trustee was Mr Rogers’ brother, Graeme Rogers.

8    Rogers Engineering Services Pty Ltd (“Rogers Engineering”) was established in 2004. Mr Rogers was a director of that company from 11 April 2007 until 3 October 2008. The other directors were Mr Psereckis (30 November 2004 until 4 March 2012) and Mark Rogers, Mr Rogers’ son (21 July 2008 until 19 April 2010). The shareholders in Rogers Engineering were Mr Psereckis with 25% of the shares and, from 2010, Rogers Southern with 75% of the shares (previously held by Mark Rogers).

Sale and refit of the “Ocean Voyager”

9    The “Ocean Voyager” was purchased by the family trust in about August 2003 for $50,000, for use as a pleasure craft. At that time, Graeme Rogers was the trustee of the family trust and, consequently, the vessel was registered in the Australian Register of Ships in Graeme Rogers’ name. Registration for a vessel of this kind is not compulsory and does not affect ownership of the vessel.

10    From the time of its purchase by the family trust, the “Ocean Voyager” was kept at Coffs Harbour, in New South Wales. It was lifted out of the water and left at a boat yard between 2004 and 2007 where, occasionally, work was done on it by Mr Rogers, Mark Rogers and Mr Psereckis.

11    In April 2008 MHM was proposing to mine for silica in a remote area of west Tasmania. Mr Rogers presented to the board of MHM possible options for operating in that area. One option was to use a survey vessel moored in nearby Macquarie Harbour to house geologists and field staff and to be the base from which operations would be conducted. Following that presentation, the board approved expenditure of $350,000 on the acquisition of a survey vessel and Mr Rogers was given the task of finding a suitable vessel.

12    The primary judge inferred that Mr Rogers knew at the time that he put the proposal to the board how much it would cost to refit the “Ocean Voyager” to make it suitable as a survey vessel and that Mr Rogers always intended the “Ocean Voyager” to be the vessel for acquisition, if the proposal went ahead.

13    On 27 May 2008, TAC provided a quote and contract terms to supply MHM with a survey vessel based on specifications prepared by Mr Rogers. Mr Rogers accepted the quote and signed the contract (“TAC contract”) on behalf of MHM the same day. The contract was countersigned by Mr Jones on 28 May 2008.

14    At the same time, Mr Jones sought and obtained a written indemnity from Mr Rogers (on behalf of the family trust), but not Mr Psereckis, “against any action .... in respect of the contract to supply a suitable vessel and refit same within the time and price quoted in the [TAC] contract”.

15    Although not named in the TAC contract, the appellants admitted that the “Ocean Voyager” was the subject matter of the contract.

16    The contract price was “a budget price of $350,000 with capped variation of 10% supplied ex Hobart Tasmania” to be paid in five instalments.

17    The contract terms included the following provision as to ownership of the survey vessel:

Ownership of the vessel will pass upon receipt of the last payment. TAC will notify the Australian Register of Ships and complete the necessary transfer documentation contemporaneously with the receipt of the final payment.

18    TAC engaged Rogers Engineering to do the refit on the vessel and MHM paid the contract price in instalments in accordance with the terms of the TAC contract, with the last instalment paid in October 2008.

19    As it turned out, the refit was never completed and the vessel was never used by MHM for its intended purpose.

20    In July 2012, Mr Rogers resigned as managing director. In August 2012, he received an email from Mr Phil Thick, the new managing director of MHM, stating that he had received legal advice relating to concerns about a conflict of interest in Mr Rogers’ dealings with the company. Mr Rogers resigned as a director shortly afterwards and, in October 2012, the remaining directors of MHM also resigned and were replaced with a new board.

21    In 2013, a review of MHM’s accounts led to questions about the carrying value of the “Ocean Voyager” in MHM’s accounts and an investigation into the acquisition and refit of the vessel. It was discovered that the registration of the vessel had never been transferred to MHM and that the registration of the vessel remained in the name of Graeme Rogers.

22    The “Ocean Voyager” was written off in the accounts of MHM in the 2012/2013 financial year.

23    As summarised by the primary judge, at the trial, MHM’s case was that the “Ocean Voyager” was a worthless wooden ketch that was actually owned by Mr Rogers’ family trust, and that Mr Rogers, through the TAC contract, procured MHM to purchase the “Ocean Voyager”, without disclosing the true ownership of the vessel or that Rogers Engineering was to undertake the refit, and that Mr Rogers used the funds paid by MHM to buy a replacement yacht for the family trust called “Taurus II”.

24    As summarised by the primary judge, MHM alleged that the “Ocean Voyager”:

(1)    was in fact owned by Graeme Rogers and was held, controlled or managed by Mr Rogers as agent or otherwise;

(2)    was not valued at $350,000 and “was in fact valueless”; and

(3)    was never transferred to MHM and MHM never became the owner,

and that there was a total failure of consideration for the moneys that MHM paid to TAC.

25    MHM elected to pursue a claim against the appellants for equitable compensation pursuant to s 1317H of the Act for the damage it claimed to have suffered, being the total amount it spent on the “Ocean Voyager”.

The appellants’ case at trial

26    The appellants’ case was that the family trust was not the owner of the “Ocean Voyager” at the time that TAC contracted to sell it to MHM. They claimed that the trust had sold the vessel to Mr Psereckis in 2007 for $150,000. When cross-examined on an email from Mr Rogers’ administrative assistant which suggested that MHM had purchased the “Ocean Voyager” from Rogers Southern, Mr Rogers asserted that it was “definitely not right”.

27    The appellants also claimed that TAC was a company set up by Mr Jones, which was acting as Mr Psereckis’ agent in relation to the supply and refit of the “Ocean Voyager” and that, without the knowledge of Mr Rogers, TAC had engaged Rogers Engineering to do the refit on the vessel.

28    Mr Rogers denied knowing Mr Jones before meeting him in relation to the TAC contract. According to the primary judge, Mr Rogers’ evidence was that he understood that TAC was Mr Psereckis’ agent in relation to the sale of the “Ocean Voyager” and that he and Mr Psereckis had discussed this.

29    Mr Jones deposed in an affidavit that, over the whole duration of the TAC contract, he saw Mr Rogers “only twice” that he could recall and “spoke to him only rarely, those occasions being when [he] had to check with [Mr Rogers] about MHM’s requirements under the [TAC] contract.”

30    Terri Branson, the office manager of Mr Jones’ accounting practice, gave evidence that Mr Rogers “was not involved in giving [her] instructions about the contract”.

31    The appellants denied that the vessel was valueless, denied that ownership never passed to MHM and denied that there had been a total failure of consideration.

Alleged transfer of the “Ocean Voyager” to Mr Psereckis in 2007

32    The appellants adduced detailed evidence about the alleged transfer of ownership of the “Ocean Voyager” from the family trust to Mr Psereckis in 2007. The primary judge disbelieved this evidence. At [46], her Honour noted that the “claim of change in ownership is wholly unsupported by any independent objective evidence of the kind that would be expected to exist if there had been a change in ownership”.

33    At [72], her Honour found that the family trust “was and remained the owner of the Ocean Voyager when TAC contracted to sell it to MHM”. This finding was repeated at [98] of her Honour’s reasons.

34    At [77], her Honour concluded:

…Mr Rogers did not disclose the identity of the vessel to the Board. In view of Mr Rogers’ knowledge that the vessel in question was the Ocean Voyager and that the Board, on his evidence, knew that his trust had owned that vessel, it is open to infer and I find that Mr Rogers deliberately concealed the identity of the vessel from the Board.

35    Her Honour accepted Mr Jones’ evidence that he did not know what vessel was being sold to MHM when he signed the TAC contract. She found it was “tolerably clear” that Mr Jones simply regarded his role as being to receive money and pay expenses at the direction of Mr Psereckis. Her Honour:

    accepted that, as Mr Jones understood it, the vessel to be supplied and refitted was being organised by Mr Rogers on behalf of MHM for that purpose;

    accepted that Mr Jones thought that the “Taurus II” was the boat in question;

    rejected Mr Jones’ evidence that he believed and understood that TAC was acting as as Mr Psereckis’ agent.

36    Ultimately, the primary judge said that she “was left with the clear impression that [Mr Jones] was covering up for Mr Rogers” and that the evidence that Mr Jones gave “was highly suggestive of collusion with Mr Rogers”.

Refit of the “Ocean Voyager”

37    The TAC contract provided for $185,000 (plus GST) of refit works, $165,000 of the $350,000 (excluding GST) being “to secure the vessel”. The primary judge found that the refit works were largely done by Rogers Engineering.

38    The primary judge rejected Mr Rogers’ evidence that he did not contemplate, when entering into the TAC contract (on behalf of MHM), that Rogers Engineering would undertake the refit and that he did not become aware that Rogers Engineering was working on the “Ocean Voyager” until some months after 30 May 2008.

Primary judge’s conclusions about misappropriation and breach of director’s duties

39    Her Honour concluded that there was “clear and cogent evidence of misappropriation” by Mr Rogers, saying:

TAC was the ostensible vendor of the vessel but for the reasons given, I have rejected the [appellants’] case that the Ocean Voyager was owned by Mr Psereckis and that TAC was acting as Mr Psereckis’ agent on the sale of the vessel to MHM. I am satisfied that Mr Rogers, by his conduct, brought about the sale of a vessel owned by his family trust to MHM, without disclosure to the Board of his family trust’s ownership of the vessel or his interest in the transaction or that Rogers Engineering would be doing the refit. Mr Rogers, in procuring and committing MHM to purchase the Ocean Voyager, thereby improperly used his position as director of MHM to gain benefits for himself and entities with which he was associated. Having rejected the respondents’ case, it is open to infer and I find that TAC’s role was nothing more than an artifice to disguise Mr Rogers’ personal interest in the transaction and I find that Mr Rogers’ conduct, and the use of TAC as the contracting party, was deliberate to conceal the true facts from the MHM Board. Accordingly, I find that Mr Rogers’ conduct was in breach of his duties under s 181, 182 and 183 of the Act and that through the artifice of the TAC contract Mr Rogers misappropriated MHM’s funds.

Primary judge’s conclusion on liability of Rogers Southern

40    Her Honour found that, as Mr Rogers was the controlling mind of Rogers Southern, his knowledge of his own dishonest and fraudulent design was to be imputed to Rogers Southern.

Primary judge’s reasons on remedy

41    The primary judge summarised MHM’s primary case as being that its compensable damage was the whole of the amount that it spent on the “Ocean Voyager” and that Mr Rogers’ contravening conduct “brought about the situation that it spent that money on acquiring and refitting a vessel in the belief that ownership of the vessel passed to it under the TAC contract, when it has not”.

42    At [111] of her Honour’s reasons, the primary judge concluded:

I accept the submission that MHM has spent $548,581 on a boat that it does not own. Title in the vessel could not pass to MHM under the TAC contract because the vessel was owned by the trust and, in consequence, MHM did not receive what it contracted to acquire under the TAC agreement: to obtain ownership of the vessel. In consequence I accept the submission for MHM that there has been a total failure of consideration. …

As the cases make clear, the mere fact that MHM may have considered itself to be the owner, and acted upon that basis, does not alter the circumstance that there has been a total failure of consideration. The notion of what constitutes a total failure of consideration looks to the benefit bargained for rather than any benefit which might have been obtained in fact…

43    The primary judge accepted (at [113]) that the damage suffered by MHM that resulted from Mr Rogers’ contravening conduct includes “the entirety of what it spent on the boat as the presumed owner of the vessel that it never came to own”.

44    Finally, her Honour noted that it was unnecessary to consider the claim by MHM that there was a total failure of consideration because the “Ocean Voyager” was valueless, given the finding that ownership never passed to MHM.

Grounds of appeal

45    The appellants raise the following two grounds of appeal:

(1)    The primary judge erred in concluding that title to the “Ocean Voyager” had not passed to MHM;

(2)    Alternatively, the primary judge erred in concluding that Rogers Southern was liable to MHM by reason of having given knowing assistance to a fiduciary with knowledge of a dishonest and fraudulent design where:

(a)    MHM’s loss was found to have occurred by reason of it not having obtained title to the “Ocean Voyager”;

(b)    Even if the primary judge was correct in concluding that title in the “Ocean Voyager” did not pass to MHM, there was no finding (and no reasonable basis upon which it could have been found) that Mr Rogers intended that MHM would not obtain title; and

(c)    In the premises, it formed no part of any dishonest and fraudulent design that MHM would not obtain title and would thereby suffer loss.

First ground of appeal: did the primary judge err in concluding that ownership of the “Ocean Voyager” did not pass to MHM?

46    The appellants’ case, as set out in the notice of appeal, was that the primary judge’s conclusion that ownership in the vessel did not pass to MHM was inconsistent with the following findings also made by her Honour:

(a)    That Mr Rogers on behalf of MHM had signed a contract with TAC for the supply and refit of the “Ocean Voyager”;

(b)    At the time of the contract being signed (and notwithstanding the appellants case being to the contrary on this issue), the “Ocean Voyager” was the property of Rogers Southern in its capacity as trustee of a family trust associated with Mr Rogers;

(c)    Mr Rogers was at all material times the sole director and shareholder of Rogers Southern;

(d)    By his conduct (including that of bringing into existence the TAC contract), Mr Rogers “brought about a sale of a vessel owned by his family trust” to MHM;

(e)    Following the execution of the contract, MHM treated “Ocean Voyager” as its property, including by commissioning and paying for work on her, paying for her storage, and recording her as an asset in the books of MHM.

47    In written submissions, the appellants relied on the following additional matters, which were said to have been found by the primary judge:

(a)    TAC was controlled by Mr Jones. The contract was signed by Mr Jones on behalf of TAC and by Mr Rogers on behalf of MHM;

(b)    The contract did not identify either the vendor or the vessel and Mr Jones was unaware of the identity of the vessel in question at the time of executing the contract;

(c)    Mr Jones understood that the vessel was to be supplied by Mr Rogers;

(d)    The terms of the contract included that title to the vessel would pass to MHM upon payment to TAC of the final instalment;

(e)    MHM’s made payments under the contract.

48    As to (b), we do not accept that the primary judge found that the contract did not identify the vendor. There is no dispute that the primary judge made findings to the effect of and about the other matters set out above.

49    The appellants contended that MHM “barely advanced the ‘no title’ case at trial”, although they acknowledged that it was explicitly pleaded. They contended that MHM had never articulated a case that TAC lacked authority to sell the “Ocean Voyager”. Rather, the case was that title did not pass because the terms of the TAC contract were not fulfilled.

50    In his opening submissions at the trial, counsel for MHM said that his client did not appear to own the boat, albeit the submission appeared to be focussed (mistakenly) on the registration of the boat as the indicia of ownership. In closing submissions, counsel for MHM said “the first question is, well, do we even have the boat”. He submitted that “perhaps the easiest course is a declaration of ownership in Mr Rogers and compensation to us”.

51    The submissions put on behalf of MHM at the trial included the following:

(1)    Mr Rogers did not sell the “Ocean Voyager” directly to MHM because his scheme was “to hide his association from the board”;

(2)    The impugned conduct amounts to “a pedestrian attempt to hide what would obviously otherwise be regarded as a highly inappropriate transaction”;

(3)    MHM was not registered as owning the boat it paid for;

(4)    MHM’s ownership of the boat or otherwise was “secondary to the strict punitive rights of relief against the tainted transaction”;

(5)    In oral opening submissions “And it is not our boat, of course”;

(6)    As at May 2008, the boat was still owned by the trust;

(7)    MHM got nothing out of the transaction.

52    In his opening submissions at the trial, Mr Williams QC explicitly addressed the question of MHM’s ownership of the “Ocean Voyager” saying:

And MHM took the benefit of that contract. Whatever my learned friend says about registered ownership, which is a furphy, because there’s no obligation to register, and registration doesn’t mean ownership in the context of boats. The fact is MHM is the owner of Ocean Voyager, and it had been since it completed the contract with TAC in about 2009. Title passed….

No one else asserts ownership of it. Only MHM, curiously, having treated the boat as its asset, having dealt with it at board level as if it was its asset, having made decisions about it, having made decisions that contemplate selling it and so on, now comes to court and says because it’s convenient “Actually, we don’t own it because the registration was never transferred to us, so we don’t really own it.” Well, your Honour, that’s just wrong as a matter of law. They do own it. They paid for it. The contract was completed.

53    At two points in his opening submissions at the trial, Mr Williams QC asserted that it was part of MHM’s case that TAC was an agent for Mr Rogers or the family trust. However, it was not suggested on the appeal that counsel for MHM had adopted Mr Williams QC’s characterisation of its case.

54    In closing submissions at the trial, Mr Williams QC said “Perhaps the most important matter that my learned friend has addressed today is his proposition about ownership of the vessel not having passed as a result of the termination [of the] agreement”. Mr Williams QC identified this as “a slightly different proposition to that which is put in the pleading at paragraph 18 and 19 [b]oth of which seem to be put on the basis that the whole transaction was a sham and that ownership did not pass.” Mr Williams QC then argued against the proposition that ownership did not pass under the TAC contract prior to its termination.

55    The case the appellants seek to make is that, their version of events having been rejected by the primary judge, her Honour’s findings necessitate or involve a further finding, in the appellants’ favour, that property in the “Ocean Voyager” passed to MHM from the family trust. They argue that her Honour’s finding that property did not pass “appears to rest solely upon the learned trial judge’s rejection…of the appellants’ case that at the time of the contract being entered, the trust was no longer the owner of the vessel, but that title had passed to one Psereckis. No other reason for MHM failing to obtain good title is enunciated”.

56    In oral submissions, senior counsel for the appellants, Mr Williams QC argued that the primary judge’s findings led to a conclusion that there was an implied contract of agency between Rogers Southern and TAC, arising out of the family trust’s ownership of the vessel, TAC’s entry into the contract to supply the boat, and Rogers Southern’s “full knowledge and encouragement” of TAC’s entry into that contract. Alternatively, Rogers Southern must be taken to have “adopted” the transaction by which TAC purported to sell the vessel.

57    As appears from the description of events at the trial above, no such case was put to the trial judge by the appellants. They put only one positive case as to how property in the “Ocean Voyager” allegedly passed to MHM. That was the appellants’ case that it passed from Mr Psereckis to MHM pursuant to the TAC contract. More specifically, it was never argued by the appellants that her Honour should find that TAC agreed with Mr Rogers to transfer ownership of “Ocean Voyager” to MHM on behalf of the family trust. Such a proposition would have been directly inconsistent with the evidence of Mr Rogers and Mr Jones.

58    MHM’s case, explicitly pleaded, was that it did not receive ownership of the vessel. That case was accepted by the primary judge on the basis that the appellants’ defence, that ownership of the vessel passed from Mr Psereckis to MHM pursuant to the TAC contract, failed.

59    At [105] of the primary judge’s reasons, her Honour explains her reasons for concluding that Mr Rogers appropriated MHM’s funds. Her Honour’s conclusion was that the misappropriation took place “through the artifice of the TAC contract”. The artifice involved TAC as “the ostensible vendor” to disguise Mr Rogers’ personal interest in the transaction, the transaction being the sale of a vessel owned by Mr Rogers’ family trust to MHM on the one hand and the purchase by MHM of the “Ocean Voyager” on the other hand.

60    We accept that her Honour’s findings at [105] are consistent with the possible transfer of property in the “Ocean Voyager” from the family trust to MHM. The language of “sale”, used by her Honour, entails the transfer of property from one party to another under a contract of sale: cf Sale of Goods Act 1896 (Tas), s 6. However, it was never suggested to her Honour that ownership in the vessel had passed in this fashion, and her Honour was not directing her attention to the question of whether property in the vessel passed to MHM in this passage of her reasons.

61    The possibility that there was an actual sale of the “Ocean Voyager” by the family trust to MHM, through the vehicle of the TAC contract, requires consideration of the relationship between TAC and Rogers Southern. Obvious questions include whether the Court should find that TAC was authorised to sell the property of the family trust when Mr Rogers specifically rejected the proposition that the vessel was sold by Rogers Southern and neither he nor Mr Jones gave evidence of any such authorisation. To the contrary, on Mr Jones’ evidence, he could only recall communicating with Mr Rogers on two occasions, and understood TAC to be selling a different vessel, the “Taurus II”. It would be necessary to consider whether the conduct of the parties evidenced assent on the part of each of the family trust and TAC to an agency relationship.

62    The facts set out at [44] above do not require a finding that there was an agency relationship between Rogers Southern and TAC.

63    The legal basis for the contention that Rogers Southern should be taken to have adopted the transaction between TAC and MHM, and the legal consequences of any such adoption, were not explored in detail. Of course, Rogers Southern now wishes to adopt the transaction, to relieve itself of the consequences of its wrongdoing to the extent that the vessel has some value. In the context of sale of goods, the buyer’s conduct signifying an adoption of the transaction may be relevant to the date on which property passes to the buyer: cf Sale of Goods Act 1896 (Tas), s 23. However, there is no principle by which the owner of goods can adopt a contract for the sale of his goods by a third party acting without the owner’s authority or consent.

64    The owner of goods may by his conduct be precluded from denying the seller’s authority to sell: cf Sale of Goods Act 1896 (Tas), s 26. However, in this case, the seller’s authority to sell was not asserted.

65    In any event, her Honour did not consider the detail of any alternative transaction because the appellants’ case was based squarely on the TAC contract as the transaction by which the vessel was sold to MHM, and the appellants explicitly denied the existence of a contract of sale between Rogers Southern and MHM. Her Honour addressed the efficacy of the TAC contract at [111] of her reasons.

66    Thus, we read [105] of her Honour’s reasons as describing the broad nature of the transaction sought to be disguised by the TAC contract, without expressing any view as to the terms or efficacy of that transaction. This reading is consistent with her Honour’s summary of MHM’s case on remedy (at [110]) that it spent money “on acquiring” and refitting the “Ocean Voyager” in the false belief that ownership passed to it (or would pass to it) under the TAC contract.

67    As part of their argument, the appellants asserted that Rogers Southern as trustee of the family trust could never “subsequently” have asserted title to the “Ocean Voyager” to the detriment of MHM, and never did so. Again, this is an issue that was not raised by the appellants for determination at the trial, and was irrelevant to the appellants’ defence because their case was that Rogers Southern had passed title to the vessel to Mr Psereckis in 2007.

68    In conclusion, the case which the primary judge found in MHM’s favour was pleaded, and was identified by senior counsel for the appellants in closing submissions. The question of ownership of the vessel was of obvious significance to the quantification of MHM’s claim. We accept the appellants’ submission that MHM did not articulate a case that TAC lacked authority to sell the “Ocean Voyager” but, equally, MHM did not accept Mr Williams QC’s contention on appeal that its case involved the proposition that TAC was an agent for Mr Rogers or the family trust. In any event, as we have said, the appellants never pleaded or proved their authorisation, if such existed, to TAC to sell the vessel. The appellants should not now be heard to put a different contractual regime than that which they put and which was rejected by the trial judge.

69    In those circumstances, it was open to the primary judge to conclude that ownership never passed to MHM for the reasons that her Honour gave. The appellants do not contend that the primary judge erred in doing so: their complaint is that her conclusion is inconsistent with her Honour’s other findings. It follows that the appellants’ complaint as to the manner in which the trial was conducted does not advance its argument on ground 1 of the notice of appeal.

70    Accordingly, the first ground of appeal must be rejected.

Second ground of appeal: did the primary judge err in concluding that Rogers Southern was liable to MHM by reason of having given knowing assistance to a fiduciary with knowledge of a dishonest and fraudulent design?

71    The appellants’ case on this ground of appeal was based on the absence of any finding that Mr Rogers intended that MHM would not obtain title. The appellants did not suggest that Rogers Southern had not assisted Mr Rogers in his breaches of duty.

72    The primary judge found (at [107]) that Mr Rogers’ knowledge of his own dishonest and fraudulent design was to be imputed to Rogers Southern. The dishonest and fraudulent design found by the primary judge at [105] was the misappropriation of MHM’s funds through the artifice of the TAC contract. In Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 (“Farah”) at [179], the High Court referred to Consul Development Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 CLR 373 as “establish[ing] for Australia that ‘dishonest and fraudulent designs’ can include not only breaches of trust but also breaches of fiduciary duty”, provided that any such breach relied on is dishonest and fraudulent. The issue was therefore whether Rogers Southern had given knowing assistance to Mr Rogers’ dishonest and fraudulent breaches of duty, the dishonesty of the conducted assessed, not by Mr Rogers’ intention, but by the standards of ordinary, decent people: cf Farah at [173]; Consul Development Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 CLR 373 at 398 (Gibbs J). Accordingly, it was not necessary for the primary judge to consider whether Mr Rogers intended that MHM would not obtain title generally (a matter which, in any event, was not raised by the appellants for determination at the trial).

73    Accordingly, this ground of appeal also fails.

Notice of contention

74    At the hearing of the appeal, the Court granted leave to file a notice of contention to the effect that the Court should find that the “Ocean Voyager” had no value, and accordingly affirm the trial judge’s assessment of compensation on that ground.

75    The respondent’s contention on this point arose for consideration in the event that the Court upheld the first ground of appeal. As we have dismissed that ground of appeal, the value of the vessel is irrelevant to the assessment of damages because title never passed

76    Damages were correctly assessed on the basis of the amounts paid by MHM in respect of the “Ocean Voyager”, ownership of which never passed to it.

Conclusion

77    The appeal must be dismissed with costs. The notice of contention will be dismissed with each party to bear his or its own costs of the notice.

Associate:

Dated:    25 May 2015