Case: Standard Chartered Bank v Pakistan National Shipping Corporation [No 2] [2002] UKHL 43 ; [2003] 1 AC 959
Outcome: distinguished
So much was decided in Houghton v Arms [2006] HCA 59 ; (2006) 225 CLR 553 where the High Court considered the scope of s 9(1) of the Fair Trading Act 1999 (Vic) which provided that: "A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive". The High Court, in substance, rejected the argument that if employees of a company act only as the company, it is the company which engages in the relevant conduct caught by s 9(1) and not the individuals who undertook that conduct. The High Court said at 566: "The appellants are fixed with the findings by the primary judge respecting the conduct in which they engaged, being certain acts and omissions. As indicated earlier in these reasons, these were 'in trade or commerce'. Why then are the appellants not persons who contravened the prohibition imposed by s 9 of the FT Act ? As a general proposition, and as Lord Rodger of Earlsferry stressed in Standard Chartered Bank v Pakistan National Shipping Corporation [No 2] [citation omitted ], ... in the world of tort the status of an individual as an employee does not divest that person of personal liability for wrongful acts committed while an employee. There is no good reason for treating the text of s 9 any differently and, in particular, for construing the section as if it read '[a] person, as principal, must not ...' . 83 In Standard Chartered Bank v Pakistan National Shipping Corporation [No 2] [2002] UKHL 43 ; [2003] 1 AC 959 the House of Lords held that the managing director of a company who made fraudulent representations in the course of his employment could not escape personal liability on the ground that he was acting within the scope of his employment and was committing the fraud on behalf of his employer. The Court of Appeal had accepted the submission that the managing director committed no deceit because he made the representation on behalf of the company and it was relied upon as a representation by the company. The House of Lords regarded that fact as irrelevant. Lord Hoffman, with whom the other members of the House of Lords agreed, said, at 968: "Mr Mehra made a fraudulent misrepresentation intending SCB to rely upon it and SCB did rely upon it. The fact that by virtue of the law of agency his representation and the knowledge with which he made it would also be attributed to Oakprime would be of interest in an action against Oakprime. But that cannot detract from the fact that they were his representation and his knowledge. He was the only human being involved in making the representation to SCB (apart from administrative assistance like someone to type the letter and carry the papers round to the bank). It is true that SCB relied upon Mr Mehra's representation being attributable to Oakprime because it was the beneficiary under the credit. But they also relied upon it being Mr Mehra's representation, because otherwise there could have been no representation and no attribution." Lord Rodger delivered a concurring judgment and said at 974: "Where someone commits a tortious act, he at least will be liable for the consequences; whether others are liable also depends on the circumstances. Here, as the facts make plain and as Cresswell J specifically found, 'all the ingredients of the tort of deceit are made out against Mr Mehra (and Oakprime)'. In other words Standard Chartered have proved all that is required to make Mr Mehra and through him Oakprime liable in deceit. That being so, there is no conceivable basis upon which Mr Mehra should not indeed be held liable for the loss that Standard Chartered suffered as a result of his deceit. If he had been a mere employee of Oakprime and had done the same things and written the same letters on behalf of the company in that capacity, it could never have been suggested that Mr Mehra was not personally liable for his fraudulent acts. His status as a director when he executed the fraud cannot invest him with immunity." 87 Nevertheless it is still necessary to establish that Mr Narain personally engaged in the relevant conduct of which the Commission complained, that is, that he personally engaged in the conduct of publishing the announcement and making the misrepresentations said to be contained in it. As I have noted earlier, although Mr Narain participated in the preparation and drafting of the 27 September letter and although he instructed the company secretary of CIL to send it to the Stock Exchange, he did not personally publish the letter. CIL sent it to the Stock Exchange through the medium of its company secretary. Nor did he personally make the misrepresentations relied upon by the Commission in the same manner as Mr Mehra did to the Standard Chartered Bank (par [83] above). Houghton v Arms (supra) is an example of a different situation where the individual employees of the company, Messrs Houghton and Student, personally made the relevant misrepresentations. So also in Arktos Pty Ltd v Idyllic Nominees Pty Ltd (supra) where Mr Price, a director the respondent company had personally made the misrepresentation relied upon by the applicant against the company and Mr Price. So also in Standard Chartered Bank v Pakistan National Shipping Corporation [No 2] (supra) where Mr Mehra, the managing director of Oakprime Ltd, signed the letter containing the false statement.