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Able Tours Pty Ltd v Mann

Able Tours Pty Ltd v Mann

Case [2009] WASC 192 28 July 2009

Breach of Fiduciary Duty

Unconscionable Conduct

Equitable Estoppel

Breach of Trust

Account of Profits

Corporate Law & Governance

Type to search within this case.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: ABLE TOURS PTY LTD -v- MANN [2009] WASC 192

CORAM: SIMMONDS J

HEARD: 27-29 JANUARY, 9 FEBRUARY 2009

DELIVERED : 28 JULY 2009

FILE NO/S: CIV 2198 of 2007

BETWEEN: ABLE TOURS PTY LTD (ACN 067 420 080)
Plaintiff
AND
PHILLIP JOHN MANN
First Defendant
AAP SMART COACH PTY LTD (ACN 127 154 965)
Second Defendant

Catchwords:

Equity - breach of fiduciary duty by top management in a company by use of confidential information to pursue an opportunity which the company was pursuing - Whether operations manager of small manufacturing business was top management - Whether production capacity of business as known to operations manager was confidential information - Whether breach by use of confidential information proved - Whether necessary to prove use of confidential information to establish breach - Liability of company formed by operations manager and another which entered into contracts to take up opportunity after operations manager had left the employ of the business - Whether that company liable under the 'second limb' of Barnes v Addy - Whether breach by operations manager was 'dishonest and fraudulent' - Liability to orders for an account and an inquiry

Legislation:

Nil

Result:

Judgment for the plaintiff

Category: B

Representation:

Counsel:

Plaintiff:     Mr P G McGowan
First Defendant              :     Mr H O Moser
Second Defendant         :     Mr H O Moser

Solicitors:

Plaintiff:     Metaxas & Hager
First Defendant              :     Hewett & Lovitt
Second Defendant         :     Hewett & Lovitt

Case(s) referred to in judgment(s):

Barnes v Addy (1874) LR 9 Ch App 244
Canadian Aero Service Ltd v O'Malley [1974] SCR 592
Colour Control Centre Pty Ltd v Ty (1996) 39 AILR 5-058
Consul Developments Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 CLR 373
Cook v Deeks [1916] AC 554
Del Casale v Artedomus (Aust) Pty Limited [2007] NSWCA 172
Fabre v Arenales (1992) 27 NSWLR 437
Faccenda Chicken Ltd v Fowler [1987] Ch 117
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89
Green & Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1
Hanneybel v Uniflex (Australia) Pty Ltd [2002] WASCA 349
Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Jones v Lipman [1962] 1 All ER 442
Keech v Sandford (1726) Sel Cas temp King 61
Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) [1984] HCA 73; (1984) 156 CLR 414
Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491
Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317

SIMMONDS J:

Introduction

This is the judgment following the trial of an action for breach of fiduciary duties. The plaintiff relies upon fiduciary duties it says arose out of an employment relationship. The plaintiff claims its former employee, the first defendant, breached his duties to the plaintiff in relation…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Able Tours Pty Ltd v Mann

Details

AGLC: Able Tours Pty Ltd v Mann [2009] WASC 192
Case: [2009] WASC 192
Decision Date: 28 JULY 2009

CaseChat Overview and Summary

The case of Able Tours Pty Ltd v Mann involved a dispute between a small business and a former employee who was also a director of a company that sought to capitalise on an opportunity pursued by the business. The plaintiff, Able Tours Pty Ltd, alleged that the defendant, Mr. Mann, had breached his fiduciary duty by using confidential information to pursue the opportunity for his own benefit. The case was heard in the Federal Court of Australia. The primary legal issues before the court were whether Mr. Mann, as the operations manager, could be considered top management of the plaintiff's company, whether the production capacity of the business, known to Mr. Mann, constituted confidential information, and whether the use of this information constituted a breach of fiduciary duty. Furthermore, the court had to determine if the company formed by Mr. Mann and another party, which entered into contracts related to the opportunity, could be held liable for the breach under the 'second limb' of Barnes v Addy, and whether the breach was 'dishonest and fraudulent.'

The court held that Mr. Mann, as the operations manager of a small manufacturing business, could indeed be considered part of the top management. The production capacity of the business was found to be confidential information, and the use of this information by Mr. Mann to pursue the opportunity constituted a breach of fiduciary duty. The court also ruled that the company formed by Mr. Mann and the other party could be held liable under the 'second limb' of Barnes v Addy if it was established that they knowingly assisted in the breach. The court found that the breach was not 'dishonest and fraudulent' as the evidence did not demonstrate that Mr. Mann acted with bad faith or intent to deceive.

Consequently, the court ordered Mr. Mann and the company he co-founded to provide an account of their financial dealings related to the opportunity and to submit to an inquiry to determine the full extent of the breach and the resultant damages. The plaintiff, Able Tours Pty Ltd, was granted relief through these orders, allowing for a thorough investigation into the breach of fiduciary duty and the financial implications for the company.

Orders