Carsten Pty Ltd v Enervite Export Pty Ltd

[1998] FCA 15

CARSTEN PTY LIMITED, CARALAPATI PREMRAJ and HARI SHOTAM SRIREKAM v. ENERVITE
EXPORT PTY LIMITED
No. NG 759 of 1997
FED No. 15/98
Number of pages
- 5

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

MOORE J

SYDNEY, 19 January 1998 (hearing), 21 January 1998 (decision)

#DATE 21:1:1998

#ADD 27:1:1998

Counsel for the Applicant: Mr S Jacobs

Solicitor for the Applicant: Stewart Levitt & Co

Counsel for the Respondent: Mr M Walton

Solicitor for the Respondent: Abbott Tout

THE COURT ORDERS THAT:

1. The notice of motion is dismissed.

2. The appellants pay the costs of the respondent.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

MOORE J

This judgment concerns a notice of motion brought by three appellants who appeal against the judgment and orders of Lehane J of 24 December 1997. The appellants seek an order staying the orders of the trial judge pending the determination of the appeal.

The proceedings before the trial judge concerned the business activities of Enervite Export Pty Ltd ("Enervite Export") and individuals and companies associated with that company. The notice of appeal and proposed amendments to it, do not challenge the findings of fact of the trial judge, save perhaps in relation to one matter which I will mention later. The following narrative is drawn from the reasons for judgment of the trial judge. Enervite Export carried on the business of supplying and distributing vitamins and other health supplements under a brand name "Enervite" and arranged for the manufacture of these products. The third appellant, Mr Shotam, was a director of Enervite Export and had been principally responsible for its management. The second appellant, Mr Premraj had been a director of Enervite Export for a period, though there was an issue left unresolved at trial whether he resigned as a director in February 1997. Enervite Export had a loan facility with the Commonwealth Bank of Australia ("the Bank") secured by a charge over its undertaking and assets. Under the contractual arrangements between the Bank and Enervite Export, receivers and managers were appointed on 1 July 1997 after accountants, appointed by the Bank, had concluded the financial position of Enervite Export was, at the very least, somewhat precarious. Enervite Export, under the control of those receivers, brought the proceedings resulting in the judgment of the trial judge. Declarations were sought that Mr Premraj and Mr Shotam had breached fiduciary duties owed to Enervite Export and that a company, Carsten Pty Ltd ("Carsten"), held certain property as constructive trustee of Enervite Export. Mr Premraj is the sole director of Carsten. In the first half of 1997 registrations for which Enervite Export was the sponsor, were transferred to Carsten under the Therapeutic Goods Act 1989. Without detailing his Honour's findings, Carsten, in effect, assumed the business of Enervite Export by mid 1997.

The trial judge made declaratory orders that Mr Shotam had breached the fiduciary duties he owed to Enervite Exports…