JUDGE:	FERGUSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	15–17, 22–24, 29–31 July, 12–15, 20–22 August 2013
DATE OF JUDGMENT:	10 April 2014
CASE MAY BE CITED AS:	CC Containers Pty Ltd v Lee (No 6)
MEDIUM NEUTRAL CITATION:	[2014] VSC 151	First revision: 11 April 2014 Second revision: 4 July 2014

---

TORT – Conspiracy to defraud – Inferences to be drawn where no direct evidence of involvement in fraud in respect of two defendants.

EQUITY – Secret commission – Sale of business to customer – Payment of moneys to director and employee of purchasing company following settlement.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr S R Horgan SC with Mr J Brereton	K & L Gates
For the First, Second and Third Defendants	No appearance
For the Fourth Defendant	Dr N Orow	Jack Bock Lawyers
For the Sixth Defendant	Mr D Williams SC with Mr B Guzzo	Doherty & Colleagues

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

CCC Old Co and operations at the container yard...................................................................... 3

Repair fraud........................................................................................................................................ 4

Factual matrix................................................................................................................................ 4
Legal principles........................................................................................................................... 13

Conspiracy............................................................................................................................... 13
Standard of proof and inference................................................................................................ 13

The Plaintiffs’ case...................................................................................................................... 15
Mr Lee’s defence......................................................................................................................... 16
Kevin’s defence........................................................................................................................... 16
Kain’s submissions..................................................................................................................... 16
Mr Neale’s submissions............................................................................................................. 18

Did the Chongs, Mr Neale and Mr Lee unlawfully conspire to injure the Plaintiffs?....... 22

Sale of business — Fraudulent misrepresentation, misleading and deceptive conduct.... 29

Sale of business and breach of fiduciary duty........................................................................... 39

Container movement fraud............................................................................................................ 46

Transport fraud................................................................................................................................. 49

Diesel fraud....................................................................................................................................... 52

Container sale fraud........................................................................................................................ 54

Conclusion......................................................................................................................................... 55

HER HONOUR:

Introduction

Mediterranean Shipping Company SA (‘MSC’) operates a shipping business transporting containerised cargo around the world. Mediterranean Shipping Company (Aust) Pty Ltd (‘MSCA’) is its wholly owned agent in Australia and New Zealand. MSC began operating in Australia in about 1989 and used the services of CCC Old Co[1] to repair, maintain and store empty shipping containers in Melbourne. That company was controlled by two of the Defendants, Kevin Chong and his father, Kain Chong.[2]
[1]ACN 082 962 598 Pty Ltd.
[2]As counsel did, I will refer to these defendants by their first names.

In about 2007, as part of its global strategy to control costs, MSC looked at acquiring container depots around the world, including in Australia. As part of that strategy, in February 2008 MSCA acquired an interest in the business conducted by CCC Old Co. A new company was established to purchase and operate the business — CC Containers Pty Ltd (‘CCC’). MSCA held 75 per cent of the shares in CCC with the remaining 25 per cent held by the Chongs. The directors of CCC included the Chongs and Christopher Neale, who was one of the directors nominated by MSCA. Mr Neale was the operations director responsible for all of MSCA’s…

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 CC Containers Pty Ltd v Lee (No 6)

Details

AGLC: CC Containers Pty Ltd v Lee (No 6) [2014] VSC 151
Case: [2014] VSC 151
Decision Date: 10 April 2014

CaseChat Overview and Summary

The case of CC Containers Pty Ltd v Lee (No 6) involved a dispute between the plaintiff, CC Containers Pty Ltd, and two defendants, Lee and another individual. The plaintiff alleged that the defendants conspired to defraud it in relation to the sale of a business. The dispute was heard in the Federal Court of Australia, which was tasked with determining whether the defendants were liable for conspiracy to defraud and for receiving secret commissions. The plaintiff claimed that the defendants had conspired to defraud it by receiving secret commissions from the sale of its business. It alleged that the defendants had been paid moneys that were not disclosed to the plaintiff and were not reflected in the sale agreement. The defendants denied the allegations and argued that there was no direct evidence of their involvement in any fraud.

The court had to decide whether the defendants could be held liable for conspiracy to defraud and for receiving secret commissions based on the circumstantial evidence presented. The plaintiff argued that the inferences drawn from the evidence were sufficient to establish the defendants' liability. The defendants, on the other hand, contended that there was no direct evidence linking them to the alleged fraud and that the inferences drawn by the plaintiff were speculative. The court considered the principles of conspiracy to defraud and the relevant legal tests, including the requirement for direct evidence of the defendants' involvement in the fraud. It also examined the evidence of secret commissions and the circumstances surrounding the sale of the business. The court found that while there was no direct evidence of the defendants' involvement in the alleged fraud, the circumstantial evidence was sufficient to draw inferences that they had conspired to defraud the plaintiff. The court held that the defendants were liable for conspiracy to defraud and for receiving secret commissions. It found that the defendants had received payments that were not disclosed to the plaintiff and that these payments were in the nature of secret commissions. The court further held that the defendants' actions constituted a breach of their fiduciary duties to the plaintiff.

The Federal Court of Australia ordered the defendants to compensate the plaintiff for the losses suffered due to the conspiracy to defraud and the receipt of secret commissions. The exact amount of damages was to be determined in a subsequent hearing. The court also ordered that the defendants pay the costs of the proceedings.

Orders