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Commonwealth v Davis Samuel Pty Ltd (No 7)

Commonwealth v Davis Samuel Pty Ltd (No 7)

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COMMONWEALTH OF AUSTRALIA v DAVIS SAMUEL PTY LTD AND ORS
(NO 7) [2013] ACTSC 146 (1 August 2013)

CORPORATIONS – Director – means of becoming – acting in position of – officer – decisions affecting corporation – maker of or participant in

EQUITY – Fiduciary duty – breach of – Barnes v Addy – receipt and assistance – liability for – third party – participatory liability – receipt liability – company – knowledge of – imputation to

EQUITY – Fiduciary duty – breach of – Barnes v Addy – remedies – In rem – In personam – constructive trust – imposition of – discretionary – occasion for – tracing – multiple fiduciary duty breaches – multiple claims

EQUITY – Breach of confidence – fundamental or operative mistake – ultra vires payment of public money

TRADE PRACTICES ACT – misleading and deceptive conduct

Audit Act, s 62A
Audit (Transitional and Miscellaneous) Amendment Act 1997 (Cth)
Australian Securities and Investment Commission Act 1989 (Cth), s 30
Business Names Act 1962 (NSW)
Commonwealth of Australia Constitution Act 1900 (UK) (63 and 64 Vict ch 12)
Competition and Consumer Act 2010 (Cth), s 7
Corporations Law 1989 (Cth), ss 9, 60, 187, 249H, 258(1)(a), 260A, 260B, 260D, 615, 623, 1002, 1116, 1274, 1311, 1317FA, 1317EA

Corporations Act 2001 (Cth), ss 471B, 1317J

Corporations Law of Western Australia, ss 232(6), 1317FA(1)
Duties Act 1997 (NSW), s 58
Evidence Act 1995 (Cth), ss 92, 136, 166, 167, 178
Financial Management and Accountability Act 1997 (Cth), ss 21, 39
Financial Management Legislation Amendment Act 1999 (Cth)
Judiciary Act 1903 (Cth), ss 39, 39B 56, 57, 64
Limitation Act 1985 (ACT), ss 11, 12, 27, 32, 51
Limitation Act 1969 (NSW), ss 47(1), 74
Limitation of Actions Act 1958 (Vic), s 30
Limitation Act 1935 (WA), ss 38, 46-7
Partnership Act 1892 (NSW), Div 4
Stamps Act 1958 (Vic), s 78
Trade Practices Act 1974 (Cth), ss 4, 52, 82, 84, 87
Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth), Sch 7, s 7

Australian Constitution, Ch III, s 75(iii)

Court Procedures Rules 2006 (ACT), Div 2.6.7, Pt 2.10, rr 319, 407, 462, Dictionary
Supreme Court Rules 1937 (ACT), O 20 r 15, O 23 rr 6, 15, O 38 r 13
ASX, Australian Stock Exchange Listing Rules (at 1 July 2000), ch 10, rr 6.23, 18.1

Australian Law Reform Commission, Evidence (Interim), Report No 26 (1985), vol 1
A Tyree and P Weaver, Weerasooria’s Banking Law and the Financial System in Australia (LexisNexis Butterworths, 6^th ed, 2006)
B Moore (ed), The Australian Concise Oxford Dictionary (Oxford University Press, 3^rd ed, 1997)
B Shahorn, ‘The end of knowing receipt? A riposte to unjust enrichment’ (2006) 80 Australian Law Journal 765
D W Crump, Dix & Crump on Contracts of Employment (Butterworths, 6^th ed, 1980)
F M B Reynolds and B J Davenport, Bowstead & Reynolds on Agency (Sweet & Maxwell Ltd, 16^th ed, 2010)
J D Heydon and…

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.

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Details

Case: [2013] ACTSC 146
Decision Date: 1 August 2013

CaseChat Overview and Summary

In the case of Commonwealth v Davis Samuel Pty Ltd (No 7), the plaintiff, the Commonwealth of Australia, sued various defendants including Davis Samuel Pty Ltd, Mark Endresz, and others for breaches of fiduciary duties, breaches of confidence, and misleading and deceptive conduct under the Trade Practices Act. The court had to determine the liability of the defendants for various breaches and the appropriate remedies for the plaintiff.

The court examined whether the defendants were liable for breach of fiduciary duty under Barnes v Addy, focusing on the concepts of receipt and assistance. It considered whether the defendants had knowledge of the breaches and whether the imputation of knowledge to the company was appropriate. Additionally, the court assessed whether the breaches warranted the imposition of an in rem or in personam constructive trust, and whether tracing was appropriate in the context of multiple fiduciary duty breaches and multiple claims.

The court concluded that the plaintiff and the twenty-seventh defendant had leave to make submissions on the consequences of the plaintiff’s election to recover funds from Mr Mark Endresz. The plaintiff was required to elect whether it sought a remedy in respect of the trust of property from the twenty-seventh defendant or from those defendants to whom the purchase price for the securities was paid. Judgment was entered for the twenty-seventh defendant on its counter-claim against several other defendants for damages to be assessed. Judgment was also entered for the twenty-seventh defendant on its third party notice against the third party for damages to be assessed. Various counter-claims were dismissed, and the application to re-open the proceedings was dismissed. The court directed the parties to be heard on consequential or further orders and on costs.

Orders

Orders of the court

4. The plaintiff and the twenty-seventh defendant have leave to make submissions as to the consequences of the plaintiff’s election to recover funds from Mr Mark Endresz.

5. If required, the plaintiff elect as to whether it seeks a remedy in respect of the trust of property, being shares and options in Kanowna Lights NL, from the twenty-seventh defendant or from those defendants to whom the purchase price for those securities or any of them were paid.

6. There be judgment for the twenty-seventh defendant on its counter-claim against the first, second, fourth, fifth, sixth, seventh, eighth, ninth, tenth and seventeenth defendants for damages to be assessed.

7. There be judgment for the twenty-seventh defendant on its third party notice against the third party for damages to be assessed.

8. The counter-claim by the twenty-seventh defendant against the plaintiff be dismissed

9. The counter claim by the first, second, fifth, sixth, seventh, eighth, ninth, tenth, fifteenth, sixteenth, nineteenth, twentieth, twenty-first and twenty-fourth defendants be dismissed.

10. The application to re-open the proceedings be dismissed.

11. The parties be heard as to consequential or further orders arising from these orders and the reasons for judgment, and as to costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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