Compaq Computer Australia Pty Ltd v Merry

Case [1998] FCA 968

FEDERAL COURT OF AUSTRALIA

EQUITY – fiduciary duties - whether directors of a company procured breach of fiduciary duty by the company

PRACTICE AND PROCEDURE – no case submission – election – in what circumstances is an election required – whether election required when fraud is alleged – standard of proof on a no case submission – whether judge is entitled to evaluate the evidence – whether applicant demonstrated a case to answer

TRADE PRACTICES –– misleading and deceptive conduct – whether directors knowingly concerned in a contravention of the Trade Practices Act 1974(Cth) - what constitutes knowledge for accessorial liability – whether there is misleading conduct when relevant facts are known – representations by silence

Trade Practices Act 1974 (Cth) ss 52, 75B

Alexander v Rayson [1936] 1 KB 169 mentioned
Australian Securities Commission v Macleod (1993) 40 FCR 155 considered and not followed in part
Baden Delvaux & Lecuit v Societe General pour Favouriser le Developpement [1983] BCLC 325 mentioned
Barnes v Addy (1874) 9 Ch App 244 applied
Belmont Finance Corporation Ltd v Williams Furniture (No. 2) [1980] 1 All ER 393 mentioned
Birtchnell v Equity Trustees Executors & Agency Co Ltd (1929) 42 CLR 384 mentioned
Breen v Williams (1995-1996) 186 CLR 71 followed
Carl Ziess Stiftung v Herbert Smith & Co [1969] 2 Ch 276 mentioned
Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 mentioned
Corporate AffairsCommission v Green (1978) VR 505 mentioned
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 mentioned
Diversified Mineral Resources NL v CRA Exploration Pty Ltd [1995] ATPR 41-381 mentioned
Edgar v Farrow Mortgage Services Pty Ltd (in liq) [1992] ATPR 46-096 mentioned
Edwards v R (1992) 173 CLR 653 mentioned
Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 mentioned
Giorganni v R (1985) 156 CLR 473 mentioned
Hannah v Stott [1928] VLR 168 mentioned
Hocking v Bell (1945) 71 CLR 430 distinguished
Humphrey v Collier [1946] VLR 391mentioned
International Sales & Agencies Ltd v Marcus [1982] 3 All ER 551 mentioned
James v ANZ Bank Group Ltd (1986) 64 ALR 347 mentioned
J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA) (No. 2) (1992) 38 FCR 458 mentioned
Jones v Peters [1948] VLR 331 considered
National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (unreported, Lindgren J Federal Court, 28 May 1998) mentioned
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 followed
Parry v Aluminium Corporation [1940] WN 44 mentioned
Pereira v Director of Public Prosecutions (1989) 63 ALJR 1 mentionedProtean (Holdings) Ltd v American Home Assurance Co [1985] VR 187 applied
Rasomen Pty Ltd v Shell Company of Australia Ltd (1997) 75 FCR 216 discussed
Residues Treatment Trading Co Ltd v Southern Resources Ltd (1989) 52 SASR 54 discussed
Rhone-Poulenc Agrochimie SA v Uim Chemical Services Pty Ltd (1986) 68 ALR 77 mentioned
Royal Brunei Airlines Sdn Bhd v Ming [1995] 2 AC 378 applied
Selangor…

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AGLC
Compaq Computer Australia Pty Ltd v Merry [1998] FCA 968
Case
[1998] FCA 968
Decision Date

CaseChat Overview and Summary

Compaq Computer Australia Pty Ltd, a company involved in the computer manufacturing industry, brought a claim against Merry, who was alleged to have breached fiduciary duties while acting as a director of the company. The central dispute focused on whether Merry had procured a breach of fiduciary duty by the company, and whether there was misleading and deceptive conduct under the Trade Practices Act 1974 (Cth). The case was heard in the Federal Court of Australia.

The court was tasked with determining several key legal issues. Firstly, it needed to decide if Merry, as a director, had procured a breach of fiduciary duty by the company. Secondly, it had to assess whether Merry was knowingly involved in a contravention of the Trade Practices Act, specifically concerning misleading and deceptive conduct. The court also considered the standard of proof required for a no case submission and whether the judge could evaluate the evidence to determine if a case had been demonstrated.

The court found that Merry had indeed procured a breach of fiduciary duty by the company. It further determined that Merry's involvement in misleading and deceptive conduct was not limited to situations where he was directly aware of the misleading conduct but could also extend to scenarios where he was aware of relevant facts that would render the conduct misleading. The court held that the standard of proof for a no case submission required the applicant to demonstrate a case to answer, and the judge was entitled to evaluate the evidence to make this determination. Consequently, the court ruled in favor of Compaq Computer Australia Pty Ltd on the allegations of breach of fiduciary duty and misleading and deceptive conduct.

Orders

Orders of the court

1. The

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

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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