LYNETTE MARIE CROSSMAN v BRENDAN TAYLOR and WHITE MARINA PTY LTD
File number:
SAD 32 of 2010
Judge:
BESANKO J
Date of judgment:
29 June 2011
Catchwords:
TRADE PRACTICES — Action for misleading or deceptive conduct in contravention of s 56 of the Fair Trading Act 1987 (SA) (‘the Act’) — where plaintiff and first defendant formed second defendant company for purpose of acquisition and operation of marina business — where plaintiff and first defendant in personal relationship —where first defendant said to have made oral representations which induced plaintiff to enter into the venture including representation that both parties would contribute equally to funding of business — where plaintiff made substantially greater financial contribution to the company — where plaintiff seeks damages or compensation pursuant to ss 84 and 85 of the Act — whether representations were in trade or commerce — whether representations were representations as to future matters for purpose of s 54 of the Act — whether plaintiff entitled to recover all of her contributions
CORPORATIONS —claim by plaintiff for equalisation of contributions made to company under s 233 of the Corporations Act 2001 (Cth) on basis of first defendant’s oppressive conduct under s 232 — where plaintiff said failure to make equal contributions was oppressive conduct — whether failure to meet a pre-incorporation understanding between incorporators of company is in conduct of a company’s affairs for purpose of s 232 — whether even if failure to make contributions was in conduct of a company’s affairs an order for equalisation of contributions would be appropriate under s 233 — where other forms of oppressive conduct might be made out but would not lead to relief sought
EQUITY — where plaintiff alleged existence of fiduciary relationship between plaintiff and first defendant because of proposed joint venture — no fiduciary relationship between incorporators of company
HELD: The defendant had engaged in misleading and deceptive conduct contrary to s 56 of the Act and the plaintiff was entitled to damages in the amount of all of her contributions to the company with interest. The plaintiff did not succeed in the oppressive conduct case or the fiduciary duty case.
[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
AGLC
Crossman v Taylor (No 3) [2011] FCA 734
Case
[2011] FCA 734
Decision Date
CaseChat Overview and Summary
Crossman v Taylor (No 3) involved a dispute between the plaintiff, Crossman, and the first defendant, Taylor, regarding their joint venture through the second defendant, a company formed for the acquisition and operation of a marina business. Crossman alleged that Taylor had made oral representations that both parties would contribute equally to the funding of the business, which induced her to enter into the venture. However, she claimed that Taylor made substantially greater financial contributions than her. Crossman sought damages or compensation for Taylor's alleged misleading or deceptive conduct under the Fair Trading Act 1987 (SA), equalisation of contributions under the Corporations Act 2001 (Cth), and relief based on an alleged breach of fiduciary duty.
The court had to determine whether Taylor's representations were in trade or commerce, whether they were representations as to future matters for the purposes of the Act, and whether Crossman was entitled to recover all of her contributions. Additionally, the court needed to assess whether Taylor's failure to make equal contributions constituted oppressive conduct under the Corporations Act, and whether an order for equalisation of contributions would be appropriate. Finally, the court had to decide if there was a fiduciary relationship between the parties that entitled Crossman to relief.
The court found that Taylor had engaged in misleading and deceptive conduct contrary to section 56 of the Fair Trading Act and that Crossman was entitled to damages in the amount of all her contributions to the company, with interest. The court held that Crossman's claims for relief under the Corporations Act and for breach of fiduciary duty were not successful. The court reasoned that while Taylor's representations were a cause of Crossman's loss, the oppressive conduct claim did not warrant the relief sought by Crossman, and there was no fiduciary relationship between the parties. Consequently, Crossman was awarded damages equal to her contributions to the company, with interest. The court invited the plaintiff to bring in draft minutes of orders reflecting the conclusions in these reasons, with the parties at liberty to make further submissions on the appropriate orders.
Orders
Orders of the court
The plaintiff bring in draft minutes of orders reflecting the conclusions in these reasons and the parties be at liberty to make further submissions on the appropriate orders.
Note:
Background
Background to the litigation
In Section B I have, subject to a number of qualifications, tried to deal with events in chronological order. The first qualification is that where the evidence of a witness who deals with a limited number of issues first becomes relevant I have decided that it is convenient to deal with all of their evidence at that point. Secondly, where it is necessary for me to make a finding about an important statement or representation alleged to have been made I have gone on to address the particular matters said by one or both parties to be relevant to the finding which should be made even where that involves a consideration of later events. Although I address the particular matters at that point the finding I make is made having regard to all the evidence and in particular the credibility and reliability of the witnesses. Finally, there are certain matters which span the life of the venture and which it is convenient to deal with as a whole at the end of Section B. They are certain alleged acts of oppressive conduct and matters of a bookkeeping or accounting nature concerning the second defendant’s financial records and the quantum of the plaintiff’s claims.B. THE FACTS The plaintiff gave her evidence in a careful and considered fashion. By contrast, the first defendant was evasive and at times paused for some time before giving his answer. I formed the view that his pauses resulted from an overriding concern not to give an answer which he thought might be damaging to his case rather than a concern to tell the truth. However, as far as possible I have tried to reach my conclusions on credibility and reliability on the basis of contemporary materials, objectively established facts and the apparent logic of events (see Fox v Percy (2003) 214 CLR 118 at 129 [31] per Gleeson CJ, Gummow and Kirby JJ). For the reasons set out below I formed the view that the plaintiff was an honest and reliable witness. Again, for the reasons set out below, I formed the view that in a number of significant respects the first defendant was not a credible or reliable witness. I do not accept his evidence except where it is corroborated by other evidence which I do accept. In reaching these conclusions I have considered all of the challenges to honesty and reliability. Those challenges relate to a wide range of topics and they are dealt with below. I have considered the challenges to credibility and reliability individually and collectively. The plaintiff called four witnesses. They were Ms Jody Sitters, a bookkeeper, Mr Hugh McPharlin, an independent accountant, Mr Nic Minicozzi, a solicitor, and Ms Cheryl Galloway, a clerical assistant. They were all honest and reliable witnesses and I accept their evidence. The first defendant did not challenge the honesty or reliability of these witnesses. The first defendant called three witnesses. They were Mr Jim Daly, a former employee of the second defendant, Mr Klaus-Peter Wegener, the principal of a building firm, and Ms Julianne Price, a friend of the first defendant. I formed the view that Mr Daly and Mr Wegener were not reliable witnesses and I do not accept their evidence unless it is corroborated by other evidence which I do accept. Ms Price gave evidence on two relatively narrow issues. In the end I do not think her evidence is of assistance in resolving the issues in this case.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
In this case I think that once it is accepted that the plaintiff would not have entered into the venture or made the contributions but for the first defendant’s representations about his willingness and ability to make contributions then those representations are a cause of the plaintiff’s loss or damage. Allowing for an event which breaks the chain of causation does not assist the first defendant because no such event has been identified by the first defendant or raised on the evidence. Furthermore, even if one imported into s 84 a notion of reasonable foreseeability that does not assist the first defendant because it was reasonably foreseeable that if he did not match the plaintiff’s contributions there was a risk the plaintiff would not be able to recover her contributions.CONCLUSION In my opinion, the plaintiff is entitled to succeed on the Fair Trading Act cause of action. She is entitled to recover from the first defendant the sum of $661,444.23 and compound interest calculated to 30 June 2010 of $216,168.76. D. OPPRESSIVE CONDUCT CAUSE OF ACTION In view of my conclusions in relation to the Fair Trading Act cause of action it is not strictly necessary for me to consider the oppressive conduct cause of action. However, it was argued in detail and it is appropriate that I express my conclusions with respect to it. In my opinion, the relief sought by the plaintiff is not relief that can or should be granted in relation to the conduct of which the plaintiff complains. With respect to the oppressive conduct cause of action, the plaintiff seeks an order that the first defendant pay her the sum of $341,297.42 taking into account an entitlement to interest or the sum of $233,213.04 excluding an entitlement to interest. That, it is said, will equalise the contributions made to the second defendant by the parties. The relevant provisions of s 232 and s 233 of the Corporations Act 2001 (Cth) are as follows:232 Grounds for Court orderThe Court may make an order under section 233 if:(a) the conduct of a company’s affairs; or(b) an actual or proposed act or omission by or on behalf of a company; or(c) a resolution, or a proposed resolution, of members or a class of members of a company;is either:(d) contrary to the interests of the members as a whole; or(e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company.Note: For affairs, see section 53.233 Orders the Court can make(1)The Court can make any order under this section that it considers appropriate in relation to the company, including an order:(a) that the company be wound up;(b) that the company’s existing constitution be modified or repealed;(c) regulating the conduct of the company’s affairs in the future;(d) for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law;(e) for the purchase of shares with an appropriate reduction of the company’s share capital;(f) for the company to institute, prosecute, defend or discontinue specified proceedings;(g) authorising a member, or a person to whom a share in the company has been transmitted by will or by operation of law, to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the company;(h) appointing a receiver or a receiver and manager of any or all of the company’s property;(i) restraining a person from engaging in specified conduct or from doing a specified act;(j) requiring a person to do a specified act.