Deemah Marble & Granite Pty Ltd v Sutherland - [2001] NSWSC 829

CITATION: Deemah Marble & Granite Pty Ltd v Sutherland [2001] NSWSC 829

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): SC 2460/01

HEARING DATE(S): 27/08/01

JUDGMENT DATE:
30 August 2001

PARTIES :

Deemah Marble & Granite Pty Ltd (In liq) (P1)
John Raymond Gibbons and Kenneth John Rennie (P2)
David Paul Sutherland, Ian Nellist Furnell, Michael James Barnes, Steven O'Halloran, John Barnes, Allan Farrar and Peter Llenoart (t/as White Barnes Solicitors) (D1)
Raymond Youseff Bechara (D2)
Sunnyford Pty Ltd (D3)

JUDGMENT OF: Young CJ in Eq

COUNSEL : C R C Newlinds (P)
S J Stanton (D2 & 3)

SOLICITORS: Clayton Utz (P)
Aitken McLachlan & Thorpe (D2 & 3)

CATCHWORDS: PROCEDURE [95]- Pleadings- Particulars- Equity suit- When ordered- Insolvent company- Defendant former director- Particulars refused.

CASES CITED: American Flange & Manufacturing Co Inc v Rheem Australia Pty Ltd [1963] NSWR 1121
Banque Commerciale SA (In liq) v Akhil Holdings Ltd (1990) 169 CLR 279
Fox v H Wood (Harrow) Ltd [1963] 2 QB 601
Marshall v Inter-Oceanic Steam Yachting Co (1885) 1 TLR 394
Millar v Harper (1888) 38 Ch D 110
Moaki v Reckitt & Colman (Africa) Ltd (1968) 3 SA 98
Sims v Wran [1984] 1 NSWLR 317
Tait v Woods (1884) 1 WN (NSW) 61
TPC v CC (NSW) Pty Ltd (1995) 131 ALR 581
Trade Practices Commission v Total Australia (1975) 24 FLR 413
Wilson v Wilson (1952) 69 WN 358

DECISION: See paras 23 and 24.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

2460 of 2001

YOUNG CJ IN EQ

Thursday 30 August 2001

DEEMAH MARBLE & GRANITE PTY LTD v SUTHERLAND

Judgment

: This is a notice of motion filed by the second and third defendants for particulars. I heard the application last Monday, 27 August 2001, virtually on the papers, though with the assistance of helpful oral submissions by Mr Robert Newlinds of counsel for the plaintiffs and Mr Steve Stanton of counsel for the defendants. I then reserved judgment until this morning so I could thoroughly digest those submissions.

2 Basically the plaintiffs' claim against the second and third defendants is that:

(a) On 8 August 2000 the first plaintiff was wound up;

(b) The first plaintiff was insolvent from at least April 1999;

(c) The second defendant was a director of the first plaintiff from 16 May 1996 to 30 September 1999;

(d) The second defendant was a de facto director from 1 October 1999 to the date of the winding up;

(e) The second defendant owed the first plaintiff fiduciary duties;

(f) On 20 July 2000 the second defendant caused the first plaintiff to sell a major asset at an under value to the third defendant;

(g) The second defendant so structured that transaction that a retention of $200,000 would in any event be paid to the third defendant;

(h) The second defendant was at all material times a director of the third defendant;

(i) Additionally, the second defendant was a shareholder and director of Petank Holdings Pty…

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: [2001] NSWSC 829
Decision Date: 30 August 2001

CaseChat Overview and Summary

The matter of Deemah Marble & Granite Pty Ltd versus Sutherland arose before the Supreme Court of New South Wales. Deemah Marble & Granite Pty Ltd, the plaintiff, sought to hold a former director of the company, Mr Sutherland, accountable for alleged mismanagement and breaches of fiduciary duty. The plaintiff sought particulars of the claims, which were filed in an equity suit. Mr Sutherland, the defendant, argued against the disclosure of the details on the grounds of being the former director of an insolvent company. The court was tasked with determining whether the plaintiff was entitled to particulars of the claims and whether the defendant's status as a former director of an insolvent company precluded such disclosure.

The central legal issue before the court was whether the plaintiff, in an equity suit, was entitled to particulars of the allegations against the defendant, who was a former director of an insolvent company. The court had to consider whether the status of the defendant as a former director of an insolvent company should preclude the plaintiff from obtaining particulars of the claims. This issue hinged on the balance between the plaintiff's right to know the specifics of the allegations and the potential prejudice to the defendant, particularly given his role and the financial status of the company.

The court found that the plaintiff was not entitled to particulars of the claims in this instance. The court reasoned that the disclosure of particulars could potentially prejudice the defendant, given his former role and the insolvency of the company. The court emphasised the need to protect the interests of all parties, particularly in cases involving former directors of insolvent companies where additional complexities and potential liabilities are present. Consequently, the court determined that the particulars should be refused to safeguard against undue prejudice to the defendant.

As a result of this determination, the plaintiff's application for particulars was dismissed. The court's ruling upheld the importance of maintaining a fair balance between the rights of creditors and the protection of former directors in insolvency contexts.

Orders