Denis Cassegrain & Ors v Gerard Cassegrain & Co Pty Ltd & Ors (Final Orders)
[2012] NSWSC 834
•24 July 2012
Supreme Court
New South Wales
Case Title: Denis Cassegrain & Ors v Gerard Cassegrain & Co. Pty Ltd & Ors (Final Orders) Medium Neutral Citation: [2012] NSWSC 834 Hearing Date(s): 12 June 2012 Decision Date: 24 July 2012 Jurisdiction: Equity Division - Corporations List Before: Bergin CJ in Eq Decision: Orders Made
Catchwords: [CORPORATIONS] - Whether assessment of "damage" under s 1317H of the Corporations Act 2001 to take into account matters and/or events occurring subsequent to date of relevant contravention Legislation Cited: Corporations Act 2001 (Cth) Cases Cited: Adler v Australian Securities & Investment Comission (2003) 46 ACSR 504
Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359
Coleman and Ors v Myers and Ors (1977) 2 NZLR 225
Ho v Akai Pty Ltd (in liq) ACN 001 500 714 [2006] FCAFC 159Texts Cited: Category: Consequential orders Parties: Denis Cassegrain (1st Plaintiff/2nd Cross Defendant)
Catherine Dunn (2nd Plaintiff/3rd Cross Defendant)
Patrick Cassegrain (3rd Plaintiff/5th Cross Defendant)
John Cassegrain (4th Plaintiff/4th Cross Defendant)
Gerard Cassegrain & Co. Pty Limited ACN 000 342 174 (1st Defendant)
Claude Cassegrain (2nd Defendant/Cross Claimant)
Felicity Cassegrain (3rd Defendant)
Anthony Blake Sarks (4th Defendant)
Expressway Spares Pty Ltd (1st Cross Defendant)
Anne Marie Cameron (6th Cross Defendant)Representation - Counsel: M A Ashhurst SC/G Colyer (Plaintiffs/2nd to 5th Cross Defendants)
G C Lindsay SC/G McGrath SC/ P Bolster (2nd and 4th Defendants/Cross Claimant)
J J Garnsey QC/P J Gormly (3rd Defendant)
D Stack (1st Cross Defendant)- Solicitors: McCabe Terrill Lawyers (Plaintiffs/2nd to 5th Cross Defendants)
Oliveri Lawyers (1st, 2nd, 4th Defendants/Cross Claimant)
Peter Condon & Associates (3rd Defendant)
Thomsons Lawyers (1st Cross Defendant)File number(s): 2008/281625 Publication Restriction: Nil
JUDGMENT
There are competing claims in respect of the final orders to be made consequent upon the delivery of my judgment in this matter on 27 April 2012: [2012] NSWSC 403. These short reasons should be read in conjunction with that judgment. The terms as defined in that judgment are adopted in these reasons. The parties were unable to argue the matter until 12 June 2012 and were then granted leave to file further submissions in respect of one aspect of the orders sought.
The plaintiffs seek declarations of breaches of fiduciary duty by the defendants. The defendants' proposed orders do not contain such declarations. I am satisfied in the circumstances that it is appropriate to make the declarations sought by the plaintiffs.
The plaintiffs seek an order that GCC be wound up, whereas the defendants oppose that order and seek orders that the shares be re-transferred to GCC. An administrator has been appointed to GCC after the hearing of the matter but just prior to the delivery of judgment. The defendants have submitted that the Court should allow the administration process to take its orderly course, thereby permitting all creditors of the GCC to participate in the decision making process.
The shares were transferred seven and a half years ago. There is no evidence that the assets and liabilities of the two companies are the same as they were at the date of transfer. In those circumstances the plaintiffs submitted that it would be inappropriate to make an order for the shares to be restored to GCC: Coleman and Ors v Myers and Ors (1977) 2 NZLR 225 at 361 and 379. There was some evidence that establishes that the assets and liabilities of each of OAL and TTO are not as they were at the time of the transfer of the shares to Felicity. Over the years there have been sales of assets and the entry into various facilities including loan agreements and overdrafts.
The plaintiffs are entitled to the relief in respect of the oppressive conduct referred to in the reasons for judgment. One of the reasons for ordering the winding up of GCC is to bring an end to the oppression by separating the oppressed from the oppressor: Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359 at [122] per Giles JA. It is also appropriate to have a Court appointed liquidation rather than a voluntary winding up in the circumstances of this case.
I am satisfied that the appropriate order to be made in the circumstances is for the winding up of GCC, rather than the re-transfer of the shares to GCC.
The next issue between the parties is the nature of the orders that should be made in respect of the compensation sought by the plaintiffs. There is no issue between the parties that consequent upon the judgment of 27 April 2012 an order for equitable compensation should be made. However the plaintiffs seek an order that the amount of equitable compensation be quantified immediately. It was submitted that it is a straightforward quantification of the difference between the amounts Felicity Cassegrain paid for the shares and the value of the shares recorded in the judgment. I am not satisfied that this is the appropriate way in which to proceed. Rather I agree with the defendants' submissions that there should be an inquiry in relation to the amount of compensation to be paid to GCC. Accordingly an order will be made for an inquiry in respect of the assessment of equitable compensation as against Claude Cassegrain, Felicity Cassegrain and Anthony Sarks.
There is an issue in relation to the compensation that is sought by the plaintiffs pursuant to s 1317H of the Corporations Act 2001. The plaintiffs claim compensation under s 1317H of the Corporations Act 2001 against Claude Cassegrain, Felicity Cassegrain and Anthony Sarks. It was submitted on Felicity's behalf that there were no findings in respect of her liability under s 79(c) of the Corporations Act. I accept that submission notwithstanding that the plaintiffs have pointed to paragraphs [252]-[254] of the judgment to suggest otherwise. Accordingly the orders made in relation to this claim will not involve an order in respect of Felicity Cassegrain.
A further issue was raised as to whether the proper assessment of compensation under s 1317H of the Corporations Act involves an assessment of "damage" (or loss) at the date of the contravention or at the date the order is made. The plaintiffs contend for the former position and the defendants contend for the latter position. The plaintiffs point to the fact that the legislation does not refer to an "inquiry" as strong support that it is intended to be a straightforward assessment as at the date of contravention.
The plaintiffs also submitted that the Court of Appeal has decided that the determination of causation of loss under s 1317H should be determined "free from the strictures of analogy with equitable claims against fiduciaries": Adler v Australian Securities & Investment Commission (2003) 46 ACSR 504 at [709]. The defendants submitted that this decision is predicated upon the propositions that: (a) s 1317H needs to be construed independently of any common law or equitable analogue; (b) a compensation order must be based on evidence of actual damage, not a presumption of damage; and (c) in determining whether to make an order, and what order should be made, the Court must have regard to events occurring after the time of contravention of the Corporations Act.
I agree with the defendants' submissions that the fact that s 1317H(2) provides that "profits made by any person resulting from" a contravention are to be taken into account demonstrates that conceptually, the assessment of the "damage" cannot be made upon a snapshot taken of the corporation's position at the time of contravention. I am satisfied that the assessment of damage for the purposes of making a compensation order under s 1317H of the Corporations Act is to be made having regard to the position at the time the order is made: see also Ho v Akai Pty Ltd (in liq) (ACN 001 500 714) [2006] FCAFC 159 at [48]-[52]; [55]-[57].
The final issue is the matter of costs. The plaintiffs claim that there should be an order for indemnity costs having regard to the fact that both Claude Cassegrain and Felicity Cassegrain propounded false versions of events. It was submitted that those versions of events caused the trial to take longer than it otherwise should have. I am not satisfied that this is a proper basis upon which I should award indemnity costs and I intend to make an order for party/party costs. I also intend to make an order that the liquidator pay the plaintiffs' costs in respect of the oppression suit and that the defendants indemnify GCC in respect of the payment of those costs.
I make the Declarations and Orders in the Short Minutes of Order initialled by me and dated today.
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