Fonterra Brands (Australia) Pty Ltd v Viropoulos

Fonterra Brands (Australia) Pty Ltd (Fonterra) brought proceedings against Nicholas Viropoulos, FCD Holdings, Frank Bruzzano, Frank Bruzzano Pty Limited, M J Leonard, Michael John Leonard, M J Leonard Pty Limited and Nick’s Food Pty Limited (Nick’s Food). Fonterra brought claims against the first, second and seventh respondents for $1,205,971.71 in respect of goods sold to Falcon GT, now in liquidation, and for misleading and deceptive conduct under the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW). In addition, the pleadings contain allegations against the third, fourth, fifth and sixth respondents in relation to the same events. The first interlocutory application was that Kemp Strang, the solicitors for the first, second and seventh respondents, be restrained from acting for those respondents. The applicant submitted that Kemp Strang had acted for the liquidator of Falcon GT, who was partly funded by Fonterra. Kemp Strang had conducted public examinations of the affairs of Falcon GT and the role in those affairs of entities and persons who were to be examined, including Mr Viropoulos. The applicant submitted that Kemp Strang had a conflict of interest and had misused confidential information. The court held that Fonterra was not a client of Kemp Strang and that the category of claim identified by Brooking JA as a breach of a fiduciary duty of loyalty not to act against a client, or against a former client, in the same matter or a closely related matter did not arise. The court held that the proper administration of justice required that Kemp Strang be restrained from acting. The court held that Kemp Strang should give an undertaking that they would not access the files held by them in respect of the Falcon GT matter and would not discuss the matter with those previously acting for Mr Hill the liquidator and vice versa. The second interlocutory application related to the proposed amended pleadings in relation to the third, fourth, fifth and sixth respondents. The third, fourth, fifth and sixth respondents submitted that the pleadings did not disclose a reasonable cause of action against them. The court held that the pleadings against these respondents did not plead facts capable of justifying a finding that these respondents had actual knowledge of the essential matters constituting Falcon GT’s contravention of the Trade Practices Act. The court held that the applicant should have a further opportunity to plead a case against these respondents and gave the applicant 28 days to serve a proposed amended pleading. The third and fourth respondents should have 14 days thereafter to state whether or not they consent to those proposed amendments and if not, the grounds therefor. The applicant should pay the third, fourth, fifth and sixth respondents’ costs of the interlocutory application filed on 10 May 2013.