Gerard Cassegrain & Co Pty Ltd (in Liq) v Cassegrain

This case concerned appeals from a primary judge's decision regarding alleged breaches of directors' duties and claims of knowing receipt. The parties involved were Gerard Cassegrain & Co Pty Ltd (in liquidation) and its liquidator, Claude Cassegrain, Anthony Sarks, and Felicity Cassegrain. The central dispute revolved around the transfer of shares owned by the company to Felicity Cassegrain, who was the wife of Claude Cassegrain and daughter of Anthony Sarks. The liquidator alleged that these transfers were at an undervalue and constituted breaches of directors' duties under the *Corporations Act 2001* (Cth) and general equitable principles.

The Court of Appeal was required to determine whether the directors, Claude Cassegrain and Anthony Sarks, had breached their duties by causing the company to transfer the shares to Felicity Cassegrain, particularly whether the shares were transferred at an undervalue. Further issues included whether such breaches occurred irrespective of the undervalue, due to improper purpose or conflict of interest, and whether the directors should be excused under s 1318 of the *Corporations Act*. The court also considered whether Felicity Cassegrain was a knowing recipient of the shares, meaning she had knowledge of circumstances indicating the breaches of fiduciary duty, and whether she could be excused under s 85 of the *Trustee Act 1925*. Finally, the court examined the remedies available, including the assessment of damages or compensation for the company and the appropriateness of the primary judge's orders.

The Court of Appeal dismissed the appeals by Claude Cassegrain and Anthony Sarks, upholding findings of breaches of directors' duties. However, the appeal by Felicity Cassegrain was allowed. The court found that the primary judge had erred in awarding relief against Felicity Cassegrain for knowing receipt when such relief had not been specifically pleaded against her in the statement of claim, nor had leave been granted to amend the pleadings to include this claim. The court noted that while the statement of claim sought declarations that Felicity held the shares on trust and orders for retransfer, it did not specifically seek compensation from her.

Consequently, the Court of Appeal set aside the primary judge's order in relation to Felicity Cassegrain and remitted the matter for the primary judge to consider any application for leave to amend the statement of claim and make appropriate orders thereafter. The appeals by Claude Cassegrain and Anthony Sarks were dismissed with costs, while Felicity Cassegrain's appeal was allowed with costs payable by the respondents to that appeal.