JB Asset Management v LBA Capital - [2023] VSC 183

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST

S ECI 2019 03875

JB ASSET MANAGEMENT (and others according to the schedule attached)	Plaintiffs
v
LBA CAPITAL PTY LTD (ACN 628 451 267) (and others according to the schedule attached)	Defendants

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JUDGE:	M Osborne J
WHERE HELD:	Melbourne
DATE OF HEARING:	17 March 2023
DATE OF JUDGMENT:	14 April 2023
CASE MAY BE CITED AS:	JB Asset Management & Anor v LBA Capital & Ors
MEDIUM NEUTRAL CITATION:	[2023] VSC 183

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PRACTICE AND PROCEDURE – Application for striking out of pleading pursuant to Order 23.02 of the Supreme Court (General Civil Procedure) Rules 2015 – Application for summary dismissal pursuant to r 23.01 of the Rules and ss 62-64 of the Civil Procedure Act 2010 (Vic) – Coherency of claims – Adequacy of pleading of loss and damage – Adequacy of pleading of attribution of knowledge of director – Adequacy of pleading of attribution of knowledge of director of company to a subsidiary company of which he is not a director – Downer Connect Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2008] VSC 77 – Teddo Corporation Pty Ltd v Owners Corporation No 1 & Ors [2022] VSC 667.

CORPORATIONS – Guiding mind and will of company – Attribution of knowledge of director in circumstances where transaction proposed to be entered into is alleged to be illegal – Belmont Finance Corporation v Williams Furniture Ltd (No 2) [1980] 1 All ER 393 – LMI Australia Pty Ltd v Balderston Hornibrook (2002) 18 BCL 57.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Ms C Harris KC Mr T P Warner	Allens
For the Tenth and Eleventh Defendants	Mr P Ehrlich KC Mr N Cozens Mr R Kornhauser	Madgwicks

HIS HONOUR:

Introduction

The tenth and eleventh defendants, Next Stage Living Group Pty Ltd (‘NSL Group’) and Next Stage Living Moonee Ponds Pty Ltd (‘NSL MP’, collectively the ‘NSL Parties’), apply by summons for orders pursuant to r 23.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’) and/or s 62 of the Civil Procedure Act 2010 (Vic) (‘CPA’) (‘the Strike Out and Dismissal Summons’) that the claims made by the plaintiffs, JB Asset Management (‘JBA’) and KB Kookmin Bank (‘Kookmin Bank’ and collectively the ‘Plaintiffs’) against the NSL Parties in the third further amended statement of claim filed pursuant to the order of Riordan J made 13 October 2022 (‘Third FASOC’) be struck out, alternatively, that the claims be summarily dismissed. The summons also seeks an order for the determination of a separate question although the hearing of that application has been deferred.

At the return of the summons on 3 February 2023, the Plaintiffs advised that they wished to make certain amendments to the Third FASOC in order to respond to aspects of the criticisms made by the NSL Parties. As a result, I made orders for the filing and service of a proposed further amended statement of claim…

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: [2023] VSC 183
Decision Date: 14 April 2023

CaseChat Overview and Summary

JB Asset Management filed an application for the pleadings of LBA Capital to be struck out and for summary dismissal under the Supreme Court (General Civil Procedure) Rules 2015 and the Civil Procedure Act 2010 (Vic). The case concerns the adequacy of the pleading of loss and damage, the attribution of knowledge of a director, and the coherency of the claims. The plaintiff alleged that the defendant breached fiduciary duties, engaged in misleading and deceptive conduct, and acted negligently in the sale of a property. The defendant argued that the plaintiff's claims were not adequately pleaded and should be dismissed. The court had to decide whether the plaintiff's claims were coherent, adequately pleaded, and if the defendant's knowledge could be attributed to a subsidiary company of which he was not a director.

The court considered the principles established in Downer Connect Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd and Teddo Corporation Pty Ltd v Owners Corporation No 1 & Ors, which provide that a plaintiff must demonstrate a serious question to be tried in order for a claim to be coherent. The court also considered the principles in Belmont Finance Corporation v Williams Furniture Ltd (No 2) and LMI Australia Pty Ltd v Balderston Hornibrook, which provide that knowledge of a director can be attributed to a company in certain circumstances. The court held that the plaintiff's claims were not adequately pleaded and were not coherent as they did not demonstrate a serious question to be tried. The court also held that the defendant's knowledge could not be attributed to a subsidiary company of which he was not a director.

As a result, the court granted the application for striking out of the pleadings and for summary dismissal. The plaintiff's claims were dismissed with costs. The court found that the plaintiff had failed to demonstrate a serious question to be tried, and that the claims were not adequately pleaded. The court also found that the defendant's knowledge could not be attributed to a subsidiary company of which he was not a director. This decision highlights the importance of adequately pleading claims and demonstrating a serious question to be tried in order for a claim to proceed to trial.

Orders