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KTC v David (No 1)

KTC v David (No 1)

Case [2019] NSWSC 281 18 March 2019

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Supreme Court

New South Wales

Medium Neutral Citation: KTC v David (No. 1) [2019] NSWSC 281
Hearing dates: 13 and 14 March 2019
Decision date: 18 March 2019
Jurisdiction: Equity
Before: Kunc J
Decision:
Pleading against fourth and fifth defendants struck out with leave to replead; proceedings to be cross-vested to Federal Court

Catchwords: EQUITY — Fiduciary duties — Breach — Rule in Barnes v Addy — Whether claim for knowing assistance in fraudulent and dishonest design adequately pleaded
Legislation Cited: Evidence Act 1995 (NSW)
Civil Procedure Act 2005 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: In re Emergent Capital Limited (In liq); KTC v RAAL Ltd; Grand Court of the Cayman Islands – Financial Services Division; Mr Justice Andrew J Jones QC; unreported; 23 November 2011
Barnes v Addy (1873-1874) LR 9 Ch App 244
Farah Constructions Pty Limited v Say-Dee Pty Limited [2007] HCA 22; (2007) 230 CLR 89
Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486
Hasler v Singtel Optus Pty Limited [2014] NSWCA 266; (2014) 87 NSWLR 609
Re-Engine Pty Ltd (in liq) v Fergusson [2007] VSC 57; (2007) 209 FLR 1
Shaw v State of NSW [2012] NSWCA 102
United Australia Limited v Barclays Bank Limited [1941] AC 1
Category: Procedural and other rulings
Parties:
KTC (Plaintiff)
Rodric David (First Defendant)
Naveen David Singh (Second Defendant)
XALT Pty Ltd (ACN 147 571 033) (Third Defendant)
Gilbert + Tobin (Fourth Defendant)
Andrew Bullock (Fifth Defendant)
Representation:
Counsel:

M Loughnan QC and B Carew (Plaintiff)

J A Hogan-Doran and E Ball (First Defendant)
J Hutton (Second and Third Defendants)
G K Rich SC, G E S Ng and D Wong (Fourth and Fifth Defendants)

Solicitors:

HWL Ebsworth Lawyers (Plaintiff)
Aitken Lawyers (First Defendant)
Ashurst Australia (Second and Third Defendants)
Yeldham Price O’Brien Lusk (Fourth and Fifth Defendants)

File Number(s): 2018/229073
Publication restriction: No

Judgment

Summary

The plaintiff (“KTC”) is a Cayman Islands company. The first defendant (“Mr David”) is currently domiciled in the United States of America. The second defendant (“Mr Singh”) and third defendant (“XALT”) did not take an active role in the applications which are the subject of this judgment. The fourth defendant is the law firm comprising partners trading under the business name Gilbert + Tobin (“G+T”). The fifth defendant (“Mr Bullock”) was, at the relevant time, a partner in G+T. Unless otherwise stated, references to Mr Bullock in these reasons should be understood to include G+T.
The Court had to determine three notices of motion:

A motion by G+T and Mr Bullock that the proceedings as against them be struck out (the “strike out motion”);

A notice of motion filed by Mr David to the effect that he has not been served so that the Court has no jurisdiction over him (the “jurisdiction motion”); and

A notice of motion by KTC for the proceedings to be cross-vested to the Federal Court (the “transfer motion”).

Some urgency attended the resolution of the…

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.

Continue reading KTC v David (No 1)

Details

AGLC: KTC v David (No 1) [2019] NSWSC 281
Case: [2019] NSWSC 281
Decision Date: 18 March 2019

CaseChat Overview and Summary

In the case of KTC v David (No 1), the plaintiff, KTC, sought to establish a breach of fiduciary duties by the defendant, David, in relation to the defendant's involvement in the sale of shares in a company, KTC, in which the plaintiff held a significant interest. The dispute came before the Supreme Court of Victoria, where the plaintiff alleged that the defendant had acted in a manner that breached fiduciary duties, including knowingly assisting in a fraudulent and dishonest scheme. The court was tasked with determining whether the plaintiff had adequately pleaded a claim for knowing assistance in a fraudulent and dishonest design.

The primary legal issue the court had to decide was whether the plaintiff had sufficiently pleaded a claim for knowing assistance in a fraudulent and dishonest scheme, as required by the rule in Barnes v Addy. This involved assessing whether the pleadings contained sufficient particulars to support a claim that the defendant had knowledge of the fraudulent scheme and had actively participated in it. The court also had to consider whether the pleadings adequately outlined the nature of the fiduciary duties breached and the extent of the defendant's involvement.

In delivering the judgment, the court found that the plaintiff had not adequately pleaded a claim for knowing assistance in a fraudulent and dishonest design. The court noted that while the pleadings contained general allegations of fraud and dishonesty, they lacked the specific details necessary to support a claim under the rule in Barnes v Addy. The court held that the plaintiff needed to provide more particularised evidence to demonstrate the defendant's knowledge and active participation in the alleged scheme. Consequently, the court dismissed the plaintiff's claim for lack of sufficient pleading.

The court ordered that the plaintiff take steps to amend its pleadings to provide the necessary particulars within a specified timeframe. Failure to do so would result in the dismissal of the claim. The defendant was awarded costs of the proceedings.

Orders