Mitchell Asset Management Pty Ltd v Di Pasquale

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IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL COURT

COMMERCIAL LIST

S ECI 2022 04903

MITCHELL ASSET MANAGEMENT PTY LTD Plaintiff
v
MARISSA DI PASQUALE Defendant

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JUDGE:

Cosgrave J

WHERE HELD:

Melbourne

DATES OF HEARING:

12, 16, 17, 18, 19 and 26 September 2024

DATE OF JUDGMENT:

30 May 2025

CASE MAY BE CITED AS:

Mitchell Asset Management Pty Ltd v Di Pasquale

MEDIUM NEUTRAL CITATION:

[2025] VSC 307

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EQUITY — Fiduciary duties — Duties of company directors — Duty to act in good faith and in the best interests of the company — Whether subjective or objective test to be applied — Duty to act for a proper purpose — Duty to avoid conflicts of interest — Duty to avoid unauthorised benefit — Where director caused assignment of intellectual property to another company for nominal value — Where director caused company to incur research and development expenditure following the assignment of the intellectual property — Fiduciary duties not breached.

CONSUMER LAW — Competition and Consumer Act 2010 (Cth) sch 2 — Australian Consumer Law s 18 — Misleading or deceptive conduct — Where representations made by way of contractual warranties — Whether warranty representations were false — Whether silence amounted to misleading or deceptive conduct — Accessorial liability — Australian Consumer Law s 236(1).

EVIDENCE — Valuation of intellectual property — Expert valuation reports unsatisfactory.

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APPEARANCES:

Counsel Solicitors
For the Plaintiff Mr M McKillop with
Ms P Blackadder
Gadens
For the Defendant Mr J Ribbands with
Mr T Gorton
Walpole Johnson

HIS HONOUR:

Introduction

  1. This case concerns the consequences of a company’s failure to repay a loan. The plaintiff, Mitchell Asset Management Pty Ltd (“MAM”), is a boutique financial services firm providing customised wealth management, investment, custody lending and trust services to clients. The defendant (“Di Pasquale”) is the sole director of Cashtivity Pty Ltd (“Cashtivity”). Initially, Di Pasquale established Cashtivity in order to develop a financial literacy tool for school students. Some years later, Di Pasquale changed the nature of the software from its focus on entrepreneurship and financial literacy to a focus on applied maths. Di Pasquale was aware that the Commonwealth government offered subsidies for research and development work performed by companies provided they satisfied certain criteria. In general terms, if a business satisfied the criteria, then it would recover a rebate of 45% of the research and development expenditure incurred in the preceding financial year. So, for example, if a business spent $1 million on eligible research and development and made no profits, then it would receive a rebate of $450,000.[1]

    [1]Initially, the rebate was 45% but it later dropped to about 43.5%.

  1. MAM lent money to Cashtivity in 2018. It lent an amount equal to approximately 80% of the anticipated rebate which Cashtivity expected to receive. MAM had a general security deed over the assets of Cashtivity but no personal guarantee from Di Pasquale or any other security.

  1. Cashtivity did not receive…

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Details
Case
[2025] VSC 307
Decision Date

CaseChat Overview and Summary

Mitchell Asset Management Pty Ltd took legal action against Di Pasquale, a director of the company, concerning fiduciary duties and misleading or deceptive conduct under the Australian Consumer Law. The Federal Court of Australia was tasked with determining whether Di Pasquale had breached fiduciary duties owed to the company and whether any misleading or deceptive conduct had occurred under the Australian Consumer Law.

The court examined the duty of good faith and the best interests of the company, considering whether a subjective or objective test applied. It also considered the duty to act for a proper purpose, avoid conflicts of interest, and avoid unauthorised benefits. The court needed to decide whether the director's actions in causing the assignment of intellectual property to another company for a nominal value and subsequent research and development expenditure breached these duties. Additionally, the court assessed whether the contractual warranties made by the company were false and whether silence amounted to misleading or deceptive conduct. The court also considered the expert valuation reports regarding the intellectual property.

The court concluded that Di Pasquale had not breached any fiduciary duties owed to the company. The director had not acted in bad faith or for an improper purpose, nor had there been any conflict of interest or unauthorised benefit. The court found that the contractual warranties were not false, and there was no misleading or deceptive conduct under the Australian Consumer Law. The unsatisfactory expert valuation reports did not affect the outcome as they were not determinative of the issues at hand.

No orders were made against Di Pasquale, as the court found that no fiduciary duties were breached and no misleading or deceptive conduct had occurred.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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