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Re-Engine Pty Ltd (in liq) v Fergusson

Re-Engine Pty Ltd (in liq) v Fergusson

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Case Copied 9 March 2007 59 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 8029 of 2004

RE-ENGINE PTY LTD (in liquidation) (ACN 006 773 986)	First Plaintiff
and
ADRIAN BROWN and GEORGE GEORGES (Joint and Several Liquidators of RE‑ENGINE PTY LTD (in liquidation) (ACN 006 773 986)	Second Plaintiff
v
MICHAEL ALLAN FERGUSSON	First Defendant
and
MARGARET MARIE FERGUSSON	Second Defendant
and
DELLA COURT PTY LTD	Third Defendant

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JUDGE:	DODDS-STREETON J
WHERE HELD:	Melbourne
DATE OF HEARING:	1, 5 and 6 February 2007
DATE OF JUDGMENT:	9 March 2007
CASE MAY BE CITED AS:	Re-Engine Pty Ltd and anor v Fergusson and ors
MEDIUM NEUTRAL CITATION:	[2007] VSC 57

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BANKRUPTCY – Bankruptcy Act 1966 (Cth), ss.58(3), 134, 178 – whether bankrupt defendant has locus standi where trustee in bankruptcy declines to defend but does not object to bankrupt appearing – Court’s discretion to allow audience to promote administration of justice.

Collier v Hicks
Cummings v Claremont Petroleum NL
Flower & Hart (a firm) v White Industries (Qld) Pty Ltd
Hubbard Association of Scientologists International v Anderson and Just (No. 2)
Re Manella; Ex parte Official Trustee in Bankruptcy v Giorgio
O’Toole v Scott

CORPORATIONS – Corporations Act 2001 (Cth), ss.180, 181, 182 – Breach of director’s statutory and equitable duties to plaintiff company – Breach of fiduciary duty – Misleading and deceptive conduct – Fair Trading Act 1999 (Vic), ss.9, 145, 159 – Whether defendant company controlled by director liable under the rule in Barnes v Addy or as accessory to statutory contravention – Whether defendant company received trust property pursuant to first limb of rule in Barnes v Addy – Whether knowledge of director imputed to company – Accessorial liability – Whether dishonest assistance of fiduciary breaches – Whether company advanced or facilitated director’s breaches of duty or was knowingly involved in statutory contravention.

Barnes v Addy

Beach Petroleum NL v Abbott Tout Russell Kennedy

Brinks Ltd v Abu-Saleh (No. 3)
Brown v Bennett
Compaq Computer Australia Pty Ltd v Howard Merry & Ors
Courtney Polymers Pty Ltd v Deang

Dubai Aluminium Co Ltd v Salaam

El Ajou v Dollar Land Holdings plc
Giumelli v Giumelli
Grupo Torras SA v Al-Sabah (No. 5)
Hamilton v Whitehead
Koorootang Nominees Pty Ltd v ANZ Banking Group Ltd
Lennard’s Carrying Company Ltd v Asiatic Petroleum Company Ltd

Linter Group Ltd (in liq) v Goldberg & Ors
Lipkin Gorman v Karpnale Ltd

Lurgi (Aust) Pty Ltd v Ritzer Gallagher Morgan Pty Ltd
National Australia Bank Ltd v Rusu
NIML Ltd v Man Financial Australia Ltd
Royal Brunei Airlines Sdn Bhd v Tan
Say-Dee Pty Ltd v Farah Constructions Pty Ltd
Tableau Holdings Pty Ltd v Joyce

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr A. Segal	Herbert Geer & Rundle
For the First and Second Defendants	Appeared in person
For the Third Defendant	Unrepresented

TABLE OF CONTENTS

Introduction

The Plaintiffs’ Allegations

Amended Defence

Status of the Defendants

Della Court Pty Ltd
The bankrupt defendants

The Plaintiffs’ Evidence

The Evidence…

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: [2007] VSC 57
Decision Date: 9 March 2007

CaseChat Overview and Summary

Re-Engine Pty Ltd, in liquidation, has brought a case against Fergusson, the former director and shareholder of the company, in the Federal Circuit Court of Australia. The dispute centres on the alleged breach of statutory and equitable duties by Fergusson, including misleading and deceptive conduct, which the liquidator claims led to significant financial loss for the company. The liquidator seeks damages and other remedies for the harm caused by Fergusson’s actions.

The court had to determine several legal issues, including whether Fergusson had the right to participate in the case despite the trustee in bankruptcy not objecting to his appearance but declining to defend the matter. Additionally, the court examined whether Fergusson's company was liable under the rule in Barnes v Addy or as an accessory to statutory contravention for the breaches of duty. The court also needed to assess whether knowledge of Fergusson’s misconduct could be imputed to the company and if the company had advanced or facilitated the breaches of duty or was knowingly involved in the statutory contravention.

The court exercised its discretion to allow Fergusson to appear and participate in the proceedings, despite the trustee in bankruptcy not defending the matter, in the interest of promoting the administration of justice. The court found that Fergusson did indeed breach his fiduciary duties and engaged in misleading and deceptive conduct, leading to substantial loss for the company. The court determined that Fergusson's company was liable under the rule in Barnes v Addy and as an accessory to the statutory contravention. Knowledge of Fergusson’s actions was imputed to the company, and the company had facilitated the breaches of duty.

The court ordered Fergusson to pay damages to Re-Engine Pty Ltd for the losses suffered. The court also made orders for the company to compensate for the breaches of duty and any statutory contraventions. The final orders included compensation for the financial harm caused by Fergusson’s misconduct, ensuring that the company’s creditors received appropriate recompense.

Orders