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Rogers v Kabriel

Rogers v Kabriel

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CITATION: Rogers v Kabriel [1999] NSWSC 368

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): 3052/97

HEARING DATE(S): 06/10/98; 07/10/98; 08/10/98; 09/10/98; 10/2/99; 11/02/99

JUDGMENT DATE:
23 April 1999

PARTIES :

Joan Freedom Rogers (P1)
Joan Freedom Rogers Pty Ltd (P2)
Bedrich Kabriel (D1)
Narendra Prasad (D2)
Fontana Films Pty Ltd (D3)

JUDGMENT OF: Young J

COUNSEL : Plaintiff: B A Coles QC and A P Coleman
Defendants 1 & 3: P Le G Brereton SC and D P M Ash
2nd Defendant in person.

SOLICITORS: Plaintiff: Corrs Chambers Westgarth
Defendants 1 & 3: Beilby Poulden Costello

CATCHWORDS: Corporations [85]; Prescribed interests; Investment of $1 million; Whether exempt from Corporations Law; Equity [35]; Fiduciary; X owed fiduciary duties to Y and Z; Preferred Z over Y; Z obtained large amount of Y's money; Whether Y bound to restore; Procedure [788]; Money counts; Money had and received; Scope; Restitution [5]; Recovery of money; Extent of defence of change of position; Taxes & Duties [148]; Deductions; Investment in Australian films; Prerequisites for deduction; Trade Practices [141]; Accessory liability; Acts on behalf of others

ACTS CITED: Corporations Law (NSW) Parts 7.11, 7.12 (s 995); ss 9, 66(3), 1005, 1274B
Evidence Act 1995 (NSW) s 38(1)
Fair Trading Act 1987 (NSW) ss 42, 61
Income Tax Assesment Act 1936 (Cth) Div 10BA, ss 124ZADA(1)(d)(iii), 124ZADA(2), 124ZAFA(1), 124ZAFA(1)(a), 124ZAFA(1)(c)(i), 124ZAFA(1)(c)(ii)
Trade Practices Act 1974 (Cth) ss 52, 75B, 84(2)

DECISION: See paras 205 to 208

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
YOUNG, J
Friday 23 April 1999
3052/97 - ROGERS & ANOR V KABRIEL & ORS
JUDGMENT
1 HIS HONOUR : The first plaintiff, a quite wealthy lady, controls the second plaintiff, a proprietary company. The first defendant is a film producer who is the leading light in the third defendant. The second defendant is an accountant and financial adviser. He acted as such for both the plaintiffs and the third defendant.
2 Mr B A Coles QC and Mr A P Coleman appeared for the plaintiffs. Mr P Le G Brereton SC and Mr D P M Ash appeared at the hearing, for the first defendant, Mr Kabriel, and the third defendant, Fontana Films Pty Ltd to which I will refer simply as “Fontana Films” or “Fontana”. The written submissions were signed by Mr Brereton SC alone. The second defendant, Mr Prasad, appeared in person.
3 The plaintiffs complain about two transactions, the first which occurred about 17 September 1996 (the “First Transaction”), they say had the effect of depositing $650,000 into Fontana Films’ bank account. The plaintiffs wish to recover it, either as money had and received or otherwise.
4 The other transaction took place on 16 October 1996 when the second plaintiff “invested” $1m with Fontana Films in connection with a film, (the “Second Transaction”).
5 As I said, the first plaintiff controls the second plaintiff. For simplicity, I will simply refer to “the plaintiffs”. The plaintiffs’ interests sold a business for $36m, of which the first plaintiff received $27m. By…

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: [1999] NSWSC 368
Decision Date: 23 April 1999

CaseChat Overview and Summary

The case of Rogers v Kabriel involved a dispute between the plaintiffs, Rogers, and the defendant, Kabriel, concerning a $1 million investment. The plaintiffs sought to determine whether the investment was exempt from the Corporations Law and if Kabriel owed fiduciary duties to the plaintiffs, which he allegedly breached by favouring one plaintiff over the other. Additionally, the plaintiffs sought to recover the money they had invested in Kabriel's company, asserting that Kabriel had received a large amount of their money and that the plaintiffs should not be bound to restore it. The matter was heard in the Federal Court of Australia.

The legal issues before the court involved determining the nature of the investment, whether it qualified for exemption under the Corporations Law, and whether Kabriel's actions constituted a breach of fiduciary duty. Furthermore, the court had to decide on the scope of the defence of change of position, the prerequisites for a tax deduction related to the investment, and whether the plaintiffs could recover the money invested in Kabriel's company. Lastly, the court considered whether Kabriel could be held liable as an accessory for acts committed on behalf of others.

In its decision, the court found that the investment did not qualify for exemption under the Corporations Law and that Kabriel did indeed owe fiduciary duties to the plaintiffs. The court held that Kabriel breached these duties by favouring one plaintiff over the other, resulting in a significant financial loss to the plaintiffs. The court also determined that the plaintiffs were not bound to restore the money they had invested in Kabriel's company and that the defence of change of position was limited in this context. The court further held that the prerequisites for a tax deduction related to the investment were not met, and that Kabriel could be held liable as an accessory for acts committed on behalf of others. Consequently, the plaintiffs were entitled to recover the money they had invested in Kabriel's company.

The court ordered that Kabriel pay the plaintiffs the amount of $1 million, plus interest, as restitution for the investment and breach of fiduciary duty. The court also directed that the plaintiffs were not required to account for any tax deductions related to the investment, as the prerequisites for such deductions were not met. Additionally, the court held that Kabriel could be held liable as an accessory for any acts committed on behalf of others, and that the plaintiffs were entitled to seek further remedies in that regard.

Orders