FEDERAL COURT OF AUSTRALIA
Sacca v El Saafin (No 2) [2021] FCA 987
File number: VID 1439 of 2018 Judgment of: ANASTASSIOU J Date of judgment: 19 August 2021 Catchwords: CORPORATIONS – proceeding settled in-principle between Plaintiffs and First Defendant – where First Defendant a director of Second Defendant at time of relevant conduct – Second Defendant not a party to the in-principle settlement and did not appear at trial – whether Second Defendant was involved in First Defendant’s breach of directors’ duties and/or oppressive conduct under Corporations Act 2001 (Cth) – whether Second Defendant was in knowing receipt of property received as a result of First Defendant’s breach of fiduciary duty – whether transfer of a licence should be declared void – transfer declared void Legislation: Corporations Act 2001 (Cth), ss 79(c), 181, 182, 183, 232, 233
Federal Court Rules 2011 (Cth), rr 22.01, 22.02, 22.04, 22.06, 22.07
Cases cited: Barnes v Addy (1874) LR 9 Ch App 244
Cassegrain v Cassegrain [2012] NSWSC 403
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89
Mernda Developments Pty Ltd (in liq) v Alamanda Property Investments No 2 Pty Ltd [2011] VSCA 392; 86 ACSR 277
MG Corrosion Consultants Pty Ltd v Gilmour [2014] FCA 990
Robins v Incentive Dynamics Pty Ltd (in liq) [2003] NSWCA 71; 45 ACSR 244
Sacca v El Saafin [2021] FCA 383
Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 24 Date of hearing: 5, 6 and 8 July 2021 Counsel for the Plaintiffs: Mr T. Mullen Solicitor for the Plaintiffs: NOH Legal Solicitor for the First Defendant: Mr M. Awad of M Joseph & Associates Solicitor for the Second Defendant: The Second Defendant did not appear ORDERS
VID 1439 of 2018 BETWEEN: GEORGE SACCA
First Plaintiff
AAM AUSTRALIAN ARAB MEDIA PTY LTD (ACN 611 134 064)
Second Plaintiff
AIR TIME AUSTRALIA PTY LTD (ACN 611 197 203)
Third Plaintiff
AND: MR WAEL EL SAAFIN
First Defendant
BARAKA MEDIA PTY LTD (ACN 628 791 284)
Second Defendant
ORDER MADE BY:
ANASTASSIOU J
DATE OF ORDER:
19 AUGUST 2021
THE COURT NOTES THAT:
1.The Plaintiffs and the First Defendant have agreed to settle the claims made in the proceeding as between them. Separate orders have been made by this Court by the consent of those parties.
2.The Second Defendant appeared in the proceeding but did not appear at the trial of this matter.
3.Having regard to the facts and documents that were admitted by the Defendants and/or tendered by the Plaintiffs in relation to the claims made in the proceeding about the transfer of Apparatus Licence number 1308290/4 issued by the Australian Communications and Media Authority (the Licence), including the deemed…
Continue reading Sacca v El Saafin (No 2)
Sign in free to access the full text
- AGLC
- Sacca v El Saafin (No 2) [2021] FCA 987
- Case
- [2021] FCA 987
- Decision Date
CaseChat Overview and Summary
The court was required to decide whether the second defendant was involved in the first defendant's breach of directors' duties and/or oppressive conduct under the Corporations Act 2001 (Cth). The court also had to determine whether the second defendant was in knowing receipt of property received as a result of the first defendant's breach of fiduciary duty and whether the transfer of a licence should be declared void. The court found that Mr El Saafin was the controlling mind of Baraka throughout August and September 2018, the time during which the Licence was purportedly transferred from AAM to Baraka. The transfer occurred for no consideration and without any express or implied authority on the part of Mr Sacca to do so on behalf of AAM. The court found that Mr El Saafin exercised his powers as a director of AAM for an improper purpose and in a manner that was contrary to the interests of the company in contravention of ss 181, 182 and 183 of the Corporations Act 2001 (Cth). The court found that Mr El Saafin's conduct constitutes oppressive conduct within the meaning of s 232 of the Corporations Act. The transfer of company assets without authority and for no consideration is plainly oppressive conduct. The court declared the transfer of the Licence from the second plaintiff to the second defendant void.
The court ordered that the third plaintiff is released from its undertaking given to the court on 25 February 2019. The court declared that the transfer of the Licence from the second plaintiff to the second defendant that was processed by the Australian Communications and Media Authority (ACMA) on 9 October 2018 is void. The second defendant, by its sole director, company secretary and shareholder, Ahmad Ayad, is to do all things necessary to effect the transfer of the Licence back to the second plaintiff, including signing a copy of the pre-filled "Application for transfer of apparatus licence(s)" ACMA form that is attached to this order. In the event that the second defendant, by its sole director, company secretary and shareholder, Ahmad Ayad, refused or fails to comply with his obligations under paragraph [3] of these Orders, an officer of the Registry of the Federal Court of Australia in Melbourne, is authorised to execute any document to give effect to those Orders on the application of the plaintiffs. The second defendant is to take all steps reasonably necessary to assist the first defendant to comply with the other orders made in this proceeding for him to deliver up to the second plaintiff the FM Transmitter and any other radio broadcasting equipment, including providing any necessary access to any premises where such equipment is presently located. The second defendant is to pay to the first plaintiff the plaintiffs' costs of and incidental to this proceeding, including all relevant reserved costs, on a standard basis, to be assessed in default of agreement.
Orders
Orders of the court
1. The Third Plaintiff is released from its undertaking given to the Court on 25 February 2019.
2. The Court declares that the transfer of the Licence from the Second Plaintiff to the Second Defendant that was processed by the Australian Communications and Media Authority (ACMA) on 9 October 2018 is void.
3. The Second Defendant, by its sole director, company secretary and shareholder, Ahmad Ayad, is to do all things necessary to effect the transfer of the Licence back to the Second Plaintiff, including signing a copy of the pre-filled “Application for transfer of apparatus licence(s)” ACMA form that is attached to this Order.
4. In the event that the Second Defendant, by its sole director, company secretary and shareholder, Ahmad Ayad, refused or fails to comply with his obligations under paragraph [3] of these Orders, an officer of the Registry of the Federal Court of Australia in Melbourne, be authorised to execute any document to give effect to those Orders on the application of the Plaintiffs.
5. The Second Defendant is to take all steps reasonably necessary to assist the First Defendant to comply with the other orders made in this proceeding for him to deliver up to the Second Plaintiff the FM Transmitter and any other radio broadcasting equipment, including providing any necessary access to any premises where such equipment is presently located.
6. The Second Defendant is to pay to the First Plaintiff the Plaintiffs’ costs of and incidental to this proceeding, including all relevant reserved costs, on a standard basis, to be assessed in default of agreement.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Plainly, the above facts demonstrate that Mr El Saafin was the controlling mind of Baraka throughout August and September 2018, that being the time during which the Licence was purportedly transferred from AAM to Baraka. That transfer occurred for no consideration and without any express or implied authority on the part of Mr Sacca to do so on behalf of AAM. Accordingly, I find that Mr El Saafin exercised his powers as a director of AAM for an improper purpose and in a manner that was contrary to the interests of the company in contravention of ss 181, 182 and 183 of the Corporations Act 2001 (Cth). Section 79(c) of the Corporations Act provides that a person has been involved in a contravention if the person has been in any way knowingly concerned in, or party to, the contravention – whether by act or omission, or directly or indirectly. Given that Mr El Saafin was the sole director and shareholder of Baraka at the material time, his knowledge is to be imputed to Baraka and so Baraka is “involved in” the contraventions established against Mr El Saafin: Yorke v Lucas [1985] HCA 65; 158 CLR 661 at 667 (Mason ACJ, Wilson, Deane and Dawson JJ) and 677 (Brennan J); MG Corrosion Consultants Pty Ltd v Gilmour [2014] FCA 990 at [526] (Barker J). Further, I find that Mr El Saafin’s conduct constitutes oppressive conduct within the meaning of s 232 of the Corporations Act. The transfer of company assets without authority and for no consideration is plainly oppressive conduct. Accordingly, if it were necessary, I could also set aside the transfer pursuant to s 233(1)(j) of the Corporations Act: see, eg, Cassegrain v Cassegrain [2012] NSWSC 403 at [196], [212]-[218] (in relation to fiduciary duties), [219]-[223] (in relation to oppressive conduct) and [224]-[228] (in relation to statutory duties) (Bergin CJ). Additionally, for the reasons I have already explained, Mr El Saafin’s conduct is a breach of fiduciary duty. Amongst other things, Mr El Saafin:(1)failed to act in good faith, honestly and for the benefit of AAM; (2)used his position to secure a personal gain and caused detriment to AAM; (3)failed to avoid a conflict of interest and duty; and (4)exercised his powers as a director of AAM for an improper purpose. As the sole director and shareholder of Baraka at the time of the relevant conduct, Mr El Saafin’s knowledge is to be imputed to Baraka: Tesco Supermarkets Ltd v Nattrass [1972] AC 153 at 170, recently cited with approval in All Class Insurance Brokers Pty Ltd (in liquidation) v Chubb Insurance Australia Limited (No 2) [2021] FCA 782 at [160] (Allsop CJ). Accordingly, there is also a claim for accessorial liability under the first limb in Barnes v Addy (1874) LR 9 Ch App 244 for knowing receipt. This is because the transfer of the Licence occurred in circumstances where Baraka knew, or ought to have known, that the Licence belonged to AAM: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 at [112] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ).