Sarks v Cassegrain

Case [2014] FCA 972

FEDERAL COURT OF AUSTRALIA

Sarks v Cassegrain [2014] FCA 972

Citation: Sarks v Cassegrain [2014] FCA 972
Parties:

ANTHONY BLAKE SARKS v DENIS CASSEGRAIN, CATHERINE DUNN, PATRICK CASSEGRAIN and JOHN CASSEGRAIN

CLAUDE CASSEGRAIN v DENIS CASSEGRAIN, CATHERINE DUNN, PATRICK CASSEGRAIN and JOHN CASSEGRAIN

File numbers: NSD 697 of 2014
NSD 698 of 2014
Judge: FLICK J
Date of judgment: 10 September 2014
Catchwords:

BANKRUPTCY – orders for payment of costs and an inquiry by Supreme Court – costs order constituted a final order – proceeding “concluded” notwithstanding the order for an inquiry   

PRACTICE AND PROCEDURE – equity proceedings – orders made, including an order for an inquiry – orders are final orders
Legislation:

Bankruptcy Act1966 (Cth) ss 40(1)(g), 41
Civil Procedure Act2005 (NSW) s 101
Legal Profession Act 2004 (NSW) ss 353, 368

Federal Court Rules2011 (Cth) r 40.13
Federal Court Rules 1979 (Cth) O 60 r 3
Uniform Civil Procedure Rules 2005 (NSW) rr 36.10, 42.7

Cases cited:

Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136
Carantinos v Magafas [2008] NSWCA 304
Crosby v Kelly [2012] FCAFC 96, (2012) 203 FCR 451
Denis Cassegrain & Ors v Gerard Cassegrain & Co Pty Ltd & Ors [2012] NSWSC 403
Denis Cassegrain & Ors v Gerard Cassegrain & Co Pty Ltd & Ors (Final Orders) [2012] NSWSC 834, (2012) 264 FLR 392
Derrawee Pastoral Company Pty Limited v McConochie [1995] NSWCA 123

Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1
Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 172
Gerard Cassegrain & Co Pty Ltd (in liq) v Cassegrain [2013] NSWCA 455, (2013) 305 ALR 687
Juul v Northey [2010] NSWCA 211
Ken Tugrul v Tarrants Financial Consultants Pty Ltd (No 1) [2013] NSWSC 1561
Meehan v Glazier Holdings Pty Ltd [2002] NSWCA 22, (2002) 54 NSWLR 146
Murran Investments Pty Ltd v Aromatic Beauty Products Pty Ltd [2000] FCA 1732, (2000) 191 ALR 579
Qu v Kuang [2008] NSWSC 991
Spotwire Pty Ltd v Visa International Service Association (No 2) [2004] FCA 571

Date of hearing: 26 August 2014
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 40
Counsel for the Applicant: Mr M L D Einfeld QC with Mr P Bolster
Solicitor for the Applicant: Oliveri Lawyers
Counsel for the Applicant: Mr M Ashhurst SC with Mr G Colyer
Solicitor for the Applicant: McCabes Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 697 of 2014
BETWEEN:

ANTHONY BLAKE SARKS
Applicant
AND:

DENIS CASSEGRAIN
First Respondent

CATHERINE DUNN
Second Respondent

PATRICK CASSEGRAIN
Third Respondent

JOHN CASSEGRAIN
Fourth Respondent

JUDGE:

FLICK J

DATE OF ORDER:

10 SEPTEMBER 2014

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The Application filed on 14 July 2014 in proceeding NSD 697 of 2014 is dismissed.

2.The time for compliance with Bankruptcy Notice No. 172691 is extended to 24 September 2014.

3.The Applicant in proceeding NSD 697 of 2014 is to pay the…

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AGLC
Sarks v Cassegrain [2014] FCA 972
Case
[2014] FCA 972
Decision Date

CaseChat Overview and Summary

Sarks v Cassegrain is a legal dispute that involves the interpretation of certain court orders and the payment of costs. The dispute arose in the context of a case involving the transfer of shares in two companies, CaTTO and OAL, and alleged breaches of directors' duties under the Corporations Act 2001. The primary issue before the court was whether the orders made on 24 July 2012 were final orders, which would affect the payment of costs, or merely interlocutory orders. The court was also asked to determine if there was a final judgment for the purposes of a particular section of the law.

The court had to determine the nature and finality of the orders made by Bergin CJ in Eq on 24 July 2012. These orders included a declaration of liability to compensate for the transfer of shares and an order for an inquiry to assess the quantum of compensation. The applicants argued that because an inquiry was yet to be held and further orders were yet to be made, the orders were not final and, therefore, the costs ordered were not payable. The applicants also argued that there was no final judgment for the purposes of the relevant section of the law because the inquiry had not yet been held.

The court concluded that the orders made on 24 July 2012 were indeed final orders, despite the need for an inquiry to determine the quantum of compensation. The court reasoned that the orders were final because they declared the liability to compensate and set out the basis upon which that compensation would be assessed. The court held that the orders were not rendered interlocutory by the requirement of an inquiry to determine the amount of compensation. Furthermore, the court found that there was a final judgment for the purposes of the relevant section of the law, as the orders declared the liability to compensate, which was sufficient to constitute a final judgment.

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

The first two arguments, to the extent that they can be separated one from the other, are to be rejected. The orders made on 24 July 2012, it is concluded, were “final” orders – and not mere interlocutory orders – even though an inquiry was yet to be undertaken and even though further orders were yet to be made. And, being final orders, r 42.7 of the Uniform Civil Procedure Rules cannot be invoked to support a contention that such costs as were ordered to be paid were not presently payable because the proceeding had not as yet reached “conclusion”. The final argument that there was no final “judgment” for the purposes of s 40(1)(g) is also rejected. A judgment on liability & an order for an inquiry – finality? The arguments advanced by Senior Counsel on behalf of the Applicants focussed upon the form of the orders made on 24 July 2012 – and, in particular, the terms of Order 17 which contemplated the making of a future order for the payment of equitable compensation after the holding of an inquiry. In the course of giving reasons for her decision on 24 July 2012, Bergin CJ in Eq observed: [7] The next issue between the parties is the nature of the orders that should be made in respect of the compensation sought by the plaintiffs. There is no issue between the parties that consequent upon the judgment of 27 April 2012 an order for equitable compensation should be made. However the plaintiffs seek an order that the amount of equitable compensation be quantified immediately. It was submitted that it is a straightforward quantification of the difference between the amounts Felicity Cassegrain paid for the shares and the value of the shares recorded in the judgment. I am not satisfied that this is the appropriate way in which to proceed. Rather I agree with the defendants’ submissions that there should be an inquiry in relation to the amount of compensation to be paid to GCC. Accordingly an order will be made for an inquiry in respect of the assessment of equitable compensation as against Claude Cassegrain, Felicity Cassegrain and Anthony Sarks.Orders 10 and 17 as made on that date give effect to this reasoning. Those Orders were in the following terms:Corporations Act 200110. Claude Cassegrain, Anthony Sarks and Felicity Cassegrain are jointly and severally liable to compensate Gerard Cassegrain & Co Pty Limited for any loss to Gerard Cassegrain & Co Pty Limited arising from the transfer of Gerard Cassegrain & Co Pty Limited’s shares in CaTTO and OAL to Felicity Cassegrain on 19 and 20 January 2005 respectively. The Court orders that:…17. An Inquiry be held as to the existence and quantum of any loss to Gerard Cassegrain & Co Pty Limited by reason of the transfer of Gerard Cassegrain & Co Pty Limited’s shares in CaTTO and OAL to Felicity Cassegrain for the purpose of making orders for equitable compensation to be paid to Gerard Cassegrain & Co Limited by Claude Cassegrain, Anthony Sarks and Felicity Cassegrain. That Inquiry is to include the assessment of any damage to Gerard Cassegrain & Co Pty Limited by reason of the contravensions of ss 180, 181(1) and 182(1) of the Corporations Act 2001 by Claude Cassegrain and Anthony Sarks (including any profits made by Claude Cassegrain and/or Anthony Sarks resulting from the contraventions) referred to in Declarations 5 and 6 and the determination of any amount of compensation to be ordered under s 1317H of the Corporations Act 2001 against Claude Cassegrain and Anthony Sarks.Emphasis was placed by Senior Counsel for the Applicants upon the terms of this order and, in particular, the phrase “for the purpose of making orders for equitable compensation…”. The importance sought to be ascribed to this phrase was that Bergin CJ in Eq expressly contemplated that the orders she was making on 24 July 2012 were not the “final” orders she would be called upon to make and that the proceeding before her would not be “concluded” until the inquiry had been undertaken and the orders for equitable compensation made.

Ratio Decidendi

Legal Principle Established

In the course of giving reasons for her decision on 24 July 2012, Bergin CJ in Eq observed: [7] The next issue between the parties is the nature of the orders that should be made in respect of the compensation sought by the plaintiffs. There is no issue between the parties that consequent upon the judgment of 27 April 2012 an order for equitable compensation should be made. However the plaintiffs seek an order that the amount of equitable compensation be quantified immediately. It was submitted that it is a straightforward quantification of the difference between the amounts Felicity Cassegrain paid for the shares and the value of the shares recorded in the judgment. I am not satisfied that this is the appropriate way in which to proceed. Rather I agree with the defendants’ submissions that there should be an inquiry in relation to the amount of compensation to be paid to GCC. Accordingly an order will be made for an inquiry in respect of the assessment of equitable compensation as against Claude Cassegrain, Felicity Cassegrain and Anthony Sarks.Orders 10 and 17 as made on that date give effect to this reasoning. Those Orders were in the following terms:Corporations Act 200110. Claude Cassegrain, Anthony Sarks and Felicity Cassegrain are jointly and severally liable to compensate Gerard Cassegrain & Co Pty Limited for any loss to Gerard Cassegrain & Co Pty Limited arising from the transfer of Gerard Cassegrain & Co Pty Limited’s shares in CaTTO and OAL to Felicity Cassegrain on 19 and 20 January 2005 respectively. The Court orders that:…17. An Inquiry be held as to the existence and quantum of any loss to Gerard Cassegrain & Co Pty Limited by reason of the transfer of Gerard Cassegrain & Co Pty Limited’s shares in CaTTO and OAL to Felicity Cassegrain for the purpose of making orders for equitable compensation to be paid to Gerard Cassegrain & Co Limited by Claude Cassegrain, Anthony Sarks and Felicity Cassegrain. That Inquiry is to include the assessment of any damage to Gerard Cassegrain & Co Pty Limited by reason of the contravensions of ss 180, 181(1) and 182(1) of the Corporations Act 2001 by Claude Cassegrain and Anthony Sarks (including any profits made by Claude Cassegrain and/or Anthony Sarks resulting from the contraventions) referred to in Declarations 5 and 6 and the determination of any amount of compensation to be ordered under s 1317H of the Corporations Act 2001 against Claude Cassegrain and Anthony Sarks.Emphasis was placed by Senior Counsel for the Applicants upon the terms of this order and, in particular, the phrase “for the purpose of making orders for equitable compensation…”. The importance sought to be ascribed to this phrase was that Bergin CJ in Eq expressly contemplated that the orders she was making on 24 July 2012 were not the “final” orders she would be called upon to make and that the proceeding before her would not be “concluded” until the inquiry had been undertaken and the orders for equitable compensation made.