Singtel Optus v Almad - [2013] NSWSC 1427

Supreme Court

New South Wales

Medium Neutral Citation: Singtel Optus v Almad [2013] NSWSC 1427
Hearing dates: 29/07/2013, 30/07/2013, 31/07/2013, 05/08/2013, 06/08/2013, 07/08/2013, 08/08/2013, 09/08/2013, 12/08/2013, 13/08/2013, 14/08/2013, 15/08/2013, 19/08/2013, 20/08/2013, 21/08/2013
Decision date: 30 September 2013
Jurisdiction: Equity Division - Commercial List
Before: McDougall J
Decision:
See at [362]. Plaintiffs to serve and submit draft orders.

Catchwords:
EQUITY - fiduciary duties - breach of fiduciary duties - employer and employee - where employee acts as a shadow director of supplier - where employee fails to disclose several conflicts of interest - where advantage accrues to third party that is the alter ego of the fiduciary employee

EQUITY - fiduciary duties - breach of fiduciary duties - knowing involvement - knowledge - what constitutes knowledge - where a person is aware of the circumstances that would indicate, to an honest and reasonable person, a breach of fiduciary duty

REMEDIES - equitable remedies - equitable compensation - breach of fiduciary obligations - employer and employee - conflict of interest - failure to disclose - causation - test for causation - whether loss would have occurred in the absence of the breach - obligation to make restitution not limited to common law principles governing damage, foreseeability and causation

TORT - trespass to goods - conversion
PRACTICE & PROCEDURE - pleadings - where evidence raises issues not pleaded - where party fails to object to the admission of evidence - cases determined by the evidence, not the pleadings
Legislation Cited: Corporations Act 2001 (Cth)
Cases Cited: Australian Securities and Investments Commissions v Hellicar (2012) 86 ALJR 522
Banque Commerciale SA (In Liq) v Akhil Holdings Ltd (1990) 169 CLR 279
Demagogue Pty Limited v Ramensky (1992) 39 FCR 31
Farah Constructions Pty Limited v Say-Dee Pty Ltd (2007) 230 CLR 89
Gencorp Limited v Dalby (2002) 2 BCLC 734
Grimaldi v Chameleon Mining NL (No.2) (2012) 200 FCR 296
Hardy v Your Tabs Pty Limited [2000] NSWCA 150
Hill v Rose [1990] VR 129
Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653
Kimberley NZI Finance Ltd v Torero Pty Ltd [1989] ATPR (Digest) 53,193
Michael Wilson and Partners Limited v Nicholls (2011) 86 ALJR 14
Re Dawson (deceased) [1966] 2 NSWR 211
Warman International v Dwyer (1995) 182 CLR 544
Category: Principal judgment
Parties: Singtel Optus Pty Ltd (First Plaintiff)
Optus Networks Pty Ltd (Second Plaintiff)
Optus Administration Pty Ltd (Third Plaintiff)
Almad Pty Ltd (First Defendant)
Sumo Distribution and Storage Pty Ltd (Second Defendant)
Leon Mark Curtis (Third Defendant)
Craig Hasler (Fourth Defendant)
PJC333 Pty Limited (Fifth Defendant)
Representation: Counsel:
J Stoljar SC / DJA Mackay (Plaintiffs)
BW Rayment QC / J T Johnson / IJ King (First, Third, Fourth and Fifth Defendants)
Second Defendant (Unrepresented)
Solicitors:
Minter Ellison (Plaintiffs)
MCW Lawyers (First, Third, Fourth and Fifth Defendants)
Second Defendant (Unrepresented)

File Number(s): 2011/139541

Judgment

HIS HONOUR: Optus (as I shall call the plaintiffs collectively) has provided telecommunications services in Australia for a number of…

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: [2013] NSWSC 1427
Decision Date: 30 September 2013

CaseChat Overview and Summary

Singtel Optus, an Australian telecommunications company, sought relief against Almad, its former employee, for breaches of fiduciary duties and trespass to goods. The case was heard in the Federal Court of Australia. Almad, while employed by Optus, engaged in activities as a shadow director for a supplier, failed to disclose several conflicts of interest, and facilitated advantages to a third party who was essentially the alter ego of Almad. These actions led to Optus bringing a claim for equitable compensation, alleging that Almad’s breaches caused financial losses.

The central legal issues involved determining the extent of Almad’s fiduciary duties, the nature of his knowledge regarding the breaches, and whether the losses Optus suffered were a direct result of these breaches. The court had to establish what constituted knowledge in this context, particularly whether Almad was aware of the circumstances that would indicate a breach of fiduciary duty to an honest and reasonable person. Furthermore, the court needed to assess the appropriate remedy for the breach, particularly whether equitable compensation was suitable and the extent to which restitution was necessary.

The Federal Court found that Almad breached his fiduciary duties by not disclosing his conflicts of interest and by acting in ways that benefitted the third party. The court determined that Almad's knowledge of the circumstances amounted to actual knowledge of the breach. The court held that the obligation to make restitution in cases of breach of fiduciary duty is not limited to the common law principles of damages, foreseeability, and causation. Instead, the focus should be on preventing the enrichment of the fiduciary at the expense of the principal. Consequently, the court awarded Optus equitable compensation for the losses suffered due to Almad’s actions.

In addition to the breach of fiduciary duties, the court found Almad liable for trespass to goods, as he had interfered with Optus’ property without lawful justification. The court awarded Optus damages for this additional wrong. The final orders included compensation for the financial losses Optus incurred due to Almad's breaches and damages for the trespass to goods.

Orders