Titan Corporation Ltd v Untra Tune P/L

SUPREME COURT OF VICTORIA

CAUSES JURISDICTION

Not Restricted

No. 6905 of 1998

TITAN CORPORATION LTD. & ORS.	Plaintiffs
v.
ULTRA TUNE PTY. LTD. & ORS.	Defendants

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JUDGE:	HARPER, J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	28 AUGUST 1998
DATE OF JUDGMENT:	1 SEPTEMBER 1998
MEDIA NEUTRAL CITATION:	[1998] VSC 56

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CATCHWORDS:

JUDGMENTS AND ORDERS - Judgment alleged to have been obtained by perjured evidence - Application for interim relief on claim for review and new trial.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr. P. Hayes Q.C. with	McMahon Fearnley
Mr. M. Clarke
For the 1st Defendant	Mr. B. Bongiorno Q.C. with	Albert Chong
Mr. M. Crennan
For the 2nd, 3rd and 4th	Mr. G. Moore	Goldsmiths
Defendants
For the 5th and 6th	Mr. P.G. Nash Q.C.	Home Wilkinson &
Defendants	Lowry
For the 11th Defendant	Mr. G.T. Bigmore Q.C. with	Gadens Lawyers
Mr. M.J. Galvin

HIS HONOUR:

Until 30 June 1994, UTSA Australia Pty. Ltd. (in liquidation) ("UTSA"), the second defendant in this proceeding, conducted a franchise operation involving a system for tuning engines of motor vehicles. That business was sold, on 30 June 1994, to the first defendant, Ultra Tune Australia Pty. Ltd. ("UTA"). At the time of the sale, the chairman of directors of the vendor was Mr. Peter Buckley, who died on 1 November 1995. His estate is the fifth defendant. His son, Peter Sean Buckley (referred to generally in this litigation as "Sean Buckley"), the third defendant, was a senior employee of the vendor.
At the time of the sale, the eighth defendant (Layerose Pty. Ltd.) ("Layerose") was the beneficial owner of 75% of the shares in UTA. Its shareholders and directors were the ninth defendant, Anne-Marie Moore and her sister, the tenth defendant, Tania Moore.
By proceeding No. 2039 of 1995, UTSA Pty. Ltd. and its joint and several liquidators (Michael Wesley McCann and David Scott), together with the first plaintiff in the present proceeding (Titan Corporation Ltd.) ("Titan") contended that, at the time of its purchase of the Ultra Tune business, Layerose, and therefore UTA, was in fact controlled not by the Moore sisters but by Peter Buckley and Sean Buckley. One of the directors of UTSA, Geoffrey Frederick Norris, knowingly assisted Peter Buckley and his son to obtain such control. It was the latter two who were the effective purchasers of the UTSA business. In the circumstances, Messrs. Buckley and Mr. Norris breached their fiduciary duty to UTSA in connection with the sale - a transaction which was facilitated by UTA which, accordingly, held the business upon a constructive trust for UTSA. In addition, the Buckleys derived, after the sale, certain benefits through their association with UTA for which (those benefits having been gained by reason of, or by use of, their fiduciary position with UTSA or with the opportunity or knowledge resulting from it), they were bound to account to UTSA. Their failure to do so constituted, according to the plaintiffs, a breach of the Buckleys' fiduciary duty to UTSA.
Each of the defendants in proceeding No. 2039 of 1995 denied that the Buckleys controlled Layerose and that Anne-Marie Moore was merely their nominee. For his part, Mr. Norris added to this denial a refutation of the accusation that, if there were such control as alleged by the plaintiffs, he knowingly participated in any wrongdoing by the Buckleys: he claimed that, if either Peter Buckley or his son had any relevant interest in Layerose or UTA, he was not aware of it. Moreover, as I understand the position, all the defendants, including Mr. Norris, denied that Sean Buckley played any part in the sale except to the extent that he advised Layerose in relation to it. He was then living with Anne-Marie Moore, a relationship known to the directors of UTSA. Those directors therefore also appreciated that Sean Buckley might indirectly benefit from the participation by Layerose in the purchase of the business; but no such gain would arise through his involvement with UTSA, because that involvement did not extend to acting for UTSA in that transaction. While conceding that Sean Buckley held a position of trust with UTSA, the defendants argued that the fiduciary duties and obligations to which that circumstance gave rise did not extend to any role which the younger Mr. Buckley may have played in the sale. Of equal importance, he was not authorised to act for UTSA in that transaction, and did not do so. Moreover, the sale of the business to UTA was advantageous to UTSA which was then in financial difficulties and which received, as the sale price, something more than the value of the business as assessed by Ernst & Young, a firm of accountants.
The claim by UTSA and the other plaintiffs in proceeding No. 2039 of 1995 was heard by Chernov, J. at a trial which commenced on 21 July 1997 and concluded on 27 February 1998. His Honour's judgment was handed down on 13 May this year. In its unreported form it covers 229 pages. His Honour concluded that neither Peter Buckley, nor Sean Buckley, nor Geoffrey Norris breached their fiduciary duty to UTSA and accepted that no relevant fiduciary duty or obligation impacted on Sean Buckley in relation to the sale. Nor did any of those individuals act in breach of the provisions of s.232 of the Corporations Law (which requires, among other things, that an officer of the corporation shall at all times act honestly in the exercise of his or her powers and must not, in relevant circumstances, make improper use of his or her position to gain (directly or indirectly) an advantage for himself or herself or for any other person, or cause detriment to the corporation).
Each of Sean Buckley, Anne-Marie Moore and Geoffrey Norris gave evidence in the trial before Chernov, J. His Honour accepted the substance of that evidence. The present plaintiffs now contend, however, that they have since come into possession of material which shows not only that Sean Buckley is a perjurer but also that his Honour's judgment is vitiated by fraud. The plaintiffs in the present proceeding therefore claim:
(i)         a declaration that the judgment of Chernov, J. was obtained by the fraud of the defendants;
(ii)        an injunction, both interlocutory and permanent, restraining each of the defendants from taking any steps to enforce that judgment;
(iii)       damages;
(iv)       exemplary damages;
(v)        an order that the present defendants pay the plaintiffs' costs on a solicitor-client basis; and
(vi)       such further or other relief as is deemed appropriate.
In paragraph 15 of their statement of claim, the plaintiffs in the present proceeding enlarge upon what they assert were his Honour's findings of fact in proceeding No. 2039 of 1995. For present purposes, however, it is sufficient to note that, according to the statement of claim, his Honour not only found that neither Peter Buckley nor his son owned or controlled Layerose, but also that neither had any beneficial interest in it. To the contrary (according to his Honour's conclusions as set out in the statement of claim) the company was controlled by Anne-Marie Moore. This, the plaintiffs allege, is entirely consistent with the evidence of Sean Buckley at the trial; which evidence was, in turn, also consistent with the conclusion that neither Peter Buckley nor Sean Buckley held any beneficial interest in the 570 shares in UTA which were held by or on behalf of Layerose.
Following judgment, Chernov, J. made a number of orders for costs, including orders that a portion of these be paid on a solicitor-client basis. The parties required to pay these costs were Titan, UTSA, Mr. McCann and Mr. Scott. By a series of summonses filed on behalf of, respectively, UTA, Mr. Norris, the estate of Peter Buckley, a company called Sung Li Holdings Ltd. and Sean Buckley, however, those defendants seek (among other orders) orders that two directors of Titan (the second and third plaintiffs in the present proceeding, Maxwell Roger Latimer and Godfrey David Cullen) pay the costs for which Titan and UTSA were otherwise liable. These summonses are to be heard by Chernov, J. in February next year. Meanwhile, UTA has commenced winding-up proceedings against Titan. These are, according to paragraph 24 of the statement of claim in the present proceeding, "based on orders for costs made in ... proceeding [No. 2039 of 1995] and pursuant to ss.459P and 461J of the Corporations Law". They are fixed for trial before Hansen, J. on 7 September 1998.
During the course of the trial before Chernov, J., the question of the control exercised (or not exercised, as the case may be) by Peter Buckley and Sean Buckley, or one or other of them, over Layerose and associated interests, was examined from many angles. According to the present plaintiffs (paragraph 26 of the statement of claim) there was evidence in the trial that:
(a)        "Sean Buckley and the late Peter Buckley at no time had any beneficial interest in any of the 570 shares in UTA held beneficially for Layerose";
(b)        a man named K.K. Wong (who was said by the defendants to be involved in transactions concerning intellectual property rights over aspects of the Ultra Tune business which UTA purchased from UTSA) "was a person separate and distinct from Sean Buckley and was not a fictitious person";
(c)         at no material time did Sean Buckley have any control over the trust into which the 570 UTA shares were placed;
(d)        Anne-Marie Moore controlled Layerose, and Layerose held the shares in UTA on behalf of that trust (which was known as the "Friends Family Trust");
(e)        "Anne-Marie Moore, through Layerose, was the beneficial owner at all material times in 95% of the shares in UTA";
(f)         that the intellectual property transactions "were commercially viable deals for UTA";
(g)        that Sean Buckley neither owned nor controlled the entities which bought the relevant intellectual property rights.
According to the present plaintiffs, this evidence was false. They allege, by paragraph 28 of the statement of claim, that:
(a)        "as at 30 June 1994, Sean Buckley and/or the late Peter Buckley did have a beneficial interest in the 570 shares in UTA held beneficially for Layerose";
(b)        "Mr. K.K. Wong was a fictitious person or a person controlled by Sean Buckley";
(c)         "at all material times Sean Buckley did have control over the Friends Family Trust";
(d)        "at no material time did Anne-Marie Moore own and control Layerose";
(e)        "Anne-Marie Moore was not at all material times the beneficial owner, through Layerose, of 95% of the shares in UTA";
(f)         the intellectual property transactions "were not commercially viable deals for UTA";
(g)        Sean Buckley did own and control the entities which purchased the relevant intellectual property rights.
Each of the allegations made in paragraph 28 of the statement of claim is based upon documents which, according to an affidavit sworn by Darren Haines-Powell on 7 August 1998 in the winding up proceeding in this Court (proceeding No. 6082 of 1998) are filed in the Equity Division of the Supreme Court of New South Wales in proceeding No. 2844 of 1998. The affidavit of Mr. Haines-Powell of 7 August is the subject of an affidavit by the same deponent in this proceeding sworn on 19 August 1998, in which he seeks to rely upon (but does not swear to the veracity of) the earlier affidavit. The plaintiffs submit that in all the circumstances I should accept as evidence in this application the New South Wales material thus put forward. For reasons to which I shall come, however, there is no need to decide this question.
The New South Wales proceedings are based, at least in part, upon the De Facto Relationships Act 1984 (N.S.W.) They concern (perhaps among other things) a dispute between Sean Buckley and Anne-Marie Moore, who (as I have already noted) once lived in a de facto relationship. They now disagree about the proper disposition of property to which each has staked a claim. One of the pleading documents in the New South Wales proceedings is a cross-claim which, although settled by counsel, is signed by Mr. Buckley. The plaintiffs in the present proceeding rely upon a number of statements in that cross-claim:
(a)        that the shareholding of Layerose in UTA was (I quote from the cross-claim as set out in sub-paragraph (1) of the particulars under paragraph 28 of the statement of claim in the present proceeding) "settled into the Friends Family Trust by Sean Buckley and Anne-Marie Moore as directors of Layerose, such shareholding having been acquired as set out in the cross- claim, and that the Friends Family Trust was vested on 12 June 1998 in the proportion 34% to Layerose, 34% to Sean Buckley, 17% to Sean Buckley's brother Clayton Buckley, and 10% retained as a lien for creditors, including the cross-claimant and others owed funds by the trustees in relation to the Ultra Tune proceeding";
(b)        in or about 1993, Anne-Marie Moore and her sister acquired all the shares in Layerose on trust for Sean Buckley and Anne- Marie Moore;
(c)         Layerose acquired its UTA shares in 1994 using knowledge provided by Sean Buckley, and funds which were contributed by both Mr. Buckley and Ms. Moore;
(d)        the purchase by Layerose of 95% of the shares in UTA (and, accordingly, the acquisition of the business conducted by UTSA) was funded solely by Sean Buckley's own moneys together with the profits from the joint share-trading activities of Mr. Buckley and Ms. Moore, or each of them together with Layerose, all of them acting on the advice of Mr. Buckley.
The evidence before me is that Mr. Buckley has filed, in the New South Wales proceedings, affidavits sworn by him on, respectively, 26 June 1998, 7 July 1998, 9 July 1998, 15 July 1998 and 20 July 1998. The plaintiffs have seized upon certain statements contained in these affidavits. Set out under the particulars to paragraph 28 of the statement of claim in the present proceeding are the following allegations:
(a) that in the affidavit of 26 June 1998, Mr. Buckley swore:

(i) that in November 1994 the shareholding of Layerose in UTA, which was intended by Ms. Moore and Mr. Buckley to form part of the joint assets of their relationship, was transferred into the Friends Family Trust, the beneficiaries of which were Sean Buckley, his brother Clayton, and Layerose itself;
(ii) that the decision to incorporate Layerose was made by Mr. Buckley and Ms. Moore when, having $30,000 to invest, they bought Layerose as an investment vehicle;
(iii) that he did not seek from Ms. Moore in the New South Wales proceedings "any more than half of what I believed were my assets";
(iv) that each of the two principal assets of Layerose (land at 14 Fitzgerald Way, Baulkham Hills and shares in a company called Arcadia Minerals) were acquired with funds provided by Mr. Buckley before the commencement of the proceedings before Chernov, J. in July 1997;
(v) that in late April 1998 Ms. Moore informed Mr. Buckley that she had decided to give him nothing, to which he responded by telling her that he would "fight [her] all the way" because she was "being totally unfair" since the dispute was over assets which "were bought with ... joint money" and to which Mr. Buckley was entitled to his share;
(b)        that in the affidavit sworn by Mr. Buckley on 7 July 1998, he stated that, in the New South Wales proceedings, Ms. Moore wanted to remove "the only asset which I managed to obtain from the relationship ... that being some shares in UTA";
(c)         that in the affidavit of 9 July 1998, Mr. Buckley swore that he was a director of a company named Sellick Pty. Ltd. which was "entitled to 52% of the shares in UTA";
(d)        that in the affidavit of 20 July 1998, Mr. Buckley swore:

(i)

(by way of repetition of his affidavit of 26 June) that the beneficiaries of the Friends Family Trust were himself, his brother Clayton and Layerose;
(ii) that Mr. K.K. Wong is not a fictitious person.

According to the plaintiffs, Ms. Moore has also filed affidavit material in the New South Wales proceedings. In these affidavits, Ms. Moore swears:
(a)        that Mr. Buckley has made upon her a demand for, and asserted an entitlement to, half the shares held by Layerose in UTA;
(b)        that Mr. Buckley told her that he was an appointor for the Friends Family Trust (with, it is to be assumed, the powers attendant upon that position); and
(c)         that he was really Mr. K.K. Wong, and the owner of the entities which purchased the intellectual property rights to the Ultra Tune business.
I have endeavoured, in what I have set out above, to select from the statement of claim in the present proceeding each allegation of evidence before the Supreme Court of New South Wales which might be said to contradict or at least throw doubt upon materially important evidence which, as the plaintiffs allege, was given before Chernov, J. in proceeding No. 2039 of 1995. The statement of claim is both repetitive and discursive, and this has hampered the task of selection. As best I can judge, however, it is on the basis of the allegations which I have endeavoured fairly to reproduce that the present plaintiffs mount their case for a review of the judgment pronounced on 13 May last. I am prepared, for the purposes of this application, to accept that the evidence in question is indeed to be found in the New South Wales material, and that Mr. Buckley's cross-claim contains the allegations which the plaintiffs assert it contains.
Several important matters should be noted at once. First, none of the evidence in the New South Wales proceeding suggests that the late Peter Buckley had any legal or beneficial interest in Layerose or in the shares which that company held in UTA. Peter Buckley was not, as I understand it, a beneficiary of the Friends Family Trust. Accordingly, nothing in the material upon which the plaintiffs now rely could be said to impugn in this respect the judgment of Chernov, J.
The second point to note is that the New South Wales material cannot sustain the plaintiffs' reliance upon it. In the first place, allegations in a cross-claim cannot impugn evidence given on oath. Secondly, evidence by Ms. Moore of demands made upon, or statements made to, her by Sean Buckley cannot found a conclusion that, if Mr. Buckley gave evidence in the Victorian proceeding which is inconsistent with that which he said to Ms. Moore, the latter is necessarily true and the former necessarily mendacious. And likewise, there is nothing before me which would justify my concluding that the evidence given on affidavit by Mr. Buckley in New South Wales must be accepted, while any inconsistent evidence given in the Victorian witness box must be rejected.
The third point of concern here follows from the second. It is that, for the very reason that I am presently in no position to judge where the truth lies in any conflict between contradictory statements made on oath by Mr. Buckley, so the best that can be said on the plaintiffs' behalf is that they now have fresh evidence which goes to Mr. Buckley's credit - but no further.
The final point to record at this juncture arises from the finding of Chernov, J. that Sean Buckley did not at any relevant time occupy a position in UTSA which generated any relevant fiduciary duty or obligation, the breach of which might sustain the plaintiffs' case. This being so, the plaintiffs could not succeed even if they were in a position to demonstrate that the fraud, if any there be, was perpetrated in this Court rather than in the Supreme Court of New South Wales.
It might be argued that all the plaintiffs must establish at this point is that there is a serious issue to be tried. That, of course, is correct; and if the question were whether Sean Buckley had made, under oath, contradictory statements so that not all he said on oath could be true, then a serious issue would doubtless be shown to exist. This case, however, is very different. Here, the plaintiffs must show that there is a serious issue to be tried on the question whether the judgment of Chernov, J. should be set aside. In my opinion, there is not.

In an article entitled "Fraud or New Evidence as Grounds for Actions to Set Aside Judgments" 77 Law Quarterly Review 358, D.M. Gordon said at 358-359:
"In general, judgments rendered after a trial are conclusive between the parties unless and until reversed on appeal. Certainly in general judgments of superior courts cannot be overturned or questioned between the parties in collateral actions. Yet there is a type of collateral action, known as an action of review, by which even a superior court's judgment can be questioned, even between the parties, and set aside. By recognising that a judgment is open to this kind of attack, the courts recognise an exception to the principles of res judicata and estoppel by judgment. The attack in no way resembles an appeal; but when it is against a superior court's judgment, it is always made in the trial court that gave the first judgment, which is asked to rescind that judgment. If the action of review runs its full course, it results in a second trial, in part at least upon oral evidence. An action of review is now always based on a claim (a) that the original judgment was based on fraud, or (b) that new evidence has been found that shows the first judgment to have been wrong on the facts.
At intervals complaints have been made that such actions are anomalous and imperil the concepts of res judicata and estoppel by judgment. Certainly it is anomalous that judgments not even claimed to be void should be attacked collaterally. But the remedy by such review must have been recognised for something like four centuries, and by such high authority that it is too firmly established to be disturbed."
If there were a new trial in this case there would be no fresh evidence at all unless Mr. Buckley was called as the plaintiff's witness, or unless his New South Wales affidavits were admitted as declarations against interest or on some other proper basis. If their contents are merely put to Mr. Buckley in cross-examination then only his answers will be in evidence and if he admits the affidavits but denies the truth of what he then swore the result, at best, will constitute evidence of prior inconsistent statements with whatever evidence of admissions may be given by Ms. Moore. But it must be remembered, in this context, that Ms. Moore herself is likely to maintain the stance which she took before Chernov, J. and to which she apparently remains committed in the New South Wales proceedings: that the position adopted by Mr. Buckley in New South Wales is, to the extent of any inconsistency with his stance in Victoria, wrong and without foundation. There is nothing to suggest that other defence witnesses will alter the evidence which they gave in the Victorian trial.
In these circumstances it is, in my opinion, impossible to conclude that the plaintiffs in the present proceeding now have available to them evidence "so strong that it would reasonably be expected to be decisive at a rehearing." D.M. Gordon, op.cit., at 377.
A further pertinent passage from the article on "Fraud or New Evidence as Grounds for Actions to Set Aside Judgments" is to be found at 533-534:
"The equity courts observed the principles of res judicata and the conclusiveness of judgments, when entered, only a little less strictly than the common law courts did; yet they recognised as an exception thata judgment could be impeached by a bill of review and set aside. Review, as opposed to appeal, was conditional on the discovery of new evidence since the trial; but a necessary distinction developed between new evidence that presented the case in a new light and evidence (however new) that merely corroborated indecisively evidence that the courts had disbelieved at the trial. This distinction was seen to be most important when the new evidence produced went to prove perjury at the trial.
It is impossible to show on the authorities that the equity courts ever laid down that they would not recognise perjury as a type of fraud remediable by review. The cases were all the other way, and it was only in 1879 that the first serious suggestion was made that perjury should be repudiated as a ground for review. Even yet this suggestion has never been accepted as good law and the only support for general exclusion of perjury has been in dicta and a few textbooks.
Of course, even before 1879 courts had seen the difficulty inherent in relief for fraud consisting of false evidence. Except in motions for new trials before entry of judgment, the common law courts refused to go into evidence. When they treated judgments that had been given after a trial as void for fraud, this would be for collusion and other extrinsic fraud, and they ignored the evidence given at the trial. The equity courts repeatedly went into charges that judgments had been obtained by false evidence; yet they came to see that they would ask for trouble if they went beyond a certain point.
The difficulties that none could miss were these: perjury is fraud, and when fully proved should be relieved against. But when is perjury fully proved? Strong evidence of perjury may be contradicted by denials just as strong. Charges of perjury can be perjured. The fallibility of curial methods for learning the truth where there is serious conflict makes certainty an unattainable ideal. Yet in order to function the courts must hold that at some stage certainty for their purposes is reached. When conflicting evidence is nicely balanced it is more than possible that if this were submitted to two different judges or two different juries, then two opposite verdicts (and neither perverse) would be reached. But anything like this competition of verdicts is what the courts must avoid at all costs, if they are not to lose all credit. And that competition is just what could result if the courts allowed unrestricted allegations of perjury in actions of review."
The evidence which the plaintiffs have put forward in the present proceeding, because it can go no higher than reflect adversely on Mr. Buckley's credit, is capable of no more than indecisive corroboration of other evidence which Chernov, J. disbelieved at the trial. This is not enough. As the learned author says at 538:
"Evidence of perjury on review must be so that it could reasonably be expected to be decisive at a rehearing, and if unanswered must have that effect."
For these reasons it seems to me that the plaintiffs have failed to demonstrate that there is a serious issue to be tried on the question of whether Mr. Buckley gave perjured evidence in the Victorian trial. The plaintiffs, however, must go further than that. They must also demonstrate a serious issue to be tried on the question whether, given Mr. Buckley's limited authority as an executive of UTSA, evidence that he at the material times had a material interest in Layerose would point towards a breach of a relevant fiduciary duty or obligation. On that point the judgment of Chernov, J. remains unchallenged and is squarely against the plaintiffs. I quote from p.184 of his Honour's reasons:
"In my view, the evidence does not establish that Peter Buckley or Norris acted in relation to the sale motivated, in any relevant sense, by the desire to see that Sean Buckley would gain such a benefit from it. They knew, of course, that he would probably benefit if Layerose made the purchase. That was obvious, bearing in mind his relationship with Moore. But this falls far short of saying that the evidence supports the contention that a material reason why Peter Buckley and Norris voted in favour of the sale, was to confer such a benefit on Sean Buckley.
As to Sean Buckley, he was obviously motivated by the likelihood of a personal gain from such a sale, but that was pursued by him in his capacity as adviser to Layerose. He played no role for UTSA in connection with the sale. In any event, as I have already mentioned, he had the consent of the UTSA directors to advise Layerose in relation to it. Moreover, for reasons I give later when I consider the plaintiffs' claim that the Buckleys breached their fiduciary duty by not accounting to UTSA for the benefits they gained from their association with UTA, although Sean Buckley was in a fiduciary relationship with UTSA, the scope of it was such that in the circumstances which prevailed, it was not a breach of his duty to seek to gain such a personal advantage from the sale, particularly given the directors' consent to his advising Layerose."
His Honour returned to this subject at pp.187-188. He there said:
"I find that neither Peter Buckley nor Sean Buckley had any direct or indirect interest in the purchaser, although it was obvious that Sean Buckley stood to gain indirectly if Layerose were to be a purchaser, but such benefit would come not through his control of Layerose, but because of his efforts in helping to make the Ultra Tune business profitable and because of his relationship with Moore. Thus, I find that in acting in respect of the sale on behalf of UTSA, Peter Buckley did not have a conflict between his duty to UTSA and self-interest. He may have subjectively favoured a sale which would give his son the opportunity of playing a significant role in the operation of the new venture and thereby gain an advantage to himself from that and from his relationship with Moore. I find, however, that he did not act in relation to the sale in order to achieve that end or that it was a material consideration in his acting on behalf of the company in effecting such a sale. Consequently, I find that he did not breach his fiduciary duty to UTSA in acting as he did in respect of the sale.
I come to the same conclusion with respect to Sean Buckley. He did not have a direct or indirect interest in the purchaser. Moreover, on the evidence, his position with UTSA was that of a senior executive (and, for the reasons I give later, not that of a general manager or chief executive officer as was contended for by the plaintiffs). He had no role to play for UTSA in relation to the sale. He advised Layerose as to that with the approval of the directors. In my view, although he may have acted in anticipation that he would ultimately make a gain from the new venture, in the circumstances, this did not constitute a breach of fiduciary duty by him in relation to UTSA ... In advising Layerose he did not enter into competition with UTSA and attempt to acquire for himself or Layerose a benefit sought by the company. In any event, he had the directors' consent so to act."
For these reasons it seems to me that the plaintiffs have failed to show that either relevant issue is one in respect of which there is a serious issue to be tried. As for Mr. Norris, Chernov, J. accepted his evidence that he did not know of any interest which either Peter Buckley or his son might have had in Layerose. Accordingly the plaintiffs have also failed to demonstrate that a serious issue remains to be tried as against Mr. Norris.
If I am wrong about this aspect of the case I am nevertheless of the view that the balance of convenience presently favours the defendants. If the application to wind up Titan proceeds and an order to that effect is made the liquidator or liquidators will know whether it will continue to prosecute this proceeding. As for application of costs and for taxation of costs it seems to me that the balance of convenience presently favours those who will seek to pursue those remedies. Whether it is appropriate to execute upon any orders for costs is a question which may be considered at the appropriate time by the appropriate judicial officer. For these reasons in my opinion the application for interlocutory relief should be dismissed.
That brings me to the question of security for costs. It seems to me that a relevant consideration which was not raised when this issue was argued before me is that if security is ordered then any creditors, if there be any, of Titan, who are not judgment creditors in relation to orders for costs might suffer adversely.
The rationale for the making of orders for security for costs is that where a plaintiff is a corporate entity and where that corporate entity is of uncertain financial worth then those individuals who stand behind it should put up the money to ensure that a successful defendant or successful defendants are not out of pocket. This is not that case. The persons who will suffer if an order for security is made seem to me to be any creditors of Titan who are not judgment creditors in relation to orders for costs. I wonder whether I should require those creditors to put, up front, the funds which would be required were Titan to provide security for costs. There is no question, as I understand it, of any order for security being made against the individual plaintiffs, Mr. Latimer or Mr. Cullen. It is most unusual for orders for security to be made against individuals, but since the question that I have just raised was not argued before me I thought I should, before making any decisions in relation to the application for security, ask whether any party wished to make any further submissions on that point.

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[1998] VSC 56

1 September 1998