FEDERAL CIRCUIT COURT OF AUSTRALIA
| TURCO v LIQUOR EQUITY PTY LTD | [2018] FCCA 1520 |
| Catchwords: LIMITATION OF ACTIONS – Whether alleged entitlement to director’s fees statute barred by time limitation. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.6A, 30, 40, 41, 54, 265, 267 Corporations Act 2001 (Cth), s.202A |
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- Case
- [2018] FCCA 1520
- Decision Date
CaseChat Overview and Summary
The primary legal issues before the court were whether Mr Turco possessed a valid counter-claim, set-off, or cross-demand that would preclude the bankruptcy notice from being valid. Specifically, the court had to determine if Mr Turco was genuinely entitled to director's fees, and if so, whether such a claim was statute-barred by the relevant limitation periods. The court also considered whether Mr Turco's conduct constituted an abuse of process.
The court found that Mr Turco's assertion of entitlement to director's fees was not credible, particularly given his declaration in his Statement of Affairs in March 2010, where he stated he was not owed any money by the company. The court noted that any contractual entitlement to director's fees would be subject to a six-year limitation period in Western Australia. As Mr Turco's claim for director's fees was first made in an affidavit sworn in June 2017, and the alleged entitlement spanned from 1991 to 2010, the court concluded that the claim was well outside the statutory limitation period. Consequently, the court held that the claim for director's fees, and any potential quantum meruit claim, could not succeed.
Orders
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
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Ratio Decidendi
Legal Principle Established
Mr Turco completed a declaration of correctness of the particulars set out in the 2010 Statement of Affairs, which declaration immediately precedes the signature and date blocks signed and completed respectively by Mr Turco on 31 March 2010. The declaration is in the following terms:DECLARATIONNote: S267(2) of the Bankruptcy Act provides that a person must not sign a declaration that the person knows to be false. Penalty: Imprisonment for 12 months.I declare that the particulars set out in this statement are correct.First VV Turco Affidavit, Annexure VVT7. In these proceedings Mr Turco asserts that the Statement of Affairs was “probably incorrect” and he believes that “there were items missing”: Second M Turco Affidavit at [2.9]. That assertion strains credulity. Firstly, nothing was missing per se from the Statement of Affairs. Rather, what Mr Turco, an experienced accountant, and clearly an experienced company director did, was to make not one, but multiple assertions in respect of multiple companies in which he had been a director or had a management role in the five years prior to 2010. In respect of every company for which he had had a director or management role in the last five years he indicated that he was not expecting a dividend or distribution and that the company did not owe him any wages, loans or other money. It strains credulity to think that an experienced accountant, and company director, and one with assets and liabilities as set out above: see [39] above, would simply forget or make a mistake with respect to 19 years’ worth of director’s fees totalling $57,000 in a company in which he says he had an entitlement to director’s fees “from the beginning”, and in a document declared just five days after he ceased to be a director of Liquor Equity in March 2010. Insofar as the entitlement to director’s fees derives from a corporation’s constitution and is a matter of contract, any contractual entitlement must have regard to the relevant period of limitation in respect of the bringing of actions in respect of that contract. The limitation period for an action in contract in Western Australia is six years: Limitation Act (WA) 1935, s.38(1)(c)(v); Limitation Act (WA) 2005, s.13(1) (effective from 15 November 2005). The claim of entitlement to director’s fees was first made in these proceedings in the First M Turco Affidavit sworn on 1 June 2017. Otherwise, there is no evidence of any action taken or proceedings instituted by Mr Turco in relation to the alleged entitlement to director’s fees. The dates of the alleged entitlement lack precision or particularisation, merely being put as “from 1991 to 2010”: First M Turco Affidavit at [5], although the Court notes that in the 2010 Statement of Affairs Mr Turco disclosed that he had resigned as a director of Liquor Equity on 26 March 2010: Statement of Affairs at page 18; (First VV Turco Affidavit at page 83). Thus, the claim for director’s fees cannot succeed in any event as it falls outside of the relevant limitation period for the bringing of an action or proceedings for recovery of those alleged director’s fees. Any quantum meruit claim if, indeed, a quantum meruit claim can be made at all: compare Kelly at [116] per Lander, Siopis and Gilmour JJ, must fail for the same reason, namely that the period in which such an action or proceeding must be brought has expired.