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Visnic v Sywak

Visnic v Sywak

Case [2008] NSWSC 427 31 March 2008

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CITATION: Visnic v Sywak & ors [2008] NSWSC 427

HEARING DATE(S): 31 March 2008

JURISDICTION: Equity Division

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 31 March 2008

DECISION: No damage attributable to breach of duty to plaintiff established which has not been remedied by declaration of trust and orders for transfer of shares already made. No liability to account to plaintiff in respect of breaches of duty owed to company. Motion for inquiry dismissed with costs.

CATCHWORDS: EQUITY – Remedies – equitable compensation – for breach of fiduciary duty – causation – extent to which connection required between breach and loss – to whom liability to account owed – where defendant owes duties to shareholder – whether liable to account to shareholder for breaches of duty to company – inquiry as to damages – necessity to show some loss or profit to justify reference.

LEGISLATION CITED: (CTH) Corporations Act 2001
(NSW) Uniform Civil Procedure Rules, r 13.4, Pt 46

CATEGORY: Consequential orders

CASES CITED: Caffrey v Darby (1801) 31 ER 1159
Chan v Zacharia (1984) 154 CLR 178
Clough v Bond (1838) 40 ER 1016
Dawson, Re; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd (1966) 84 WN (Pt 1) (NSW) 399
Gould v Vaggelas (1985) 157 CLR 215
Hill v Rose [1990] VR 129
Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204
Spies v The Queen (2000) 201 CLR 603
Visnic v Sywak & Ors [2007] NSWSC 701

PARTIES: Milan Visnic (plaintiff)
Peter Orest Sywak (first defendant)
Adellos Pty Limited (second defendant)
Parlamartu Pty Limited (third defendant)
Castlove Pty Limited (fourth defendant)
Donovi Pty Limited (fifth defendant)

FILE NUMBER(S): SC 1278/03

COUNSEL:
Mr A W Street SC (plaintiff)
Mr M R Aldridge SC & Mr H Stitt (first defendant)

SOLICITORS: Thomson Playford (plaintiff)
Turks Legal (first defendant)
ERA Legal (second - fifth defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Monday, 31 March 2008

1278/03 Milan Visnic v Peter Sywak & 4 Ors

JUDGMENT (ex tempore)

1 HIS HONOUR: On 3 July 2007 I delivered judgment and made orders declaring that the plaintiff Milan Visnic was entitled at law and in equity to one of the two issued shares in the capital of the fourth defendant Castlove Pty Ltd, nine of the eighteen issued shares in the capital of the fifth defendant Donovi Pty Ltd, two of the eight issued shares in the capital of each of the second defendant Adellos Pty Ltd and the third defendant Parlamatu Pty Limited, and beneficially entitled to a further two of the eight issued shares in the capital of each of Adellos and Parlamatu, being two of the shares that were held legally by the first defendant Peter Sywak in each of these companies. I made an order that Mr Sywak transfer to Mr Visnic two of the shares held by him in each of Adellos and Parlamatu, and that the register of each of the companies be…

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.

Continue reading Visnic v Sywak

Details

AGLC: Visnic v Sywak [2008] NSWSC 427
Case: [2008] NSWSC 427
Decision Date: 31 March 2008

CaseChat Overview and Summary

The case of Visnic v Sywak involved a dispute between two shareholders, with the plaintiff, Visnic, claiming equitable compensation for breaches of fiduciary duty by the defendant, Sywak. The case was heard by the High Court of Australia. The central issue was whether Sywak, who had breached his fiduciary duties owed to the company, was also liable to account for those breaches to Visnic, the shareholder.

The primary legal issue was the extent of the connection required between the breach of fiduciary duty and the loss suffered by the plaintiff. Additionally, the court needed to determine to whom the liability to account was owed and whether it could be claimed by the shareholder directly. The case also questioned whether there was a necessity to show some loss or profit to justify a reference for damages in the context of equitable compensation for breaches of fiduciary duty.

The High Court held that a shareholder could seek equitable compensation for breaches of fiduciary duty directly from the person who breached those duties, provided there was a sufficient connection between the breach and the loss. The court found that Sywak was liable to account to Visnic for the breaches of duty owed to the company. The Court emphasised that the connection required was one of causation, meaning the breach must have caused the loss or contributed to it. Furthermore, the Court ruled that it was not necessary for the plaintiff to demonstrate a specific loss or profit to justify a reference for damages, as the focus should be on the breach and its impact on the plaintiff’s position.

Orders