Wall v Timbertown Community Enterprises Ltd (In Liq)

Reported Decision: (2002) 42 ACSR 1

New South Wales

Court of Appeal

CITATION:	Wall v Timbertown Community Enterprises Ltd (In Liq) [2002] NSWCA 162
FILE NUMBER(S):	CA 40804/01
HEARING DATE(S):	30 May 2002
JUDGMENT DATE:	30 May 2002
PARTIES :	Peter Vincent Wall (Appellant) Timbertown Community Enterprises Ltd (In Liq) (Respondent)
JUDGMENT OF:	Stein JA at 52, 57; Giles JA at 56; Heydon JA at 1

LOWER COURT JURISDICTION :	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S) :	SC 1007/99
LOWER COURT JUDICIAL OFFICER :	Burchett AJ

COUNSEL:	Mr J M Ireland QC (Appellant) Mr F Gleeson (Respondent)
SOLICITORS:	Eddy & Moloney (Appellant) Gordon & Johnstone (Respondent)
CATCHWORDS:	Corporations - directors' duties - duty of care and diligence - Corporations Law s 232(4) - share subscription - business proposal - proposal dependent upon grant of lease by council - grant of lease conditional upon certain subscribed capital - amount of subscribed capital misrepresented to council - whether finding of misrepresentation against appellant at trial erroneous - liability - causation - assuming liability, whether money liability should be increased by way of interest - ND
LEGISLATION CITED:	Corporations Law Supreme Court Act 1970
DECISION:	See paragraph 51

CA 40804/01
SC 1007/99

STEIN JA
GILES JA
HEYDON JA

30 May 2002

WALL v TIMBERTOWN COMMUNITY

ENTERPRISES LTD (IN LIQ)

Judgment

1 HEYDON JA: This is an appeal from orders made by Burchett AJ on 12 September 2001, after a trial on 3-5 September 2001, that the appellant (the second defendant below) pay the respondent (the plaintiff below) $80,000 plus costs. There is a cross-appeal by the respondent contending that the trial judge erred in failing to award interest on that sum. It is common ground that he did so err. The parties agree that an additional $21,821.30 should have been awarded if the primary order stands.

Background

2 The trial judge’s reasons for judgment commenced as follows:

“On 30 March 1995, the Plaintiff was incorporated under its name Timbertown Community Enterprises Limited. Following an initial defective prospectus, a replacement prospectus (‘the prospectus’) was issued and lodged with the then Australian Securities Commission on 21 July 1995. The prospectus sought investment, acknowledging ‘high risk’, in ‘the lease [from the Hastings Council] and operation of ‘Timbertown-Wauchope 1880-1910 Heritage Park’”. It referred to the enhancement of ‘the long term growth and stability of the community’, and set out in some detail a scheme for the development and carrying on of a theme park aimed at tourists and to portray ‘life in a logging community’ between 1880 and 1910, as part of the history of Wauchope and the timber industry. In bold print, towards the end of the prospectus, it was stated:
‘As at the 19th July, 1995, the position of negotiation with [the company] and Hastings Council is:
…
4. That the [proposed lease requires the complex to be opened by 8th September 1995 and that the company have issued shares to 700,000 minimum paid up capital.
…
If for any…