CATCHWORDS PRACTICE AND PROCEDURE - Statement of claim disclosing no cause of action. CORPORATIONS LAW - Nature of duty under s.232(2) Corporations Law - whether remedy for breach includes civil damages. Corporations Law s.232(2), (6B), (11) Darryl Keith Barker v. Caroline Ann Toscan No. QG3024 of 1994 Cooper J., Brisbane, 21 February, 1995 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION No. QG3024 of 1994 IN THE MATTER OF CAROLINE ANN TOSCAN BETWEEN: DARRYL KEITH BARKER Applicant AND: CAROLINE ANN TOSCAN Respondent JUDGE MAKING ORDER: Cooper J. WHERE MADE: Brisbane DATE OF ORDER: 21 February, 1995 MINUTES OF ORDER THE COURT ORDERS THAT: 1. The application filed on 26 September, 1994 be dismissed. 2. The applicant pay the respondent's costs of and incidental to the application, including the notice of motion filed herein by the respondent, to be taxed if not agreed. Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION No. QG 3024 of 1994 IN THE MATTER OF CAROLINE ANN TOSCAN BETWEEN: DARRYL KEITH BARKER Applicant AND: CAROLINE ANN TOSCAN Respondent CORAM: Cooper J. PLACE: Brisbane DATE: 21 February, 1995 REASONS FOR JUDGMENT This is an application by the respondent, Caroline Ann Toscan, to have struck out a statement of claim and to have the proceedings brought against her dismissed on the ground that the statement of claim discloses no cause of action. The applicant is a solicitor who brings the application seeking damages for an alleged breach of a duty imposed by section 232 of the Corporations Law. The statement of claim in essence alleges that the respondent was a director of a company Exelden Pty. Ltd., which company retained the solicitor to provide legal professional services in relation to litigation in the Supreme Court of Queensland. It is alleged that the solicitor engaged counsel and is entitled to receive a sum of approximately $36,000.00 by way of professional fees and disbursements. The company has not paid the solicitor's bill. The solicitor, however, does not appear to have sued the company for the fees allegedly due. Rather, he alleges that the company came into a sum of approximately $30,000.00 and that the respondent failed to procure the company to pay the bill, presumably, although the statement of claim does not say so, by utilising the $30,000.00 received by the company. The relevant duty provided for in section 232 of the Corporations Law is that contained in subsection (2), which reads :- "An officer of a corporation shall at all times act honestly in the exercise of his or her powers and the discharge of the duties of his or her office". Subsection (6B) of section 232 provides :- "Subsections (2), (4), (5) and (6) are civil penalty provisions as defined by section 1317DA, Part 9.4B provides for civil and criminal consequences of contravening any of them, or of being involved in a contravention of any of them." Subsection (11) of section 232 provides :- "This section has effect in addition to, and not in derogation of, any rule of law relating to the duty or liability of a person by reason of the person's office or employment in relation to a corporation and does not prevent the institution of any civil proceedings in respect of a breach of such a duty or in respect of such a liability." Subsection (11), in my view, is for the purpose of preserving civil remedies for a breach of any of the duties which arise by virtue of a person holding a position as a director of a company, namely, fiduciary duties in the discharge of the office. Subsection (11) does not of itself provide for any new, different or additional duty, nor does the subsection itself provide a new statutory cause ofaction. Because of the provisions of subsection (6B), I am of the view that the statutory consequence of breach of the duty provided in sub-section (2) is that one of the remedies provided in Part 9.4B of the Corporations Law become available. The remedies in that Part of the Corporations Law provide for civil remedies at the suit of specified persons. The applicant solicitor in this matter does not satisfy the locus requirements of Part 9.4B, nor does the Part provide for the recovery of civil damages. The relevant remedy is one of a civil penalty. In my view, the application and statement of claim are misconceived. The statement of claim does not, in any event, identify or allege conduct which is relevantly dishonest and as such in breach of subsection (2) of section 232. Therefore, even assuming the existence of an independent duty created by the statute, breach of which gave rise to an action for damages at the suit of a person to whom the duty was owed and who suffered damage, such a case has not been pleaded against the respondent in these proceedings. The mere non-payment of a memo of costs from a solicitor by a company does not render a director of that company thereby dishonest. (There has been no attempt in the statement of claim to tie any of the conduct particularised to the duty or any breach). I am satisfied that the statement of claim cannot be redeemed by amendment and the appropriate course is to strike the proceedings out. I should also state that I am satisfied that the notice of motion was served on the applicant for principal relief. The applicant was called three times at the commencement of these proceedings and did not appear to argue in support of either the statement of claim or the substantive application. Consequently, the court has been denied the benefit of any argument from the applicant to support either the proceedings or the statement of claim. THE COURT ORDERS THAT: 1. The application filed on 26 September, 1994 be dismissed. 2. The applicant pay the respondent's costs of and incidental to the application, including the notice of motion filed herein by the respondent, to be taxed if not agreed. I certify that this and the preceding three (3) pages are a true copy of the reasons for judgment herein of his Honour Justice Cooper. Date: 21 February, 1995 Associate Counsel for the Applicant: No appearance Solicitors for the Applicant: No appearance Solicitor for the Respondent: Mr. A.A.J. Hornemann-Wren, Goss Downey Carne Date of Hearing: 21 February, 1995 Place of Hearing: Brisbane Date of Judgment: 21 February, 1995