Altendorf Australia Pty Ltd v Parkanson Pty Ltd & Ors [1995] FCA 829

IN THE FEDERAL COURT OF AUSTRALIA) ) NEW SOUTH WALES DISTRICT REGISTRY) NG 493 of 1995 ) GENERAL DIVISION )

BETWEEN: ALTENDORF AUSTRALIA PTY LIMITED Applicant AND: PARKANSON PTY LIMITED First Respondent PETER DOUGLAS ELSWORTH Second Respondent BERNARD HANLEY Third Respondent

CORAM: Burchett J. PLACE: Sydney DATE : 15 August 1995

REASONS FOR JUDGMENT

BURCHETT J.:

An issue has arisen concerning certain declarations which Mr Rares has included in his draft short minutes of order in relation to the personal liability of Messrs Elsworth and Hanley for breaches of fiduciary duty of Parkanson Pty Limited ("Parkanson") in which they were personally involved. The question is whether those orders should be made, having regard to the way in which the case was pleaded and fought. The application as amended did seek a declaration, in para. 4, concerning a whole series of actions by the company in relation to refunds and duty drawbacks, and it alleged unjust enrichment, in respect of which there was a case pleaded that the company owed fiduciary duties to the applicant. Then, in the amended application, it was sought that a declaration be made that in the events which had happened each of the individual respondents is liable to the applicant and/or certain other bodies in respect of his participation in the conduct by reference to which the other declarations were sought against Parkanson. The amended statement of claim did not itself fully reflect that last part of the amended application. However, I am quite satisfied that the particular matters that have been debated before me, in relation to paras. 1 and 2 of the short minutes of order submitted by Mr Rares, were in fact at issue between the parties, and were understood to be at issue, although the legal formulation was not made precise. In particular, para. 2.2 refers to an issue which arose during the course of the evidence in respect of some documents the precise fate of which, it became clear, was either not known to the applicant prior to the adducing of the evidence, or if anything in respect of those documents was known, it had been overlooked. During the hearing, in my opinion, it was perfectly clear that the questions relating to the moneys represented by those documents were very much in issue, and the personal involvement of the individual respondents in the breach of fiduciary duty, which I have found occurred in relation to those documents, was a hotly debated matter. Accordingly, I think that I should make the orders that are sought in paras. 1 and 2. I will add to 1.3 a 1.4 in the following terms: Each of Elsworth and Hanley is liable under s. 75B of the Trade Practices Act 1974 in respect of the duty drawback of $22,491.20. So far as the costs are concerned, there are obviously numerous factors which go into the exercise of the discretion, and I will not attempt to outline them all. I have considered all of the arguments that were put to me. There was an amendment made by the applicants, shortly before the hearing, which greatly increased the quantum of the claim. So far as it was reflected in increased cost of the prosecution of the case, I think it would be fair to say that any increase in the costs would be fully reflected if I reduced the costs order that I propose to make in favour of the applicant by the costs attributable to one day of hearing. Mr Gleeson objects to para. 3.3 of the short minutes on the footing that it involves claims, in respect of his clients, on the basis that they assisted in breaches of trust or of fiduciary duty, which claims he says were not made in the pleadings or at the hearing. To the extent that it was sought to include moneys paid in 1994, I have already ruled in Mr Gleeson's favour. I think that those payments were indeed outside the purview of the action. However, Mr Rares also presses this particular part of the short minutes on the basis of a payment or payments made in 1991, and he points to para. 4 of the amended application as embracing a claim against Messrs Elsworth and Hanley which would cover payments in 1991. There is no doubt that the statement of claim is not clearly drawn in such a way as to cover this particular claim. Equally, I think there is no doubt that the issues on the basis of which it is put were dealt with at the hearing, and I have made relevant findings of fact, either in express words or that are clearly implicit, in the course of the written judgment which I delivered. I think this particular matter is more borderline than the others that I considered earlier, but I do think that all the issues of fact were actually raised at the hearing and were understood to be in dispute before me, and I have made appropriate findings to ground the order that Mr Rares wishes to have made in the short minutes. Mr Gleeson objects that his clients may not have known that what they were assisting was in fact a breach of fiduciary duty. There was a claim, even in the unamended application and statement of claim, which should have put them on quite clear notice; but apart from that, it does not seem to me that what is required is knowledge that upon the true interpretation of the facts the law would find a fiduciary duty. Rather what is required is a knowledge of those circumstances which in reality, whether or not a particular respondent acknowledges the reality, do constitute a fiduciary duty, and do constitute him a person who is assisting in a breach of it - with knowledge, not of the law, but of the circumstances which, as a matter of law, give rise to a claim against him if he so acts. Accordingly, I think that as to the 1991 payment or payments, para. 3.3 of the short minutes should stand. I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Burchett.