Trilogy Funds Management Limited v Sullivan (No 2) [2015] FCA 1452

FEDERAL COURT OF AUSTRALIA

Trilogy Funds Management Limited v Sullivan (No 2) [2015] FCA 1452 Citation: Trilogy Funds Management Limited v Sullivan (No 2) [2015] FCA 1452

Parties: TRILOGY FUNDS MANAGEMENT LIMITED (ACN 080 383 679) AS THE RESPONSIBLE ENTITY FOR THE PACIFIC FIRST MORTGAGE FUND (ARSN 088 139 477) v PHILIP KEITH SULLIVAN, THOMAS WILLIAM SWAN, STEPHEN ANTHONY MCCORMICK and IAN WILLIAM DONALDSON

File number: NSD 604 of 2012

Judge: WIGNEY J

Date of judgment: 18 December 2015

Catchwords: CORPORATIONS – directors – officers – statutory duties of directors – duty of care and diligence – duties of a responsible entity of a registered managed investment scheme pursuant to s 601FC of the Corporations Act 2001 (Cth) – duties of directors and officers of a responsible entity pursuant to s 601FD of the Corporations Act 2001 (Cth) – standard of care and diligence for directors and officers of a responsible entity acting as a professional trustee – duty of officers of a responsible entity to act in the best interests of scheme members – duty of officers to take steps to ensure responsible entity complies with Corporations Act 2001 (Cth), scheme constitution and compliance plan – where the directors and officers of a responsible entity of a registered managed investment scheme approved or purportedly approved the increase of a loan facility in circumstances where scheme constitution and compliance plan not complied with – whether directors and officers of a responsible entity of a managed investment scheme acted with care and diligence in approving increase to loan facility – where advances above the approved limit of loan facility – whether directors or officers of a responsible entity of a managed investment scheme failed to exercise care and diligence in failing to prevent advances being made – whether non-executive directors entitled to rely on management and auditors – failure of directors and officers to comply with the Corporations Act 2001 (Cth) – contravention of s 601FD of the Corporations Act 2001 (Cth) – contravention resulting in loss – compensation orders under s 1317H of the Corporations Act 2001 (Cth) – causation – relevant principles of causation in context of s 1317H of the Corporations Act 2001 (Cth) – where contraveners claim that loss inevitable irrespective of contraventions – where contraveners claim failure to mitigate loss resulting from contraventions – principles relating to mitigation of loss in context of compensation orders under s 1317H of the Corporations Act 2001 (Cth) – exoneration – whether directors and officers ought fairly to be excused for contraventions pursuant to ss 1317S and 1318 of the Corporations Act 2001 (Cth) EVIDENCE – admissibility – opinion evidence – expert's field of specialised knowledge – whether specialised knowledge demonstrated – whether demonstrated that opinions based on specialised knowledge – whether probative value of opinion evidence substantially outweighed by danger of undue waste of time or unfair prejudice – Evidence Act 1995 (Cth), ss 76, 79, 135 REAL PROPERTY – valuations – land value – "as is" valuations – highest and best use of land – whether expert valuer is required to consider the possibility of rezoning of land when preparing valuation of land DAMAGES – losses resulting from contraventions of s 601FD of the Corporations Act 2001 (Cth) by directors and officers of a registered managed investment scheme – whether the responsible entity of a registered managed investment scheme failed to act reasonably to mitigate the loss – whether the responsible entity of a registered managed investment scheme is entitled to a compensation order pursuant to s 1317H of the Corporations Act 2001 (Cth) – relevant principles of causation and loss – test for causation and loss – whether any damage suffered by the responsible entity "resulted from" contraventions of the Corporations Act 2001 (Cth) – where contraveners claim that loss would have been suffered irrespective of contraventions – method of calculating loss