Stav Investments Pty Ltd v Taylor; LK Group Investments Pty Ltd v Taylor [2022] NSWSC 208

Supreme Court New South Wales

Medium Neutral Citation: Stav Investments Pty Ltd v Taylor; LK Group Investments Pty Ltd v Taylor [2022] NSWSC 208 Hearing dates: 5 – 13 October 2021 Date of orders: 9 March 2022 Decision date: 09 March 2022 Jurisdiction: Equity Before: Ward CJ in Eq Decision: 1. In the Stav proceeding, order that each of the first and second defendants pay Stav Investments damages of $1,012,500.00 for contraventions of s 1041I of the Corporations Act 2001 (Cth), s 12GF of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and the Australian Consumer Law (NSW). 2. In the Stav proceeding, dismiss the second plaintiff's claims. 3. In the LK Group Investments proceeding, order that each of the first and second defendants pay LK Group Investments of $1,012,500.00 for contraventions of s 1041I of the Corporations Act 2001 (Cth), s 12GF of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and the Australian Consumer Law (NSW). 4. Order that the first and second defendants pay the plaintiffs' costs of the proceedings. Catchwords: CORPORATIONS — Misleading or deceptive conduct — "No transaction" case — Where defendants made various warranties and representations to the plaintiffs as to their ownership of valuable intellectual property, and the value of their company — Representations as to future matters — Silence or non-disclosure — Where plaintiffs induced to invest in defendants' company on the basis of representations — Where defendants' company not a going concern — Whether plaintiffs entitled to recover totality of their investments CORPORATIONS — Misleading or deceptive conduct — Contributory negligence and proportionate liability CONTRACTS — Breach of contract — Where defendants made various contractual warranties which were in fact false — Causation — Whether falsity of warranties causative of plaintiffs' loss Legislation Cited: Australian Consumer Law, s 236 Australian Securities and Investments Commission Act 2001 (Cth), ss 12BAB, 12GF, 12GP, 12GR Civil Liability Act 2002 (NSW), s 3, Part 4 Civil Procedure Act 2005 (NSW), ss 19, 65 Competition and Consumer Act 2010 (Cth), ss 87CB, 87CD, 131A, 137B, Schedule 2 Copyright Act 1968 (Cth), ss 10, 29(1)(a), 32, 35 Corporations Act 2001 (Cth), ss 436C, 1041I, 1041H, 1041L, 1041N Fair Trading Act 1987 (NSW), s 28(1)(b) Law Reform (Miscellaneous Provisions) Act 1965 (NSW), s 9 Legal Profession Uniform Law Application Act 2014 (NSW), Sch 2 Limitation Act 1969 (NSW), s 14 Uniform Civil Procedure Rules 2005 (NSW), r 6.2 Cases Cited: ABN AMRO Bank NV v Bathurst Regional Council (2014) 224 FCR 1; [2014] FCAFC 65 Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 Alati v Kruger (1955) 94 CLR 216; [1955] HCA 64 Anchorage Capital Master Offshore Ltd v Sparkes (No 3); Bank of Communications Co Ltd v Sparkes (No 2) [2021] NSWSC 1025 Andrews v Racken Pty Ltd [2007] NSWSC 1010 Appleby v Johnson (1874) LR 9 CP 158 Astley v Austrust Ltd (1999) 197 CLR 1; [1999] HCA 6 Australian Competition and Consumer Commission v Original Mama's Pizza and Ribs [2008] FCA 370 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54 Australian Competition and Consumer Commission v Valve Corporation (No 3) (2016) 337 ALR 647; [2016] FCA 196 Australian Securities and Investments Commission v Narain (2008) 169 FCR 211; [2008] FCAFC 120 Ballas v Theophilos (1957) 98 CLR 193; [1957] HCA 90 Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11 Barclay Mowlem Construction Ltd v Dampier Authority (2006) 33 WAR 82; [2006] WASC 281 Barnes v Forty Two International Pty Ltd (2014) 316 ALR 408; [2014] FCAFC 152 Bartier Perry Pty Ltd v Paltos [2021] NSWCA 158 Brambles Holdings v Carey (1976) 15 SASR 270 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54 Computer Edge v Apple Computer (1986) 161 CLR 171; [1986] HCA 19 Crouchman v Hill [1947] 1 All ER 103 Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 EW Blanch Pty Ltd v Cooper [2005] NSWCA 217 Fink v Fink (1946) 74 CLR 127; [1946] HCA 54 Finnegan v Allen [1943] KB 425 Futuretronics International Pty Ltd v Gadzhis (1992) 2 VR 217 Galati v Deans [2019] NSWSC 1548 Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 Gould v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490; [1916] HCA 81 Gould v Vaggelas (1984) 157 CLR 215; [1984] HCA 68 GR Capital Group Pty Ltd v Xinfeng Australia International Investment Pty Ltd [2020] NSWCA 266 Gran Gelato Ltd v Richcliff (Group) Ltd [1992] Ch 560 at 574 Harvard Nominees Pty Ltd v Tiller [2020] FCA 604 Henjo Investments Pty Limited v Collins Marrickville Pty Limited (1988) 39 FCR 546 Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 Houghton v Arms (2006) 225 CLR 553; [2006] HCA 59 HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54 Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613; [2013] HCA 10 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653; [2008] NSWCA 206 Jams 2 Pty Ltd v Stubbings (No 3) [2019] VSC 150 Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526 Jones v Daniel [1894] 2 Ch 332 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Joslyn v Berryman (2003) 214 CLR 552; [2003] HCA 34 JR Consulting & Drafting Pty Ltd v Cummings (2016) 329 ALR 625; [2016] FCAFC 20 JWH Group Pty Ltd v Kimpura Pty Ltd (2004) 61 IPR 295; [2004] WASC 39 Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281; [1995] HCA 4 Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; [1995] HCA 68 Lee v Westpac Banking Corporation (No 2) [2016] FCA 901 Lifehealthcare Distribution Pty Ltd v Nicholas [2011] NSWSC 661 Macquarie Bank Ltd v Arup Pty Ltd [2016] FCAFC 117 McGrath v Australian Naturalcare Products Pty Ltd (2008) 165 FCR 230; [2008] FCAFC 2 McMillan v Coolah Home Base (No 3) [2020] NSWSC 1325 McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] HCA 79 Meetfresh Franchising Pty Ltd v Ivanman Pty Ltd [2020] NSWCA 234 Merewether v Scottish Australian Mining Co Ltd (1907) 4 CLR 953; [1907] HCA 8 Mistrina v Australian Consulting Engineers [2020] NSWCA 223 Mitchell Morgan Nominees Pty Ltd v Vella [2011] NSWCA 390 Nintendo Co Ltd v Centronics Systems Pty Ltd (No 2) (1994) 181 CLR 134; [1994] HCA 27 Oscar Chess Ltd v Williams [1957] 1 All ER 325 Palmer Street Developments Pty Limited v J & E Vanjak Pty Ltd [2018] QCA 111 Perestrello e Companhia Limitada v United Paint Co Ltd [1969] 3 All ER 479 Phoenix Commercial Enterprises v City of Canada Bay Council [2010] NSWCA 64 Pilmer v The Duke Group Ltd (2001) 207 CLR 165; [2001] HCA 31 Potts v Miller (1940) 54 CLR 282; [1940] HCA 43 Precision Pools Pty Ltd v Federal Commissioner of Taxation (1992) 37 FCR 554; [1992] FCA 746 RCR Energy Pty Ltd v WTE Co-Generation Pty Ltd [2017] VSCA 50 Reinhold v New South Wales Lotteries Corp (No 2) (2008) 82 NSWLR 762; [2008] NSWLR 187 Robinson v 470 St Kilda Road Pty Ltd (2018) 263 FCR 572; [2018] FCAFC 84 SPAR Licensing Pty Ltd v MIS QLD Pty Ltd (2014) 314 ALR 35; [2014] FCAFC 50 Standard Chartered Bank v Pakistan National Shipping Corporation [No 2] [2003] 1 AC 959 Street v Luna Park Sydney Pty Ltd [2007] NSWSC 588 Summergreene v Parker (1950) 80 CLR 304; [1950] HCA 13 Tesco Supermarkets Ltd v Nattrass [1972] AC 153; [1971] 2 AII ER 127 The Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479; [2000] HCA 14 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 Tonitto v Bassal (1992) 28 NSWLR 564 Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333 Vincent v Premo Enterprises (Voucher Sales) Ltd [1969] 2 QB 609; [1969] 2 All ER 941 Vines v Australian Securities and Investments Commission (2007) 73 NSWLR 451; [2007] NSWCA 75 W Scott Fell & Co Ltd v Lloyd (1906) 4 CLR 572; [1906] HCA 79 Williams v Pisano (2015) 90 NSWLR 342; [2015] NSWCA 177 Wyzenbeek v Australasian Marine Imports Pty Ltd (in Liq) (2019) 272 FCR 373; [2019] FCAFC 167 Xu v Lindsay Bennelong Developments Pty Ltd [2020] NSWSC 1692 Texts Cited: Heydon, Heydon on Contract: The General Part (Thomson Reuters, 2019) Category: Principal judgment Parties: 2018/00245168 Stav Investments Pty Ltd atf the Stav Investments Family Trust (First Plaintiff) Scott Stavretis (Second Plaintiff) Andrew George Taylor (First Defendant) John Thomas Charles Wilkinson (Second Defendant)