Bluemine Pty Ltd (in liq) v AKA (Civil) Pty Ltd; Earth Civil Australia Pty Ltd (in liq) v AKA (Civil) Pty Ltd; Diamondwish Pty Ltd (in liq) v Ivana Cassaniti; Rackforce Pty Ltd (in liq) v Ivana Cassaniti; RCG CBD Pty Limited (in liq) v Borg Family Pty Ltd [2022] NSWCA 160

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Bluemine Pty Ltd (in liq) v AKA (Civil) Pty Ltd; Earth Civil Australia Pty Ltd (in liq) v AKA (Civil) Pty Ltd; Diamondwish Pty Ltd (in liq) v Ivana Cassaniti; Rackforce Pty Ltd (in liq) v Ivana Cassaniti; RCG CBD Pty Limited (in liq) v Borg Family Pty Ltd [2022] NSWCA 160 Hearing dates: 16, 17, 18 May 2022 Date of orders: 25 August 2022 Decision date: 25 August 2022 Before: Gleeson JA; Leeming JA; Mitchelmore JA Decision: Diamondwish appeal (2021/289067) (1) Appeal dismissed. (2) The appellants to pay the respondent's costs. Rackforce appeal (2021/289068) (1) Appeal dismissed. (2) The appellants to pay the respondent's costs. RCG appeal (2021/289069) (1) Appeal dismissed. (2) The appellants to pay the respondent's costs. Bluemine appeal (2021/289065) (1) Appeal allowed. (2) Set aside order 13 of the final orders made by the primary judge on 15 September 2021, as contained in the Schedule to that judgment insofar as the orders concern AKA (NSW) Pty Ltd (23rd defendant) and AKA (Civil) Pty Ltd (24th defendant), and in lieu, make the following orders: (a) Judgment for Bluemine Pty Ltd (in liq) (Bluemine) in the sum of $1,376,481.40 against AKA (NSW) Pty Ltd (the 23rd defendant) for equitable compensation and/or compensation pursuant to s 1317H of the Corporations Act 2001 (Cth) comprising: (i) $1,348,381.28 for the proportion of the tax liability for the payment into Bluemine of $1,780,318.21; and (ii) $28,100.12 for the proportion of the costs and expenses of the winding up. (b) Judgment for Bluemine in the sum of $1,215,030.28 against AKA (Civil) Pty Ltd (the 24th defendant) for equitable compensation and/or compensation pursuant to s 1317H of the Corporations Act 2001 (Cth) comprising: (i) $1,190,226.09 for the proportion of the tax liability for the payment into Bluemine of $1,571,500; and (ii) $24,804.19 for the proportion of the costs and expenses of the winding up. (3) Set aside costs orders (2) and (3) made by the primary judge on 15 September 2021 insofar as those orders concern AKA (NSW) Pty Ltd (23rd defendant) and AKA (Civil) Pty Ltd (24th defendant), and in lieu, order that AKA (NSW) Pty Ltd and AKA (Civil) Pty Ltd pay the plaintiffs' costs of the proceeding, including any reserved costs. (4) The respondents to pay the appellants' costs in this Court. Earth Civil appeal (2021/289066) (1) Appeal allowed. (2) Set aside order 6 of the final orders made by the primary judge on 15 September 2021 as contained in the Schedule to that judgment and in lieu, make the following orders: (a) Judgment for Earth Civil Australia Pty Ltd (in liq) (Earth Civil) in the sum of $294,614.83 against AKA (Civil) Pty Ltd (the 6th defendant) for equitable compensation and/or compensation pursuant to s 1317H of the Corporations Act 2001 (Cth) comprising: (i) $285,326.17 for the proportion of the tax liability for the payment into Earth Civil of $400,000; and (ii) $9,288.66, for the proportion of the costs and expenses of the winding up. (b) Judgment for Earth Civil in the sum of $431,610.72 against AKA (NSW) Pty Ltd (the 7th defendant) for equitable compensation and/or compensation pursuant to s 1317H of the Corporations Act 2001 (Cth) comprising: (i) $418,002.83 for the proportion of the tax liability for the payment into Earth Civil of $586,000; and (ii) $13,607.89, for the proportion of the costs and expenses of the winding up. (3) Set aside costs orders 2 and 3 made by the primary judge on 15 September 2021, and in lieu order that AKA (Civil) Pty Ltd (6th defendant) and AKA (NSW) Pty Ltd (7th defendant) pay the plaintiffs' costs of the proceeding, including any reserved costs. (4) The respondents to pay the appellants' costs in this Court. Catchwords: EQUITY – fiduciary duties – breach – accessorial liability – whether assistant had knowledge of breaches of fiduciary duties – where limitations to appellate review of credibility-based findings EQUITY – fiduciary duties – breach – accessorial liability – whether knowledge of breaches of fiduciary duties – whether reliance on professional advice glaringly improbable – where lack of understanding of full effect of transactions – whether assistant had knowledge of dishonest and fraudulent scheme EVIDENCE – general principles – Jones v Dunkel –where alleged assistant in dishonest and fraudulent design did not give evidence – where inference sought to fill gap in plaintiffs' case EQUITY – fiduciary duties – breach – accessorial liability – where alleged assistant was a company – transactions constituting carousel frauds – corporate attribution rule – whether knowledge of director attributed to company – whether fraud exception applied – whether transactions partly for the benefit of the company Legislation Cited: Corporations Act 2001 (Cth), ss 79, 181, 182, 1317H, Pt 5.7B Supreme Court Act 1970 (NSW), s 75A Uniform Civil Procedure Rules 2005 (NSW), r 51.36, 51.53 Cases Cited: Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 46 ACSR 504 Australian Securities and Investments Commission v Loiterton [2004] NSWSC 897; (2004) 50 ACSR 693 Australian Securities and Investments Commission v Vines (2006) 58 ACSR 298; [2006] NSWSC 760 Australian Securities and Investments Commission v Hellicar [2012] 247 CLR 345; [2012] HCA 17 Baden v Sociéte Générale pour Favoriser le Développement du Commerce et de l'lndustrie en France SA [1993] 1 WLR 509 Barnes v Addy (1874) LR 9 Ch App 244 Beach Petroleum NR v Johnson (1993) 115 ALR 411; 43 FCR 1 Bilta (UK) Ltd (in liq) v Nazir (No 2) [2016] AC 1; [2015] UKSC 23 Daniels v Anderson (1995) 37 NSWLR 438; (1995) 16 ACSR 607 Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113; [2003] NSWCA 91 ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24; (2021) 388 ALR 128 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 69; [2007] HCA 22 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Goodrich Aerospace Pty Ltd v Arsic (2006) 66 NSWLR 186; [2006] NSWCA 187 Johnson v Mackinnon [2021] NSWCA 152 Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 Manly Council v Byrne [2004] NSWCA 123 Massoud v Nationwide News Pty Ltd; Massoud v Fox Sports Australia Pty Ltd [2022] NSWCA 150 Permanent Trustee Co Ltd v O'Donnell [2009] NSWSC 902; (2009) 15 BPR 28,101 Robinson Helicopters Co Inc v McDermott (2016) [2016] HCA 22; 331 ALR 550 South-Western Sydney Local Health District v Gould (2018) 97 NSWLR 513; [2018] NSWCA 69 Texts Cited: Halsbury's Laws of Australia Category: Principal judgment Parties: Bluemine appeal (2021/289065) Mitchell Warren Ball in his Capacity as Liquidator of Bluemine Pty Limited (in liq) (First appellant) Bluemine Pty Limited (Second appellant) AKA (Civil) Pty Ltd (First respondent) AKA (NSW) Pty Ltd (Second respondent)