Xiao v BCEG International (Australia) Pty Ltd [2023] NSWCA 48

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Xiao v BCEG International (Australia) Pty Ltd [2023] NSWCA 48 Hearing dates: 6 February 2023 Date of orders: 23 March 2023 Decision date: 23 March 2023 Before: Gleeson JA at [1] Mitchelmore JA at [163] Griffiths AJA at [164] Decision: (1) Appeal allowed on ground 4 and is otherwise dismissed. (2) Set aside orders 2, 7, 8, 9 and 15 made by the primary judge on 22 July 2022 and orders 1, 2 and 4 made by the primary judge on 17 August 2022. (3) Direct the parties to bring in short minutes of order in respect of the amount of monetary judgment in order 1 made on 22 July 2022, together with compound interest (such judgment to take effect on 17 August 2022). (4) In the absence of agreement as to costs in this Court and below, direct the appellants to file and serve short written submissions on the question of costs in this Court and below within 14 days, the respondent to file and serve its response within a further 14 days and the appellants to file and serve any reply within a further 7 days. Any such submissions are not to exceed 3 pages. (5) Note that the question of costs will be determined on the papers. Catchwords: EQUITY — Equitable remedies — Whether claimant entitled to make "split election" seeking different remedies against different wrongdoers (defaulting fiduciary and accessories) — Where directors dissipated company's monies — Where knowing receipt by corporate accessories — Whether knowing recipients liable for an account of profits and fiduciaries liable for equitable compensation EQUITY — Fiduciary duties — Breach — Causation — Whether positive fiduciary duty to obtain informed consent to conflict of interest and duty — Whether failure to disclose to company the dissipation of company's monies was causative of later losses on subsequent transaction APPEALS — Procedural fairness — Whether appellants denied procedural fairness — Where primary judge assessed account of profits at trial rather than in post-judgment inquiry — Where appellants on notice of the claim for profits and claimant's evidence — Where appellants did not file any responsive evidence Legislation Cited: Corporations Act 2001 (Cth), s 1305(1) Evidence Act 2005 (NSW), s 69 Cases Cited: Alliance Australia Insurance Limited v Delor Vue Apartments CTS 39788 [2022] HCA 38 Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 Bagnall v Carlton [1877] LR 6 Ch D 371 Baxter v Obacelo Pty Limited (2001) 205 CLR 635; [2001] HCA 66 BCEG International (Australia) Pty Ltd v Xiao [2022] NSWSC 972 BCEG International (Australia) Pty Ltd v Xiao (No 2) [2022] NSWSC 1102 BCEG International (Australia) Pty Ltd v Xiao (No 3) [2022] NSWSC 1221 BCI Finances Pty Ltd (in liq) v Binetter [2018] FCAFC 189; (2018) 362 ALR 597 Blackmagic Design Pty Ltd v Overliese [2011] FCAFC 24; (2011) 276 ALR 646 Blackwood v Borrowes (1843) 4 Dr & War 441; (1843) 65 RR 729 BLB Corporation of Australia Establishment v Jacobsen (1974) 48 ALJR 372 Break Fast Investments Pty Ltd v Rigby Cooke Lawyers [2022] VSCA 118 Breen v Williams (1996) 186 CLR 71; [1996] HCA 57 Buitendag v Ravensthorpe Nickel Operations Pty Ltd [2012] WASC 425 Canson Enterprises Ltd v Boughton (1991) 85 DLR 4th 129 Cassaniti v Ball as liquidator of RGC CBD Pty Ltd (in liq) [2022] NSWCA 161 Central Railway Co of Venezuela v Kisch (1867) LR 2 HL 99 Chan v Zacharia (1984) 154 CLR 178 at 204-205; [1984] HCA 36 Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25; [1968] HCA 50 Concut Pty Ltd v Worrell [2000] HCA 64; 75 ALJR 312 Coope v LCM Litigation Fund Pty Ltd [2016] NSWCA 37; (2016) 333 ALR 524 Cornerstone Property & Developments Pty Ltd v Suellen Properties Pty Ltd [2015] Qd R 75; [2014] QSC 6 Dart Industries Inc v Décor Corporation Pty Ltd (1993) 179 CLR 101; [1993] HCA 54 Davies v Ford [2021] EWHC 2550 (Ch) De Vitre v Betts (1873) LR 6 HL 319 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 Fistar v Riverwood Legion and Community Club Ltd (2016) 91 NSWLR 732; [2016] NSWCA 81 FM Partners Ltd v Marino [2018] EWHC 2905 (Comm) FM Partners Ltd v Marino [2020] EWCA Civ 245 Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21 Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 Gunasegaram v Blue Visions Management Pty Ltd; Blue Visions Management Pty Ltd v Chidiac [2018] NSWCA 179; [2018] 129 ACSR 265 Harlowe's Nominees Pty Ltd v Woodside (Lakes Entrance) Oil Company NL (1968) 121 CLR 483; [1968] HCA 37 Hill v Rose (1990) VR 129 Holyoake Industries (Vic) Pty Ltd v V-Flow Pty Ltd [2011] FCA 1154 Howard v Commissioner of Taxation (2014) 253 CLR 83; [2014] HCA 21 Jacobus Marler Estates Ltd v Marler (1913) 114 LT 640 Jameson v Central Electricity Generating Board [1998] QB 323 King of the Clubs Pty Ltd v King Network Group Pty Ltd (No 2) [2007] NSWSC 574 Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23 Mahesan S/O Thambiah v Malaysia Government Officers' Co-operative Housing Society Limited [1979] AC 374 Michael Wilson & Partners Ltd v Emmott [2021] NSWCA 315 Michael Wilson & Partners v Nicholls (2011) 244 CLR 427; [2011] HCA 48 National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd [1998] FCA 564 Neilson v Betts (1871) LR 5 HL 1 Nocton v Lord Ashburton [1914] AC 932 Novoship (UK) Limited v Yuri Nikitin [2014] EWCA Civ 908 O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Pilmer v Duke Group Limited (in liq) (2001) 207 CLR 165; [2001] HCA 31 Prest v Petrodel Resources Ltd [2013] 2 AC 415; [2013] UKSC 34 Stead v State Government Insurance Commission (1986) 161 CLR 141 Tang Man Sit v Capacious Investments Limited [1996] AC 514 Target Holdings Ltd v Redferns [1996] 1 AC 421 The Electric Furnace Co v Selas Corporation of America [1987] RPC 23 The Mayor, Aldermen, and Burgesses of the Borough of Salford v Lever [1891] 1 QB 168 Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 Tracy v Mandalay Pty Ltd (1953) 88 CLR 215; [1953] HCA 9 United Australia Ltd v Barclays Bank Ltd [1941] AC 1 United Dominions Corporation v Brian Pty Ltd (1985) 157 CLR 1 Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102; [1995] HCA 14 Walden Properties Ltd v Beaver Properties Ltd (1973) 2 NSWLR 815 Warman International Limited v Dwyer (1995) 182 CLR 544; [1995] HCA 18 Whisprun Pty Ltd v Dixon (2003) 234 CLR 492; [2003] HCA 48 Wright v Lemon (as executor of estate of Wright) [2021] WASC 159 Yarrawonga Earthmoving & Garden Supplies Pty Ltd v Clem Court Pty Ltd [2014] VSC 439 Youyang Pty Limited v Minter Elllison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 Texts Cited: Meagher, Gummow and Lehane's Equity: Doctrine and Remedies (5th Ed, 2015, Lexis Nexis Butterworths) Category: Principal judgment Parties: Yu Xiao (First appellant) Yan Ying Chen (Second appellant) Interlink Laboratory Pty Ltd (Third appellant) Interlink Wagga Central Pty Ltd (Fourth appellant) West Wyalong Marketplace Pty ltd (Fifth appellant) BCEG International (Australia) Pty Ltd (Respondent) Representation: Counsel: J C Giles SC / B Le Plastrier (Appellants) D L Williams SC / N D Riordan (Respondent)