Firmtech Aluminium Pty Ltd v Xie; Zhang v Xu; Xie v Auschn Conveyancing & Associates Pty Ltd [2024] NSWSC 1293

Supreme Court New South Wales

Medium Neutral Citation: Firmtech Aluminium Pty Ltd v Xie; Zhang v Xu; Xie v Auschn Conveyancing & Associates Pty Ltd [2024] NSWSC 1293 Hearing dates: 22-26 July 2024, 29 July 2024-2 August 2024, 5 August 2024 Date of orders: 17 October 2024 Decision date: 17 October 2024 Jurisdiction: Equity - Corporations List Before: Nixon J Decision: (1) Directs the parties to bring in short minutes of order, by 5pm on 31 October 2024, to give effect to these reasons for judgment. (2) Directs that, insofar as any aspect of the orders to give effect to the reasons for judgment cannot be agreed: (a) the parties exchange, by 5pm on 31 October 2024, the orders which each party proposes and submissions (limited to 5 pages) on those orders; and (b) the matter be listed for hearing at 9.15 am on 6 November 2024, or such other date as may be arranged with the Associate to Nixon J. Catchwords: CORPORATIONS – Directors and officers – Duties under Corporations Act 2001 (Cth), ss 180, 181, 182 – Involvement of third parties in contraventions of ss 180, 181, 182 – Remedies under s 1317H CORPORATIONS – Fiduciary duties owed by director – Fiduciary duties owed by employee – Scope of fiduciary duties of employee – Whether fiduciary duties modified by agreement to "close down" corporation EQUITY – Fiduciaries – Conflict Rule – Profit Rule - Whether director and employee diverted business opportunities from principal to companies which they controlled –Whether informed consent – Liability of third parties under rule in Barnes v Addy CORPORATIONS – Whether affairs of company conducted in a manner that was contrary to interests of members as a whole, and oppressive to, unfairly prejudicial to, or unfairly discriminatory against a member CONTRACT – Whether breach of express term – Whether breach of implied terms EQUITY – Remedies – Constructive trust – Account of profits – Scope of liability to account – Whether liability to account on a "whole of business" basis or by reference to the specific business opportunities which were diverted from the principal EQUITY – Fiduciaries – Whether conveyancer made payments from settlement proceeds without authorisation from principal – Whether payments discharged liabilities of principal Legislation Cited: Corporations Act 2001 (Cth), ss 9, 79, 180-182, 232-233, 237, 286, 1317H Evidence Act 1995 (NSW), s 140 Home Building Act 1989 (NSW), s 8 Cases Cited: Adaz Nominees Pty Ltd v Castleway Pty Ltd [2020] VSCA 201 Alora Davies Developments 104 Pty Ltd (in liq) v Raphael [2024] NSWSC 547 Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 Anderson v Canaccord Genuity Financial Ltd [2023] NSWCA 294 Atanaskovic Hartnell v Birketu Pty Ltd (2021) 105 NSWLR 542; [2021] NSWCA 201 Australian Karting Association Ltd v Karting (New South Wales) Incorporated [2022] NSWCA 188 Australian Securities and Investments Commission v King (2020) 270 CLR 1; [2020] HCA 4 Auxil Pty Ltd v Terranova (2009) 260 ALR 164; [2009] WASCA 163 Barnes v Addy (1874) LR 9 Ch App 244 Bellevarde Constructions Pty Ltd v L'Officina by Vincenzo Australia Pty Limited [2022] NSWCA 246 Birtchnell v Equity Trustees, Executors & Agency Co Ltd (1929) 42 CLR 384; [1929] HCA 24 BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 Bentley Capital Limited v Keybridge Capital Limited [2019] FCA 1675 Breen v Williams (1996) 186 CLR 71; [1996] HCA 57 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Brisbane South Regional Authority v Taylor (1996) 186 CLR 541; [1996] HCA 25 Brunningshausen v Glavanics (1999) 46 NSWLR 538; [1999] NSWCA 199 Butt v McDonald (1896) 7 QLJ 68 Catalano v Managing Australia Destinations Pty Ltd (2014) 314 ALR 62; [2014] FCAFC 55 Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36 Charlton v Baber [2003] NSWSC 745 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; [1982] HCA 24 Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373; [1975] HCA 8 Cook v Deeks [1916] 1 AC 554 Coote v Kelly [2016] NSWSC 1447 Crawley v Short [2009] NSWCA 410 Dhami v Martin [2010] NSWSC 770 Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd (No 8) [2022] FCA 1404 DVO16 v Minister for Immigration and Border Protection (2021) 273 CLR 177; [2021] HCA 12 Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 ET-China.com International Holdings Ltd v Cheung (2021) 150 ASCSR 461; [2021] NSWCA 24 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21 Furs Ltd v Tomkies (1936) 54 CLR 583; [1936] HCA 3 Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 Gunasegaram v Blue Visions Management Pty Ltd [2018] NSWCA 179 Herron v McGregor (1986) 6 NSWLR 246 Hightime Investments Pty Ltd v Adamus Resources Ltd [2012] WASC 295 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64 Howard v Commissioner of Taxation (2014) 253 CLR 83; [2014] HCA 21 Huang v Wei (No 2) [2022] NSWSC 473 In the matter of Cheal Industries Pty Ltd – Fitzpatrick v Cheal [2012] NSWSC 261 In the matter of ICB Medical Distributors Pty Ltd and The International College of Biomechanics Pty Ltd; ICB Gait and Posture Clinic Pty Ltd; Foot Steps Orthotics Pty Limited [2018] NSWSC 1315 In the matter of Sunnya Pty Ltd [2024] NSWSC 403 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; [1995] HCA 68 Lawfund Australia Pty Ltd v Lawfund Leasing Pty Ltd [2008] NSWSC 144 Law Society of New South Wales v Harvey [1976] 2 NSWLR 154 Ling v Pang [2023] NSWCA 112 Longman v The Queen (1989) 168 CLR 79; [1989] HCA 60 Mackay v Dick (1881) 6 App Cas 251 Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23 Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 Moubarak by his tutor Coorey v Holt (2019) 100 NSWLR 218; [2019] NSWCA 102 Mualim v Dzelme [2021] NSWCA 199 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449; [1992] HCA 66 O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Oliveri Legal Pty Ltd t/as Oliveri Lawyers v Cassegrain Tea Tree Oil Pty Ltd [2024] NSWCA 74 Omnilab Media Pty Ltd v Digital Cinema Network Pty Ltd (2011) 285 ALR 63; [2011] FCAFC 166 Pilmer v Duke Group Limited (in liq) (2001) 207 CLR 165; [2001] HCA 31 Re Keneally (as administrator of Australian Blue Mountain International Cultural & Tourist Group Pty Ltd (admin apptd)) [2015] NSWSC 937 Re Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 Sangha v Baxter [2009] NSWCA 78 Shafron v Australian Securities and Investments Commission (2012) 247 CLR 465; [2012] HCA 18 Southern Real Estate Pty Ltd v Dellow (2003) 87 SASR 1; [2003] SASC 318 Town & Country Property Management Services Pty Ltd v Kaltoum [2002] NSWSC 166 Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18 Warner Capital Pty Ltd v Shazbot [2020] NSWCA 121 Watson v Foxman (1995) 49 NSWLR 315 Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459; [1985] HCA 6 Wild v Meduri [2024] NSWCA 230 Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48 Category: Principal judgment Parties: Proceedings 2022/221710 Firmtech Aluminium Pty Ltd (First Plaintiff) Zhaohui Xu (Second Plaintiff) Xiaoyan Xie (First Defendant) Jiamin Zhang (Second Defendant) Firmtech Aluminum Pty Ltd (Third Defendant) Logikal Façade Solutions Pty Ltd (Fourth Defendant)