Aequitas v AEFC [2001] NSWSC 14

Reported Decision : (2001) 19 ACLC 1006

New South Wales Supreme Court

CITATION : Aequitas v AEFC [2001] NSWSC 14 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 5532/91 HEARING DATE(S) : 23, 24 & 30 June, 1 & 2 July, 3 August, 1, 20 & 23 September 1999 JUDGMENT DATE : 9 April 2001

Aequitas Limited and Aequitas No.1 Limited (P) PARTIES : Sparad No.100 Limited (formerly Australian European Finance Corporation Limited) (D1) AEFC Leasing Pty Limited (D2) John Gledhill (D3) JUDGMENT OF : Austin J

COUNSEL : S Rares SC and N Perran (P) A J Meagher SC and P Brereton (D) SOLICITORS : Cutler Hughes & Harris (P) Holman Webb (D) CATCHWORDS : COMPANY LAW - financial adviser's and promoter's fiduciary duties - directors' duties - breach of duty - EQUITY - negative content of fiduciary duties - remedies for breach of fiduciary duties - where rescission not available - equitable compensation for causally connected but unforeseeable losses - PRINCIPAL & AGENT - secret commission - ingredients - element of inducement - knowledge by principal, where principal is a fledgling company controlled by promoters LEGISLATION CITED : Fair Trading Act (NSW) 1984, ss 42, 68 Trade Practices Act (Cth) 1974, ss 52, 82 Alati v Kruger (1955) 94 CLR 216 AM Spicer & Son Pty Ltd (In Liq) v Spicer (1931) 47 CLR 151 Anderson's (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd [1980] 2 NSWLR 870 Armstrong v Jackson [1917] 2 KB 822 Astley v Austrust Ltd (1999) 73 ALJR 403 Attorney-General for Hong Kong v Reid [1994] 1 AC 324 Australian Breeders Co-operative Society Ltd v Jones (1997) 150 ALR 488 Barnes v Addy (1874) LR 9 Ch App 244 Beach Petroleum NL v Johnson (1993) 115 ALR 411 Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 Bernard Elsey Pty Ltd v Commissioner of Taxation (1969) 121 CLR 119 Bonds & Securities (Trading) Pty Ltd v Glomex Mines NL [1971] 1 NSWLR 879 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Breen v Williams (1986) 186 CLR 71 Brickenden v London Loan & Savings Co [1934] 3 DLR 465 Briginshaw v Briginshaw (1938) 60 CLR 336 Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129 Chan v Zacharia (1984) 154 CLR 178 198 Citicorp Australia Ltd v O'Brien (1996) 40 NSWLR 398 Commonwealth Bank of Australia v Smith (1991) 42 FCR 390 Commonwealth of Australia v SCI Operations Pty Ltd (1998) 192 CLR 285 Consul Developments Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 Cook v Deeks [1916] 1 AC 554 Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 370 Derry v Peek (1889) 14 App Cas 337 Duke Group Ltd (in liq) v Pilmer (1999) 31 ACSR 213 Elders Trustee and Executor Co Ltd v EG Reeves Pty Ltd (1987) 78 ALR 193 Emma Silver Mining Co Ltd v Lewis & Son (1879) 4 CPD 396 Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 Ex parte James (1803) 8 Ves Jn 337 Farrington v Rowe McBride & Partners [1985] 1 NZLR 83 Federal Supply & Cold Storage Co of South Africa v Anghern & Piel (1910) 80 LJ(PC) 1 Ford v Andrews (1916) 21 CLR 317 Furs Ltd v Tomkies (1936) 54 CLR 583 Gibson v Jeyes (1801) 6 Ves Jn 266 Gluckstein v Barnes [1900] AC 240 Gray v New Augarita Porcupine Mines [1952] 3 DLR 1 Hamilton v Whitehead (1988) 166 CLR 121 Hawkins v Clayton (1988) 164 CLR 539 Haywood v Roadknight [1927] VLR 512 Henderson v Merrett Syndicates Ltd [1994] 3 WLR 761 Herron v McGregor (1986) 6 NSWLR 246 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 CASES CITED : Hovenden & Sons v Millhoff (1900) 83 LT 41 Humphris v Jenshol (1997) 160 ALR 107 Imperial Mercantile Credit Association v Coleman (1873) LR 6 HL 189 In re a Solicitor; Ex parte Incorporated Law Society [1894] 1 QB 254 Jacobus Marler Estates v Marler (1913) 85 LJPC 167n JC Houghton & Co v Nothard, Lowe & Willis Ltd [1928] AC 1 Jones v Dunkel (1959) 101 CLR 297 Ladywell Mining Co v Brookes (1887) 35 ChD 400 Lagunas Nitrate Co v Lagunas Syndicate [1899] 2 Ch 392 Lamb v Cologno (1987) 163 CLR 1 Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 Liquidators of Imperial Mercantile Credit Association v Coleman (1873) LR 6 HL 189 Livingston v Rawyards Coal Co (1880) 5 App Cas 25 Maguire v Makaronis (1997) 188 CLR 449 Mayor & c of Salford v Lever [1891] 1 QB 168 McInerney v McDonald [1992] 2 SCR 138 McPherson v Watt (1877) 3 App Cas 254 Nocton v Lord Ashburton [1914] AC 932 Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1 O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Panama & South Pacific Telegraph Company v India Rubber Gutta Percha & Telegraph Works Co (1875) LR 10 Ch App 515 R v Byrnes (1985) 183 CLR 501 R v Ghosh [1982] QB 1053 Re Hampshire Land Co [1896] 2 Ch 743 Re Kape Breton Co (1885) 29 ChD 795 Re Morvah Consuls Tin Mining Company (McKay's Case) (1875) 2 ChD 1 Rejfek v McElroy (1965) 112 CLR 517 Richard Brady Franks Ltd v Price (1937) 58 CLR 112 Royal Brunei Airlines v Tan [1995] 2 AC 379 Salomon v Salomon [1897] AC 22 Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322 Spence v Crawford [1939] 3 All ER 271 T Mahesan S/O Thambia v Malaysia Government Officers' Co-operative Housing Society Ltd [1979] AC 374 Target Holdings Ltd v Redferns [1996] 1 AC 421 Tesco Supermarkets Ltd v Nattrass [1972] AC 153 Tracy v Mandalay Pty Ltd (1953) 88 CLR 215 United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 182 CLR 102 Wagon Mound (No 1) [1961] AC 388 Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642 Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 Warman International Ltd v Dwyer (1994) 182 CLR 544 Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 White v Jones [1995] 2 WLR 187 DECISION : See last two paragraphs.