MARONIS HOLDINGS LTD v. NIPPON CREDIT AUSTRALIA LTD [2001] NSWSC 448

(2001) 38 ACSR 404 (2001) 10 BPR 18, 717 Reported Decision : [2001] NSWSC 448 [2001] ACL Rep 120 NSW 76 [2001] ACL Rep 185 NSW 12

New South Wales Supreme Court

CITATION : MARONIS HOLDINGS LTD v. NIPPON CREDIT AUSTRALIA LTD [2001] NSWSC 448 CURRENT JURISDICTION: EQUITY FILE NUMBER(S) : SC 1946/94 HEARING DATE(S) : 10/07-8/9; 9/10-19/10; 30/10-1/11/00 JUDGMENT DATE : 7 June 2001

Maronis Holdings Limited - First Plaintiff Girvan Corporation (New Zealand) Ltd (in Liq) - Second Plaintiff Nippon Credit Australia Limited - First defendant Paul Francis Petersen - Second Defendant PARTIES : Warren Alexander Duncan - Third Defendant Alan Raymond Ambler - Fourth Defendant Christopher McCulloch - Fifth Defendant Robert Vincent Ramsay - Sixth Defendant Brian Wilson & Ors (Clayton Utz) - Seventh Defendant Peter Bowen & Ors (Gadens Ridgeway) - Cross-defendants to First Cross-claim JUDGMENT OF : Bryson J at 1

B.W. Rayment QC, J.E. Marshall & G.R. Kennett for First and Second Plaintiffs F.M. Douglas QC & T.G. R. Parker for First Defendant R. K. Rasmussen for Second Defendant G.E. Underwood & T. Thawley for Third Defendant COUNSEL : A. McGrath for Fourth Defendant C. McCulloch in Person Fifth Defendant R. Darke for Sixth Defendant R. Macfarlan QC & J.P.A. Durack for Seventh Defendant J.B. Simpkins SC for Cross-defendants to First Cross-claim Henry Davis York (Ms S. Lever) for First and Second Plaintiffs Allen Allen & Hemsley (P. Kerr) for First Defendant English Kearns (M. F. English) for Second Defendant Peter W. Hopkins for Third Defendant SOLICITORS : Thompson Eslick (P. Thompson) for Fourth Defendant C. McCulloch in Person Fifth Defendant Greaves Wannan & Williams (S. Burns) for Sixth Defendant Minter Ellison (Ms S. Hooke) for Seventh Defendant Phillips Fox (Mrs K. Rigney) for Cross-defendants to First Cross-claim. CATCHWORDS : CORPORATIONS - Directors' duties - exercise of powers - Directors of Girvan Australia included the only two directors of Maronis, a subsidiary of Girvan NZ which was 74% controlled by Girvan Australia, 26% by public through listing on NZ stock exchange - Directors caused Maronis to mortgage its principal asset to Nippon Credit to secure loan of A$15m to Girvan Australia - no cross-security or recorded arrangement for protection of Maronis - on the facts, the Directors of Maronis were liable for breach of duty - claims against other officers failed. Consideration of - Charterbridge and duty of directors - formalities relating to appointment of directors. Claims against solicitors who acted for Girvan Austrlaia and against Nippon Credit for alleged breaches of fiduciary duties to Maronis failed. Consideration of Res Judicata and Ashun Estoppel. Assessment of equitable compensation based on value of land when Nippon Credit took control. Conveyancing Act 1919 (NSW) Companies Act 1955 (New Zealand) LEGISLATION CITED : Evidence Act 1995 Real Property Act 1990 (NSW) Community Land Management Act 1989 (NSW) Advance Bank of Australia Ltd, v. FAI Insurances Ltd (1987) 9 NSWLR 464 Arklow Investments Ltd, v. Maclean [2000] 1 WLR 594 AWA Ltd v. Daniels (1992) 7 ACSR 759 Bank of New Zealand v. Fiberi Pty Ltd (1994) 12 ACLC 48 Banque Belge Pour Uetranger v. Hambrouck & Ors [1921] 1 KB 321 Beach Petroleum NL v. Kennedy (1999) 48 NSWLR 1 Belmont Finance Corporation v. Williams Furniture Ltd & Ors (No.2) [1980] 1 All ER 393 Breen v. Williams (1996) 186 CLR 71 Birtchnell v. Equity Trustees Executor and Agency Co. (1929) 42 CLR 384 Brick & Pipe Industries Ltd v. Occidental Life Nominees Pty Ltd [1992] 2 VR 279 Bristol and West Building Society v. Mothew [19981 Ch 1 Charterbridge Corporation Ltd v. Lloyds Bank Ltd & Anor [1970] Ch 62 Clark Boyce v. Mouat [1994] 1 AC 428 Consul Development Pty Ltd v. DPC Estates Pty Ltd [1975] 132 CLR 373 Corporate Affairs Commission v. Drysdale (1978) 141 CLR 236 Daniels v. Anderson (1995) 16 ACSR 607 Dovey v. Cory [1901] AC 477 Equiticorp Finance Ltd (in liq) v. Bank of New Zealand (1992) 29 NSWLR 260 Equiticorp Finance Ltd (in Liq) v. Bank of New Zealand (1993) 32 NSWLR 50 Equiticorp Industries Group v. The Crown [1998] 2 NZLR 481 Farrow Finance Co. Ltd (in Liq) v. Farrow Properties Pty Ltd (in Liq) & Ors (1997) [1999] 1VR 584 CASES CITED : Haira v. Burbery Mortgage Finance and Savings [1995] 3 NZLR 396 Hill v. Van Erp (1997) 188 CLR 159 Hogan v. Howard Finance Limited (1987) AFC 55-594 Howard Smith Ltd v. Ampol Petroleum Ltd [1974] AC 821 Linton v. Telnet Pty Ltd (1999) 30 ACSR 465 Macedone v. Collins (CA NSW unreported December 1996) MacIndoe & Anor v. Parbery (1994) Aust Torts Reports 61 Macquarie Bank Ltd v. Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 MB v. Protective Commissioner [2000] NSWSC 718 Morris v. Kanssen [1946] AC 459 Nelson & Ors v. Larholt [1948] 1 KB 339 Nicholson v. Permakraft Ltd (1983) 3 ACLC 453 Northside Developments Pty Ltd v. Registrar General & Ors (1990) 170 CLR 146 O'Hollaran v. R.T. Thomas & Family Pty Ltd (1998) 45 NSWLR 262; O'Brien v. Gillespie (1996) 41 NSWLR 549 Permanent Trustee v. Boulton (1994) 33 NSWLR 735 Perre & Ors v. Apand Pty Ltd (1999) 198 CLR 180 Selingor United Rubber Estate v. Craddock [1968] 1 WLR 1555 Shuttleworth v. Cox Bros Co. [1927] 2 KB 9 Sinclair v. Brougham & Anor [1914] AC 398 Stacpoole v. Glass [ 1870] 1 VLR (L) 195 Storey v. Advance Bank Australia Ltd (1993) 31 NSWLR 722 Walker v. Winbourne & Ors (1976) 137 CLR 1 Whitehouse v. CarIton Hotel Pty Ltd. (1987) 162 CLR 285 Williams v. Marac Australia Limited (unreported, SC(NSW), Hodgson J, 6 May 1985 Williams v. Marac Australia Ltd (1985) 5 NSWLR 529 DECISION : Equitable compensation against Directors - see para 550