Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2004] NSWSC 1143

New South Wales Supreme Court

CITATION : Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2004] NSWSC 1143 revised - 09/12/2005 HEARING DATE(S) : 10 - 19 April, 7 - 14 November, 2 - 20 December 2002, 14 - 16, 22 April - 2 May, 16, 17, 19 - 27 June, 10 - 14 & 20 November 2003, 9 - 20 February, 1 - 9 March, 21 April, 11 May and 8 November 2004 JUDGMENT DATE : 29 November 2004 JURISDICTION: Equity JUDGMENT OF : Hamilton J DECISION : See paragraph [202]

CATCHWORDS : CONTRACTS [218] - Particular parties - Principal and agent - Relations between principal and third persons - Other cases - Agent participating with principal in transactions involving breach of trust - Knowing receipt of proceeds of breach of trust - CORPORATIONS [19] - Constitution and legal capacity - Contracts - Other matters - Engagement of solicitors and accountants by one of two directors in proceedings brought at the instance of the other - Ratification by general meeting - Whether effective - CORPORATIONS [291] - Winding up - Liquidator - Appeal from liquidator's decision - Rejection of proof of debt - Nature of proceedings - EQUITY [1] - General principles - Rules and maxims of equity - "Unclean hands" - Corresponding common law maxims relating to illegal conduct - Respective operation of defences of illegality and of unclean hands - Principles relating to application of clean hands doctrine - EQUITY [185] - Trusts and trustees - Powers, duties, rights and liabilities of trustees - Liability for breach of trust - What constitutes a breach of trust and who may be liable - Breach of fiduciary duties - Conflict between duty and interest - Duty not to profit from position - Remedies - EVIDENCE [144] - Burden of proof, presumptions, and weight and sufficiency of evidence - Generally - Sufficiency - Standard in civil proceedings - When fraud alleged - Whether "clear and cogent" proof required - Whether "actual persuasion of its occurrence or existence" necessary before Court can find fact proved - EVIDENCE [216] - Witnesses - Cross examination - When permitted and in general - By whom - Evidence of witness proposed to be contradicted by adversary. The Corporations Law ss 232(2), (4) & (6) LEGISLATION CITED : Corporations Act 2001 (Cth) s 251A(6) Evidence Act 1995 ss 128, 140 Abdurahman v Field (1987) 8 NSWLR 158 Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1 Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419 Barnes v Addy (1874) LR 9 Ch App 244 Black Uhlans Incorporated v New South Wales Crime Commission [2002] NSWSC 1060 Blundell v Curvers [1999] NSWCA 421 Bray v Ford [1896] AC 44 Briginshaw v Briginshaw (1938) 60 CLR 336 Browne v Dunn (1893) 6 R 67 Canson Enterprises Ltd v Boughton & Co [1991] 3 SCR 534 Catt v Marac Australia Ltd (1986) 9 NSWLR 639 Chalker v Barwon Coast Committee of Management Inc [2003] VSC 286 Chan v Zacharia (1984) 154 CLR 178 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 Danish Mercantile Co Ltd v Beaumont [1951] Ch 680 Day v Mead [1987] 2 NZLR 443 Dering v Earl of Winchelsea (1787) 1 Cox Eq Cas 318; 29 ER 1184 FAI Insurances Ltd v Pioneer Concrete Services Ltd (1987) 15 NSWLR 552 Gascoigne v Gascoigne [1918] 1 KB 223 George v Greater Adelaide Land Development Co Ltd (1929) 43 CLR 91 Government Employees Superannuation Board v Martin (1997) 19 WAR 224 Griffiths v Griffiths [1973] 1 WLR 1454 Helton v Allen (1940) 63 CLR 691 Hill v Rose [1990] VR 129 Idameneo (No 123) P/L v Ticco P/L [2003] NSWSC 538 Idameneo P/L v Ticco P/L [2004] NSWCA 329 In Re Emery's Investment Trusts. Emery v Emery [1959] Ch 410 In re Hulkes. Powell v Hulkes (1886) 33 ChD 552 Jones v Dunkel (1959) 101 CLR 298 Jones v Lenthal (1669) 1 Chan Cas 154; 22 ER 739 Karl Suleman Enterprizes Pty Ltd (in liq) v Babanour (2004) 49 ACSR 612 Lewis v Nortex Pty Ltd [2001] NSWSC 511; (2001) 10 BPR 19,035 Lewis v Nortex Pty Ltd (In Liq) [2002] NSWSC 124 Lewis v Nortex Pty Ltd (In Liq) [2002] NSWSC 143 CASES CITED : Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 189 Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 337 Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 1192 Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2003] NSWSC 354 Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2004] NSWSC 121 Loughran v Loughran 292 US 216 (1934) McKenzie v McDonald [1927] VLR 134 Meyers v Casey (1913) 17 CLR 90 Miller v Miller (1995) 16 ACSR 73 Mills v Mills (1938) 60 CLR 150 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 Nelson v Nelson (1995) 184 CLR 538 Nocton v Lord Ashburton [1914] AC 932 Nortex Pty Ltd v Lamru Pty Ltd NSWSC 12 August 1997 Master McLaughlin unreported Pascoe Ltd (in liq) v Lucas (1999) 75 SASR 246 R v Birks (1990) 19 NSWLR 677 Re Jay-O-Bees; Rosseau v Jay-O-Bees [2004] NSWSC 818 Re Nortex Pty Ltd (In Liq) [2003] NSWSC 1036 Rejfek v McElroy (1965) 112 CLR 517 Rochefoucauld v Boustead [1897] 1 Ch 196 Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 Seltsam Pty Ltd v McGuiness (2000) 49 NSWLR 262 Southern Area Health Service v Brown [2003] NSWCA 369 Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 Tinker v Tinker [1970] P 136 Weston v Beaufils (No 2) (1994) 50 FCR 476 I E Davidson "The Equitable Remedy of Compensation" (1982) 13 MULR 349 W M C Gummow "Compensation for Breach of Fiduciary Duty" in T G Youdan (ed) Equity, Fiduciaries and Trusts (1989) 57 Sir Frederick Jordan "Chapters on Equity in New South Wales" (6th ed, 1947) (reprinted in "Select Legal Papers" (1983)) at 115 Meagher & Gummow, Jacobs' Law of Trusts in Australia (6th ed, 1997) at [1334], [1711], [1735] Meagher, Gummow and Lehane's Equity Doctrines and Remedies (4th ed, 2002) at [3-110], [5-260] Stephen Odgers, Uniform Evidence Law (6th ed, 2004) at [1.4.100] F M B Reynolds, Bowstead and Reynolds on Agency (17th ed, 2001) Article 13 [2-047] 4 Scott on Trusts (4th ed, 1989) par 326.3 Lord Walker "Dishonesty and Unconscionable Conduct in Commercial Life - Some Reflections on Accessory Liability and Knowing Receipt" John Lehane Memorial Lecture 2004 3081/97 Peter Lawrence Lewis (P) Lamru Pty Ltd (Applicant) Kation Pty Ltd (Respondent) Brian Raymond Silvia (Liquidator) PARTIES : 1750/02 Lamru Pty Limited (P) Kation Pty Limited (D1) Peter Lawrence Lewis (D2) Mark Lewis (D3) Nortex Pty Ltd (In Liq) (D4) FILE NUMBER(S) : SC 3081/97; 1750/02 S D Rares SC then N A Cotman SC and J T Johnson (P L Lewis & Kation P/L) COUNSEL : S J Motbey (Lamru P/L) V R W Gray (Liquidator & Nortex P/L) P R Whitford & M P Cleary (M Lewis) Kemp Strang (P L Lewis & Kation P/L) SOLICITORS : Lyons & Lyons (Lamru P/L) Abbott Tout (Liquidator & Nortex P/L) Corrs Chambers Westgarth (M Lewis)