Short v Crawley (No. 30) [2007] NSWSC 1322

New South Wales Supreme Court

CITATION : Short v Crawley (No. 30) [2007] NSWSC 1322

HEARING DATE(S) : 13/02/06 – 17/02/06, 20/02/06 – 24/02/06, 27/02/06 – 02/03/06, 06/03/06 – 10/03/06, 13/03/06 – 17/03/06, 20/03/06 – 23/03/06, 27/03/06 – 31/03/06, 03/04/06 – 07/04/06, 10/04/06 – 12/04/06, 21/04/06, 01/05/06, 04/05/06, and 08/05/06 – 12/05/06

JUDGMENT DATE : 26 November 2007

JURISDICTION : Equity Division

JUDGMENT OF : White J

DECISION : Plaintiffs to bring in short minutes of order in accordance with the reasons.

CATCHWORDS : CORPORATIONS – Oppression – Numerous instances of oppression by director of companies – Remedies – Winding up – Whether discretion to order winding up should be exercised – Order to wind up a solvent company only as a last resort – Appropriate remedy a compulsory purchase order – Valuation of shares. - EQUITY – Fiduciary duties – Causation – Breach of obligation to act for proper purpose distinguished from failure to disclose improper purpose – Consideration of application of principle in London Loan and Savings Co of Canada v Brickenden [1934] 3 DLR 465 – Director precluded from alleging would have derived profits irrespective of improper purpose – Liable to account for profits derived – No liability to pay equitable compensation where loss would have occurred irrespective of breach of duty. - EQUITY – Breach of fiduciary duty – Remedies – Account of profits – Director and third party company under his control each received benefit from director's breach of duty – Third party company with full knowledge that profits derived by reason of fiduciary's breach – Purpose of account of profits considered – Each liable to account for profits derived by them from fiduciary's breach – Entitlement to claim just allowances for skill, expertise and labour. - EQUITY – Fiduciary duties – Conflict of interest – Director owing concurrent fiduciary duties as solicitor – Duties as director owed in addition to duties owed as solicitor – Onus on fiduciary to show that fully informed consent obtained – What constitutes fully informed consent – Circumstances requiring independent advice. - LIMITATION PERIODS – Application of Limitation Act 1969 (NSW) by analogy – General rule that statutory limitation period applied by analogy only if court satisfied it is just to do so – Where account ordered for breach of fiduciary duty not constituting a breach of trust, analogy prima facie drawn between action to account at law and action to account in equity – Limitation period applicable to account at law applied where reliance on statute of limitations by analogy not unconscionable. - EQUITY – General principles – Equitable defences – Laches and delay – Equitable doctrine of laches applies where Limitation Act does not apply either directly or by analogy. - EQUITY – Fiduciary duties – Directors' duties to shareholders – Consideration of circumstances in which directors may owe fiduciary duties to shareholders. - MEETINGS – Voting – Circumstances in which directors interested in transaction may vote on resolution to enter into transaction – Articles providing that interested director may vote where disclosure in certain manner made – s 231, Corporations Law - s 123, Companies Act 1961 (NSW) – Whether Article applicable where only two directors, both personally interested in transaction – Continuing underlying requirement that directors act in accordance with fiduciary duties when voting notwithstanding that declaration of interest made in accordance with articles.