New South Wales Court of Appeal CITATION: Visnic v Sywak [2009] NSWCA 173 HEARING DATE(S): 14 May 2009 JUDGMENT DATE: 1 July 2009 JUDGMENT OF: Spigelman CJ at 1; Campbell JA at 47; Macfarlan JA at 50 DECISION: Appeal dismissed with costs. CATCHWORDS: CORPORATIONS – distinction between company and shareholders – limitations on shareholders' rights to enforce duties owed to company - EQUITY – equitable remedies – accounts and inquiries – sufficient connection – scope of breach of fiduciary duty – inquiry to determine equitable damages and/or account of profits by reason of breaches of fiduciary duty – whether sufficient connection between breach of fiduciary duty and inquiry for purposes of determining account of profits – whether breach was a conflict of interest and duty – deprivation of shareholding – evidence of benefits and profits – distinction between trust and fiduciary relationship - EQUITY - equitable remedies - accounts and inquiries - whether trial judge took into account irrelevant considerations - fiduciary's conduct capable of constituting breach of duties owed to companies - EQUITY – equitable remedies – election between equitable compensation and disgorgement damages - WORDS AND PHRASES – "sufficient connection" LEGISLATION CITED: Corporations Act 2001 (Cth) Uniform Civil Procedure Rules 2005 Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 83 ALJR 196 Canson Enterprises Ltd v Boughton & Co [1991] 3 SCR 534 Chan v Zacharia (1983–1984) 154 CLR 178 Friend v Brooker [2009] HCA 21; (2009) 255 ALR 601 Hill v Rose [1990] VR 129 Hunter Area Health Service v Presland [2005] NSWCA 33; (2005) 63 NSWLR 22 In re Coomber; Coomber v Coomber [1911] 1 Ch 723 CASES CITED: Keech v Sandford (1726) Sel Cas T King 61; 25 ER 223 Lumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27; (2008) 232 CLR 635 Maguire v Makaronis (1996–1997) 188 CLR 449 New South Wales v Paige [2002] NSWCA 235; (2002) 60 NSWLR 371 Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1996] AC 514 Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 Re Dawson (deceased); Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 211 Sullivan v Moody [2001] HCA 59; (2001) 207 CLR 562 Warman International Limited v Dwyer (1994–1995) 182 CLR 544 PARTIES: Milan Visnic (Appellant) Peter Sywak (Respondent) FILE NUMBER(S): CA 40097/08 COUNSEL: A W Street SC, J A English (Appellant) M R Aldridge SC (Respondent) SOLICITORS: Lander & Rogers (Appellant) Polczynski Lawyers (Respondent) LOWER COURT JURISDICTION: Supreme Court LOWER COURT FILE NUMBER(S): SC 1278/03 LOWER COURT JUDICIAL OFFICER: Brereton J LOWER COURT DATE OF DECISION: 3 July 2007; 31 March 2008 LOWER COURT MEDIUM NEUTRAL CITATION: Visnic v Sywak [2007] NSWSC 701; Visnic v Sywak [2008] NSWSC 427 - 10 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40097/08 SPIGELMAN CJ CAMPBELL JA MACFARLAN JA Wednesday 1 July 2009 Milan Visnic v Peter Sywak FACTS Justice Brereton found that Mr Sywak ("the respondent") owed Mr Visnic ("the appellant") a fiduciary duty as trustee of shares that he held on trust for the appellant and that the respondent breached his fiduciary duty by depriving the appellant of his shareholding. Justice Brereton ordered that the respondent transfer the shares to which the appellant was beneficially entitled to him and that the share register of the companies be rectified. He also ordered that the companies be wound-up because the companies would be deadlocked. Justice Brereton reserved liberty to the appellant to apply with respect to certain matters that had not been resolved. The appellant sought an order for an inquiry under Pt 46 of the Uniform Civil Procedure Rules 2005 in order to determine equitable damages and/or an account of profits by reason of the respondent's breaches of fiduciary duty. After a further hearing, Brereton J dismissed the motion. The appellant appealed. The issue before the Court of Appeal was whether there was a sufficient connection between the respondent's breach of fiduciary duty and a "profit" capable of being identified. HELD ( per Spigelman CJ, Campbell and Macfarlan JJA agreeing ) "Sufficient Connection" 1 The respondent needs to demonstrate a "sufficient connection" between the particular breach of fiduciary duty found to have occurred and a "profit" capable of being identified: [22]. 2 The only breach indicated by the trial judge's reasons was the respondent's refusal to transfer the legal interest in the shares when called upon to do so. The trial judge did not find that the relevant breach was a conflict of interest and duty. There is no sufficient connection with any benefit suggested to have been received by the respondent from the companies for purposes of directing an inquiry which could identify and quantify any such benefit: [24] [26] [27] [36]. Maguire v Makaronis (1996–1997) 188 CLR 449; Warman International Limited v Dwyer (1994–1995) 182 CLR 544; In re Coomber; Coomber v Coomber [1911] 1 Ch 723 applied. Friend v Brooker [2009] HCA 21; (2009) 255 ALR 601; Lumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27; (2008) 232 CLR 635 referred to. Irrelevant Considerations 3 The trial judge correctly concluded that restoration of any benefits of which the appellant had been deprived could be achieved in the course of the winding-up and that, as a shareholder, the appellant had no right to direct access to the monies distributed by the respondent to himself through his exercise of control of the companies: [39]. Friend v Brooker [2009] HCA 21; (2009) 255 ALR 601; Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 applied. Keech v Sandford (1726) Sel Cas T King 61; 25 ER 223 considered. Orders Appeal dismissed with costs. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40097/08 SPIGELMAN CJ CAMPBELL JA MACFARLAN JA Wednesday 1 July 2009 Milan Visnic v Peter Sywak Judgment 1 SPIGELMAN CJ: The appellant succeeded in establishing a case that he was entitled to half of the shares in four corporations and that, accordingly, those shares, which were registered in the name of the respondent, were held in trust for him. (Visnic v Sywak [2007] NSWSC 701.) Consequential upon these findings, Brereton J, after ordering transfer of shares in, and rectification of the registers of, the four corporations, determined that the four corporations would be deadlocked and, accordingly, should be wound-up. His Honour appointed a liquidator. 2 The four corporations are Adellos Pty Ltd, Parlamartu Pty Ltd, Castlove Pty Ltd and Donovi Pty Ltd. I do not find it necessary, however, to set out the differences in the manner in which the appellant was found to have been deprived of his interests in the four corporations. Suffice it to say that on the issues now before the Court there is no reason to differentiate between the corporations, although the differences explain some matters, for example, relevant dates, which will appear in some of the materials I set out below. 3 Justice Brereton reserved liberty to the appellant to apply with respect to certain matters that had not been resolved. The appellant sought an order for an inquiry under Pt 46 of the Uniform Civil Procedure Rules 2005 in order to determine equitable damages and/or an account of profits by reason of breaches of the fiduciary duty which his Honour had found in the first judgment. After a further hearing his Honour rejected the appellant's application. (Visnic v Sywak [2008] NSWSC 427.) The appeal before this Court is brought from his Honour's second judgment. There is no appeal, or cross-appeal, from his Honour's first judgment. 4 The appellant's submissions in this Court focused on his assertion of a right to an account of profits. However, the appellant sought to preserve his right to elect to pursue a claim for equitable compensation after the inquiry is complete. (See Warman International Limited v Dwyer (1994-1995) 182 CLR 544 especially at 569-570; see also Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1996] AC 514 at 521.) 5 In the light of the retention of the option to elect, it appears that the nature of the "account" for which the appellant contends, at this stage of the proceedings, is the identification of what, if any, benefits or profits the respondent had received in the course of operation of the four corporations during the period in which the appellant's rights to a shareholding had been denied. He does not, at this stage, seek an account in the sense of an order requiring disgorgement of profits. 6 In his pleadings the appellant sought an account in the following terms: "An order pursuant to section 233(1) of the Corporations Act and otherwise that there be an accounting in relation to the management of the affairs of the second, third, fourth and fifth defendants by the first defendant and in respect of moneys received and paid by the first defendant during his management of those defendants between: (a) 1992 and the date of this order in the case of the second defendant; and (b) 1996 and the date of this order in the case of the third, fourth and fifth defendants." 7 The appellant also sought consequential and further or other orders. 8 Where a court makes findings of oppressive conduct of the affairs of a corporation pursuant to s 232 of the Corporations Act 2001 (Cth), the court is empowered to make orders expressed in broad terms: " 233 Orders the Court can make (1) The Court can make any order under this section that it considers appropriate in relation to the company …" The section then proceeds to set out a non-exclusive list of particular orders. 9 By reason of the winding-up order made, at the request of the appellant, in the first judgment, any order of this character pursuant to s 233(1) of the Corporations Act was no longer in issue at the time of the second judgment. However, the words "and otherwise" in the prayer for relief set out in [6] above, are sufficient to found a claim for an order, based on equitable principles, for an inquiry into what the order sought characterised as "the management of the affairs" of the four corporations. That was the matter which, together with the option of claiming equitable damages in lieu, had been reserved at the time of Justice Brereton's first judgment, after which the appellant sought the order referred to at [3] above. This was the subject of his Honour's second judgment from which this appeal is brought. The Judgments of Brereton J 10 With respect to the matters which remained in issue, Brereton J said in his first judgment: "[123] The plaintiff has sought an order that it be referred to an Associate Judge to inquire into and certify the damages allegedly suffered by reason of the first defendant's breaches of fiduciary duty, and that the first defendant be directed to file an affidavit accounting for his dealings with the assets and income of the four corporations. I accept that, at least, in respect of the negotiations with the Business Associates, and as the legal owner of shares of which Mr Visnic was a beneficiary, that Mr Sywak was a fiduciary. However, the Statement of Claim identifies no damage resulting from a breach of fiduciary duty, other than depriving Mr Visnic of his shareholdings. It seems to me that the only damage that could have been occasioned to Mr Visnic is loss of the dividend that he might otherwise have received, but there is no evidence that dividends were declared or paid during the relevant period. Accordingly, as presently advised, it seems to me that there is not the necessary evidence of some damage that would be required to refer the matter for an inquiry. The orders that I have already pronounced will restore to him his shareholding. If there has been some breach by Mr Sywak of some obligation owed by him to any of the companies – whether as their accountant or as a director – prima facie , that is a matter for the liquidator to pursue. Lest I have overlooked something in this respect, however, I will reserve liberty to apply if it is desired to pursue an inquiry as to damages." 11 I have indicated at [3] the order for an inquiry which the appellant sought by Notice of Motion consequent upon this judgment. In his second judgment his Honour said: "[3] At the outset, I make some observations about some of the concepts referred to in paragraph 123 of my previous judgment. First, I accepted that, in some limited respects – namely, the negotiations with the business associates and as legal owner of shares of which Mr Visnic was a beneficiary – that Mr Sywak was a fiduciary. Secondly, I recorded that there appeared to be no evidence, nor even allegation, of damage resulting from any breach of fiduciary duty, other than Mr Visnic being deprived of his shareholdings. Thirdly, I identified a possibility that there might have been some breach by Mr Sywak of some obligation owed by him to the companies (as distinct from to Mr Visnic), which would be a matter for the liquidator to pursue." 12 His Honour referred to relevant authorities: Re Dawson (deceased); Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 211; Hill v Rose [1990] VR 129; Canson Enterprises Ltd v Boughton & Co [1991] 3 SCR 534; Chan v Zacharia (1983-1984) 154 CLR 178. His Honour concluded: "[13] At least for the purposes of what has to be decided on this application, the following may be drawn from the cases to which I have so far referred. First, equity requires a fiduciary to restore to the trust estate anything lost from it as a result of a breach of duty. Secondly, a fiduciary is obliged to account for benefits or gains made by the fiduciary from a breach of duty to the person to whom the relevant fiduciary obligation was owed. Thirdly, while the obligation to make equitable compensation is not constrained to the same extent as liability to pay damages in common law by considerations of causation and foreseeability, nonetheless there must be some common sense connection between the loss or the profit and the breach in question. [14] Returning then to the present case, the only fiduciary duties which I accepted in my previous judgment were (1) in connection with the negotiations with the business associates and (2) as trustee of those shares that Mr Sywak held on trust for Mr Visnic. The only breach of such duty that I found – and indeed, the only breach of fiduciary duty which has been suggested in the present argument – was that Mr Sywak deprived Mr Visnic of his shareholding. I identified the possibility that, as well as the property in the shareholdings themselves, a dividend might have been declared or paid in respect of Mr Visnic's shares from which Mr Sywak benefited, but there was no evidence that any such dividend has been declared or paid during the relevant period; that has not changed, and there remains no evidence that dividends were declared or paid during the relevant period. In those circumstances, it seems to me now, as it seemed to me then, that restitution to the trust estate of the property of which it was deprived by the breach of the trust will be effected by the orders, already made, declaring trusts in respect of the shareholdings and requiring their transfer to Mr Visnic. [15] On the present application, however, it has been argued that there are additional benefits in respect of which Mr Sywak ought to be liable to account: in particular, to take the highest and least controversial of them, payments made or authorised by him from the assets of at least one of the companies to his personal superannuation fund which, for present purposes, I shall assume were made for his own benefit. Mr A W Street SC informs me, and I do not doubt, that there was some evidence of such a payment in the substantive proceedings, and I proceed on that basis. Assuming, as I do, that such payments were made by Mr Sywak, then it may well be that they were in breach of an obligation owed by him to the companies as a director of those companies or as accountant for those companies. But applying the test referred to by McLachlin J in Canson Enterprises Pty Ltd v Boughton & Co , they do not seem to me to be losses that, on any common sense view of causation, were caused by the relevant breach, namely, depriving Mr Visnic of his shareholdings; indeed, they seem to me to be entirely unconnected with and outside the scope of that breach. They arose from a different breach of a different duty, one owed to the companies; not the breach of the particular duties that, I have found, were owed by Mr Sywak to Mr Visnic." 13 His Honour emphasised the significance of the distinction between a breach of duty owed to a shareholder and a breach of duty owed to a company, referring to Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204. His Honour then said: "[17] … However, the proposition that in a case where the relevant obligation is owed to the company, any corresponding liability to account is also owed to the company, can be tested by asking what would be the position in the present case if the company had creditors. Assuming, as I do, that Mr Sywak has received benefits from one or more of the companies, then Mr Street suggested that the remedy would be a liability to account for one half of those benefits to Mr Visnic. If the company had creditors, plainly the obligation would be to return the whole – not one half – of the benefit to the company, so that it could be applied first for the benefit of the creditors and then division between the shareholders. Thus, it seems to me plain that, in respect of such breaches, where the duty breached, if any, was one that was owed to the company, the obligation to account is one that lies to the company and not to Mr Visnic. [18] Again, the position can be tested by speculating that if, notwithstanding the breach that I have found in respect of Mr Visnic's shareholding, Mr Sywak had acted properly as a director , there would be no liability to account in respect of the payments into the superannuation fund. On the other hand, if he had not taken Mr Visnic's shares, but authorised the payments to be made to the superannuation fund, there would still be a liability to account to the company, regardless of the absence of any breach of duty to Mr Visnic. [19] All these considerations point firmly to the conclusion that the matters about which it is now suggested Mr Sywak ought be required to account to Mr Visnic are matters in respect of which he is obliged to account, if at all, to the company and not to Mr Visnic. [20] For those reasons, I am of the view that, even were there no other obstacle to the grant of the relief sought, Mr Visnic is not entitled on the merits to the inquiry which he seeks. In short, so far as the breaches of fiduciary obligation owed to him are concerned, no damage or profit such as would attract an inquiry has been identified over and beyond the depreciation of his shares which will be remedied by the restitution to him of the shareholding, which has already been decreed. So far as it is suggested that there is a liability to account in respect of other amounts received by Mr Sywak, any liability to account is owed, if at all, to the relevant company and not to Mr Visnic. [21] The same result is supported by two other considerations. The first is that, in reserving liberty to apply for an inquiry, I had expressed the qualification 'at least' in the second sentence of paragraph 123 – lest it might be established on further argument that Mr Sywak's fiduciary obligations to Mr Visnic went further than those which I accepted – and the qualifications 'it seems to me' and 'as presently advised' in the fourth and fifth sentences – which were intended to reflect the circumstance that the identification of damage for the purposes of an inquiry had not been addressed in the submissions at the substantive hearing, and that I wished to afford Mr Visnic an opportunity to point to anything further in respect of damage that I might have overlooked in the course of preparing the judgment. I did not contemplate that evidence not before the Court at the time of the final hearing would be received on the liberty to apply; but as I have said, I accept that there was evidence before me insofar as the payment to the superannuation fund is concerned, and at least in that respect the present application would not have been precluded by the absence of requisite evidence. Nonetheless, what I had in mind was that I might be persuaded that Mr Sywak's fiduciary obligations were more extensive, or that my attention might be drawn to evidence of damage that I might have overlooked in respect of the breaches then found. Evidence and argument on the present application has not persuaded me on either of those matters to a different position. [22] Secondly, it is also of some relevance, as Mr M R Aldridge SC points out, that whereas Mr Sywak, in the principal proceedings, proposed that he be afforded an opportunity to buy out Mr Visnic pursuant to (CTH) Corporations Act 2001, s 233(1)(d) – albeit acknowledging that that would be a much less likely result if, as eventuated, my conclusion was that the shareholdings were in equity equal – Mr Visnic pressed for a winding up order and resisted any suggestion that Mr Sywak should be afforded the opportunity of obtaining alternative remedy. Mr Visnic might have sought, but did not seek, an order under s 233(1)(g) authorising him to institute, prosecute, defend or discontinue proceedings in the name and on behalf of any of the companies. This also tells against now allowing him a remedy in the nature of a derivative action in these proceedings. [23] This result will not leave Mr Visnic without a remedy. First, insofar as breaches of duty to the company are established, the liquidator can pursue them. There is some evidence that the liquidator is investigating those matters, although it obviously cannot be foretold to what extent the liquidator will pursue them. Secondly, if the liquidator does not do so, then Mr Visnic may bring a derivative action pursuant to Corporations Act s 236 and s 237, subject to obtaining the leave of the Court to do so." 14 His Honour dismissed the appellant's Notice of Motion. This order disposed of a Notice of Motion, filed on behalf of the respondent, seeking that the appellant's Notice of Motion be struck out. 15 As will appear further below, I agree with his Honour's reasons. The "Sufficient Connection" Issue 16 His Honour's rejection of the appellant's case turned on the proposition that no connection had been established between the particular breach of fiduciary duty, which his Honour had found to have occurred, and any matter into which an inquiry for purposes of determining an account of profits was said to be required. 17 In [123] of his Honour's first judgment which I have set out at [10] above, and to which his Honour made further direct reference at [14] and [21] of his second judgment, set out at [12] and [13] above, his Honour identified two relevant fiduciary duties. Nothing was said to flow from the first, namely the Business Associates' negotiations, which was a reference to the process by which the appellant and the respondent acquired their interests in two of the four corporations from the original joint venturers with the appellant. It is unnecessary to refer to this matter further. The submissions focused, and focused only, on the beneficial entitlement to the shares in each of the four corporations. 18 I note that in [123] of his first judgment, his Honour referred to these two particular fiduciary duties in a context where he found that "at least" these had been breached. His Honour had before him pleadings and submissions which may have suggested the existence of some other kind of fiduciary relationship, for example, with respect the management of the affairs of the corporation. However, nothing of that character was pressed before his Honour. No additional fiduciary relationship was suggested to exist in the submissions to this Court. There is, as I have said, no appeal from the first judgment. 19 As set out at [12] above, Brereton J identified in [15] of his second judgment that, in the case of one corporation, there was evidence that the respondent had caused funds of that corporation to be paid into his personal superannuation fund. His Honour had before him, prior to the second judgment, additional evidence including the claim made in the winding-up by the respondent which, of course, came after his Honour's appointment of a liquidator in the first judgment. 20 With respect to each of the four corporations, the respondent made claims to the liquidator as to funds advanced by him on behalf of those corporations. In these claims he accepted that amounts had to be deducted by reason of payments, in each case, made to him from the funds of the corporation. It does appear that there was evidence in the case of each corporation of a character which, if the appellant was otherwise entitled to enforce the remedy of account, could constitute profits for purposes of that remedy. As noted above, his Honour proceeded on the basis that there were such, albeit only with respect to the payment of superannuation funds. It is unnecessary to consider, for present purposes, all of the matters to which the appellant referred in this respect. The analysis below applies to each of them. 21 What is required is the identification of a link between the particular breach of fiduciary duty found to have occurred and a "profit" capable of being identified. This linkage is often referred to in terms of "causation". However, it is more appropriate to use the terminology of the joint judgment of the High Court in Maguire v Makaronis (1996-1997) 188 CLR 449. What is required is "a sufficient connection (or 'causation') between breach of duty and the profit derived …" (at 468). 22 The issue before this Court is whether there is a "sufficient connection" between the particular breach found and any matter into which an order for accounts could be said to relevantly inquire. The necessity for such a link, to which it may be convenient, albeit somewhat inaccurate, to refer to as a requirement of causation, has been expressed on a number of occasions in different but equivalent terminology. 23 The joint judgment in Maguire v Makaronis supra at 468 said: "Where the plaintiff seeks recovery of a profit, the necessary connection has been identified in this Court by asking whether the profit was obtained 'by reason of [the defendant's] fiduciary position or by reason of his taking advantage of opportunity or knowledge derived from his fiduciary position'. [ Warman at 557.]" 24 The joint judgment in Warman supra at 557 said: "A fiduciary must account for a profit or benefit if it was obtained either (1) when there was a conflict or possible conflict between his fiduciary duty and his personal interest, or (2) by reason of his fiduciary position or by reason of his taking advantage of opportunity or knowledge derived from his fiduciary position." 25 The appellant suggested that an issue raised on this appeal is whether, notwithstanding the reliance on proposition (2) of Warman in Maguire v Makaronis, proposition (1) can be relied upon as an alternative basis for a "sufficient connection". 26 There are cases in which proposition (1) will apply. This is not such a case. In my opinion, neither proposition applies in this case. The respondent held property in trust. The only breach indicated by his Honour's reasons was the refusal to transfer the legal interest when called upon to do so. There is no sufficient connection with any benefit suggested to have been received by the respondent from the corporations for purposes of directing an inquiry which could identify and quantify any such a benefit. 27 Justice Brereton proceeded on the basis that if a sufficient connection had been suggested to exist between the appropriation of the shareholding and some other benefit to the respondent, he may have made the orders sought. His Honour gave the example of the payment of a dividend. Other examples of a "sufficient connection" could be identified, for example, if the shareholding had been used in order to carry into effect a members' voluntary winding-up with a subsequent distribution of assets. His Honour was unable to identify any such connection, nor was any specific matter of this character relied upon in this Court. 28 In oral submissions in this Court, the appellant suggested that there was a sufficient connection because the appropriation of the appellant's shares enabled the respondent to control the company and, thereby, make the contested payments. 29 There may be cases in which appropriation of a shareholding can be said to be sufficiently linked to conduct of the person who, thereby, controls the company. There was no such finding, nor evidence that this was such a case. This Court should not make such a finding for the first time. It is quite inconsistent with the case that the appellant advanced below. 30 The appellant's case below was that he had always believed that he was entitled to half the shares. Nevertheless, the respondent conducted the financial affairs of each company without any relevant intervention, it appears, from the appellant. The respondent was the accountant of each company and financial matters had been delegated to him. 31 The primary focus of the appellant's submissions was to the effect that his Honour's finding with respect to the deprivation of the appellant's interests in the shares should be characterised as a finding that there existed a conflict of interest and duty. The appellant submitted that when the matter is characterised at this level of generality, in view of the high public interest which is to be vindicated by enforcing the rights of beneficiaries, his Honour's findings should be taken to establish a sufficient connection for purposes of an inquiry into the extent to which a conflict of interest and duty had manifested itself in the affairs of the four corporations by the respondent. 32 The appellant's contention that, upon establishing a breach with respect to a particular fiduciary relationship, he was entitled to proceed on the basis that there was a general finding of a conflict of interest and duty should be rejected. When determining what relief is appropriate, it is always necessary to focus upon the particular fiduciary relationship which has been established. 33 The appellant's contention is an example of the fallacy exposed in the frequently cited passage of Fletcher Moulton LJ in In re Coomber; Coomber v Coomber [1911] 1 Ch 723 at 728-729: "Fiduciary relations are of many different types … and the Courts have again and again, in cases where there has been a fiduciary relation, interfered and set aside acts which, between persons in a wholly independent position, would have been perfectly valid. Thereupon in some minds there arises the idea that if there is any fiduciary relation whatever any of these types of interference is warranted by it. They conclude that every kind of fiduciary relation justifies every kind of interference. Of course that is absurd. The nature of the fiduciary relation must be such that it justifies the interference. There is no class of case in which one ought more carefully to bear in mind the facts of the case … than cases which relate to fiduciary and confidential relations and the action of the Court with regard to them." 34 The legal incidents of a person who holds property in trust for another constitute a distinct, well developed body of rules. They cannot be subsumed as merely one example of rules or principles applicable to every relationship to which the appellation fiduciary may be applicable. As the learned authors of Jacobs' Law of Trusts in Australia, 7th ed (2006) Lexis Nexis Butterworths, put it at [202]: "The trust is a fiduciary relation, but every fiduciary relation is not a trust", and at [208]: "Trustees and fiduciaries owe different duties, which are breached in different ways, and breaches give rise to different remedies at the suit of different plaintiffs". (See also Maguire v Makaronis supra at 473.) 35 The appellant's analysis involves an inappropriately "high level of abstraction". (Lumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27; (2008) 232 CLR 635 at [75]; Friend v Brooker [2009] HCA 21; (2009) 255 ALR 601 at [47].) 36 His Honour made no finding that the relevant breach was a conflict of interest and duty. His Honour's reasoning is to the effect that the legal title to the shares had been acquired by the respondent, but the beneficial title had remained with the appellant. As Brereton J said at [14] of his reasons, set out at [12] above: "The only breach of such duty that I found … was that Mr Sywak deprived Mr Visnic of this shareholding". Another way of expressing this breach of a duty is as a failure to transfer the legal title on demand. 37 In any event, the appellant's submissions involve an impermissible elision. Even if there was breach in the sense of a conflict of interest and duty with respect to the shares, that did not involve any breach which would permit an inquiry into whether there had been any other conflicts of that character in conduct which can be seen to be related to the original breach in some way or another. That proposition goes well beyond the bounds of a "sufficient connection". The Irrelevant Considerations Issue 38 The appellant contended that his Honour erred when he said that the conduct which the appellant sought to investigate could constitute a breach of duties, including fiduciary duties, owed to the company. The appellant submitted that this was an irrelevant consideration. It is not clear that this was an important, let alone determinative, factor in his Honour's conclusion that the breach he actually found had no connection with what the appellant sought to achieve by an account. 39 In any event, his Honour was correct to say that restoration of any benefits of which the appellant had been deprived could be achieved in the course of the winding-up and that, as a shareholder, the appellant had no right to direct access to the monies distributed by the respondent to himself through his exercise of control of each of the four corporations. 40 This is not to suggest that the appellant could be denied relief because he would not have been entitled to himself obtain the particular benefit which his fiduciary had appropriated. The principle identified in Keech v Sandford (1726) Sel Cas T King 61; 25 ER 223 has been applied on numerous occasions to disgorge a benefit which a beneficiary could never have for himself or herself. The fact that the appellant is a shareholder and would not have been entitled to receive any of the payments made to the respondent by the corporation would not be determinative. 41 However, his Honour correctly applied the reasoning in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) supra at 222-223: "In our judgment the personal claim is misconceived ... what he [that is, a shareholder] cannot do is to recover damages merely because the company in which he is interested has suffered damage. He cannot recover a sum equal to the diminution in the market value of his shares, or equal to the likely diminution in dividend, because such a 'loss' is merely a reflection of the loss suffered by the company. The shareholder does not suffer any personal loss. His only 'loss' is through the company, in the diminution of the value of the net assets of the company, in which he has … a ... shareholding. The plaintiff's shares are merely a right of participation in the company on the terms of the articles of association. The shares themselves, his right of participation, are not directly affected by the wrongdoing. The plaintiff still holds all the shares as his own absolutely unencumbered property. The deceit practised upon the plaintiff does not affect the shares; it merely enables the defendant to rob the company." 42 The High Court has recently reaffirmed, albeit in the context of the equitable doctrine of contribution, the significance of the interposition of a corporation in the legal relationships between shareholders. In Friend v Brooker the joint judgment said: "[86] The appellant also submits that equity does not impose fiduciary duties between the parties to a deliberate commercial decision to adopt a corporate structure in which they would owe duties, but to the corporation and as directors. Why, it is asked, should equity intervene in such a fashion when the company, by which Mr Brooker and Mr Friend carried on the business, failed and, in the result, their personal losses will not be in equal amounts? That submission is to be accepted." and "[88] … The appellant submits that the equitable doctrine of contribution should not be extended to outflank the consequences of the selection by the parties of the corporate structure. We agree. That selection brought with it the attendant legal doctrines of corporate personality and limited personal liability. Moreover, at the time of the incorporation of the Company, the Companies Act 1961 (NSW) was in force and this (and the successor legislation) provided for the breakdown of relations between the controllers of closely held companies by such provisions as those for winding up on the just and equitable ground under s 222(1)(h) [see Ebrahimi v Westbourne Galleries Ltd [1973] AC 360] and for oppression suits under s 186 [see In re Jermyn Street Turkish Baths Ltd [1970] 1 WLR 1194; [1970] 3 All ER 57]." 43 Similarly, as Brereton J noted, the appellant has never sought an order under s 233(1)(g) of the Corporations Act 2001 permitting him to institute proceedings in the name of any company. Nor has he otherwise asserted a right, or sought leave, to pursue a derivative action. 44 Corporations law has, over a long period of judicial and statutory development, limited and defined the rights of a shareholder to enforce duties owed to the company. It would undermine the coherence of the law to extend the remedy for an account of profits into the careful balance of conflicting considerations that has been attained in corporations law. 45 For the reasons set out above with respect to the "sufficient connection" issue, this is not a case in which an order for an account could properly be made. However, even in a case in which deprivation of shareholding could be indirectly linked to conduct by a corporate controller, the Court should be slow to extend the remedy of account, in the exercise of its discretion, by reason of the issue of coherence of the law to which I have referred and which is a significant consideration in contemporary jurisprudence. (See Friend v Brooker supra at [47]; Lumbers supra at [78]; Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 83 ALJR 196 at [100]; Sullivan v Moody [2001] HCA 59; (2001) 207 CLR 562 at [54]-[55] and other cases discussed in New South Wales v Paige [2002] NSWCA 235; (2002) 60 NSWLR 371 at [93]-[94] and Hunter Area Health Service v Presland [2005] NSWCA 33; (2005) 63 NSWLR 22 at [20]-[21].) Conclusion 46 The appeal should be dismissed with costs. 47 CAMPBELL JA: Subject to one brief comment, I agree with Spigelman CJ. 48 The comment relates to the quotation by the Chief Justice at [34] of the statement in Jacobs Law of Trusts in Australia, LexisNexis Butterworths Australia 2006 at [202], that: "The trust is a fiduciary relation, but every fiduciary relation is not a trust". In my view the matter could be expressed with less risk of misleading by saying: "The trust is a fiduciary relation, but not every fiduciary relation is a trust." The correct position is that trusts are a subclass of fiduciary relations. 49 I agree with the order proposed by Spigelman CJ. 50 MACFARLAN JA: I agree with Spigelman CJ. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.