New South Wales Supreme Court CITATION : Nigel Charles Purves v Corcum Group Limited [2008] NSWSC 924 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 12 August 2008 JUDGMENT OF : Hammerschlag J EX TEMPORE JUDGMENT DATE : 12 August 2008 DECISION : Judgment for the cross-claimant against the cross-defendant on the cross-claim for $282,019.04 plus interest. Cross-defendant to pay cross-claimant's costs of the proceedings. CATCHWORDS : CORPORATIONS – directors' duties – cross-claimant sought damages for breach of a director's fiduciary and statutory duties in respect of expenses incurred by the director – verdict for company – no issues of principle LEGISLATION CITED : Corporations Act 2001 (Cth) PARTIES : Nigel Charles Purves Corcum Group Limited (formerly Cosmos Ltd ) (ABN 25 000 091 305) FILE NUMBER(S) : SC 3546/2006 COUNSEL : R.E.Steele (Defendant / Cross-Claimant) SOLICITORS : Michie Shehadie & Co (Defendant / (Cross-Claimant) - 4 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST HAMMERSCHLAG J 12 AUGUST 2008 3546/2006 NIGEL CHARLES PURVES -V- CORCUM GROUP LIMITED EX TEMPORE JUDGMENT 1 HIS HONOUR: The cross-defendant, to whom I shall refer as "Mr Purves", was appointed a director of the cross-claimant, to which I shall refer as "the company", on 19 November 2002 and was employed as managing director on or about 4 December 2003. He vacated office on 4 March 2005. The terms of his engagement entitled him to reimbursement for reasonable out of pocket expenses, including travel, accommodation and communication costs incurred in the performance of his duties. 2 As a director of the company, he owed it fiduciary duties to act in good faith and in its best interests and to avoid conflicts between its and his own personal interests. He owed it statutory duties to exercise his powers and discharge his duties in good faith and in its best interests and for proper purposes (s 181 of the Corporations Act 2001 (Cth) ("the Act")). He also owed the company statutory duties not to improperly use his position to gain an advantage for himself or someone else or to cause it detriment (s 182 of the Act). 3 By cross-claim dated 1 May 2006 originally brought in the District Court of New South Wales but transferred to this Court, the company claims damages against Mr Purves arising out of the alleged breach by him of his duties. 4 The matter was last before the Court on 19 June 2008 when it was set down for hearing today. On that occasion Mr Purves did not appear. Austin J set the cross-claim down for hearing today and made directions for the service on Mr Purves of the affidavit evidence and supporting documentation upon which the company intended to rely. I am satisfied that that direction has been complied with. 5 The material served on Mr Purves and admitted into evidence was the affidavit of Julian Walter, the company secretary of the company, sworn on 18 June 2008, together with two substantial volumes of written material, some of which counsel has taken me to and some of which I have read whilst off the Bench during the course of a short adjournment today. 6 The matter was called outside of Court this morning and Mr Purves did not appear. 7 There are a number of separate heads of damage, each of which is supported by evidence, references to which were set out in schedules provided by counsel, copies of which shall be kept with the papers. In each instance I am satisfied that the company has suffered loss and damage in the amounts set out below as a consequence of the breach by Mr Purves of his duties to the company in: incurring expenses other than for the benefit of the company and to its detriment; claiming amounts from the company to which he was not entitled and procuring their payment; writing off amounts in the books of the company which were properly to be refunded and which, because they were so written off, were not paid; the payment of airfares by the company for travel not by him in the course of the conduct of his duties on behalf of the company but for members of his family; the payment of car lease expenses and expenses in respect of a second motor vehicle outside the ambit of his rightful entitlement; the payment for his benefit of rental on apartments to which he was not entitled; an overpayment of consultancy fees in respect of the entire month of March 2005, when his services terminated on 4 March 2005; and a loss incurred by the company as the consequence of having to pay an amount in respect of a boat which was leased in the name of the company. The lease was procured by Mr Purves. Upon repossession by the finance company, Capital Finance Australia, which financed the lease, the company had to pay $70,000 in discharge of the obligation to which Mr Purves had, in breach of his duties, committed it. The boat had never been included in the company's asset register. 8 The figures are as follows: a. expenses incurred by Mr Purves other than in the course of his duties which were to be reimbursed by him and which were reflected in the company's records as owing but which were, on his instructions, written off to the detriment of the company and in breach of his duties $32,261.50 b. expenses not for the benefit of the company charged to its corporate cards, repayable by him but rather allocated to company accounts on his instructions $40,051.95 c. payment for air travel for members of his family $2,551.80 d expenses incurred other than in the performance of his duties and wrongly reimbursed to him by the company and expenses paid by the company and refunded to him in circumstances where he was not entitled to refunds $19,148.65 e amounts paid in respect of car leases and expenses in respect of a second car to which he was not entitled $50,106.81 f. amounts paid by the company in respect of the rent of apartments, the payment which was reimbursed to Mr Purves in circumstances where he had no entitlement $39,815 g. the overpayment of consultancy fees in respect of the month of March 2005 $28,083.33 h. loss suffered by the company on repossession of the boat $70,000 Total $282,019.04 9 There will be judgment for the cross-claimant against the cross-defendant on the cross-claim for $282,019.04 plus interest to be calculated from 4 March 2005 to the date of judgment save in respect of the boat amount in respect of which interest is to be calculated from 27 February 2006. 10 Short minutes may be brought in tomorrow at 10am to reflect the final calculation. 11 The cross-defendant is to pay the cross-claimant's costs of the proceedings. ********** 04/11/2008 - Name of Defendant spelt incorrectly - Paragraph(s) Heading, page 1 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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