Coyte & Anor v Norman & Anor; Centre Capital (Newcastle) Pty Ltd & Anor v B Scorer & Ors [2016] NSWSC 1242

Supreme Court New South Wales

Medium Neutral Citation: Coyte & Anor v Norman & Anor; Centre Capital (Newcastle) Pty Ltd & Anor v B Scorer & Ors [2016] NSWSC 1242 Hearing dates: 24 – 27, 31 May, 1, 3, 7– 8, 14 and 24 June 2016 Decision date: 07 September 2016 Jurisdiction: Equity - Corporations List Before: Black J Decision: Parties to bring in agreed short minutes of order to give effect to this judgment within 14 days or, if there is no agreement between them, their respective draft short minutes of order and submissions as to differences between them. Parties to be heard as to costs. Catchwords: CONTRACTS — Existence of contract — where parties had entered into a joint venture under a "Heads of Agreement" for the purpose of conducting a financial planning business – where plaintiffs made various contractual claims against the defendants – whether contracts relied on by the plaintiffs fail for lack of sufficient certainty and intention to enter into contractual relations – where plaintiffs claimed first defendant engaged in unconscionable conduct under s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) – whether relevant conduct had a material connection with the supply or possible supply of financial services sufficient to support claim – where cross-claimants/defendants made various claims against the cross-defendants/plaintiffs under an alleged "Further Agreement" – whether existence of Further Agreement pleaded by cross-claimants established – whether cross-defendant was entitled to retain his clients and associated income upon termination of the joint venture under the Heads of Agreement – whether the cross-defendant was in breach of trust in diverting client income away from a trust. CORPORATIONS — Management and administration — duties and liabilities of officers of corporation – where parties had entered into a joint venture under a "Heads of Agreement" for the purpose of conducting a financial planning business – where Heads of Agreement provided each party would retain their own clients upon termination of joint venture – where cross-defendant/plaintiff was director of certain companies and caused payments to his associated interests and diverted client income upon termination of joint venture – where cross-claimant/defendant claimed cross-defendant's conduct was in breach of director's statutory duties – whether director's duties were narrowed by the contractual terms and relationship between relevant parties – where cross-claimant claimed that the entity that received funds as a result of the cross-defendant's alleged breaches of statutory fiduciary duties was liable as constructive trustee – whether claim under the first limb of Barnes v Addy established. CORPORATIONS — Management and administration — duties and liabilities of officers of corporation – where in the second proceedings the plaintiffs claimed breach of director's statutory duties by the second defendant in facilitating payments to a third party without proper authority – where defendant contended payments were agreed between relevant parties or expressly contemplated by the terms of an employment agreement – whether breach of director's duties established – whether plaintiffs have established the quantum of their loss in relation to the purported breach of director's duties. EQUITY — constructive trustee — where in the second proceedings it was claimed that the first defendant diverted payments away from company to an associated entity in breach of the defendant's obligations to the company – whether the associated entity is liable as constructive trustee in circumstances it was aware the funds were procured in breach of obligations to the company – whether restitutionary claim against associated entity established. Legislation Cited: - Australian Securities and Investments Commission Act 2001 (Cth), s 12CB - Civil Procedure Act 2005 (NSW), s 56 - Companies (SA) Code, s 229 - Corporations Act 2001 (Cth), ss 180, 181, 182, 1317E, 1317H, Ch 7 - Evidence Act 1995 (NSW), s 140 Cases Cited: - Angas Law Services Pty Ltd (in liq) v Carabelas [2005] HCA 23; (2005) 226 CLR 507 - Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99 - Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 - Australian Financial Services & Leasing Pty Limited v Hills Industries Limited [2014] HCA 14; (2014) 253 CLR 560 - Australian Securities and Investments Commission (ASIC) v Rich (2009) 236 FLR 1; (2009) 75 ACSR 1 - Australian Securities and Investments Commission v Maxwell [2006] NSWSC 1052; (2006) 59 ACSR 373 - Avoca Consultants Pty Ltd v Millenium3 Financial Services Pty Ltd [2009] FCA 883; (2009) 73 ACSR 307 - Barnes v Addy (1874) LR 9 Ch App 244; (1874) 43 LJ Ch 513 - Birtchnell v Equity Trustees, Executors and Agency Co Ltd [1929] HCA 24; (1929) 42 CLR 384 - Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 - Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 - Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187; (2001) 69 NSWLR 558 - Chan v Zacharia [1984] HCA 36; (1984) 154 CLR 178 - Chew v R (1991) 4 WAR 21 at 49; 5 ACSR 473 - County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 - David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 353; (1992) 175 CLR 353 - DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423 - Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599 - Electricity Generation Corporation (t/as Verve Energy) v Woodside Energy Ltd [2014] HCA 7; (2014) 306 ALR 25 - Equuscorp Pty Limited v Haxton [2012] HCA 7; (2012) 246 CLR 498 - Fistar v Riverwood Legion and Community Club Ltd [2016] NSWCA 81 - Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 - Grimaldi v Chameleon Mining NL (No 2) [2012] - FCAFC 6; (2012) 200 FCR 296 - Holyoake Industries (Vic) Pty Ltd v V-Flow Pty Ltd [2011] FCA 1154; (2011) 86 ACSR 393 - Howard v Commissioner of Taxation [2014] HCA 21; (2014) 309 ALR 1 - JR Consulting & Drafting Pty Limited v Cummings [2016] FCAFC 20; (2016) 329 ALR 625 - Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (t/a Uncle Ben's of Australia) (Federal Court of Australia, 29 June 1995, unrep) - Maguire v Makaronis (1997) 188 CLR 449 at 466 - Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 185 ALR 152 - Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 - Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 325 ALR 188 - Natural Extracts Pty Ltd v Stotter (1997) 24 ACSR 110 - Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 110 ALR 449 - Omnilab Media Pty Ltd v Digital Cinema Network Pty Ltd [2011] FCAFC 166; (2011) 285 ALR 63 - Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313; (2015) 90 NSWLR 605 - Pennimpede v Gerard Pennimpede [2009] NSWSC 85 - Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789; (2014) 101 ACSR 233 - Re Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 - Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516 - Spellson v George [1992] NSWCA 254; (1992) 26 NSWLR 666 - Streeter v Western Areas Exploration Pty Ltd (No 2) [2011] WASCA 17; (2011) 278 ALR 291 - Target Holdings Ltd v Redferns (a firm) [1995] 3 All ER 785; (1995) 17 ACSR 582 - Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 - Watson v Foxman (1995) 49 NSWLR 315 - Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15; (2003) 212 CLR 484 Category: Principal judgment Parties: 2013/43716 Robert Edward Coyte (First Plaintiff/Second Cross-Defendant) Blooms Investment Nominees Pty Ltd (Second Plaintiff/First Cross-Defendant) Michael Norman (First Defendant) Centre Capital (Newcastle) Pty Ltd (Second Defendant) Centre Capital Pty Ltd (First Cross-Claimant) Centre Capital Securities Pty Ltd (Second Cross-Claimant) Shartru Wealth Management Pty Ltd (Third Cross-Defendant)