Lewis Securities Ltd (in Liq.) v Marilyn Carter & Anor [2017] NSWSC 412

Supreme Court New South Wales

Medium Neutral Citation: Lewis Securities Ltd (in Liq.) v Marilyn Carter & Anor [2017] NSWSC 412 Hearing dates: 6 March 2017 – 13 March 2017 Date of orders: 07 April 2017 Decision date: 07 April 2017 Jurisdiction: Equity Before: Rein J Decision: See [102], [121], [130], and [152]. Catchwords: EQUITY – Barnes v Addy claims against wife of former director of companies based on knowing receipt and knowing assistance in respect of the sum of $1.3 million paid out of the bank account of one of the companies and used for the purchase of a property in the name of the wife. Of the $1.3 million, $775,000 was recorded as a loan to the director. Two years later the loan (then $850,000) was purportedly repaid following a 'round robin' of cheques totalling $1 million organised by the director of the two companies with the assistance of another director of one of the companies – whether the provision of funds for the purchase of property was a breach of fiduciary duty by the first director – whether the wife, who was also company secretary of the first company and its in house accountant, had knowledge of the alleged breach of fiduciary duty and received the funds with knowledge – whether the second transaction involving the round robin of cheques was a fraudulent and dishonest transaction involving the two directors in a breach of fiduciary duties owed by them to the first company and, in the case of the husband, also to the second company – whether the wife assisted the husband in his breach of fiduciary duty with knowledge of the dishonest and fraudulent design – whether the wife received the $995,000 of the $1 million because it was paid into an account of which she was a joint owner with her husband – whether the transaction is to be treated as a sham and whether the companies suffered any loss – issue of informed consent/ratification discussed - whether the claims were statute barred by analogy with s 1317K of the Corporations Act 2001 – whether a certificate, issued pursuant to s 128 of the Evidence Act 1995, can be given in respect of questions asked, and answered, before objection taken. Legislation Cited: Corporations Act 1989 (Cth) Corporations Act 2001 (Cth) Evidence Act 1995 (Cth) Limitation Act 1969 (NSW) Cases Cited: Barnes v Addy (1874) LR 9 Ch App 244 Simmons v New South Wales Trustee and Guardian (2014) 17 BPR 33, 717; [2014] NSWCA 405 Watson v Foxman (2000) 49 NSWLR 315 Lurgi (Australia) Pty Ltd v Ritzer Gallagher Morgan Pty Ltd [2000] VSC 277 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 Linton v Telnet (1999) 30 ACSR 465 Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 Briginshaw v Briginshaw (1938) 60 CLR 336 Young v Queensland Trustees Ltd (1956) 99 CLR 560 Ogilvie v Adams [1981] VR 1041 Joachimson v Swiss Bank Corporation [1921] 3 KB 110 Paul A Davies (Aust) Pty Ltd (in liq) v Davies (No 2) [1983] 1 NSWLR 440 Nicholson v Permakraft (NZ) Ltd (1985) 3 ACLC 453 Kinsela v Russell Kinsela Pty Ltd (1986) 4 NSWLR 722; 10 ACLR 3 Walker v Wimbourne (1976) 137 CLR 1; 3 ACLR 529 Robins v Incentive Dynamics Pty Ltd (in liq) (2003) 175 FLR 286 [(NSWCA)]; 45 ACSR 244 Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; 200 FCR 296 Plunkett v Bull (1915) 19 CLR 544 Yeshiva Properties No 1 Pty Ltd v Marshall [2005] NSWCA 23; (2005) 219 ALR Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266 Richardson v Commercial Banking Co of Sydney Ltd (1952) 85 CLR 110 Panama and South Pacific Telegraph Co. v India Rubber, Gutta Percha, and Telegraph Works Co (1875) 10 Ch App 515 R v Burdett (1820) 4 B & Ald 95; 106 ER 873 Re Hallett's Estate [1879] 13 Ch D 696 Maguire v Makaronis (1997) 188 CLR 449 Lewis v Condon [2013] NSWCA 204 Re New World Alliance Pty Ltd; Sycotex Pty Ltd v Baseler (1994) 51 FCR 425; 122 ALR 531; 13 ACSR 766 Australasian Annuities Pty Ltd (in liq) (recs and mgrs apptd) v Rowley Super Fund Pty Ltd (2015) 318 ALR 302 Hughes v N M Superannuation Pty Ltd (1993) 29 NSWLR 653 Miller v Miller (1995) 16 ACSR 73 Forge v ASIC [2004] NSWCA 448 National Commercial Banking Corporation of Australia Ltd v Batty (1986) 160 CLR 251 SCEGS Redlands Ltd v Alison Barbour & Anor [2008] NSWSC 928 Gerace v Auzhair Supplies Pty Ltd [2014] NSWCA 181 Port Ballidu Pty Ltd v Frews Lawyers & Ors [2017] QSC 19 Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) [2012] WASCA 157; (2012) 44 WAR 1 The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; (2008) 39 WAR 1 KM v HM (1993) 96 DLR (4th) 289 Williams v Minister, Aboriginal Land Rights Act 1983 (1994) 35 NSWLR 497 LGM v CAM [2011] FAMCAFC 195 Schwaller-Schroeder v Schwaller-Schroeder [2012] FAMCA 1121 Texts Cited: Ritchie's Uniform Civil Procedure NSW (LexisNexis, Sydney, 2005) Chitty on Contracts (27th Edition, Sweet & Maxwell) Heydon, J; Leeming, M; Turner, P, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (5th edition, LexisNexis Butterworths, 2014) Leeming, M 'How Long is Too Long for an Equitable Claim?' (2014) 88 ALJ 621 Category: Principal judgment Parties: Lewis Securities Ltd (in Liq.) (First Plaintiff) LSL Holdings Pty Ltd (in Liq.) (Second Plaintiff) Marilyn Carter (First Defendant) Robert Miller (Second Defendant in 2014/317554) Representation: Counsel: J. Stoljar SC & M.P Cleary (First and Second Plaintiff) A.G Bell SC & L. Livingston (First Defendant) E.T Finnane (Second Defendant)