Lewis Securities Ltd (in liq) v Carter [2018] NSWCA 118

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Lewis Securities Ltd (in liq) v Carter [2018] NSWCA 118 Hearing dates: 12 March 2018 Decision date: 07 June 2018 Before: Leeming JA at [1]; Sackville AJA at [94]; Emmett AJA at [100] Decision: 1. Appeal allowed in part. 2. Set aside order 1 made on 7 April 2017 in proceeding 2014/317554, and in lieu thereof, order that there be judgment in favour of the plaintiffs against the first and second defendants. 3. Direct the parties to file and serve within 21 days (a) agreed short minutes of order, or, in default of agreement, (b) the orders for which they contend and short submissions in support as to (i) the amount of the judgment debt, (ii) the appropriate order as to costs in this Court, and (iii) and further orders which should be made. Catchwords: CORPORATIONS ACT - claim in equity against third parties involved in director's dishonest and fraudulent breach of duty - whether claim limited by analogy with 6 year limitation period under Corporations Act 2001 (Cth) s 1317K against persons involved in breach of directors' duties under s 79 of that Act

EQUITY - fiduciary duty - Barnes v Addy claim for knowing receipt - money taken from client account and used to contribute to purchase price of property - liquidator contended money taken from company in breach of duty - no error in finding by primary judge that money borrowed from client - no claim for breach of duty owed to client pleaded

EQUITY - fiduciary duty - Barnes v Addy claim for knowing assistance - fraudulent scheme by director to create appearance that his personal indebtedness to the company had been repaid - scheme involved dishonestly created letter referring to commercial opportunity, the creation of companies unbeknownst to their directors, and a "round robin" of cheques - primary judge held that transactions although fraudulent had no legal effect and thus caused no loss to company - held on appeal that effect of transactions was to replace claim in debt against director by more complicated claim against third parties - consideration of direct application of limitation statute, and application by analogy in equity