DIF III – Global Co-Investment Fund LP v Babcock & Brown International Pty Limited [2019] NSWSC 527

Supreme Court New South Wales

Medium Neutral Citation: DIF III – Global Co-Investment Fund LP v Babcock & Brown International Pty Limited [2019] NSWSC 527 Hearing dates: 18 to 22, 25, 26 and 28 February, 1, 4 to 8 and 11 March 2019 Decision date: 13 May 2019 Jurisdiction: Equity - Commercial List Before: Ball J Decision: The proceedings (including all cross-claims) be dismissed Catchwords: EQUITY – Fiduciary relationships – Promoters –whether fiduciary relationship existed on basis of being promoter of commercial transaction – indicia of fiduciary relationships – whether relationship exhibited characteristics of fiduciary relationship EQUITY – Fiduciary duties – duty of utmost candour and honesty – whether existence of duty consistent with current authority – duty to avoid position of conflict or undisclosed profits – whether obligation to disclose potential conflicts and profits – whether disclosure was means of negating consequences of position of conflict – whether entitled to be relieved of consequences of any breaches by relevant clauses of agreements – whether relevant clauses void under s 12EB of ASIC Act 2001 (Cth) – application of Trident General Insurance Co Ltd v McNiece Bros Pty Ltd – whether entitled to relief under s 1318 of Corporations Act 2001 (Cth) EQUITY– Remedies – equitable compensation – for breach of fiduciary duty – whether loss caused by breach – whether knowledge of particular facts negates causation – whether knowledge of particular facts said to give rise to breach can be inferred EQUITY – Contribution – whether claim for contribution arises in respect of breach of fiduciary duty – whether claim for contribution time-barred – whether common obligation or co-ordinate liability to make good same loss – whether not liable for contribution because of release of other party from whom contribution is sought CONTRACT – release – whether release applied to other defendants – whether jointly or jointly and severally liable MISLEADING AND DECEPTIVE CONDUCT – s 1041H of the Corporations Act 2001 (Cth) – s 12DA of ASIC Act 2001 (Cth) – representation – whether approval of investment constituted representation as to commerciality of investment – whether misleading and deceptive – whether representation constituted representation concerning a future matter – s 769C of Corporations Act 2001 (Cth) and s 12BB of ASIC Act 2001 (Cth) – whether there were reasonable grounds for making representation – evidential burden for establishing reasonable grounds – on whose behalf was representation made MISLEADING AND DECEPTIVE CONDUCT – s 1041H of the Corporations Act 2001 (Cth) – s 12DA of ASIC Act 2001 (Cth) – silence – whether failure to disclose information constituted misleading and deceptive conduct – whether reasonable expectation that information would be disclosed MISLEADING AND DECEPTIVE CONDUCT - s 1041H of the Corporations Act 2001 (Cth) – s 12DA of ASIC Act 2001 (Cth) – quantification of loss – Potts v Miller – time at which loss should be assessed – whether to account for subsequent events MISLEADING AND DECEPTIVE CONDUCT - s 1041H of the Corporations Act 2001 (Cth) – s 12DA of ASIC Act 2001 (Cth) – defences – whether liability is excluded by agreements – whether contrary to public policy – whether void under s 12ED of ASIC Act 2001 (Cth) – whether to excuse under s 1318 of the Corporations Act 2001 (Cth) – whether relevant defendants are concurrent wrongdoers and as a consequence whether claims apportionable – discretion of court under statute to apportion based on responsibility for damage or loss – contributory negligence TORT – negligent misstatement – whether duty of care owed – whether existence of duty of care inconsistent with contract – features of relationship – scope of duty CONTRACT – Implied terms – statute – whether warranties under s 12ED of ASIC Act 2001 (Cth) are implied – definition and characteristics of 'small business' – whether liability excluded by relevant agreements – whether clauses of relevant agreements void under s 12EB of ASIC Act 2001 (Cth) – whether conduct of relevant defendants constituted breach of express terms of agreement – meaning of 'gross negligence' INSURANCE – Liability insurance – professional indemnity insurance – notification – whether evidence of knowledge of facts or circumstances from which it might reasonably be concluded that claim would be made – application of s 54 of Insurance Contracts Act 1984 (Cth) – other express exclusions in policy INSURANCE – directors and officers – notification – whether claims made arise out of circumstances notified during policy period – s 54 of Insurance Contracts Act 1984 (Cth) – other express exclusions in policy Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth) Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) Corporations Act 2001 (Cth) Evidence Act 1995 (NSW) Insurance Contracts Act 1984 (Cth) Law Reform (Miscellaneous Provisions) Act 1946 (NSW) Limitation Act 1969 (NSW) Trade Practices Act 1974 (Cth) Cases Cited: ABN AMRO Bank NV v Bathurst Regional Council; (2014) 224 FCR 1; [2014] FCAFC 65 Akai Pty Ltd v People's Insurance Co Ltd (1996) 188 CLR 418 Armitage v Nurse [1998] Ch 241 Baden v Société Générale pour Favoriser le Dévelopment due Commerce et de l'Industrie en France [1992] All ER 161 Baxter v Obacelo Pty Ltd (2001) 205 CLR 635 Boardman v Phipps [1967] 2 AC 46; [1966] 3 WLR 1009 Bonython v Commonwealth (1950) 81 CLR 486; [1951] AC 201 Breen v Williams (1996) 186 CLR 71 Briginshaw v Briginshaw (1938) 60 CLR 336 Bryan v Maloney (1994-1995) 182 CLR 609 Friend v Booker (2009) 239 CLR 129; [2009] HCA 21 Brunninghausen v Glavanics (1999) 46 NSWLR 538; [1999] NSWCA 199 Burke v LFOT Pty Ltd (2002) 209 CLR 202 Caltex Refineries (Qld) Pty Limited v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 Celtherne Pty Ltd v WKJ Hauliers Pty Ltd [1981] 1 NSWLR 606 Central Railway of Venezuela v Kisch (1867) LR 2 HL 99 Central Trust Co v Rafuse (1986) 31 DLR (4th) 48; [1986] 2 SCR 147 Chubb Insurance Company of Australia Ltd v Robinson (2016) 239 FCR 300; [2016] FCAFC 17 Community Association DP No 270180 v Arrow Asset Management Pty Ltd & Ors [2007] NSWSC 527 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Edgewater Homes Pty Ltd v Donohoe [2019] NSWSC 44 Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd (1987) 78 ALR 193 FAI General Insurance Co Ltd v Australian Hospital Care Pty Ltd (2001) 204 CLR 641; [2001] HCA 38 Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 230 CLR 89; [2007] HCA 22 Fire and All Risks Insurance Co Ltd v Powell [1966] VR 513 Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) [2001] FCA 1628; 188 ALR 566 Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21 Gerace v Auzhair Supplies Pty Ltd (2014) 87 NSWLR 435; [2014] NSWCA 181 Grimaldi v Chameleon Mining NL (No 2) (2012) FCR 296; [2012] FCAFC 6 Hanave Pty Ltd v LFOT Pty Ltd (formerly Jagar Projects Pty Ltd) and Ors [1999] FCA 357 Henjo Investments Pty Limited v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546 Hope v Bathurst City Council (1980) 144 CLR 1 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54 James Thane Pty Ltd v Conrad International Hotels Corp [1999] QCA 516 John Alexander Clubs Pty Ltd v White City Tennis Club Limited (2010) 241 CLR 1; [2010] HCA 19 Lewis Securities Ltd (in liq) v Carter [2018] NSWCA 118 McCann v Switzerland Insurance Australia Ltd & Ors (2000) 203 CLR 579 Meriton Apartments Pty Ltd v The Owners Strata Plan No 72381 [2015] NSWSC 202 Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 427; [2011] HCA 48 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 New Zealand Netherlands Society "Oranje" Inc v Kuys [1973] 1 WLR 1126 News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 Paul Dainty Corp Pty Ltd v National Tennis Centre Trust (1990) 22 FCR 495 Pilmer v Duke Group Limited (in liq) (2001) 207 CLR 165; [2001] HCA 31 Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Aust) Pty Ltd (1977-1978) 139 CLR 231 Potts v Miller (1940) 64 CLR 282 QBE Insurance (Australia) Ltd v Lumley General Insurance Ltd (2009) 24 VR 326; [2009] VSCA 124 Red Sea Tankers Ltd v Papachristidis (The "Hellespont Ardent") [1997] 2 Lloyd's Rep 547 Scruttons Ltd v Midland Silicones Ltd [1962] AC 446 Sucden Financial v Fluxo-Cane Overseas Ltd [2010] EWHC 2133 (Comm) Tepko Pty Ltd v Water Board (2001) 206 CLR 1; [2001] HCA 19 The Owners – Strata Plan 74602 v Eastmark Holdings Pty Ltd [2015] NSWSC 1981 Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 Tracy v Mandalay Pty Ltd (1953) 88 CLR 215 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107; [1988] HCA 44 United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 Wilkie v Gordian Runoff Ltd & Anor (2005) 221 CLR 522 Wyzenbeek v Australasian Marine Imports Pty Ltd (No 2) [2018] FCA 1517 XL Petroleum Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 Texts Cited: Professor P D Finn in "The Fiduciary Principle" in T G Youdan (ed) Equity, Fiduciaries and Trusts (1989) Category: Principal judgment Parties: DIF III – Global Co-Investment Fund LP (formerly Babcock & Brown DIF III - Global Co-Investment Fund LP) (First Plaintiff) DIF III GP Limited (Second Plaintiff) Babcock & Brown International Pty Ltd (ACN 108 617 483) (First Defendant) Babcock & Brown LP (Second Defendant) DIF Capital Partners Limited (ACN 101 611 438) (Third Defendant) Robert Neil Topfer (Fourth Defendant) Phillip Hartley Green (Fifth Defendant) Fergus John Neilson (Sixth Defendant) Harry Nicholson (Seventh Defendant) Robert Rupert Officer (Eighth Defendant) The Royal Bank of Scotland Plc (Sixteenth Defendant) RBS Equity Corporation (Seventeenth Defendant) Certain Underwriters subscribing to Lloyd's policy FD014280g (Thirty Fourth Defendant) Certain Underwriters subscribing to Lloyd's Policy Numbered BD0391FD014600G (Thirty Fifth Defendant) Certain Underwriters subscribing to Lloyd's policy numbered B0391FD014610G (Thirty Sixth Defendant) Certain Underwriters subscribing to Lloyd's policy numbered B0391FD017580G (Thirty Seventh Defendant) Allianz Australia Insurance Limited (First Cross-Defendant to First Cross Claim | Second Cross Claim and Third Cross Claim | First Third Party) XL Insurance Company SE (formerly known as XL Insurance Company Limited (Second Cross-Defendant to First Cross Claim | Second Cross Claim and Third Cross Claim | Second Third Party) QBE Underwriting Limited (Third Cross Defendant to First Cross Claim | Second Cross Claim and Third Cross Claim | Third Third Party) Aspen Insurance UK Limited (Fourth Cross Defendant to First Cross Claim | Second Cross Claim and Third Cross Claim | Fourth Third Party) Liberty Mutual Insurance Company trading as Liberty International Underwriters (Fifth Cross-Defendant to First Cross Claim | Second Cross Claim and Third Cross Claim | Fifth Third Party) Certain Lloyd's Underwriters comprising Markel Syndicate 3000 at Lloyd's subscribing to Contract No B0391FD023290G (Sixth Cross-Defendant to First Cross Claim | Second Cross Claim and Third Cross Claim | Sixth third Party) London Australia Underwriting Pty Limited on behalf of Novae Syndicates Limited (Syndicate 2007 at Lloyd's) (Seventh Cross-Defendant to First Cross Claim | Second Cross Claim and Third Cross Claim | Seventh Third Party) HCC International Insurance Company PLC (Company No. 01575839) (Eighth Cross-Defendant to First Cross Claim | Second Cross Claim and Third Cross Claim | Eighth Third Party) Chubb Insurance Australia (formerly known as ACE Insurance Limited) (Ninth Cross-Defendant to First Cross Claim | Second Cross Claim and Third Cross Claim | Ninth Third Party) Spin Holdco Inc (Fourteenth Third Party | Cross Defendant to Fourth Cross Claim) Representation: Counsel: