Finance & Guarantee Company Pty Ltd v Auswild [2019] VSC 664

Finance & Guarantee Company Pty Ltd v Auswild [2019] VSC 664 - VSC 2019 case summary — Zoe

[451]

(a) he took advice from trusted advisers and experts, including solicitors, accountants, auditors, Ted Dove (who was an 'outstanding man'), Doug Farrelly (who was a 'very honourable man'), Nola Hancock, Fay Tickell (who 'was a good person' and 'very reliable'), Joe Hart, Vince Choy and Geoff Thoroughgood;

(b) in executing documents he was presented with, he relied on the fact that they had been prepared, reviewed or vetted by one or more of Ms Hancock, Mr Dove, Mr Farrelly, his father and, in relation to legal documents, usually his lawyers. JRA took comfort from the involvement and guidance of these people. He considered Ms Hancock, Mr Dove, Mr Farrelly and his father to be honest and honourable people who acted in the best interests of the family as a whole. There was nothing reckless or willfully blind about relying on these well-qualified people;

(c) when his father asked him to do something, his father (or Mr Dove or Ms Hancock) would give reasons. His father was not a dictator. His father was also accepting that JRA might ask/check with others such as Mr Dove and Mr Farrelly before signing a document;

(d) it wasn't the case that he always agreed to sign documents that his father asked him to, he gave an example where he would not agree to buy a golf course even though his father wanted to do so;

(e) it was his practice to read documents '[b]ecause you would want to make sure it was what you were signing' and further 'I would have read the document because Nola would say, What did you sign there?' and she 'was a pretty hard taskmaster too'. He also said 'I think it was a good idea to read what you signed';

(f) he 'often had to go and see solicitors', which he would organise himself;

(g) he 'signed various documents that had been vetted by paid solicitors, administrators'. He took comfort from the fact that documents he was asked to sign were drafted up qualified solicitors;

(h) Ms Hancock would have explained what was happening in respect of meetings;

(i) Mr Farrelly, Mr Dove and his father were accountants and he would listen to discussions in meetings between them;

(j) when he was asked to pass a resolution, he 'would with the support of the executive chief staff of the company we're talking about'; and

(k) he knew that Ms Hancock was responsible for recording benefits received by family members and ensuring equality between the two sides of the family.

[897]

(a) Beron was registered on 9 January 1986 and Geraldine Bergmuller observed:

After JAFA died, BW and RWA then put Carlisle, Destination Resorts and Beron and Geologics in their own names but ran it all through Rossfield. RWA had huge borrowing power with telling everyone he owned or controlled all of Preston Motors and Commonwealth Motors, and Rossfield with BW, so they could do what ever they liked.

As they were the Directors and we had no say and saw no accounts or anything on any of the companies. But the only problem was that my family owned 25% Rossfield through Jenola and 52% Preston and 50% Commonwealth Motors, and our companies were used to service and pay for the Company's or entities above, but we had no shares in them.

(b) Serenade the boat. Earlier this boat was not on the books anywhere, it now appears in the 1993 Statement to be James Auswild boat valued at $30,000.00 which means he should pay all the bills for this at least dating back to then. I do not have the family statements from between 81-93 and after 2000.

(c) 11th August 1994, Minutes Preston Directors, James A. Ron A. to Purchase units from Rossfield, B G Webb etc, and documents attached. Would like to know if we paid the $8 million or how were these paid for or were we given them to pay for debts in rossfield, and just paid the stamp duty, can't see $8 million coming out of Preston anywhere. Asked Geoff the above he said we paid for these and we would have had the $8million don't know where from.

(d) 26th October, 1994, Joan Auswild bought the Sutton Farm out of Auswild Securities for $540,000. It was on the books in 1990 for $683,083 and in 1994 $847,423.

Why this was in the financials as a loss, as shareholders shouldn't buy properties for a loss and gain a wonderful asset and the other partners have a loss in the company.

I don't know who approved the sale below way below cost let alone evaluation, as RWA and JA would have been Directors of Auswild Securities then. Would also like to see if Joan Auswild actually paid for the farm into Auswild Securities and where the cheque came from.

(e) 6th July, 1998, Joan Auswild and Baronja purchased units in Elizabeth Street Hyde Park, Units 1701, 1705 in Joan's name and 1702 in Baronja. The 1702, was paid for out of Preston Motors, was this accounted for or in the loan Baronja has with us. The purchase price for the 3 would have been around $2 million. I would like this checked where this money came from if it was from F & G or Preston.

(f) 20/8/1998. Admiral North Units in the Gold Coast.

These units were in the name of Beresford Investments, they were bought out of this company by JA and his brother Ronald Auswild for total price of $755,000 then the company Beresford investments was wound up.

It should be checked if the JA and Ronald Auswild paid cash for these and the dividends distributed to the share holders on wind up as the only assets in the company were these 2 units.

In Folder 2 1996 Beresford Investments supposedly had assets of $436,291, and I would like to make sure that we all received a dividend from Beresford Investments for the sale to JA and Ronald Auswild of the units he paid the above.

(g) Rossfield house Pty Ltd. Salaries of Directors, and Car allowances.

As you can see JFJA family hasn't received any car allowances. And the salaries were definitely not fairly distributed. Over the years the answer to that will be that Ron and James A was Chairman and entitled to the extra cars etc, my argument would be that they had huge wages and the cars should have been shared with the JFJA family.

(h) Beron: in around June 2005 I found out that JFJA family was not a share holder of Beron which has approx 11 million worth of property, we discovered this as Auswild Accounting wanted to flow some of the pub money through this e.g. RW Auswild Holdings which JFJA family don't have a share.[129]

[1408]

Company or under any company in which this Company shall be a shareholder or otherwise interested or from contracting or arranging with the Company either as vendor purchaser broker solicitor accountant or otherwise nor shall any such contract or any contract or arrangement entered or to be entered into by or on behalf of the Company in which any Director alternate Director or Managing Director so contracting or being so interested be liable to account to the Company for any profit arising from such office or place of profit or realised by any such contract or arrangement by reason only of such Director alternate Director or Managing Director holding that office or of the fiduciary relation thereby established but it is declared that the nature of his interest must be disclosed by him at or before the meeting of the Directors at which the contract or arrangement is under consideration if his interest then exists or in any other case at the first meeting of the Directors after the acquisition of the interest. If a Director becomes interested in a contract or arrangement after it is made or entered into the disclosure of his interest shall be made at the first meeting of the Directors held after he becomes so interested. No Director alternate Director or Managing Director shall as a Director vote in respect of any contract or arrangement in which he is so interested as aforesaid and if he do so vote his vote shall not be counted. Provided nevertheless that this prohibition shall not apply to any contract by or on behalf of the Company to give any Director alternate Director or Managing Director or any of them any security for advances or by way of indemnity or to any allotment of shares to any Director upon any application for shares by such Director or to any modification thereof or any supplemental or substituted agreement or any matter arising thereout or to contracts or arrangements between this Company and any other public or incorporated company in which any such Director alternate Director or Managing Director is interested only as a shareholder Director or liquidator nor to prevent the Directors alternate Directors or Managing Director or any of them from lending money to the Company at interest or guaranteeing underwriting or placing any debentures stock or shares of this Company or any company promoted by it and receiving remuneration for so doing. Such prohibition may at any time or times be suspended or relaxed to any extent and either prospectively or retrospectively by a general meeting. Any Director being a solicitor or any firm of solicitors of which such Director is a member shall be entitled to receive all such usual professional charges and remuneration as he or they would have been entitled to receive had such a solicitor not been a Director. A general notice that a Director alternate Director or Managing Director is a member of or interested in any specified firm or company with whom any contract is proposed to be entered into in relation to the affairs of this Company and is to be regarded as interested in all transactions with such firm or company shall be sufficient disclosure under this clause as regards such Director and the said transactions and after such general notice it shall not be necessary for such Director to give any special notice relating to any particular transaction with such firm or company."

At a glance

Court

Decision date

Before

Source

Judgment (1556 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (47)