Gap Constructions Pty Limited & Anor v Vigar Pty Limited & Ors

Judgment (ex tempore) 1HIS HONOUR: In the substantive proceedings, the plaintiffs Gap Constructions Pty Limited and Peter Bega sue the defendants Vigar Pty Limited, Bega Pty Limited, Con Bosganas and Bugong Pty Limited in respect of alleged breaches of fiduciary and like duties, under (CTH) Corporations Act (2001), s 182 and s 183, and for consequential relief flowing from alleged breaches by the third defendant, who was an officer of the first plaintiff, of his fiduciary obligations, which involved him allegedly appropriating to himself and subsequently causing to be transferred into a share trading account held by the fourth defendant sums of moneys totalling nearly $1,000,000. There does not appear to be any issue that the third defendant appropriated such sums, nor does there appear to be any issue that at least a substantial part of them were transferred into the share trading account in question. It appears that the principal issue in the substantive proceedings is whether certain conditions on which it is said that the third defendant was to be entitled to those funds were or were not satisfied. There is a cross-claim, but it is not material for present purposes. 2It is accepted for the purposes of the present interlocutory application that there is a serious question to be tried for final relief. In that respect it is, I think, important to observe that while the proceedings are framed as proceedings for relief under the Corporations Act , including for compensation under that Act, they are in respect of sums allegedly appropriated in breach of fiduciary duty and traceable into the share trading account in question. 3On 27 June 2011, White J made orders relevantly as follows: ... 3. Until 5pm on 4 July 2011, the defendants are restrained from dealing with the proceeds in the E*trade Cash Investment account 012-012 2587-52672 with ANZ Banking Group Limited ("Share Trading Account") and the account referred to in account statements for that account as the "NOM AC" ("Main Account"), except as provided by paragraphs 4-7. 4. The order in paragraph 3 does not prohibit payment out from the Main Account of the ordinary living expenses of the defendants, Diana Pappas, Alex Pappas, Elizabeth Bosganas and their children (including for the holiday to Greece for the third defendant and wife and children from 3 July 2011 to 5 August 2011), on the condition that they keep a written record of all such expenditure exceeding $500. 5. The order in paragraph 3 does not prohibit payment out from the Main Account of the defendants' reasonable legal expenses, on the condition that they instruct each relevant lawyer to produce as and when they require a statement of legal expenses incurred and a statement that they have been reasonably and properly incurred. 6. The order in paragraph 3 does not prohibit payments between the Share Trading Account and the Main Account. 7. The order in paragraph 3 does not prohibit share trading using funds in the Share Trading Account, however it does prohibit encumbering shares. ... 4An interlocutory hearing in respect of the continuation of those orders commenced before Ward J on 4 July 2011 and was settled in the course of the hearing whereupon her Honour, by consent, made orders, relevantly in the following terms: ... 3. The restraints in paragraphs 3-7 made in these proceedings on 27 June 2011 are continued until further order, with the liberty in paragraph 8 of those orders granted, except paragraph 7 of those orders is varied by adding the following words "provided any share purchases are confined to companies in the top 200 public companies trading on the Australian Stock Exchange and provided that only Alex Pappas gives instructions to make the trades, there is no margin trading and the fourth defendant's solicitors provide to the plaintiffs' solicitors weekly a report of the transactions made during the past week and shares held at the end of the week. 3A. While the restraints referred to in paragraph 3 of these orders remain in operation, the fourth defendant is to notify the plaintiffs' solicitors forthwith if the value of the shares held by the fourth defendant in its Share Trading account together with the value of the funds held by the fourth defendant in the Main account and Share Trading account (as those terms are defined in the orders of 27 June 2011) falls below $600,000 in aggregate. 5On 16 September 2011, the plaintiffs approached Rein J sitting as duty judge, ex parte , on which occasion his Honour granted leave to file a number of affidavits and adjourned the proceedings to 19 September. On 19 September, his Honour (although it seems that no process was filed), upon the plaintiffs giving the usual undertaking as to damages, made the following orders: