Schmierer & Anor v Taouk

[2004] NSWSC 345

Supreme Court of NSW|2004-05-07|Before: White J

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Court

Supreme Court of NSW

Decision date

2004-05-07

Before

White J

Source

Original judgment source is linked above.

Judgment (116 paragraphs)

[1]

CITATION : Schmierer & Anor v Taouk [2004] NSWSC 345 HEARING DATE(S) : 27/04/04, 28/04/04 JUDGMENT DATE : 7 May 2004

[2]

JUDGMENT OF : White J DECISION : See Conclusion Page 29

[3]

CATCHWORDS : CORPORATIONS - Winding-up - Plaintiff liquidator seeking recovery of two payments to director under s 598(2) and (4) of Corporations Act 2001 (Cth) - Alleged negligence, default and breach of fiduciary duty - Whether duty of director not to prefer personal interest to company's interests - Whether money recoverable on other basis - Whether sum recoverable as loan - Plaintiff's onus of proof in showing nature of money advanced to defendant - Nature of loan - Nature of restitutionary obligation to repay - Whether and from when interest payable - Whether withdrawal of funds from bank constituted breach of defendant's director's duties - Whether amount consequently recoverable by liquidator under s 598(2) of Corporations Act - Whether shareholders can ratify director's breach where latter leads to company's insolvency - Whether defendant entitled to relief under s 1318 Corporations Act. - (CTH) Corporations Act 2001 ss 598, 1318. Corporations Law s 233, s 461 (k) LEGISLATION CITED : Corporations Act 2001, s 598 (2), s 1318 Supreme Court Act, s 92 Walker v Wimborne (1976) 137 CLR 1 at 37 Re New World Alliance Pty Ltd Sycotex Pty Ltd v Baseler (1994) 51 FCR 425 at 444-445 Ferguson v O'Neill [1943] VLR 30 at 32 Pannam, The Law of Moneylenders Australia & New Zealand (1965) Heydon v Perpetual Executors Trustees and Agency Co (WA) Ltd (1930) 45 CLR 111 at 113 Oubert v Walsh (1812) 4 Taunt. 294 128 E.R. 342 Joaquin v Hall [1976] VR 788 Jenkins v Wynen [1992] 1 QdR 40 at 43-44 Motor Auction Pty Ltd v John Joyce Wholesale Cars Pty Ltd (1997) 23 ACSR 647 at 660 Coshott v Sakic (1998) 667 at 671-672 Mason & Carter, Restitution Law in Australia Seldon v Davidson (1968) 2 All ER 755 at 757, 759. CASES CITED : Cary v Gerrish (1801) 4 ESP. 9 170 E.R. 624 Welsh v Seabourne (1816) 1 Stark. 474 171 E.R. 534 Baltic Shipping Company v Dillon (1993) 176 CLR 344 at 356-357 Roxborough v Rothmans of Pall Mall (2001) 208 CLR 516 at 525, 540, 550-551 Bullen & Leake, Precedents of Pleadings, 3 Ed Moses v McFerlan 2 Burr. 1005, 1110 97 E.R. 676 Halsbury's Laws of England, 4 Ed, Para 672 Star v O'Brien (1996) 40 NSWLR 695 at 701 Goff & Jones, The Law of Restitution, 5 Ed p 848 Baker v Courage [1910] 1 KB 56 Maskell v Horner [1915] 3 KB 106 Torrens Aloha Pty Ltd v Citibank NA (1997) 72 FCR 581 Trevor John Schmierer & Anor PARTIES : v Fahd Taouk FILE NUMBER(S) : SC 005721/2001 COUNSEL : Plaintiff: Mark Ashhurst Defendant: Robert Tregenza SOLICITORS : Plaintiff: Levitt Robinson Solicitors Defendant: Malouf Solicitors

[68]

50 The schedule was headed "Advance Bank Cheques paid from Louis Persanal (sic) Account". It included an item in the following terms "04-12-1998 Cement Render and Plastering $12,500.00 Cheque No. 000090". The cheque butt recorded "4/12/98 Ahmed RADWA (Renderer)" "For Tony". The amount was recorded as "$12,500-". In objecting to the tender of the cheque butt counsel for the plaintiff pointed out that the bank statement for the account showed that the relevant cheque was for an amount of $2,500.00, not $12,500.00.[48] In subsequent oral evidence the defendant said that he gave the renderer bits and pieces of money, $2,500.00 and $2,000.00 and a cash amount of $10,000.00. He said that he placed the figure "1" in front of the figure "2" in the figure $2,500.00 on the cheque butt to record that he had paid an additional $10,000.00 in cash to the renderer.[49] I do not accept that evidence. Plainly the cheque butt was intended to convey that the cheque to which it was a butt had been written in the amount of $12,500.00. When a call was made for the production of any documents which recorded the withdrawal of a sum of $10,000 from an account of the defendant being the $10,000 said to have been paid to Mr Ahmed Radwa, no document was produced.[50] I do not accept that the defendant paid $10,000.00 in cash to Mr Ahmed. However, even if he did, the cheque butt and the summary were prepared with what I can only regard as the intention of producing a false impression that the rendering work had been paid for, in part, by a cheque for $12,500.00. I do not accept Mr Tregenza's submission that the cheque butt was merely an indication of the defendant's very informal accounting system in respect of work done. The fact that the deception was readily picked up by the plaintiff's representatives owing to the application of an ink of a slightly different hue of blue on the cheque butt and by comparison with the bank statement, does not persuade me that the defendant did not attempt a deception.

[115]

1 Exhibit 1 pages 374, 414. 2 The defendant paid $11,000.00 on 19 December 1996 and $40,000.00 on 4 January 1997; Exhibit 1 pages 97 & 98; Affidavit of Fahd Louis Taouk of 20/10/2000, paragraph 9. 3 F Louis Taouk Affidavit 20/10/00 paragraphs 7, 11. 4 F Louis Taouk Affidavit 20/10/00 paragraph 11. 5 Affidavit Tony Taouk 23/11/01 paragraph 10. 6 Cheque butt dated 19/6/97, No 100015 in Exhibit 2; Exhibit C. 7 F Louis Taouk affidavit 20/10/00 paragraph 11. 8 Affidavit Tony Taouk 23/11/01 paragraph 14. 9 F Louis Taouk affidavit 20/10/00 paragraphs 23, 24. 10 Affidavit 23/11/01 paragraphs 17, 18. 11 Transcript 27/4/04 pp 14, 19. 12 Transcript 27/04/04 page 14; Affidavit F Louis Taouk 20/10/00 paragraph 27. 13 Transcript 27/04/04 page 28 14 Transcript 27/04/04 pp 18, 28 15 Transcript 27/04/04 page 15. 16 Affidavit F Louis Taouk 20/10/00 paragraph 31; Affidavit Tony Taouk, 20/11/00 page 3. 17 F Louis Taouk, Affidavit 20/10/00 paragraph 32; Exhibit 1 pages 374, 414 18 Affidavit Tony Taouk 23/11/01 paragraph 21. 19 Tony Taouk Affidavit 23/11/01 paragraph 21. 20 Affidavit Tony Taouk 23/11/01 paragraph 23. 21 F Louis Taouk Affidavit 25/3/02 paragraph 23. 22 Affidavit Tony Taouk 23/11/01 paragraph 24. 23 Affidavit Tony Taouk 23/11/01 paragraph 25. 24 Transcript 27/04/04 page 20. 25 Letter of 2/12/99 from Malouf Solicitors to Hancock Aldiss, Annexure G to affidavit of Tony Taouk of 23/11/01. 26 Annexure H to the affidavit of Tony Taouk sworn 23/11/01. 27 Affidavit of F Louis Taouk, sworn 20/11/00 paragraph 9; Affidavit of Tony Taouk, sworn 23/11/01 paragraph 4. 28 Affidavit of 20/11/00 paragraph 1. 29 Affidavit of F Louis Taouk sworn 20/11/00 paragraph 8. 30 Culverley v Green (1985) 155 CLR 242 at 246-7, 258, 266-7. 31 T 19.10; Affidavit of Tony Taouk sworn 16/04/02 Annexure D. 32 Paragraph 5. 33 Transcript 27/04/04, page 10. 34 On the basis of Mr Tony Taouk's evidence at Transcript 27/04/04, page 10.36 35 Affidavit of Tony Taouk23/04/04 pp 2-4. 36 Paragraph 4. 37 See Transcript 28/4/04 pp 61-62. 38 Affidavit F Louis Taouk 20/10/00 paragraph 3. 39 Transcript 27/04/04, p 19.10. 40 Exhibit 2 Cheque Nos. 100013 and 100014. 41 Transcript 28/04/04 page 4.50. 42 T 7.25 43 Exhibit 1 pp 378, 379. 44 Transcript 27/04/04 page 9.12. 45 Exhibit 1 page 374. 46 Affidavit 20/10/00 paragraph 31. 47 The document was admitted in evidence on 28/4/04; T 43; Exhibit 5. 48 Transcript 28/04/04 page 36; Exhibit 1 page 416. 49 Transcript 28/04/04 p 38.20-30. 50 Transcript 28/04/04 Page 40 51 Affidavit 20/10/00 paragraph 9; Transcript 28/04/04 page 6. 52 Exhibit 1 page 127. 53 Affidavit Tony Taouk 20/11/00 page 2. 54 T 21.17 55 Affidavit 20/10/00 paragraph 10. 56 Exhibit 1 page 98. 57 Transcript 28/04/04 page 20-22. 58 Affidavit 20/11/00 page 2; Transcript pages 24-25. 59 As to the payment of Kentlans see Affidavit of Tony Taouk of 23/04/04 paragraph 3 Annexures F &G and Exhibit 1 page 354. 60 Exhibit D. 61 See Transcript 28/04/04 pages 64-65. 62 Affidavit Tony Taouk sworn 23/04/04 paragraph 5 63 Transcript 27/04/04 page 14. 64 Transcript 27/04/04 page 19. 65 Welch v Seaborn (1816) 1 Stark 474, 171 E.R. 534. 66 Mason & Carter, Restitution Law in Australia, paragraph 841. 67 Affidavit of 20/10/00 paragraph 31. 68 Transcript 27/04/04 Page 15.25. 69 Transcript 27/04/04 page 18.11-.24, 28.51. 70 Affidavit 23/11/01 paragraph 20. 71 Transcript 28/4/04 page 69. 72 Judgment of Campbell J 30/8/02 paragraph 5. 73 See Gamble v Hoffman (1997) 15 ACLC 1314 at 1331