TSAPRAZIS & ORS. V. GOLDCREST PROPERTIES PTY. LTD. & ORS. [2000] NSWSC 206

TSAPRAZIS & ORS. V. GOLDCREST PROPERTIES PTY. LTD. & ORS. [2000] NSWSC 206

The pleaded facts did not disclose a sufficient basis for a duty of care by Mr. Micola to the plaintiffs. A director is not generally liable for a company's contractual breach absent a guarantee or recognised tortious conduct, and knowledge of the contract, possible severe loss, and power to procure company performance are insufficient. Although positive action by a director that substantially increases a contracting party's vulnerability with actual knowledge of that effect might possibly found a duty, the pleading did not allege that Mr. Micola's actions substantially increased the plaintiffs' vulnerability or that they were taken with actual knowledge of that effect.

Jurisdiction
Australia
Judgment Date
23 March 2000
Procedural Posture
Application by the Third Defendant to Strike Out Paragraphs of the Amended Statement of Claim Alleging Duty of Care and Breach of Duty / Interlocutory Application
Outcome
Application granted; challenged paragraphs of the Amended Statement of Claim struck out; costs of the application to be Mr. Micola's costs in the proceedings.
Legal Topics
["directors' Liability" 'negligence and Pure Economic Loss' 'company Contracts' 'lease Covenants' 'strike Out Application']
['corporations' 'torts' 'contract'] ["directors' Liability" 'negligence and Pure Economic Loss' 'company Contracts' 'lease Covenants' 'strike Out Application']

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Procedural Posture

Application by the Third Defendant to Strike Out Paragraphs of the Amended Statement of Claim Alleging Duty of Care and Breach of Duty / Interlocutory Application

Legal Issues

  1. 1 ['Whether the third defendant director and shareholder of Dernu owed the plaintiffs a duty of care to ensure that Dernu complied with lease covenants so as to avoid economic loss.' 'Whether paragraphs 23.1, 23.2 and 23.3 of the Amended Statement of Claim disclosed a tenable negligence claim against the director of the landlord company.' "Whether a director's knowledge of a company contract, knowledge of possible severe damage from breach, and power to ensure performance is sufficient to found a duty of care to the other contracting party."]

Ratio Decidendi

The pleaded facts did not disclose a sufficient basis for a duty of care by Mr. Micola to the plaintiffs. A director is not generally liable for a company's contractual breach absent a guarantee or recognised tortious conduct, and knowledge of the contract, possible severe loss, and power to procure company performance are insufficient. Although positive action by a director that substantially increases a contracting party's vulnerability with actual knowledge of that effect might possibly found a duty, the pleading did not allege that Mr. Micola's actions substantially increased the plaintiffs' vulnerability or that they were taken with actual knowledge of that effect.

Court Disposition

Application granted; challenged paragraphs of the Amended Statement of Claim struck out; costs of the application to be Mr. Micola's costs in the proceedings.

Orders

  • ['Paragraphs 23.1, 23.2 and 23.3 of the Amended Statement of Claim be struck out.' "Costs of Mr Micola's application be Mr Micola's costs in the proceedings."]