Anchorage Capital Master Offshore Ltd v Sparkes (No 3); Bank of Communications Co Ltd v Sparkes (No 2) [2021] NSWSC 1025

Anchorage Capital Master Offshore Ltd v Sparkes (No 3); Bank of Communications Co Ltd v Sparkes (No 2) [2021] NSWSC 1025

Company officers and signatories to drawdown and rollover notices did not owe a personal duty of care to lenders, nor did they make personal representations to lenders as to the company's financial position; all relevant representations were made on behalf of the company. Plaintiffs failed to establish that Arrium was insolvent during relevant times or that officers assumed personal responsibility or that lenders relied reasonably on any personal representation. Contractual and negligence claims, as pleaded, were not assignable as bare causes of action. Thus, all claims against individual defendants failed and proceedings were dismissed.

Parties
First Plaintiff: Anchorage Capital Master Offshore Ltd; Second Plaintiff: ACMO Finance (Ireland) Designated Activity Company; Third Plaintiff: Midtown Acquisitions LP; Fourth Plaintiff: Deutsche Bank Aktiengesellschaft; Fifth Plaintiff: Commonwealth Bank Australia; First Defendant: Delia Sparkes; Second Defendant: Vera Verawati; Third Defendant: Hazel Hall; Fourth Defendant: Jaimee Lieu; Fifth Defendant | Cross Claimant: Robert Bakewell; Cross Defendants: Herbert Smith Freehills; First Plaintiff (boc Proceedings): Bank of Communications; Second Plaintiff (boc Proceedings): Westpac Banking Corporation; Third Plaintiff (boc Proceedings): Banco Bilbao Vizcaya Argentaria SA t/as Banco Bilbao Vizcaya Argentaria SA (Hong Kong Branch); Third Defendant (boc Proceedings): Sarah Pearce
Jurisdiction
Australia
Judgment Date
17 August 2021
Procedural Posture
Principal Judgment / Final Judgment After Full Hearing
Outcome
Both proceedings dismissed. Cross-claims dismissed.
Legal Topics
Misleading and Deceptive Conduct, Duty of Care, Negligence, Insolvency, Contract Representations, Assignment of Choses in Action
Commercial Law Corporations Law Consumer Law Torts Damages Misleading and Deceptive Conduct Duty of Care Negligence +3 more

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Parties

Anchorage Capital Master Offshore Ltd

First Plaintiff

ACMO Finance (Ireland) Designated Activity Company

Second Plaintiff

Midtown Acquisitions LP

Third Plaintiff

Deutsche Bank Aktiengesellschaft

Fourth Plaintiff

Commonwealth Bank Australia

Fifth Plaintiff

Delia Sparkes

First Defendant

Vera Verawati

Second Defendant

Hazel Hall

Third Defendant

Jaimee Lieu

Fourth Defendant

Robert Bakewell

Fifth Defendant | Cross Claimant

Herbert Smith Freehills

Cross Defendants

Bank of Communications

First Plaintiff (boc Proceedings)

Westpac Banking Corporation

Second Plaintiff (boc Proceedings)

Banco Bilbao Vizcaya Argentaria SA t/as Banco Bilbao Vizcaya Argentaria SA (Hong Kong Branch)

Third Plaintiff (boc Proceedings)

Sarah Pearce

Third Defendant (boc Proceedings)

Procedural Posture

Principal Judgment / Final Judgment After Full Hearing

Legal Issues

  1. 1 Whether company officers made misleading statements when signing drawdown and rollover notices
  2. 2 Whether company officers owed a duty of care to lenders in making representations
  3. 3 Whether company was insolvent during the relevant periods

Ratio Decidendi

Company officers and signatories to drawdown and rollover notices did not owe a personal duty of care to lenders, nor did they make personal representations to lenders as to the company's financial position; all relevant representations were made on behalf of the company. Plaintiffs failed to establish that Arrium was insolvent during relevant times or that officers assumed personal responsibility or that lenders relied reasonably on any personal representation. Contractual and negligence claims, as pleaded, were not assignable as bare causes of action. Thus, all claims against individual defendants failed and proceedings were dismissed.

Court Disposition

Both proceedings dismissed. Cross-claims dismissed.

Orders

  • Proceeding 2018/104383 (including the cross-claim) be dismissed.
  • Proceeding 2019/316305 (including the cross-claim) be dismissed.