KATION PTY LTD v LAMRU PTY LTD; LEWIS v NORTEX PTY LTD (In liq) (NO 2) [2009] NSWCA 428

KATION PTY LTD v LAMRU PTY LTD; LEWIS v NORTEX PTY LTD (In liq) (NO 2) [2009] NSWCA 428

No additional accessorial liability attached to the appellants for breach of trust regarding application of accounting conventions where dishonesty was not proven on the facts; the trial judge was correct not to infer dishonesty merely from other findings of dishonesty. Court order regarding indemnification for liquidator’s costs is to be construed as referring to ‘legal’ costs only. Loan account balances were restated only after correction of arithmetical errors and must stand as declared in the interest of finality and public interest, despite ongoing related litigation.

Jurisdiction
Australia
Judgment Date
21 December 2009
Procedural Posture
Appeal and Cross Appeal (consequential Orders) / Post Judgment Applications to Vary and Clarify Orders After Principal Appeal Judgment
Outcome
Orders varied and clarified as specified; leave to make further submissions on certain costs issues; other post-judgment motions dismissed.
Legal Topics
['trusts and Trustees Liability' 'accessorial Liability' 'costs and Indemnification' 'variation of Court Orders' 'accounting Conventions in Trusts' 'breach of Trust' 'remuneration of Liquidator']
['equity' 'corporations' 'civil Procedure'] ['trusts and Trustees Liability' 'accessorial Liability' 'costs and Indemnification' 'variation of Court Orders' 'accounting Conventions in Trusts' 'breach of Trust' 'remuneration of Liquidator']

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Procedural Posture

Appeal and Cross Appeal (consequential Orders) / Post Judgment Applications to Vary and Clarify Orders After Principal Appeal Judgment

Legal Issues

  1. 1 ['Whether further accessorial liability arose from failure to apply accounting conventions for 1996-1997 accounts' 'Whether dishonesty could be inferred for not applying accounting conventions' 'Proper calculation and allocation of Nortex legal expenses/legal costs among loan accounts' 'Entitlement to or part of legal expenses as between Nortex and appellants' "Interpretation of 'costs' for indemnification in liquidation context (legal costs only or broader)" 'Appropriateness of further orders regarding finalisation of loan accounts and costs']

Ratio Decidendi

No additional accessorial liability attached to the appellants for breach of trust regarding application of accounting conventions where dishonesty was not proven on the facts; the trial judge was correct not to infer dishonesty merely from other findings of dishonesty. Court order regarding indemnification for liquidator’s costs is to be construed as referring to ‘legal’ costs only. Loan account balances were restated only after correction of arithmetical errors and must stand as declared in the interest of finality and public interest, despite ongoing related litigation.

Court Disposition

Orders varied and clarified as specified; leave to make further submissions on certain costs issues; other post-judgment motions dismissed.

Orders

  • ['Variation of loan account balances: Lamru - $1,197,673; Kation - $631,651.' 'Order clarified so indemnification by Kation and Mr Lewis is for Lamru’s ‘legal’ costs only (not broader expenses).' 'Leave granted to all parties to make submissions within 28 days regarding variation of prior costs orders, and right of...