CellOS Software Ltd v Huber (No 2) [2020] FCA 505

CellOS Software Ltd v Huber (No 2) [2020] FCA 505

The First Respondent breached statutory and fiduciary duties by implementing the Scheme to divert share sales and uncommercial loan arrangements, resulting in significant profits to himself and Huber controlled entities from shares acquired and sold at a discount. Respondents are jointly and severally liable to account for profits made. An account of profits is ordered as the most suitable remedy, with constructive trust declared over specific shares and payments traceable to breach. Fault lies in the diversion of investors, uncommercial share issues, and failure to disclose interests, for which equitable remedies are appropriate.

Parties
Applicant: CellOS Software Ltd; First Respondent: Jason Joseph Emmanuel Huber; Second Respondent: Birinc Trade Corp; Third Respondent: Sky Wealth International Ltd; Fourth Respondent: Rex Investors Ltd; Fifth Respondent: Sun Way Global Group Limited; Sixth Respondent: Aura Finance Limited; Seventh Respondent: Harvest Sky Holdings Limited; Eighth Respondent: Rich Max Investments Limited; Ninth Respondent: Nesterland Services Ltd; Tenth Respondent: Willow Financial Ltd; Eleventh Respondent: Lighthouse Investments Ltd; Twelfth Respondent: Leario Overseas Corp; Thirteenth Respondent: Stardust Financial Corp; Fourteenth Respondent: Pized Management Ltd; Fifteenth Respondent: Blue Delorite Pty Ltd; Seventeenth Respondent: Constance Emily Peck; Eighteenth Respondent: Alan Peck; Nineteenth Respondent: Melvin Tan
Jurisdiction
Australia
Judgment Date
17 April 2020
Procedural Posture
Corporations – Equitable Remedies – Trial on Quantum / Post Liability Judgment, Trial on Quantum and Orders
Outcome
Judgment for Applicant. Declarations and orders made for account of profits, constructive trust, and costs.
Legal Topics
Breach of Director's Duties, Breach of Fiduciary Duties, Account of Profits, Constructive Trust, Equitable Compensation
Corporations Law Equity Breach of Director's Duties Breach of Fiduciary Duties Account of Profits Constructive Trust Equitable Compensation

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 5 Authorities cited 11 Party arguments 2 Amounts and remedies 8
Sign in to unlock

Parties

CellOS Software Ltd

Applicant

Jason Joseph Emmanuel Huber

First Respondent

Birinc Trade Corp

Second Respondent

Sky Wealth International Ltd

Third Respondent

Rex Investors Ltd

Fourth Respondent

Sun Way Global Group Limited

Fifth Respondent

Aura Finance Limited

Sixth Respondent

Harvest Sky Holdings Limited

Seventh Respondent

Rich Max Investments Limited

Eighth Respondent

Nesterland Services Ltd

Ninth Respondent

Willow Financial Ltd

Tenth Respondent

Lighthouse Investments Ltd

Eleventh Respondent

Leario Overseas Corp

Twelfth Respondent

Stardust Financial Corp

Thirteenth Respondent

Pized Management Ltd

Fourteenth Respondent

Blue Delorite Pty Ltd

Fifteenth Respondent

Constance Emily Peck

Seventeenth Respondent

Alan Peck

Eighteenth Respondent

Melvin Tan

Nineteenth Respondent

Procedural Posture

Corporations – Equitable Remedies – Trial on Quantum / Post Liability Judgment, Trial on Quantum and Orders

Legal Issues

  1. 1 Whether the First Respondent breached statutory and fiduciary duties to the Applicant
  2. 2 Whether Respondents are liable to account for profits obtained through the Scheme
  3. 3 Appropriate equitable remedies and quantum for breaches

Ratio Decidendi

The First Respondent breached statutory and fiduciary duties by implementing the Scheme to divert share sales and uncommercial loan arrangements, resulting in significant profits to himself and Huber controlled entities from shares acquired and sold at a discount. Respondents are jointly and severally liable to account for profits made. An account of profits is ordered as the most suitable remedy, with constructive trust declared over specific shares and payments traceable to breach. Fault lies in the diversion of investors, uncommercial share issues, and failure to disclose interests, for which equitable remedies are appropriate.

Court Disposition

Judgment for Applicant. Declarations and orders made for account of profits, constructive trust, and costs.

Orders

  • First to Fifteenth Respondents to account to the Applicant in sum of AU$42,000,000
  • First to Fifteenth Respondents to pay Applicant's costs of proceeding