Lewis Securities Ltd (in liq) v Carter [2018] NSWCA 118

Lewis Securities Ltd (in liq) v Carter [2018] NSWCA 118

Barnes v Addy claims against third parties for knowing assistance in a dishonest and fraudulent breach of fiduciary duty are not barred by analogy with s 1317K of the Corporations Act, since the limitation analogy is inapt given the requirement of fraud; direct application of Limitation Act 1969 (NSW) s 47 would apply to constructive trust claims, but as it was not pleaded, equity leaves no scope to apply a shorter limitation period by analogy. Laches and informed consent defences were not made out, as no prejudice sufficient for laches or valid corporate ratification was demonstrated.

Parties
First Appellant: Lewis Securities Ltd (in liq); Second Appellant: LSL Holdings Pty Ltd (in liq); First Respondent: Marilyn Carter; Second Respondent: Robert Miller
Jurisdiction
Australia
Judgment Date
07 June 2018
Procedural Posture
Appeal / Judgment on Appeal
Outcome
Appeal allowed in part
Legal Topics
Fiduciary Duty, Director's Duties, Limitation Periods, Knowing Assistance, Constructive Trust, Barnes V Addy Liability, Laches, Informed Consent
Corporations Equity Fiduciary Duty Director's Duties Limitation Periods Knowing Assistance Constructive Trust Barnes V Addy Liability +2 more

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Parties

Lewis Securities Ltd (in liq)

First Appellant

LSL Holdings Pty Ltd (in liq)

Second Appellant

Marilyn Carter

First Respondent

Robert Miller

Second Respondent

Procedural Posture

Appeal / Judgment on Appeal

Legal Issues

  1. 1 Whether Barnes v Addy claims are statute-barred by analogy with Corporations Act s 1317K
  2. 2 Availability of limitation defences to claims involving dishonest and fraudulent breach of duty
  3. 3 Establishment of knowing assistance by respondents in breach of fiduciary duties

Ratio Decidendi

Barnes v Addy claims against third parties for knowing assistance in a dishonest and fraudulent breach of fiduciary duty are not barred by analogy with s 1317K of the Corporations Act, since the limitation analogy is inapt given the requirement of fraud; direct application of Limitation Act 1969 (NSW) s 47 would apply to constructive trust claims, but as it was not pleaded, equity leaves no scope to apply a shorter limitation period by analogy. Laches and informed consent defences were not made out, as no prejudice sufficient for laches or valid corporate ratification was demonstrated.

Court Disposition

Appeal allowed in part

Orders

  • Set aside order 1 made on 7 April 2017 in proceeding 2014/317554
  • In lieu thereof, judgment in favour of the plaintiffs against the first and second defendants