Chung-Yi Pty Limited v Justin Chih-Yang Chang (No 2) [2018] NSWSC 1112

Chung-Yi Pty Limited v Justin Chih-Yang Chang (No 2) [2018] NSWSC 1112

Justin Chih-Yang Chang breached his duties as a director and fiduciary by causing unauthorised payments to himself from Chung-Yi Pty Limited and related accounts; he is liable to compensate Chung-Yi for those sums. The payments were not authorised by Mr Cheng or in accordance with proper purpose or valid direction. Plaintiff's conduct in proceedings did not constitute oppression. Limitation, laches and statutory relief defences fail on the facts. Rights issue for funding was not oppressive.

Parties
First Plaintiff: Chung-Yi Pty Limited; Second Plaintiff: Chih-Shih Cheng; Third Plaintiff: Chih-Chung Cheng; Fourth Plaintiff: Chang Ling-Ling Wang; Fifth Plaintiff: Ching-Ching Cheng; Sixth Plaintiff: Shirley Chen Hsui-Ju Cheng; Seventh Plaintiff: Chen Tsui-Miao Cheng; Eighth Plaintiff: Chao-Ching Wang; Defendant: Justin Chih-Yang Chang
Jurisdiction
Australia
Judgment Date
20 July 2018
Procedural Posture
Principal Judgment / Final Judgment
Outcome
Judgment for Chung-Yi Pty Limited against Justin Chih-Yang Chang. Cross-claim dismissed.
Legal Topics
Directors' Duties, Business Judgment Rule, Duty of Care and Diligence, Duty to Act in Good Faith, Duty Not to Use Position Improperly, Fiduciary Duties, Unauthorised Profit, Informed Consent, Unclean Hands, Those Who Seek Equity Must Do Equity, Oppression, Statute of Limitations, Laches and Acquiescence, Breaches of Trust, Misappropriation of Trust Property, Remedial Trust, Winding Up
Corporations Equity Directors' Duties Business Judgment Rule Duty of Care and Diligence Duty to Act in Good Faith Duty Not to Use Position Improperly Fiduciary Duties +11 more

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Parties

Chung-Yi Pty Limited

First Plaintiff

Chih-Shih Cheng

Second Plaintiff

Chih-Chung Cheng

Third Plaintiff

Chang Ling-Ling Wang

Fourth Plaintiff

Ching-Ching Cheng

Fifth Plaintiff

Shirley Chen Hsui-Ju Cheng

Sixth Plaintiff

Chen Tsui-Miao Cheng

Seventh Plaintiff

Chao-Ching Wang

Eighth Plaintiff

Justin Chih-Yang Chang

Defendant

Procedural Posture

Principal Judgment / Final Judgment

Legal Issues

  1. 1 Whether payments made by Justin Chih-Yang Chang from Chung-Yi accounts were authorised or in breach of directors' duties and fiduciary duties
  2. 2 Whether TM Accounts funds controlled by Justin Chih-Yang Chang were held on trust for family members or Chung-Yi Pty Limited
  3. 3 Whether defendant is liable for breach of trust, breach of duty, or constructive trust remedies

Ratio Decidendi

Justin Chih-Yang Chang breached his duties as a director and fiduciary by causing unauthorised payments to himself from Chung-Yi Pty Limited and related accounts; he is liable to compensate Chung-Yi for those sums. The payments were not authorised by Mr Cheng or in accordance with proper purpose or valid direction. Plaintiff's conduct in proceedings did not constitute oppression. Limitation, laches and statutory relief defences fail on the facts. Rights issue for funding was not oppressive.

Court Disposition

Judgment for Chung-Yi Pty Limited against Justin Chih-Yang Chang. Cross-claim dismissed.

Orders

  • Justin Chih-Yang Chang must pay Chung-Yi Pty Limited the amounts of $709,142, $2,343,321, $360,000, $600,030, $1,100,000, $255,000, $23,411.18 and $70,000, with interest from the date of each payment.
  • Cross-claim dismissed.