Raphael, Allan Charles v Whatson, Edwin Henry Whatson, Edwin Henry v Raphael, Allan Charles [1998] FCA 577

Raphael, Allan Charles v Whatson, Edwin Henry Whatson, Edwin Henry v Raphael, Allan Charles [1998] FCA 577

Raphael's suit for damages is dismissed due to illegality: the agreement constituted unlawful financial assistance contrary to s 205 of the Corporations Law; thus Raphael cannot recover. Whatson's cross-claims and those by the Whatson Group fail as no breach of fiduciary duty, misleading conduct, or actionable loss was proven. The claim against Abelitis fails as no duty was owed or breached.

Parties
Applicant; Cross Respondent; Respondent: Allan Charles Raphael; Respondent; Cross Claimant; Applicant; Cross Respondent: Edwin Henry Whatson; Applicant: Robyn Carole Whatson; Applicant: Rema Industries & Services Pty Limited; Applicant: Storgate Rae Endeavour Co Pty Limited; Applicant: Rema Holdings Pty Limited; Respondent; Cross Claimant: Ian Abelitis
Jurisdiction
Australia
Judgment Date
29 May 1998
Procedural Posture
Commercial Law; Corporations Law; Contract; Equity; Cross Claims / Final Determination Following Consolidated Hearings of Three Proceedings
Outcome
All claims and cross-claims dismissed; costs awarded to prevailing parties as specified
Legal Topics
Financial Assistance for Share Acquisition, Breach of Contract, Fiduciary Duties, Misleading and Deceptive Conduct, Illegality Defense, Accessory Liability
Corporations Law Contract Law Equity Financial Assistance for Share Acquisition Breach of Contract Fiduciary Duties Misleading and Deceptive Conduct Illegality Defense +1 more

Case Brief

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Parties

Allan Charles Raphael

Applicant; Cross Respondent; Respondent

Edwin Henry Whatson

Respondent; Cross Claimant; Applicant; Cross Respondent

Robyn Carole Whatson

Applicant

Rema Industries & Services Pty Limited

Applicant

Storgate Rae Endeavour Co Pty Limited

Applicant

Rema Holdings Pty Limited

Applicant

Ian Abelitis

Respondent; Cross Claimant

Procedural Posture

Commercial Law; Corporations Law; Contract; Equity; Cross Claims / Final Determination Following Consolidated Hearings of Three Proceedings

Legal Issues

  1. 1 Whether the contract between Raphael and Whatson for $1,000,000 was enforceable given statutory prohibitions on financial assistance by companies for acquisition of their own shares
  2. 2 Whether Raphael breached fiduciary duties or misled RIS and associated companies by establishing a competing business
  3. 3 Whether claims against Abelitis for breach of duty as solicitor can be made out

Ratio Decidendi

Raphael's suit for damages is dismissed due to illegality: the agreement constituted unlawful financial assistance contrary to s 205 of the Corporations Law; thus Raphael cannot recover. Whatson's cross-claims and those by the Whatson Group fail as no breach of fiduciary duty, misleading conduct, or actionable loss was proven. The claim against Abelitis fails as no duty was owed or breached.

Court Disposition

All claims and cross-claims dismissed; costs awarded to prevailing parties as specified

Orders

  • NG 839 of 1994: The action is dismissed. The applicant pay the respondent's costs. The cross-claim is dismissed. The cross-claimant pay the cross-respondent's costs.
  • NG 3043 of 1994: The application is dismissed. The applicants pay the respondent's costs.