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CLQ Vol36 No4 Dec 2022-Feb 2023

Why leave to sue a court-appointed liquidator in unnecessary and unconstitutional
By Dr John Azzi
 
In November 2020, the NSW Court of Appeal dismissed an appeal seeking to overturn a decision refusing the applicants leave to commence proceedings against a court-appointed liquidator (Aardwolf Industries LLC v Tayeh [2020] NSWCA 301). And despite the parties commonly agreeing leave was required, Leeming JA nevertheless questioned whether this was in fact correct, making in obiter remarks ‘lest they be overlooked in later cases.’   
Given the preceding, this paper demonstrates that appointing court leave is both unnecessary and is inconsistent with s599 of the Corporations Act 2001 (Cth), which entitles a person aggrieved by the liquidator’s conduct to appeal to a superior Court.
 
 
The duty of confidence and the departing employee: recent cases
By Lee Aitken
 
A skilled and trusted employee, nestling in the bosom of the business, is in a privileged, trusted, position. He or she, by definition, acquires detailed knowledge of the how the business is conducted, and who trades with it. A departing employee unconstrained by any equitable or contractual obligation could do immense damage by siphoning off existing custom from the previous employer, or misusing a ‘trade secret’. On the other hand, since the time of the Black Death, the common law has strained against anything which prevents the full exploitation of an individual’s talents for the common weal. How are these competing goals to be reconciled?
When does an equitable obligation to keep information ‘confidential’ arise? When may an obligation of confidence be imposed by contract? To what extent is section 183 of the Corporations Act relevant, if at all? How do such obligations interact with the general prohibition against a restraint of trade?
These issues have been examined very recently in detail by Halley J in Xiamen Huadian Switchgear Co Ltd v Powins Pty Ltd, Mossop J in Elston Private Wealth Pty Ltd v Wilson Advisory and Stockbroking Ltd and Anderson J in Luvalot Clothing Pty Ltd v Dong. In each case, the departing employee was accused of misusing information about existing customers.
 
 
Why a director can and should be held liable for inducing their company’s breach of trust
By Lachlan J McIntyre
 
The trading trust is an extremely popular legal tool in Australia, and many more companies owe fiduciary duties in relationships such as partnership, joint-venture and agency. When a company breaches trust, wronged beneficiaries will often turn to their trustee/fiduciary for recourse, only to find them minimally capitalised or insolvent. Whether it is then possible to sue the company’s director for inducing or procuring that breach of trust is a question of considerable commercial significance, especially given recent global financial uncertainty. Yet, the answer to that question is unknown in New South Wales and beyond, with one Court of Appeal case proceeding on the basis that such liability could attach to such a director, but doubting the validity of that position: Pittmore v Chan. This article tests the thesis that accessorial liability can extend to directors who induce their company’s breach of trust and should so extend.

  • Why leave to sue a court-appointed liquidator in unnecessary and unconstitutional
    By Dr John Azzi
    page 4
  • The duty of confidence and the departing employee: recent cases
    By Lee Aitken
    page 18
  • Why a director can and should be held liable for inducing their company’s breach of trust
    By Lachlan J McIntyre
    page 24
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    Non Member Price: $30.00
     
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