Australia, Jan. 23 -- New South Wales Land and Environment Court issued text of the following judgement on Dec. 23:

1. On 8 November 2024, I delivered judgment (Re 1derful Pty Ltd [2024] NSWSC 1414 ("Primary Judgment")) in a claim brought by the Plaintiffs against Fletch Capital Pty Ltd ("Fletch") and others. In summary, I found that the Third and Fourth Plaintiffs ("1derful Companies") established a claim for breach of fiduciary duty against the Second Defendant, Mr Seymour, and that Fletch was knowingly involved in that breach; they had established statutory unconscionability claims against the Second and Third Defendants, Mr Seymour and Mr Birch; they had established a contravention of s 420A of the Corporations Act 2001 (Cth) ("Corporations Act") against Fletch; and they had also established a claim in conspiracy against Fletch.

2. I observed (Primary Judgment [193]) that:

"The Plaintiffs plead (SOC [25], denied D1/2 Defence [25], D3 Defence [25]) and I find that Mr Seymour and Mr Birch developed a plan for Fletch to acquire the Companies' business by, first, acquiring at a discount the debt of [PI Lorica Pty Ltd ("PIL")] owed by the Companies; then demanding payment of the debt within a very short time, knowing (through Messrs Seymour and Birch) that the Companies could not pay that debt within that short time; then purportedly exercising the power of controller to sell the Companies' business to itself without marketing or taking any steps to identify the value of that business; then transferring the shareholding held by 1derful in 1derful Lending to Fletch, to allow it to obtain its Australian credit licence, and then causing that Australian credit licence to be reissued to 1derful Lending under the changed name of APL Lending Pty Ltd ("APL Lending"); and finally appointing a receiver to the Companies knowing that no assets remained in them so that no steps could be easily taken to recover those assets. I recognise that plan was developed, and steps added and modified, over time. The Plaintiffs refer to these steps as "the Scheme"; I will also use that term although it has a pejorative implication, where that implication is supported by the findings that I have reached. The Plaintiffs plead (SOC [26]) and I accept that each of Fletch and Messrs Seymour and Birch took part in the Scheme."

3. As I noted above, I found (Primary Judgment [242]) that Mr Seymour's conduct constituted a breach of fiduciary duty which was dishonest in the relevant sense and that Fletch knowingly assisted with that breach. I also found (at Primary Judgment [319]) that, subject to allowing a further opportunity for the Fourth Defendant, Mr Ball, to be heard, an order would likely be made setting aside his appointment by Fletch as receiver to 1derful's assets.

4. I also observed (Primary Judgment [324]-[325]) that:

"For the reasons set out above, I would make the order sought by the Plaintiffs (depending on their election) that would bring about the return of the Companies' business to the Companies, albeit in a degraded state where that business currently likely has no value and where the development of that business will likely be significantly delayed or may now be impossible. Fletch would then be reinstated as a lender to the Companies, where the transfer of the business to it was set aside, but the amount of damages (including any exemplary damages, to which I return below) awarded against it may well exceed the amount of that loan. That order would not be inconsistent with an order for damages or compensation in favour of the Companies calculated by reference to the loss suffered by the Companies on the transfer of business at an undervalue, where that loss is not reduced by the return of the business after its value is lost.

*Rest of the document and Footnotes can be viewed at: (https://www.caselaw.nsw.gov.au/decision/193f0cf88325540567cb2149)

Disclaimer: Curated by HT Syndication.