V-Flow Pty Limited v Holyoake Industries (Vic) Pty Limited [2013] FCAFC 16: Corporations, Equity and Remedies

TimeBase Point-in-TimeThe Full Federal Court upheld the appeal today of Holyoake Industries as to the primary judge's assessment of statutory compensation in regards to a breach of director's fiduciary duties in the case of V-Flow Pty Limited v Holyoake Industries (Vic) Pty Limited [2013] FCAFC 16.

The Facts

This appeal concerns the relief to be granted as a consequence of breaches of fiduciary and contractual duty, and contraventions of the Corporations Act 2001 (Cth), in relation to the respondent, Holyoake Industries (Vic) Pty Limited (Holyoake).  The breaches and contraventions were committed by a former director and two former employees of Holyoake (the individual appellants) in connection with the acquisition by the first appellant, V-Flow Pty Limited (V-Flow), of the business of Variflow Melbourne Pty Limited (Variflow).

The Primary Judgment

Having found that such breaches and contraventions on the part of the individual appellants had occurred, and that V-Flow had knowingly benefitted from them, a judge of the Court made assessments in relation to the possible alternative remedies: equitable compensation, account of profits and statutory compensation under s 1317H of the Corporations Act.  Following the assessments, Holyoake elected for statutory compensation and his Honour made orders accordingly. V-Flow appealed the amount of statutory compensation ordered.

The Appeal

The appeal of Holyoake was upheld due to lost profits and loss of opportunity being incorrectly costed by the primary judge. All parties were invited to make subsequent submissions on new costs for statutory compensation.

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