Schmidt v AHRKalimpa Pty Ltd

[2020] VSCA 193

Victorian Court of Appeal

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Interrogate

Catchwords

1. Equity
2. › Fiduciary Duties
3. › Joint venture negotiations
4. › Director of proposed joint venture vehicle
5. › Whether fiduciary duties arose during negotiations for joint venture
6. › Whether fiduciary duties survived resignation as director
7. › Misappropriation of business
8. › Diversion of business opportunity
1. Equity
2. › Equitable Compensation
3. › Assessment of loss
4. › Whether loss was loss of existing business or loss of opportunity
5. › Characterisation of loss where fiduciary misappropriated ongoing business
1. Equity
2. › Equitable Compensation
3. › Date of valuation
4. › Whether equitable compensation assessed at date of trial or date of breach
5. › Use of hindsight in assessment
6. › Flagrant breach as factor in selecting valuation date
1. Corporations
2. › Directors' Duties
3. › Breach of directors' duties
4. › Duties owed to company during and after directorship
5. › Whether duties survived resignation
6. › Corporations Act 2001 (Cth), ss 181, 182, 183

Quick Take

Where a fiduciary misappropriates an existing business (as opposed to merely diverting a prospective opportunity), equitable compensation should be assessed on the basis of the value of the business lost, not the value of a lost opportunity. The normal rule that equitable compensation is assessed at the date of trial using hindsight applies with particular force where the fiduciary's breaches were flagrant and continuing, and where valuation at an earlier date would enable the fiduciary to retain the bulk of the value of the misappropriated business. A director's fiduciary duties may survive resignation where the resignation was materially influenced by the director's desire to acquire the company's business opportunities.