Yao v Jatcorp Limited

[2026] VSC 459

Supreme Court of Victoria

Built by Barristers,
For Australian Law.

1. Practice and Procedure
2. › Summary Judgment
3. › No real prospect of success — reflective loss principle
1. Practice and Procedure
2. › Strike Out
3. › Abuse of process — re-litigation of claims abandoned in prior proceeding
1. Corporations Law
2. › Directors' Duties
3. › Breach of ss 180 and 181 Corporations Act — managing director's failure to prevent subsidiary misconduct
1. Corporations Law
2. › Reflective Loss Principle
3. › Parent company claim for diminution in dividends — subsidiary's independent cause of action

The reflective loss principle prevents a parent company from recovering, as damages for breach of a director's duties owed to it, losses that are in substance a diminution in the value of its shareholding in a subsidiary where the subsidiary itself has a cause of action to recover the same loss — the principle turns on the substance of the loss claimed, not the form of the cause of action or the identity of the duty breached.
Where claims raising the same or overlapping issues could have been raised in an earlier proceeding but were deliberately withdrawn, pursuing those claims offensively in a later proceeding against a different defendant may constitute an abuse of process, though the same factual allegations may still be relied upon defensively where they are relevant to the real issues in dispute.
The question whether the reflective loss principle is engaged may be determined summarily on the pleadings where the loss claimed is clearly and solely particularised as a reduction in the parent's share of the subsidiary's profits, without the need for a mini-trial on disputed facts.