FEDERAL COURT OF AUSTRALIA

Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Limited (No 2) [2017] FCAFC 99

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be allowed.

2.    The respondent account to the appellants for profits, in equity and pursuant to s 1317H of the Corporations Act 2001 (Cth), in the sum of $6,558,495.

3.    The respondent pay interest to the appellants in an amount to be assessed if not agreed.

4.    Order 6 of the Orders of Besanko J dated 14 April 2016 in SAD 99 of 2012 be set aside and in lieu thereof it is ordered that the respondent pay the appellants’ costs of the proceeding before Besanko J and the costs of the appeal on a party and party basis.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    On 12 May 2017, the Court handed down its decision in this matter and ordered the appellants to file short minutes of orders conformable with the reasons of the Court. The respondent has consented to the form of orders proposed by the appellants save for the declaration sought in order 2 as follows:

The Court declares that Foresters through its Board of Directors knowingly assisted and induced Mr Woff and Mr Corby to breach their duties and obligations owed by each of them to Lifeplan Australia Friendly Society Ltd (Lifeplan) and to Funeral Plan Management Pty Ltd (FPM), in that:

i.     from July 2010, Foresters knowingly assisted Mr Woff and Mr Corby to breach their fiduciary duties to Lifeplan and FPM by using Lifeplan’s and FPM’s confidential and valuable information in deciding whether to proceed with a proposed business involving Mr Woff, Mr Corby, Funeral Planning Australia Pty Ltd and Foresters (the business) and thereafter for the purpose of measuring the performance of the business;

ii.     from 20 October 2010 until 29 December 2010, Foresters knew that Mr Woff, in breach of his fiduciary duties to Lifeplan and FPM, was soliciting business from funeral directors for the proposed business and was likely to continue to do so, in circumstances where Foresters was working towards the proposed business and where it did nothing to discourage Mr Woff from soliciting funeral directors;

iii.     between September and December 2010, Foresters:

A.    knowingly assisted Mr Woff and Mr Corby to breach their fiduciary duties to Lifeplan and FPM; and

B.    induced Mr Woff and Mr Corby to breach their contractual duties to Lifeplan and FPM;

by playing an active role in the conduct of Mr Woff and Mr Corby taking impermissible steps towards establishing the proposed business by involving Mr Woff and Mr Corby in the changes to be made to the rules governing the Foresters’ fund and the preparation of the Foresters’ disclosure documents.

2    The primary judge declined to grant that declaratory relief. In Lifeplan Australia Friendly Society Ltd v Woff [2016] FCA 364, the primary judge stated at [23]:

In my opinion, a declaration against Foresters should not be made in this case. The [appellants’] claim against Foresters was for an account of profits. On the face of it, that is a private law claim. The [appellants] established some elements of their claim, but not all of the elements and, in those circumstances, they failed to establish an entitlement to profits. I do not think that in the ordinary course the Court would make a declaration that the applicant has established some elements of its claim. If this be too narrow a view of the power to make a declaration, then the declaration should nevertheless be refused because it will have no foreseeable consequences for the parties. There is nothing to suggest that the parties have an ongoing relationship. It may be taken that there is “disapproval” of Foresters’ conduct as identified in the principal reasons, but this case does not have a public interest element, for example, a misstatement in a disclosure document where a declaration will serve a purpose of correcting a falsehood or untruth.

The respondent submitted that the primary judge correctly declined to grant declaratory relief because a declaration would not have foreseeable consequences for the parties.

3    Ordinarily, a court will decline to grant declaratory relief if the declaration does not serve any legitimate purpose, or would be of no utility: Ainsworth v Criminal Justice Commission [1992] HCA 10; 175 CLR 564 at 581-582 (Mason CJ, Dawson, Toohey and Gaudron JJ); Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Limited [2000] HCA 11; 200 CLR 591, 613 at [52] (Gaudron J). In this case, the declaration sought in proposed order 2 is not a declaration of right; it does no more than state the findings made against the respondent in a private law claim and has no practical effect in circumstances where the contravening conduct has ceased and the parties have no ongoing relationship. Whilst the appellants succeeded on appeal in establishing an entitlement to an account of profits by reason of the respondent’s contravening conduct, the remedy is in the order that the respondent account to the appellants for such profits quantified in the sum of $6,558,495. The declaration would have no foreseeable consequences for the parties and accordingly should not be made.

4    For these reasons, we would make the orders as formulated by the parties to reflect our reasons published on 12 May 2017, save for proposed order 2.

Associate:

Dated:    16 June 2017