Golden Taste Investment Pty Ltd v Laurence & Ors [2016] VSC 250 (16 May 2016): Summary judgment application by plaintiff

May 17, 2016 |

In Golden Taste Investment Pty Ltd v Laurence & Ors [2016] VSC 250 Derham AsJ considered the plaintiff’s application for summary judgment under section 63 of the Civil Procedure Act 2010.


The plaintiff is the master franchisee for the Cacao Green and Red Mango franchises for Australia and operates retail stores in Victoria selling frozen yogurt and coffee products [2].

The first defendant (‘Daniel’) was a director and secretary of the plaintiff from 23 March 2010 to 18 February 2015 while the second defendant (‘Jesse’) was a director of the plaintiff between 23 March 2010 and 3 June 2014 [2].

The plaintiff’s claims against Daniel and Jesse are, at [4]:

(a) declarations that each of Daniel and Jesse breached fiduciary duties and directors duties arising under ss 180, 181, 182 and 183 of the Corporations Act 2001 (Cth) (‘the Act’);

(b) damages against Daniel and Jesse;

(c) injunctions restraining Daniel and Jesse from improperly using any information obtained as a result of being officers of the plaintiff; and

(d) delivery up on oath to the plaintiff for destruction all documents constituting information which each of Daniel and Jesse obtained by reason of their positions with the plaintiff.

The plaintiffs allege that:

  1. whilst Daniel and Jesse were directors and officers of the plaintiff they entered into an agreement with another with a view to establishing a business in direct competition with the plaintiff’s business in Australia and China. Under that agreement Jesse agreed to make available his know-how and knowledge of establishing, marketing and operating a frozen yoghurt and coffee business on terms that the know-how was valued at $200,000.00, a company would be registered to carry on the new business, [8].
  2. Daniel and Jesse used information and documentation obtained by reason of their positions at the plaintiff, including such things as recipes, product mixes, supplier details, ingredient types, a menu and operations manual, and used these documents for their benefit and in establishing marketing and conducting the business of the third defendant, Yogulatte [10].
  3. Yogulatte opened a store in China and that plans were in place to locate and open a store in Adelaide [12].

Jesse’ s defence, [9], provided that:

  1. there was an approach about establishing a yoghurt business in China but  that that interest was disclosed to  the principal remaining director of the plaintiff;
  2. the business has not operated in any way; and
  3. a draft agreement was prepared in which it was proposed that he would agree to make available  his know-how for a proposed business involving yoghurt and coffee but says that the agreement was not entered into.

Daniel and Jesse admitted using unspecified information and documentation obtained from the plaintiff for the purpose of evaluating a proposed business involving yoghurt and coffee but say that the outcome of the evaluation was that the proposed business was not viable and the business has not traded in China or elsewhere [10] & [12].

Further, Counsel for the defendants pointed out that it was impossible for a business in China to directly compete with the plaintiff’s business, which was limited to franchises in Australian and was presently confined to Victoria.

Daniel and Jesse admitted, at [5]:

(a) that they owed fiduciary duties to the plaintiff to act in good faith and for its benefit and to avoid conflicts of interest and duty; and

(b) that as directors of the plaintiff they were bound by the duties set out in ss 180, 181, 182 and 183 of the Act.

The relevant directors duties are described, at [6]:

(a) to exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they were a director or officer of the plaintiff in its circumstances and occupied the office held by, and had the same responsibilities within the plaintiff as, the director or officer (s 180);

(b) to exercise their powers and discharge their duties in good faith in the best interests of the plaintiff and for a proper purpose (s 181);

(c) not to improperly use their positions as directors or officers of the plaintiff to gain an advantage for themselves or for someone else and/or to cause detriment to the plaintiff (s 182); and

(d) not to improperly use information which has been obtained because they are or have been directors or other officers or employees of the plaintiff to gain an advantage for themselves or someone else or cause detriment to the plaintiff (s 183).


The Court undertook a review of the operation of sections 61 and 63 of the CPA and the test to be applied stating:

  • a plaintiff in a civil proceeding may apply to the Court for summary judgment in the proceeding on the ground that a defendant’s defence or part of that defence has no real prospect of success under section 61 while under section 63  a Court may give summary judgment if satisfied that a defence or part of a defence has no real prospect of success [14].
  • Rule 22.03 of the Rules provides that an application under s 61 by a plaintiff for summary judgment shall be made in accordance with Part 2 of Order 22 while Rule 22.04 requires such an application to be made by summons supported by an affidavit [15]

(a) verifying the facts on which the claim or the part of the claim to which the application relates is based; and

(b) stating that in the belief of the deponent, the defence to the claim or the defence to the relevant part of the claim:

(i) has no real prospect of success; or

(ii) has no real prospect of success except as to the amount of the claim or as to the amount of the relevant part of the claim.

  • the powers of the Court are, subject to Part 4.4 of Chapter 4 of the CPA, to dismiss the application, give such judgment for the plaintiff as is appropriate or give the defendant leave to defend with respect to the claim or a part of it [17]
  • the procedure liberalises the rules governing summary judgment in Victoria, such that it is easier to dispose of unmeritorious claims or defences summarily [18];
  • the test must be applied according to its own terms and not according to considerations of whether the proceeding is ‘hopeless’ or ‘bound to fail’ and that to  adopt ‘an unduly constrained, historical approach to the construction of s 63’ would ‘subvert the purpose of the provision’ [19]
  • courts must exercise the power to terminate proceedings summarily with caution [20]. That means only exercising the power if it is clear that there is no real question to be tried even where an application is made on the basis that:
    • the pleadings do not disclose a reasonable cause of action, and no amendment could cure this error;
    • the action is frivolous, vexatious or an abuse of process;
    •  the application for summary judgment is supported by evidence.
  • the power to give summary judgment must be exercised in accordance with the overarching purpose of the CPA and taking into account the fact that, if granted, a party will be deprived of the chance to pursue its claim or defence [21]
  • even if there is no real prospect of success, a court may nevertheless allow a matter to proceed to trial, [21], if:

(a) it is not in the interests of justice to summarily dispose of the proceeding; or

(b) the dispute is of such a nature that only a full hearing on the merits is appropriate.

  • whether a proceeding should be allowed to go to a full hearing on the merits must be determined according to the circumstances of each case [22].

Based on the affidavits the court stated:

  • the first and second defendants while  directors and officers of the plaintiff did the things alleged including using documentation and information obtained by virtue of their position as directors and officers of the plaintiff in the development of plans to establish the business of Yogulatte [23].
  • it is not established, even if pleaded that the Yogulatte business was actually established and that a store was opened in China [23] and Yogulatte never traded [24]. The plaintiff  failed to verify the facts its claim that in 2014 a Yogulatte store was opened in China [28]
  • there were difficulties in the operation of the plaintiff’s business arising out of relationships between Daniel and Jesse, on the one part, and Mr Loe and his wife and mother-in-law, on the other part [25]. The business did not go well.  There was a meeting in December 2014 in which Daniel and Jesse suggested the plaintiff be wound up because it had too much debt. Daniel and Jesse and Mr Loe all sold their shares to her company. through the company they had invested in the plaintiff sold its shares ond 28 November 2014. From that time onwards, Daniel and Jesse were not involved in the operations of the plaintiff [25].
  • in relation to the admission by Daniel and Jesse of using documents and information obtained by them in the course of their directorships of the plaintiff for the purposes of establishing a like business to that operated by the plaintiff, but in a different jurisdiction, Counsel for the defendants submitted that on his clear instructions the admission was wrongly made and that the information used was publicly available information. He sought leave to apply to amend the defences to withdraw the admissions [26].
  • there are significant disputes of fact between the plaintiff and the defendants regarding their respective roles and duties in the operations of the plaintiff [27]
  •  Daniel and Jesse have, in breach of their fiduciary and directors duties, used information obtained by them as directors and officers of the plaintiff for the purpose of investigating the establishment of another business of a similar kind to that operated by the plaintiff [29]. While the defendants seek to withdraw that admission they say that because the business was never likely to be competitive with the plaintiff’s business and had never started, the relief available to the plaintiff will be limited to damages and delivery up of any documentary information for destruction and the damages will be nominal [29].

The Court also noted the following issues, at [28]:

(a) the issues of breach of duty sought to be raised by the proposal to amend the defences;

(b) the issue raised by Daniel and Jesse’s fellow director, Mr Loe, having knowledge of, and perhaps giving his tacit consent, to the investigations of the viability of another similar business (but not operated in competition with the plaintiff); and

(c) the issue whether the defendants’ conduct has caused the plaintiff any damage other than nominal damage.

The affidavit of Daniel shows that there is a great deal of material to be investigated before it can be established that any of the defendants have caused or are liable for damage to the plaintiff.

The Defendants submitted that:

  • the prosecution of this the proceeding involves a contravention of the plaintiff’s overarching obligation to ensure costs are reasonable and proportionate to the issues and amounts in dispute and the proceeding should be dismissed under ss 28(1) and 29(1) of the CPA.  The Court rejected this submission on the basis that it is not possible at this point to conclude one way or the other whether this contention can succeed even if it is possible on the evidence to date [30].
  • in addition to amending their defences to withdraw the admissions they seek to claim pursuant to s 1318 of the Act that they acted honestly and having regard to all the circumstances of the case.  The court noted that evidence shows a tangled web of relationships between the directors of the plaintiff and a course of events that requires investigation before the Court can be satisfied that there have been clear breaches of duty by Daniel and Jesse [31].

Given the complex:

  • facts giving rise to the plaintiff’s claims
  • complex issues  the defendants wished to raise

the court found it was inappropriate to grant summary judgment [32].  His Honour said that it was not clear that there was no real question to be tried and further investigation was required  and the dispute was of such a nature that only a full hearing on the merits was appropriate [32].

The court ordered that the defendants have leave to defend the plaintiff’s claims and that the plaintiff will need to amend its statement of claim [33] – [34].

While the Plaintiffs did not obtain summary judgment they were awarded costs [35].


The decision highlights the need for clear and unequivocal evidence on material allegations if an applicant is to succeed in obtaining summary judgment.  It also highlights the continuing broad discretion open to the court in dealing with cases where there are policy issues which militate against a determination before trial.  In this case while the application was ultimately unsuccessful the problems apparent in the defendants’ cases justified a cost order in the plaintiff’s favour.

One Response to “Golden Taste Investment Pty Ltd v Laurence & Ors [2016] VSC 250 (16 May 2016): Summary judgment application by plaintiff”

  1. Golden Taste Investment Pty Ltd v Laurence & Ors [2016] VSC 250 (16 May 2016): Summary judgment application by plaintiff | Australian Law Blogs

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