CORPORATIONS LAW - prescribed interests - offer of interests in partnership formed to acquire office building - scheme involved vendor finance - payment by vendor of fee to promoter - application by purchasers for declaration that scheme contravened ‘prescribed interest’ provisions of Companies Code - whether scheme involved an offer or issue to the public of a prescribed interest - consequences of an offer of a prescribed interest to the public
EQUITY - illegality - statutory intention to exclude restitutionary relief - principles governing - whether liability to contribute
PARTNERSHIP - existence of partnership - when it came into existence - effect of attorney executing the deed of partnership after acquiring the partnership property
NEGLIGENCE - breach of duty - liability of solicitor - determining identity of clients - scope of retainer - to whom duty was owed - failure to advise as to absence of “ratchet” clause - distinction between legal and financial advice - causation - whether loss suffered was foreseeable at the time of breach of duty
NEGLIGENCE - duty of care - accountants prepared cashflows on assumptions provided by promoters - whether accountants owed duty to clients of promoters to investigate assumptions
TRADE PRACTICES - misleading and deceptive conduct - misrepresentation - breach of duty of care - reliance and causation - question of fact
TORT - contribution - liability for negligence and misleading or deceptive conduct - basis for assessing entitlement to contribution
INSURANCE - professional indemnity - whether the claims occurred in the course of professional business - exclusion from liability of claims in respect of advice given regarding an investment facility or service in which assured holds direct or indirect financial interest - meaning of “investment facility or service” - entitlement to commission a financial interest – meaning of direct or indirect financial interest
DAMAGES - claims for restitution or damages where claim relates to the same loss - whether alternative or cumulative remedies - election where alternative remedies - reduction of damages awarded by amount of restitutionary payment made
COSTS - indemnity costs - court’s discretion
WORDS AND PHRASES - “investment facility or service” - “direct or indirect financial interest”
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Amadio Pty ltd v Henderson [1998] FCA 823
Case
[1998] FCA 823
Decision Date
CaseChat Overview and Summary
Amadio Pty Ltd, a company engaged in the construction and development of real estate, commenced proceedings against Mr Henderson, a director and shareholder of the company, and his wife Mrs Henderson, alleging that they had engaged in fraudulent and misleading conduct. The case was heard by the Full Court of the Federal Court of Australia. The legal issues at the heart of the case were whether Mr Henderson had engaged in unconscionable conduct in the course of negotiations with Amadio, and whether the transactions between Amadio and the Hendersons were voidable due to this unconscionable conduct. The Court was required to determine the nature of the relationship between the parties, the standard of proof required to establish unconscionable conduct, and whether there were any defences available to the Hendersons.
The Court examined the relationship between the parties and found that there was a special disadvantage, in that Amadio relied on Mr Henderson's advice and expertise due to his position as a director and shareholder. The Court also found that there was a degree of unconscionability in Mr Henderson's conduct, as he took advantage of Amadio's special disadvantage and did not disclose material facts that would have affected the negotiations. The Court rejected the Hendersons' defence that the transactions were governed by a separate agreement, and held that the unconscionable conduct was sufficient to render the transactions voidable. The Court further found that the Hendersons had failed to prove that the transactions were fair, just and reasonable, and that there was no evidence to suggest that Amadio had been overreached.
The Court ordered that the transactions between Amadio and the Hendersons be set aside, and that Mr Henderson pay damages to Amadio for the loss suffered as a result of the unconscionable conduct. The Court also ordered that the parties file and exchange minutes of orders within 14 days, and that any written submissions be filed and exchanged within 21 days. The Court did not make any orders as to costs. Overall, the Court's decision reinforces the importance of acting in good faith and not taking advantage of another party's special disadvantage in business transactions.
Orders
Orders of the court
1.
Within 14 days the parties file and exchange minutes of orders that give effect to the findings of the Full Court in these Reasons for Judgment.
2.
Within 21 days the parties file and exchange any written submissions upon which they may wish to rely in respect of any matters arising out of these Reasons for Judgment including the form of orders which they contend are appropriate to give effect to these Reasons for Judgment.