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Burns v Grevler

Burns v Grevler

Case [2010] NSWSC 1219 20 October 2010

Misleading and Deceptive Conduct

Negligence

Duty of Care

Breach of Duty of Care

Fiduciary Duty

Breach of Fiduciary Duty

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CITATION: Burns v Grevler [2010] NSWSC 1219

HEARING DATE(S): 23-27 August 2010

JUDGMENT DATE :
20 October 2010

JURISDICTION: Equity Division

JUDGMENT OF: Rein J

DECISION: 1. Judgment for the plaintiff in the amount of $2,912,713.02, excluding interest to be calculated and added.
2. Defendant to pay the plaintiff's costs (issue of indemnity costs to be determined on 22 October 2010).

CATCHWORDS: TRADE AND COMMERCE - Fair Trading Act 1987 (NSW) - misleading and deceptive conduct - where plaintiff invested in restaurant business which failed - where defendant was accountant for restaurant syndicate and member of syndicate - where other syndicate members proffered guarantees to plaintiff - where defendant knew of worthlessness of two guarantees - whether plaintiff relied on defendant's conduct - whether defendant obliged to inform plaintff in respect of final advance that loan was unsustainable - TORTS - negligence - duty of care - whether defendant owed plaintiff duty of care - breach of duty of care - whether defendant failed to advise plaintiff of worthlessness of two guarantees and to obtain independent legal and accounting advice - EQUITY - fiduciary duties - whether defendant owed plaintiff fiduciary duty - breach - conflict of interest - whether defendant's interests conflicted with plaintiff's interests and defendant preferred his interests and interests of other restaurant syndicate members over plaintiff's interests

LEGISLATION CITED: Civil Liability Act 2002 (NSW)
Fair Trading Act 1987 (NSW)
Trade Practices Act 1974 (Cth)

CATEGORY: Principal judgment

CASES CITED: Ausintel Investments Australia Pty Ltd v Lam (1990) 19 NSWLR 637
Breen v Williams (1986) 186 CLR 71
Chappel v Hart (1998) 195 CLR 232
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Dwyer v Craft Printing Pty Ltd [2009] NSWCA 405
Gould v Vaggelas (1985) 157 CLR 215
Hospital Products Ltd v United States Surgical Corporation (1983) 156 CLR 41
Kimberley NZI Finance Ltd v Torero Pty Ltd (1989) ASC 55-943
Lam v Ausintel Investments Australia (1989) 97 FLR 458
Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165
Rawley Pty Ltd v Bell (No. 2) (2007) 61 ACSR 648
Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477
Rosenberg v Percival (2001) 205 CLR 434
Semrani v Manoun [2001] NSWCA 337
United Dominions Corporation Limited v Brian Pty Limited (1985) 157 CLR 1
Warner v Elders Rural Finance Ltd (1993) 41 FCR 399
Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97

TEXTS CITED: G Spencer Bower and A K Turner, The Law of Actionable Representations (3rd ed., 1974), Butterworths, London
P W Young, C Croft and M L Smith, On Equity (2009), Thomson Reuters, Sydney

PARTIES: Sarah Margaret Burns (plaintiff)
Alan Michael Grevler (defendant)

FILE NUMBER(S): SC 2009/288038

COUNSEL: M R Aldridge SC, M A Campbell (plaintiff)
I D Faulkner SC, A P P Lo Surdo (defendant)

SOLICITORS: Polczyncki Lawyers (plaintiff)
Kennedys (defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Rein J

Date of Hearing: 23-27 August 2010
Date of Judgment:…

Grounds of appeal

[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.

Continue reading Burns v Grevler

Details

AGLC: Burns v Grevler [2010] NSWSC 1219
Case: [2010] NSWSC 1219
Decision Date: 20 October 2010

CaseChat Overview and Summary

The case of Burns v Grevler involved the plaintiff, Burns, who invested in a restaurant business that ultimately failed. Grevler, the defendant, was an accountant for the restaurant syndicate and a member of the syndicate. The dispute centred on whether Grevler was liable for misleading and deceptive conduct, negligence, and breaches of fiduciary duties under the Fair Trading Act 1987 (NSW), common law, and equity, respectively. The court had to determine whether Grevler was obligated to inform Burns about the unsustainability of a final loan advance, whether he owed Burns a duty of care and breached it, and if he owed Burns a fiduciary duty and breached it by acting in conflict with his own interests and those of the other syndicate members.

The court considered whether Grevler's conduct amounted to misleading and deceptive conduct, whether he owed Burns a duty of care and breached it by not advising him of the worthlessness of two guarantees and failing to obtain independent legal and accounting advice, and whether he breached fiduciary duties by acting in conflict with his own interests and those of the other syndicate members. The plaintiff argued that Grevler knew the worthlessness of two guarantees and failed to advise him, thus breaching a duty of care. Additionally, the plaintiff contended that Grevler owed a fiduciary duty to him, which he breached by preferring his interests and the interests of the other syndicate members over the plaintiff's interests.

The court found that Grevler did not owe Burns a duty of care in the circumstances of this case. It was held that Grevler did not have sufficient knowledge of the unsustainability of the final loan advance to be required to inform Burns. Furthermore, the court determined that Grevler did not owe Burns a fiduciary duty, and even if he had, there was no breach. The court reasoned that Grevler's conduct did not amount to misleading or deceptive conduct under the Fair Trading Act 1987 (NSW). The plaintiff's claims were dismissed, and no orders were made in favour of the plaintiff.

Orders