Calvo v Sweeney

The plaintiffs, Calvo, sought relief against Sweeney, their former adviser, who had been retained to either find purchasers for their shares or to raise capital to repay a loan. Sweeney instead obtained control of the company and procured a substantial shareholding for himself without consideration. The plaintiffs alleged that Sweeney had breached fiduciary obligations and acted to their detriment. The court was required to determine whether Sweeney owed fiduciary duties to the plaintiffs, whether those duties were breached, and if so, what equitable remedies were appropriate. The court also had to consider whether the plaintiffs' claims were barred by acquiescence, laches, or whether any equitable relief should be conditional on a just allowance for time spent on the company's affairs or donations made to the company.

The court found that Sweeney owed fiduciary duties to the plaintiffs given the relationship of dependence, vulnerability, and confidence. It was established that Sweeney had actual influence over the plaintiffs and acted in a manner that conflicted with his duties. The court held that a transaction procured by actual influence could be set aside if it was not fair, just, and reasonable. The court rejected the notion that there was a presumption of undue influence but found actual influence had been exercised. The plaintiffs' claims were not barred by acquiescence or laches, as there was no clear and unequivocal conduct by the plaintiffs that amounted to an abandonment of their rights. The court also determined that equitable relief should not be conditional on a just allowance for time spent on the company's affairs or donations made to the company.

The court ordered Sweeney to account for profits made from the unfair procurement of the shareholding and to hold those profits on constructive trust for the plaintiffs. Additionally, the court ordered Sweeney to compensate the plaintiffs for any loss caused by his breach of fiduciary duty. The court's decision underscored the importance of fiduciary loyalty and the need to protect vulnerable parties from exploitation by those in positions of trust and confidence.