Cassaniti v Katavic (No 2)

This matter concerned an appeal to the Court of Appeal of New South Wales concerning claims of misleading or deceptive conduct and breaches of trust. The dispute arose from a unitholders' agreement which the appellants alleged contained unusual terms imposing a high interest obligation on excess capital contributions, inconsistent with prior informal agreements. The appellants contended that these terms were not disclosed and that the agreement was represented as "standard" or "simple," leading them to enter into it.

The Court of Appeal was required to determine whether the representations made regarding the unitholders' agreement constituted misleading or deceptive conduct under statute. Further issues included whether the appellants relied on these representations given commercial imperatives, and whether they had proven causation of loss, particularly in light of a pleaded "no transaction" case at trial and a "different transaction" case advanced on appeal. The court also considered whether a mistaken payment by a trustee became an asset of the trust, whether the trustee breached their duty by preferring one unitholder's interests, and whether leave to appeal was required against an interlocutory declaration that certain contract terms were void.

The Court of Appeal allowed the appeal in part concerning the misleading conduct claim. It set aside the primary judge's declaration that terms of the contract were void and, in lieu, dismissed the respondents' further amended statement of cross-claim. The court refused an oral application to amend the claims for relief to include specific proposed orders, but granted leave to amend to substitute a reference to the giving of security over property. The appeal against the third respondent was dismissed, and the appellants were ordered to pay the third respondent's costs. The court also directed the parties to file written submissions on the question of costs in the Court of Appeal.