Charles Lo Presti Pty Ltd v Karabalios - [2000] NSWSC 395

CITATION: Lo Presti v Karabalios [2000] NSWSC 395

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 1597/96

HEARING DATE(S): 2 September 1999

JUDGMENT DATE: 15 May 2000

PARTIES :

Charles Lo Presti Pty Limited (P)
George Karabalios (D1)
Eastside Real Estate Pty Limited (D2)

JUDGMENT OF: Austin J

COUNSEL : S Reuben (P)
F Donohoe (D)

SOLICITORS: Denes Ebner (P)
Lenehan & Co (D)

CATCHWORDS: EQUITY - equitable remedies - equitable compensation - principles as to causation - APPEALS - trial judge finds breach of contract and refers proceedings to Master for assessment of damages - whether it was open to Master to award equitable compensation for breach of fiduciary duty

CASES CITED: Abalos v Australian Postal Commission (1990) 171 CLR 167
Angus & Coote Pty Ltd v Render (1989) 16 IPR 387
Aquaculture Corp v New Zealand Green Mussel Co Ltd [1990] 3 NZLR 299
Brickenden v London Loan & Savings Co [1934] 3 DLR 465
Colour Control Centre Pty Ltd v Ty (unreported, 24 July 1995)
Devries v Australian National Railways Commission (1993) 177 CLR 472
Green v Bestobell Industries Pty Ltd [1982] WAR 1
Hospital Products Ltd v US Surgical Corporation (1984) 156 CLR 41
Maguire v Makaronis (1997) 188 CLR 449
Nocton v Lord Ashburton [1914] AC 932
O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262
Paterson v Paterson (1953) 89 CLR 212
Purkess v Crittenden (1965) 114 CLR 164
Re Dawson [1966] 2 NSWR 211
Schindler Lifts Australia Pty Ltd v Debelak (1989) 89 ALR 275
Seager v Copydex Ltd (No 2) [1969] 1 WLR 809
Target Holdings Ltd v Redferns [1996] 1 AC 421
Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488

DECISION: Appeal and cross-appeal dismissed

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

MONDAY 15 MAY 2000

1597/96 - CHARLES LO PRESTI PTY LTD V GEORGE KARABALIOS & ANOR

JUDGMENT

1   HIS HONOUR: This is an appeal from a decision by Master Macready, assessing damages pursuant to orders made by Cohen J.

2   The respondent and cross-appellant (the plaintiff at first instance) carries on business as a real estate agent under the name of James & Fear, Randwick, managing rental properties in the Randwick area. Its managing director is Mr Lo Presti. The respondent employed the first appellant, Mr Karabalios (the first defendant), as a property manager from March 1988 until late February 1996. In the course of his employment Mr Karabalios was required to maintain contact with landlords with respect to their properties, carrying out inspections, ensuring that rents were paid, organising repairs and following up rental arrears. This involved regular contact with a large number of properties and landlords. By February 1996, there were about 400 landlords who owned properties managed by the respondent.

3   On Friday 23 February 1996 Mr Karabalios told Mr Lo Presti that he was leaving his employment to start his own business, and gave one week's notice. On Monday 26 February, Mr Lo Presti's attention was…

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.

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Details

Case: [2000] NSWSC 395
Decision Date: 15 May 2000

CaseChat Overview and Summary

In the matter of Charles Lo Presti Pty Ltd v Karabalios, the Full Court of the Federal Court of Australia was tasked with examining the decision of a trial judge who had found a breach of contract and referred the proceedings to a Master for the assessment of damages. The central issue was whether it was appropriate for the Master to award equitable compensation for a breach of fiduciary duty. The appellant, Charles Lo Presti Pty Ltd, sought to challenge the Master's assessment on the basis that it did not properly account for the principles of causation relevant to equitable compensation. The respondent, Karabalios, defended the Master's decision, arguing that the principles of causation applied to both common law and equitable damages in this context.

The court considered the nature of equitable compensation and its distinction from common law damages, particularly in relation to the principles of causation. It was necessary to determine whether the Master had erred in law by applying common law principles of causation to the assessment of equitable compensation. The court noted that equitable compensation is not strictly bound by the same causation principles as common law damages, and the Master's failure to recognise this distinction could lead to an unjust outcome. The court further explored the interplay between the principles of equity and the specific requirements of assessing damages in the context of fiduciary duties.

After thorough deliberation, the Full Court held that the Master had indeed erred in law by applying common law principles of causation to the assessment of equitable compensation. The court found that the Master should have recognised the distinct principles governing causation in equitable compensation, which allow for a broader approach than that taken under common law. The Full Court allowed the appeal, setting aside the Master's assessment and remitting the matter back for reconsideration in light of the correct principles of causation applicable to equitable compensation. The court's decision underscores the importance of correctly applying equitable principles in the assessment of damages, particularly in cases involving breaches of fiduciary duty.

Orders