Farah Constructions Pty Ltd & Ors v Say-Dee Pty Ltd - [2006] HCATrans 682

[2006] HCATrans 682

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S347 of 2006

B e t w e e n -
FARAH CONSTRUCTIONS PTY LTD
First Appellant
FARAH ELIAS
Second Appellant
LESMINT PTY LTD
Third Appellant
MARGARET ELIAS
Fourth Appellant
SARAH ELIAS
Fifth Appellant
JADE ELIAS
Sixth Appellant
and
SAY-DEE PTY LTD
Respondent

GLEESON CJ
GUMMOW J
CALLINAN J
HEYDON J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 12 DECEMBER 2006, AT 10.18 AM

__________________

MR F.M. DOUGLAS, QC: May it please the Court, I appear with my learned friends, MR V.R.W. GRAY and MR R.J. HARDCASTLE, for the appellants in this matter. (instructed by Strathfield Law)

MR A.J. SULLIVAN, QC: May it please the Court, I appear with my learned friends, MR J.K. KIRK and MR J.S. EMMETT, for the respondent. (instructed by Esplins)

GLEESON CJ: Yes, Mr Douglas.

MR DOUGLAS: There are just some procedural matters which may need to be handled beforehand, one of which is the summons seeking to raise, if necessary, any amended grounds of appeal. I have an amended summons which I think the Court has and my learned friends have. The Court may feel it is appropriate to deal with that matter during the course of the hearing, but to a certain extent I am in my learned friend’s hands and the Court’s hands.

GLEESON CJ: Is that opposed, Mr Sullivan?

MR SULLIVAN: In respect of one ground only, your Honour, that is the second ground, the substitute ground 9.

GLEESON CJ: Why do we not hear argument from the parties and then we can decide what we will do about the application in the light of the argument we hear from the parties.

MR SULLIVAN: If your Honour pleases, we have no problem with that, and may I just add my own housekeeping there? We have foreshadowed in our written submissions a notice of contention which we would seek leave to file as well and I take it that ‑ ‑ ‑

GLEESON CJ: What is your attitude to that, Mr Douglas?

MR DOUGLAS: We have made our attitude known in our reply submissions and we are content to have that dealt with in the course of argument.

GLEESON CJ: All right, we will do the same with that, too. Yes, Mr Douglas.

MR DOUGLAS: If it please the Court.

GUMMOW J: Was there not a judgment last week in the Court of Appeal varying the orders?

MR DOUGLAS: That is the other matter which I wanted ‑ ‑ ‑

GUMMOW J: That would seem to change the subject matter.

MR DOUGLAS: It does, yes, your Honour. The orders which are under appeal have been changed and it seems to us that, as we have intimated in our reply submissions, the Court may need to give consideration to giving special leave to appeal from that matter as well so that the whole matter can…

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: [2006] HCATrans 682
Decision Date

CaseChat Overview and Summary

Farah Constructions Pty Ltd and others (the appellants) appealed to the High Court of Australia against a decision of the New South Wales Court of Appeal, which had found them liable to Say-Dee Pty Ltd (the respondent) for breaches of fiduciary duty. The dispute concerned the development of land at 11-13 Ramsay Street, Haberfield, New South Wales. Say-Dee Pty Ltd, a joint venturer with Farah Constructions in the development, alleged that Farah Constructions and its directors had breached their fiduciary duties by acquiring adjoining properties for their own benefit without the consent of Say-Dee.

The High Court was required to determine whether the directors of Farah Constructions had breached their fiduciary duties owed to Say-Dee Pty Ltd by acquiring the adjoining properties. Specifically, the court considered whether the appellants had acted in their own interests to the detriment of the joint venture and whether they had obtained the consent of Say-Dee to acquire these properties. The court also had to consider the application of the rule in *Barnes v Addy* concerning liability for knowing assistance in a breach of trust or fiduciary duty.

The High Court held that the directors of Farah Constructions had breached their fiduciary duties to Say-Dee Pty Ltd. The court reasoned that the appellants, as fiduciaries, were prohibited from placing themselves in a position where their personal interests conflicted with their duty to the joint venture. The acquisition of the adjoining properties for their own benefit, without the informed consent of Say-Dee, constituted a breach of this duty. The court affirmed that the rule in *Barnes v Addy* requires proof of dishonesty or a wilful and reckless disregard of the plaintiff's rights for a third party to be liable for knowing assistance. In this instance, the appellants' conduct was found to be a breach of their fiduciary obligations.

The High Court dismissed the appeal, upholding the decision of the New South Wales Court of Appeal. The appellants were found liable to Say-Dee Pty Ltd for the breaches of fiduciary duty.

Orders