HIGH COURT OF AUSTRALIA
GLEESON CJ
GUMMOW, CALLINAN, HEYDON AND CRENNAN JJFARAH CONSTRUCTIONS PTY LTD & ORS APPELLANTS
AND
SAY-DEE PTY LTD RESPONDENT
Farah Constructions Pty Ltd v Say-Dee Pty Ltd
[2007] HCA 22
24 May 2007
S347/2006 & S461/2006ORDER
1. Appeal allowed.
2. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 21 December 2005 and varied on 28 November 2006 and in their place order that the appeal to that Court from the judgment and orders of the Supreme Court of New South Wales dated 19 August 2004 and 22 November 2004 be dismissed with costs.
3. Respondent to pay the appellants' costs of the proceedings in this Court.
On appeal from the Supreme Court of New South Wales
Representation
F M Douglas QC with V R W Gray and R J Hardcastle for the appellants (instructed by Strathfield Law)
A J Sullivan QC with J K Kirk and J S Emmett for the respondent (instructed by Esplins)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
GLEESON CJ, GUMMOW, CALLINAN, HEYDON AND CRENNAN JJ. These somewhat complex appeals concern fiduciary duties in relation to land development. The reasons for judgment are organised under the following headings:
The land [2]
The nature of the proceedings in outline [3]
The parties [4]
The primary events [9]
The principals of Farah and Say-Dee meet [9]
The agreement of the parties [11]
Performance of the agreement begins [12]
Difficulties with the Council [13]
Purchases by the Elias interests [16]
Mr Elias's concealed offer to buy No 11 [20]
Procedural history [21]
Issues before this Court [29]
The need to amalgamate: disclosure of the Council's view [30]
The Court of Appeal's conclusions [30]
The evidence [32]
Did the Notice of Determination convey enough? [39]
Disclosure to Say-Dee about the possible development of No 13, No 15 or No 20: preliminary points [43]
The problem for the courts below [43]
The trial judge's reasoning [45]
Disclosure to Say-Dee about the possible development of No 13, No 15 or No 20: errors by the Court of Appeal [48]
Demeanour-based findings [48]
Contradictions in the Say-Dee affidavits [50]
Acquisition of No 15 and No 20 [63]
Acquisition of No 13 [66]
Mr Elias's financial difficulties [69]
Say-Dee's financial difficulties [78]
The concealed offer [84]
The probability that Mr Elias would ask Say-Dee to join in acquiring No 13 and No 15 [89]
The Court of Appeal's reasoning considered [90]
Did Mrs Elias and her daughters have actual knowledge of Say-Dee's rights? [100]
Scope of Farah's fiduciary duty [101]
Did Farah fulfil its obligations of disclosure? [106]
Liability of Mrs Elias and her daughters under the first limb of Barnes v Addy [110]
The "rule in Barnes v Addy" stated [111]
The Court of Appeal's reasoning on the first limb [114]
Non-application of the first limb: no receipt of property to…
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- Case
- [2007] HCA 22
- Decision Date
CaseChat Overview and Summary
The legal issues before the High Court included whether Mr. Elias, as a fiduciary, breached his duty to Farah Constructions and, by extension, to the joint venture with Say-Dee, by failing to disclose information about the adjoining properties and the council's stance on redevelopment. Further, the Court had to determine if the properties acquired by Mr. Elias's wife and children, who were registered proprietors, were subject to a constructive trust, either through knowing receipt under the first limb of *Barnes v Addy* or as knowing participants in a dishonest and fraudulent design under the second limb. The Court also considered whether the doctrine of unjust enrichment applied to impose restitutionary liability and whether the indefeasibility provisions of the *Real Property Act 1900* (NSW) protected the registered title of Mr. Elias's wife and children against these claims.
The High Court allowed the appeal, setting aside the orders of the Court of Appeal. The Court reasoned that the trial judge's findings of fact, particularly regarding the knowledge and intentions of Mr. Elias's wife and children, were not demonstrably wrong and should not have been overturned by the Court of Appeal. The Court found that the evidence did not establish that the wife and children had the requisite knowledge to be liable under the principles of *Barnes v Addy* or that their registered title was subject to an *in personam* claim for constructive trust. The Court also held that the Court of Appeal had erred in deciding the appeal on grounds not argued before it and on matters not pleaded at trial. Consequently, the appeal to the Court of Appeal was dismissed, and the respondent was ordered to pay the appellants' costs.
Orders
Orders of the court
1. Appeal allowed.
2. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 21 December 2005 and varied on 28 November 2006 and in their place order that the appeal to that Court from the judgment and orders of the Supreme Court of New South Wales dated 19 August 2004 and 22 November 2004 be dismissed with costs.
3. Respondent to pay the appellants' costs of the proceedings in this Court.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Established by: GLEESON CJ, CJ, GUMMOW, CALLINAN, HEYDON AND CRENNAN JJ
Full text does not contain this section.