FTV Holdings Cairns Pty Ltd v Smith - [2014] QCA 217

SUPREME COURT OF QUEENSLAND

CITATION:

FTV Holdings Cairns Pty Ltd v Smith [2014] QCA 217

PARTIES:

FTV HOLDINGS CAIRNS PTY LTD
ACN 082 256 791
(appellant)
v
ROBIN LINDSAY SMITH
(respondent)

FILE NO/S:

Appeal No 12316 of 2013
DC No 311 of 2008

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

District Court at Brisbane

DELIVERED ON:

29 August 2014

DELIVERED AT:

Brisbane

HEARING DATE:

4 August 2014

JUDGES:

Holmes and Fraser JJA and Ann Lyons J
Separate reasons for judgment of each member of the Court, each concurring as to the order made

ORDER:

Appeal dismissed with costs.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – ACCEPTANCE – GENERALLY – PARTICULAR CASE – where the respondent solicitor acted for clients (“the borrowers”) who owed money to the appellant – where the appellant’s solicitor and the respondent negotiated an “Irrevocable Authority” whereby the borrowers irrevocably directed their debt to be paid out of the proceeds of an anticipated sale of their house – where the borrowers executed that document, gave it to the respondent, and where the respondent sent it to the appellant – where the borrowers sold the house but did not repay their debt and are now insolvent – where the appellant seeks to recover from the respondent – where the respondent argues there was no concluded contract between the appellant and the borrowers upon the terms of the authority – whether amendments made during negotiation abrogated the appellant’s acceptance – whether the appellant by its subsequent conduct nonetheless confirmed its acceptance of the authority

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSIDERATION – WHAT AMOUNTS TO CONSIDERATION – GENERAL – where the respondent argues there was no contract between the appellant and the borrowers upon the terms of the authority because the appellant gave no valuable consideration – whether the appellant gave consideration by forbearing to sue and/or by accepting a lower interest rate on the debt

CONTRACTS – PARTICULAR PARTIES – PRINCIPAL AND AGENT – RELATIONS BETWEEN AGENT AND THIRD PERSONS – LIABILITES OF AGENT – IN RESPECT OF MONEY RECEIVED – where the appellant argues the respondent is liable as an agent of the borrowers on the basis of Art 112 of Bowstead and Reynolds on Agency, a form of common law attornment of money – where the respondent had negotiated the Irrevocable Authority and sent it to the appellant – whether the respondent by his conduct impliedly promised the appellant that the debt would be repaid – whether the respondent ever received the proceeds of sale

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – PARTIES – RIGHTS AND LIABILITIES OF THIRD PARTIES – where the appellant argues the respondent is liable under s 55 of the Property Law Act 1974 – whether the respondent made any promise for the benefit of the appellant within the meaning of s 55 of that Act

EQUITY – TRUSTS AND TRUSTEES – IMPLIED TRUSTS – CONSTRUCTIVE TRUSTS – GENERALLY – where the appellant argues…

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: [2014] QCA 217
Decision Date: 29 August 2014

CaseChat Overview and Summary

In FTV Holdings Cairns Pty Ltd v Smith, the appellant, a finance company, sued the respondent, a solicitor, for the recovery of a debt owed by the respondent's clients. The dispute centred on whether the solicitor could be held liable for the clients' failure to repay the debt from the proceeds of a house sale. The appellant and the solicitor had negotiated an "Irrevocable Authority" whereby the clients directed the debt to be paid from the sale proceeds. The clients executed this document, gave it to the solicitor, who then sent it to the appellant. The clients sold the house but did not repay the debt, and the solicitor was subsequently sued by the appellant.

The legal issues the court had to decide included whether amendments made during negotiations abrogated the appellant's acceptance of the Irrevocable Authority, whether the appellant gave consideration by forbearing to sue or by accepting a lower interest rate, and whether the solicitor was liable as an agent for the clients or under a constructive trust or for breach of the second limb of the rule in Barnes v Addy. Additionally, the court had to consider whether the appellant's failure to plead specific allegations about the clients' and solicitor's states of mind precluded the appellant from succeeding on the basis of a breach of the second limb of the rule in Barnes v Addy.

The court held that there was no concluded contract between the appellant and the clients upon the terms of the Irrevocable Authority, as amendments during negotiation abrogated the appellant's acceptance. The court also held that the appellant did not give valuable consideration for the Irrevocable Authority. The solicitor was not liable as an agent for the clients because the Irrevocable Authority did not create a fiduciary relationship between the parties, and there was no evidence the solicitor ever held the balance of the sale proceeds. The court further held that the appellant's failure to plead that the clients dishonestly and fraudulently breached their fiduciary duties and that the solicitor knew the facts from which such an inference should be drawn precluded the appellant from succeeding on the basis of a breach of the second limb of the rule in Barnes v Addy. The appeal was dismissed with costs.

The court concluded that the appellant's case against the solicitor was unsuccessful on the basis of the Irrevocable Authority, agency, constructive trust, and breach of the second limb of the rule in Barnes v Addy. The appellant's failure to plead specific allegations about the clients' and solicitor's states of mind further precluded the appellant from succeeding on the basis of a breach of the second limb of the rule in Barnes v Addy. The appeal was dismissed with costs.

Orders

Orders of the court

Appeal dismissed with costs.

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

Full text does not contain this section.

CITATION:	FTV Holdings Cairns Pty Ltd v Smith [2014] QCA 217
PARTIES:	FTV HOLDINGS CAIRNS PTY LTD ACN 082 256 791 (appellant) v ROBIN LINDSAY SMITH (respondent)
FILE NO/S:	Appeal No 12316 of 2013 DC No 311 of 2008
DIVISION:	Court of Appeal
PROCEEDING:	General Civil Appeal
ORIGINATING COURT:	District Court at Brisbane
DELIVERED ON:	29 August 2014
DELIVERED AT:	Brisbane
HEARING DATE:	4 August 2014
JUDGES:	Holmes and Fraser JJA and Ann Lyons J Separate reasons for judgment of each member of the Court, each concurring as to the order made
ORDER:	Appeal dismissed with costs.
CATCHWORDS:	CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – ACCEPTANCE – GENERALLY – PARTICULAR CASE – where the respondent solicitor acted for clients (“the borrowers”) who owed money to the appellant – where the appellant’s solicitor and the respondent negotiated an “Irrevocable Authority” whereby the borrowers irrevocably directed their debt to be paid out of the proceeds of an anticipated sale of their house – where the borrowers executed that document, gave it to the respondent, and where the respondent sent it to the appellant – where the borrowers sold the house but did not repay their debt and are now insolvent – where the appellant seeks to recover from the respondent – where the respondent argues there was no concluded contract between the appellant and the borrowers upon the terms of the authority – whether amendments made during negotiation abrogated the appellant’s acceptance – whether the appellant by its subsequent conduct nonetheless confirmed its acceptance of the authority CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSIDERATION – WHAT AMOUNTS TO CONSIDERATION – GENERAL – where the respondent argues there was no contract between the appellant and the borrowers upon the terms of the authority because the appellant gave no valuable consideration – whether the appellant gave consideration by forbearing to sue and/or by accepting a lower interest rate on the debt CONTRACTS – PARTICULAR PARTIES – PRINCIPAL AND AGENT – RELATIONS BETWEEN AGENT AND THIRD PERSONS – LIABILITES OF AGENT – IN RESPECT OF MONEY RECEIVED – where the appellant argues the respondent is liable as an agent of the borrowers on the basis of Art 112 of Bowstead and Reynolds on Agency, a form of common law attornment of money – where the respondent had negotiated the Irrevocable Authority and sent it to the appellant – whether the respondent by his conduct impliedly promised the appellant that the debt would be repaid – whether the respondent ever received the proceeds of sale CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – PARTIES – RIGHTS AND LIABILITIES OF THIRD PARTIES – where the appellant argues the respondent is liable under s 55 of the Property Law Act 1974 – whether the respondent made any promise for the benefit of the appellant within the meaning of s 55 of that Act EQUITY – TRUSTS AND TRUSTEES – IMPLIED TRUSTS – CONSTRUCTIVE TRUSTS – GENERALLY – where the appellant argues…