Court of Appeal
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: Galati v Deans & Ors [2023] NSWCA 13 Hearing dates: 20 September 2022; written submissions 27 and 29 September 2022 Decision date: 15 February 2023 Before: Macfarlan JA at [1];
White JA at [2];
Basten AJA at [108]Decision: (1) Appeal allowed in part.
(2) Set aside order (1) made on 1 September 2021 in the court below.
(3) In lieu thereof,
(a) Declare that the third respondent holds the shares in the fourth respondent on trust for the appellant and the second respondent as tenants in common in equal shares;
(b) Otherwise dismiss the appellant’s claim.
(4) Order that within 28 days the parties file and exchange written submissions of no more than 8 pages as to the appropriate costs orders to be made in respect of the proceedings below and of the appeal.
Catchwords: EQUITY – trusts – resulting trusts – constructive trusts – characterisation of trusts – where appellant and respondents engaged in joint venture in hope of redevelopment of Sydney Fish Market – where in the course of the joint venture companies controlled by appellant and first respondent acquired call option for the acquisition of shares in an unrelated company – where nominee company appointed to exercise call option on behalf of grantees – where grantees provided finance for nominee company to exercise call option – whether evidence established that grantees intended nominee company to hold acquired shares on trust for them in equal shares – whether such trust is properly characterised as a presumed resulting trust or a common intention constructive trust – whether parties intended that trust over shares should only arise upon allocation of units to appellant in nominee company’s unit trust – held that nominee company holds half of its shares acquired under call option deed on trust for appellant
EQUITY – fiduciary duties – secret commissions – entitlement of company related to joint venturer to commission under antecedent agency agreement – commission retained in its entirety by joint venturer’s company upon receipt – whether receipt of commission amounts to breach of fiduciary duty – whether liability of other joint venturer for breach of fiduciary duty ought to be reduced by amount of commission said to be wrongfully received and retained – no breach of fiduciary duty established in circumstances where antecedent agency agreement unconnected with joint venture
Cases Cited: Austin v Keele (1987) 10 NSWLR 283
Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59
Bijkerk Investments Pty Ltd v Bikic [2020] NSWSC 1336
Bosanac v Commissioner of Taxation [2022] HCA 34
Calverley v Green (1984) 155 CLR 242 at 246; [1984] HCA 81
Carantinos v Magafas [2008] NSWCA 304
Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353; [1956] HCA 28
Dewhirst v Edwards [1983] 1 NSWLR 34
Grant v Edwards [1986] Ch 638; 2 All ER 426
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- AGLC
- Galati v Deans [2023] NSWCA 13
- Case
- [2023] NSWCA 13
- Decision Date
CaseChat Overview and Summary
The court was required to determine whether the evidence established the intention of the grantees that the nominee company should hold the acquired shares on trust for them equally. It also had to consider the proper characterisation of any such trust, and whether the parties intended the trust to arise only upon the allocation of units in the nominee company's unit trust to the appellant. Furthermore, the court had to assess whether the receipt of a commission by a company associated with one of the joint venturers, pursuant to an agreement predating and unrelated to the joint venture, amounted to a breach of fiduciary duty.
The court found that the nominee company held half of the shares acquired under the call option deed on trust for the appellant. This trust was characterised as a presumed resulting trust, arising from the contributions made by the parties to acquire the shares. The court reasoned that the intention of the parties was for the shares to be held for their benefit in equal proportions, reflecting their financial contributions. Regarding the commission, the court held that there was no breach of fiduciary duty because the antecedent agency agreement was entirely unconnected with the joint venture.
The appeal was allowed in part. The order of the court below was set aside, and in its place, it was declared that the third respondent holds the shares in the fourth respondent on trust for the appellant and the second respondent as tenants in common in equal shares. The appellant's claim was otherwise dismissed. The parties were ordered to file written submissions regarding costs.
Orders
Orders of the court
(1) Appeal allowed in part.
(2) Set aside order (1) made on 1 September 2021 in the court below.
(3) In lieu thereof,
(a) Declare that the third respondent holds the shares in the fourth respondent on trust for the appellant and the second respondent as tenants in common in equal shares;
(b) Otherwise dismiss the appellant’s claim.
(4) Order that within 28 days the parties file and exchange written submissions of no more than 8 pages as to the appropriate costs orders to be made in respect of the proceedings below and of the appeal.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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