Medium Neutral Citation: Galati v Deans [2021] NSWSC 1094
Hearing dates: 30 November, 1-2, 7-10, 14-15 December 2020
Date of orders: 1 September 2021
Decision date: 01 September 2021
Jurisdiction: Equity
Before: Ward CJ in Eq
Decision:
As to the statement of claim:
1.   Dismiss Mr Galati’s claim with costs.
As to the fourth amended cross-claim:
1.   Order that Mr Galati pay damages at law and/or equitable compensation to Fishbank Development Corporation in the sum of $899,910.48 (being half of the $1,799,820.95 secret commission), plus interest.
2.   Order that Wealth Shift Pty Ltd and Ms Pritchard be jointly and severally liable with Mr Galati to pay damages for misleading or deceptive conduct to Fishbank Development Corporation in the sum of $899,910.48 (being half of the $1,799,820.95 secret commission), plus interest.
3.   Order Mr Galati to pay the sum of $100,000 to Fishbank Development Corporation as exemplary damages for the tort of deceit.
4.   Order Mr Galati, Wealth Shift Pty Ltd and Ms Pritchard to pay the cross-claimants’ costs of the fourth amended cross-claim.

Catchwords:
EQUITY — Fiduciary duties — Fiduciary relationships — Partners and joint venturers — Breach — Unauthorised profit
ESTOPPEL — Promissory estoppel — Existing or expected legal relationship — Estoppel by convention — Mutual assumption
EQUITY — Assignment — Of causes of action — Nature of interest required
EQUITY — Unconscionable conduct — Special disability or disadvantage
CONSUMER LAW — Misleading or deceptive conduct — Conduct evaluated in all the circumstances— Silence or non-disclosure— “Likely” to mislead or deceive
CONSUMER LAW — Unconscionable conduct — Unconscionable conduct within the meaning of the unwritten law — Special disadvantage
CONSUMER LAW — Enforcement and remedies — Person involved in a contravention — Person knowingly concerned
TORTS — Miscellaneous torts — Deceit — Exemplary damages

Legislation Cited:
Civil Liability Act 2002 (NSW), Pt 4, ss 34-39
Companies Act 1936 (NSW), s 26, 37A, 66G
Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law, ss 2, 18, 20, 21, 75B, 87, 236
Conveyancing Act 1919 (NSW), s 37A
Corporations Act 2001 (Cth), ss 249, 477, 1322
Partnership Act 1892 (NSW), ss 1, 2, 24
Trade Practices Act 1974 (Cth), s 52

Cases Cited:
13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (in liq) (1999) 30 ACSR 377
Anthony v Morton [2018] NSWSC 1884
Attorney General for Hong Kong v Reid [1994] 1 AC 324
Ausintel Investments Australia Pty Ltd v Lam (1990) 19 NSWLR 637)
Australian Building & Technical Solutions Pty Ltd v Boumelhem; Boral Australia Ltd v Boumelhem; Boumelhem v Jones (2009) 2 ASTLR 336; [2009] NSWSC 460
Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (2021) 388 ALR 577; [2021] FCAFC 40
Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18
Bao v Qu; Tian (No 2) (2020) 102 NSWLR 435; [2020] NSWSC 588
Barnes v Addy (1874) LR 9 Ch App 244
Barrett v…

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.

Continue reading Galati v Deans

Details

AGLC: Galati v Deans [2021] NSWSC 1094
Case: [2021] NSWSC 1094
Decision Date: 01 September 2021

CaseChat Overview and Summary

In the case of Galati v Deans, the parties were Galati, a property developer, and Deans, a former partner in a joint venture. The dispute centred around allegations of breach of fiduciary duty, promissory estoppel, unconscionable conduct, and misleading or deceptive conduct under the Australian Consumer Law. The case was heard in the Supreme Court of New South Wales.

The legal issues that the court had to decide involved whether Galati breached his fiduciary duties by taking unauthorised profits from the joint venture. It was also necessary to determine if promissory estoppel applied based on the mutual assumption of a legal relationship between the parties. Furthermore, the court had to assess if there was unconscionable conduct by Galati and if Deans' silence amounted to misleading or deceptive conduct under the Australian Consumer Law. The court also needed to decide whether Deans had a special disadvantage that could be considered in assessing unconscionable conduct.

The court found that Galati did breach his fiduciary duties by taking unauthorised profits. However, the court did not find promissory estoppel applicable as there was no clear and unambiguous assumption of a legal relationship between the parties. The court found that there was unconscionable conduct by Galati due to Deans' special disadvantage, which was the lack of property development experience. The court also concluded that Deans' silence did not amount to misleading or deceptive conduct. Consequently, the court ordered Galati to compensate Deans for the unauthorised profits taken and to pay costs.

In summary, the court ruled in favour of Deans on the grounds of breach of fiduciary duty and unconscionable conduct, ordering Galati to compensate Deans and pay costs. The court found no basis for promissory estoppel or misleading or deceptive conduct under the Australian Consumer Law.

Orders