Galati v Deans

[2021] NSWSC 1094

Supreme Court

New South Wales

• Summary available

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 Maradaca Pty Ltd [2020] NSWSC 440

Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59

BB Australia Pty Ltd v Danset Pty Ltd [2018] NSWCA 101

Blomley v Ryan (1956) 99 CLR 362

BM Sydney Building Materials Pty Ltd v AWT Building Group (Aust) Pty Ltd [2019] NSWSC 421

Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600; [1982] HCA 53

Boulos Holdings Pty Ltd v Edwin Davy Pty Ltd [2021] NSWSC 689

Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61

Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66

Bristol and West Building Society v Mothew [1998] Ch 1

BSP Technical Services Pty Ltd v AMEV-UDC Finance Ltd (Supreme Court (NSW), Hodgson J, 25 March 1985, unrep

Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60

Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) (1974) 131 CLR 321

Cassell & Co Ltd v Broome [1972] AC 1027

Cetojevic v Cetojevic [2006] NSWSC 431

Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14

Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373; [1975] HCA 8

County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193

Cresswell v Potter [1978] 1 WLR 255

Cribb v Korn (1911) 12 CLR 205

Daraydan Holdings Ltd v Solland International Ltd [2005] Ch 119

Delehunt v Carmody (1986) 161 CLR 464; [1986] HCA 67

Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31

DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728; [2011] NSWCA 348

Director General, Department of Services, Technology and Administration v Veall (No 4) [2011] NSWSC 904

Domain Administration v Domain Names Australia Pty Ltd (2004) 207 ALR 521; [2004] FCA 424

Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105

Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8

Falcke v Scottish Imperial Insurance Company (1887) LR 34 ChD 234

Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 98; [2007] HCA 22

FHR European Ventures LLP v Mankarious [2015] AC 250

Furs Ltd v Tomkies (1936) 54 CLR 583; [1936] HCA 3

Galati v Deans (No 2) [2018] NSWSC 181

Giorgianna v R (1985) 156 CLR 473; [1985] HCA 29

Gipps v Gipps [1978] 1 NSWLR 454

Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82

Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435; [2013] HCA 1

Gould v Vaggelas (1984) 157 CLR 215; [1984] HCA 68

Grant v Gold Exploration and Development Syndicate Ltd [1900] 1 QB 233

Gray v Motor Accident Commission (1998) 196 CLR 1; [1998] HCA 70

Greenaway v Auzhair 1 Pty Ltd (2010) 80 ACSR 538; [2010] NSWSC 1339

Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6

Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298; [2003] NSWCA 10

Havyn Pty Ltd v Webster (2005) 12 BPR 22,837; [2005] NSWCA 182

He Kaw Teh v R (1985) 157 CLR 523; [1985] HCA 43

Hill v James [2004] NSWSC 55

Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64

Howard v Mechtler (1999) 30 ACSR 434; [1999] NSWSC 232

Hybernia Management & Development Co v Newfoundland Steel Inc (1996) NFLD & PEIR 91

Indeco Pacific Pty Ltd v Geneva Investments Pty Ltd [2012] VSC 621

Industrial Equity Ltd v Lyons (Supreme Court (NSW), Cohen J, 15 October 1991, unrep)

Industries & General Mortgage Company Ltd v Lewis [1949] 2 All ER 573

Ipstar Australia Pty Ltd v APS Satellite Pty Ltd (2018) 356 ALR 440; [2018] NSWCA 15

James v Hill [2004] NSWCA 301

Jiangsu Lianguan Zhaoxing Petrochemical Science and Technology Co Ltd v Wu [2021] VSC 228

John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19

John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451

Johnson v Mackinnon [2012] NSWCA 152

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

King v Adams [2016] NSWSC 1798

Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458

Lewis v Australian Capital Territory (2020) 381 ALR 375; [2020] HCA 26

Liquor National Wholesale Pty Ltd v Redrock Co Pty Ltd [2007] NSWSC 392

Magill v Magill (2006) 226 CLR 551; [2006] HCA 51

Marzec v Lysiak [2015] NSWSC 647

Metalcorp Recyclers Pty Ltd v Metal Manufactures Ltd (2004) ASAL (Digest) 55-119; [2003] NSWCA 213

Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48

Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31

Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106

Moratic Pty Ltd v Gordon (2007) 13 BPR 24,713; [2007] NSWSC 5

Mortimer v Ah Sam [2020] NSWSC 1763

Musca and Others v Astle Corporation Pty Ltd (1988) 80 ALR 251

Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78

O’Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262

Owen v Tate [1976] QB 402

Owners of Strata Plan 5290 v CGS & Co Pty Ltd (2011) 81 NSWLR 285; [2011] NSWCA 168

Panama and South Pacific Telegraph Company v India Rubber, Gutta Percha and Telegraph Works Company (1875) LR 10 Ch App 515

Payne v Parker [1976] 1 NSWLR 191

Pentridge Village Pty Ltd (in liq) v Capital Finance Australia Ltd (2018) 58 VR 1; [2018] VSC 633

Phillips-Higgins v Harper [1954] 1 QB 411

Placer Development Ltd v The Commonwealth (1969) 121 CLR 353; [1969] HCA 29

Rafferty v Madgwicks (2012) 203 FCR 1; [2012] FCAFC 37

Re Anglican Development Fund Diocese of Bathurst (2015) 336 ALR 372; [2015] NSWSC 1856

Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ASCR 223; l2104] NSWSC 789

Re Steel; Public Trustee v Christian Aid Society [1979] Ch 218; 2 All ER 1026

Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99

Reinhold v New South Wales Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187

Rema Tip Top Asia Pacific Pty Ltd v Gruterich [2019] NSWSC 1594

Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65

Sealed Air Australia Pty Ltd v Aus-lid Enterprises Pty Ltd (2020) 375 ALR 324; [2020] FCA 29

Semrani v Manoun ; Williams v Manoun [2001] NSWCA 337

Sergienko v AXL Financial Pty Ltd [2021] NSWSC 297

Sydney Water Corporation v Makucha [2010] NSWSC 114

T Mahesan s/o Thambiah v Malaysia Government Officers Co-op Housing Society Ltd [1978] 2 WLR 444

Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177

The Nominal Defendant v Cordin (2017) 79 MVR 210; [2017] NSWCA 6

Thorby v Goldberg (1964) 112 CLR 597; [1964] HCA 41

Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49

Tonto Home Loans Australia Pty Ltd v Tavares (2011) 15 BPR 29,699; [2011] NSWCA 389

Trio Capital Ltd (Admin App) v ACT Superannuation Management Pty Ltd (2010) 79 ACSR 425; [2010] NSWSC 941

United Builders Pty Ltd v Mutual Acceptance Ltd (1980) 144 CLR 673

United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1

Violet Home Loans Pty Ltd v Schmidt (2013) 44 VR 202; [2013] VSCA 56

Vouzas v Bleake House Pty Ltd [2013] VSC 534

Walters v Scarborough [2011] NSWSC 1380

Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7

Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18

Watson v Foxman (1995) 49 NSWLR 315

Weiner v Harris [1910] 1 KB 285

West v Mead [2003] NSWSC 161

White v Philips Electronics Australia Ltd [2019] NSWCA 115

Yorke v Lucas (1983) 49 ALR 672

Zobory v Federal Commission of Taxation (1995) 64 FCR 86

Texts Cited:

Roderick l’Anson Banks, Lindley & Banks on Partnership (18th ed, 2002, Sweet & Maxwell)

Category:

Principal judgment

Parties:

Dominic Gerardo Galati (Plaintiff)
Robert Paton Deans (First Defendant)
Fishbank Development Corporation Limited (Second Defendant)
TRHS Pty Ltd (Third Defendant)
Felan’s Fisheries Pty Ltd (Fourth Defendant)
Trading Australia Pty Ltd (in liq)(Fifth Defendant)
Wealth Shift Pty Ltd (Eighth Cross-Defendant)
Caroline Pritchard (Ninth Cross-Defendant)

Representation:

Counsel:
Mr R Marshall SC with Mr A Butt (Plaintiff)
Mr M Einfeld QC with Mr P Barham (First to Fourth Defendants/Cross-Claimants)
Mr M Fantin (Eighth and Ninth Cross Defendants)

Solicitors:
Nelson McKinnon (Plaintiff)
FCB Group (First to Fourth Defendants/Cross Claimants)
Conceptual Commercial (Eighth and Ninth Cross Defendants)

File Number(s):

2016/00360462

Publication restriction:

Nil

Judgment

1. HER HONOUR: Before me for hearing late last year was a dispute arising out of a proposal for the redevelopment of the Sydney Fish Markets and surrounding areas at Blackwattle Bay, including as to the disputed ownership of shares in the third defendant, TRHS Pty Ltd (TRHS), which relevantly owns shares in a company known as Felan’s Fisheries Pty Ltd (Felan’s Fisheries) (the fourth defendant).

2. The significance (at least at the time of the events the subject of this proceeding, although it is by no means clear that the shares retain quite the same significance now) of the shares in Felan’s Fisheries is that Felan’s Fisheries has a 25% shareholding in another company, SFM Tenants and Merchants Pty Ltd (referred to as “Buyers”).

3. Buyers is a 50% shareholder of the company which operates the Sydney Fish Markets (Sydney Fish Markets Pty Ltd, to which I will refer as SFM). Buyers (as its name suggests) represents the interests of the merchants who buy the catch from the fishermen (and women, one would assume) for ultimate sale at the Sydney Fish Markets (where the merchants occupy tenancies). The other 50% shareholder of SFM is an entity that represents the fishermen (and women) themselves (N.S.W. Fishermen’s Holding Company Pty Ltd, referred to as “Catchers”). There was in evidence a Shareholders’ Agreement dated 27 September 1994 between the two shareholders of SFM but it is not necessary here to explore the detail of that agreement as nothing turns on it.

4. SFM owns the Sydney Fish Market site and leases or licenses stalls or premises at the Sydney Fish Markets for occupation by those whose interests are represented by Buyers.

5. The strategic importance of the shareholding in Felan’s Fisheries (originally owned by Bidvest Australia Ltd (Bidvest), the owner of an adjacent site – the Bidvest Land) is that it was recognised by the parties involved in the Blackwattle Bay redevelopment project that the support of SFM would be required for any redevelopment proposal that involved the Sydney Fish Markets (and that control or influence over Buyers was a means of progressing support from SFM for the proposal). At the time of some of the events in question it appears that there was a live dispute within SFM or the Board of SFM as to whether it should support the redevelopment proposal then under consideration.

6. It is also relevant to note at the outset that the redevelopment proposal (which from at least 2013 came to be referred to as “Destination Blackwattle Bay”) was not confined to the Sydney Fish Markets site itself. It comprised a much larger area, including various sites owned by third parties (those sites being the Bidvest Land, to which I have referred briefly above; a former concrete company site referred to as the Hymix Site; land owned by other Sydney Fish Markets tenants, the Poulos brothers – referred to as the Poulos Land; and one or more marinas on Crown land on the waterfront at Blackwattle Bay). Thus, any redevelopment proposal of the kind envisaged required the acquisition of, or rights over, much more than the Bidvest Land alone (as well as the support from SFM in relation to the Sydney Fish Markets site).

7. The proposed redevelopment was contemplated to be in the order of some $1.6 billion. It was envisaged that there would be significant profits flowing through to the parties involved in the redevelopment were it to come to fruition (which it did not); the “worst case” scenario contemplated in some of the documents in evidence being a $100 million profit to be shared between the parties in varying proportions. Perhaps unsurprisingly, therefore, there appear to have been any number of people keen to share in the anticipated profits of the proposed development or to earn commissions or fees either in the course of the redevelopment project or after its completion. Somewhat implausibly, the plaintiff (Mr Dominic Galati) suggested that he was not one such person (insisting in cross-examination that he did not care about the money – a position belied by the impassioned submissions made on Mr Galati’s behalf as to the unfairness of him not having received “even one cent” from the first and second defendants in relation to his work for the project).

8. The principal dispute in the present proceeding is between, on the one hand, Mr Galati, on his own account an experienced businessman, who controlled the fifth defendant (a company now in liquidation – Trading Australia Pty Ltd (Trading Australia)); and, on the other hand, the first and second defendants (Mr Robert Deans, a real estate agent; and a company controlled by Mr Deans, Fishbank Development Corporation Pty Ltd (Fishbank)) (see the further amended statement of claim filed on 8 October 2020).

9. Mr Deans and Fishbank have in turn brought cross-claims against, relevantly, not only Mr Galati but also the eighth and ninth cross-defendants (Wealth Shift Pty Ltd (Wealth Shift)) and its principal (Ms Caroline Pritchard, a real estate agent and business broker) seeking relief, among other things, in relation to the payment of an alleged secret commission to Mr Galati or Trading Australia in connection with the sale of the Bidvest Land (see fourth amended statement of cross-claim filed on 7 November 2018). There is no dispute that the payment was made (nor that it was made without the knowledge of Mr Deans and Fishbank); simply a dispute as to its characterisation as a secret commission and as to whether Mr Galati (or the eighth and ninth cross-defendants) should in some way be required to account for some or all of that payment.

10. Claims made by Mr Deans and Fishbank in an earlier iteration of their cross-claim against another entity (EJC Pyrmont Pty Ltd, to which I will refer as EJC), that being the entity which ultimately bought the Bidvest Land, were settled prior to the hearing. EJC’s Chief Executive Officer, Mr John Vassallo, gave evidence on subpoena at the hearing.

11. As to the remaining parties, the third defendant, TRHS, is the entity which now holds the shares in Felan’s Fisheries and which is presently controlled by Mr Deans. (There is a dispute between the principal protagonists as to the control of TRHS.) The fourth defendant is Felan’s Fisheries. The fifth defendant is Trading Australia (formerly, the second plaintiff) which, as noted above, is now in liquidation and which, during the course of the proceeding, assigned its choses in action in the proceeding to Mr Galati. Neither TRHS nor Trading Australia took any active role in the hearing. Felan’s Fisheries was represented by the Deans interests in the litigation.

Introduction

12. By way of further introduction, for some time since at least around 2002, Mr Deans (the sole director and shareholder of Fishbank) had been working on his concept or vision for the redevelopment of the area at Blackwattle Bay comprising the Sydney Fish Markets and adjacent lands; which included the proposed acquisition of a property located adjacent to the Sydney Fish Markets in Bank Street (referred to in the fourth amended statement of cross-claim and in these reasons as the Bidvest Land). Mr Deans’ company, Deans Property Pty Ltd (Deans Property), a licensed real estate agency, entered into an agency agreement at some stage around 2002 with the owner of the Bidvest Land for commission in the event of the introduction of a purchaser for the site.

13. At some stage in or around 2014 (the precise timing of this being uncertain), Mr Galati (the sole director and secretary of Trading Australia) became involved in the redevelopment project (initially, it would seem, in the role of assisting Mr Deans and his company, Fishbank, to identify and liaise with particular funders of or investors in the project or at least for the acquisition of the Bidvest Land – and, I might add, Mr Galati did so seemingly on an unpaid basis at least at first, no doubt with an entrepreneurial view to potential remuneration or reward in some fashion if those efforts proved successful).

14. Over the period from then until late 2015, Mr Galati and Trading Australia (to whom I will refer jointly, where relevant, as the “Galati interests”) worked with Mr Deans and Fishbank (to whom I will refer jointly as the “Deans interests”) to progress the “project” (i.e., the proposed redevelopment of the overall Blackwattle Bay site).

15. The precise capacity in which the Galati interests were involved in the course of the project was a matter of no little contention in the proceeding. Mr Galati’s position is that (at some point, although not at the outset of his involvement with the Deans interests) a partnership relationship was formed between the relevant interests (i.e., Mr Galati and Mr Dean or, perhaps, the Galati interests and the Deans interests to the extent that their respective corporate entities were involved in the project). Mr Deans denies that there was a partnership as such but nevertheless seems to accept that, by the time of the events in the latter part of 2015, there was some form of joint venture or joint endeavour relationship in place with Mr Galati (and, indeed, part of the cross-claim is predicated on the existence of fiduciary duties arising out of that relationship).

12. On or about 24 April 2015, as part of arrangements in relation to the proposed sale of the Bidvest Land to a Chinese company within the Dahua group of companies, Fishbank and Trading Australia entered into a call option agreement providing them with an option to enter into a share sale agreement to acquire the shares of Felan’s Fisheries (the Share Option Agreement). Felan’s Fisheries was, at the time, a leaseholder of premises at the Sydney Fish Markets and, through Buyers, had an indirect interest in SFM, the company which (as noted above) managed and operated the Sydney Fish Markets.

13. The grantor of the option under the Share Option Agreement was Dahua Fish Market No. 2 Pty Ltd (Dahua No 2), by then the registered owner of all the shares in Felan’s Fisheries (having acquired those shares from Bidvest). There was provision under the Share Option Agreement for Fishbank and Trading Australia to nominate a nominee to become the registered owner of the shares upon the proper exercise of the option. Ultimately (after a series of events to which I refer in due course, including the rescission and then further grant of the option), the option fell to be exercised by no later than 5pm on 20 November 2015.

14. There was at the same time, and interdependent on the exercise of the option under the Share Option Agreement, another call option agreement (the Land Option Agreement). The Land Option Agreement was entered into with another company among the Dahua group of companies (Dahua Fish Market No. 1 Pty Ltd, to which I refer as Dahua No 1), by then the registered owner of the Bidvest Land, under which Fishbank and Trading Australia were granted the option to acquire the Bidvest Land. That option was (again after its rescission and then the grant of a new option to the same effect) ultimately required to be exercised by 5pm on 20 November 2015. As adverted to above, the exercise of the respective options was “inter-conditional”, each only being able to be exercised if the other was exercised at the same time.

15. Attempts to secure finance for the overall proposed redevelopment project ultimately proved to be unsuccessful and, at some point prior to 20 November 2015 (the date on which the respective call options were to expire), it appears that a decision was made by the respective Deans and Galati interests that it would be necessary to sell the option rights (in order to preserve any ability later to progress the proposed redevelopment proposal). There is no doubt that there was by then (and had been for at least a few months) a financial imperative to identify a third party investor or financier to enable the option rights to be exercised (and to preserve some ability to proceed with the proposed redevelopment). Mr Deans (as will be seen in due course) attributes the cause of this financial pressure to the Galati interests and seems to believe that this was calculated to force him out of the project or to agree to a deal on Mr Galati’s terms. (I am not persuaded that the financial pressure at this time was caused by the Galati interests or part of some grand conspiracy to deprive the Deans interests of their involvement in the project; rather, it seems to me that it was a culmination of events, as evidenced by the chronology of events that I set out shortly.)

16. In November 2015, metaphorically at the eleventh hour, Celestino Pty Ltd (Celestino) then became involved in the transaction, following an introduction facilitated (through Mr Galati) by Ms Caroline Pritchard, the principal of Wealth Shift. EJC (as noted above, formerly but no longer a party to this proceeding), a company associated with Celestino, was incorporated as a special purpose vehicle for the purpose of exercising the option to acquire the Bidvest Land. However, the proposed arrangement was that the shares in Felan’s Fisheries would be acquired in the names of Fishbank and Trading Australia, or their nominee.

17. To give effect to this arrangement, on 20 November 2015, a Nomination Agreement was executed, pursuant to which TRHS was nominated to exercise the option contained in the Share Option Agreement and EJC was nominated as the purchaser of the Bidvest Land. EJC duly acquired the Bidvest Land pursuant to the Land Option Agreement. Under the Nomination Agreement, Fishbank and Trading Australia were to have rights to share in the development profit if the Bidvest Land was ultimately redeveloped by EJC.

18. Mr Galati’s complaint in the present proceeding is that Mr Deans and Fishbank have subsequently refused to acknowledge his (or Trading Australia’s) claimed 50% beneficial interest in the shares in Felan’s Fisheries (of which TRHS is the registered owner). Mr Galati contends that TRHS holds 50% of the shares in Felan’s Fisheries on trust for him and 50% on trust for Fishbank (and seeks a declaration to that effect); or, alternatively, that Mr Deans holds the shares in TRHS on trust as to 50% for Mr Galati (and alternatively seeks a declaration to that effect). Complaint is also made as to the removal (at Mr Deans’ behest) of Trading Australia’s nominee director on the board of TRHS (Mr Thanh-Chi Pho); and relief is sought in this regard.

19. By their cross-claim, Mr Deans and Fishbank have cross-claimed against Mr Galati, Wealth Shift and Ms Pritchard contending, among other things, that Mr Galati and/or Trading Australia sought and obtained a secret commission from EJC in connection with the sale of the call option rights (namely, the payment to Trading Australia of a sum of $1,799,820.95 that was invoiced by Wealth Shift to EJC at Trading Australia’s direction after the sale of the Bidvest Land for alleged “property advisory services”; that amount being paid to Wealth Shift by EJC’s holding company, Baiada Pty Ltd (Baiada), and on-paid to Trading Australia without the Deans interests’ knowledge. Claims are also made for damages for false or misleading conduct or unconscionable conduct and for breach of fiduciary duties in relation to the payment and/or receipt of that sum (and there are claims of accessorial liability against the respective cross-defendants). It was made clear at the outset that the cross-claims against Trading Australia are not here pressed as it is in liquidation.

20. Relevantly, the allegation as to a secret commission is to the effect that, instead of payment to the co-joint venturers (the Deans interests on the one hand and the Galati interests on the other hand) of the (agreed, as between Mr Galati and Mr Vassallo of Celestino) purchase price of $24 million for the option rights in respect of the Bidvest Land, the purchase price disclosed to the Deans interests was in the order of $22 million; and Trading Australia received (via Wealth Shift, after an invoice raised by Wealth Shift against the ultimate purchaser, EJC, for property advisory services that had not on any sensible view of events been rendered by Wealth Shift to Trading Australia), the sum of $1,799,820.95 (to which sum the Deans interests say Trading Australia had no entitlement and which they say should have been received by the co-venturers for the benefit of the project).

Issues

25. At the outset of the hearing, the plaintiff identified the following issues in the proceeding (and I summarise my conclusion on each issue below). However, in the body of these reasons I will broadly deal with these issues as part of the particular claims to which they relate.

Statement of Claim

1. Whether TRHS held all the shares in Felan’s Fisheries on trust as to 50% for Mr Galati and Trading Australia, and 50% for Mr Deans and/or Fishbank. (No.)

2. Alternatively, whether Mr Deans held 50% of the shares in TRHS on trust for Mr Galati and/or the Trading Australia. (No.)

3. Whether it was agreed by the Galati interests, on the one hand, and the Deans interests, on the other hand that each of the Galati interests and the Deans interests would nominate one director to the Board of Felan’s Fisheries and that no other director would be appointed to that Board. (Yes, they agreed that each would nominate a director to the Board of Felan’s Fisheries; however, I am not persuaded that that was to be an irrevocable or exclusive nomination such that another director could not later be appointed to that Board in place of one or both of the initial two directors.)

4. Whether the nominee director of the Galati interests (Mr Pho) was wrongly removed as a director of Felan’s Fisheries by TRHS. (Mr Galati does not have standing to seek declaratory relief in relation to this issue; nor were any rights held by Trading Australia in this regard – and if there were they were personal rights and prima facie not assignable.)

5. If the matters in (i)-(iv) are not established by way of a trust relationship, whether Mr Deans and Fishbank are otherwise estopped from denying those matters. (No.)

6. Whether, previously, in about August 2014, Mr Deans and/or Fishbank agreed with Mr Galati and/or Trading Australia to pay them a success fee of $1.5 million if Dahua No 1 purchased the Bidvest Land. (No.)

7. Whether the Galati interests have suffered loss and damage (noting that it is common ground that the Dahua success fee has not been paid). (No.)

8. Whether Trading Australia has absolutely assigned to Mr Galati all its claims made in these proceedings. (Nothing turns on this but, if it did, certain of the choses in action here sought to be maintained are not assignable.)

Cross-Claim

1. Whether as at 20 November 2015, the Galati interests were: (a) the agents of Fishbank and Mr Deans; or (b) partners or joint venturers with Fishbank and Mr Deans. (The Galati interests were involved in a joint venture or joint enterprise of some description with the Deans interests (and, indeed, Mr Galati’s submissions concede as much); however, I am not persuaded that there was a partnership relationship as such. I consider that the joint venture or joint enterprise came into being from around the time of the equity funding agreements reached in October 2014 as to the basis on which a commission or share of profits would be paid to Mr Galati or Trading Australia in certain events; and that (as Mr Galati concedes in his submissions) Mr Galati owed obligations of a fiduciary nature to the Deans interests arising out of that relationship – see below. As to the assertion that the Galati interests were agents of the Deans interests, in general I do not find that there was an agency relationship; however, I consider that insofar as Mr Galati or Trading Australia received part of the purchase price for the option rights ($1,799,820.95) without disclosure of that fact to the Deans interests, that amount was received as agent for the benefit of the co-joint venturers, i.e., the Deans interests and the Galati interests, jointly.)

2. Whether, as at 20 November 2015, fiduciary duties as particularised in the fourth amended statement of cross-claim at [87] (or otherwise) were owed between the Galati interests (on the one hand) and the Deans interests (on the other) in either an unilateral or a mutual manner. (The Galati interests and the Deans interests were involved in a joint venture relationship and owed each other fiduciary duties of the kind recognised in United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 (UDC v Brian) at this time.)

3. Whether the October 2014 Equity Funding Agreement(s) (as defined in due course) was or were superseded by later agreements, terminated in accordance with their terms or are still binding, and if the latter was there a breach. (The Equity Funding Agreements were in effect superseded by the Agreement Principles document; and, in any event, there has been no breach of the earlier agreements by the Deans interests.)

4. Whether either the Galati interests or the Deans interests breached any extant confidentiality term, or duty of good faith or fiduciary duties owed to the other as alleged. (I am not persuaded that there was a breach of any confidentiality term; I do consider that there was a breach by the Galati interests of a duty of good faith or fiduciary duty in relation to the payment and receipt by Trading Australia of the alleged secret commission.)

5. Whether Trading Australia holds any interest in the FeIan’s Fisheries’ shares on a resulting, alternatively constructive, trust for the benefit of Mr Deans. (Trading Australia does not have any interest in the Felan’s Fisheries shares.)

6. Whether Trading Australia holds any interest in any funds received on the sale of the option rights to and/or shares in Felan’s Fisheries on a resulting, alternatively constructive, trust for the benefit of Fishbank. (On receipt of the undisclosed payment, i.e., the secret commission, from Wealth Shift, Trading Australia held this on constructive trust for the co-venturers jointly (Fishbank and Trading Australia). That payment was in respect of the option rights for the purchase of the Bidvest Land; there is no dispute that the funds received in respect of the option rights for the shares in Felan’s Fisheries were properly disbursed; and I have found that Trading Australia has no interest in the shares in Felan’s Fisheries.)

7. Whether the Deans interests are entitled to damages and/or equitable compensation and/or an account of profits in respect of any commissions earned on the sale of rights to EJC. (Yes, the Deans interests are entitled to damages at law and equitable compensation in respect of the alleged secret commission that I have found was made. I am not persuaded that an account of profits should be ordered.)

8. Whether the Galati interests hold any interest in funds received on the sale of the option rights to and/or other interest in the Bidvest Land on trust for Fishbank. (These funds appear already to have been largely disbursed. The orders for damages and equitable compensation are the appropriate remedy in the present case.)

9. Whether the Deans interests are entitled as against any cross-defendant to any: (a) damages and/or equitable compensation; (b) damages pursuant to Sch 2 – Australian Consumer Law of the Competition and Consumer Act 2010 (Cth) (Competition and Consumer Act) (Australian Consumer Law) on the basis of unconscionable conduct or false or misleading conduct; (c) damages and/or an account of profits in respect of breach of fiduciary duty; (d) exemplary damages on the basis of misleading and deceptive conduct, unconscionable conduct or deceit. (Various (but not all) of these claims are made good against the respective cross-defendants; as I explain in due course.)

10. Whether: (a) Mr Galati or (b) Wealth Shift and Ms Pritchard has or have aided, abetted, counselled or procured and/or induced and/or been directly or indirectly knowingly concerned in and/or conspired with Trading Australia within the meaning of s 75B of the Competition and Consumer Act in respect of the alleged representations and alleged claims of unconscionable conduct under the Australian Consumer Law pleaded in the fourth amended statement of cross-claim. (I find, as an alternative to a direct breach of fiduciary duty, that Mr Galati would have accessorial liability to the cross-claimants in respect of the claims made good against Trading Australia; the claim for accessorial liability against Wealth Shift and Ms Pritchard is made good only in relation to their knowing participation in the payment of the secret commission.)

11. Whether Wealth Shift, Ms Pritchard, Trading Australia and Mr Galati hold any funds transferred to them arising out of a payment from Baiada made on 8 December 2015 in the sum of $2,279,820.95 as constructive trustees for the Deans interests. (On receipt of the sum of $1,799,820.95, Trading Australia held that sum jointly for the benefit of it and Fishbank. As noted above, that amount has now largely been disbursed, including in part to Mr Galati or for his benefit. I make no declarations of constructive trust in relation to the transfer of those funds but instead make orders for the payment to Fishbank of half of the sum comprising the secret commission.)

12. Whether Wealth Shift, Ms Pritchard, Trading Australia and Mr Galati should transfer any amount arising out of a payment from Baiada made on 8 December 2015 of $2,279,820.95 to the Deans interests. (As adverted to above, the claims against Trading Australia are not pressed. I make orders for the payment to Fishbank of the sum of $899,910.48, plus interest, being its half share of the secret commission.)

13. Whether pursuant to s 37A of the Conveyancing Act 1919 (NSW) (Conveyancing Act) any payments of $1,799,820.95 made by Wealth Shift to Trading Australia on 9 December 2015 are void. (This relief was not ultimately pressed; so the issue does not arise for determination.)

14. If the Galati interests are held liable for claims of misleading or deceptive conduct (fourth amended statement of cross-claim at [142]-[175]), whether Wealth Shift, Ms Pritchard and EJC are concurrent wrongdoers. (For the purposes of the proportionate liability regime, no, because Mr Galati is an excluded concurrent wrongdoer.)

15. Whether any party is entitled to a defence of set off (fourth amended statement of cross-claim at [74]; defence to fourth amended statement of cross-claim at [47]-[48]); and, if so, in what respect and what amount. (No.)

Overall

1. Whether in respect of the various unliquidated claims of any party the matter should be referred for an enquiry as to damages and/or equitable compensation and/or account of profits for any party. (No.)

Chronology of Events

26. It is convenient at this stage to set out in more detail the factual background to the dispute by reference to the documents in evidence.

Initial proposal to redevelop Blackwattle Bay precinct – 2002

27. From around 2002, Mr Deans formulated a proposal to redevelop the area around Blackwattle Bay. Fishbank was the entity through which Mr Deans pursued the redevelopment project.

28. There is reference in some of the evidence to Fishbank acting as the trustee of a unit trust. It is not clear that there was any such unit trust established at the outset of the proposed redevelopment project (i.e., in or around 2002). There is reference in some later documents – in particular, see the October 2014 Equity Funding Agreements, to two seemingly separate unit trusts: a trust established by deed dated 24 December 2010 “and known as the Fishbank Development Corporation Unit Trust”; and a trust referred to as the FDC Group Unit Trust, of which another entity apparently associated with Mr Deans (FDC Group Pty Ltd, to which I will refer as FDC Group) seems to have been the trustee. However, I was not taken to any Trust Deed or Unit Holder register in relation to either of those trusts.

29. In 2002, Deans Property, the licensed real estate agency through which Mr Deans carried on business as a real estate agent, entered into an agency agreement with the owner of the Bidvest Land. I was not taken to a copy of this agreement but I note this because Mr Deans relies on an entitlement to commission under this or a similar agreement with Bidvest as the explanation for the receipt by Deans Property of a $500,000 commission after the sale of the Bidvest Land to Dahua No 1. Mr Galati complains that this amount was not received for the benefit of the project – and Mr Galati has made issue of the fact that it was he who had introduced the Dahua Group to the project; as to which I say more in due course. Suffice it here to note that Mr Galati contends that the receipt of this amount was a breach of fiduciary or other duties owed by Mr Deans as a joint venture partner (see below), although the commission payment itself appears referable to the agency agreement entered into some years before the joint venture.

Involvement of Mr Mark Fraser in project – 2009

30. In 2009, Mr Mark Fraser, a solicitor, of Fraser Clancy Lawyers, became involved in the project with Mr Deans. There was reference to the acquisition by Mr Fraser or a company associated with Mr Fraser (identified by Mr Deans as a company called Nomad – see at T 423) at some stage of a 7% interest in one of the Unit Trusts with which Mr Deans was associated (Mr Deans was not clear as to the name of the Unit Trust) as a way of giving Mr Fraser an interest in the project (see Mr Deans’ evidence in cross-examination at T 423, to the effect that Mr Fraser’s company was a unitholder in the unit trust because he was working on the Blackwattle Bay project). (This is of some relevance insofar as there was an assertion made by Mr Galati’s lawyers later in the course of events to the effect that Mr Galati or Trading Australia was a shareholder or unitholder in that or another unit trust – see below; through which it seems Mr Galati understood his participation in the project would be recognised.)

30. Mr Fraser provided legal advice and acted as solicitor in relation to various matters associated with the proposed development and for both the Deans interests and the Galati interests in various transactions; and also acted as solicitor on the record in litigation brought by the Deans interests in 2015 against Mr Galati (involving a dispute as to the wish of Mr Deans to conduct an auction of the Bidvest Land option rights), leading ultimately to complaints by Mr Galati (not unwarranted in my opinion) that Mr Fraser had a conflict of interest. In any event, there appears to be no dispute that, during 2014 and until about March 2016, Fraser Clancy Lawyers (through Mr Fraser) acted as the solicitors for Mr Galati, Trading Australia, Mr Deans and Fishbank in a variety of matters and contexts. (Mr Fraser’s absence from the witness box in the present proceeding gave rise to a submission that an adverse inference against the Deans interests should be drawn therefrom – as to which I say more in due course.)

Initial attempts to attract investors and support for project

32. Mr Deans’ evidence is that he met with a number of potential investors to seek finance and support for the project (including representatives of Hooker, Janusz, PolyGroup, Gerry Harvey and Leighton Properties), offering them an equity interest (30%-70%) in the project (which by at least 2013 became known as “Destination Blackwattle Bay”). Leighton Properties at one stage entered into a Memorandum of Understanding in relation to this project (which Mr Deans in cross-examination was adamant was a commitment on its part) but this did not proceed (see below).

Agreement for acquisition rights in respect of the Bidvest land – 2013

33. It is alleged (see the fourth amended cross-claim at [6]), and it does not appear to be disputed, that at some stage Fishbank entered into an agreement with the owner of the Bidvest Site. The cross-claimants alleged that this was in about February 2013 and was for acquisition rights in respect of that land to form part of Fishbank’s then proposed development of land in the general area of the Sydney Fish Markets. (Mr Galati denies this allegation other than as to the entry by Fishbank into an agreement with respect to the property – see his defence at [3].)

Submission of Unsolicited Proposal – December 2013

34. By letter sent in December 2013 (apparently not received until 7 January 2014) with further information submitted on 13 February 2014 (after “initial feedback”), Fishbank submitted an “Unsolicited Proposal” to the New South Wales (NSW) Government in relation to the project (under the Government guidelines for Unsolicited Proposals at that time).

35. The proposal included by way of introduction (or abstract) the statements that Destination Blackwattle Bay “delivers what no other proposal can deliver”, including amalgamation and control of the Blackwattle Bay precinct and control of the Sydney Fish Market; and that the Destination Blackwattle Bay Master Plan “has garnered broad acceptance by stakeholder and the community” (Ex 3 at 10). (There seems to have been no little element of puffery in those statements having regard to the incomplete state of negotiations at that time for the overall parcels of land in the Blackwattle Bay area and the later evidence of dispute within SFM in respect of the proposed development – but nothing here turns on this.)

36. At the time of the Unsolicited Proposal, Mr Deans was working with a number of people in relation to the project including Mr Kym Lennox (a consultant who apparently provided consultancy services through a company or entity associated with him – referred to as Tipping Point Capital or The Tipping Point Institute Pty Ltd (The Tipping Point Institute), about which I say further below) and Ms Bhavani Ma (who is also known as Ms Kerry Anne Hyland) (a “Spiritual Entrepreneur, mentor and teacher” – see T 287) who provided her consultancy services at the time through a company known as Heartland Productions Pty Ltd (Heartland Productions) and later incorporated a company known as That Sounds Fantastic Pty Ltd (TSF) which provided services to Mr Galati and his then company or companies).

37. The Destination Blackwattle Bay Unsolicited Proposal was rejected by letter dated 6 June 2014. The letter rejecting the proposal advised Mr Deans that, while the proposal aligned “at a high level” with the NSW Government’s strategies to redevelop the precinct, the proposal was “not found to be sufficiently unique to justify direct dealing” and did not demonstrate that Blackwattle Bay possessed any unique property rights or full support from the landowners and leaseholders (the latter presumably being a reference at least to the leaseholders of stalls or space inside the Sydney Fish Markets). The letter also stated that it was determined that the proposal did not demonstrate sufficient financial and delivery capacity for the proposed development.

Initial involvement of Mr Galati in project – 2014

38. At some stage in the course of 2014, Mr Galati and Mr Deans met. In Mr Galati’s first affidavit affirmed 4 December 2017 (at [6]) he placed this meeting as occurring in August 2014. Mr Galati corrected that in his later affidavit affirmed 12 March 2019 at [11] and seemed to place the meeting in around April 2014. The first meeting must have been after 6 June 2014 if, as Mr Galati said, he was told at the first meeting about the rejection of the Unsolicited Proposal (T 49-50). However, pressed on this in cross-examination, Mr Galati thought it was closer to August 2014 that he was told about the rejection of the Unsolicited Proposal (T 51). There remains some doubt therefore as to the precise time at which Mr Galati and Mr Deans first met.

39. Pausing here, Mr Galati was self-avowedly “not good with dates” (see in the course of his cross-examination his evidence at: T 50; T 54; T 85, where he gave a rambling answer about dates in relation to the alleged success fee; and as to certain stages of the project), which makes it difficult to be confident as to the reliability of his memory as to the chronology of events (though, for Mr Galati, it is said that he broadly remembered the sequence of events).

40. In any event, it seems clear that Mr Galati’s involvement in the project commenced not long after the rejection of the Unsolicited Proposal, which (as noted above) was in early June 2014. There is a reference in some of the documentary evidence to discussion between Mr Deans and Mr Galati in June 2014 which supports this conclusion. Therefore, it is reasonable to assume that, from at least around June 2014, Mr Galati was involved to some extent in discussions with Mr Deans about the project.

41. Mr Galati’s evidence is that he (Mr Galati) was asked by Mr Deans to find investors for the project; and Mr Galati says that he gave advice as to how to progress the proposal generally and which “high profile” businesspeople should represent it to the NSW Government and major corporates.

42. Mr Galati’s evidence is that when he began working on the project (from May-June 2014) he began to attend Fishbank’s office three to four days a week (in the first year) to get the project or development up and to get the funds raised (T 53-54). Mr Galati emphasised in submissions that he did so several days a week (without remuneration up until 20 November 2015). There is a tension in Mr Galati’s case between the proposition that he was in a partnership arrangement with Mr Deans and his emphasis on the fact that he did not receive any remuneration at all from the Deans interests for his work on the project – something that he relies upon to suggest that his later “separate agreement” or “side agreement” for the $1,799,820.95 alleged secret commission was understandable – but I will return to this in due course. Suffice it for present purposes to say that it is not suggested by Mr Galati that, at the start of the working relationship between Mr Galati and Mr Deans, their relationship was put on any formal basis as to his (ultimate) remuneration and it seems clear from Mr Galati’s evidence that he was not expecting any remuneration at least until or unless he “brought in the money” (which, as I explain below, he maintains he did – albeit I note that was only in relation to the option rights not the project overall).

43. Mr Galati’s evidence in cross-examination was that he “started doing stuff” for Mr Deans two to three months after the first meeting to try to find a developer or funds for the project (see T 52); and he says that, from August 2014, he introduced into the “venture” the former Premier (the Hon Kerry Chikarovski) (who took on the role of chairperson of the Fishbank Board), Mr John Shepherd (later put forward as the managing director of Fishbank) and Mr Tony Shepherd (his affidavit affirmed 12 March 2019 at [36]); and it is said that, from September 2014 until December 2014, Mr Galati met numerous prospective investors for the project (including SpaceCon, LandCorp, Mr Yossie Goldberg and, relevantly, Dahua Group Fish Market Project Pty Ltd, to which I refer as Dahua Group).

44. It would appear that Mr Galati’s introduction of Dahua Group to the project occurred through a referral to Mr Galati by another entity, Madison Marcus Advisory Pty Ltd (Madison Marcus Advisory), since that entity claimed in due course a consultancy fee or commission for the introduction and was a party to at least one of the agreements into which the relevant parties entered (see below). (Pausing here, a recurring feature in this saga, as adverted to above, is the proliferation of consultants and advisers seeking and/or receiving commission or consultancy fees in respect of the project – not necessarily referable to any particular outcome for the project.)

Alleged oral agreement re $1.5 million success fee – August 2014

45. In Mr Galati’s affidavit evidence he deposes (and in the further amended statement of claim he pleads to this) that, in August 2014, the Deans interests agreed to pay the Galati interests the sum of $1.5 million on the sale of the Bidvest Land to Dahua (his affidavit affirmed 12 March 2019 at [56]-[57]). In cross-examination, that date was placed as being in November or December 2014. Any such agreement is hotly disputed by Mr Deans. I refer to this in more detail in due course. However, it is relevant to note that Mr Galati’s claim to the sum of $1.5 million is based solely on this alleged oral agreement.

46. Mr Deans accepted that, before the Dahua Group signed, Mr Galati wanted to be paid something for getting the deal done but Mr Deans was firm in his denial that he had agreed to pay Mr Galati 10% or a $1.5 million fee (see at T 433-434). Mr Deans’ response to that proposition was that there was to be a “$107 million split” as between Mr Galati and Madison Marcus (which clearly related to the overall development project) (see T 434 and below). In Mr Deans’ eyes, therefore, there was no separate payment agreed with Mr Galati in respect of the initial signing of Dahua Group or the Dahua entities.

Leighton Properties withdrawal from project – October 2014

47. In October 2014, Leighton Properties (which had previously signed some form of Memorandum of Understanding in relation to the project) withdrew from the project, which Mr Galati says meant that Fishbank then needed “an alternative financial and delivery partner” (his affidavit affirmed 12 March 2019 at [22(h)].

Cessation and then resumption of Mr Kym Lennox’ involvement in project –2014

48. At some time after the 6 June 2014 rejection of the Unsolicited Proposal (this is put in Mr Galati’s reply submissions as being in late 2014), Mr Lennox ceased to work as part of the Deans interests’ team in relation to the project. Mr Galati says that Fishbank could not afford to retain Mr Lennox and that there were arrears owing to Mr Lennox (and Mr Lennox was clearly also of that view by reference to some of his evidence in cross-examination to which I refer in due course). Whether or not there was actually anything contractually owing to Mr Lennox or his company at the time (which strictly speaking would depend on the terms of any retainer or other arrangement Mr Lennox or his company may have had with Fishbank at the time – and there was none in evidence), it does not appear to be disputed that Mr Deans did not continue any consultancy arrangements with Mr Lennox at that time (and there was evidently a level of dissatisfaction on Mr Lennox’ part – and, for that matter, Ms Ma’s part – as to the lack of payment by the Deans interests for their respective consulting services).

49. Mr Galati says that (not long after Leighton Properties withdrew from the project) he “re-introduced” Mr Lennox to the project, and promised to pay him (it is relevant here to note that Mr Galati thus seems to have assumed the burden of responsibility for Mr Lennox’ fees – although he now says they were expenses of Fishbank).

50. Mr Galati says that Mr Lennox was an important team member, producing project modelling and attending presentations to prospective investors. Certainly, Mr Lennox appears to have had a firm view as to the value of his intellectual property (IP) in relation to the project (since he made very clear in cross-examination his concern to protect his “IP” and he justified a considerable payment made by Trading Australia or Trading Australia Enterprises Pty Ltd (Trading Australia Enterprises) to his company in late 2015 by reference to his “IP” and consultancy services in relation to the project). In submissions, the (valuable) IP was identified as being the “figures” (I assume this means the project financial calculations or “project modelling” to which reference was made, though there was also an assertion of copyright in some of the information memoranda prepared in relation to the project). As will be seen in due course, what seems to have happened is that, over time, different iterations of the project documentation were prepared – in broadly identical form but with a re-branding or re-badging of the group or team purportedly involved in the proposal (and by November 2015 this was without the inclusion of reference to Mr Deans).

Equity Funding Agreements – October 2014

51. On 23 October 2014, a deed was entered into between Trading Australia and various entities, including Mr Deans. The deed was prepared by Fraser Clancy Lawyers and was entitled “Equity Funding Agreement”.

52. On 29 October 2014, another deed was entered into by the same parties, also prepared by Fraser Clancy Lawyers and entitled “Equity Funding Agreement”. The two deeds were virtually identical and it appears that the later document was intended to supersede the former (particularly having regard to the respective footers of the deeds), although there was no recital to that effect. The only relevant difference between the two deeds was the Sunset Date (see below), which was amended from 30 November 2014 in the first deed to 31 December 2014 in the second deed. Where I refer to the Equity Funding Agreement henceforth in these reasons it is to the deed executed on 29 October 2014.

53. I note that Mr Galati relies on the Equity Funding Agreement as providing him with an entitlement to an equitable share in the redevelopment project, depending on funds secured. It is the first such written agreement recording the basis on which the Galati interests were to be involved with the Deans interests in the project. Relevantly, there is no reference in either of the iterations of this agreement to any $1.5 million success fee or commission.

54. The Recital to the Equity Funding Agreement (Recital A) recited that the Investment Recipients (defined in the Reference Schedule as each of: FDC (i.e., Fishbank), FDC Group, four other entities which were parties to the deed and the FDC Unit Holders (being the holders of FDC Units who are parties to the Units Sale Agreement as also defined in the Reference Schedule)), on the one hand; and Fishbank, on the other hand; had requested that Trading Australia: (i) procure funds to enable the Investment Recipients to redevelop part/s of the Blackwattle Bay foreshore and waterway; and (ii) procure a buyer of Fishbank’s assets or of some or all of the units currently issued in the FDC Trust; and that Trading Australia had agreed to use its best endeavours to comply with those requests on the terms and conditions set out in the Deed.

55. Part A of the Equity Funding Agreement (headed “Trading Australia’s Obligations”) provided for Trading Australia to use its best endeavours to procure payment to one or more of the Investment Recipients of “Invesmtent [sic] Funds” (an obvious typographical error but which I note because it appears in both versions of the executed Deed which makes clear, as evident from the footer in any event, that the 29 October 2014 version is simply an amended version of the 23 October 2014 version).

56. The term “Investment Funds” was defined as “Equity Funds” and funds received as a payment of the Sale Price. The term “Equity Funds” is in turn defined as funds paid: (a) for application to the progress of the redevelopment of the Development Site and for such other purposes as may be agreed between the Investor and the respective Investment Recipients; and (b) whether by way of loan and or in exchange for the issue to the payer or its nominee of units in a unit trust of which the payee is the trustee or of shares in a company which is the payee. The term “Sale Price” was defined as the price which is agreed to be paid by an Investor to Fishbank for “FDC’s Assets, or as the case may be, to the FDC Unit Holders for the FDC Units”.

57. The term “FDC’s Assets” was defined as the contracts which Fishbank has with persons who have an interest in or a right to develop the Development Site and the intellectual property which Fishbank has in respect of its proposed redevelopment of the Development Site. The term “FDC Units” was defined as units issued in the FDC Trust, which in turn was defined as the trust established by deed dated 24 December 2012 “and known as the Fishbank Development Corporation Unit Trust”.

58. The Equity Funding Agreement referred both to the FDC Trust (with some specificity insofar as it referred to a trust deed of specified date); and to the FDC Group Unit Trust (the trustee of that trust, FDC Group Pty Ltd, being a party to the Equity Funding Agreement).

59. Mr Deans executed the Equity Funding Agreement on behalf of various (but not all) of the Investment Recipients, including FDC Group Pty Ltd as trustee of the FDC Group Unit Trust; and also in his personal capacity.

60. Mr Deans (by cl 7) warranted, among other things, that Fishbank (there referred to as FDC) was the sole trustee of the FDC Trust; that he was the sole shareholder and director of Fishbank; that an entity which he controls holds a substantial number of the units issued in the FDC Trust and that he was authorised by the FDC Unit Holders to enter into the deed on their behalf.

61. The structure of the Equity Funding Agreement was that Trading Australia was to become entitled to a commission (equal to the product of the amount of the Investment Funds which that Investment Recipient received and the Commission Rate (of 5%)) each time it satisfied the Commission Entitlement Pre-Condition (defined as the payment of Investment Funds to one or more of the Investment Recipient/s) (see cl 4.1); and there was provision for payment of a Bonus Sale Commission (see cl 5) as well as the issue of Bonus Units in the events there specified (see cl 6).

62. In essence, if Fishbank or the FDC Unit Holders received payment of a part of the Sale Price in excess of the “Super Sale Price” (of $150 million) then the Bonus Sale Commission was payable (50% of the Sale Price received in excess of the Super Sale Price); and if one or more payments to the Investment Recipients exceeded, or the total of which exceeded, $25 million, Trading Australia was entitled to the issue of units (i.e., Bonus Units) in the FDC Trust or the FDC Group Unit Trust “as the case may be” which represented 3% of the total number of units issued in the respective trust immediately following the issue of those units.

51. It is relevant to note that this was an agreement (as so named) that related to the equity funding of the project; not an agreement as to commission for finding a purchaser for the Bidvest Land, as such (although Mr Galati was adamant in cross-examination that the initial task – and his initial focus – was to find a purchaser for the land).

52. Mr Galati says that at this time he was mainly working on a “commission” basis but that the relationship between the Galati interests and Deans interests changed after Dahua Group became involved (or, in the words of his submissions, after a “real investor” “started to commit”).

53. Mr Galati accepted that the $150 million figure in the Equity Funding Agreement was for a “Super Sale Price”. Mr Galati’s evidence is that this agreement was separate from the other “agreements” with Mr Deans (relevantly, the alleged agreement for a $1.5 million success fee) (T 99). At T 100, Mr Galati was not sure if the timing of the $1.5 million agreement was before or after this Equity Funding Agreement (cf [8CA] of the pleading which puts the former at August 2014). However, Mr Galati later said that the $1.2 million success fee agreement was reached roughly two months before the two Equity Funding agreements were signed (T 1010).

Identification of Dahua Group as prospective investor

66. As noted, Mr Galati says that he identified Dahua Group (a Chinese investment or property company) as a proposed investor through a contact at Madison Marcus Advisory.

67. As adverted to above, this seems an instance of a chain of persons or entities claiming credit, and in some cases commission or a fee, for having introduced an entity “into the project”; i.e., Madison Marcus Advisory claimed, and was later acknowledged, to have been the effective cause of the introduction of Dahua Group to the project; but Mr Galati here claims credit for introducing the Dahua Group to the Deans interests (albeit through Madison Marcus Advisory) and Deans Property separately claimed and received commission from Bidvest in relation to the sale to Dahua No 1 of the Bidvest Land. Another instance of this seems to have been the introduction of Celestino as purchaser of the Bidvest Land. It was seemingly accepted that Ms Pritchard (or Wealth Shift) introduced Celestino to Mr Galati but in due course Mr Galati suggested to Ms Pritchard (and her evidence was that Mr Galati was very angry when she did not agree to this) that part of Ms Pritchard’s commission should be paid to another real estate agent (Mr Steve Kremisis) who Mr Galati apparently believed also had some involvement in the project for which he should have been paid (and whom Mr Galati did later pay, out of the sum of $1,799,820.95 received after the sale to EJC). It is not clear to me that Mr Kremisis’ involvement in the project went further than he having introduced an unrelated business opportunity to Ms Pritchard, in the course of which Ms Pritchard learnt from Mr Galati about the Sydney Fish Markets opportunity.

68. On 18 November 2014, Mr Deans (for Deans Property) and Bernard Berson (of Bidvest) signed a letter in which it was agreed that Bidvest would pay an agent’s commission to Deans Property if the Bidvest Land was sold to Dahua for more than $18 million and settlement occurred by April 2015. (This may have superseded the earlier 2002 agency agreement with Bidvest to which Mr Deans referred, although that was not made clear in the evidence.) As noted above, Mr Galati complains that the commission received (by Deans Property) under this arrangement was not disclosed to him at the time (and that those funds were not expended on the project).

Deed of Exclusivity – 10 December 2014

69. On 10 December 2014, Fishbank and Trading Australia entered into a Deed of Exclusivity with Dahua Group. The document was prepared by Madison Marcus Law Firm Pty Ltd (Madison Marcus Law Firm) (as distinct from Madison Marcus Advisory, which appears to be a related transactional company).

70. The Deed of Exclusivity recited that, in consideration of the payment by Dahua Group to Fishbank and Trading Australia of the Exclusivity Fee (of $1 million plus GST) and “committing time and resources to investigate and analyse and consider the Proposed Transaction”, Fishbank agreed to grant Dahua Group a period of exclusivity in relation to the Proposed Transaction (Recital A). Recital B recorded that Dahua Group wished to ensure that neither Fishbank nor Trading Australia negotiated with any third party in respect to the Proposed Transaction during the Exclusivity Period (of ten business days from the date of the Deed).

71. The Proposed Transaction was defined as meaning “a transaction/s” pursuant to which Dahua Group or a related entity “will enter into a Relationship to acquire rights from the owners of the Property and the Project based on the Core Commercial Conditions”.

72. “Relationship” was defined as a relationship between Dahua Group, Fishbank and Trading Australia for the development of the Project subject to Gazettal and Master Plan Approval. The “Property” was defined as the land comprising and upon which the Project is located as described by item four of the Schedule (which was there described the Bidvest Land, the Hymix Site, the Sydney Fish Markets and two properties on Pyrmont Bridge Road). “Project” was defined as the development known as the Blackwattle Bay Project and identified in the same item of the Schedule as the “proposed Blackwattle Bay Project”.

73. The “Core Commercial Conditions” were set out at cl 7 of the Deed of Exclusivity which specified conditions required to be satisfied on or before the expiry of the Exclusivity Period, including that: (a) Fishbank and Trading Australia demonstrate that they “have secured” a 52% simple majority support and rights to make decisions material for the Project from Buyers; and (b) have the proxy of the majority of the shareholders of that entity; as well as Fishbank and Trading Australia obtaining a total Project GFA (gross floor area) of not less than 239,000 square metres as there set out. (Pausing there, the likelihood of at least the second of those conditions – the securing of the specified GFA – being satisfied within ten business days would seem, at least in hindsight in the context of the history of the project to that date, to have been very low.)

74. Nevertheless, the Deed of Exclusivity set out certain adjustments to the Core Commercial Conditions (cl 8) there being provision for Dahua Group to elect to proceed with the Project on the basis of specified adjustments if the Core Commercial Conditions were not satisfied by the expiration of the Exclusivity Period.

75. The Exclusivity Fee, as noted above, was $1 million plus GST. Clause 10.1 provided that payment of the Exclusivity Fee under the Deed of Exclusivity to Fishbank and Trading Australia was to be held in Madison Marcus Advisory’s Trust Account (cl 10.1(a)) and released to Fishbank and Trading Australia only for the purpose of facilitating the exchange of the acquisition contract for the Bidvest Land in the name of the special purpose vehicle established by Dahua Group in its absolute discretion (see cl 10.1(b)).

76. Clause 5 provided for Dahua Group to be entitled to rescind the Deed in certain circumstances including: (a) if the parties had not been able to agree the Proposed Transaction by the expiry of the Exclusivity Period; and (b) if Dahua Group notified Fishbank and Trading Australia that it did not wish to proceed with the Proposed Transaction. Clause 7(h) further provided that in the event that, following completion of its due diligence, Dahua Group was not satisfied that Fishbank and Trading Australia can deliver any or all of the Core Commercial Conditions then Dahua Group was entitled to rescind the Deed. Under either clause, it was provided that, on rescission, cl 11 of the Deed was to apply (which provided for the form by which notice of rescission was to be given).

77. Clause 10.1(c) provided for what was to occur in the event that Dahua Group, following the exchange of the Bidvest Land acquisition contract, wished to rescind the Deed of Exclusivity. In that event, Dahua Group was to grant to Fishbank and Trading Australia a call option over 100% of the issued capital of the special purpose vehicle established by Dahua Group and the following provisions (in subcll (i) and (ii)) were to apply. Sub-clause 10.1(d) provided what was to occur should Dahua Group wish to proceed with the Project and remain bound to the terms of the Deed (as to how the Exclusivity Fee was to be credited to the first instalment payable under cl 10.2(a)(i) of the Deed).

78. In cross-examination, Mr Deans was not sure what had happened in relation to the $1 million fee paid by Dahua Group under the Deed of Exclusivity arrangements (T 435-436). However, that appears to have been elucidated in an email chain from Mr Deans to Madison Marcus on 19 June 2019 and the response of 1 July 2019 thereto; and nothing here turns on this (see Ex 5).

Deed of Binding Commission Distribution Direction – 12 December 2014

79. On 12 December 2014, each of Mr Galati, Trading Australia, Mr Deans, Fishbank and Madison Marcus Advisory entered into a deed which was entitled a “Deed of Binding Commission Distribution Direction”. This document was also prepared by Madison Marcus Law Firm.

80. The Deed recited, among other things, that on about 1 December 2014 Trading Australia, Madison Marcus Advisory, Fishbank and Mr Deans and Mr Galati “amongst other parties” entered into a Commission Sharing Agreement (Recital A) (though I note that a copy of this does not appear to be in evidence); that the Commission Sharing Agreement provided for Madison Marcus Advisory to assist Trading Australia in procuring investors to invest into the Blackwattle Bay Project pursuant to an Equity Funding Agreement attached to the Commission Sharing Agreement (Recital B); and to provide assistance to Trading Australia in order to satisfy its obligations under the Equity Finding Agreement and introduce potential investors to provide Investment Funds in payment to investment recipients pursuant to both agreements (Recital C); and that Madison Marcus Advisory had procured the Deed of Exclusivity (Recital D).

81. The Deed further recited that the parties agreed that Madison Marcus Advisory had complied with its obligations under the Commission Sharing Agreement and pursuant to the Deed of Exclusivity (Recital E); acknowledged that Madison Marcus Advisory was the effective cause of the introduction of Dahua Group to the investment (Recital F); and agreed that (in relation to the payments to be made by Dahua Group “of the Deed of Exclusivity”), the commission and bonus entitlements payable pursuant to the Commission Sharing Agreement under cl 2 would be pursuant to the terms and conditions of the Deed of Binding Commission Distribution Direction (Recital G).

82. Relevantly, the Deed of Binding Commission Distribution Direction contained: an acknowledgement that Fishbank and Trading Australia were jointly and severally entitled to receive payments of the Pool of Funds pursuant to cl 10.2 of the Deed of Exclusivity (i.e., the payments due if Dahua Group agreed to proceed with the Project) (see cl 3.1); an irrevocable direction and authority to Dahua Group to pay the Pool of Funds directly to Trading Australia (see cl 3.2); and provided how Trading Australia was to deal with those funds (see from cl 4).

83. Effectively, this document recorded an agreement between the parties as to the percentage each would receive upon Dahua Group or its nominee purchasing any of the assets the subject of the Deed of Exclusivity (Madison Marcus Advisory and Trading Australia were together to receive 58% and Fishbank was to receive 42%). (I interpose here to note that Mr Galati says that this represented a substantial increase in Mr Galati’s equity allocation in the Blackwattle Bay project, all of which he says was being overseen by the “partners”’ joint solicitor, Mr Fraser.)

84. Mr Deans’ understanding of the agreement entered into with Madison Marcus Advisory was that entry into that agreement was a condition that Madison Marcus Advisory and Trading Australia had put to him as to how the deal was to be (see at T 438). This suggests that Mr Deans was there falling in with their wishes or acceding to what he understood was the exigency of getting the deal ‘over the line’, so to speak. Mr Deans denied that the document was one that recognised a partnership with Mr Galati and his company (T 438).

85. Mr Deans’ explanation as to the acknowledgement in the Deed of Binding Commission (that Madison Marcus Advisory had been the effective cause of Dahua’s introduction to the project) was that it introduced Dahua to the project and to Deans Property; and that Deans Property then introduced Dahua to the land (T 439). Mr Deans repeated that distinction at T 440. However, Mr Deans also accepted that the property was part of the project. In submissions, Mr Galati says that (while Mr Deans would not concede that he “freeloaded” in receiving a commission for the sale to Dahua) Mr Deans did eventually concede that the sale of the Bidvest Land was part of the deal done by Madison Marcus Advisory.

86. Mr Deans was, however, adamant that he was entitled to the $500,000 commission earnt from the sale to Dahua because of the earlier agency agreement between Deans Property and the owner of the land. Mr Deans thought (and I found him to be genuine in this belief) that the Deed of Binding Commission was “complicated” (T 440). Similarly, Mr Deans was confused when asked about the call options (T 441). (There was some inconsistency in his answers as to meetings with the Dahua people in 2015 (see T 442-443) but Mr Deans was adamant that it was “absolutely not” the idea that Dahua would own the whole project.)

Nomination of special purpose vehicles by Dahua Group

87. Dahua Group proceeded to become registered as the registered owner of the whole of the issued share capital in Felan’s Fisheries and nominated two special purpose vehicles: Dahua No 1, in relation to the purchase of the Bidvest Land; and Dahua No 2, in relation to the purchase of the shares in Felan’s Fisheries.

Call Options – 19 December 2014

88. On 19 December 2014, Trading Australia and Fishbank jointly entered into two interdependent call option deeds (each for a Call Option Fee of $1): a Call Option Deed with a Share Sale Deed annexed, entered into with Dahua No 2 in relation to all of the Felan’s Fisheries shares (which I have referred to above as the Share Option Agreement); and a Land Option Agreement with Dahua No 1 concerning the Bidvest Land (the Land Option Agreement). The documents were again prepared by Madison Marcus Law Firm.

89. Relevantly, Trading Australia and Fishbank were named jointly as the Grantee in the Share Option Agreement, that call option being expressed to be interdependent with the Land Option Agreement on the same day over the whole of the issued share capital in Dahua No 1 by way of a Put and Call Option Deed executed on 19 November 2014. In other words, what was proposed was that if both options were exercised (and they were required to be exercised together), Trading Australia and Fishbank or their nominee would acquire both the Felan’s Fisheries shares and the shares in Dahua No 2 (the latter giving the ownership of the Bidvest Land).

90. Pausing here, Mr Galati notes that diagrammatic charts prepared by Mr Lennox (with Mr Fraser) in late December 2014 to February 2015 make reference to the separate acquisition of the shares and the land. It is said for Mr Galati that the charts reflect the notion that Mr Galati and Mr Deans were envisaging a shared profit and control structure upon Dahua Group “bankrolling” the project. In any event, there is no doubt that the call option in relation to the Felan’s Fisheries’ shares provided for Trading Australia and Fishbank to acquire the shares or to nominate a purchaser in that regard. None of the agreements made clear what arrangements there were to be as between Trading Australia and Fishbank in respect of the Felan’s Fisheries’ shares beyond this.

91. Mr Deans accepted that the Call Option was held by Trading Australia and Fishbank but was not sure as to how that worked (i.e., he was not sure that they would be the only ones with the right to get the shares – asking, perhaps rhetorically, “is that how it works” before agreeing that that was how it was proceeding all along) (see T 452). With all due respect to Mr Deans, it is by no means clear to me from his evidence in the witness box that he had any accurate understanding what any of the contractual documents provided. Mr Deans’ explanation at the end was that Mr Fraser became an equity partner because he acquired units in the unit trust but he was adamant that Mr Galati never became an equity partner in Fishbank (T 453) and nor did Trading Australia (T 454); rather, Mr Deans said that Trading Australia was entitled to a “profit share” after expenses but he was adamant that Mr Galati and Trading Australia were not equity partners (T 454).

92. Mr Deans disagreed that when the first options were entered into in December 2014 he knew that Trading Australia was going to be on equal footing with Fishbank, saying that “I agreed for them to be on the option. I didn’t agree that they were equal standing” (T 467). As to why he agreed to the later (“new”) options (in September 2015 – see below) Mr Deans said, at T 468, “well I wasn’t informed there was another thing I could do” and that no one had asked him.

Mr Galati appointed as director of Buyers – March 2015

93. There is reference in Mr Galati’s submissions to his appointment as a director of Buyers. (It is not clear how this is consistent with the evidence that the acquisition of the Felan’s Fisheries shares was arranged in a way that would disguise Mr Galati’s involvement in the project, though nothing turns on this other than perhaps to suggest that it was Mr Deans’ involvement in the project that was really being sought to be disguised, which would be consistent with Mr Deans’ evidence that at a later point, when there was litigation on foot, it was no longer necessary to disguise his involvement.)

Completion of purchase of Bidvest Assets – March/April 2015

94. In about March or April 2015, the entities nominated by Dahua Group (Dahua No 1 and Dahua No 2) completed the purchase of the Bidvest Assets (i.e., the Bidvest Land and the shares in Felan’s Fisheries). However, in about April 2015, Dahua Group apparently decided that it did not wish to continue with the Blackwattle Bay project.

Issue of notice to quit by SFM re Felan’s Fisheries tenancy – April 2015

95. A notice to quit was issued by SFM to Felan’s Fisheries in April 2015 terminating its tenancy of space at the Sydney Fish Markets. The effect of this would have been to require Felan’s Fisheries to relinquish its shares in Buyers.

Payment of commission by Bidvest to Deans Property – 10 April 2015

96. On 10 April 2015, Mr Deans’ real estate agency (Deans Property) was paid commission of $500,000 by Bidvest in connection with the sale of the Bidvest Land to Dahua Group’s nominated entity (Dahua No 1). This was apparently spent by Deans Property on its business. As noted above, Mr Galati complains about the fact that Mr Deans did not in some way account to him or to Fishbank for the purposes of the project for this sum, contending that this was a sale that had occurred due to Mr Galati’s efforts (see at T 94); and Mr Galati points to Recital E of the Deed of Binding Commission Distribution Direction in this regard (which recited an agreement that Madison Marcus Advisory had complied with its obligations under the Commission Sharing Agreement and pursuant to the Deed of Exclusivity and which referred to Dahua as the investor introduced by Marcus Madison Advisory); and see also the defence to cross-claim which seeks to have this amount taken into account in respect of any amount for which Mr Galati is held liable to the cross-claimants.)

889. Thus, I do not find that there was a breach of contract or breach of fiduciary duty as alleged at [88], nor am I satisfied that there was misleading or deceptive conduct, in relation to the negotiations entered into by Mr Galati with other potential purchasers or failed attempts to obtain finance or investment funds; nor were those matters pressed to any extent in the submissions at hearing. To make any such determination, much more would need to be known as to the details of the negotiations with particular parties and the like. Furthermore, it is difficult to see how it could have been expected that Mr Galati could secure investment from financiers or investors to the project without providing details in relation to the project and hence, the complaints as to the misuse of confidential information are not to my mind made good.

890. Nor am I satisfied that the loss and damage particularised at [95] has been established. The assertion that Fishbank entered into various of the documents under duress, for example, is not made good. (There was no doubt pressure at a later time occasioned by the impending expiry of the Call Options but I am not persuaded that at the time the original commission agreements and options were entered into Fishbank was acting under duress occasioned by the Galati interests – and I note that Fishbank had the advice of its lawyer or the joint venture’s lawyer (Mr Fraser), however he might have been characterised, throughout that whole process.)

Material change to arrangement

893. As to the complaint that Trading Australia (or Mr Galati) failed to inform Fishbank of a material change to the basis of the arrangement between the parties (as to the effect of the documents in relation to Trading Australia acquiring an entitlement to options for the Bidvest Land and the shares in Felan’s Fisheries), I find such a complaint extraordinary in circumstances where the Deans interests had legal representation and were quite capable of obtaining advice as to precisely the legal effect of the documentation into which they were entering. It must have been obvious that the documents entered into in and from October 2014 were intended to put in place a structure for the parties’ respective rights in relation to the development. If the Deans interests failed to understand the import of those documents that was not due to any unconscionable conduct on the part of the Galati interests.

894. The complaints made as to the No Equity Change Representation and the Execute Now or Lose Representation are not, in my opinion, made good. In particular, the suggestion that somehow the Galati interests engaged in a strategy to expose the Deans interests to a position of financial distress (so that the former could put pressure on the latter and be able to take over the development rights to the exclusion of the latter), seems to me no more than a conspiracy theory (perhaps inspired by the email referring to a plan to wind up Fishbank but not established nonetheless). The complaint of a breach of good faith or breach of fiduciary duty as to the alleged Elias Conduct is also not established to my mind.

895. Thus, I find that the various alleged breaches of contract and of fiduciary duty leading up to the claims of loss and damage as particularised at [95] are not made good. The fact that the Deans interests were under financial pressure (and chose to enter into the various commission agreements and Call Options deeds) was a result of the position in which the Deans interests had placed themselves. It was not due to any duress caused by the Galati interests and not due to any misunderstanding as to the legal effect of the documents that was attributable to the Galati interests (although I have no doubt that Mr Deans had little real understanding as to the contractual arrangements – or at least he exhibited none in the witness box).

896. In any event, I do not accept that it has been established that, had Fishbank not executed the relevant documents in the form that it did, Fishbank would have been able to source its own financiers and/or investment funds and would have realised a high profit by concluding investment arrangements with others. At most it lost the opportunity to do so and I would not have placed any real value on the loss of an opportunity to gain more from the project than ultimately it did through the Celestino deal (having regard to the history of the project to the time of Mr Galati’s involvement and the uncertainty that any of the “deals” that Mr Deans himself claims to have sourced would have eventuated).

897. The suggestion that some breach of duty on the Galati interests’ part led to Fishbank becoming embroiled in litigation against Dahua or SFM seems to me to be unsustainable; and I do not accept that it has been established that the sale to EJC of the rights with respect to the land and shares was “on a fire-sale basis”, even though it was certainly a sale that was entered into at a time when the option rights were shortly due to expire.

The Cabe offer

898. Next, as to the alleged breaches relating to conduct in relation to prospective investors after December 2014 (see from [96]), the principal complaint pressed in submissions related to the Cabe offer (see at [101]). The cross-claimants say that the Cabe offer (see above) was considerably better than the offer subsequently received from Celestino because it offered to Trading Australia and Fishbank $2.5 million plus half the cost paid for the Felan’s Fisheries shares, as well as a significant profit share. Thus, the cross-claimants submit that the Cabe offer promised a substantially greater return to the Galati and Deans interests than was obtained under the Nomination Agreement which came to be signed with EJC on 20 November 2015. It is said that the offeror was ready to proceed.

899. The cross-claimants say that, at the same time, Mr Galati was already “running his own race” in order to achieve a redevelopment of his own (see above). The cross-claimants say that this was not a mere case of Mr Galati and Mr Deans having differing views as to a particular offer; rather, that the Cabe offer was rejected by Mr Galati for no sound reason and that the rejection of this offer was not in the interests of the project or the parties.

900. In this regard, there is a claim that this conduct amounted to unconscionable conduct and a breach of fiduciary duty. It is submitted that Mr Deans’ special vulnerability arose from the prior execution by both Trading Australia and Fishbank of the Call Options, so that it was not open to Mr Deans to proceed unilaterally with the Cabe offer. It is said that Mr Deans and Fishbank were in effect “held to ransom” by Mr Galati with the Call Options about to expire. In the circumstances, and for the reasons set out below, the cross-claimants say that Fishbank suffered loss directly attributable to Mr Galati’s unconscionable conduct.

901. For Mr Galati, it is said in response to the allegations as to the Cabe offer that there is no evidence as to the intention of Cabe’s principal (Mr Pelligra) to follow through with the proposed investment (and no evidence about who he is or what he is worth). It is said that the only evidence of this concerns a purported Cabe offer supported by a brief term sheet attached to Mr Pelligra’s affidavit and a brief discussion in the affidavit (noting that Mr Daly’s affidavit was not read). Mr Galati submits that the term sheet does not show a concluded offer; saying that it is “embryonic”, has no finalised figures; and that there is no substantive supporting evidence showing any ability to implement it. Further, it is noted that the term sheet envisages a 50/50 joint profit sharing (which it is said reinforces Mr Galati’s case).

902. I am not persuaded that the complaint as to the Cabe offer has been established (whether as a claim for breach of fiduciary duty or good faith or as a claim for unconscionable conduct). I am not persuaded that Mr Galati’s stance was so unreasonable as to amount to a breach of such obligations; nor am I persuaded that the fact that the Deans interests had committed to the arrangements in relation to the option rights (and hence required Mr Galati’s consent) was such as to put them in a position of special vulnerability.

903. Thus, I am not persuaded that the refusal of the Galati interests to progress a proposed investment by Cabe (even if that were because of Mr Galati’s refusal to be involved in a joint venture with Mr Daly) was in breach of any duty owed by the Galati interests (and whether or not it was unreasonable might well depend on the basis for Mr Galati’s disapproval of Mr Daly’s business operations – which was not explored). Similarly, I am not satisfied that the refusal to accept or engage with that offer amounts to unconscionable conduct in equity or under s 20 of the Australian Consumer Law. In any event, all that would sound in would be a loss of opportunity claim (as was fairly conceded in the course of submissions) and I would not have put any great prospect of that deal going ahead when so many others fell by the wayside in that period.

Platform Developments

904. Next is the complaint as to the alleged alignment of the Galati interests with the Platform Developments “development vehicle” (see from [103]). This seems to me to be in a somewhat different position to the Cabe offer. It does seem to me extraordinary that persons purportedly working towards the project as a whole would present a proposal for a development vehicle to the Deans interests without disclosing their involvement in that development vehicle and I cannot accept that Mr Galati had no association or knowledge of this – it is simply not plausible that Mr Lennox did this “off his own bat”.

905. The most logical conclusion is that the Galati interests and others associated with the proposal (Mr Lennox and Ms Ma) were looking to put forward a proposal that would see the Deans interests out of the picture so that they could progress the development themselves. While that might well have been in breach of their duties of good faith (in relation to the project being run through Fishbank) nothing flows from this in my view because I am not persuaded that the putting up of this “Platform” proposal caused the Deans interests any loss. The pressure at that stage that the Deans interests were facing was that the options were due to expire. That was a product of the time pressure from Dahua Group not from the Galati interests; and the making of the Platform proposal does not seem to me to be able to be blamed for the lack of other investors or the need at the last minute to enter into the deal with Celestino.

The Poulos Land Representation

906. Next as to the complaints made in relation to the allegedly false Poulos Land Representations (i.e., that Platform’s marketing material represented that the development included the right to the Poulos Family property; see at [106]), it is again difficult to see how this conduct (even if it amounted to a breach as alleged) sounded in any damage; nor was any time devoted to this allegation in the course of submissions.

Failure to follow Mr Deans’ direction

907. The next discrete complaint is as to alleged breach of the Agreement Principles documents by reference to what is said to have been the repeated refusal of Trading Australia to follow Mr Deans’ directions between 7 June 2015 and November 2015. Complaint is here made as to matters such as an alleged failure or refusal to procure financiers and/or investment funds (again, the fact that someone is unsuccessful in obtaining funding does not establish that there has been a breach of an agreement to use best endeavours to do so). The balance of the complaints made at [112(ii)-(xi)] relate to matters on which it is clear that there was room for a difference of judgment (such as whether to auction the option rights). I am not persuaded that those matters amounted to a breach of the Agreement Principles document (nor am I persuaded that the alleged loss and damage from the complained of conduct has been established).

Further false or misleading representation and unconscionable conduct claims

908. Further allegations of misleading conduct in relation to the alleged breaches of contract and fiduciary duty are made (at [114]-[118]): the No Equity Change Representation; the Execute Now or Lose Representation; the Platform BMD Conduct; the Poulos Land Representations Conduct . To the extent that these representations have not already been dealt with above, I simply note that I similarly do not consider that the complaints are made good (or that damage has been established as a result of them).

909. As to the further or alternative claims (at [121]-[124]) for unconscionable conduct, these broadly relate to the allegations as to a failure to use best endeavours to obtain investors. For the reasons adverted to above, I am not persuaded that they are made good. The complaint that the Galati interests instructed their lawyers to prepare legal documents to benefit the Galati interests seems to me to be particularly difficult to maintain in circumstances where there is no suggestion that the Deans interests were not capable of seeking their own advice in relation to the documents. Ultimately, and as elaborated upon above, these were two commercial parties on equal footing and there was no vulnerability suffered by the Deans interests.

Failure of the substratum

910. Next, insofar as it is alleged (at [125]-[127]) that there was a total failure of consideration and/or failure of the substratum (without attributable blame) of any agreement that may be found to have been in existence to give Trading Australia half of the legal rights held by Fishbank in the proposed development or joint endeavour, it appears that this is an attempt to counter Mr Galati’s contention that Trading Australia was entitled to half of the shares in Felan’s Fisheries (or a half share in the joint venture through half the shares in TRHS or the TRHS Unit Trust).

911. In equity, there is a general principle which restores to a party the contributions made to a joint venture which fails in circumstances where it was not intended that the other party should enjoy the contributions (see Walters v Scarborough at [293]). Accordingly, per Mason CJ, Wilson and Deane JJ in Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59, citing Deane J in Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 (Muschinski), a constructive trust may arise when an assertion of a legal right would be unconscionable (at 148):

…the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do…

912. These principles may (in an appropriate case) be applied in commercial joint ventures (see here Liquor National Wholesale Pty Ltd v Redrock Co Pty Ltd[2007] NSWSC 392 at [42] per Brereton J).

913. As I earlier considered in Australian Building & Technical Solutions Pty Ltd v Boumelhem; Boral Australia Ltd v Boumelhem; Boumelhem v Jones (2009) 2 ASTLR 336; [2009] NSWSC 460 (Boumelhem) (citing West v Mead [2003] NSWSC 161), the prerequisites for imposing such a trust are as follows (at [50]-[53]): first, there must be both a joint relationship or endeavour, in which expenditure is shared for the common benefit in the course of and for the purposes of which an asset is acquired; second, the substratum of that joint relationship or endeavour must have been removed or the joint endeavour prematurely terminated “without attributable blame”; and, third, it must be unconscionable for the benefit of those monetary and non-monetary contributions to be retained by the other party to the joint endeavour.

914. In Boumelhem, citing Cetojevic v Cetojevic [2006] NSWSC 431 at [43] per Campbell J, I noted that in such a case, a starting point for ownership of the asset is that the beneficial interest ought to be shared equally and that “the application of the maxim equity is equality places an onus of attributing any other conclusion on a person who asserts that the title should be held unequally.” As to the meaning of “without attributable blame”, I suggested (at [99]) that the answer may be that “if the joint endeavour comes to an end due to some wrongful conduct of the party seeking the imposition of a constructive trust this might impact on whether it is unconscionable for the other party in those circumstances to retain the benefits of the joint endeavour”; in other words, that a lack of focus on the “without attributable blame” part of the Muschinski formulation of the test may be explicable if it is bound up in the question of unconscionability.

915. As to the claim in the present case, that there was a failure of the substratum of any such agreement or joint venture can hardly be disputed. Moreover, I am prepared to accept that this was without attributable blame on the Deans interests’ part (in circumstances where the Galati interests chose to engage in the secret commission conduct and acted so as to to exclude the Deans interests from the project).

916. The difficulty I have with this claim (leaving aside questions as to how to assess the parties’ non-monetary contributions to the joint venture) is that the Call Option Deeds clearly gave Trading Australia the ability (jointly with Fishbank) to exercise the option rights and acquire an interest in the Bidvest Land and the Felan’s Fisheries shares. The fact that Trading Australia contributed no funds directly into the joint venture does not to my mind establish a failure of consideration as such. The arrangement reached with the Galati interests was clearly one whereby the consideration to be provided by Trading Australia for its interest in the option rights was the agreement by it to use its best endeavours to attract an investor or financier to the project. Its ultimate inability to find a financier for the whole of the project does not mean that there was a failure of consideration and does not detract from the fact that ultimately, Trading Australia contributed Mr Galati’s skills so as to be able jointly to exercise the Call Option Deeds to the project. Thus, I see no basis to impose a constructive trust over Trading Australia’s interests in the joint venture (but in any event nothing turns on this because I am not persuaded that there was any concluded agreement as to the TRHS shares being held on trust).

917. This appears to be an alternative claim by the Deans interests. The option rights were exercised and TRHS was nominated as the holder of the shares in Felan’s Fisheries. As noted above, I am not satisfied that there was a trust in respect of those shares; nor am I satisfied that there was an enforceable agreement for the acquisition by the Galati interests of an interest in the TRHS Unit Trust. Therefore, it seems to me that the rights to the shares in Felan’s Fisheries (and the units in the TRHS Unit Trust or shares in TRHS) remain as presently constituted. Trading Australia has no interest in those shares or units (and hence there is nothing over which a resulting or constructive trust ought to be declared for the benefit of Fishbank).

Mistake

918. As to the pleading (at [128]-[130]) of mistake on the part of Fishbank (of which it is alleged Trading Australia knew and took unconscientious advantage) as to its ownership rights in the proposed development being unaffected as against Trading Australia, I am not persuaded that any mistaken belief was attributable to Trading Australia. In any event, nothing here turns on this having regard to my conclusion above that Trading Australia now has no interest in the Felan’s Fisheries shares or TRHS. Hence, there is no need for the declaration sought as to Trading Australia’s ownership entitlements gained under the Deed of Exclusivity being held on a constructive trust for the benefit of Fishbank.

Damage and concurrent wrongdoers

919. In order to make a finding as to concurrent wrongdoers, it is necessary first to determine the loss or damage suffered and the acts or omissions that caused that loss or damage (see Reinhold v New South Wales Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187 at [19]-[22] per Barrett J, as his Honour then was). I have set out s 236 of the Australian Consumer Law above and I am satisfied that as a result of that misleading and deceptive conduct, Fishbank suffered damage, in that the $1,799,820.95 that would have been payable to the joint venture was diverted to Trading Australia solely. As the Nomination Price was payable to the Grantee (being Fishbank and Trading Australia), I consider that Fishbank has suffered loss in the form of half of that sum (i.e., $899,910.48).

920. Mr Galati claims that Ms Pritchard and Wealth Shift are concurrent wrongdoers and so the damage or loss awarded by the Court should be apportioned between them pursuant to Part VIA of the Competition and Consumer Act or Part 4 of the Civil Liability Act 2002 (NSW) (Civil Liability Act). I have found that Wealth Shift and Ms Pritchard were involved in Trading Australia’s contravention of s 18 of the Australian Consumer Law as to the misleading and deceptive conduct in relation to the secret commission.

921. It is helpful to set out the sections of the Competition and Consumer Act that are relevant to the apportionment of damage between concurrent wrongdoers:

87CB Application of Part

(1) This Part applies to a claim (an apportionable claim) if the claim is a claim for damages made under section 236 of the Australian Consumer Law for:

(a) economic loss; or

(b) damage to property;

caused by conduct that was done in a contravention of section 18 of the Australian Consumer Law.

(2)    For the purposes of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind).

(3)   In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim.

(4)   For the purposes of this Part, apportionable claims are limited to those claims specified in subsection (1).

(5)   For the purposes of this Part, it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died.

87CC Certain concurrent wrongdoers not to have benefit of apportionment

(1)   Nothing in this Part operates to exclude the liability of a concurrent wrongdoer (an excluded concurrent wrongdoer) in proceedings involving an apportionable claim if:

(a)   the concurrent wrongdoer intended to cause the economic loss or damage to property that is the subject of the claim; or

(b)   the concurrent wrongdoer fraudulently caused the economic loss or damage to property that is the subject of the claim.

(2)    The liability of an excluded concurrent wrongdoer is to be determined in accordance with the legal rules (if any) that (apart from this Part) are relevant.

(3)   The liability of any other concurrent wrongdoer who is not an excluded concurrent wrongdoer is to be determined in accordance with the provisions of this Part.

87CD Proportionate liability for apportionable claims

(1)   In any proceedings involving an apportionable claim:

(a)   the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant’s responsibility for the damage or loss; and

(b)   the court may give judgment against the defendant for not more than that amount.

(2)      If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim:

(a)   liability for the apportionable claim is to be determined in accordance with the provisions of this Part; and

(b)    liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.

(3)   In apportioning responsibility between defendants in the proceedings:

(a)   the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law; and

(b)   the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings.

(4)    This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings.

(5)    A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise.

922. Therefore, if not intentionally or fraudulently done, a claim for damages under s 236 for contravention of s 18 of the Australian Consumer Law is an apportionable claim. The apportionment provisions in the Australian Consumer Law are similar to ss 34-39 of the Civil Liability Act.

923. As I have found Mr Galati liable for the tort of the deceit for the same conduct that satisfied the claim against him under s 18 of the Australian Consumer Law, Mr Galati is an “excluded concurrent wrongdoer” under s 87CC of the Competition and Consumer Act (as would also be the case under s 34A(1)(b) of the Civil Liability Act). This is because I have found that Mr Galati fraudulently caused the relevant loss to Mr Deans and Fishbank and so Mr Galati’s liability cannot be reduced by a defence of apportionment (see Johnson v Mackinnon [2021] NSWCA 152 at [61], [298] per Brereton J (with whom Macfarlan JA and Simpson AJA agreed; Jiangsu Lianguan Zhaoxing Petrochemical Science and Technology Co Ltd v Wu [2021] VSC 228).

Conclusion

924. For the above reasons, I consider that Mr Galati’s claims have not succeeded and that the cross-claims against Mr Galati and against Ms Pritchard and Wealth Shift, in relation to the secret commission, have been made good.

925. The issue is as to the relief that should be granted in that regard. Had the secret commission not been paid, the whole of the purchase price (less commission) would have been paid to Fishbank and Trading Australia in their joint capacity as Grantee. The Deans interests maintain that the whole of the amount should be awarded in Fishbank’s favour having regard to the evidence of Mr Deans in his first affidavit of 9 February 2018 that if the whole of the secret commission had been paid it would have been set off against project expenses which exceeded that amount (see at [6]; T 606). It is said that all of that amount should have gone to Fishbank to defray expenses and that Mr Galati should not retain any of that amount.

926. However, I do not accept that it can be assumed that the whole of the money would have been applied by the joint venturers towards the project expenses as calculated by Mr Deans (not least because of the dispute between them at that time as to what those project expenses were). Had the moneys been paid to the “Grantee” jointly, then there might well have been a dispute as to how those moneys were to be expended.

927. Notwithstanding that the Agreement Principles document reserved to Mr Deans the ability to make final decisions, I cannot confidently conclude that (particularly given the history of the relationship between the parties) he would have had the final say as to who was to be paid out of the funds (and I note that the Galati interests disputed this). I consider that the appropriate relief is to require Mr Galati to account to Fishbank for a half share of the secret commission (as damages at law or equitable compensation for breach of fiduciary duty or as an accessory for the breach of fiduciary duty by Trading Australia). There should also be an award of exemplary damages against Mr Galati in the sum of $100,000 for the tort of deceit. A similar award of damages (but not exemplary damages) should be made against Wealth Shift and Ms Pritchard.

928. I see no utility in the declaratory relief that has been sought in the fourth amended cross-claim, in circumstances where I have made findings as to the impugned conduct.

929. Costs should in the ordinary course follow the event. If any of the parties wishes to make submissions as to the costs orders to be made then I will make directions for this to be dealt with on the papers.

Orders

930. I make the following orders:

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.

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Decision last updated: 01 September 2021