Galati v Deans

The appeal in *Galati v Deans* concerned a dispute arising from a joint venture between the appellant and the first respondent concerning the redevelopment of the Sydney Fish Market. During the course of this joint venture, companies controlled by the appellant and the first respondent acquired a call option for shares in an unrelated company. A nominee company was appointed to exercise this call option, with the grantees providing the necessary finance. The central issue was whether the nominee company held the acquired shares on trust for the grantees in equal shares, and if so, whether this trust should be characterised as a presumed resulting trust or a common intention constructive trust. A secondary issue involved whether the receipt and retention of a commission by a company related to the first respondent, under an antecedent agency agreement unconnected to the joint venture, constituted a breach of fiduciary duty.

The court was required to determine whether the evidence established the intention of the grantees that the nominee company should hold the acquired shares on trust for them equally. It also had to consider the proper characterisation of any such trust, and whether the parties intended the trust to arise only upon the allocation of units in the nominee company's unit trust to the appellant. Furthermore, the court had to assess whether the receipt of a commission by a company associated with one of the joint venturers, pursuant to an agreement predating and unrelated to the joint venture, amounted to a breach of fiduciary duty.

The court found that the nominee company held half of the shares acquired under the call option deed on trust for the appellant. This trust was characterised as a presumed resulting trust, arising from the contributions made by the parties to acquire the shares. The court reasoned that the intention of the parties was for the shares to be held for their benefit in equal proportions, reflecting their financial contributions. Regarding the commission, the court held that there was no breach of fiduciary duty because the antecedent agency agreement was entirely unconnected with the joint venture.

The appeal was allowed in part. The order of the court below was set aside, and in its place, it was declared that the third respondent holds the shares in the fourth respondent on trust for the appellant and the second respondent as tenants in common in equal shares. The appellant's claim was otherwise dismissed. The parties were ordered to file written submissions regarding costs.