Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) (No 2)

The appeal concerned a dispute between Gerrard Toltz Pty Ltd (the appellant) and City Garden Australia Pty Ltd (in liq) (the respondent) regarding the appellant's retainer and alleged breaches of fiduciary duty in a loan transaction. The primary judge had found that the appellant was retained to act for the respondent in the loan transaction, owed fiduciary duties to the respondent in that capacity, and breached those duties, causing loss to the respondent. The appellant contended that the primary judge erred in these findings.

The legal issues before the Court of Appeal included whether the primary judge erred in finding that the appellant was retained to act for the respondent in the loan transaction, and whether the appellant owed fiduciary duties to the respondent in respect of that transaction. Further issues involved whether the appellant was in a relevant position of conflict of interest, whether the primary judge erred in assessing causation by reference to what would have happened if informed consent had been obtained, and whether the primary judge erred in finding that the appellant required the consent of both directors to establish informed consent. The court also considered whether the primary judge determined issues on a basis that was neither pleaded nor run at trial, and whether there was any practical injustice arising from those findings.

The Court of Appeal allowed the appeal, setting aside the primary judge's orders regarding the retainer, fiduciary duties, and costs. The court found that the primary judge had erred in concluding that the appellant was retained to act for the respondent in the loan transaction, and consequently, that the appellant owed fiduciary duties to the respondent in that context. The court determined that the appellant had acted for the lender in the transaction, and that the respondent had received independent legal advice, which was contemplated by the transaction. The court also found that the primary judge had erred in assessing causation and in determining that the appellant required the consent of both directors for informed consent. The respondent was ordered to pay the appellant's costs of the appeal and the proceedings at first instance.