Jacques v Forte Enterprises Pty Ltd - [2012] NSWSC 1241

Supreme Court

New South Wales

Medium Neutral Citation: Jacques v Forte Enterprises Pty Ltd [2012] NSWSC 1241
Hearing dates: 6 - 9 August 2012
Decision date: 14 September 2012
Jurisdiction: Equity Division
Before: Rein J
Decision:
Judgment against the defendants on the plaintiff's claim in the amount of $60,514 plus interest.

Catchwords:
PARTNERSHIP - rights and duties of partners inter se - fiduciary relationship - sale of partnership property - where more than one offer of purchase available - where one partner had personal interest in a proposed purchaser - onus of establishing fully informed consent lies on the fiduciary - where there is no evidence that this conflict of interest was disclosed to the other partner - where other partner later obtained independent legal representation to settle terms of dissolution of partnership - fiduciary's onus not discharged
DAMAGES - general principles - assessing damages for loss caused by failure to explore and potentially finalise purchase offer - need to account for uncertainties - whether agreement could be reached - possible obstacles in path of financing - general commercial uncertainties - discount of 35 per cent
Legislation Cited: Civil Procedure Act 2005
Practice Note SC Gen 16
Cases Cited: Birtchnell v Equity Trustees Executors & Agency Co Ltd (1929) 42 CLR 384
Boardman v Phipps [1967] 2 AC 46
Chan v Zacharia (1984) 154 CLR 178
Maguire & Tansey v Makaronis (1997) 188 CLR 449
McKenzie v McDonald [1927] VLR 134
Pilmer v The Duke Group Ltd (in liq) (2001) 207 CLR 165; [2001] HCA 31
Shears v Chisholm [1994] 2 VR 535
Thomas v SMP (International) Pty Ltd (No 4) [2010] NSWSC 984
Texts Cited: R P Meagher, J D Heydon & M J Leeming, Meagher, Gummow and Lehane's equity: doctrines and remedies, 4th ed (2002), LexisNexis Butterworths
Category: Principal judgment
Parties:
Phillip Jacques (Plaintiff)
Forte Enterprises Pty Ltd (First defendant)
Ahtram Nominees Pty Ltd (Second defendant)
George Senes (Third defendant)
Representation: Counsel:
D A Lloyd (Plaintiff)
A Hourigan (Defendants)
Solicitors:
J Orford (Plaintiff)
T Morgenstern (Defendants)

File Number(s): SC 2008/278386

Judgment

These proceedings relate to a partnership formed in 1988 between the plaintiff, Mr Phillip Jacques ("Mr Jacques"), and the first and second defendants, Forte Enterprises Pty Ltd ("Forte") and Ahtram Nominees Pty Ltd ("Ahtram"). Forte is an investment vehicle for the third defendant, Mr George Senes ("Mr Senes"). Ahtram was the investment vehicle of Mr Victor Berger ("Mr Berger") but in 1993 Ahtram had agreed to transfer its interest in the partnership to Mr Senes. Mr D A Lloyd of counsel appears for Mr Jacques. Mr A Hourigan of counsel appears for all three defendants.

Mr Jacques claims that, in relation to the sale of partnership property at Collaroy New South Wales to Landmark-Forum Pty Ltd ("Landmark"), Forte, Ahtram and Mr Senes breached fiduciary duties owed by them to him as a partner.

The background is that the partnership conducted a gym, pool and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Jacques v Forte Enterprises Pty Ltd

Details

AGLC: Jacques v Forte Enterprises Pty Ltd [2012] NSWSC 1241
Case: [2012] NSWSC 1241
Decision Date: 14 September 2012

CaseChat Overview and Summary

In this case, the plaintiff, Jacques, sought damages against Forte Enterprises Pty Ltd, a partnership of which Jacques was a partner. The dispute arose from a situation where the defendant, Forte Enterprises, had received an offer to purchase partnership property. Jacques claimed that Forte Enterprises failed to explore and potentially finalise this offer, resulting in financial loss to the partnership. The matter was heard in the Federal Court of Australia.

The central legal issues that the court needed to address were whether Forte Enterprises breached its fiduciary duty by not disclosing a potential conflict of interest and whether Jacques was entitled to damages for the alleged breach. The court also had to determine the appropriate method for assessing damages in this context, including any applicable discounts due to uncertainties.

The court found that Forte Enterprises had indeed breached its fiduciary duty by not disclosing a potential conflict of interest, as one partner had a personal interest in the proposed purchaser. The court held that the onus of proving fully informed consent lies with the fiduciary and, in this case, there was no evidence that the conflict of interest was disclosed. The court further noted that the plaintiff's obtaining of independent legal representation did not discharge this onus. Regarding damages, the court concluded that a 35 per cent discount was appropriate to account for uncertainties such as the possibility of reaching an agreement and potential financing obstacles.

The court ordered Forte Enterprises to pay Jacques damages for the loss suffered, applying a 35 per cent discount to account for uncertainties in the assessment. This discount reflected the potential difficulties in reaching an agreement and securing financing for the sale.

Orders