Maher v Honeysett & Maher Electrical Contractors Pty Ltd - [2007] NSWSC 12

Reported Decision:
(2007) Aust Contract Reports 90-249

New South Wales

Supreme Court

CITATION: Maher v Honeysett & Maher Electrical Contractors Pty Ltd [2007] NSWSC 12

HEARING DATE(S): 30/05/06, 31/05/06, 01/06/06, 02/06/06, 18/07/06, 19/07/06, 20/07/06
Written submissions: 10/08/06, 15/08/06, 06/09/06, 20/09/06

JUDGMENT DATE :
29 January 2007

JURISDICTION: Equity Division

JUDGMENT OF: Barrett J

DECISION: See paragraphs 163 to 165

CATCHWORDS: CONTRACTS - general contractual principles - whether terms sufficiently certain to create legal relations - whether supported by consideration - harsh and unconscientious contracts - undue influence - unconscionable conduct - whether one party to knowledge of other labouring under disability - CORPORATIONS - directors - duties of directors - where one director/shareholder induces other to agree to cessation of company's business and transfer of company property to him

LEGISLATION CITED: Corporations Act 2001 (Cth), s.237

CASES CITED: Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101
Australia & New Zealand Banking Group Ltd v Karam (2005) 64 NSWLR 149
Bank of Credit and Commercial International SA v Aboody [1990] 1 QB 923
Bridgewater v Leahy (1998) 194 CLR 457
Brunninghausen v Glavanics (1999) 46 NSWLR 538
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Hammond v Vam Ltd [1972] 2 NSWLR 16
Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503
Item Software (UK) Ltd v Fassihi [2005] 2 BCLC 91
Johnson v Buttress (1936) 56 CLR 113
Louth v Diprose (1992) 175 CLR 621
Maher v Honeysett & Maher Electrical Contractors [2005] NSWSC 859
Masters v Cameron (1954) 91 CLR 353
Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601
Poosathurdi v Kanappa Chettiar (1919) LR 47 IA
Spong v Spong (1914) 18 CLR 544
Union Bank of Australia Ltd v Whitelaw [1906] VLR 711
Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429
Watkins v Combes (1922) 30 CLR 180

PARTIES: David Maher - Plaintiff
Honeysett & Maher Electrical Contractors Pty Ltd - First Defendant
Mark William Honeysett - Second Defendant

FILE NUMBER(S): SC 6055/04

COUNSEL: Mr A.F. Fernon - Plaintiff
Mr G.A. Sirtes/Mrs S.A. Sirtes - Defendants

SOLICITORS: Low Doherty & Stratford - Plaintiff
Morton & Harris - Defendants

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

MONDAY, 29 JANUARY 2007

6055/04 DAVID MAHER v HONEYSETT & MAHER ELECTRICAL CONTRACTORS PTY LTD & ANOR

JUDGMENT

Introduction

1 The first plaintiff, David John Maher, and the second defendant, Mark William Honeysett, are electricians by trade. They began trading in partnership as electrical contractors in 1989. In 1994 they incorporated their business as Honeysett & Maher Electrical Contractors Pty Ltd (“HME”) and became equal shareholders and the only directors of that company. HME traded successfully and profitably. It ceased trading on 19 December 2003.

2 Cessation of business of HME occurred after differences had arisen between Mr Maher and Mr Honeysett in about September 2003 concerning the future direction and operation of the business. In brief,…

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.

Keep reading for free

Create a free CaseChat account to read Maher v Honeysett & Maher Electrical Contractors Pty Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2007] NSWSC 12
Decision Date: 29 January 2007

CaseChat Overview and Summary

In the Federal Circuit Court, Maher sued Honeysett and the company, Maher Electrical Contractors, alleging that Honeysett, a director and shareholder of the company, had influenced him to enter into an agreement to cease his business and transfer the company's property to Honeysett. The dispute centred around whether the terms of the agreement were sufficiently certain to create legal relations, whether they were supported by consideration, and whether the agreement was harsh, unconscientious, or constituted undue influence or unconscionable conduct.

The legal issues before the court included whether the agreement was sufficiently certain and supported by consideration, whether Honeysett had taken unfair advantage of Maher due to his disability, whether Honeysett was aware of Maher's disability and exploited it, and whether Honeysett's conduct breached his duties as a director. The court had to determine if the agreement was harsh and unconscientious, and whether it amounted to undue influence or unconscionable conduct.

The court found that the agreement was sufficiently certain to create legal relations and was supported by consideration. However, it found that Honeysett had induced Maher to agree to the terms by taking advantage of his disability, constituting undue influence. Additionally, the court held that Honeysett was aware of Maher's disability and had exploited it, which constituted unconscionable conduct. The court also found that Honeysett's actions breached his duties as a director. Consequently, the court set aside the agreement and ordered that the company's property be returned to the company, with Honeysett to compensate the company for any losses resulting from his actions.

Orders