Mantonella Pty Ltd v. Thompson - [2008] QCA 241

[2008] QCA 241

COURT OF APPEAL

HOLMES JA
MUIR JA
PHILIPPIDES J

Appeal No 5067 of 2008

MANTONELLA PTY LTD (ACN 069 012 531) Applicant

and

MYLES THOMPSON

BRISBANE

DATE 19/08/2008

JUDGMENT

MR I JORGENSEN for the applicant

MR M P SUMNER-POTTS (instructed by Myles Thompson Lawyers) for the respondent

HOLMES JA: The applicant for leave to appeal, Mantonella Pty Ltd, with Freeway Management Property Ltd, Mantonella's predecessor as trustee of a family trust, sued the respondent, Mr Thompson, a solicitor, in the Magistrates Court claiming damages for negligence and breach of fiduciary duty arising out of Freeway's purchase of a restaurant business from the executor of a deceased estate. Mr Jorgensen, the secretary of Freeway, acted on its behalf in negotiating the purchase and executing the contract. The Magistrate found that Mr Thompson acted for Freeway as well as the executor of the estate after the contract was executed.

One of the clauses of the contract required the vendor to assign the lease in respect of the premises and to obtain the landlord's consent to the assignment before settlement. As matters fell out, the landlords did not consent to assignment of the lease and Freeway was never able to conduct its restaurant at the premises.
Freeway and Mantonella failed in their action in the Magistrates Court against Mr Thompson, and Mantonella failed again in an appeal to the District Court against the Magistrate's judgment.

Mantonella now seeks leave to appeal in this Court. The proposed grounds are somewhat obscure, but I think it is fair to say their gist is that the Magistrate and District Court judge should have found that Mr Thompson owed and breached a duty of care to protect Freeway's interest in the completion of the sale contracts and thereafter.

Mr Thompson, on the other hand, resists the application.

Freeway and Mantonella sued Mr Thompson for damages of $15,000, reflecting the purchase price Freeway had paid under the contract, together with $1000 in legal costs paid to Melbourne solicitors, claiming, among other things, that Mr Thompson had acted for Freeway as well as the vendor, and negligently had failed to advise it, Freeway, not to pay the purchase price until the assignment was procured by the vendor. A breach of fiduciary duty was alleged, that Mr Thompson failed to advise Freeway to obtain independent legal advice, despite his conflict of interest in acting for both parties. It was also alleged that Mr Thompson had been negligent in failing to advise Freeway that the lease required it to provide a $25,000 bank guarantee.

Mr Thompson entered a defence in which he denied having acted for Freeway prior to its execution of the contract, but admitted that he had accepted instructions to act for it, as well as for the executor of the estate, to effect settlement of the contract. The Magistrate accepted Mr Thompson's assertion for a number of reasons: her adverse view of Mr Jorgensen's credit, the fact that he had not, at the stage at…

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.

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Details

Case: [2008] QCA 241
Decision Date: 19 August 2008

CaseChat Overview and Summary

In the case of Mantonella Pty Ltd v. Thompson, the Court of Appeal granted leave to Mantonella Pty Ltd to appeal from the District Court's judgment upholding the Magistrates Court's decision that Mr. Thompson, a solicitor, was not liable for damages to Mantonella Pty Ltd for his alleged negligence and breach of fiduciary duty in relation to a contract for the sale of a restaurant business. The contract was intended to be settled on the basis that the vendor would assign the lease to the purchaser, but this did not occur and the purchaser was unable to conduct its restaurant at the premises. Mantonella Pty Ltd and Freeway Management Property Ltd, its predecessor, sought damages for negligence and breach of fiduciary duty against Mr. Thompson. The Court of Appeal found that there was a reasonable argument that the Magistrates Court and District Court erred in finding that Mr. Thompson was not negligent in advising the purchaser to settle without the assignment of the lease, that the settlement occurred on 26 August 1994, and that he was not in breach of any duty in acting for both parties. The Court of Appeal granted leave to appeal on those grounds, subject to the filing of a notice of appeal within a specified time.
The Court of Appeal found that there were a number of reasons why the Magistrates Court's finding that Mr. Thompson did not act for Mantonella Pty Ltd before the contract was executed was unassailable. However, the Court of Appeal found that there was scope for argument that the Magistrates Court erred in finding that Mr. Thompson was not negligent in failing to advise Mantonella Pty Ltd that it was not contractually obliged to, and should not, settle until clause 7 of the contract relating to the assignment of the lease was satisfied. The Court of Appeal also found that there was scope for argument that the Magistrates Court erred in finding that the settlement occurred on 26 August 1994, given that the evidence revealed a number of references by Mr. Thompson to settlement not yet having occurred in late 1994 and early 1995. Finally, the Court of Appeal found that there was scope for argument that the Magistrates Court erred in finding that Mr. Thompson was not in breach of any duty in acting for both parties and failing to advise Mantonella Pty Ltd of the conflict of interest and the advisability of separate representation.
The Court of Appeal found that there was a reasonable argument that the Magistrates Court and District Court erred in finding that Mr. Thompson was not negligent in failing to advise Mantonella Pty Ltd to settle without the assignment of the lease, that the settlement occurred on 26 August 1994, and that he was not in breach of any duty in acting for both parties. The Court of Appeal found that there was a reasonable prospect of an injustice having occurred if those errors were made out. The Court of Appeal granted leave to appeal on those grounds, subject to the filing of a notice of appeal within a specified time.

Orders