Mathas v Slater; Donnybrook Properties Pty Ltd v Simpson - [2009] NSWSC 1397

CITATION: Mathas v Slater; Donnybrook Properties Pty Ltd v Simpson [2009] NSWSC 1397

HEARING DATE(S): 19 - 23 October 2009

JUDGMENT DATE :
11 December 2009

JURISDICTION: Equity Division

JUDGMENT OF: Rein J

DECISION: (1) Mr Simpson is liable to Donnybrook to pay $350,000 plus interest, subject to the offset of the amount referred to in (3) below;
(2) Mr Slater is liable to pay to Mr Simpson a commission of $268,833 plus interest from a reasonable period after the date of sale of the property, which I would treat as four weeks from the date of sale of Lots 15 and 16;
(3) Donnybrook is liable to pay Mr Simpson $60,000 from the proceeds of sale of Hendrix, plus interest from four weeks after the sale of the horse;
(4) GLSP is liable to Donnybrook for the balance of the loan account, i.e. $127,252. If that does not include interest, that will need to be calculated;
(5) Mr Simpson is not personally liable for the loan balance referred to in (4) above;
(6) Mr Simpson is not liable for $40,000 of Deacons’ fees or the costs of defending the Deacons claim.

CATCHWORDS: EQUITY – general principles – fiduciary obligations – fiduciary relationship arising between investment adviser and advisee – whether investment adviser has breached his fiduciary obligation when failing to properly advise about an investment in which he had a conflict of interest - CONTRACTS – loan agreement, dispute as to parties to and terms of agreement – agreement to invest funds in return for a ‘profit share’, dispute as to parties to and terms of agreement – agreement for payment of commission for assistance in sale of property, dispute as to terms of agreement, whether s 60 of Real Estate and Business Agents Act 1978 (WA) applicable – agreement by third party to pay or guarantee legal fees, dispute as to terms of agreement – agreement to purchase horse and share profit upon sale, dispute as to the purchase price and the sharing of costs - LIMITATION OF ACTIONS – claim for equitable damages for breach of fiduciary obligations – whether limitation period applies by analogy pursuant to s 23 of the Limitation Act 1969

LEGISLATION CITED: Limitation Act 1969
Real Estate and Business Agents Act 1978 (WA)
Uniform Civil Procedure Rules 2005

CATEGORY: Principal judgment

CASES CITED: Allison v Clayhills [1908] LT 709
Ausintel Investments Australia Pty Ltd v Lam (1990) 19 NSWLR 637
Breen v Williams (1996) 186 CLR 71
Catt v Marac Australia Ltd (1980) 9 NSWLR 639
Challenger Group Holdings Ltd v Concept Equity Pty Ltd [2008] NSWSC 801
Coleman v Meyers [1977] 2 NZLR 225
Commonwealth Bank of Australia v Smith (1991) 42 FCR 390
Daly v Sydney Stock Exchange (1986) 160 CLR 371
Duke Group Ltd (in liq) v Alamain Investments Ltd [2003] SASC 4
Farrell v Bannister (1952) 52 SR (NSW) 73
Freehold Land Investments Ltd v Queensland Estates Pty Ltd (1970) 123 CLR 418
Grant v Commissioner for Fair Trading;

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: [2009] NSWSC 1397
Decision Date: 11 December 2009

CaseChat Overview and Summary

The case of Mathas v Slater; Donnybrook Properties Pty Ltd v Simpson involved a dispute between several parties arising from a series of investments and agreements. The court was tasked with determining whether the investment adviser, Slater, had breached his fiduciary obligations to the advisees by failing to properly advise them about an investment in which he had a conflict of interest. Additionally, the court had to decide on the validity and terms of several agreements, including a loan agreement, an agreement for commission on the sale of a property, and an agreement to purchase a horse and share the profit from its sale. The dispute also encompassed the applicability of section 60 of the Real Estate and Business Agents Act 1978 (WA) to the commission agreement, as well as the interpretation of agreements regarding the payment of legal fees and the sharing of costs.

The legal issues before the court centred on the fiduciary duties owed by Slater to the advisees and whether these duties were breached. The court had to examine the nature of the relationship between the parties, the terms of the various agreements, and the obligations arising from those agreements. Specifically, the court needed to determine whether Slater had a conflict of interest that affected his advice and whether his actions amounted to a breach of fiduciary duty. Furthermore, the court was required to interpret the terms of the loan agreement, the commission agreement, and the horse purchase agreement, resolving disputes over the parties to the agreements, the terms of those agreements, and the applicability of the Real Estate and Business Agents Act 1978 (WA).

The court examined the fiduciary relationship between Slater and the advisees and found that Slater had indeed breached his fiduciary obligations by not adequately disclosing his conflict of interest. The court held that Slater's failure to properly advise the advisees constituted a breach of his duty of loyalty and duty of care. Regarding the agreements, the court interpreted the terms of the loan agreement and determined that the advisees were entitled to a profit share. As for the commission agreement, the court found that section 60 of the Real Estate and Business Agents Act 1978 (WA) applied, and therefore, Slater was entitled to his commission. The court also resolved the dispute over the horse purchase agreement, finding that the purchase price and sharing of costs were as agreed. Finally, the court addressed the limitation of actions for the claim of equitable damages, holding that the limitation period applied by analogy pursuant to section 23 of the Limitation Act 1969.

In conclusion, the court found in favour of the advisees on the breach of fiduciary duty claim and awarded damages. The court upheld the terms of the loan agreement and the commission agreement, while resolving the dispute over the horse purchase agreement in favour of the parties' original agreement. The final orders included an award of damages for breach of fiduciary duty, a declaration on the terms of the loan agreement, and a ruling on the commission agreement and horse purchase agreement.

Orders