Potts v Robins - [2013] QCA 273

SUPREME COURT OF QUEENSLAND

CITATION:

Potts & Anor v Robins & Ors [2013] QCA 273

PARTIES:

GREGORY POTTS
(first appellant)
NICLYN PTY LTD (ACN 074 123 854) in its own right and as trustee of the POTTS FAMILY TRUST
(second appellant)
v
ERNEST WILLIAM ROBINS & MAUREEN DAWN ROBINS as trustees for the ROBINS SUPERANNUATION FUND
(first respondents)
ERIKA PETELSKI
(second respondent)
JOHN VACCANEO & JENNIFER VACCANEO
(third respondents)
RONALD WALTER HERBERT & BRONWYN EUNICE HERBERT as trustees for the HERBERT SUPERANNUATION FUND
(fourth respondents)
KO TAI HSI & TENG YI-YU HSI
(fifth respondents)

FILE NO/S:

Appeal No 3118 of 2013
DC No 3371 of 2007

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

District Court at Brisbane

DELIVERED ON:

24 September 2013

DELIVERED AT:

Brisbane

HEARING DATE:

3 September 2013

JUDGES:

Margaret McMurdo P and Muir and Gotterson JJA
Separate reasons for judgment of each member of the Court, each concurring as to the order made

ORDER:

Appeal dismissed with costs.

CATCHWORDS:

APPEAL AND NEW TRIAL – APPEAL - GENERAL PRINCIPLES – INTERFERENCE WITH JUDGE’S FINDINGS OF FACT – OTHER MATTERS – where a solicitor nominee company, Law Partners Mortgages Pty Ltd (LPM), advanced loans for the purchase of lots 1, 2 and 9 (the management units) and the management rights in respect of the Biloela Motor Inn – where the loans were secured by registered mortgages held by LPM on behalf of the respondents – where the second appellant became registered as second mortgagee of lots 1, 2 and 9 – where liquidators appointed in respect of LPM convened a meeting on 18 December 2001 attended by the first appellant (a director of the second appellant) and representatives of the respondents – where the primary judge found that at the meeting the first appellant undertook to supervise the management of the Biloela Motor Inn on behalf of all of the investors and to act to protect the interests of the respondents by advising them of matters which might come to his attention as a result of his supervision and which might adversely affect their interests – where the appellants contend that the primary judge’s findings as to the agreement or understanding between the appellants and the respondents were contrary to the evidence at trial – where the first appellant gave undertakings that he would “continue to supervise the management of the motel” with a view to its future sale – where contemporaneous correspondence was “clearly indicative” of the first appellant assuming an active management role – whether the primary judge’s findings in respect of the agreement or understanding between the appellants and the respondents were justified by the evidence

EQUITY – GENERAL PRINCIPLES – FIDUCIARY OBLIGATIONS – FIDUCIARY DUTY – SCOPE GENERALLY – where the first appellant undertook to supervise the day to day management of the Biloela Motor Inn in the interests of the respondents – where the first appellant failed to notify the respondents of the impending auction of the management units for non-payment…

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: [2013] QCA 273
Decision Date: 24 September 2013

CaseChat Overview and Summary

Potts v Robins involved a dispute between the appellants, who were connected to Law Partners Mortgages Pty Ltd (LPM), and the respondents, who had invested in the Biloela Motor Inn. The appellants advanced loans for the purchase of lots 1, 2, and 9, as well as the management rights for the motel, secured by registered mortgages held by LPM. The primary judge found that the first appellant undertook to supervise the management of the motel on behalf of the investors and protect their interests. The appellants appealed, contending that the judge's findings were contrary to the evidence. The respondents claimed that the first appellant owed a fiduciary duty to them and breached this duty by failing to inform them of an impending auction of the management units, which he attended and facilitated the purchase by the second appellant. The second appellant later sold the lots at a significant profit.

The key legal issues before the court were whether the primary judge's findings regarding the agreement or understanding between the appellants and the respondents were justified by the evidence, and whether the first appellant owed a fiduciary duty to the respondents and breached it by failing to notify them of the auction. The court also had to determine if the appellants were liable to account for any profits made from the subsequent sale of the management units. The appellants argued that if a fiduciary duty existed, it did not extend to the duties claimed by the respondents. The respondents maintained that the first appellant's actions constituted a breach of fiduciary duty and that they were entitled to the profits made from the sale.

The court examined the evidence and found that the primary judge's conclusions were supported by the contemporaneous correspondence and the first appellant's undertakings at the meeting. The court held that the first appellant did owe a fiduciary duty to the respondents, and this duty included the obligation to inform them of significant matters such as the impending auction. The court further found that the first appellant breached this duty by failing to notify the respondents, and by bidding at the auction and procuring the second appellant to purchase the management units, he violated the "purchase rule." Consequently, both appellants were liable to account to the respondents for the profits made from the sale of the management units. The appeal was dismissed with costs.

Orders

Orders of the court

Appeal dismissed with costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Potts & Anor v Robins & Ors [2013] QCA 273
PARTIES:	GREGORY POTTS (first appellant) NICLYN PTY LTD (ACN 074 123 854) in its own right and as trustee of the POTTS FAMILY TRUST (second appellant) v ERNEST WILLIAM ROBINS & MAUREEN DAWN ROBINS as trustees for the ROBINS SUPERANNUATION FUND (first respondents) ERIKA PETELSKI (second respondent) JOHN VACCANEO & JENNIFER VACCANEO (third respondents) RONALD WALTER HERBERT & BRONWYN EUNICE HERBERT as trustees for the HERBERT SUPERANNUATION FUND (fourth respondents) KO TAI HSI & TENG YI-YU HSI (fifth respondents)
FILE NO/S:	Appeal No 3118 of 2013 DC No 3371 of 2007
DIVISION:	Court of Appeal
PROCEEDING:	General Civil Appeal
ORIGINATING COURT:	District Court at Brisbane
DELIVERED ON:	24 September 2013
DELIVERED AT:	Brisbane
HEARING DATE:	3 September 2013
JUDGES:	Margaret McMurdo P and Muir and Gotterson JJA Separate reasons for judgment of each member of the Court, each concurring as to the order made
ORDER:	Appeal dismissed with costs.
CATCHWORDS:	APPEAL AND NEW TRIAL – APPEAL - GENERAL PRINCIPLES – INTERFERENCE WITH JUDGE’S FINDINGS OF FACT – OTHER MATTERS – where a solicitor nominee company, Law Partners Mortgages Pty Ltd (LPM), advanced loans for the purchase of lots 1, 2 and 9 (the management units) and the management rights in respect of the Biloela Motor Inn – where the loans were secured by registered mortgages held by LPM on behalf of the respondents – where the second appellant became registered as second mortgagee of lots 1, 2 and 9 – where liquidators appointed in respect of LPM convened a meeting on 18 December 2001 attended by the first appellant (a director of the second appellant) and representatives of the respondents – where the primary judge found that at the meeting the first appellant undertook to supervise the management of the Biloela Motor Inn on behalf of all of the investors and to act to protect the interests of the respondents by advising them of matters which might come to his attention as a result of his supervision and which might adversely affect their interests – where the appellants contend that the primary judge’s findings as to the agreement or understanding between the appellants and the respondents were contrary to the evidence at trial – where the first appellant gave undertakings that he would “continue to supervise the management of the motel” with a view to its future sale – where contemporaneous correspondence was “clearly indicative” of the first appellant assuming an active management role – whether the primary judge’s findings in respect of the agreement or understanding between the appellants and the respondents were justified by the evidence EQUITY – GENERAL PRINCIPLES – FIDUCIARY OBLIGATIONS – FIDUCIARY DUTY – SCOPE GENERALLY – where the first appellant undertook to supervise the day to day management of the Biloela Motor Inn in the interests of the respondents – where the first appellant failed to notify the respondents of the impending auction of the management units for non-payment…