Schipp v Cameron

Case [1998] NSWSC 997

NEW SOUTH WALES SUPREME COURT

CITATION:    Schipp v Cameron, Harrison & ors [1999]  NSWSC 997

CURRENT JURISDICTION:             Supreme Court, Equity Division

FILE NUMBER(S):    6425/91

HEARING DATE{S):             5&6.2.98, 6&7.4.98, 22-26.9.98, 29 & 30.9.98, 1,3,7-10,13,17,20-24 & 30.10.98, 3-7, 20&21.11.98, 1& 12.12.98

JUDGMENT DATE: 09/07/1998
 PARTIES:

Delcie Joan Schipp (Plaintiff/Cross-Defendant)
Donald Cameron (First Defendant/First Cross-Claimant)
Donald Cameron Real Estate Pty Ltd (Second Defendant)
George Harrison (Third Defendant/Second Cross-Claimant)
Emibarb Pty Ltd (Fourth Defendant)
Pyogrove Pty Ltd (Fifth Defendant)
Aegon Insurance Company (UK) Ltd & ors (Seventh Defendants)

JUDGMENT OF:       Einstein J      

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S):          Not Applicable

LOWER COURT JUDICIAL OFFICER:     Not Applicable

COUNSEL:
M.J. Slattery QC and JM Hennessey (Plaintiff)
Donald Cameron (First Defendant self litigant)
S.J. Archer and M.G. Stubbs (Third & Fourth Defendants)
N.C. Hutley SC and PJ Brereton (Seventh Defendants)

SOLICITORS:
Barker Gosling (Plaintiff)
Hegarty & Elmgreen (Third & Fourth Defendants)
Minter Ellison (Seventh Defendants)

CATCHWORDS:
Catchwords:
EQUITY - Joint Venture Agreement - Loan agreement - Ability to set aside - Unconscionable conduct - Position of special disadvantage or vulnerability arising from lack of experience and reliance - Exploitation of disadvantage - Economic duress - Whether illegitimate pressure exerted by defendants - Undue influence - Presumption of - Whether will of the plaintiff independent and voluntary.
EQUITY - Fiduciary duty - Breach - Joint venture agreement for property development - Duties of intending co-venturers - Whether fiduciary duties owed by joint venturers when agreement reached - Content of fiduciary obligations of participants in a joint venture - Circumstances in which a joint venture will bear sufficient similarity to a partnership to attract fiduciary obligations - Solicitor and client - Whether acting in capacity as a solicitor or entrepreneurial activity - Failure of solicitor to disclose interest - Propriety of acting in transaction for more than one party - Relationships of trust and confidence - Whether fiduciary who acts in breach of duty under a continuing liability to make restitution - Remedies of plaintiff - Equitable compensation for breach of fiduciary duty.
NEGLIGENCE - Duty of care - Breach - Solicitors - Whether retained to act for joint venturers in respect of property transactions - Whether retained to give advice in respect of tax liability and a loan agreement - Whether duty of care owed to third party - Whether any assumption of responsibility arising from knowledge of total dependence - Causation.
TRADE PRACTICES - Misleading and deceptive conduct - Trade Practices Act 1974 (Cth) section 52;  Fair Trading Act 1987 (NSW) section 42.
INSURANCE - Professional indemnity insurance - Claims made policy - Proceeding against insurer direct - Whether statutory charge attaches to insurance moneys - Construction of statute - Remedial provision - Beneficial construction of statute - Principles applicable - Law Reform (Miscellaneous Provisions) Act 1946 (NSW), section 6
CONTRACT - Construction - Oral agreement - Agreement later reduced to written document containing different provisions - Implied Terms - Collateral contract - Failure of consideration.
INSURANCE - Professional indemnity insurance - Scope of…

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Schipp v Cameron [1998] NSWSC 997
Case
[1998] NSWSC 997
Decision Date

CaseChat Overview and Summary

In the matter of Schipp v Cameron, the plaintiff, Mrs. Schipp, brought forth claims against Mr. Cameron, a solicitor, and Mr. Harrison, who was both a solicitor and a party to a joint venture involving property development. The dispute arose from a series of transactions concerning the joint venture, including the sale of a property, a loan agreement, and the purchase of another property, all of which Mrs. Schipp claimed were influenced by Mr. Harrison's alleged breaches of fiduciary duty, economic duress, and misleading conduct. The case was heard in the Supreme Court of New South Wales. The primary legal issues before the court included whether Mr. Harrison owed fiduciary duties to Mrs. Schipp during the formation of the joint venture, the nature and extent of these duties, and whether Mrs. Schipp's claim constituted a single claim or multiple claims under the professional indemnity insurance policy held by Mr. Harrison's firm.

The court considered whether Mr. Harrison's actions during the joint venture formation amounted to a breach of fiduciary duty. It was determined that the relationship between the parties bore sufficient similarity to a partnership, thus attracting fiduciary obligations. The court found that Mr. Harrison had indeed breached his fiduciary duties by failing to disclose his interests and by acting in a manner that exploited Mrs. Schipp's lack of experience and reliance. Additionally, the court assessed whether Mr. Harrison exerted illegitimate pressure on Mrs. Schipp, constituting economic duress. The court ruled that while there was some pressure exerted, it did not reach the level of economic duress. Regarding the insurance policy, the court needed to determine whether the claim constituted one or multiple claims under the policy. After reviewing the facts, the court concluded that Mrs. Schipp's claim, despite multiple causes of action, constituted a single claim due to the continuous course of conduct by Mr. Harrison that led to her persistent deprivation of investment.

The court's reasoning led to a decision that Mr. Harrison's conduct warranted equitable compensation for the breach of fiduciary duty. It was held that Mr. Harrison's actions were exploitative and amounted to a continuous breach of fiduciary duty, leading to a single claim for equitable compensation. The court further ruled that the claim against Mr. Harrison should be treated as a single claim under the professional indemnity insurance policy, as the underlying facts demonstrated a continuous course of conduct by Mr. Harrison. Consequently, the court ordered that the insurance company was liable to compensate Mrs. Schipp for the breach of fiduciary duty, and the claim was deemed a single claim under the policy.

Orders

Orders of the court

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Background

Background to the litigation

It was also submitted by the Plaintiff that an alternative approach to the assessment of the number of claims within the policy was by reference to the ability to isolate damages in respect of each claim. This was the approach to the issue said to have been adopted by Sir John Donaldson MR in Thorman (supra). In that case, on the Plaintiff’s submission, the Master of the Rolls considered that, in circumstances where more than one claim exists, delineation of the number of claims made under the policy may be achieved by determining when each “new and unrelated assertion of damages” occurs: Thorman at 11. The Master of the Rolls sought to demonstrate such analysis by way of the following example (at 11-12):“An architect has separate contracts with separate building owners. The architect makes the same negligent mistake in relation to each. The claims have a factor in common, namely the same negligent mistake, and to this extent are related, but clearly they are separate claims. Bringing the claims a little closer together, let us suppose that the architect has a single contract in relation to two separate houses to be built on quite separate sites in different parts of the country. If one claim is in respect of a failure to specify windows of the requisite quality and the other is in respect of failure to supervise the laying of foundations, I think once again the claims would be separate. But it would be otherwise if the complaint was the same in relation to both houses. Then take the present example of a single contract for professional services in relation to a number of houses in a single development. A single complaint that they suffered from a wide range of unrelated defects and a demand for compensation would, I think, be regarded as a single claim. But if the defects manifested themselves seriatim and each gave rise to a separate complaint, what then ? They might be regarded as separate claims. Alternatively later complaints could be regarded as enlargements of the original complaint that the architect had been professionally negligent in his execution of his contract. It would, I think, very much depend on the facts.” [Emphasis added] It seems to me that the approach proposed by Sir John Donaldson MR is not, in substance, different from the approach followed by Stocker LJ in that case and by the Privy Council in Haydon which looked to the underlying facts of the case as determinative of the number of claims made under a particular policy. The question, then, is whether the underlying facts of the case can be said to give rise to three claims against Mr Harrison, as the Insurers submitted, or just one, as the Plaintiff submitted. The Plaintiff submitted that Mr Harrison embarked upon "a course of conduct" in his capacity as a solicitor which caused Mrs Schipp to become involved in the Mary Street joint venture and continued through the sale of Mary Street, the loan made to Mr Harrison and the purchase of Kembla Street. [Plaintiff's Submission Volume 2 paragraph 2.4(c)] As a result of this conduct, Mrs Schipp was persistently deprived of the money she initially invested in the Mary Street property. Mr Harrison's conduct has resulted in Mrs Schipp making a single demand for relief which although a number of different causes of action are alleged should be characterised as one claim under the policy. I accept the Plaintiff's submission.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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