Scott & Ors v Davis - [1999] HCATrans 180

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Adelaide No A31 of 1998

B e t w e e n -
TRAVIS KANE SCOTT
First Applicant
GEOFFREY STEPHEN SCOTT
Second Applicant
GAYNOR JUNE SCOTT
Third Applicant
and
GEOFFREY ARTHUR DAVIS

Respondent

Application for special leave to appeal

McHUGH J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 18 JUNE 1999, AT 12.47 PM

MR W.J.N. WELLS, QC: If the Court pleases, I appear with my learned friend, MR D.W. SMITH, QC, for the applicants. (instructed by Johnston Withers)

MR D.M. QUICK, QC: If the Court pleases, I appear with my learned friend, MR K.G. NICHOLSON, for the respondent. (instructed by Thomson Playford)

McHUGH J: I think we might be interested in hearing from Mr Quick. Mr Quick, we thought it would be more profitable if we heard from you first.

MR QUICK: If the Court pleases. There are three reasons for opposing special leave in this matter. They are, first, that it is submitted that the judgment of the Full Court is correct or is not attended by sufficient doubt as to warrant a grant of special leave; secondly, it is submitted that the facts of this case do not give rise to a suitable vehicle for the determination of the special leave point which the application identifies; and, thirdly, that the proposed appeal does not raise a question of law of sufficient public importance.

I will deal with those matters in the same order in which I have gone through them. The first point may be stated quite succinctly. The case for the applicants involves a reading of Morgans v Launchbury which, it is submitted, is wider than the case justifies. It is the case that three of their Lordships do talk about vicarious liability in relation to the use of chattels generally but there is nothing in the speeches to suggest that their Lordships were recognising a wider principle of responsibility or a wider principle of vicarious liability. Indeed, the case is all about a motor vehicle and the authorities relied upon are all about motor vehicles. There is nothing to suggest that there was a consideration of a wider policy basis of establishing vicarious liability.

Indeed, their Lordships go so far as to say that in relation to the suggestion that there should be a widening of the basis of vicarious liability in relation to motor vehicles, that that was a matter which they were incapable of dealing with because it involved such wide ramifications and it was a matter best left to Parliament. On that basis, their Lordships refused to extend the doctrine in so far as it applied to motor vehicles. Our submission is that Morgans v Launchbury does not recognise a wider principle dealing with chattels generally. Although there is reference made to chattels, the decision is firmly based in relation to the use of…

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: [1999] HCATrans 180
Decision Date

CaseChat Overview and Summary

The High Court of Australia considered an appeal concerning the alleged breach of fiduciary duties by the respondents, Mr. and Mrs. Davis, in their dealings with the appellants, Scott and others, who were minority shareholders in a company. The dispute arose from the respondents' actions in acquiring shares in the company, which the appellants contended amounted to a misuse of their position as directors and majority shareholders.

The central legal issues before the High Court were whether the respondents had breached their fiduciary duties owed to the appellants as minority shareholders, and if so, what remedies were available. Specifically, the court had to determine the nature and scope of the fiduciary obligations owed by directors to minority shareholders in circumstances where those directors were also majority shareholders and were pursuing their own commercial interests.

The High Court, in its joint judgment, affirmed that directors owe fiduciary duties to the company itself, and generally not to individual shareholders. However, their Honours recognised that in certain exceptional circumstances, such as where a director is also a majority shareholder and is involved in a transaction that directly impacts the value of shares held by minority shareholders, a fiduciary duty may arise. In this instance, the court found that the respondents' conduct in acquiring shares did not, on the facts presented, give rise to a breach of any fiduciary duty owed to the appellants. The court emphasised that the respondents were acting in their own capacity as shareholders and not in their directorial capacity when acquiring the shares, and that the transaction did not involve any improper use of their directorial position or company assets.

The appeal was dismissed.

Orders