Scrivener v Cappello

In *Scrivener v Cappello*, the New South Wales Court of Appeal considered an appeal and cross-appeal concerning alleged breaches of fiduciary obligations arising from a partnership agreement. The dispute involved the acquisition and subsequent sale of three contiguous parcels of land, with the respondents alleging that the appellant was an accessory to breaches of fiduciary duties owed to them by a third party. The core of the disagreement centred on the appellant's role in causing a company, the third respondent, to fail to account for profits derived from the land transactions.

The legal issues before the Court of Appeal included whether the appellant was liable as an accessory to breaches of fiduciary obligations. This required determining whether the appellant had knowledge of facts and circumstances that would have indicated to an honest and reasonable person that a breach of fiduciary duty was occurring. Additionally, the court had to consider the interpretation of an oral agreement for a partnership to acquire and resell the land, including whether it was subject to a sunset condition, and whether the third respondent held the rights to the properties in trust for the partnership.

The Court of Appeal, comprising Bathurst CJ, Bell P, and Macfarlan JA, found that the primary judge had not adequately addressed certain essential matters for establishing accessorial liability under the second limb of *Barnes v Addy*. However, the Court of Appeal ultimately dismissed the appeal. It allowed the cross-appeal, declaring that a partnership existed between the first plaintiff and the first defendant for the acquisition and sale of the properties, and that the second defendant held the rights in trust for this partnership. The court also varied the primary judge's orders regarding equitable compensation, finding the first and second defendants liable to pay substantial sums to the first and second plaintiffs respectively, with provisions for pro tanto reduction of liability.