Seymour (in her own right and as trustee for John Paul Micallef and Victoria Seymour) v Ashley
[2013] WASC 333
•5 SEPTEMBER 2013
SEYMOUR (in her own right and as trustee for JOHN PAUL MICALLEF and VICTORIA SEYMOUR) -v- ASHLEY [2013] WASC 333
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2013] WASC 333 | |
| Case No: | CIV:2813/2011 | 16 & 17 APRIL 2013 | |
| Coram: | McKECHNIE J | 5/09/13 | |
| 30 | Judgment Part: | 1 of 1 | |
| Result: | Judgment for the plaintiff | ||
| B | |||
| PDF Version |
| Parties: | MARY SEYMOUR (in her own right and as trustee for JOHN PAUL MICALLEF and VICTORIA SEYMOUR) MARK JOHN ASHLEY MAUREEN SOFIA ASHLEY |
Catchwords: | Fiduciary relationships Arrangement for share trading Use of an account of third party Relationship of trust and confidence Duty owed to plaintiff Extent of duty Whether duty breached |
Legislation: | Nil |
Case References: | Breen v Williams [1995] HCA 57; (1995) 186 CLR 71 Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 John Alexander's Clubs v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1 Permanent Building Society v Wheeler (1994) 11 WAR 187 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
MARK JOHN ASHLEY
First Defendant
MAUREEN SOFIA ASHLEY
Second Defendant/Third Party
Catchwords:
Fiduciary relationships - Arrangement for share trading - Use of an account of third party - Relationship of trust and confidence - Duty owed to plaintiff - Extent of duty - Whether duty breached
Legislation:
Nil
Result:
Judgment for the plaintiff
Category: B
Representation:
Counsel:
Plaintiff : Mr P A Tottle
First Defendant : In person
Second Defendant/Third Party : No appearance
Solicitors:
Plaintiff : Tottle Partners
First Defendant : In person
Second Defendant/Third Party : No appearance
Case(s) referred to in judgment(s):
Breen v Williams [1995] HCA 57; (1995) 186 CLR 71
Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41
John Alexander's Clubs v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1
Permanent Building Society v Wheeler (1994) 11 WAR 187
- McKECHNIE J:
What this case is about
1 This is a case of broken friendships and loss of trust and money.
2 One of Mary Seymour's best friends was Maureen Ashley. Mrs Ashley was married to Mark Ashley until the marriage broke down in 2008. He was chief executive of a resources company, Apex Minerals NL. Mrs Seymour, who generally lived in England, except for a two year period in 2005 and 2006 when she lived in Australia, wanted to invest some money in the Australian Stock Exchange. She did not have a brokerage account or an Australian bank account. During a conversation in 2003 it was agreed that they would use Mrs Ashley's account for trades that Mr Ashley would make for Mrs Seymour.
3 Thereafter Mrs Seymour sought Mr Ashley's advice and gave him money with which he traded shares on her behalf. (Some of the shares were purchased for Mrs Seymour's children, John and Victoria, but that is of no moment).
4 Mr Ashley did this out of friendship. It was not a commercial relationship. He gained nothing out of the transactions. Eventually in 2007 Mrs Seymour opened her own trading account with Southern Cross Equities, the broker that Mr Ashley used and where Mrs Ashley had an account.
5 The Ashleys' marriage breakup was bitter. Mrs Ashley had just arrived in England, and was being driven from Heathrow by Mrs Seymour, when she received a phone call. At its conclusion she told Mrs Seymour that Mr Ashley had moved out of the house. In October 2008, Mrs Ashley's account held shares on Mrs Seymour's account in three companies, Apex, Red 5 and MMB. On 29 October 2008 Mrs Ashley sold shares which had been registered in her name but really belonged to Mrs Seymour. Mrs Ashley kept the proceeds of sale. The market value of the shares sold by her was $125,567.60. Mr Ashley found out about the sale of the Apex shares before he entered into a binding financial agreement (BFA) with his former wife. He let her keep the proceeds of the sale of Apex shares and promised to reinstate Mrs Seymour her Apex holdings by transferring an equivalent number of Apex shares from the holdings in his family trust, Shelay Investments.
6 He did not know that Mrs Ashley had also sold Red 5 shares and MMB shares until November 2009.
7 Mrs Seymour eventually brought this action against Mr Ashley claiming that he was in a relationship of trust and confidence with her and he must make good her loss.
8 Perhaps through friendship, but nevertheless surprisingly, Mrs Seymour did not immediately sue Mrs Ashley, whom both Mrs Seymour and Mr Ashley agree converted the proceeds of the shares. It was only shortly before trial on 4 April 2013, that Mrs Seymour applied to add Mrs Ashley as second defendant. Mrs Ashley was not served as a defendant by the time of trial. However, Mr Ashley had joined her as a third party. Mrs Ashley entered an appearance to the third party proceedings though took no other steps. On 26 February 2013 she was notified of the trial date by the court.
9 On 12 April 2013 a letter was faxed to the Registrar from Dr Stephen Brabazon, it said:
Medical Certificate
This is to certify that
Mrs Maureen Ashley
Is receiving medical treatment for severe PANIC DISORDER and DEPRESSION and is unable to attend court on Tuesday 16 April 2013.
In addition, her ex-husband has remarried and left the country, leaving her with four children and no money. Mrs Ashley will have to apply for bankruptcy in the near future.
This Certificate was completed on 12April 2013
10 Apart from confirming that Mrs Ashley had notice of the proceedings, the medical certificate is totally unsatisfactory and contained material which, on no view, relates to her medical condition.
11 Mrs Seymour attended the trial from England where she lives. Mr Ashley attended the trial from the United States of America where he now lives.
12 Mr Tottle did not press for the action to proceed against Mrs Ashley. However, as Mrs Ashley had notice of the action and has not provided a satisfactory excuse for her absence she will be bound by the result in the third party proceedings.
13 In the course of this judgment I must make findings about Mrs Ashley's actions and their consequences so as far as is necessary. It does not preclude her making a defence to the plaintiff's claim in due course should she wish to do so. I am conscious that I have not heard her side of the story. On the other hand, her actions speak for themselves sufficiently to draw conclusions for resolving Mrs Seymour's claim and Mr Ashley's third party notice.
The evidence
14 There were only two witnesses at trial - the plaintiff and the defendant.
15 The parties each filed witness statements and were cross-examined.
16 Mr Ashley represented himself. He displayed a keen intelligence and general understanding of the law and procedure. He cross-examined Mrs Seymour comprehensively but courteously. He in turn was cross-examined appropriately.
17 I generally accept the evidence of both Mrs Seymour and Mr Ashley. I make no adverse findings in respect of their credibility. There are a number of reasons for this. The first is that the relationship between them is in general well documented. A considerable amount of the evidence led by Mrs Seymour related to transactions which were not in contest. This was necessary in order to establish the true nature of the relationship, one which Mrs Seymour asserted was one of trust and confidence. There were some minor differences in their evidence. An example is of a conversation said by Mr Ashley to have taken place in October 2003 with Mrs Seymour during the course of which he said that the basis on which he would help was 'that I would neither benefit from Mary's transactions nor could there be any liability to me'.
18 Mrs Seymour says no such conversation took place. Whose recollection is better of a conversation that occurred ten years ago is of no moment. Mr Ashley agreed in cross-examination that what he meant by that was that he would not be held responsible if shares lost value and he was not acquiring liability as a financial adviser.
The issues
• Was Mr Ashley in a relationship of trust and confidence with Mrs Seymour?
• If so, did he owe her a duty?
• What was the extent of that duty?
• Did he breach that duty?
The plaintiff's case - Overview
19 Mrs Seymour mounts her case in relation to two events which she says breached the duty of trust and confidence causing her eventual loss.
20 The first of those events is when she, having created a trading account of her own with Southern Cross Equities, asked for the shares that were being held in Mrs Ashley's name to be transferred over to her. This was not done.
21 The second arises out of the sale of shares in Apex, MMB and Red 5 by Mrs Ashley. Mrs Seymour contends that Mr Ashley breached his relationship of trust and confidence, especially when he entered into a BFA with Mrs Ashley.
22 As a result of these breaches she has lost the value of the shares at the time and is entitled to compensation
A relationship of trust and confidence: Mr Ashley
23 There can be no doubt that Mr Ashley was in a relationship of trust and confidence with Mrs Seymour. The evidence from both sides clearly establishes that Mr Ashley undertook to trade shares on Mrs Seymour's behalf and had authority and discretion to buy and sell shares for her as he saw fit. Obviously, the object was to make money and indeed this was achieved over many of the transactions. The fact that he was undertaking this endeavour as a volunteer and without remuneration has some effect overall but a volunteer may, nevertheless, assume the duties of an agent and enter into a relationship of trust and confidence, even if unaware that is what he or she is doing. The evidence (which it is unnecessary to set out) abundantly shows the nature of the relationship from 2003 onwards. Mrs Seymour is not a vulnerable person. However, she relied on Mr Ashley's advice as to what shares to buy and entrusted him to make decisions from time to time without reference to her. It may seem harsh to Mr Ashley that the result of his generous spirit to a person who was his wife's best friend should lead him into litigation but that is a consequence of entering into the burden of a relationship of trust and confidence.
24 The nature of the relationship fits well within the classic description. Although Mason J was in dissent in Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 his description of the nature of the fiduciary relationship has come to be accepted as authoritative. For example, John Alexander's Clubs v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1 [86].
25 Mason J said:
The accepted fiduciary relationships are sometimes referred to as relationships of trust and confidence or confidential relations (cf. Phipps v. Boardman (1967) 2 AC 46 @ 127), viz., trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company, and partners. The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions 'for', 'on behalf of', and 'in the interests of' signify that the fiduciary acts in a 'representative' character in the exercise of his responsibility, to adopt an expression used by the Court of Appeal.
It is partly because the fiduciary's exercise of the power or discretion can adversely affect the interests of the person to whom the duty is owed and because the latter is at the mercy of the former that the fiduciary comes under a duty to exercise his power or discretion in the interests of the person to whom it is owed: see generally Weinrib, The Fiduciary Obligation, University of Toronto Law Journal, vol. 25 (1975), pp. 4-8. Thus a mere sub-contractor is not a fiduciary. Although his work may be described loosely as work which is to be carried out in the interests of the head contractor, the sub-contractor cannot in any meaningful sense be said to exercise a power or discretion which places the head contractor in a position of vulnerability (96 - 97).
26 Mr Ashley had power to invest on Mrs Seymour's behalf - that is, to buy and sell shares and to draw on the brokerage account in Mrs Ashley's name. The fact that on the whole the transactions were profitable to Mrs Seymour is of no moment. I find that a relationship of trust and confidence existed between the plaintiff and the defendant.
A relationship of trust and confidence: Mrs Ashley
27 There was another person who was in a relationship of trust and confidence with Mrs Seymour - Mrs Ashley. Mrs Seymour and Mrs Ashley met at school. They were very close friends. Mrs Ashley was Mrs Seymour's bridesmaid. The couples visited each other. The brokerage account was in Mrs Ashley's name. She was a trustee for the shares which Mrs Seymour paid for and were lodged in her account. Mrs Seymour had no qualms about the arrangement whereby the shares would be held in Mrs Ashley's name. She trusted her friend.
28 There is no evidence that either Mrs Seymour or Mr Ashley knew, or even thought, that Mrs Ashley might sell the shares and pocket the proceeds. Yet this is what she did.
29 In about September 2008 Mrs Ashley travelled to England as her mother was very ill. Mrs Seymour collected her from Heathrow Airport. As they were driving from the airport Mrs Ashley received a phone call from Mr Ashley and when the call ended she said words to the effect that Mark had moved out of the house.
30 On 21 October 2008 Mrs Seymour emailed Mr Ashley to ask whether she still had the Red 5 and MMB shares and whether he was still happy to look after them. She says she did not mention the Apex shares as she assumed the transfer of the shares from Mrs Ashley's account to her account had taken place and had not heard to the contrary.
31 Mr Ashley responded that she still had those shares and he was still happy to continue to look after them. At the time of the email exchange on 21 October 2008 that statement was correct both in fact and as far as Mr Ashley knew. However, unbeknown, as I find, to either Mrs Seymour or Mr Ashley, on 29 October 2008 Mrs Ashley gave instructions by fax to her broker, Mr David Keogh at Southern Cross Equities Ltd, to sell shares. She provided her address and bank details and then continued in the fax:
Please note - Mark John Ashley is no longer able to trade under this share account - Maureen S Ashley.
32 The share trade confirmation for 29 October 2008 includes a sale of 400,000 Red 5 Ltd shares for AUD12,659.20 and 78,500 Magma Metals Ltd (MMB) shares for AUD19,409.12.
33 In a letter from Mrs Ashley's family law solicitors to Mr Ashley's family law solicitors dated 12 January 2009:
1. Our client received net proceeds of $194,922.19 from her sale of APEX and Kaririqi Energy Ltd shares on 30 October 2008.
34 Her breach of trust in selling the shares without authority to do so and converting the proceeds to her own use was the direct cause of Mrs Seymour's loss. Mrs Ashley breached the fiduciary relationship and incidentally sundered the friendship.
There were two relationships
35 Each of the Ashleys was in a relationship of trust and confidence with Mrs Seymour. It is inescapable that Mrs Ashley breached her duty to Mrs Seymour and in doing so caused her loss. In these circumstances it is necessary to analyse carefully the precise nature of the relationship between Mr Ashley and Mrs Seymour to see whether, and if so how, Mr Ashley breached that relationship in circumstances where there is no evidence that he knew his wife would sell the shares. There is no evidence that Mr Ashley was constructively or actually put on notice to the possibility that Mrs Ashley might breach her fiduciary duty. He had given her nearly a quarter of a million dollars a relatively short time earlier and there was no past behaviour to indicate that she might act as she did, especially in respect of her long term friend.
The scope of the duty: The principles
36 The scope of the fiduciary duty must be carefully identified and moulded to the facts of the case. Mason J continued:
The categories of fiduciary relationships are infinitely varied and the duties of the fiduciary vary with the circumstances which generate the relationship. Fiduciary relationships range from the trustee to the errand boy, the celebrated example given by Fletcher Moulton L.J. in his judgment in In re Coomber (1911) 1 Ch 723, in which, after referring to the danger of trusting to verbal formulae, he pointed out that the nature of the curial intervention which is justifiable will vary from case to case. In accordance with these comments it is now acknowledged generally that the scope of the fiduciary duty must be moulded according to the nature of the relationship and the facts of the case: Phipps v. Boardman (1967) 2 AC 46 @ 127; Kuys (1973) 1 WLR 1129; Canadian Aero Service Ltd. v. O'Malley (1973) 40 DLR 371 @ 383, 390. The often repeated statement that the rule in Keech v. Sandford [1726] Sel Cas 1 applies to fiduciaries generally tends to obscure the variable nature of the duties which they owe. The rigorous standards appropriate to a trustee will not apply to a fiduciary who is permitted by contract to pursue his own interests in some respects. Thus, in the present case the so-called rule that the fiduciary cannot allow a conflict to arise between duty and interest (Kuys) cannot be usefully applied in the absolute terms in which it has been stated. (102 - 103)
37 It is necessary to identify the subject matter over which the fiduciary obligations extend: Breen v Williams [1995] HCA 57; (1995) 186 CLR 71 (Brennan J):
Fiduciary duties arise from either of two sources, which may be distinguished one from the other but which frequently overlap. One source is agency; the other is a relationship of ascendancy or influence by one party over another, or dependence or trust on the part of that other. Whichever be the source of the duty, it is necessary to identify 'the subject matter over which the fiduciary obligations extend'. It is erroneous to regard the duty owed by a fiduciary to his beneficiary as attaching to every aspect of the fiduciary's conduct, however irrelevant that conduct may be to the agency or relationship that is the source of fiduciary duty. As Fletcher Moulton LJ pointed out in In re Coomber (1911) 1 Ch 723, fiduciary relations are of many different types and where there is a fiduciary relation the court may interfere and set aside acts which, between persons in a wholly independent position, would have been perfectly valid. His Lordship then added:
Thereupon in some minds there arises the idea that if there is any fiduciary relation whatever any of these types of interference is warranted by it. They conclude that every kind of fiduciary relation justifies every kind of interference. Of course that is absurd. The nature of the fiduciary relation must be such that it justifies the interference. There is no class of case in which one ought more carefully to bear in mind the facts of the case, when one reads the judgment of the Court on those facts, than cases which relate to fiduciary and confidential relations and the action of the Court with regard to them (82).
38 The scope of activities over which the relationship existed can be found in the plaintiff's own evidence.
39 Mrs Seymour said that in October 2003 when they visited Australia, her husband Paul and she had a conversation with the Ashleys about shares. She had known that Mr Ashley had purchased shares on behalf of Mrs Ashley's brother-in-law who lived in the United Kingdom. She recalled that Mr Ashley said words to the effect that it was not possible to buy Australian shares without an Australian bank account and broker's account. After Mr and Mrs Seymour returned to the United Kingdom they decided to ask Mr Ashley to invest money. In about November or December 2003 she had a conversation with Mr Ashley in which she said words to the effect that, 'we would like you to invest some money for us if you are happy to do so'. Mark (Mr Ashley) said words to the effect that he was happy to do so.
40 Mrs Seymour sent Mr Ashley a cheque for $20,000 in his name on 9 December 2003. On 7 January 2004 Mr Ashley sent an email confirming that he had acquired 11,000 Kagara (Code KZL) shares and 100,000 Aurex (Code AXL) shares on her behalf.
41 Thereafter Mrs Seymour advanced various amounts of money to Mr Ashley and he invested the money in shares on her behalf through Mrs Ashley's account. He accounted to her in relation to the share trades with a spreadsheet which he had sent to her. It is unnecessary to detail all the trades. The evidence establishes that this was a continuous and unbroken relationship of trust and confidence in the course of which Mrs Seymour advanced sums of money on her own behalf, or for her children, and Mr Ashley used his complete discretion to buy and sell shares. The shares were held in Mrs Ashley's account. At times there may have been an intermingling but Mr Ashley detailed the trades to Mrs Seymour by email and spreadsheet.
42 Mrs Seymour was asked about the relationship in cross-examination. She was asked exactly what she expected Mr Ashley to do:
What I expected you to do and what you were happy to do was to buy shares on my behalf … And sell … And I trusted you to do that. … I was happy because I trusted you. … Money was made (ts 16/4/13, page 31).
…
On a number of occasions you continually asked me to look after those Red and MMB shares. Not once did you ask me to transfer them into your account?---No.
Can you tell me why?---The reason they were not - I did not ask you to transfer them into my account is because if you look at the history behind the share trading, I was happy and I had trusted you to buy and sell the shares. They went from MKY to DOM and carried on, and I had no reason other than for you to carry on trading them. I was happy for you to do it. So therefore they stayed in your name because that way you could carry on trading them and that's how I understood it (ts 35).
The amended statement of claim
43 The duties which the plaintiff alleges the first defendant owed her:
2. By reasons of the matters alleged in paragraph 1 there existed between the plaintiff and the first defendant a relationship of trust and confidence pursuant to which the first defendant owed the plaintiff the following duties:
(a) a duty not to place himself in a position where his duty and his interest conflicted;
(b) a duty not to let his interest conflict with his duty to the plaintiff;
(c) a duty not to prefer his interests over the plaintiff's interests;
(d) a duty to exercise reasonable care;
(e) a duty to act in good faith;
(f) a duty to transfer to the plaintiff's name, or cause to be transferred into the plaintiff's name, shares purchased by him on her behalf if so requested and, if so requested, to transfer the proceeds of sale of any such shares to the plaintiff; and
(g) a duty to account to the plaintiff.
44 The breach of the duty is pleaded in paragraph 3:
In breach of the duties pleaded in paragraph 2(d) above, the first defendant failed to ensure that the second defendant (who was the first defendant's wife) was aware that shares bought in the name of the second defendant were held on trust for the plaintiff (amended statement of claim).
45 This breach cannot be sustained. There is no evidence that Mr Ashley failed to ensure that Mrs Ashley was aware the shares bought were held in trust. There is evidence that Mrs Ashley well knew she was holding shares on behalf of Mrs Seymour. In the plaintiff's witness statement:
40. In April 2008, I visited Australia and stayed with Mark and Maureen. On 12 April 2008, I had a conversation with Mark about my Apex shares (which he had purchased on my behalf during 2006).
41. I recall that Maureen was in the room doing the ironing while I had that discussion with Mark. During the course of that conversation, I said to Mark words to the effect of whether my Apex shares were in my name or still in Maureen's name.
42. Mark said words to the effect that they were still in Maureen's name and that we should transfer them, and he then said he would email Southern Cross and have them transferred to my own account with Southern Cross.
46 Immediately after that conversation Mrs Seymour said that Mr Ashley sent an email to Southern Cross and copied her in on the email. The email is dated 12 April 2008 and reads:
David
We have previously bought shares for Mary Seymour in Maureens name (prior to Mary opening an account with you). Now that she has an account, could you arrange to have her shares in Apex, namely 407,000 held in Maureens names 'crossed' into Mary's account. Many thanks. Mark.
47 After that email had been sent, Mrs Seymour said:
Maureen said words to the effect that I should go upstairs and check on their computer that I had received the email. I did not do so because Mark said words to the effect that the internet was not working ...
48 The parties, as I say, have a different recollection of the earlier meeting. Mrs Seymour does not recollect any discussion about Mrs Ashley's brother-in-law, John Norbury, and his investments. Mr Ashley said:
14. I recall that Maureen mentioned to Mary during their 2003 visit that I had come to an arrangement with her brother-in-law (John Norbury) whereby I arranged to buy and sell shares in various Australian listed companies on his behalf.
15. During that discussion, Maureen said words to the effect that John's share portfolio had generated significant profits.
16. I explained to Mary in the presence of Paul and Maureen that I had bought shares for John through Maureen's broker account with Southern Cross Equities (a Sydney based Stock Broker), as it was easier and more efficient to do it this way.
17. Mary asked if I would be prepared to help her buy and sell shares on the same basis as I was doing for John Norbury.
18. I said words to the effect that I would be happy to accommodate Mary, but on the understanding and agreement that I would be doing so as a personal favour for the best friend of my (then) wife and on the basis that I would neither benefit from Mary's transactions nor could there be any liability to me. I recall Mary saying words to the effect that she was happy with my requirement.
19. In addition I said words to the effect that any shares bought for Mary would be transacted through the broker account that had been established by Southern Cross Equities in Maureen's name and those shares would be held in trust for Mary.
20. Maureen was present and actively participated in those discussions.
49 Having regard to the closeness of the two couples in 2003, the probabilities are, as Mr Ashley states, that this was a joint discussion in which relevantly Mr Seymour, Mrs Seymour, Mr Ashley and Mrs Ashley participated.
50 There is no breach of this duty because I find Mrs Ashley well knew or at the very least ought to have known that she held shares for Mrs Seymour and should not have sold them.
The entitlement to have shares transferred to the plaintiff: Amended statement of claim par 2(f)
4. On or about 12 April 2008 the plaintiff in effect, requested that the first defendant cause all shares in Apex Minerals NL purchased by him on her behalf to be transferred into her own account with Southern Cross Equities.
5. In breach of the duty pleaded in paragraph 2(e) the first defendant failed to cause the shares in Apex Minerals NL purchased by him on the plaintiff's behalf to be registered in the plaintiff's name.
6. As at 30 September 2008 the shares that the first defendant had purchased on the plaintiff's behalf and which were then under his control were as follows:
(i) 400,000 shares in Red 5 Limited;
(ii) 33,000 shares in Magma Mentals Limited; and
(iii) 407,000 shares in Apex Minerals NL;
The shares were registered in the name of the second defendant. The plaintiff was immediately entitled to have the shares transferred to her or in accordance with her direction.
52 After an exchange of emails around 13 to 18 March 2007, steps had been taken for Mrs Seymour to open an account with Southern Cross Equities Ltd, Mr Ashley's Australian broker. In an email of 19 March 2007, Mr Ashley indicated, 'I will put our address down on the form'.
53 After the account was opened in 2007, Mrs Seymour began to trade some shares herself directly through Southern Cross Equities. She assumed responsibility for those trades. Contract notes and other correspondence, however, were sent to the Ashleys' home. Although she realised that there were still a number of shares of hers in Maureen's account, Mrs Seymour did not ask them to be transferred into her account because she was content for Mr Ashley to continue to look after them and trade them for her and he was happy to do so.
54 About a year later, in April 2008, the question of the transfer of the Apex shares arose and the email of 12 April 2008 was sent from Mr Ashley to David Keogh at Southern Cross Equities.
55 I return to the precise nature of the relationship of trust and confidence. It was a relationship for the buying and selling of shares. It was not necessarily a relationship which extended into every aspect of Mrs Seymour's life or financial affairs. My impression of Mrs Seymour as a witness was that she is a capable, intelligent woman. There was no reason to extend the relationship of trust and confidence to ensuring that an instruction for the transfer of shares was carried out. By April 2008 Mrs Seymour already had an active trading account with Southern Cross Equities. Even though documentation was going to the Ashleys' premises she was able, if she wished, to receive copies of that material. She was, after all, the broker's client.
56 On 8 July 2007 Mrs Seymour requested that Mr Ashley arrange 'for our shareholding in Kagara (KZL) to be sold and the monies realised to be reinvested in the purchase of further Apex Minerals shares.
57 Mr Ashley rang Mr Keogh on Monday, 9 July 2007 and gave him those instructions confirming with an email:
You should have an account set up for Mary Seymour now. She has 7,000 shares in KZL held in trust in Maureen's name. As per her instructions can you please arrange to sell these and then buy (in her account) Apex shares to a similar amount realized.
58 This appears to have been done. The significance of this transaction is that it was carried out without the necessity by Southern Cross Equities for Mrs Ashley's approval even though the shares were in her account.
59 Mr Ashley's recollection of the conversation on 12 April 2008, in the presence of Maureen, included:
47. During the discussion I recall that Mary saying words to the effect that her RED and MMB shares should not be transferred to her account with Southern Cross and that only the 407,000 shares in Apex should be transferred. I recall that Mary said words to the effect that she was considering whether to sell her RED and MMB shares and asked that they remain in Maureen's account.
60 The email of 12 April 2007 received a response from Mr Keogh shortly after at 12.45 pm on 12 April 2008:
Mark
Does the credit from pay for the purchase. If so we will need an instruction from Maureen.
Thanks
David Keogh
61 Mr Keogh gave his mobile number and Mr Ashley said he rang Mr Keogh:
51. During the conversation I said words to the effect that I did have authority to act on Maureen's account in accordance with an Enduring Power of Attorney that I recall previously provided to Southern Cross Equities and that he didn't need an instruction from Maureen as his email had suggested.
52. During that conversation I recall David saying words to the effect that the requirement for Maureen's authority contained in his email to me was not required, that I had the power and authority to give such instructions and apologized for his oversight.
62 Support for this conversation and Mr Ashley's authority is found in an email sent from Mr Keogh to Mrs Seymour on 1 April 2010, obviously in response to an email from Mrs Seymour's representative. It relevantly says:
1) at all times we operated the account in question appropriately;
2) at no time did we purchase shares on another client's account on the understanding or agreement that they were being purchased for you. The shares were purchased in the name of Maureen Ashley with Mark's authority.
3) Mark Ashley had authority to deal on the account given his knowledge of the mining sector.
63 Contrary to Mr Keogh's assertion in his email of 1 April 2010, it would appear from the earlier email of 9 July 2007, that he was aware that shares in Mrs Ashley's name were being held in trust for Mrs Seymour.
64 In the light of the conversation with Mr Keogh and the acknowledgement that Mr Ashley had authority to deal on the account given, it was reasonable for Mr Ashley to have expected that Southern Cross Equities would have acted on his instruction and transferred the Apex shares. After all the broker had done something similar in the previous year when Mrs Seymour's brokerage account was set up: KZL shares sold and Apex shares bought. The broker had acknowledged the authority to act on Mr Ashley's instructions.
65 It took less than four months before Mrs Ashley sold the Apex shares. Had the transfer taken place as Mr Ashley requested it is likely that paperwork would have been sent to Mr Ashley's home address. No paperwork was sent because the transfer did not take place. Mr Ashley says he moved out of the family home permanently in May 2008. The evidence as to what Mrs Ashley said to Mrs Seymour in the car journey from Heathrow does not contradict this and there is no other evidence. I have taken this into account in assessing whether Mr Ashley has breached his duty. I do not consider that he has. First, because I do not consider that the duty of confidence and trust extended to the mere transfer of shares between accounts rather than buying and selling. Secondly, because I do not consider, in all the circumstances, that Mr Ashley was negligent. Having regard to his long relationship with Mr Keogh of Southern Cross Equities, and the phone call that he had in response to the somewhat ambiguous email, he was entitled to believe that the shares were transferred as per his instruction. This aspect of the claim fails.
The duty not to have interests conflict: Amended statement of claim par 2(a), (b), (c)
66 The plaintiff pleads:
8. In breach of the duties pleaded in paragraphs 2(a), (b) and (c) on or about 19 May 2009 the defendants entered into a binding financial agreement for the purposes of the Family Law Act in which:
(a) in breach of the duty pleaded in paragraph 2(d) above, the first defendant failed to ensure that the plaintiff's interests in proceeds of the sale of the shares referred to in paragraph 6 above were recognised and preserved; and/or, in the alternative,
(b) in breach of the duty pleaded in paragraph 2(d) above, the first defendant failed to:
(i) make enquiries as to whether the sum of $194,922.19 received by the second defendant from the sale of shares included the proceeds of sale of shares held on trust for the plaintiff; and/or
(ii) ensure that the proceeds of the sale of the shares referred to in paragraph 6 above were not dealt with as if the second defendant had an absolute right to those shares, alternatively to the proceeds of sale of those shares; and
(c) the defendants wrongly represented and acknowledged that the proceeds of sale of the shares referred to in paragraph 6(iii) were an asset to be retained by the second defendant when in truth, and as the first defendant knew, the plaintiff was entitled to the proceeds of the sale of the shares.
9. In breach of the duty to account alleged in paragraph 2(f) the first defendant has failed to account to the plaintiff in respect of shares purchased by him on the plaintiff's behalf.
9A. By reason of the breach of duty alleged in paragraph 3 the plaintiff has suffered loss and damage in that had the first defendant ensured that the second defendant was aware that the shares were held in trust for the plaintiff, the second defendant would not have sold the shares.
Particulars of loss
- The plaintiff has lost the value of the shares as at 29 October 2008, being $125,567.60 and interest on that sum.
Alternatively, the plaintiff has lost the use of the capital invested in the shares, being $75,642.85 and interest on that sum.
67 As I have said the marriage breakup was bitter. Solicitors were engaged by both parties. Butlers acted for Mrs Ashley. On 12 January 2009 they wrote to Kim Wilson & Co, who acted for Mr Ashley, in relation to the financial disclosure and said:
1. Our client received net proceeds of $194,922.19 from her sale of APEX and Karrinji Energy Ltd shares on 30 October 2008. She will bring the documents to the Conference this afternoon.
2. The net proceeds were deposited in her NAB account [number given]. The account had a balance of $242,007.00 at 7 January 2009. She does not have any other bank accounts.
68 Mr Ashley says that this is the first occasion that he became aware the Apex shares had been sold. The disclosure statement from Butlers, it will be observed, did not mention the Red 5 shares or the MMB shares. He says that Mrs Ashley did not bring the statement to the conference meeting.
69 Mr Ashley said that at the time he held some 16 million Apex shares in his superannuation fund and his family trust.
70 In an email in February 2009, following an exchange of emails with her broker, including changing her address, Mrs Seymour asked about the 407,000 Apex shares that were transferred from Maureen's account. Eventually she emailed Mr Ashley who replied on 25 February 2009 by email:
Mary, I don't think southern cross could provide you with anything. However I can if that helps. I can state what happened and that within say 3 months we will arrange to have that number of shares transferred to your private account. The 3 months is the latest time I think that settlement between me and Maureen will take. Effectively its all been agreed its just having to go through the formality. Will this be ok for you? Mark.
71 On 25 March 2009 Mr Ashley wrote a letter 'To whom it may concern':
This is to confirm that Maureen Ashley inadvertently sold approximately 400,000 Apex shares held in her name but in trust for Mary Seymour.
At the moment separation settlement of assets are currently being finalised which at that point, those shares referred to above will be reinstated in Mary Seymour's name.
72 The relevant passages of the BFA state:
2. The Wife is also to retain the following assets, whose value is agreed to be ignored for the purpose of calculation of the proposed division:
...
2. $194,922.19 being the net proceeds of sale of APEX and Kuiriqi shares paid to the Wife.
...
7. The Husband and Wife agree that at the time of entering this Agreement they have both made full disclosure of all material matters relevant to the making of this Agreement.
...
16. That the Wife is otherwise to retain to the exclusion of the Husband the following:
...
(b) The proceeds of $194,922.19 received by the Wife from the sale of APEX and Kuiriqi Energy Ltd shares;
64. On 15th January 2010 I first became aware that the net proceeds received by Maureen from the share sales arranged by her on 29th October 2008 were in fact the result of the sale of shares by Maureen not only of Apex and Kuirigi Energy, but also the shares in RED and MMB.
...
68. The $194,922 net proceeds received by Maureen was specifically excluded from the matrimonial assets the subject of allocation. Maureen therefore benefitted 100% from the sale of these shares. I did not benefit directly nor indirectly from the sale of those shares owned by Mary.
74 It is of some significance that Mr Ashley's authority to trade or deal with the broker on behalf of Maureen was withdrawn by her on 29 October 2008. He said:
72. I first became aware at the beginning of March 2009 (during the final negotiations regarding the BFA) that 407,000 of the 614,000 Apex shares that Maureen had sold on 29th October 2008 were actually owned by Mary.
73. I recall speaking to Mary during March 2009 on the telephone regarding the Apex shares that Maureen had sold and I advised Mary that I would be able and prepared to reinstate those shares (407,000 in total) from my own holding, once the financial settlement between me and Maureen had been finalized, and that I was able to access those Apex shares.
74. I recall saying to Mary words to the effect that the financial settlement contained in the draft BFA required the sale of three key assets to occur and only upon the last of those assets being sold could financial settlement between Maureen and me occur.
75. During that conversation I recall Mary saying words to the effect that she was happy with my proposal to restate her 407,000 Apex shares upon financial settlement occurring but asked me to put it in writing.
75 This is why he wrote to Mrs Seymour on 25 March 2009.
76 The last asset required to be sold pursuant to the BFA occurred on 14 April 2011. But matrimonial financial settlement did not occur at that time. There were disputes and in about September or October 2011 it was agreed that the financial settlement would be determined by arbitration. The award was handed down in December 2011:
79. An Arbitration Award was handed down in December 2011, (which is registered with the Family Court of Western Australia) which, amongst other things, awarded me 100% beneficial ownership of the Apex shares bought and owned by me and Maureen and from which I had agreed to restate Mary's Apex shares sold by Maureen in October 2008.
77 In January 2009 Mrs Seymour received a request from Mr Ashley asking for a copy of the most recent share portfolio he had sent as he needed it for his lawyers. She assumed this had something to do with the separation. She had received a card from Maureen shortly before with a new address she believed was in Cottesloe. On 4 February 2009 Mrs Seymour emailed Mr Keogh at Southern Cross Equities asking for her address to be changed from the Ashleys' Mandurah address to her own address in the United Kingdom because she knew that Mrs Ashley had also moved out of the house and the mail may not be collected. When she received the statement from the brokers she became aware that it did not include the Apex shares. She contacted Mr Ashley who, after explaining the conversation he had had with Mr Keogh, said that she should not worry as he had 16 million Apex shares and would replace the shares that Maureen had sold.
78 Mrs Seymour received the letter dated 25 March 2009 and between April and June 2009 emailed Mr Ashley several times asking him to confirm whether she still had the Red 5 and MMB shares. After further communications between them in late January, early February 2010, she telephoned Mr Ashley and during the course of that conversation Mr Ashley said he had just found out that Mrs Ashley had sold the Red 5 and MMB shares. Mrs Seymour then wrote to Mrs Ashley to tell her that the shares sold were hers.
79 Mrs Seymour was cross-examined about this by Mr Ashley. Some of Mr Ashley's questions invited responses that were conclusionary in nature and I have taken that into account. Mrs Seymour said that it was important for the shares to be reinstated because it was the money of her children and she. The agreement to reinstate the shares was within three months. She agreed that Mr Ashley would give her back the shares. However, she insisted that it was an agreement for only three months. She does not recall ever being told that the shares were going to be reinstated from the family trust.
80 On 5 June 2009 Mr Ashley sent an email to Mrs Seymour:
Still working on the settlement with maureen. Hoping to complete in a month or two. Is that ok with you? Mark.
81 Mrs Seymour's response:
Mark
Thanks for that. Can you let me know when the apex will be transferred back into my account re settlement.
82 Mrs Seymour sent another email to Mr Ashley dated 17 August 2009 including: 'Just wondering about apex shares'.
83 On 21 October 2009:
John has told me about his shares, as my shares are in your pot can you do anything re the rights issue without it costing me any more money.
84 On 22 October 2009 Mr Ashley asked:
Can you remind me how many shares you have in apex registered in Australia.
85 And received the response from Mrs Seymour:
I have approximately 407,000 in your pot, and then there are another 70,000 purchased in August in my name under Eunamara address. Southern Cross amended my address to UK effective from May.
86 She emailed on 4 November 2009 and 16 December 2009, still making enquiries about the shares.
87 There was further email correspondence between the parties as it appears Mrs Ashley was disclaiming knowledge of the fact that the shares were held in trust for Mrs Seymour and it was necessary for both Mr Ashley and Mrs Seymour to address that. There was a series of emails on 22 February 2010 relevant parts of which read:
From: Mary Seymour
To: Mark Ashley
Sent: Mon Feb 22 16:21:05 2010
Subject: URGENT
Hi Mark,
…
To confirm again the shares that I owned which were bought under Maureen's name are 407,000 x Apex
500,000 Red (of which 100,000 were sold leaving) 400,000 x Red
33,000 x MMB (now MMW)
Maureen also said settlement happened in April 09 so this is all becoming very confusing as I had an email from you in June 09 saying that my apex shares would be transferred into my name following settlement. Also in respect of RED and MMB you said in your emails that you did buy me 500,000 RED and then in Sept 07 you sold 100,000 of them so I had 400,000 remaining and yes you were happy to carry on looking after them for me. You asked me to send you my portfolio in Jan 09 which again confirmed my share holding in all of these shares (transfer from Maureen) which as we know now was not done.
Mark at the end of the day these shares are mine and have got to be transferred back into my name.
Please let me know asap what intends to be done.
From: [Mark Ashley]
To: [Mary Seymour]
Subject: RE: URGENT
Date: 22 February 2010 08:47:34
…
I will get in touch with you once I have heard from David Keogh. It may be necessary to appoint legal representation here - which (again on a confidential basis) I can help you with, to send an aggressive legal letter on your behalf. I'm sorry she is taking this stance - its what I've had to put up for a while now and I am just at the end of my patience. Mark
Subject: Re: URGENT
Date: Tue, 23 Feb 2010 11:52:18 +0800
From: [Mark Ashley]
To: [Mary Seymour]
…
Thinking about these dates and the term 'settlement' I think the concussion here may bearound this term. My june email to you ref to 'settlement' related to settlement of the asset allocation between Maureen and me as part of the divorce. I was assuming that your reference to 'settlement' in your email y'day related to 'settlement' of Maureens share trading. Maureens reference to 'Settlement' that she discussed with you on friday may have been reference to when the BFA (the Binding Financial Agreement - the agreed asset allocation agreement between Maureen and I as part of the divorce). That agreement was SIGNED in may 09 but 'settlement' occurs once both Eunamara house and the Sunseeker boat. Once both have been sold, then the other assets (shares, superfund, any remaining cash etc) are distributed in accordance of the BFA. Eunamara has bee sold, but the boat hasn't been - in this market its been unbelievable difficult to sell such an asset. … I understand your concern and frustration, but Maureen should be under absolutely no illusion that the share she sold and rec'd money for are yours and morally and legally she must give you back the shares or give you the funds she rec'd. This is absolutely clear. Finally, the BFA mentions her sale of those shares (which at the time I was unaware that she had sold Red and mmb) and I was generous to exclude them from the Settlement calculation. I will have absolutely no benefit (either directly or indirectly) from those funds. You ought to write to maureen stating that you understand the confusion and error but that now she knows that these are your shares she must deal with their return to you (ie she needs to buy the shares back in your name (or provide you the funds in order to do so). Otherwise you will need to take whatever action is necessary to ensure that those assets are returned to you. Mark (TB 84A, 84B)
88 In cross-examination Mrs Seymour said that of those exchanges of emails she was still waiting to get back what was hers.
89 She acknowledged that in November 2009 she had bought 470,000 additional Apex shares at a lower price for her son.
90 A point of difference between the parties, which I think arises from confusion at the time rather than any lack of credibility, is the time it would take for the shares to be reinstated.
91 It seems clear, and I so find, that Mr Ashley did not become aware that Mrs Ashley had sold 407,000 Apex shares until early 2009. He excluded the proceeds of those shares from the BFA because it was his intention to make good the 407,000 Apex shares to Mrs Seymour by transferring some of his, or more correctly his family trust's shareholding, to her of an equivalent number of shares. Mrs Seymour accepted this arrangement.
92 The difference arises as to how long it would take for the shares to be transferred to Mrs Seymour. Her belief was that it would take three months. Mr Ashley intended that the shares would be transferred after settlement of the affairs between he and his wife. I accept he thought that would be about three months but they were considerably delayed due to the need to go to arbitration.
93 The fact that Mrs Seymour might have chosen to retain the Apex shares is immaterial if there has been a breach of the duty of trust and confidence. Ipp J summarised the relevant principles in Permanent Building Society v Wheeler (1994) 11 WAR 187:
There are claims for breaches of fiduciary duty where the court does not inquire into aspects of causality. In Brickenden v London and Loan Savings Company (1934) 3 DLR 465 at 469 (applied in Commonwealth Bank of Australia v Smith (1991) 102 ALR 453 at 479 and Wan v McDonald (1992) 105 ALR 473 at 502) Lord Thankerton, delivering the advice of the Privy Council, said:
When a party, holding a fiduciary relationship, commits a breach of his duty by non-disclosure of material facts, which his constituent is entitled to know in connection with the transaction, he cannot be heard to maintain that disclosure would not have altered the decision to proceed with the transaction, because the constituent's action would be solely determined by some other factor, such as the valuation by another party of the property proposed to be mortgaged. Once the court has determined that the non-disclosed facts were material, speculation as to what course the constituent, on disclosure, would have taken is not relevant.
It is to be stressed, however, that this principle applies where there has been a breach of a true fiduciary obligation, carrying with it, ordinarily, in the words of Southin J in Girardet v Crease & Company: 'the stench of dishonesty - if not of deceit, then of constructive fraud'. The principle applies because the fiduciary has abused the control of the trust, there is a substantial potential for gain through such wrongdoing, the fiduciary has superior information concerning his or her acts, and there is a need 'to keep persons in a fiduciary capacity up to their duty' (as was said by Lord Dunedin in Nocton v Lord Ashburton [1941] AC 932 at p963). These factors do not apply to a breach of a duty of care.
Another example of a breach of a fiduciary obligation not requiring any investigation into causation is where an account is ordered by reason of a breach of the fiduciary obligation to avoid a conflict of interest. Thus, in Green & Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1 Burt CJ said at 5 - 6:
The question, however, remains, it being whether it is necessary for a plaintiff claiming an account to prove, that is to say to establish on the balance of probabilities, that the fiduciary did in fact use the knowledge, or the information, or the opportunity which came to him while he stood in that relationship and that he made the profit by such use. In my opinion it is not.
It is enough, I think, to show that the fiduciary gains his knowledge or opportunity within the fiduciary relationship; that it was knowledge or an opportunity which could have been used in the sense that it was relevant to the acquisition of the profit or benefit in fact acquired and that by doing what he did to acquire the profit or benefit the fiduciary placed himself in a position where his duty and interest did conflict or in a position where as a real and sensible possibility they may conflict. If that can be shown, and on the facts of this case the conflict was actual and not merely potential, it is not necessary to go further so as to prove that either the information or the opportunity was in fact used so as to acquire that benefit (245 - 246).
95 Moreover, in the BFA Mr Ashley did not benefit from the exclusion of the proceeds of $194,922.19. That benefit went to Mrs Ashley.
96 The communications by Mr Ashley with Mrs Seymour about the Apex shares were open and did not hide anything.
Conclusions
97 When Mr Ashley agreed to trade shares on Mrs Seymour's behalf (and her children) even though he did this out of friendship and not for any gain, he entered into a relationship of trust and confidence with her.
Mrs Ashley's breach
98 Mrs Seymour undoubtedly suffered a loss. The direct cause of that loss was Mrs Ashley's breach of her fiduciary duty as trustee in selling the shares and not immediately accounting to Mrs Seymour for the proceeds. Indeed, she concealed her actions for some time in relation to the Apex shares and for a longer time in relation to the Red 5 and MMB. She knew or, at the least ought to have known, that the shares she sold belonged to Mrs Seymour. She was present at the initial conversation when it was agreed that her account would be used because Mrs Seymour did not have an Australian brokerage account or bank account. She was present when the broker was instructed by email to transfer the shares from her account to Mrs Seymour's. Had Mrs Ashley been diligent she would have realised that the shares she sold on 29 October 2008 were not hers to sell. Her actions are the direct cause of the loss.
Mr Ashley's limited breach
99 Mr Ashley did not breach his duty of trust and confidence in the respects to which that duty attached to his relationship with Mrs Seymour. He did not put his interests above hers. When he became aware of the situation he advised Mrs Seymour what had happened. To the extent that he had a duty not to put his interests above those of Mrs Seymour in relation to the BFA and (I am far from certain that he did have such a duty in the circumstances), he discharged that duty by offering to replace the shares sold with an equivalent number of Apex shares. He did not offer to replace the others because he was unaware of them in circumstances where his wife was required to give disclosure and had not.
100 When Mrs Ashley clandestinely sold Mrs Seymour's shares in Apex, Red 5 and MMB on 29 October 2008 she also cut off Mr Ashley's ability to find out what happened.
101 She did not acknowledge her action until her solicitor's letter in February 2009. Even then she referred only to the Apex shares, not the Red 5 or MMB shares.
102 Mr Ashley advised Mrs Seymour what had happened. He told her he would reinstate the Apex shares. He chose to do so by assigning to her an equivalent amount (in fact a little more 418,000) Apex shares held by his trust company, Shelay Investments.
103 Mr Ashley's lawyers supplied a spreadsheet to Mrs Ashley's lawyers in a letter dated 27 April 2011 (TB 122A). Mr Ashley said that although a similar spreadsheet was not attached to the BFA it was provided to the parties. It showed a reduction in Mr Ashley's holdings in respect of shares allocated to Mrs Seymour. Document 122H was attached to the letter of 27 April 2011 and further explained by document 122(1).
104 Mr Ashley did not know the Red 5 shares and the MMB shares had also been sold by Mrs Ashley until Mr Les Blake, Operations Manager, Southern Cross Equities advised him by email with trade confirmations (TB 75).
105 Counsel for the plaintiff submitted in effect that this showed how easily it was for Mr Ashley to have obtained information from the broker even though the account was in Mrs Ashley's name and she had terminated his authority to trade. I do not agree. I have no reason to doubt Mr Ashley's description that getting information was like 'pulling teeth' (ts 75) and the emails were preceded by telephone calls.
106 The plaintiff submits:
17. The BFA recited that Mrs Ashley was to retain, (amongst other assets), 'the net proceeds of sale of Apex and Kuirigi shares' and that those assets were to be ignored for the purpose of calculating the division of assets of the marriage.
18. Pursuant to the duty of care owed by him Mr Ashley had a duty to preserve and protect Mrs Seymour's interest in the shares he had purchased on her behalf and following the sale, in the proceeds of sale of those shares.
19. Mr Ashley had a personal interest in reaching an agreement with Mrs Ashley in relation to the division of the assets of their marriage.
20. It is contended that:
(a) at the point at which Mr Ashley contemplated entering an agreement which included a term relating to the proceeds of sale of the shares such as that referred to above, he placed himself in a position where his duty and interest conflicted;
(b) at the point at which Mr Ashley entered the BFA he let his interest conflict with his duty and preferred his interest over his duty to Mrs Seymour.
21. Mr Ashley's conduct deprived Mrs Seymour of the opportunity of ensuring that her claim was recognised and met at time when he and Mrs Ashley were dividing their assets and at a time when funds were seemingly available to meet her claim.
107 I do not accept the submission. On the whole of the evidence, Mr Ashley did not place himself in a position of conflict or put his interests above those of Mrs Seymour.
108 He told Mrs Seymour what had happened and made arrangements with her and in the financial settlement with Mrs Ashley to reinstate the Apex shares (which he did know about) to Mrs Seymour.
109 He derived no advantage from this. He was not underhand.
110 It is of course the fact that the shares have not been transferred although Mr Ashley says he remains willing to transfer the equivalent number of shares. There has been a 10 to 1 consolidation.
111 In order to ensure that his duty does not conflict, Mr Ashley needs to compensate Mrs Seymour for the Apex shares by arranging for the transfer of the appropriate number of Apex shares to Mrs Seymour.
112 This will not completely compensate Mrs Seymour because the value of the shares has plummeted.
113 Mrs Seymour was prepared to wait for three months when Mr Ashley notified her. I find that she continued to request the transfer of Apex shares. In June 2009 she reluctantly acquiesced to a further delay.
114 I do not find that she acquiesced to a delay until eventual settlement of the affairs between Mr and Mrs Ashley following arbitration. Her acquiescence was for a reasonable time only.
115 In assessing compensation in respect of the Apex shares, I consider a reasonable time in all the circumstances would be 1 August 2009.
116 Mr Ashley should compensate Mrs Seymour by transferring the shares and paying the difference (if any) between the value of the shares at judgment and the value at 1 August 2009.
117 Mrs Seymour is not entitled to compensation from Mr Ashley reflecting the whole of the value of the shares when sold by Mrs Ashley or the capital amount represented by those shares. She may be entitled to that amount from Mrs Ashley - I make no findings.
118 But Mr Ashley did not breach the relationship of trust and confidence to cause Mrs Seymour loss except in the limited manner I have outlined.
119 Mrs Seymour is not entitled to relief from Mr Ashley in respect of the Red 5 and MMB shares. Again she may be entitled to relief from Mrs Ashley. I make no finding.
120 Mr Ashley did not know of the sale and in view of the letter from Butlers which materially omitted reference to the sale, did not act in breach of his duty to Mrs Seymour in entering into the BFA.
121 By the time the true position was discovered by him on 26 November 2009 the BFA had been executed on 19 May 2009. His interest did not conflict Mrs Seymour's interest in the shares.
122 I commenced this judgment by commenting on the need to analyse carefully the precise nature of the relationship of trust and confidence which was asserted. The scope of the relationship must be moulded to the facts and circumstances. The subject matter over which the fiduciary obligations extend is all important.
123 Mr Ashley's role was to buy and sell shares for Mrs Seymour and account to her for that. He accepted that role and carried it out.
124 His obligation does not in the circumstances extend to becoming a virtual insurer on behalf of another person, Mrs Ashley, who was undoubtedly in a fiduciary relationship with Mrs Seymour.
125 Insofar as Mr Ashley effectively incorporated the fait accompli of Mrs Ashley into the BFA he is liable to account to Mrs Seymour for the Apex shares he acknowledges he holds on trust for her. They should have been transferred at a reasonable time and she is liable to be compensated for the value of these shares as at the time which I assess as 1 August 2009.
126 The plaintiff's, Mrs Seymour's, claims are otherwise dismissed.
127 The first defendant, Mr Ashley, is entitled to judgment on the amended third party notice. He is entitled to be indemnified as to the amount he is liable to pay Mrs Seymour, the plaintiff. Any loss which Mrs Seymour incurred and for which I have found Mr Ashley is liable was directly caused by Mrs Ashley's breach of trust, first in selling the shares; and secondly then in failing to account for the proceeds to Mrs Seymour. I make clear this is a finding only in the third party proceedings, not in the main action.
128 No evidence was led as to the value of the Apex shares as at 1 August 2009 although amounts are mentioned in Mr Ashley's closing submissions.
129 I will hear from the parties as to the form of judgment consistent with these reasons.
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