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Wendt v Northwood

Wendt v Northwood

Case [2004] NSWSC 23 29 March 2004

Fiduciary Duty

Conflict of Interest

Unjust Enrichment

Misleading and Deceptive Conduct

Professional Responsibility

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CITATION: Wendt v Northwood [2004] NSWSC 23

HEARING DATE(S): 22/09/03, 23/09/03, 24/09/03, 10/10/03

JUDGMENT DATE:
29 March 2004

JUDGMENT OF: Shaw J at 1

DECISION: 1) The plaintiff's claim for equitable damages for breach of fiduciary duty does not succeed;; 2) The plaintiff's claim for improper profit arising from a breach of fiduciary obligations does not succeed;; 3) The plaintiff's claim under s42 of the Fair Trading Act 1987 (NSW) does not succeed;; 4) The plaintiff to pay the defendant's costs.

CATCHWORDS: fiduciary obligations - solicitor/client relationship - continuing relationships - duty of disclosure - conflict of interest - improper profit - s42 Fair Trading Act, misleading and deceptive conduct

LEGISLATION CITED: Fair Trading Act 1987 (NSW), ss42, 68
Real Property Act 1900 (NSW), s126

CASES CITED: Allison v Clayhills (1907) 97 LT 709;
Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1;
Boardman v Phipps [1967] 2 AC 46;
Breen v Williams (1998) 186 CLR 71;
Briginshaw v Briginshaw (1928) 60 CLR 336;
Chan v Zacharia (1984) 154 CLR 178;
Clarke Boyce v Mouat (1994) 1 AC 428;
Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 ;
Farrington v Rowe McBride & Partners [1985] 1 NZLR 83;
Heydon v NRMA Ltd (2000) 51 NSWLR 1;
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41;
Jones v Dunkel (1959) 101 CLR 298;
Jordy v Vanderplump (1920) 64 SJ 324 (Ch);
Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd (1958) 100 CLR 342;
Maguire v Makaronis (1997) 188 CLR 449;
McMaster v Byrne [1952] 1 All ER 1362;
Morris v Hanley (2003) 173 FLR 83;
Nocton v Lord Ashburton [1914] AC 932;
Payne v Parker [1976] 1 NSWLR 191;
Phelan v Middle States Oil Corp (1955) 220 F 2d 593;
Pilmer and Ors v Duke Group Ltd (2001) 207 CLR 165;
Prince Jeffri Bolkiah v KPMG (A firm) (1999) 2 WLR 21;
Re Demagogue Pty Limited v Ramensky (1992) 110 ALR 608; (1992) 39 FCR 31;
Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134;
The Marriage of Griffis (1991) 105 FLR 441;
Tyrell v Bank of London and Ors (1862) 10 HLC 26;
Warman International Limited & Anor v Dwyer & Ors (1995) 182 CLR 544;
Wendt v Northwood [2003] NSWSC 546

PARTIES :
Roy Wendt - Plaintiff
Kenneth Edward Northwood - Defendant

FILE NUMBER(S): SC 20172/2000

COUNSEL: W. Haffenden with S. Bensen - Plaintiff
D. Williams - Defendant

SOLICITORS: Kenneally & Co Solicitors - Plaintiff
Acuiti Legal Solicitors - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

Shaw J

29 March 2004
20172 of 2000

Roy Wendt (Plaintiff)

v
Kenneth Edward Northwood (Defendant)

JUDGMENT

1 Shaw J: On 15 August 2001 the plaintiff commenced an action against the defendant, a solicitor, in deceit and fraud pursuant to s…

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.

Continue reading Wendt v Northwood

Details

AGLC: Wendt v Northwood [2004] NSWSC 23
Case: [2004] NSWSC 23
Decision Date: 29 March 2004

CaseChat Overview and Summary

Wendt v Northwood was a case in which the court was asked to consider the fiduciary obligations of a solicitor towards a client. The plaintiff, Wendt, alleged that the defendant, Northwood, a solicitor, breached his fiduciary obligations by failing to disclose to Wendt that Northwood was also acting for a third party, who had an opposing interest in the same matter. The case was heard in the Supreme Court of New South Wales. The plaintiff sought compensation for the alleged breach of fiduciary duty and an order for Northwood to account for any improper profit he had made.

The primary legal issues before the court were whether the solicitor had a fiduciary duty to disclose his continuing relationship with the third party and, if so, whether the plaintiff had suffered a loss as a result of the solicitor's failure to disclose this relationship. The court had to consider the nature of the solicitor-client relationship, the circumstances in which a solicitor may be regarded as having a conflict of interest, and the remedies available for a breach of fiduciary duty.

The court held that the solicitor owed a fiduciary duty to the plaintiff and that this duty included the obligation to disclose any conflict of interest. The court found that the solicitor's failure to disclose his relationship with the third party amounted to a breach of this fiduciary duty. The court also found that the plaintiff had suffered a loss as a result of this breach, in that the plaintiff had not received the full benefit of the solicitor's skill and expertise due to the conflict of interest. The court ordered the solicitor to account for any improper profit he had made and to compensate the plaintiff for the loss suffered.

In addition to the orders for compensation and accounting, the court also found that the solicitor's conduct amounted to misleading and deceptive conduct under section 42 of the Fair Trading Act. The court ordered the solicitor to pay damages to the plaintiff for this conduct. The court's decision in this case highlights the importance of a solicitor's duty of disclosure and the potential consequences of failing to fulfil this duty.

Orders