Chirnside v Fay - [2004] NZCA 111

IN THE COURT OF APPEAL OF NEW ZEALAND
CA34/03
BETWEENW A C CHIRNSIDE & RATTRAY PROPERTIES LTD
Appellant

ANDR E FAY
Respondent

Hearing:18 February 2004

Coram:Anderson P
McGrath J
Hammond J
Appearances: P F Whiteside and J V Ormsby for Appellants
H McIntosh for Respondent

Judgment:29 June 2004

JUDGMENT OF THE COURT

Introduction
[1]       We have before us appeals and cross appeals with respect to two judgments delivered by William Young J on 20 December 2002 (liability) and 15 August 2003 (relief), in a commercial cause.
[2]       Broadly, the issues in the case are whether there was a fiduciary relationship between one of the appellants, Mr Chirnside, and the respondent, Mr Fay, in relation to a joint venture; whether there was a breach of that relationship; and if so, as to the appropriate monetary compensation to be paid to Mr Fay.
Background
[3]       Mr Chirnside is now in his late fifties. He had been in business as a caravan manufacturer, but from the mid-1970s he turned to property development.
[4]       Mr Fay is in his late sixties. He is a real estate agent and property developer. Up until 1999 he was principally based in Dunedin; thereafter he moved to Christchurch.
[5]       The second appellant, Rattray Properties Ltd (RPL), is a company associated with Mr Chirnside. The other partners in that firm are associated with a Dunedin law firm. RPL was to become the holding vehicle for a property proposal which we will call the Harvey Norman project. That project is central to this litigation.
[6]       Messrs Fay and Chirnside had known each other for many years. In 1985 Mr Fay, acting as a real estate agent, was involved in the sale of a property called “Taunton Mews” in central Dunedin to a company associated with Mr Chirnside and his brother. From time to time Mr Fay also had other business dealings with Mr Chirnside.
[7]       In 1996 Mr Fay and Mr Chirnside decided to work together as property developers, if and when opportunities should arise for them. Young J described the arrangement as a "loose" one.
[8]       It is common ground that Messrs Fay and Chirnside completed one development as joint venturers. This was in fact a three-way joint venture between Messrs Fay and Chirnside and Combined Rural Traders Ltd, which utilised as a vehicle a joint venture company called Cumberland Investments Ltd. We will call this the CRT project.
[9]       It is also common ground that Messrs Fay and Chirnside looked at, but did not proceed with, certain other property developments in Dunedin.
[10]     This, then, was the context as between the parties to this litigation when the Harvey Norman project came into view.
[11]     By 1997 Lion Nathan Ltd was attempting to sell the old Speights Brewery building in Dunedin. The Judge called this the "Speights site", and we adopt that term. The Speights site is adjacent to Taunton Mews; it was zoned for retail use; and it was close to a major retail outlet, The Warehouse. This…

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 Chirnside v Fay

Details

AGLC: Chirnside v Fay [2004] NZCA 111
Case: [2004] NZCA 111
Decision Date: 29 June 2004

CaseChat Overview and Summary

The Court of Appeal of New Zealand heard an appeal and cross-appeal in the case of Chirnside v Fay, involving a commercial dispute between the appellant, W A C Chirnside, and the respondent, R E Fay. The primary issues were whether a fiduciary relationship existed between Chirnside and Fay in relation to a joint venture, if there was a breach of such a relationship, and the appropriate monetary compensation for any breach. The Court found that a fiduciary relationship did exist between the parties, and that Chirnside breached this relationship by excluding Fay from the joint venture. The Court held that the proper remedy was compensation for the loss of the opportunity to enter into a joint venture agreement, rather than traditional damages or an account of profits. The Court dismissed the appeal against the finding of liability and adjourned the appeal and cross-appeal against the award of damages for further argument.

Orders