64 Mr Weber characterises the venture between the parties as a partnership; Mr Gray, who appears for Farah, characterises it as a joint venture. In the end, the distinction does not matter as Mr Gray concedes that in all aspects of managing the development of No 11 Farah was acting on behalf of Say-Dee and therefore had fiduciary obligations. The real issue is how far those fiduciary obligations extended in the factual circumstances of the present case.
65 Mr Weber submits that it was part of the obligation of Farah to disclose to Say-Dee any relevant information about the Council's attitude to the development on No 11. This obligation was inherent in the contractual duties undertaken by Farah and bore a fiduciary character as well. Mr Gray does not dissent from this proposition.
66 Mr Weber says that it was the fiduciary duty of Farah to disclose to Say-Dee that the Council was of the view that No 11 was too narrow to maximise its development potential and that it should be amalgamated with the adjoining properties. Mr Gray originally took the position that this information was not confidential but ultimately accepted that it was information conveyed to Farah in the course of its management of the project and was, therefore, information which should have been conveyed to Say-Dee. I am prepared to find that that information was not, in terms, conveyed to Say-Dee. The real question is, however, what follows from that?
67 The view of the Group Manager of Burwood Council that No 11 was "too narrow to maximise its development potential" did not mean that no development of any sort was possible on No 11. It must be borne in mind that when the parties agreed to go into the venture and when No 11 was purchased, Farah had not drawn up any particular development proposal for the project showing how many units would be constructed and of what description. All that one can say is that the common intention of the parties must then have been to develop No 11 in the best and most profitable way which would be permitted by the Council. What the Group Manager was saying in his report was nothing more than that the proposal actually advanced in the development application submitted by Farah was much too large for No 11 and, if one wanted to develop something of that size, one would have to look at acquiring a larger site by incorporating adjoining properties.
68 Mr Weber says that that information received by Farah was information which it was not entitled to exploit for its own benefit without the informed consent of Say-Dee. However, the information was really no more than that if Say-Dee and Farah wanted to construct a development of the size proposed they would have to acquire adjoining properties, and that would involve an acquisition of property beyond that which had been agreed between the parties.
69 There is no question but that all that was discussed and agreed between Farah and Say-Dee when they entered into their contract for the investment was the acquisition and development of No 11. There could be no suggestion that the parties contemplated in their contract a partnership or joint venture for real estate development generally. It is clear, therefore, that if the subject matter of the agreement were to be expanded from development of No 11 to development of any additional property there would have to be an express and unequivocal variation to the existing contract between the parties.
70 Mr Weber submits that real estate development is a dynamic thing. As a matter of commercial practicality, he says, it was impossible to confine the development of No 11 within the boundaries of that land, necessarily and for all time, so that it is unrealistic to say that a property development on No 11 would never contemplate the possibility of the necessity of an attempt to acquire adjoining land in order to achieve a desirable outcome. In this case, he says, when Farah was confronted with the Council's view that the proposed development of No 11 was too large, the need to explore acquiring Nos 13 and 15 became part of the business of the partnership or venture between the parties and the fiduciary duties of Farah extended to the exploration of that possibility.
71 Mr Gray submits that the scope of the venture was the development of No 11 and nothing more. Accordingly, the scope of the fiduciary obligations owed by Farah extended no further, as he says, than the boundaries of that property. The economic interests of the parties beyond the development of No 11 were untouched by fiduciary obligation so that if Farah became aware of opportunities to develop other properties it owed no duty to disclose those opportunities to Say-Dee or to invite Say-Dee to participate.
72 Mr Gray points out that when No 15 became available for purchase, there would have been no possibility of amalgamating it into a development with No 11. No 13 stands in between the two properties and in early 2001 No 13 was not on the market, nor was there any indication when, if ever, it would come onto the market. The acquisition of No 15 could not, as a matter of practicality, have been regarded at the time of its acquisition as an extension of the projected development on No 11.
73 Further, as Mr Gray points out, it could not said that Farah acquired knowledge of the opportunity to acquire No 15 (or No 13, for that matter) in the course of performing its duties in the development of No 11.
74 In my view, the submissions of Mr Gray should be accepted. The scope of the fiduciary duties of Farah are defined by the nature and scope of the obligations which it assumed in its contract with Say-Dee.
75 All that Farah contracted to do was to manage the development of No 11. It did not contract to provide opportunities for Say-Dee to participate in any project other than such development as could be constructed within the boundaries of No 11. The fiduciary obligations of Farah cannot be extended to cast upon it burdens which do not find their source in the contract which Farah entered. This principle is aptly illuminated in Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1, at 16.
76 Here, Say-Dee seeks to impose upon Farah a fiduciary duty to make available to it the opportunity to invest in one or more development projects which are quite different from the one which was the subject of its contract with Say-Dee, namely, a possible development of No 13, or a possible development of No 15, or a possible amalgamated development of Nos 13 and 15, or a possible amalgamated development of Nos 11, 13 and 15. Farah did not contract to do anything in relation to any such developments and it cannot be required by resort to the law of fiduciaries to undertake responsibilities or obligations which have no source in its contractual responsibilities.
77 In my opinion, Farah was under no fiduciary duty to disclose to Say-Dee the opportunity to acquire Nos 13 and 15, nor was it under any fiduciary inhibition in acquiring those properties for itself directly or indirectly.