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[2005] VSCA 113
Court of Appeal (Vic)
2005-05-11
WARREN, C.J., CHERNOV, J.A. and DODDS-STREETON, A.J.A.
Original judgment source is linked above.
FIDUCIARY DUTY -- Proposed joint venture -- Breach of fiduciary duty - Estoppel pleaded as defence to breach of fiduciary duty - Forex contract - Election of remedy -Equitable compensation - Full benefit of hindsight to be applied - Proportion of profits claimed - Calculating the value of lost opportunity
1 This appeal is brought by the appellant, G.M. & A.M. Pearce & Co. Pty Ltd ("Pearce Co.") against declarations and orders made in favour of the first respondent, Australian Tallow Producers Pty Ltd ("ATP"), the second respondent (Barry Palmer) and third respondent (Mary Palmer, formerly fourth defendant).
2 The appellant brought proceedings against the three respondents by Writ. Initially there were another two parties joined to these proceedings, Oceania Products Ltd ("Oceania") and Australian ByProducts Pty Ltd ("ABP"). Oceania was a company incorporated pursuant to the laws of Ohio in the United States of America and was joined by the appellant as third defendant before trial but was not a party to the appeal. ABP, the proposed corporate vehicle for the joint venture which is the subject of proceedings, was second plaintiff at trial but also did not participate in the appeal.
3 There were broadly two matters raised at trial for which equitable relief was sought. The first issue concerned orders for the supply of meat products to a company domiciled in the United States (the "Platte River contracts"). The appellant sought equitable compensation for loss of opportunity to earn profits as a result of a breach of fiduciary duty alleged to be owed to Pearce Co. by Barry Palmer and Mary Palmer. The second issue was inter-related to the first and also fell under the appellant's claim for equitable compensation. Arising from the liability incurred under a forward foreign exchange ("forex") contract obtained by Pearce Co. from the ANZ Banking Group ("ANZ"), the appellant also sought indemnity or other kind of compensation from any or all respondents. The trial judge held that Barry Palmer and Mary Palmer acted in breach of a fiduciary duty owed to Pearce Co. by permitting ATP to take the benefit of the Platte River contracts but that the appellant failed to establish that Pearce Co. was entitled to any amount of equitable compensation for loss of opportunity. The appellant at trial was also unsuccessful in its claim for an indemnity against the total which Pearce Co. incurred under the forex contract.
Summary of Facts
4 The factual background was comprehensively set out in the reasons of the trial judge.
5 The appellant, Pearce Co., was a meat exporting business incorporated in Australia in 1993. Graham Pearce, also known as "Wax" or "Waxy", was a director of Pearce Co. and Anita Pearce was the only other director and the secretary. The first respondent, ATP, like Pearce Co., was in the business of exporting meat. ATP was also in the tallow producing business. Barry Palmer and Mary Palmer, since divorced, operated their business through a corporate trust structure with their six children. They were directors and co-secretaries of ATP.
6 The Pearces and the Palmers had known each other for some years before trial, evidently becoming acquainted through associations in the meat industry. They became involved in a previous business venture, other than the one that was the subject of this appeal, concerning mechanically de-boned meat. At trial, this venture was referred to as the "MDM Partnership". This partnership involved the co-operation of Oceania and was associated with one Jim Workman. The MDM Partnership came to an end around December 1999 and was the subject of a counter-claim at trial. However, the counter-claim has since been disposed of and Oceania ceased to be a party to the proceeding.
7 In October 1999, near the end of the MDM Partnership, Graham Pearce proposed to Barry Palmer a new business venture involving the direct export of minced or crushed bone to a company called "Platte River ByProducts Pty Ltd" ("Platte River") in the USA. The joint venture proposed to eliminate the use of intermediaries, such as brokers, in the export of meat and bone products to the US.
8 With such venture in mind, Graham Pearce telephoned Platte River on 20 October 1999. Because he believed at the time that Platte River was not prepared to deal with "Graham Pearce", he told Platte River's purchasing officer, Sola Torres ("Torres"), that he was in fact "Barry Palmer" of ATP.
9 In discussions with Graham Pearce either before or after the time of the 20 October telephone call to Platte River, Barry Palmer evidently indicated his interest in the new business venture.
10 On 21 October 1999, Graham Pearce caused a fax to be sent to Platte River using the ATP logo, name, address and other contact details for ATP which referred to the phone conversation of the previous day and alluded to the availability of ATP to supply certain amounts of product. The fax was signed "Barry Palmer" on behalf of ATP. There was contention at trial as to just when the respondents knew of Graham Pearce's pretence. However, as the respondents admitted to acquiescing to his conduct soon after that time, the trial judge concluded that it was not necessary to determine exactly when the pretence became known to them.
11 Telephone conversations between Graham Pearce and Torres continued throughout November and December 1999. Graham Pearce obtained four contracts in that period, all in the name of ATP and representing himself as "Barry Palmer". Two of the contracts obtained from Platte River were for the supply of offal: lamb livers on 3 November and lamb hearts on 4 November 1999. A further two purchase orders for a large quantity of frozen mutton bone were also obtained on 10 November and 7 December 1999.
12 In mid to late November 1999, Barry Palmer mentioned to Graham Pearce that, as ATP was intending to vacate its business premises, that perhaps the new venture could lease and use the ATP site located at 49 Chifley Drive, Preston in Melbourne. It was proposed that the new company would lease such land and plant for $1.00 per week with an option to purchase for $450,000.
13 Discussions took place throughout November and December 1999 between Graham Pearce and Barry Palmer for the setting up of a joint venture in relation to the Platte River contracts. The business name decided upon was "Australian ByProducts Pty Ltd". ABP was subsequently incorporated on 22 December 1999. Graham Pearce was the only director and held all 15 ordinary shares, it being intended at that stage that he hold two-thirds of the shares on trust for "the Palmers".
14 During these discussions, it was apparent that both Graham Pearce and Barry Palmer intended for the venture to be shared equally, one-third each, between Graham Palmer (on behalf of Pearce Co.), one-third to Barry Palmer and one-third to Mary Palmer. The trial judge found that these three were in fact the intended parties to the proposed joint venture.
15 On or around the date of incorporation of ABP, Graham Pearce informed Barry Palmer that he would arrange for the purchase orders from Platte River to be changed into the name of ABP.
16 On 23 December 1999, a fax was sent by Anita Pearce to Torres at Platte River, requesting that the four purchase orders now be amended from ATP to the name of Australian ByProducts. The fax notified Platte River that "we", that is, ATP, were in the process of establishing a new division to the company, called Australian ByProducts, and that the purchase orders should be amended to that name.
17 On 24 December 1999, Graham Pearce also opened a bank account in the name of ABP with the ANZ Bank in Essendon North. He notified Barry Palmer that this had been done. One month later, on 1 February 2000, Barry Palmer and Mary Palmer went to the ANZ Bank in Essendon North to supply both their signatures so they also could be authorised signatories to the ABP account.
18 Throughout January 2000, there were a number of document exchanges occurring between the between the parties and their respective solicitors, primarily Hall & Wilcox for the respondents, and Andrew Cox for the appellant. To protect Pearce Co.'s interests, Andrew Cox proposed several amendments and additions to documentation being prepared for the joint venture.
19 The trial judge found that in a telephone conversation held on or around 31 January 2000, Graham Pearce and Barry Palmer agreed that Graham Pearce would try to arrange a forward foreign exchange ("forex") contract for the Platte River contracts. The details of arranging the forex contract were left to Graham Pearce. Graham Pearce initially applied to the ANZ Bank for a forex contract in the name of ABP. On 2 February 2000, this application was rejected by the bank. The ANZ informed Graham Pearce that it would, however, agree to supply a forex contract with Pearce Co., an existing client, instead. On 3 February, Pearce Co. and the ANZ Bank entered into a forex contract for US$1,000,000. The terms of the contract were that the ANZ agreed to buy and Pearce Co. to sell, on or before 30 June 2000 (the "date of maturity"), the US$1,000,000 for A$1,564,954. Pearce Co. was in this way attempting to shield itself from increases in the Australian dollar as against the US dollar where the rate went above US$0.639. The forex contract was eventually utilised against two shipments under the Platte River contracts on 15 February and 23 February 2000.
20 It was not in issue that Barry Palmer was at all times fully aware of the existence of the forex contract. Graham Pearce told him that his house had been pledged as security to obtain it. The trial judge was, however, not convinced that Mary Palmer had agreed to the obtaining of a forex contract, only that she may have been "vaguely aware" of what Graham Pearce had in mind in relation to the forex contract.
21 In early 2000, the parties failed to reach agreement regarding the terms of a shareholder's agreement for ABP, eventually resulting in the breakdown of joint venture negotiations. As part of the correspondence on the shareholder's agreement, Andrew Cox on 9 March 2000 wrote to the respondents' solicitors informing them that if their clients could not agree on the basis on which to do business, then there would be no business relationship and moreover that "the parties will be free to compete with each other". On 11 March 2000, Graham Pearce informed Barry Palmer in strong terms on the telephone that the deal was off and that each would go their own separate way.
22 Barry Palmer proceeded directly after this telephone conversation to obtain the Platte River contracts for ATP. This was with the knowledge of Mary Palmer. Torres agreed to revert to the original contract with "Australian Tallow Producers" and said that ATP would be held responsible for the contract. Soon after, Platte River sent faxes to ATP and Pearce Co. with amended purchase orders in the name of ATP and stamped "name change only". Although Graham Pearce and Anita Pearce then sought to retain the contracts for ABP, they were unsuccessful.
23 However, Platte River demonstrated its willingness to continue doing business with ABP when on 28 March 2000 it faxed them two completely new orders for 10 containers of hearts and 20 containers of minced bone. A further order for 10 containers of livers was also later received. The trial judge accepted that the combined value of new orders to ABP was estimated to be about US$1,140,000.
24 No new orders were received by ATP from Platte River. Nevertheless, ATP continued to supply product to Platte River under the original purchase orders until November 2000, when Torres requested ATP to stop sending any more product. Torres subsequently informed Barry Palmer that Platte River was going out of business. The total value of product shipped by ATP was US$2,500,000, instead of the projected US$3,000,000.
25 In February 2002, Pearce Co. paid out the $416,588.41 owed to the ANZ Bank under the forex contract.
Summary of Pleadings and Findings of the Trial Judge
26 In the pleadings there were broadly two matters raised by the appellant for which equitable relief was sought. The first issue concerned orders for the supply of meat products from ABP to Platte River. In the Amended Statement of Claim, the appellant alleged that the contracts were appropriated away from ABP by Barry Palmer and Mary Palmer to the Palmers' family company, ATP. The novation of the contracts to ATP was alleged to breach the fiduciary duties of Barry Palmer, by reason of the fact he directly procured the contracts for ATP, and Mary Palmer, due to the fact she indirectly knew and/or assisted in the novation. The appellant sought equitable compensation for loss of opportunity to earn profits on the Platte River contracts which they claimed belonged to or were intended to benefit ABP. On the other hand, the respondents submitted that equitable compensation was not owed for the reason that a fiduciary relationship did not arise in this situation as the parties were at the negotiation stage only and no steps had been taken by the parties to implement the arrangement. Moreover, the respondents contended that a relevant consideration as to whether or not Barry Palmer and Mary Palmer were subject to a fiduciary duty or not to procure ATP to supply product pursuant to the Platte River contracts was that the parties agreed prior to the termination of venture negotiations that they would be free to compete with each other and that assets proposed to be placed into ABP would revert to the persons entitled to those assets should the joint venture not go ahead.
27 The second issue was inter-related to the first and also fell under the appellant's claim for equitable compensation. Arising from the liability incurred under the forex contract obtained by Pearce Co. from ANZ, the appellant sought indemnity or other kind of compensation from any or all respondents. The Amended Statement of Claim asserted that it was intended by the proposed joint venturers that the forex contract would be an asset or liability of the proposed joint venture.[1] It was alleged that in reliance upon the assurance and conduct of Barry Palmer, Mary Palmer and ATP, Graham Pearce on behalf of Pearce Co. entered into the forex contract which thereby acted to its detriment.[2] The pleadings alleged that it would be unconscionable for Barry Palmer, Mary Palmer and ATP to resile from the assurance and conduct relied upon by Pearce Co. and they were estopped from doing so and that the forex contract was a liability of the proposed joint venture.[3] The respondents submitted in their defence that the forex contract was in Pearce Co.'s name all along and that it was intended for the use of that company rather than the joint venture which at that negotiation stage might not go ahead.
28 As to the first matter, the trial judge held that Barry Palmer and Mary Palmer acted in breach of a fiduciary duty owed to Pearce Co. by permitting ATP to take the benefit of the Platte River contracts but that the appellant failed to establish that Pearce Co. was entitled to any amount of equitable compensation for loss of opportunity. This was because when assessing equitable compensation owed, the trial judge determined that when the appropriate subtractions were calculated, the amount fell substantially in to the negative.
29 As to the second matter, the forex contract, the trial judge held that no compensation was owed by any or all respondents. Although his Honour concluded that Barry Palmer (but not Mary Palmer) knew of the existence of the forex contract, the conduct of Graham Pearce on behalf of Pearce Co. demonstrated that the forex contract was later used for purposes other than that of the proposed joint venture; the nexus of liability owed by the respondents was thereby broken.
Summary of Issues on Appeal
30 The appellant appealed in December 2002. The appellant now relies upon five grounds; with two grounds having been dealt with between the parties prior to hearing and notice given of another ground abandoned. One other ground is also contended by the respondents as the trial judge found in favour of the appellant on that point (the breach of fiduciary duty issue).
31 There are therefore six issues for determination on appeal. They are as follows:
(a) Whether respondents Barry Palmer and Mary Palmer breached a fiduciary duty owed to Pearce Co. for taking the benefit of the Platte River contracts in the name of ATP;
(b) Whether the trial judge erred in concluding that Pearce Co. applied US$ receipts from Platte River's new orders against the forex contract after the first rollover on 30 June 2000 (Ground 1 of the amended notice of appeal);
(c) Whether the trial judge erred as a matter of law in concluding that the appellant is entitled to one-third, as opposed to the appellant's claim to the whole, or alternatively half, of the profits that ABP would have made from the Platte River contracts in the event of breach of fiduciary duty (Ground 4);
(d) Whether the trial judge's calculation of equitable compensation (measure of which is the value of the relevant 'lost opportunity') was incorrect (Ground 7);
(e) If the trial judge's calculation of equitable compensation is incorrect, what is the correct method for calculation? (Ground 8);
(f) And lastly, whether the trial judge erred as a matter of law in concluding that the appellant sought only equitable compensation for breach of fiduciary duty, failing to offer the appellant an election for a taking of account of the benefit received by ATP pursuant to the Platte River contracts (Ground 2).
32 The issues raised in the appeal fall under four general headings: (1) breach of fiduciary duty; (2) the forex contract; (3) the issue of election of remedy; and lastly, (4) the question of equitable compensation as divided into two parts: (a) question of proportion: whether the appellant is entitled to the whole, or alternatively half, of the profits that ABP would have made from the Platte River contracts, or only one-third; and (b) calculation of equitable compensation.
Breach of Fiduciary Duty
33 At trial the respondents pleaded estoppel as a defence to the claim that Barry Palmer and Mary Palmer had breached a fiduciary duty owed to Pearce Co. by permitting ATP to take the benefit of the Platte River contracts. In the appeal, the respondents maintained estoppel as a defence to alleged breach of fiduciary duty.
34 Graham Pearce (on behalf of Pearce Co.), Barry Palmer and Mary Palmer were held at trial to be engaging in negotiations for the "joint venture" concerned. The term "joint venture" does not have a settled common law meaning and is said to be an American conception imported into Australian law. Nevertheless, it is widely understood as referring to a kind of association in which no firm name is used and where the association is restricted to a single "one-off" undertaking. Use of the term "joint venture" does not automatically import fiduciary duties; one must look to the form which the joint venture takes and also to the content or the obligations that the particular relationship imposes. The duties of joint venturers have often been viewed as analogous to that of partners in a partnership.[4]
35 In the present case, it is apparent that the relationship between the parties was a fiduciary one even though no formal agreement was ever executed. It is plain from the authorities that fiduciary relationships can and do arise as soon as prospective partners embark upon the course of their association.[5] The fact that a transaction is commercial in nature will not prevent the finding of a fiduciary relationship, though additional care may be taken to recognize a fiduciary duty in these circumstances.[6] In this matter emphasis was not on the existence of a formal agreement, rather, upon the character of the relationship itself, in particular one of mutual trust and confidence, which gave rise to fiduciary obligations. By December of 1999, it may be clearly seen that the parties were more than just seriously contemplating the venture - they had in fact begun co-ordinating the business. The relationship at that time was plainly based upon mutual confidence and trust. By that stage, the evidence revealed that the parties had numerous exchanges and correspondence with each other on the topic of the proposed joint venture, had sought legal advice, had agreed upon the share and profit division, had incorporated a company for the purpose of carrying out the joint venture (ABP) and also set up a bank account for ABP, to which all three eventually became signatories.
36 At trial the appellant argued that an important aspect in recognizing the existence of a fiduciary relationship was the fact that each party was vulnerable to abuse by the other owing to his or her position: Hospital Products Ltd v United States Surgical Corporation.[7] As pointed out by the trial judge, the vulnerability of the appellant in several regards was striking: the fact that the Platte River contracts had been obtained in the name of ATP before transfer to the joint venture vehicle; the fact the first few shipments were at the expense of Pearce Co.; and also the fact that the forex contract was taken out with security provided by Pearce Co. and its directors. The heavier weight of duty in this relationship may be therefore seen as resting with Barry Palmer and Mary Palmer.
37 The respondents assert that the case advanced against Mary Palmer - framed by the appellant at trial in terms of accessorial liability or "knowing assistance" to Barry Palmer in breach of fiduciary duties - should be dismissed, given that the conduct giving rise to breach was undertaken by Barry Palmer alone. For accessorial liability to arise under the second limb of the Barnes v Addy principle,[8] "actual" knowledge must be demonstrated. The knowledge required to hold a person liable is "knowledge of circumstances which would indicate to an honest, reasonable person that such a design was being committed". As a director of ATP, which took the benefit of the Platte River contracts, it is difficult to see on an appraisal of the evidence how this limb fails to capture Mary Palmer's conduct. From December until March 2000 (when the contracts were transferred), Mary Palmer was employed by ATP in the capacity of officer manager and administrator. She doubtless knew - if only in her capacity as office employee and not director - and if not at the time, 15-16 March 2000, then soon after, that Barry Palmer had changed the contracts from ABP to ATP. Barry Palmer kept her informed by his own admission. Critically, without her assistance in some form, given her dual roles in the small family-owned business at that stage, it is difficult to see how co-director Barry Palmer could have successfully transferred the Platte River contracts entirely on his own and moreover without her knowledge.
38 The respondents mainly relied upon an estoppel as a defence to the claim for breach of fiduciary duty. Although the estoppel defence was not referred to directly in the reasons of the trial judge, his Honour was doubtless relating to the same where he explained his reason for rejecting the notion that the joint venture parties would be "free to compete with each other" and that assets proposed to be placed into ABP would revert to the "persons entitled to those assets":
"There is in my opinion, no evidence that such an agreement was made. There were unilateral statements to that effect made either by or on behalf of the plaintiffs, but I do not think that such broad statements had the effect of eliminating or modifying the alleged fiduciary duty, if one existed."[9]
39 It is clear that even if the proposed joint venturers said they were free to compete against each other following the breakdown in negotiations, that still did not mean that any one or more of them was entitled to divert the benefit of the existing contracts to the exclusion of the other prospective joint venturers. It was no excuse for the respondents to state that they did not know that a freedom to compete did not extend to the existing purchase orders in the name of ABP. Equally, as acknowledged by the trial judge, it would have been a breach of fiduciary duty as owed to Barry Palmer and Mary Palmer if Pearce Co. had procured for itself the full benefit of the Platte River contracts to the exclusion of the other participants.
40 Therefore, the respondents failed to establish estoppel at trial. In my view, no error has been shown in the judgment of the trial judge in this regard. Once a fiduciary relationship is recognised in these circumstances it can only be a small step to conclude that a breach of fiduciary duty has occurred. Consequently, in my opinion, the trial judge was correct to hold that Barry Palmer and Mary Palmer stood in a fiduciary relationship to Graham Pearce on behalf of Pearce Co., and had an attendant fiduciary duty which was subsequently breached.
The Forex Contract
41 The cause of action relied upon by the appellant at trial in relation to the forex contract was estoppel. In the end, however, the appellant would seem to have treated the forex contract as part of the claim for equitable compensation, seeking an indemnity for the full amount of the liability incurred on the forex contract, $416,600, together with interest.
42 The central issue raised on appeal was the trial judge's finding that Pearce Co. had applied the proceeds of Pearce Co.'s US dollar receipts from Platte River's new orders against the forex contract. The question for determination before this Court was whether this error of fact led to an error of law being made.
43 The respondents, in their outline of submissions, agreed with the appellant that his Honour made an incorrect finding when he stated that Pearce Co. applied the receipts against the forex contract after 30 June 2000. The evidence substantiated the appellant's claim that the US dollar receipts were only applied against the forex contract twice before the first rollover date (30 June 2000), once on 15 February 2000 (for US$26,005.35) and again on 23 February 2000 (for US$26,116.14). Nevertheless, the respondents submitted that this finding of the trial judge was not material to his Honour's ultimate findings in relation to liability of the forex contract.
44 The respondents contended that Pearce Co.'s conduct was such that it destroyed any causal nexus between the conduct of the respondents and loss borne by Pearce Co. In other words, the argument was that Pearce Co.'s "conduct" was effectively the use of the forex contract by Pearce Co. for its own purposes, thereby severing any claim that Pearce Co. could have in relation to liability on the forex contract. This is correct for a series of reasons. First of all, the trial judge found that the appellant elected to roll over the forex contract and then use it for its own commercial purposes. On this point, his Honour stated as follows:
"That conduct, it seems to me, deprived Pearce Co. of the right to indemnity or any kind of compensation from any defendant for the ultimate liability incurred to the ANZ Bank, because Pearce Co. intended to take the benefit of any "favourable" movements in the exchange rate and therefore had elected to beat the risk of any liability should the forex contract be unprofitable."[10]
45 Although Graham Pearce denied rolling over or extending the forex contract to provide hedge cover against Pearce Co.'s new purchase orders from Platte River (i.e. the orders given to Pearce Co. as separate from the respondents following the complete breakdown of joint venture negotiations), the respondents claimed that his wife, Anita Pearce, agreed to this idea "in substance". In her evidence, Anita Pearce admitted to the possibility of Pearce Co. utilising the forex contract if the spot rate had gone up above US$0.639. If the dollar had risen above this mark, the contract would have been utilised for Pearce Co.'s benefit alone and not any other party's. As it was, they made a loss. The losses they made as a result must therefore also be their own.
46 The trial judge explained in his reasons that the amount of the liability incurred pursuant to the forex contract resulted from Pearce Co.'s decision to extend the contract. Thus, there are two relevant findings here of the trial judge: first, that no liability at all was incurred as at 30 June 2000, the original maturity date, and secondly, that the contract was rolled over four times, each time for Pearce Co.'s own purposes and not for the benefit of other joint venture members. It is possible (although it is unnecessary to explore in any detail here) that the mere fact of an election being made by Pearce Co. for its own benefit was sufficient to deprive Pearce Co. of the right to indemnity or compensation of any kind from the defendants because at that point no "loss" had in fact arose. The liability under the forex contract had not yet "crystallised". Furthermore, the original forex contract was effectively replaced by subsequent forex contracts as negotiated on Pearce Co.'s behalf alone.
47 In the end, I am not persuaded that the error in factual finding led to an error in law being made. Whether or not the US$ receipts were applied after 30 June 2000, the result would be the same; it was the conduct of Graham Pearce on behalf of Pearce Co. in relation the forex contracts that mattered.
48 It follows that the first ground of appeal in relation to the forex contract has not been made out.
Equitable Compensation and Account of Profits: Choice of Remedy
49 I now turn to a discussion of the relief available to Pearce Co. as a result of the breach of fiduciary duty by Barry Palmer and Mary Palmer.
50 A fiduciary cannot be permitted to retain a profit or benefit which she or he has obtained by reason of a breach of fiduciary duty.[11] In light of the finding of the trial judge, Pearce Co. was entitled to claim relief.
51 In Hospital Products Ltd v United States Surgical Corporation[12], Mason J discussed the approach to relief where breach of fiduciary duties has occurred and observed that each case will depend upon its own facts and circumstances. Where fiduciaries have either made profits or caused loss through breach of fiduciary duties, one or more of the following remedies will be applied: (i) constructive trust; (ii) an account of profits; or (iii) equitable compensation.
52 The first mentioned remedy, which was a constructive trust, was abandoned by the appellant in the Amended Notice of Appeal. In any event, the trial judge dismissed the plaintiffs' claim based upon a resulting or constructive trust for the reason that the plaintiffs' arguments were "misconceived".[13] The remedies claimed by the appellant in the appeal, therefore, concern only an account of profits and equitable compensation.
53 An account of profits directs a defendant to give the plaintiff the monetary value of what she or he has obtained,[14] whereas equitable compensation directs the defendant to restore the monetary value of the loss which she or he has caused to the plaintiff.[15]
54 That the appellant had the right to elect between one of these two remedies is not in issue given that the respondents apparently made a profit as a result of breach of fiduciary duties.[16] What is in question is whether, at trial or at the time of judgment, the appellant made the election of remedy in favour of equitable compensation.
55 Relevantly, the appellant contended in the second ground in the Notice of Appeal that the trial judge ought to have offered an election of remedy to Pearce Co. to seek an order for the taking of an account of the benefit or profit received by ATP from the Platte River contracts prior to the entry of judgment. As it was, the trial judge concluded that Pearce Co. had elected not to seek an order for the taking of an account of the benefit or profits in relation to the Platte River contracts, concluding that the appellant had "expressly declined" to seek that remedy. His Honour proceeded in his reasons on the basis that the company sought an order for equitable compensation. In the outline of submissions, the appellant also attached to this second ground a claim that the trial judge erred in concluding that the net profit derived by ATP from the Platte River contracts was not "substantial". However, that assertion would appear to be largely irrelevant to the election of remedy point. This is because the trial judge concluded that whatever the motivation for election, the appellant had already made its choice of remedy.
56 A plaintiff, where faced with a choice between an account of profits or equitable compensation, must make a decision as to which one it will pursue. For instance, in Tang Man Sit v Capacious Investments[17], the plaintiff was awarded an account of profits and compensation in the same suit and sought to enforce both remedies. However, in that case the Privy Council reiterated, as did the High Court in Warman International Ltd v Dwyer[18], that an account for profits and an award of damages are alternative and not cumulative remedies.[19] Normally, where both remedies are available, a plaintiff must elect between them. Ordinarily, the election need not be made before the trial starts and may be delayed until determination of the cause of action. There is therefore no difficulty where the plaintiff claims both equitable compensation and an account of profits in the prayer for relief, however, election must be made when (but not before) judgment is given. Where the plaintiff does not know which remedy is more favourable at the time of judgment on liability, the court may order discovery or other orders designed to give the plaintiff the information it requires to make the election.[20]
57 However, if Pearce Co. or ABP required further information to pursue the remedy of an account of profits prior to judgment or at the time judgment was made, it did not indicate this to the court. They were in fact silent on the matter. This may be contrasted to the position of the plaintiffs in Island Records v Tring International[21], cited with approval in Australia in Artistic Builders Pty Ltd v Elliot & Tuthill (Mortgages) Pty Ltd[22] and Dr Martens Australia Pty Ltd v Bata Shoe Co. of Australia Pty Ltd[23]. In Tring the court declared that the plaintiff was entitled to, at its election, an assessment of damages or an account of profits only after the plaintiff had by means of discovery or had otherwise obtained sufficient information to make an informed choice. In that case, the relevant proceedings involved a hearing of motion, with the plaintiff claiming (the point later being won) entitlement to election only following further inquiry as to which remedy was the most appropriate for them, whereas the defendants claimed that the time for election was at the actual hearing of the motion itself. It is important to note here that those proceedings also involved the use of a "split trial", a practice developed particularly in relation to intellectual property cases, where the first stage is often confined to determining issues of liability. Use of the split trial in Tring meant that the plaintiffs in Tring could claim they were deprived of the opportunity to obtain information as to the most suitable remedy, since at this earlier stage no information of the sort could be brought forward. The parties in that case also had little knowledge of each other's operations and for this reason, further inquiry into the defendant's accounts was deemed necessary before an informed election could be made. This may be contrasted directly to the facts of this case before the court at trial, where there was no split trial, the parties were well known to one another and the profits ATP made on the Platte River contracts were doubtless known or at least estimable by Pearce Co. and ABP. According to the facts established at trial, Graham Pearce played a major role in originally negotiating the contracts with Platte River. It is in this way clear that the appellant did not require discovery or other further inquiry before making an informed choice.
58 Further evidence from the trial itself points to the trial judge's presumption of election having been made by the appellant as well-founded. For instance, although in its outline of submissions, Pearce Co. contended that it did not abandon its claim for an account of profits, submissions proceeded on the basis that equitable compensation would be claimed. Statements by counsel at trial also confirm that the trial proceeded on the assumption that the remedy of account of profits had been abandoned.[24]
59 Moreover, Pearce Co.'s own final submissions at trial indicated that they had made their election:
"The entitlement of a deprived beneficiary to seek equitable compensation rather than an accounting from a defaulting fiduciary is recognised in the cases".[25]
When counsel for the third respondent, Mary Palmer, made his submissions, and noted that Pearce Co. had elected to pursue equitable compensation, this remark went unchallenged by the counsel for Pearce Co.[26]
60 Thus, even if the exact timing of election is unclear, it is apparent that at some time during the trial - and certainly by the time of judgment - the appellant made an election based upon what was believed to be the more advantageous remedy. At the least, the election was implicitly that of equitable compensation in favour of an account of profits.
61 As a matter of policy, the court must moreover be wary of appellants who wish to revive an election of remedy because judgment at first instance has gone against them. At trial, there was found to be a lack of sufficient evidentiary basis for the claimed award of equitable compensation for Pearce Co. or ABP. It is to be kept in mind that principles of fairness dictate that once a choice is made, then that election is final and may not be revisited at the whim of the plaintiff alone. To do so would waste valuable court time and possibly result in prejudice against the defendants.
62 In any case, once judgment is entered for either equitable compensation or account of profits, the right to elect the alternative remedy is forever lost.[27] "In the ordinary course the decision made when judgment is entered is made once and for all".[28] For these reasons I see no special reason why the appellant should now receive the right to elect for the alternative remedy of an account of profits.
63 It follows that the second ground of appeal should be dismissed.
Equitable Compensation
Calculation of Containers (bones, livers, hearts)
64 I now turn to consider the issue of equitable compensation.
65 The measure of equitable compensation is that sum which would restore the plaintiff to the position he or she would have been in had the breach not occurred.[29] Equitable compensation is not assessed with respect to the foreseeable value at the time the breach of fiduciary duty occurred. This principle is explained by McLachlin J in Canson Enterprises Ltd v Boughton & Co.[30] in reference to an earlier case, Guerin v The Queen[31], where damages awarded at common law (compensation as assessed from the date of breach) from equitable compensation. With respect to equitable compensation, McLachlin J clearly stated that damages will be based on the trial date "having regard to what actually happened", as is the case in an equitable award for restitution.[32] Her Ladyship moreover stated that it is essential that losses made good are only those which, "on a common sense view of causation, were caused by the breach".[33] The dicta of McLachlin J in Canson Enterprises has been followed in Australia,[34] and notably, by the House of Lords in Target Holdings Ltd v Redferns[35]. In Target Holdings, Lord Browne-Wilkinson (with whom Lord Keith of Kinkel, Lord Ackner, Lord Jauncey of Tullichettle and Lord Lloyd of Berwick agreed) held that:
"Equitable compensation for breach of trust is designed to achieve exactly what the word compensation suggests. To make good a loss in fact suffered by the beneficiaries and which, using hindsight and common-sense, can be seen to have been caused by the breach".[36]
66 The court is also entitled, with the full benefit of hindsight, not to speculate against the interest of the plaintiff. This principle is well illustrated in Guerin, where the Canadian Supreme Court considered the source of the fiduciary duty owed by the Crown to First Nations Peoples. In that case the relevant government department was entrusted with negotiating a lease of land owned by an Indian band to a golf club. The court approved the speculative assumption made by the trial judge in assessing compensation, namely that the plaintiffs would have desired to develop their land in the most advantageous way possible. That principle may be applied here in relation to the orders received by Pearce Co. after the breakdown in joint venture negotiations; namely, the inclusion of these later orders when assessing equitable compensation.
67 The key difference in calculation for equitable compensation between the two parties would appear to lie chiefly with reference to the number of containers of crushed bone, livers and hearts. In the outline of submissions, the appellant contended that the trial judge made an arithmetical error. In his working out, his Honour calculated 129 containers of bones (first 85 @ $728.18, remaining 44 @ $3,037.46). The appellant submitted that paragraph [103] of the judgment makes clear that the trial judge intended to calculate 159 containers of bones in total (129 from ATP and 30 from Pearce Co.). If this view is correct, then his Honour's calculation is short by $91,123.80 (30 containers of bones).
68 However, the respondents argued that the number of containers of bones should be calculated pursuant to ATP orders only (129 containers). The respondents further submitted that the trial judge in fact made an error by approaching Pearce Co.'s claim to lost profit by reference to the total product supplied to Platte River by both ATP and Pearce Co. The trial judge rationalized that approach to calculations on the basis that "all of that product would have been supplied by ABP if it had been permitted to complete the contracts".
69 The respondents argued that these orders should not be included for a number of reasons: Even with the full benefit of hindsight, (the respondents contended that) it is not a natural assumption for the court to make that the new orders gained by Pearce Co. would have also been gained by ABP should the joint venture have gone ahead. As is evident from the information given by both sides, Platte River commonly also used brokers, very likely more than one, to fulfil orders. Another reason given by the respondents was that ABP was behind schedule in its shipment of orders before the breakdown in joint venture negotiations, making it perhaps less likely that Platte River would entrust them with more orders in future (at least until existing orders were fulfilled). Also, following the breach, ATP and the Palmers claim that it was the new set of circumstances that led to new orders from Platte River being pursued by Pearce Co.
70 According to the respondents, not only should the number of containers of bones be calculated as 129 (pursuant to ATP purchase orders only), the containers of livers and hearts supplied by ATP should be calculated at 3 and 1 respectively (instead of 4 1/2 and 7 1/2). The reason why combining both deliveries pursuant to ATP and Pearce Co. orders was an error they said was because Pearce Co. was only given the additional contracts by Platte River as recompense for their loss of participation with ATP in the original purchase orders. These were also the original purchase orders undertaken before the breakdown of joint venture negotiations. On this view, to award more would involve going against the object of equitable compensation, which is to restore persons who have suffered loss to the position in which they would have been if their had been no breach of the equitable obligation in question (and not to unjustly enrich).[37]
71 Nevertheless, one must have regard to the principle that the court is entitled not to speculate against the interest of the plaintiff[38] or to make assumptions against the defendant on the issue of causation.[39] This allows the plaintiff to lead only a minimum of evidence to discharge the evidentiary burden of causation. Indeed, in this regard it has been said that "[e]quity must strive to repair the breach of fiduciary duty lest the fiduciary in default could be exonerated too easily... [and] the courts being seen to wink at wrong-doing".[40]
72 In other words, the trial judge was entitled to make the assumption when calculating compensation that the appellant would have wished to develop the joint venture business in the most advantageous way possible - and therefore that the post-venture negotiation orders would have been obtained by ABP if the joint venture had gone ahead. The orders received by Pearce Co. following the breakdown in joint venture negotiations were as a consequence validly included by the trial judge when assessing equitable compensation.
73 It follows that the conclusion of the trial judge that the loss of orders received by Pearce Co. following the breakdown in joint venture negotiations would not have occurred but for the breach of duty by Barry Palmer and Mary Palmer (on behalf of ATP) was correct.
Question of proportion: whether the appellant is entitled to the whole, or alternatively half, of the profits that ABP would have made from the Platte River contracts, or only one-third
74 The appellant claimed that it was entitled to receive the whole, or alternatively half, of the profits that ABP would have made from the Platte River contracts. The trial judge held that the appellant's loss of opportunity flowing from the breach of fiduciary duty however was only one-third.
75 To support its claim for entitlement to all of the profits, the appellant relied upon the fact that the party who procured and contributed the relevant benefit to the proposed joint venture was Graham Pearce. The appellant further contended that Mary Palmer played no part in procuring the Platte River contracts for the proposed joint venture and that the use of Barry Palmer's and ATP's names by Graham Pearce was neither necessary nor determinative.
76 Nevertheless, it is difficult to see why, on this basis alone, the appellant would be owed the whole or alternatively half of the net profit which ABP would have made from the Platte River contracts. The fact remained that Graham Pearce did use the names of both Barry Palmer and ATP in order to procure the contracts with Platte River. The parties moreover entered negotiations on the basis that Graham Pearce (on behalf of Pearce Co.), Barry Palmer and Mary Palmer would each have a one-third interest in the joint venture business. This was conceded by the appellant's solicitor in a letter of demand to the respondents dated 5 July 2000 which requested profits be apportioned between ATP (two-thirds) and Pearce Co. (one-third).
77 Furthermore, there must also be regard to a cardinal principle of equity that the remedy must be fashioned to fit the nature of the case and the particular facts.[41] In other words, whilst a fiduciary in breach should not be permitted to benefit from their own wrong, neither should the liability of the fiduciary be transformed into a "windfall" or vehicle for the unjust enrichment of the plaintiff. For these reasons, it would be unsound in law to apportion Pearce Co.'s profit share in these circumstances as more than one-third.
78 In any case, the appellant's submission was confused. The appellant's fourth ground of appeal states that the trial judge erred in law in concluding that Pearce Co. did not lose an opportunity to earn more than one-third of the net profit which would have been made by ABP, and "ought to have found that Pearce Co. was entitled to the whole, alternatively, no less than half of the profits which were made and which would have been made on the Platte River contracts by ABP after discharging the liabilities of the failed joint venture". Yet, in their calculations for equitable compensation for their eighth ground of appeal,[42] their calculations implicitly recognised the notion of Pearce Co. receiving just a one-third share.
79 In my view, it follows that no error has been made out as to the conclusion of the trial judge that Pearce Co. was entitled to one-third only of the prospective joint venture net profits.
Calculating the Value of the "Lost Opportunity"
80 The correct calculation should be as follows:
First 85 bones @ $728.18 $61,895.30
Remaining 74 bones @ $3,037.46 $224,772.04
4 1/2 livers @ $1067.22 $4,802.49
7 1/2 hearts @ $3,858.49 $28,938.68
Sub-total: $320,408.51
One-third share: $106,802.82
Less amount received by Pearce Co. $99,156.12[43]
on new contracts (profit retained)
Less 2/3 of the profit retained by Pearce $5,837.73[44]
Co. from the initial shipmentsTOTAL
81 At trial the appellant claimed the value of "lost opportunity" to ABP and Pearce Co. as $408,742.59 and the quantum of appellant's entitlement to equitable compensation as $309,586.47 ($408,742.59 less profit earned on new contracts from Platte River). This was revised to a positive value of $1,808.99 after taking into account a one-third share of profits, plus two deductions factored in by the trial judge and now accepted by both sides (less amount received by Pearce Co. on new contracts ($99,156.12) and less two-thirds of the profit retained by Pearce Co. from the initial shipments ($5,837.73), totalling $104,993.85 in deductions). As liability in relation to the forex contract has already been dealt with separately, it is not factored into any of the above calculations.
82 It is apparent that the calculations held by the trial judge were only in error in relation to the numbers of containers of bones. The trial judge calculated the remaining bones at 44 units when this should have been 74, for a total figure of 159 containers.
83 The value of the "lost opportunity" was therefore only $1,808.99. However, the ground of appeal contending compensation was owed is not made out. This is because when other reductions to entitlement by Pearce Co. are taken away from the figure of $1,808.99, the amount reached is substantially in the negative.
Other Reductions to entitlement by Pearce Co.
84 The respondents further argue that Pearce Co.'s calculations at trial significantly understated expenses which would have reduced Pearce Co.'s entitlement even further. These other reductions to entitlement by Pearce Co. were not considered by the trial judge because of the conclusion that Pearce Co.'s entitlement was already "substantially negative".
85 Nevertheless, the trial judge noted the defendants' criticism that the plaintiffs' claim had not taken account of any increased overhead or operating costs and that expenses of this sort would inevitably have flowed from an administration of the total number of deliveries by ABP. His Honour noted that this submission was probably correct. I agree with that statement. If this Court were to calculate the costs of administration, the amount of equitable compensation would clearly reach a substantial negative amount once again.
86 For these reasons, in my opinion the appellant fails to establish that it is entitled to any amount of equitable compensation for loss of opportunity. I would
dismiss the appeal.
87 I have had the advantage of reading the draft reasons for judgment of the Chief Justice and agree that the appeal should be dismissed for the reasons advanced by her Honour.
88 So far as is relevant, the learned trial judge concluded that the appellant had not made out its case for equitable compensation for its alleged loss of opportunity to earn profit on contracts that it claims would have been available to the joint venture but for the respondents' breach of fiduciary duty to it. His Honour found that although the respondents had breached their fiduciary duty to the appellant, the latter did not suffer any relevant loss flowing from such breach. The learned judge also rejected the appellant's claim that the respondents wrongfully failed to indemnify it for the loss which it incurred on the Forex contract, which was entered into by it in anticipation of the joint venture being formed and with intention that the benefit of the contract (and the risk of loss arising from it) would be taken over by the new venture. The appellant claims that his Honour erred in those findings and, further, that his Honour wrongly deprived it of the opportunity of electing whether to claim an account of profits in lieu of equitable compensation.
89 Turning first to the last matter mentioned, it is plain on the material before the Court that what the appellant claimed at trial was equitable compensation for breach of fiduciary duty; it effectively abandoned the course that was open to it of seeking, in the alternative, an account of profits and then electing, possibly as late as at the time of judgment, which of the two courses it wished to pursue. In the event, and notwithstanding that in its prayer for relief the appellant claimed, as alternative remedies, an account of profits and equitable compensation, his Honour found that, at trial, the appellant elected to claim equitable compensation. In my view, there was ample material on which his Honour could have properly concluded, as he did, that the appellant made such an election. It is now too late for it to complain on appeal
that his Honour erred by not giving it the opportunity to claim an account of profits in lieu of equitable compensation.
90 In my view there is little doubt that his Honour correctly found that the respondents owed a fiduciary duty to the appellant in relation to the proposed joint venture and that this duty was breached by them. In the latter part of 1999 and early 2000 the parties had together taken, in the anticipation of the joint venture coming into existence, a number of significant steps towards the establishment and operation of the proposed business, including securing, albeit under false pretences, contracts for delivery of products to Platt River. It is not surprising, therefore, that his Honour concluded that these circumstances gave rise to mutual obligations and trust between the parties in respect of the subject matter that came into existence during the negotiating period and despite the fact that the joint venture never came into existence.[45] In the circumstances, like the learned Chief Justice, I consider that his Honour was correct in concluding that the respondents owed a fiduciary duty to the appellant not to divert to themselves profits from the undertaking that came into existence by March 2000 to the exclusion of the other co-venturer. Such a conclusion is all the more apparent given his Honour's finding, which was well open to him on the evidence, that there was no agreement between the parties that they were free to compete with each other to the extent that one or other of them could take the benefit of their joint effort to the exclusion of the other. Since the respondents diverted the benefits of the Platt River contracts to ATP to the exclusion of the appellant, it seems plain enough that they thereby breached their fiduciary duty.
91 It was the appellant's case below that the measure of equitable compensation to which it was entitled was the value of the appellant's opportunity to earn profit from the venture - its primary claim was that it was entitled to the whole of the lost net profit that ABP would have made on the Platt River contracts, and not just one-third of it. His Honour was correct, in my view, in concluding that, in light of the proposed holdings in the joint venture in particular, the appellant would be entitled, at best, to one-third of such lost profit.
92 The appellant then argued that, even if it was not entitled to the whole of the lost profit, his Honour impermissibly underestimated the amount to which it was entitled by way of equitable compensation. It may be accepted for present purposes that, as the appellant contended, his Honour made an arithmetic error against it in making the relevant calculations. But, as is made apparent by the Chief Justice, assuming his Honour so erred, there were other matters not taken into account by the learned trial judge in his calculations that would have produced a negative figure. Looking at the totality of the material, I consider that his Honour did not relevantly err in his final conclusion that the appellant had not established that its claimed loss of opportunity had any value because, if the amount in question has been properly calculated by his Honour, the resultant figure would have been, as I have noted, negative.
93 Similarly, I consider that no relevant error was made by the learned judge in rejecting the appellant's claim for indemnity on the loss incurred by it on the Forex contract. It is true that, as the respondents conceded, his Honour erred in stating that the appellant applied the receipts from the Platt River contracts after 30 June 2000, in other words, after the rollover date, against the Forex contract. It seems clear enough that, as the appellant contended, the receipts were applied against that contract on two occasions before the rollover date. In my view, however, such an error is not material, given his Honour's finding that the appellant rolled over the Forex contract for its own commercial benefit, intending to take advantage of any "favourable" movement in the rate of exchange. In my view, there was evidence to support that finding. More particularly, as the Chief Justice explains in her reasons, the evidence of Mrs Pearce supports such a conclusion. In the circumstances, it follows that the appellant also accepted the risk of the contract becoming unprofitable. Thus, I consider that his Honour did not relevantly err in concluding
that the appellant was not entitled to be indemnified in respect of that loss, notwithstanding that, as his Honour found, the obtaining of the Forex contract was contemplated by the joint venture. The cause of the loss was not the respondents' breach of fiduciary duty, but the appellant's decision to "renew" the contract for its own benefit.
94 In the circumstances, I agree that the appeal should be dismissed.
95 I agree with the disposition of this matter proposed by Warren, C.J., and for the reasons she has given.
[1] Para. [19] of the Amended Statement of Claim.
[2] Ibid. at para's [25]-[26].
[3] Ibid. at para [27].
[4] Birtchnell v Equity Trustees Executors & Agency Co. Ltd [1929] HCA 24; (1929) 42 C.L.R. 384 at 408, per Dixon J.
[5] United Dominions Corporation Ltd v Brian Pty Ltd [1985] HCA 49; (1985) 157 C.L.R. 1.
[6] Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 C.L.R. 41 at 70.
[7] Ibid.
[8] Barnes v Addy (1874) LR 9 C.L. App. 244; see also Consul Development v DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 C.L.R. 373 and Koorootang Nominees v ANZ Banking Group [1998] 3 V.R. 16.
[9] Reasons for Judgment, 19 November 2002 at para. [95].
[10] Ibid. at para. [99].
[11] Consul Development v DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 C.L.R. 373 at 393; Queensland Mines v Hudson (1978) 18 A.L.R. 1 at 4; 52 A.L.J.R. 399 at 401.
[12] Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 C.L.R. 41.
[13] The trial judge noted that the plaintiffs did not claim any proprietary remedy. His Honour emphasized that they "did not claim an equitable interest in any property (nor did such property exist) and they did not seek to trace any monies alleged to have been derived from any trust property." Reasons for Judgment, 19 November 2002 at para. [98].
[14] Colbeam Palmer Limited v Stock Affiliates Pty Limited [1968] HCA 50; (1968) 122 C.L.R. 25, at 32, per Windeyer J.
[15] Nocton v Lord Ashburton [1914] A.C. 932; Re Dawson; Union Fidelity Trustee Co. Ltd v Perpetual Trustee Co. Ltd [1966] 2 N.S.W.L.R. 211.
[16] This may be contrasted to the position of the plaintiffs in Biala Pty Ltd v Mallina Holdings Ltd (No 2) (1993) 13 W.A.R. 11, where Ipp J at first instance held that the gains-based remedy of an account of profits or a constructive trust were not available largely because Dempster Nominees' misrepresentation did not noticeably alter the profits made by that company when it sold its interest in the venture. It also did not result in Dempster Nominees obtaining Mallina's share in the venture, whereas in this case, the appellant claims that profits were taken away from them by the respondents - essentially for their own gain.
[17] Tang Man Sit v Capacious Investments [1996] A.C. 514.
[18] Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 C.L.R. 544.
[19] Tang Man Sit v Capacious Investments [1996] A.C. 514 at 521.
[20] Ibid.; see also Island Records Ltd v Tring International Plc [1995] 3 All ER 444.
[21] Ibid. (Tring).
[22] Artistic Builders Pty Ltd v Elliot & Tuthill (Mortgages) Pty Ltd [2002] N.S.W.S.C. 16 at [159].
[23] Dr Martens Australia Pty Ltd v Bata Shoe Co. of Australia Pty Ltd (1997) 75 F.C.R. 230 at [7]-[10].
[24] AB Vol 2 T180.15-T180.22; AB Vol 6 T998.23-T998.29.
[25] AB Vol. 1 pp.A0121-A0122.
[26] See line 23, p.1080 of the transcript (trial).
[27] United Australia Ltd v Barclays Bank Ltd [1941] A.C. 1 at 30.
[28] Tang Man Sit v Capacious Investments [1996] A.C. 514 at 198.
[29] Nocton v Lord Ashburton [1914] A.C. 932 at 952; Re Dawson; Union Fidelity Trustee Co. Ltd v Perpetual Trustee Co. Ltd [1966] 2 N.S.W.L.R. 211; Hill v Rose [1990] VicRp 13; [1990] V.R. 129 at 143-4; Target Holdings Ltd v Redferns [1995] UKHL 10; [1996] 1 A.C. 421 at 436.
[30] Canson Enterprises Ltd v Boughton & Co. (1991) 85 D.L.R. (4th) 129.
[31] Guerin v The Queen (1984) 13 D.L.R. (4th) 321.
[32] Ibid. This principle is appropriately illustrated in the case Re Dawson; Union Fidelity Trustee Co. Ltd v Perpetual Trustee Co. Ltd [1966] 2 N.S.W.L.R. 211, where the compensation payable by a trustee whose breach of duty resulted in the loss of trust assets was calculated by reference to the (higher) value of the trust assets at the date of restoration and not at the date of loss.
[33] Canson Enterprises Ltd v Boughton & Co. (1991) 85 D.L.R. (4th) 129 at 163.
[34] See O'Halloran v R T Thomas & Family Pty Ltd [1998] NSWSC 596; (1998) 45 N.S.W.L.R. 262 at 273, per Spigelman C.J.; Youyang Pty Ltd v Minter Ellison [2001] N.S.W.C.A. 198 at [77]; Biala Pty Ltd v Mallina Holdings Ltd (No 2) (1993) 13 W.A.R. 11.
[35] [1995] UKHL 10; [1996] 1 A.C. 421.
[36] Ibid. at 439. See also Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15; (2003) 212 C.L.R. 484 at [45]- [50] per Gleeson C.J, McHugh, Gummow, Kirby and Hayne JJ.
[37] O'Halloran v RT Thomas & Family Pty Ltd [1998] 45 N.S.W.L.R .262, at 272; Hill v Rose [1990]
[38] Charles Lo Presti Pty Ltd v Karabalios [2000] N.S.W.S.C. 395 at [60], per Austin J.
[39] Ibid. at [66].
[40] Maguire v Makaronis [1997] HCA 23; (1998) 188 C.L.R. 449 at 492-493; Kirby J explicating the principle that "once a breach of fiduciary duty is shown, the inquiry is not a simple one as to what caused subsequent losses", as enunciated by Lord Thankerton in Brickenden v London Loan & Savings Co. [1934] 3 D.L.R. 465 and Street J. in Re Dawson Union Fidelity Trustees v Perpetual Trustee Co. Ltd [1966] 2 N.S.W.L.R. 211.
[41] Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 C.L.R. 544 at 559.
[42] See page 8 of the Amended Notice of Appeal.
[43] Figure accepted by the trial judge and both parties.
[44] Figure accepted by the trial judge and both parties.
[45] See United Dominion Corporations Ltd. v. Brian Pty. Ltd. [1985] HCA 49; (1985) 157 C.L.R. 1 at 11 to 13 per Mason, Brennan and Deane, JJ. and at 16 per Dawson, J. See also the other cases referred to by the learned trial judge at [93] and [94].
G M & AM Pearce & Co Pty Ltd
Australian Tallow Producers & Ors [2005] VSCA 113