Jones v Bouffier [1911] HCA 7;

Jones v Bouffier [1911] HCA 7; - HCA 1911 case summary — Zoe

[31]

On 8th May 1905 defendant wrote to the plaintiff M. Bouffier saying that he had learned from Shaw that the plaintiffs were impatient "in reference to the coal lease or sale." He then discussed the position, pointing out that "It will pay us far better to get a coal mine on our land than any other way of dealing with it," and giving reasons for that opinion. He added: "Now with regard to the company which I had got together, we have practically failed because though we had sufficient capital subscribed to do the development work we feared that if the coal trade continued as slack as at present we would run a serious risk of losing all we put into it, and without inviting more investors to put money into it, we were not sufficiently assured of success. However this has not interfered with my endeavours to have the land dealt with and I have to report the result so far. Our area together with Brown's and O'Brien's and a portion of the New-castle-Cessnock area, has been submitted to the chairman of the Hetton colliery and they are now considering the areas; they are having a report made I believe, but by whom I cannot say. It has also been mentioned to two South Coast men whose areas are worked out, and after the meeting of the next coal exchange in Sydney, will give me some sort of answer. Then again I have mentioned the area to a director of the Wickham and Bullock Co., but as you probably noticed this company may be wound up. But in case of their winding up we believe that we may form a company from some of the shareholders, but even if they do not wind up, they may be induced to reject the area then at (Qu. for the) present. The course which would suit us best however I think, would be to get a small colliery on our own and Brown's and O'Brien's area alone, for then our own areas would be worked constantly right on till they are worked out and I am now making every inquiry for a man who has worked out his area and if he will take on our area I can get him considerable financial backing."

[56]

On the 1st April I went to Singleton. On the morning of the 2nd April I went to Martin Bouffier's house. I said to him, Howard Smith or the Caledonian Coal Company are again inquiring about our land, are you inclined to sell? He said, yes I would still prefer to sell in one lot than to subdivide. I said the company have told me they will not deal for our property without O'Brien's. I said that means we must acquire O'Brien's if we wish to deal with them. Are you prepared to consider purchasing O'Brien's? He said, no, I won't have anything to do with purchasing, neither will Mrs. Bouffier. We want to sell. I said, very well then will you sell to me? And I will buy O'Brien's and try and make a deal with the company. He said yes, I will sell to you but I want my price. I said what is the lowest price. He said £30 per acre. I said the prices I understand the company is prepared to pay will not go that, if you can't bring it down to something like £25 I had better go back by the next train. After some consideration he said, well I won't come below £25. I said I have not seen O'Brien yet and it will depend on what price he asks. I said the margin is very small for me and I must ask you to cut it down as low as possible. I said if you sell to me there will be no commission to pay and I think you ought to bring it down at least £1 an acre. I expect on the price I have at present there is not more than a profit of about £200 for me. After some further discussion Martin Bouffier said provided Shaw will agree I'll accept £24 an acre. We were dealing for the Bouffier 160 acres.

Then we went to Shaw and saw Austin. Martin Bouffier said to him - I want to sell 160 acres to Jones and the price is £24 an acre for the lot. Austin said the reserve price for the subdivision sale had been fixed, and he didn't think the auction could be cancelled. I think after some discussion Shaw either came into the room or was referred to.

I said I would give £100 for the two lots 18 and 19. Austin said the sale would have to be subject to the Registrar's consent. Eventually Martin Bouffier said emphatically "I want to sell."

Looking at Exhibit D - I told Austin I had to purchase O'Brien's property, and I had not yet seen it, and that I was going to see O'Brien, and would require Bouffier's offer for a week. There was some discussion about it. Austin said to me, "you won't require much time after you return to Sydney to make up your mind." I said "very well, leave it till Wednesday next, i.e., the 4th April." Austin left the room and brought back Exhibit D. He read it and Martin Bouffier signed it. I took it.

[70]

That agreement, as already said, was subject to the approval of the Registrar of Probates, which was formally given on 28th May. As to the charge that it was obtained by the defendant's fraudulent concealment of the sale to the Caledonian Coal Co., it is sufficient to say that the word "concealment" is misleading, unless either there was a duty on defendant's part to disclose, or he took an active part in preventing the disclosure of material facts to the Registrar. The mere fact that defendant was a purchaser did not create any duty to disclose the re-sale, and the evidence entirely fails to show that he procured the concealment of that fact. At most, it amounts to a suggestion to Shaw that the fact was not material to be disclosed. The real truth is that the £4,800 conventionally assigned as between defendant and the company to the 160 acres, plus (apparently) the three-quarter acre which afforded access to the railway station, does not represent the value of the 160 acres per se, but the value of the 160 acres as increased by the inclusion of the 60 acres of O'Brien's land in the bargain. If, however, there were any dereliction of duty on the part of the defendant in this respect, other questions would arise. The order of the Registrar stands unimpeached, and I do not know of any principle on which a suit can be founded upon a suggested fraud upon the Court while the order stands. A suit of such a character, if it would lie at all, would be a very different case from that with which we are dealing. The land has been transferred to purchasers for value without notice, and the sale itself cannot be set aside. The relief, if any, to be given would be in the nature of damages to the beneficiaries in H. Bouffier's intestacy. It will be time enough to deal with such a suit when it is brought. But I should add that I do not see any evidence of the non-disclosure of any material facts. If it were necessary to express an opinion on the subject I should, as at present advised, find as a fact that the sale by the plaintiffs to the defendant was not made at an undervalue.

[82]

Now, to my mind, there was not then, any more than at any previous stage, any relation between the parties which imposed on one of them any more than on the other a fiduciary obligation. It would have been impossible for co-owners to stand in a position of clearer independence of each other than the Bouffiers, advised by their solicitor, and the defendant then stood. But if a fiduciary relationship did not subsist at that time, what is there to show that any such position was created afterwards? Let us look at the offer of 111 acres made by the plaintiffs on the 2nd December following, and the defendant's reply (in which, though willing to treat for 100 acres, he made it clear that he was relying for any such purchase on his ability to buy also 50 acres adjoining from O'Brien, and to lease the 150 acres thus acquired to the Howard Smith Company for mining). The parties are here bargaining, each as alert in his own interest as if they had been complete strangers, and it is absurd to say that the plaintiffs did not accept the position. So, again, as to the correspondence in January 1906, after that treaty with the Howard Smith Company had gone off. They were now in disagreement as to the expediency of a subdivision sale, and in the next month M. Bouffier's solicitor announces that he is instructed to offer the land for auction in lots. Shaw adds "we have carefully considered this matter for months, and from every point of view." The plaintiffs, advised by their solicitor, made up their minds in entire independence of Jones, and subsequent letters show this, if possible, more emphatically. Then we come to the transactions of the following April. On the 1st of that month Martin Bouffier, though at last ready to sell the 160 acres in a block, flatly refuses, on behalf of both plaintiffs, to join in buying any of O'Brien's land, without which Howard Smith & Co. or the Caledonian Coal Company, who, as Jones tells him, are again inquiring about the 160 acres, will not bargain. He says, he and Grace Bouffier will have nothing to do with purchasing, they want to sell. "Very well then," says the defendant, "will you sell to me, and I will buy O'Brien's land and make a deal with the company." Yes, he is willing to sell to Jones. At first he will not take less than £30 per acre. When told that the prices that it is understood the company is prepared to pay "will not go to that," he considers, and then says he will not go below £25. After further discussion he will accept £24 if Shaw will agree. This, be it remembered, with knowledge that Jones is contemplating a re-sale on his own account. Then they go to Shaw's office and the matter is discussed with him and his managing clerk, and the offer at £24 an acre is drawn up in the office and signed by the plaintiffs. The lots 18 and 19, three-quarters of an acre, were to be added for £100, and the option lasted to the 4th April.

[87]

Two main issues are involved in this appeal. First, whether the appellant is entitled to retain the remuneration allowed him by the respondents in pursuance of the agreement whereby he gave them information and assistance which enabled them to recover certain lands which otherwise would have been lost to them. Secondly, whether, having purchased from them a portion of the said lands under the circumstances disclosed in evidence, he is bound to account to them for the profits made by him on the re-sale of the portion together with other lands to the Caledonian Coal Company. As to the first issue I agree with the learned Judge in the Court below that the agreement was champertous, and therefore illegal. But I also agree with him that, for the reasons he has given, it was not open to the respondents, in the events that happened, to take advantage of the illegality, and that therefore the respondents claim to have the 25 per cent. of the value of the land recovered repaid to them must fail. As to the second issue there is no controversy as to the general principles of law which are applicable. The rights of the parties in the suit depend upon what is the right view to take of the facts, that is to say, of the great mass of evidence, oral and documentary, which was placed before the learned Judge. If the decision had turned upon the credibility of the parties or witnesses I should have been loth to disturb the finding of the learned Judge who had the advantage of hearing the parties and their witnesses give evidence. But the decision does not turn upon questions of personal credibility. The crucial facts are established by uncontradicted evidence, and supported by documents, the only matter for determination being what is the proper inference to be drawn from those facts and documents. In arriving at that determination the Court of first instance is in no better position than the Court of Appeal. After a full consideration of all the evidence I have come to the conclusion that the learned Judge of the Court below has not drawn the right inference in deciding that the appellant is liable to account to the respondents for his profits on the re-sale by him of the portion of land in question, and I am of opinion that as to that portion of the judgment the appeal must be allowed. I have had the advantage of reading the judgment of my learned brother the Chief Justice, which states very fully and completely the reasons which have led him to the same conclusion. Deeming it unnecessary to repeat what he has said, I do not think it necessary to do more than say that for the reasons he has given I entirely concur in holding that the appeal should be allowed, and the decree that he has proposed should be pronounced.

[93]

They determined to make a profit out of the land either by letting or selling it. Both Martin Bouffier and Jones at various times took steps with a view of selling the land as an entirety, and not of selling severally their respective shares. They from time to time communicated to each other and discussed the progress of negotiations that each carried on. Mrs. Bouffier left the active conduct of the matter so far as she was concerned to Martin and to Shaw. In the state of the title it is plain that the appellant had not even a legal interest of his own to deal with. It follows from all this that whatever sale or letting of the property was proposed to another by him must necessarily have been on the Bouffiers' behalf as well as his own, unless and until some express arrangement all round provided to the contrary. There was none before the conversation of 2nd April which eventuated in the agreement of 14th April 1906. Each of the several co-owners of a thing can only sell or authorize the sale of his own interest in the thing, but all the co-owners of a thing may combine and sell or authorize the sale of the whole thing: Per Lindley J. in Keay v. Fenwick[7]. And if a joint owner purports to sell the entirety, the purchaser cannot obtain specific performance even of the vendor's share; per the same Judge in Lumley v. Ravenscroft[8]. The appellant, therefore, in treating for the disposition of the whole property as an entirety, with the knowledge and approbation of the Bouffiers carried the matter far beyond mere co-ownership. He acted in contemplation of and preparatory to their being co-principals in the disposition; his acts being in fact according to the essence of his own postscript to the letter of 21st September 1904. This contemplation of being co-principals or joint vendors lasted down to 2nd April 1906, according to Jones' own evidence, and until the moment when Bouffier refused to purchase O'Brien's land. If Bouffier had consented to do that the whole transaction would have been on behalf of the three co-owners. See Robinson v. Gleadow[9].

[97]

Now, as I shall indicate presently, this case does not depend on whether Jones was the Bouffiers' "agent" in the strict sense or not. It does not even matter whether in fact he had or had not any antecedent permission or authority to act on their behalf. He did in fact interfere with their affairs and their property, as a person would who had some authority to do so; they, in confidence that he would thereby promote their common welfare, allowed him to place their property on the market, and test what it was worth. By that means he acquired information of a material nature with respect to the value of their property as a whole, which he would not have otherwise acquired. This is the potent fact in the case; it is, in my view, the determining element on this branch. All the other circumstances so strenuously urged by Mr. Mitchell as the strongmindedness of Martin Bouffier, his independent will, his frequent rejection of Jones' suggestions, his guidance by Shaw and experts at various times, the ordinary market value of the land and so on, become quite immaterial, in view of the central fact that Jones acquired in the manner described material information affecting the value of the property or what could be obtained for it, irrespective of ordinary values, that was unknown to Bouffier and those advising him when Jones bought from his co-owners. The right to information, and the right to reject advice are independent considerations and are not mutually exclusive: See Clark v. Clark[13]. Now why is the circumstance to which I have referred the controlling factor in this branch of the case? The appellant is clearly entitled to demand that, before being saddled with fiduciary liability, he shall be brought within what Lord Thurlow L.C. called in Fox v. Mackreth[14], "some settled definition of wrong recognized by this Court." The appellant's radical error, in my view, is in assuming that once agency in the strict sense is got rid of, and it is shown that Jones' advice and ideas were rejected, and Bouffier displayed an independent spirit, there is an end of the case. I might observe that, having regard to all the evidence, and particularly the appellant's postscript, Bouffier's evidence at fols. 1655 and 1737 with the qualifications at folio 1677, and Jones' letters of 5th January 1906, and 10th April 1906, and the learned Judge's findings, I should if necessary be prepared to hold there was agency in the true sense. But I do not wish to rest upon that, but to deal with this case upon facts that are either accepted by both sides or are uncontroverted. And so I emphasize the position that agency is unnecessary to the appellant's liability. Sir George Turner V.C. said in Billage v. Southee[15]: - "The jurisdiction is founded on the principle of correcting abuses of confidence, and I shall have no hesitation in saying it ought to be applied, whatever may be the nature of the confidence reposed, or the relation of the parties between whom it has subsisted." The "settled definition" of fiduciary wrong is therefore not so narrow as is contended. Fiduciary relation is nothing else than a confidential relation between the parties in which good faith demands of one of them some special duty towards the other, beyond what is required of complete strangers. The nature and extent of the duty depend upon the circumstances. Agency per se cannot be the test. Not every agent is fiduciary: Piddocke v. Burt[16]; even partners do not for all purposes act as fiduciaries: Ib., and Trevor v. Hutchins[17]. The rule of equity is broad and cannot be exhausted by particular instances such as formal trustee and beneficiary, principal and agent, and so on. These are only examples of the application of the principle. The principle itself is dwelt on In re Hallett's Estate[18], cited by Mr. Rich, and in other cases I have examined since the argument. In Edwards v. Meyrick[19], Vice-Chancellor Wigram stated and reasoned out the rule as applied to contracts between parties said to stand in a fiduciary relation. He said: "The rule of equity which subjects transactions between solicitor and client to other and stricter tests than those which apply to ordinary transactions, is not an isolated rule, but is a branch of a rule applicable to all transactions between man and man, in which the relation between the contracting parties is such as to destroy the equal footing on which such parties should stand." And then the learned Vice-Chancellor goes on to show that communication of knowledge may place the parties on an equality.

[105]

Then he induced the Bouffiers to place the land under offer to him. But did he do so with that candour which the law required? On his own showing he did not. He on the contrary actively created an erroneous impression. Not only did he omit to mention the actual price offered which was itself material, but he omitted to say that he had rejected that offer of £6,000 as being too little, and still demanded £30 an acre. But worse than all, his words necessarily led Bouffier to abate his required price of £30 an acre on the supposition that Jones intended to take the price the company was offering. Jones avowedly had no such intention, and had demanded more, and yet the supposition referred to was the basis upon which Bouffier was pressed to reduce the price. As soon, however, as he got the reduction he came to Sydney, and on the 4th April, wrote to the company: - "The best offer that I can and do make to sell these properties is £6,300," &c. That is not accepted, and so on the same day he writes to Bouffier that his attempt has failed, and the parties resume their old relative positions, Jones advising in that letter that the sub-divisional sale should proceed. The co-owners are again taking steps to dispose of the entirety. Then, according to the uncontradicted testimony of Howell, a few days before 11th April he sent for Jones, and asked him to put the land again under offer at the old price, that is, £30 an acre, and Jones agrees to do so with an added £50. Before he does so, however, he writes on the 9th (M3) to Bouffier asking for what he calls "extending your option," or, as he says in M5 "renew your offer." This meant necessarily taking up the old threads where they broke off, and continuing as though there had been no break. Bouffier accedes, plainly on the faith of the old story. The Caledonian Company accepts Jones' offer, and Jones then having secured the sale, without disclosing the least further information, closes with Bouffier. He says that he was clear of all obligation to disclose his knowledge gained in the past. But in the words of Lord Cottenham in Carter v. Palmer[25] his "disqualification must continue so long as the reasons upon which it is founded continue to operate." The learned Lord's succeeding observations apply in principle very much to the facts here, and show that, there being no disclosure of the knowledge he had confidentially obtained, his disqualification continued.

At a glance

Court

Decision date

Before

Source

Judgment (140 paragraphs)

Jones v Bouffier [1911] HCA 7; (1911) 12 CLR 579 (12 April 1911)

Parties

Legislation Cited (1)

Cases Cited (1)