Maher v Millennium Markets Pty Ltd [2004] VSC 174

Maher v Millennium Markets Pty Ltd [2004] VSC 174 - VSC 2004 case summary — Zoe

[73]

"[39] The question of my receiving a fee was first raised by Herszberg, at about the time of a meeting at Denman Audio on or about 14 February. He volunteered to me the sum of $150,000 upon completion of the deal. [40] I advised Patricia and Justice of that offer. When I told them Justice quipped 'why doesn't he give it to us?' then Patricia said 'you should take it.' I said 'there may be problems with me accepting it. You wouldn't mind if I did?' Patricia said 'no get him to pay our legal costs as well.' On 17 February I negotiated with Herszberg for a substantial period trying to convince Herszberg to pay the legal costs and he eventually agreed to pay $35,000 of the costs being the amount in addition to the allowance allowed by the bank in its letter of 12 February 1999. He had been in a board room annexed to my office. During the same conference when the fee offer had become concrete I telephoned the Law Institute in Patricia and Justice's presence and in the presence of Herszberg on loud speaker. The person I spoke with at the Law Institute said that I could receive the fee as long as my clients had been informed of it and consented and given the opportunity to obtain independent legal advice. [41] I was conscious of the need to fully disclose the commission to Patricia and Justice and to obtain their formal consent and I told them I would require a written agreement. Accordingly a further agreement to record that Herszberg was to pay $150,000 to me was signed by Herszberg, Patricia, Justice, Dominus and myself on 1 March 1999. The agreement was drafted by Christopher Northrop of counsel at my request to ensure full disclosure and proper consent. I provided a copy of this agreement to Mr Moishe Gordon ('Gordon') on 2 March. A copy of my covering letter is at Court Book 750. [42] This Agreement was signed by Patricia, Justice and Dominus in my presence. I specifically discussed with them at the meeting on 1 March 1999 at which they signed the agreement, the fact that I was seeking their signature and formal agreement to my receiving the fee about which I had previously informed them. They said that it was of no concern to them as they were not paying the fee. I said to them words to the effect 'I need to disclose it and know that you are happy with it. You will need another lawyer to look at that.' She replied to me with words to the effect 'I have been doing business for fifty years. I don't need a solicitor to tell me what it means.' They then signed the document. At no time in this transaction did I act in any capacity for Herszberg. Herszberg was represented by both Richard Szental and Efron & Associates ('Efron'). I have never acted for Herszberg or his related companies before or since the transaction."

[112]

"In Maguire v Makaronis (at 466), it was stated that what constitutes a fully informed consent is a question of fact to be determined in all the circumstances of each case. The court said that there is no precise formula which will determine in all cases whether a fully informed consent has been given. Abbott Tout's submission on informed consent is straightforward. Clearly there was no express informed consent in the sense that Abbott Tout told Beach that there would be a potential conflict of interest in acting for it in the transactions while acting for other companies within the group and Beach consented to Abbott Tout so acting. However such fully informed consent is to be inferred from the undisputed facts. The three directors of Beach, Mr Fuller, Mr Cummings and Mr Main, were the directing minds and will of Beach. When they instructed Abbott Tout, on behalf of Beach, they did so with full knowledge of the circumstances that Abbott Tout were acting for the other companies in the transactions. They knew exactly what was going on and what Abbott Tout were asked to do. Reliance was placed on an analogous situation in Bristol & West Building Society v Mathew [1998] Ch 1. Millett LJ said (at 18-19): '... A fiduciary who acts for two principals with potentially conflicting interests without the informed consent of both is in breach of the obligation of undivided loyalty; he puts himself in a position where his duty to one principal may conflict with his duty to the other: see Clark Boyce v Mouat [1994] 1 AC 428 and the cases there cited. This is sometimes described as 'the double employment rule'. Breach of the rule automatically constitutes a breach of fiduciary duty. But this is not something of which the society can complain. It knew that the defendant was acting for the purchasers when it instructed him. Indeed, that was the very reason why it chose the defendant to act for it. The potential conflict was of the society's own making: see Finn, Fiduciary Obligations (at 254) and Kelly v Cooper [1993] AC 205. It was submitted on behalf of the society that this is irrelevant because the defendant misled the society. It did not know of the arrangements which the purchasers had made with their bank, and so could not be said to be 'fully informed' for the purpose of absolving the defendant from the operation of the double employment rule. The submission is misconceived. The society knew all the facts relevant to its choice of solicitor. Its decision to forward the cheque for the mortgage advance to the defendant and to instruct him to proceed was based on false information, but its earlier decision to employ the defendant despite the potentially conflicting interest of his other clients was a fully informed decision.' So too here. Beach, through its directors, knew that Abbott Tout were acting for other companies within the group on the various transactions. Indeed, they had quite deliberately given instructions on behalf of those other companies to Abbott Tout. If there was any conflict, it was of their own making and a decision which was made by them with knowledge of all the facts relevant to the choice of solicitor. It was a fully informed decision."

[180]

"The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate? Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress. In their dissenting advice in Barton v Armstrong [1973] 2 NSWLR 598; [1976] AC 104, Lord Wilberforce and Lord Simon of Glaisdale pointed out (at 634; 121): '... in life, including the life of commerce and finance, many acts are done under pressure, sometimes overwhelming pressure, so that one can say that the actor had no choice but to act. Absence of choice in this sense does not negate consent in law: for this the pressure must be one of a kind which the law does not regard as illegitimate. Thus, out of the various means by which consent may be obtained - advice, persuasion, influence, inducement, representation, commercial pressure - the law has come to select some which it will not accept as a reason for voluntary action: fraud, abuse of relation of confidence, undue influence, duress or coercion.' In Pao On v Lau Yiu Long [1979] UKPC 2; [1980] AC 614, the Judicial Committee accepted (at 635) that the observations of Lord Wilberforce and Lord Simon in Barton v Armstrong were consistent with the majority judgment in that case and represented the law relating to duress. It is unnecessary, however, for the victim to prove that the illegitimate pressure was the sole reason for him entering into the contract. It is sufficient that the illegitimate pressure was one of the reasons for the person entering into the agreement. Once the evidence establishes that the pressure exerted on the victim was illegitimate, the onus lies on the person applying the pressure to show that it made no contribution to the victim entering into the agreement: Barton v Armstrong (at 633; 120) per Lord Cross."[18]

[225]

"There is little doubt that the term 'Trash and Treasure Market' connotes something akin to the old fashioned 'jumble sale' or 'flea market'. This impression is, however, not sustainable when measured against the definition provisions of the Ordinance. In this regard, the Board adopts what was said by another Division in Caribbean Gardens Pty Ltd v City of Knox (Appeal No. X80/159C, 27 May 1983, unreported) where, at page 17, it was stated: 'Mr Black, QC maintained that one had to look at the planning document to determine the description of the operation. This certainly appears to be correct. If the planning document assigns a meaning to a term used in the Ordinance then that meaning attaches to such term even though it may be different from the manner in which the word or term might be understood in common parlance. The expression means what it is defined to mean and in the Ordinance it certainly does not refer to secondhand goods in any way. If the draftsman wished to limit the sale of goods to that class of merchandise it would have been simple enough to do so by definition. The definition of 'junk yard' in the Ordinance is a case in point. It cannot be said that the expression 'trash and treasure market' has acquired a generally accepted meaning and certainly has no precise meaning. It is simply a descriptive phrase to describe a new concept. As Mr Black submitted, the expression, being new, describes something which is still evolving and developing ...' Whatever deficiencies the Board might perceive in the present definition, it is obliged to give effect to the Planning Scheme and not to impose capricious interpretations of its own. As the matter presently stands, no limitation is placed on the range of goods which might be sold at a 'Trash and Treasure Market'. Indeed, observations at other facilities on Sundays revealed that many goods, which are not permitted to be sold under present Sunday trading restrictions, are indeed retailed at 'Trash and Treasure Markets'. The analysis provided by Mr Heap might well provide a worthy basis for a reappraisal of the place of markets within the retail hierarchy, a review which, in the Board's opinion, is overdue in the light of some obvious anomalies in the planning controls as they presently stand. The main anomaly is that, although a 'Market' and a 'Trash and Treasure Market', as presently defined, can each serve what amounts to substantially the same function, the former is a prohibited use under the provisions of the planning scheme while the latter is open to discretion. That comment notwithstanding, the Board is obliged to determine this matter in accordance with the controls as they presently exist and it can find no lawful justification, based on planning considerations, to place any limitation on the range of goods which might be sold at the facility."

[326]

"63. I spent much time on 15 and 16 March 1999 in discussions with Justice and Patricia, particularly Justice, about the question of the uses that would be permitted for the Market under the planning laws of the Whittlesea Shire Council. Justice principally, and also Patricia, were adamant in these discussions that they were certain that the current town planning permit would enable them to use the Market for factory retail outlets. The final changes to the definition 'Proposed Uses' in the agreement which became the 16 March agreement were made on the instructions of Justice and Patricia whereby the reference to shops was deleted but the reference to factory retailing outlets remained. At the meeting with Justice and Patricia on the night of 15 March 1999 and discussions on 16 March 1999 which led to this deletion to the definition of Proposed Uses, Justice said to me in the presence of Patricia that he was certain that the existing town planning permit would allow the use to be obtained to enable the operation of factory retailing outlets and that the other uses referred to in the definition could be met. 64. I said to Justice and Patricia at that time that I was not expert in respect of local planning issues, and I advised them that they needed to be sure about their views about the Proposed Uses and that it would be wise in the circumstances to obtain written advice of experienced counsel in the area as the achievement of the Proposed Uses would control the cancellation of the apartment contract, which was the security that Herszberg and Gordon were demanding to ensure that such uses could be achieved for the Market. Justice and Patricia both said to me in this meeting that they did not want me to obtain such expert advice from counsel as Justice had the expertise himself, and that the clauses in the 16 March 1999 agreement which required the involvement of Justice in the obtaining of the permit gave them the assurance that any permit would be properly applied for and that in their view the permit would be obtained. Because of these instructions by Justice and Patricia, I did not take the matter further, and in particular did not instruct counsel to give advice. Justice and Patricia in my presence both read the proposed terms of the definition of 'Proposed Uses' many times and Justice said to me that from his knowledge of the planning requirements of the Whittlesea Shire Council he had no doubt that the uses described in the definition would be achieved."

[361]

"117. I was always reluctant to lodge a caveat against the apartment, as I was fully aware of the consequences under the 16 March 1999 agreement. I spoke to Patricia about the consequences of lodging a caveat. Initially in these conversations, Patricia did not want to lodge a caveat as she said she did not want to take the consequences. She said that she would deal with Herszberg and Gordon and Herzog and that she believed she would have the apartment returned. I was also speaking to Patricia in this period about issuing litigation. She did not want to do that either. Prior to 2 September, Patricia said to me that she had had no luck in her dealings with Herszberg, Gordon and Herzog, that she now wanted to lodge a caveat against all the properties. I said to her that she had no caveatable interest in any of the properties other than the Bourke Street apartment. She said to me that she was not going to pay any monies for the Bourke Street apartment, and that she now wanted to lodge a caveat against the title to tie Herszberg and Gordon up in respect of any dealings with the property. She also said to me that she believed Herszberg and Gordon were acting dishonestly in that they were already trying to leave the Bundoora markets upon the basis that factory retailing outlets were allowed by their current permit. 118. On 2 September I arranged for a caveat to be lodged at the Titles Office over the apartment. The named caveator was my firm. The interest claimed was an interest as chargee, pursuant to the 16 March agreement. 119. I was only prepared to lodge this caveat after I was satisfied by reason of the conversations referred to in paragraph 117 above that Patricia and Justice were aware that the effect of lodging a caveat over the apartment would be to cancel the option to purchase the apartment. I was certain from my discussions with Justice and Patricia from July 1999 onwards that so far as Justice and Patricia were concerned they were not prepared to ever exercise the option to re-purchase the apartment by paying any sum of money as in their view the Proposed Uses were met and that they expressed the clear view to me that Herszberg and Gordon were in breach of contract by not making the application for the permit. I spoke in these conversations to Justice and Patricia about the effect of the caveat upon the exercise of the right to re-purchase and they were both adamant in these discussions that they would not be paying one cent to Herszberg and Gordon for the return of the apartment. Patricia said to me in these conversations that she was talking to Herszberg directly about the matter and that she believed from those discussions that she would resolve the matter with the apartment being returned to her. 120. On 9 September 1999 I wrote a letter to Patricia confirming that arrangements had been made with regard to lodging a caveat over the apartment and that due to the lack of any caveatable interest in the Thomastown properties no caveat could be lodged over them. The letter was sent by facsimile. I note that it appears the facsimile was in fact sent on 15 September. My letter was written in response to Patricia's facsimile to me dated 28 August 1999, ... 121. Following the receipt of requisitions on the caveat from the Land Titles Office on 27 September I requested the caveator be amended to Eighty-Sixth Eternity in lieu of my firm. The caveat (No. W265550E) was registered on the title to the apartment on 18 November 1999."

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Judgment (424 paragraphs)

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Cases Cited (16)