Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 236 ALR 209

Facts

Say-Dee was owned by Sadie and Dalida, who had no real estate experience. Farah was owned by Mr Elias who did have experience.
They entered into a joint venture to develop a house at Number 11, Burwood.
By the agreement, Say-Dee was responsible for finances while Farah did the sale, approvals etc
Profit was to be distributed equally between the two.
The approval was rejected for being too narrow so Mr Elias acquired the two adjoining properties, 13 and 15.
It was common ground there were fiduciary duties owed to Say-Dee and so they sued saying that this was a breach because Mr Elias never told them about the problems with development.
The Court accepted that Mr Elias had actually told Say-Dee and invited them to purchase but they declined for financial reasons.

Held

Mr Elias was permitted to purchase the other properties even though he had a fiduciary duty regarding property no. 11.
His duty of disclosure was upheld because he told them about the council and that they could buy properties 13 and 15 with him also.
Had he not told them, that would have been a breach, because here would have been no informed consent.
The High Court of Australia rejected the proposition that it was held on constructive trust for Say Dee – there was no reason that they could not pursue the development themselves.

Quotes

Opportunities were “not open to Farah to exploit, consistently with its fiduciary duty, unless Say-Dee gave its informed consent to a contrary course.”

(Gleeson CJ, Gummow, Callinan Heydon and Crennan JJ at page 137 [103])