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

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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])

Full Text

The full text is available here:

http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/2007/22.html


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