- 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.
- 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.
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 )
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