Heap, John & Anor v Olliver, Brian & Anor [1995] FCA 1085

C A T C H W O R D S SOLICITOR AND CLIENT - whether solicitor client relationship existed in respect of certain transactions - whether solicitor vicariously liable for acts of employee solicitor - whether breach of contractual duty of care - whether breach of fiduciary duty - whether duty of care - whether misleading and deceptive conduct. PARTNERSHIP - profit sharing arrangement made between solicitor and employee - profit share in respect of real estate development schemes conducted by employee during office hours - whether business in common with a view to profit. Trade Practices Act 1974 (Cth) - s.52 Fair Trading Act 1987 (NSW) Badeley v Consolidated Bank (1888) 38 Ch D 238 Hawkins v Clayton (1988) 164 CLR 539 JOHN HEAP and J S HEAP CONSTRUCTIONS PTY LIMITED v BRIAN OLLIVER and MICHAEL NOYCE No NG 823 of 1991 Davies J. Sydney 12 December 1995

IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No G 823 of 1991 ) GENERAL DIVISION ) BETWEEN: JOHN HEAP First Applicant JS HEAP CONSTRUCTIONS PTY LIMITED Second Applicant BRIAN OLLIVER Respondent/Cross-Claimant MICHAEL NOYCE Cross-Respondent Coram: Davies J. Date: 12 December 1995 Place: Sydney MINUTES OF ORDER THE COURT ORDERS THAT: Counsel bring in short minutes of the orders which they propose. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No G 823 of 1991 ) GENERAL DIVISION ) BETWEEN: JOHN HEAP First Applicant JS HEAP CONSTRUCTIONS PTY LIMITED Second Applicant BRIAN OLLIVER Respondent/Cross-Claimant MICHAEL NOYCE Cross-Respondent Coram: Davies J. Date: 12 December 1995 Place: Sydney REASONS FOR JUDGMENT John Heap and J S Heap Constructions Pty Limited ("Heap Constructions"), of which Mr Heap is a director, seek damages from Mr Brian Olliver, the principal of Noyce Olliver, solicitors. The claim concerns four real estate projects in which Mr Heap and Heap Constructions became involved and the claim raises allegations of negligence, breach of fiduciary duty, breach of or involvement in a breach of s.42 of the Fair Trading Act 1987 (NSW) and breach of contractual obligations. In respect of two of the matters, it is said that Mr Olliver is personally responsible. In respect of the other two matters, it is said that Mr Olliver is liable both as the employer of Mr Michael Noyce and as a partner of Mr Noyce in real estate development. Mr Noyce is not a respondent to the proceedings but has been joined by Mr Olliver as a cross-respondent. Mr Heap Before turning to the relevant transactions, I should say something about the dramatis personae. For many years prior to 1988, Mr Heap had been a successful businessman and Heap Constructions had been a successful builder and developer. By 1988, Mr Heap had reduced his activity in business, presumably because of his age, but he and Heap Constructions had substantial funds which were available for investment. This was a fact known to Mr Noyce and presumably to other persons concerned with the Blue Dolphin Group of Companies which I shall later mention. Mr Heap's perspicacity in active business did not translate to the lending of money to others, at least from late 1988 onwards. Mr Heap was gullible and, within a short time, had lost a great deal of money. One of the witnesses, Mr P.J. Caldwell, a partner in Michell Sillar, solicitors, said in evidence of Mr Heap:- "This was my second dealing with John Heap. I had met him a year or so earlier when he was involved in a property development at West Pennant Hills. Brian Olliver was acting in his capacity as a Director of Marsalin Pty Ltd at this time and I was acting for another of the developers. At all times he struck me as an astute businessman who is experienced in property purchases and sales and the financing of property developments."