Hadid v Lenfest Communications Inc [1999] FCA 1798

FEDERAL COURT OF AUSTRALIA

Hadid v Lenfest Communications Inc [1999] FCA 1798 CONTRACTS – commercial joint venture – alleged contract imposing on a joint venturer obligation to seek investors – whether contract existed – contract establishing joint venture – terms – express terms – whether obligation of a venturerto seek investors an express term of contract – implied terms – alleged implied terms of a fiduciary nature – whether terms to be implied –alleged contract between underwriter of fund raising in relation to venture and a venturer – alleged term that underwriter would provide financial advice to the venturer – whether oral contract existed – whether contract to be implied from conduct – whether underwriter agreed to act as financial adviser to participants in venture – derivative liability – consequences of findings for allegations of procurement or inducement by other respondents of alleged breaches of contract by certain respondents EQUITY – fiduciary relationships – alleged fiduciary duties arising out of terms of commercial written contract – parties to contract participants in commercial venture – relevance of events and actions succeeding formation of contract – whether fiduciary relationship contended for the fiduciary relationship pleaded – whether, assuming existence of obligation of party to seek investors, the alleged fiduciary duties arose – whether circumstances of venture gave rise to relationship analogous to partnership – fiduciary relationships – alleged fiduciary duties, including duty of disclosure, owed to venturer by underwriter of fund raising in relation to venture – whether fiduciary duties arose – circumstances of provision by venturer of information to underwriter – interests pursued by underwriter – whether underwriter acted as financial adviser to the applicant venturer or the participants in the venture together – whether underwriter a participant in the venture – derivative liability – consequences of findings for allegations of participation of other respondents in breach of fiduciary duty by each respondent – whether, assuming existence of alleged fiduciary duties, respondent involved in transaction complained of, but not a participant in venture, participated in breach of fiduciary duty NEGLIGENCE – duty of care – whether duty of care and skill, in relation to the seeking of investors for the purpose of fund raising relating to commercial venture, owed by one venturer to another, arose from terms, as found, of contract establishing venture and their performance – duty of care – whether duty of care, including duty to provide full and frank advice, owed to a venturer, or to participants in venture together, by underwriter of fund raising in relation to venture, arose from relationship of underwriter and venturer or participants in venture TRADE PRACTICES – conduct that is misleading or deceptive – representations allegedly made expressly by one venturer to another regarding present and future dealings in relation to the subject matters of the venture – whether representations made – whether, in relation to certain of the representations, assuming the representations were made, applicant suffered loss as a result – alleged failure, on the part of all respondents, before or during course of a negotiation between venturers, to disclose to a venturer matters arising out of certain discussions of which the venturer was not aware and which allegedly were relevant to negotiation – whether misleading or deceptive – liability of venturer – whether allegedly misled venturer had a reasonable expectation that such matters would be disclosed – effect, in context of relationship and negotiations between venturers, of statements made by allegedly misleading venturer – liability of mediator of negotiation, who was also a representative of future underwriter of fundraising in relation to venture – effect of disclosure of interests and knowledge by mediator – whether duty to disclose the matters – whether allegedly misled venturer had a reasonable expectation that mediator would disclose such matters – pleadings – whether case against mediator and underwriter available on pleadings – whether case relating to certain conduct of venturer available on pleadings – whether conduct pleaded as misleading or deceptive alleged to be conduct in trade or commerce and conduct relied upon by applicant – derivative liability – whether each respondent liable, on the basis of a relationship of agency, for any deceit or misrepresentation of any other respondent – consequences of findings for allegations of involvement in misleading and deceptive conduct – cross-claim – conduct that is misleading or deceptive – alleged representation by applicant venturer as to expected lack of competition with venture and as to commitment of underwriter – whether representation made DECEIT – availability of action where alleged misleading or deceptive conduct not made out CONSPIRACY TO CHEAT AND DEFRAUD – alleged agreement by respondents that certain matters would be concealed from applicant – whether agreement existed – whether matters occurring subsequently to alleged agreement were steps agreed, on the occasion of alleged agreement, to be taken – whether, in the absence of independent legal duty to disclose, failure to disclose matters dishonest CORPORATIONS – inducement to deal in securities – whether misleading or deceptive statement knowingly made – whether dishonest concealment of matters – misleading or deceptive conduct in dealing with securities – availability of action where alleged misleading or deceptive conduct under Trade Practices Act 1974 (Cth) s 52 not made out and alleged contractual and fiduciary duties not established – alleged "securities recommendation", made by representative of underwriter of fund raising in relation to venture during his conduct as mediator of negotiation between participants in venture, contravening Corporations Law s 849 and s 851 – whether recommendation made – adequacy of disclosure – whether respondent venturer or a party ultimately involved in transaction the subject of the negotiation but not participant in venture "associate" of underwriter – extent of particulars of matters required to be disclosed – whether applicant venturer suffered loss or damage as a result of alleged recommendation EVIDENCE – credit – matters reflecting on credit of certain witnesses – whether certain witnesses involved in "collaborative concoction" of evidence CONTRACTS – defences – releases from claims, demands or causes of action – effect of written releases from claims – relevance of Trade Practices Act 1974 (Cth) s 87 – alleged oral agreement by applicant not to take legal action against underwriter or its representative – whether agreement existed – availability of relief under Trade Practices Act s 87 in relation to later release of liability EQUITY – defences – acquiescence – availability of defence in answer to claim for equitable compensation for breach of equitable duty – requirements of practical justice in relation to alleged acquiescence – estoppel – availability of defence where alleged oral agreement not to sue not established PRACTICE AND PROCEDURE – defences – non-joinder of parties – whether proceeding improperly constituted DAMAGES – loss of opportunity to deal with property in ways other than property actually dealt with – extent of alleged loss – loss of opportunity to negotiate more favourable terms in relation to transaction actually entered into – whether opportunity existed – whether damages case put to witnesses for respondents WORDS AND PHRASES – "conduct that is misleading or deceptive" – "joint venture" – "securities adviser" – "securities recommendation" – "particulars" Trade Practices Act 1974 (Cth) ss 50, 52, 75B, 82, 87 Broadcasting Services Act 1992 (Cth) ss 18, 93, 96, 97, 98, 98A, Pt 7 Div 3 Corporations Law ss 9, 15, 94, 471B, 849, 851, 852, 995, 1000 Fair Trading Act 1987 (NSW) ss 42, 61, 68, 72 Law Reform (Miscellaneous Provisions) Act 1946 (NSW) s 5 Federal Court Rules O 6 r 7 Browne v Dunn (1894) 6 R 67 applied Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1 at 23 applied Jones v Dunkel (1959) 101 CLR 298 at 308 applied Hospital Products Ltd v United States Surgical Corporation (1985) 156 CLR 41 at 66 applied; at 96, 97 referred to BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20 cited Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 cited United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 distinguished Phipps v Boardman [1967] 2 AC 46 cited Tate v Williamson (1866) LR 2 Ch App 55 cited Breen v Williams (1996) 186 CLR 71 cited Chan v Zacharia (1984) 154 CLR 178 cited Briginshaw v Briginshaw (1938) 60 CLR 336 at 361, 362 applied Barnes v Addy (1874) LR 9 Ch App 244 cited Ahern v The Queen (1988) 165 CLR 87 discussed Tripodi v The Queen (1961) 104 CLR 1 at 6, 7 applied The Koursk [1924] P 140 referred to Kimberley NZI Finance Ltd v Torero Pty Ltd (1989) ATPR (Digest) ¶46‑054 at 53,195 applied Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 31, 32 applied Brunninghausen v Glavanics (1999) 46 NSWLR 538 discussed Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458 discussed Poseidon Ltd v Adelaide Petroleum NL (1992) ATPR ¶41‑164 referred to General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164 referred to Glavanics v Brunninghausen (1996) 19 ACSR 204 discussed Percival v Wright [1902] 2 Ch 421 cited Nescor Industries Group Pty Ltd v Miba Pty Ltd (1997) 150 ALR 633 cited Galland v Mineral Underwriters Ltd [1977] WAR 116 cited Trade Practices Commission v Allied Mills Industries Pty Ltd (1980) 48 FLR 102 cited Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405 cited Peters v R (1998) 192 CLR 493 cited Williams v Hursey (1959) 103 CLR 30 cited Lonrho plc v Fayed [1992] 1 AC 448 cited Womboin Pty Ltd v Reichelt (Supreme Court of New South Wales, Windeyer J, 25 August 1995 unreported) cited Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 cited Gantry Acquisition Corp v Parker & Parsley Petroleum Australia Pty Ltd (1994) 51 FCR 554 cited Lindsay Petroleum Company v Hurd (1874) LR 5 PC 221 discussed Clegg v Edmondson (1857) 8 De GM & G 787 discussed Warman International Ltd v Dwyer (1995) 182 CLR 544 cited Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 distinguished Willis v The Commonwealth (1946) 73 CLR 105 distinguished Sellars v Poseidon Ltd (1994) 179 CLR 332 referred to ALBERT HADID v LENFEST COMMUNICATIONS INC AND GERRY LENFEST AND BAIN CAPITAL MARKETS LIMITED AND WAYNE BURT AND AUSTRALIS MEDIA LIMITED AND RODNEY PRICE N 36 OF 1995 LEHANE J 24 DECEMBER 1999 SYDNEY