Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) (No 2) [2024] NSWCA 232

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) (No 2) [2024] NSWCA 232 Hearing dates: 24-26 July 2024 Date of orders: 30 September 2024 Decision date: 30 September 2024 Before: Kirk JA at [1]; Stern JA at [3]; Basten AJA at [186]. Decision: (1) Appeal allowed. (2) Set aside order 3 of the orders made by the primary judge on 5 December 2023. (3) Set aside orders 3 and 4 of the orders made by the primary judge on 31 January 2024. (4) The respondent is to pay the appellant's costs of the appeal and of the proceedings at first instance. Catchwords: CONTRACTS – solicitor client retainer – construction of retainer– where the appellant acted for the respondent in various capacities – where the appellant acted for the lender in respect of a loan to the respondent – where the appellant communicated that it would not act for the respondent on a previous transaction involving similar parties – where the transaction contemplated the respondent receiving independent legal advice – where the respondent received independent legal advice – whether primary judge erred in finding that the appellant was retained to act for the respondent in respect of a loan transaction EQUITY – fiduciary duties – breach – whether the primary judge erred in finding that the appellant owed a fiduciary duty to the respondent in respect of entering the loan transaction – whether the primary judge erred in finding that the appellant was relevantly in a position of conflict of interest EQUITY – fiduciary duties – causation – whether the primary judge erred in assessing causation by reference to what would have happened if informed consent was obtained – whether the primary judge erred in finding that the breach of fiduciary duty caused the respondent to enter the loan transaction EQUITY – fiduciary duties – informed consent – whether the primary judge erred in finding that the appellant required the consent of both directors to establish informed consent to it acting for the lender PROCEDURAL FAIRNESS – whether the primary judge erred by determining issues on a basis that was neither pleaded nor run at trial – whether there was any practical injustice arising from the primary judge's findings PROPORTIONATE LIABILITY – apportionable claims – whether s 34(1) of the Civil Liability Act 2002 (NSW) requires a failure to take reasonable care to be an element of the cause of action Legislation Cited: Civil Liability Act 2002 (NSW), ss 3, 3A, 3B, Pt 1A, ss 5, 5A, 5D, 5Q, Div 8, Pt 4, ss 34, 34A, 35 Fair Trading Act 1987 (NSW), s 42 Trade Practices Act 1974 (Cth), s 52 Cases Cited: Aidzan Pty Ltd (in liq) v K. and A. Laird (N.S.W.) Pty Ltd (in liq) [2024] NSWCA 185 Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151; [2023] NSWCA 294 Australian Executor Trustees (SA) v Kerr [2021] NSWCA 5 Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408 Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384; [1929] HCA 24 Blackmagic Design Pty Ltd v Overliese (2011) 191 FCR 1; [2011] FCAFC 24 Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49 Break Fast Investments Pty Ltd v Rigby Cooke Lawyers [2022] VSCA 118 Breen v Williams (1996) 186 CLR 71; [1996] HCA 57 Brickenden v London Loan & Savings Co [1934] 3 DLR 465 Cassegrain v Cassegrain [2016] NSWCA 71 City Garden Australia Pty Ltd (in administration) as trustee for the Ming Tian City Garden Unit Trust v Dai [2023] NSWSC 1498 City Garden Australia Pty Ltd (in administration) as trustee for the Ming Tian City Garden Unit Trust v Dai (No 2) [2024] NSWSC 22 Clark Boyce v Mouat [1994] 1 AC 428 Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd (2007) 164 FCR 450; [2007] FCA 1216 David v David [2009] NSWCA 8 Electricity Networks Corporation v Herridge Parties (2022) 276 CLR 271; [2022] HCA 37 Farrington v Rowe McBride & Partners [1985] NZLR 83 Ferguson v John Dawson & Partners (Contractors) Ltd [1976] 1 WLR 1213 Gilbert v Shanahan [1998] 3 NZLR 528 Godfrey Spowers (Victoria) Pty Ltd v Lincoln Scott Australia Pty Ltd (2008) 21 VR 84; [2008] VSCA 208 Herridge Parties v Electricity Networks Corp t/as Western Power (2021) 59 WAR 69; [2021] WASCA 111 Johnston v Brightstar Holding Company Pty Ltd [2014] NSWCA 15 Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23 Mantonella P/L v Thompson [2009] QCA 80 Mao v Bao [2023] NSWCA 278 Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384 Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 Monaghan Surveyors Pty Ltd v Stratford Glen-Avon Pty Ltd [2012] NSWCA 94 O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Perpetual Trustee Company Ltd v CTC Group Pty Ltd (No 2) [2013] NSWCA 58 Perpetual Trustee Company Ltd v Milanex Pty Ltd (in liq) [2011] NSWCA 367 Prince Jefri Bolkiah v KPMG (a Firm) [1999] 2 WLR 215 Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36 Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211 Reinhold v NSW Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187 Richtoll Pty Ltd v WW Lawyers (in liq) Pty Ltd [2016] NSWSC 438 Shrimp v Landmark Operations Ltd (2007) 163 FCR 510; [2007] FCA 1468 Stead v State Government Insurance Commission (1986) 161 CLR 141 Stephen James Rigg v Paul Sheridan & Ors [2008] NSWCA 79 Tanah Merah Vic Pty Ltd v Owners Corp No 1 of PS613436 [2021] VSCA 72 White v Illawarra Mutual Building Society Ltd [2002] NSWCA 164 Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48 Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 Zakka v Elias [2013] NSWCA 119 Texts Cited: A Scalia and B Garner, Reading Law: The Interpretation of Legal Texts (2012, Thomson/West) B McDonald and JW Carter, "The Lottery of Contractual Risk Allocation and Proportionate Liability" (2009) 26 Journal of Contract Law 1 J Edelman, McGregor on Damages (21st ed, 2021, Sweet & Maxwell) JD Heydon, Heydon on Contract (2019, Thomson Reuters) JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane's Equity Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths Australia) JLR Davis, Inquiry into the Law of Joint and Several Liability: Report of Stage 2 (Australia, Attorney-General's Department, January 1995) Category: Principal judgment Parties: Gerrard Toltz Pty Ltd (Appellant) City Garden Australia Pty Ltd (in liq) as trustee for Ming Tian City Garden Unit Trust (Respondent) Representation: Counsel: R Dick SC and M Hall (Appellant) P Clarke and F Lim (Respondent)