Brooker v Friend & Brooker & Anor [2006] NSWCA 385

New South Wales Court of Appeal

CITATION: Brooker v Friend & Brooker & Anor [2006] NSWCA 385 This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 13 March 2006

JUDGMENT DATE: 20 December 2006

JUDGMENT OF: Mason P at 1; McColl JA at 60; Basten JA at 164

DECISION: Appeal allowed; see para [58]

CATCHWORDS: CORPORATIONS - effect of incorporation on liability of parties in quasi–partnership - company's activities financed in part by funds raised by personal borrowings from family and friends by 2 directors and shareholders on-lent to company - whether agreement to bear burden of personal borrowings equally - nature of relationship between parties - whether evidence established fiduciary relationship.CONTRACT - ongoing relationship - necessary to look at whole relationship to determine whether contract in existence not only at what was said and done when relationship first formed.PARTNERSHIP - whether manifestation of mutual assent sufficient to prove a partnership agreement pursuant to which parties undertook to assume personal, and equal, responsibility for borrowings from family and friends - whether partnership displaced by incorporation of company.QUASI–PARTNERSHIP - mutual trust and confidence manifest from outset of business relationship - whether fiduciary relationship between parties exposing them to an obligation to account to each other in relation to personal borrowings on-lent to company - nature of the subject matter over which obligation extends EQUITY - fiduciary relationship - fiduciary relationship between parties arising from mutual trust and confidence reposed in each other from the outset of business relationship – determined by reference to course of parties' conduct and inferences drawn from that conduct - can exist despite fact parties are in a corporate relationship - can exist between parties who have not reached, and who may never reach, agreement upon the consensual terms which are to govern the arrangements between them.CONTRIBUTION - right of contribution - rests on matters of substance not form - absence of contractual arrangement not controlling - common interest and common burden - shared decision-making touching administration of loan and application of loan proceeds - whether right of contribution where creditor not threatening to enforce debt - whether relief should be refused on discretionary grounds.DELAY – notwithstanding lapse of time possible to grant equitable relief on just terms - respondent on notice claim not abandoned. (D)