Published 23 March 2018
Breach of fiduciary duty — misleading or deceptive conduct — chattels — leasehold — trusts — Fair Trading Act 1986. The plaintiffs were claiming damages for breach of fiduciary duty and/or misleading or deceptive conduct under s 9 of the Fair Trading Act, against the defendants, who had acted as their lawyers over an 11 year period. The plaintiffs argued that the defendants had failed to properly advise and/or disclose that an agreement for the sale of a freehold property, where the plaintiffs were the vendors, included chattels for a 10 unit motel complex to be built on the site. More than merely an agreement for sale and purchase of the land, the agreement also encompassed the development of the motel units, the motel fit-out and the subsequent lease of the motel business by the plaintiffs as tenants. The plaintiffs claimed: the effect of the sale under the agreement was that the sale included the motel chattels; they should have retained the chattels under a registered lease by the purchaser; and that without the chattels their ownership of the leasehold interest was valueless. The four issues for the Court were: 1. Were the motel chattels sold to the landlord/purchaser? 2. What was the defendants advice to the plaintiffs? 3. Have the plaintiffs proved, on the balance of probabilities, a breach by the defendants of their fiduciary obligations? 4. What if any were the plaintiffs losses? Based on business commonsense, usual practice and the subsequent mutual conduct of the parties, the Court found that it was clear the motel chattels were not sold under the contract. The Court further found that the defendants work in regards to the poorly drafted contract and advice, or non-advice, was sloppy and careless but on the balance of probabilities the plaintiffs failed to prove a breach of a fiduciary duty and/or misleading or deceptive conduct. Both claims for the breach of fiduciary duty and breach of the Fair Trading Act were dismissed. After considering the issue of loss the court concluded that had there been any breach, the defendants would have shown that loss would have occurred anyway, without any liability on the defendant's part. The plaintiff's claims were dismissed and judgment entered in favour of the defendant. Judgment Date: 10 October 2017
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