The issues concern the correctness of the finding of the majority in the Court of Appeal that there had not been a breach of fiduciary duty by the Respondent. In particular:
a) whether the scope of the Respondent’s fiduciary obligations extended to the Appellant’s business venture and whether the Respondent breached his fiduciary obligation by failing to continue negotiations and subsequently receiving an unauthorised profit from his position.
b) whether the majority was correct to award an account of profits rather than ordering a constructive trust over Phones R Us retail business.
c) Whether* the majority’s approach in rejecting the principle of equitable compensation was correct as the Respondent’s breach caused the Appellant’s …show more content…
The Appellant challenges the characterisation of the duties of a fiduciary determined by the majority. The Appellant submits that upon termination of the solicitor-client relationship the Respondent entered a factual fiduciary relationship by his agreement and undertaking to negotiate as a representative on behalf of the Appellant with Ring Go Pty Ltd (‘Ring Go’).
2. The scope of the Respondent’s fiduciary obligations encompassed the negotiations on the Appellant’s intended business ventures and facilitating the purchase of the Ring Go factory. Irrespective of the Appellant’s status as a Professor of Accounting, the nature of their relationship and the disparity of bargaining power indicate that she was in a position of vulnerability. As such, the Respondent had the power to affect the outcome of the Appellant’s business venture. …show more content…
The Respondent undertook to negotiate with Ring Go with respect to the separation of the factory from the retail division and facilitate the purchase of the factory. Streeter v Western Areas Exploration Pty Ltd (No 2) emphasised that an undertaking is a ‘critical feature’ of a fiduciary relationship. As such, the Appellant placed trust and confidence in the Respondent to negotiate in good faith and for proper purposes.
3. Accordingly, the Respondent was obligated to act exclusively and bona fide in the best interests of the Appellant and not withhold material information or obtain an unauthorised benefit by virtue of his position. The High Court in Youyang Pty Ltd v Minter Ellision Morris Fletcher highlighted that ‘the essence of a fiduciary relationship is that one party pledges itself to act in the best interests of the other’.
3. The Appellant submits that the scope of the Respondent’s fiduciary obligations therefore encompassed the negotiations and facilitation of the purchase of the Ring Go factory in accordance with the undertaking and conduct of the