Reid v MacDonald [1907] HCA 45

Reid v MacDonald [1907] HCA 45

The High Court held that the shares received by Reid as consulting engineer to the Melbourne Ice Skating and Refrigerating Co. Ltd. did not belong in equity to MacDonald, because Reid acted with MacDonald’s knowledge and consent, in a role separate from his general employment. The remuneration in question was not a secret profit obtained in breach of duty, but was openly acquired from the company for services distinct from those owed as servant to MacDonald. The claim by MacDonald was accordingly rejected.

Parties
Appellant / Defendant: Henry Newman Reid; Respondent / Plaintiff: Charles Arthur MacDonald; Defendant Company (stakeholder): Melbourne Ice Skating and Refrigerating Co. Ltd.
Jurisdiction
Australia
Judgment Date
24 September 1907
Procedural Posture
Appeal / On Appeal From the Supreme Court of Victoria (madden C.j.), Judgment for Plaintiff; Appeal to High Court of Australia
Outcome
Appeal allowed; judgment for defendant (Reid).
Legal Topics
Constructive Trusts, Master and Servant / Employment, Fiduciary Duties, Remuneration and Secret Profits
Equity Employment Law Constructive Trusts Master and Servant / Employment Fiduciary Duties Remuneration and Secret Profits

Case Brief

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Parties

Henry Newman Reid

Appellant / Defendant

Charles Arthur MacDonald

Respondent / Plaintiff

Melbourne Ice Skating and Refrigerating Co. Ltd.

Defendant Company (stakeholder)

Procedural Posture

Appeal / On Appeal From the Supreme Court of Victoria (madden C.j.), Judgment for Plaintiff; Appeal to High Court of Australia

Legal Issues

  1. 1 Whether a servant who accepted remuneration from a third party during the course of his employment must hold such remuneration on trust for his employer.
  2. 2 Whether, with the employer's knowledge and consent, the servant is entitled to retain the remuneration received from the third party.
  3. 3 Whether the remuneration (2,000 shares) arose out of the servant's duties to his employer or was earned as remuneration for duties to the third party.

Ratio Decidendi

The High Court held that the shares received by Reid as consulting engineer to the Melbourne Ice Skating and Refrigerating Co. Ltd. did not belong in equity to MacDonald, because Reid acted with MacDonald’s knowledge and consent, in a role separate from his general employment. The remuneration in question was not a secret profit obtained in breach of duty, but was openly acquired from the company for services distinct from those owed as servant to MacDonald. The claim by MacDonald was accordingly rejected.

Court Disposition

Appeal allowed; judgment for defendant (Reid).

Orders

  • Judgment of Madden C.J. reversed; judgment for defendant Reid.
  • Respondent MacDonald to pay costs of the appeal.