Fitzwood Pty Ltd (ACN 005 180 163) v Unique Goal Pty Ltd (In Liq) (ACN 064 926 843) [2002] FCAFC 285

Fitzwood Pty Ltd (ACN 005 180 163) v Unique Goal Pty Ltd (In Liq) (ACN 064 926 843) [2002] FCAFC 285

The trustee (Unique Goal) breached trust and fiduciary duty in proceeding with the sale without the required consent and in conflict of interest, thus losing the right to indemnity from trust assets for resulting liabilities. The management agreement was properly construed to require deduction of non-cash expenses (depreciation, building allowance) when calculating the manager's fee, rectification and estoppel arguments failed, and no binding contract for payment of the management fee on an alternative basis was completed. The court declined to permit amendments to raise new claims as they were brought too late.

Parties
First Appellant / First Cross Respondent: Fitzwood Pty Ltd (ACN 005 180 163); Second Appellant / Second Cross Respondent: Mapeka Pty Ltd (ACN 005 037 088); Third Appellant / Third Cross Respondent: Mapwood Pty Ltd (ACN 090 880 318); First Respondent / Sixth Cross Respondent: Unique Goal Pty Ltd (In Liquidation) (ACN 064 926 843); Second Respondent / First Cross Appellant / First Cross Respondent: Briaroaks Pty Ltd (ACN 007 055 745); Third Respondent / Second Cross Appellant / Second Cross Respondent: Michael Drapac; Fourth Cross Respondent: Cemak Pty Ltd (ACN 060 432 902); Fifth Cross Respondent: Nejat Mackali; Seventh Cross Respondent: Price Brent (a firm); Eighth Cross Respondent: Coltmans Price Brent (a firm); Ninth Cross Respondent: Middletons Moore & Bevins (a firm)
Jurisdiction
Australia
Judgment Date
14 November 2002
Procedural Posture
Appeal / Judgment on Appeal From a Judge of the Federal Court of Australia
Outcome
Appeal by Fitzwood allowed in part, cross-appeal by Manager and Mr Drapac dismissed, primary judge's declaration of Trustee's indemnity entitlement set aside, otherwise orders generally affirmed.
Legal Topics
Trustee's Duty and Indemnity, Management Agreements in Trusts, Rectification, Estoppel, Interpretation of Contracts, Leave to Amend Pleadings, Breach of Contract, Fiduciary Duties
Trusts Contract Equity Practice and Procedure Trustee's Duty and Indemnity Management Agreements in Trusts Rectification Estoppel +4 more

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Parties

Fitzwood Pty Ltd (ACN 005 180 163)

First Appellant / First Cross Respondent

Mapeka Pty Ltd (ACN 005 037 088)

Second Appellant / Second Cross Respondent

Mapwood Pty Ltd (ACN 090 880 318)

Third Appellant / Third Cross Respondent

Unique Goal Pty Ltd (In Liquidation) (ACN 064 926 843)

First Respondent / Sixth Cross Respondent

Briaroaks Pty Ltd (ACN 007 055 745)

Second Respondent / First Cross Appellant / First Cross Respondent

Michael Drapac

Third Respondent / Second Cross Appellant / Second Cross Respondent

Cemak Pty Ltd (ACN 060 432 902)

Fourth Cross Respondent

Nejat Mackali

Fifth Cross Respondent

Price Brent (a firm)

Seventh Cross Respondent

Coltmans Price Brent (a firm)

Eighth Cross Respondent

Middletons Moore & Bevins (a firm)

Ninth Cross Respondent

Procedural Posture

Appeal / Judgment on Appeal From a Judge of the Federal Court of Australia

Legal Issues

  1. 1 Whether the trustee (Unique Goal) was entitled to indemnity from trust assets for commission and damages after entering into the sale in breach of an agreement not to deal without consent and possibly in breach of trust/fiduciary duties
  2. 2 Whether the management fee should be calculated with or without considering non-cash expenses (depreciation, building allowance) per management agreement, and whether rectification or estoppel arose
  3. 3 Whether there was a binding agreement or completed contract regarding payment of the management fee and unit sale agreement

Ratio Decidendi

The trustee (Unique Goal) breached trust and fiduciary duty in proceeding with the sale without the required consent and in conflict of interest, thus losing the right to indemnity from trust assets for resulting liabilities. The management agreement was properly construed to require deduction of non-cash expenses (depreciation, building allowance) when calculating the manager's fee, rectification and estoppel arguments failed, and no binding contract for payment of the management fee on an alternative basis was completed. The court declined to permit amendments to raise new claims as they were brought too late.

Court Disposition

Appeal by Fitzwood allowed in part, cross-appeal by Manager and Mr Drapac dismissed, primary judge's declaration of Trustee's indemnity entitlement set aside, otherwise orders generally affirmed.

Orders

  • Within seven days parties to file costs submissions as to variations to primary judge's order on costs.
  • Parties to prepare Short Minutes of Order setting out substantive and costs orders to be made as foreshadowed.