Chickabo Pty Ltd & Ors v Zphere Pty Ltd

[2019] VSC 73

Supreme Court of Victoria

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For Australian Law.

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Interrogate

Catchwords

1. Equity
2. › Fiduciary duties
3. › Partnerships
4. › Whether individual Principal of partnership of corporations owed fiduciary duties to partners
5. › Obligations of trust, confidence, loyalty and fidelity arising from relationship and partnership deed
6. › Scope of fiduciary duty determined by character of venture, express agreement and course of dealing
1. Equity
2. › Fiduciary duties
3. › Duty to avoid conflict of duty and interest
4. › Duty not to derive unauthorised profit from fiduciary position
5. › Partner investing in shares of partnership client without disclosure or consent
6. › Whether investment opportunity fell within scope of partnership business
7. › Whether additional payment from client constituted unauthorised profit
1. Equity
2. › Accessorial liability
3. › Knowing receipt
4. › First limb of Barnes v Addy
5. › Corporate vehicles of fiduciary receiving property in breach of fiduciary duty
6. › Knowledge of directing mind and will imputed to corporate recipients
1. Equity
2. › Accessorial liability
3. › Knowingly inducing or procuring breach of fiduciary duty
4. › Whether distinct from knowing assistance under second limb of Barnes v Addy
5. › Whether dishonest and fraudulent design required

Quick Take

An individual who serves as a Principal of a partnership of corporations may owe fiduciary duties to the partnership and its partners arising from the relationship of mutual trust, confidence and loyalty, even if the individual is not formally a Partner. Where a partnership deed defines 'Partners' to include individuals 'where relevant to actions required from individuals' and imposes personal obligations on those individuals, the individuals are Partners and personally bound by the deed. A partner who obtains an investment opportunity through a partnership client relationship must disclose the opportunity and seek approval; confidentiality obligations to the client do not excuse the failure to disclose. Benefits received from a partnership client, even if characterised as gifts, constitute unauthorised profits where they arise from the fiduciary position.