Attached is a paper by Nicholas Ferrett KC, presented at the Bar Association of Queensland Annual Conference on 3 March 2023.

Class actions, or ‘representative proceedings’, have been a feature in the litigation landscape in Australia now for over 30 years and, notwithstanding Queensland is a relative newcomer in commencing its jurisdiction in the State courts, there is significant expertise in class action litigation at the Queensland Bar.  Class actions are large and complex matters that raise difficult questions around access to justice, procedural fairness, adequacy of compensation and litigation funding. This paper is designed to assist those unfamiliar with the jurisdiction; a tasting plate introducing some of the fundamental concepts and still-evolving issues.

The Supreme Court of Queensland practice direction 2017/2 Representative Proceedings can be found here and the new practice direction 2023/8 Class Actions List can be found here.

The attached paper was delivered at the Bar Association of Queensland Annual Conference on 3 March 2023.

In the recent decision in  R v SDI [2023] QCA 67 (18 April 2023) the QCA provided a concise summary of the law relating to overturning an unreasonable verdict.  Morrison JA said (and with whom Mullins P and Flanagan JA agreed) at [73] – [77]:

Ground 1 – unreasonable verdicts

[73] The legal principles applicable where the ground is that the verdict was unreasonable are well known. They were recently restated in Dansie v The Queen.[67] Dansie reaffirmed the approach set out in M v The Queen.[68]

[74] The Court reaffirmed the relevant task as being that laid down in M v The Queen:[69]

“[8] That understanding of the function to be performed by a court of criminal appeal in determining an appeal on the unreasonable verdict ground of a common form criminal appeal statute was settled by this Court in M. The reasoning in the joint judgment in that case establishes that “the question which the court must ask itself” when performing that function is “whether it thinks that upon the whole of the evidence it was open to the jury to be satisfied beyond reasonable doubt that the accused was guilty”, that question being “one of fact which the court must decide by making its own independent assessment of the evidence”.

[9] The joint judgment in M made clear that “in answering that question the court must not disregard or discount either the consideration that the jury is the body entrusted with the primary responsibility of determining guilt or innocence, or the consideration that the jury has had the benefit of having seen and heard the witnesses”. The joint judgment equally made clear how those considerations are to impact on the court’s independent assessment of the evidence. That was the point of the carefully crafted passage in which their Honours stated:

“It is only where a jury’s advantage in seeing and hearing the evidence is capable of resolving a doubt experienced by a court of criminal appeal that the court may conclude that no miscarriage of justice occurred [on the unreasonable verdict ground]. That is to say, where the evidence lacks credibility for reasons which are not explained by the manner in which it was given, a reasonable doubt experienced by the court is a doubt which a reasonable jury ought to have experienced. If the evidence, upon the record itself, contains discrepancies, displays inadequacies, is tainted or otherwise lacks probative force in such a way as to lead the court of criminal appeal to conclude that, even making full allowance for the advantages enjoyed by a jury, there is a significant possibility that an innocent person has been convicted, then the court is bound to act and to set aside a verdict based upon that evidence. In doing so, the court is not substituting trial by a court of appeal for trial by jury, for the ultimate question must always be whether the court thinks that upon the whole of the evidence it was open to the jury to be satisfied beyond reasonable doubt that the accused was guilty.”

[75] The High Court also said:[70]

“[12] The authoritative guidance to be gained from the joint judgment in M has not diminished with time. M was unanimously affirmed in MFA v The Queen and again in SKA v The Queen, where it was spelt out that the “test set down in M” required a court of criminal appeal to undertake an “independent assessment of the evidence, both as to its sufficiency and its quality” and that consideration of what might be labelled “jury” questions does not lie beyond the scope of that assessment. Coughlan v The Queen illustrates that an independent assessment of the evidence in a case in which the evidence at trial was substantially circumstantial requires the court of criminal appeal itself “to weigh all the circumstances in deciding whether it was open to the jury to draw the ultimate inference that guilt has been proved to the criminal standard” and in so doing to form its own judgment as to whether “the prosecution has failed to exclude an inference consistent with innocence that was reasonably open”.”

[76] In Pell v The Queen,[71] the Hight Court said:

“[39] The function of the court of criminal appeal in determining a ground that contends that the verdict of the jury is unreasonable or cannot be supported having regard to the evidence, in a case such as the present, proceeds upon the assumption that the evidence of the complainant was assessed by the jury to be credible and reliable. The court examines the record to see whether, notwithstanding that assessment – either by reason of inconsistencies, discrepancies, or other inadequacy; or in light of other evidence – the court is satisfied that the jury, acting rationally, ought nonetheless to have entertained a reasonable doubt as to proof of guilt.”

[77] In R v Miller,[72] this Court said:

“[18] An appellant who contends that the verdict of the jury was unreasonable or that it was unsupported by the evidence must identify the weaknesses in the evidence and must then also demonstrate that these weaknesses reduced the probative value of the evidence in such a way that the appellate court ought to conclude that even making full allowance for the advantages enjoyed by the jury there is a significant possibility that an innocent person has been convicted. The mere identification of weaknesses in the prosecution case is not enough to sustain the ground. As Brennan J said in M v The Queen, and as criminal practitioners and trial judges know very well, it is a sad but salutary experience of counsel for the defence that the prosecution’s “weak point” is often brushed aside dismissively by a jury satisfied of the honesty of the prosecution witness.”

…

A link to the decision is at R v SDI [2023] QCA 67 (sclqld.org.au)

[68] [1994] HCA 63; (1994) 181 CLR 487.

[69] Dansie at [8]–[9]. Citations omitted.

[70] Dansie at [12]. Citations omitted.

[71] (2020) 268 CLR 123 at [39]. Citations omitted.

[72] [2021] QCA 126; (2021) 8 QR 221 at [18]. Citations omitted. Emphasis in Original.

In this useful piece, solicitors Tim case and Alan Wrigley canvass the procedural conduct of causes in jurisdictions where it is prescribed “the rules of evidence do not apply” or like prescription. As they predicate, so much does not entail that the parties may litter the trial of the cause with evidence which is irrelevant or is bereft of arguable probative value. This article was published in the Queensland Law Society’s “Proctor” magazine on 2 May 2023 and is reproduced herein with the kind consent of the Society and the authors.

Tim Case is a Partner, and Alan Wrigley is a Senior Associate, in the Litigation and Dispute Resolution Group at McCullough Robertson Lawyers in Brisbane.

Rules of evidence lay down the means by which facts may be proved in a court of law.

They are fundamental to common law legal systems and many modern rules of evidence can be traced back to the Middle Ages. These rules are typically exclusionary and dictate what cannot be relied upon by a court and therefore what is not admissible in evidence.

Common examples are the rule against hearsay, and the general exclusion of non-expert opinion evidence.

Rules of evidence are notoriously complex. The rules themselves are riddled with exceptions and often vest a general discretionary power in the court to exclude evidence that is ‘unfairly prejudicial’, even where otherwise relevant.

Specific legislation exists at both at Commonwealth and state level to regulate existing common law rules.1 Questions of admissibility inevitably pervade any dispute which reaches a court room. Indeed, one commentator has remarked (with a hint of exaggeration) that the body of law which comprises the rules of evidence is:

“Founded apparently on the proposition that all jurymen are deaf to reason, that all witnesses are presumptively liars and that all documents are forgeries, it has been added to, subtracted from and tinkered with for two centuries until it has become less of a structure than a pile of builders’ debris.”2

Nonetheless, rules of evidence have also been described as “part of the machinery” by which a court ensures parties to a legal dispute receive a fair hearing in a system of justice that is essentially adversarial.3 A failure to correctly apply the rules of evidence will often lead to an appellable error.4 At the most basic level, the rules of evidence have been described as:

“…the attempt made, though many generations, to evolve a method of inquiry best calculated to prevent error and elicit truth”.5

Notwithstanding the importance of the rules evidence, statute books are filled with express references to certain tribunals, statutory authorities and decision-making bodies not being bound by the rules of evidence and/or being entitled to inform themselves on any matter as they see fit, effectively dispensing with the rules of evidence.

These provisions stand in stark contrast to the generally strict rules of evidence applied within a courtroom and, importantly, are slightly different to legislative provisions which allow courts of record to dispense with strict proof on an issue or permit evidence to be given in a different way.6

By way of example, the statute which establishes the Queensland Civil and Administrative Tribunal (QCAT) provides that the tribunal:

1. “is not bound by the rules of evidence, or any practices or procedures applying to courts of record, other than to the extent the tribunal adopts the rules, practices or procedures”7
2. “may inform itself in any way it considers appropriate”,8 and
3. “must act with as little formality and technicality as the requirements of this Act, an enabling Act or the rules and a proper consideration of the matters before the tribunal permit”.9

Provisions such as the above, which are common for statutory tribunals such as QCAT, are intended to be facilitative in nature, rather than restrictive. The purpose is to free tribunals, to some extent, from the constraints and rigours that would otherwise be applicable to courts of law and which Parliament has deemed would not be necessarily appropriate to fact-finding tribunals, such as QCAT.10

Importantly, however, where a tribunal such as QCAT is not required to apply the rules of evidence, that freedom or flexibility applies at the stage of the reception of such evidence, rather than in the evaluation and consideration of that evidence.11 

For example, a tribunal may determine that is appropriate to receive and consider second, or even third-hand hearsay evidence (which would otherwise typically be excluded).

Decisions of quasi-judicial bodies such as QCAT, even when relieved of the rules of evidence, must still be based on evidence that has rational probative force. Rules of evidence cannot simply be ignored as being of no account.12 That is, the decision of a tribunal not bound by the rules of evidence must still be based on material which tends logically to show the existence or non-existence of facts relevant to the issue which the fact-finding tribunal is being asked to determine.13 In doing so, the tribunal:

“must not spin a coin or consult an astrologer, but they may take into account any material which, as a matter of reason, has some probative value… If it is capable of having any probative value, the weight to be attached to it is a matter for the person to whom Parliament has entrusted the responsibility of deciding the issue.”14

In determining whether a particular piece of evidence has “some probative value” or “rational probative force”, there is perhaps an inclination to simply resort back to the established rules of evidence which would otherwise be applicable. However, appeal courts have consistently re-affirmed the principle that, where the rules of evidence have been expressly excluded by the operation of legislation, they are “not to creep back through domestic procedural rule”.15

Indeed, it remains well-accepted that facts can be fairly found without demanding adherence to the rules of evidence. Accordingly, courts have also stressed that the rules of evidence form no part of the rules of natural justice.16

That is, a party can still receive a fair hearing without resorting to strict rules of evidence.17 Fundamentally, the position remains that tribunals such as QCAT must, despite not being bound by formal rules of evidence, administer “substantial justice”.18

Footnotes1 See for example, Evidence Act 1995 (Cth); Evidence Act 1977 (Qld).2 CP Harvey, The Advocate’s Devil, 1958, p79.3 Polizzi v Commissioner of Police (No.2) [2017] WASC 166 [77]–[80].4 Deputy Commissioner of Taxation v Ahern (No.2) [1988] 2 Qd R 158, 163.5 R v War Pensions Entitlement Appeal Tribunal; Ex parte Bott (1933) 50 CLR 228, 256 (Evett J), cited with approval by French CJ in Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; (2010) 241 CLR 390 [17].6 See for example, Evidence Act 1977 (Qld), s129A.7 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s28(3)(b).8 Ibid s28(3)(c).9 Ibid s28(3)(d).10 Minister for Immigration & Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 197 CLR 611 [49] (Gleeson CJ & McHugh J).11 Argyle v State Administrative Tribunal [2022] WASC 317, [34].12 R v War Pensions Entitlement Appeals Tribunal; Ex parte Bott (1933) 50 CLR 228 at 256.13 R v Deputy Industrial Injuries Commissioner; Ex parte Moore [1965] 1 QB 456 at 488.14 Ibid.15 Pochi v Minister for Immigration & Ethnic Affairs (1979) 36 FLR 482, 492–493.16 R v Deputy Industrial Injuries Commissioner; Ex parte Moore [1965] 1 QB 456 at 488.17 T A Miller Ltd v Minister of Housing and Local Government [1968] 1 WLR 992 at 995.18 n12.

Paper delivered at the Bar Association of Queensland Annual Conference on 4 March 2023

Read here.

A summary of the High Court’s decision in Davis v Minister for Immigration

In April this year the High Court delivered judgment in Davis v Minister for Immigration [2023] HCA 10, which concerned Departmental officers making decisions which the Migration Act 1958 (Cth) reserved for exercise by the Minister personally.

Davis is an important reminder that Departments and other government decision-makers should carefully consider whether some powers may not be exercised by a delegate, and whether there are other statutory limitations on their executive power.

This article briefly outlines the relevant legislative and factual background, before summarising the reasoning of the Court.

Background

Section 351 of the Migration Act 1958 (Cth) (the Act) provides a power for the Minister to “substitute for a decision of the Tribunal … another decision that is more favourable to the applicant”, where “the Minister thinks that it is in the public interest to do so”. However, the provision makes clear that the Minister “does not have a duty to consider whether to exercise the power … in respect of any decision” (sub (7)).

Both Mr Davis and DCM20 are citizens of other countries (the United Kingdom and Fiji, respectively), who had applied for and been refused visas, the refusal of which had been affirmed by a Tribunal (the Administrative Appeals Tribunal and Migration Review Tribunal, respectively). Subsequently, each had requested an exercise of the power under s 351 of the Act.[1]

In purported reliance on Ministerial Instructions issued in 2016, an Assistant Director of the Department of Home Affairs purported to finalise the requests of both Mr Davis and DCM20 without referring them to the Minister.[2] This was on the basis that the Instructions indicated that the Minister only wished to be put into a position to consider making a decision under s 351 “in cases assessed by the Department to have unique or exceptional circumstances” (which were described non-exhaustively) – which the Department considered to not be the case for either Mr Davis or DCM20.[3]

At first instance, both Mr Davis and DCM20 had sought judicial review of the refusal to refer their requests to the Minister on grounds which included legal unreasonableness.[4] Both were unsuccessful.[5] The Full Federal Court dismissed their appeals, which were heard concurrently.[6]

The issue in the High Court

The High Court granted special leave to Mr Davis and DCM20 to argue a ground that was “not fully developed before the Full Court”. The ground was essentially that the 2016 Ministerial Instructions, and the Department decisions made in purported reliance on them, exceeded the executive power of the Commonwealth, in that they involved persons other than the Minister determining whether or not it was in the public interest for the s 351 power to be exercised.[7]

A majority of the High Court upheld that ground of appeal (per a plurality judgment of Kiefel CJ, Gageler and Gleeson JJ; Gordon J, Edelman J and Jagot J each wrote separately in support of the same conclusion). Steward J dissented. The remainder of this article focuses in particular on the reasons of the plurality.

Why the appeal was successful / how executive power had been exceeded

The plurality observed that, ordinarily, Parliament will be taken to contemplate that a Minister can task a Department with “sorting the wheat from the chaff”, so as to bring to the Minister’s attention only those requests for the exercise of discretionary statutory powers which “warrant the Minister’s personal consideration”.[8]

However, the “availability of such an inference must ultimately depend on the precise statutory scheme”,[9] and it is conditioned by the principle outlined Brown v West that:[10]

“A valid law of the Commonwealth may so limit or impose conditions on the exercise of the executive power that acts which would otherwise be supported by the executive power fall outside its scope.”

In this case, a valid law of the Commonwealth – namely, s 351(3) of the Act – imposed a limit on the circumstances in which the Minister’s power could be exercised. Its prescription that the power may only be exercised by the Minister personally meant that it was “neither delegable by the Minister … nor exercisable on the Minister’s behalf by any other officer of the Department”.[11] In other words, it would be beyond executive power to “entrust the dispositive evaluation of the public interest” under s 351 to an “executive officer other than the Minister”.[12]

Their Honours considered that the decisions made by Departmental officers in this case, pursuant to the Ministerial Directions, had exceeded executive power as limited by s 351(3) of the Act. In particular, that was because:[13]

“… it is impossible to avoid the conclusion that the concept of unique or exceptional circumstances was used in the 2016 Ministerial Instructions as an approximation of the public interest. By instructing that those cases assessed by the Department not to have unique or exceptional circumstances were to be finalised by the Department without referral, the Minister purported to entrust the dispositive evaluation of the public interest to departmental officers. The Minister thereby exceeded the statutory limit on executive power imposed by s 351(3).”

Consequently, the appeal was allowed, and the Court declared that the decisions made to not refer the requests of Mr Davis and DCM20 to the Minister (for an exercise of the power under s 351) had exceeded the executive power of the Commonwealth.[14]

The dissent of Steward J

In dissent, Steward J considered that each ‘decision’ made here had no legal consequences. Each was only an anterior step that “could have led, but ultimately did not lead, to an exercise of power” by the Minister. The result was that the rights and obligations of Mr Davis and DCM20 remained untouched.[15]

In his Honour’s view, since there had been no exercise of ‘power’ (defined as the “capacity to interfere with or legally alter rights, obligations and legally recognised interests”), there was no warrant for judicial review.[16]

SAVE THE DATE – 25 July 2023, 5:30pm

Australian Institute of Administrative Law SeminarGim Del Villar KC SG on Davis v Minister for Immigration

Inquiries can be directed to the AIAL (Queensland Chapter) Secretary, Mr Matthew Paterson at:  aialqueensland@gmail.com

[1] [2023] HCA 10, [43]-[44], [49]-[51].

[2] Ibid [44]-[45], [52]-[53].

[3] Ibid [34].

[4] Ibid [46], [54].

[5] Ibid.

[6] Ibid [5], [47], [55].

[7] Ibid [8].

[8] Ibid [26].

[9] Ibid [27].

[10] (1990) 169 CLR 195, 202.

[11] [2023] HCA 10, [12].

[12] Ibid [29].

[13] Ibid [38].

[14] Ibid Orders 2, 3.

[15] Ibid [196].

[16] Ibid [234]-[235]. Quoting Brennan J in Quin (1990) 170 CLR 1, 35: “The essential warrant for judicial intervention is the declaration and enforcing of the law affecting the extent and exercise of power: that is the characteristic duty of the judicature as the third branch of government.”

Earlier this year, the High Court handed down judgment in two important decisions concerning the controversial ‘peak indebtedness’ rule and the previously unresolved question as to whether a creditor could rely on the statutory set-off in section 553C of the Corporations Act 2001 (Cth) (the Act) as a defence to an ‘unfair preference’ claim.

In Bryant v Badenoch Integrated Logging Pty Ltd [2023] HCA 2, the High Court unanimously held that the Act does not incorporate the ‘peak indebtedness’ rule and further clarified that the approach to determining whether a transaction falls within a ‘continuing business relationship’ is to objectively ascertain, on the whole of the evidence, the “business character” of the transaction.

In Metal Manufactures Pty Limited v Morton [2023] HCA 1, the High Court unanimously held that the statutory right to set-off could not be used by a creditor as a defence to an unfair preference claim brought by a liquidator.

Bryant v Badenoch Integrated Logging Pty Ltd [2023] HCA 2

What was the case about?

1. Gunns and Badenoch entered into an agreement in 2003 for Badenoch to supply Gunns with timber. Under the agreement, Badenoch provided timber in a specified quantity per annum. Badenoch was to provide an invoice at the end of each calendar month and payment was due from Gunns on the last working day of the following month. They renewed their agreement in 2008 for the period from 1 January 2008 to June 2013.
2. Badenoch continued to provide services to Gunns despite its revenue starting to decline in 2010 and it frequently being late in making payments or only being able to make partial payments. After numerous attempts to reduce the indebtedness, the parties agreed to terminate the agreement in August 2012 on the basis that Badenoch would supply limited services for a short period while Gunns found another contractor. Shortly after, Gunns entered voluntary administration on 25 September 2012.
3. Liquidators later commenced proceedings against Badenoch seeking declarations that a series of payments totalling approximately $3.3 million made by Gunns to Badenoch between 30 March 2012 and 25 September 2012 were voidable transactions, pursuant to section 588FF(1) of the Act, and liable to be repaid.
4. Badenoch argued there was a “continuing business relationship” and all of the payments should be considered together to determine the net (not total) unfair preference.
5. In response, the liquidators argued that, if there was a “continuing business relationship”, they were entitled to apply the so-called ‘peak indebtedness’ rule and thereby choose the starting date within the period to prove the unfair preference Badenoch received (with the effect of maximising the value of the unfair preference). The liquidators argued that the transactions of the relevant relationship should be assessed from 31 May 2012, rather than 30 March 2012 (the date Gunns was determined by the Court to have become insolvent).

The Relevant Provisions of the Act

1. Section 588FF of the Act allows a court to make certain orders in relation to ‘voidable transactions’ including orders directing a person to repay to the company some or all of the money that was paid under the transaction.[1] A transaction is voidable if it is an “insolvent transaction” of the company being wound up and such transaction was entered into during the six months ending on the “relation-back day”[2] (in this case, the date the winding up commenced). 
2. An ‘insolvent transaction’ includes an ‘unfair preference’ between the company and creditor which results in the creditor receiving from the company more than the creditor would receive in respect of an unsecured debt if the transaction were set aside and the creditor “were to prove for the debt in a winding up of the company”.[3]
3. Section 588FA(3) provides that when a company and a creditor are in a continuing business relationship (for example, a running account), all transactions forming an integral part of that relationship are to be considered together, by reference to the overall indebtedness of the creditor during the period, to assess the net value of any unfair preference during the relation back period.

Does the ‘peak indebtedness rule’ apply to a ‘continuing business relationship’?

1. The High Court unanimously upheld the Full Federal Court’s finding that the peak indebtedness rule is not incorporated in the Act. Their Honours found the rule is not open on the express words of the Act and there is no reason why a liquidator should be able to arbitrarily choose the first transaction within the relevant continuing business relationship to determine the highest net value for the unfair preference. Jagot J, with whom Kiefel CJ, Gageler, Gordon, Edelman and Steward JJ agreed, said at [70]:

The purpose of the “running account principle” is not to maximise the potential for the claw-back of money and assets from a creditor, but that is the effect of the “peak indebtedness rule”. The “running account principle” recognises that a creditor who continues to supply a company on a running account in circumstances of suspected or potential insolvency enables the company to continue to trade to the likely benefit of all creditors.

2. As to whether a transaction forms an ‘integral part of a continuing business relationship’, the Court held it is a question of objectively ascertained fact.  The Court said at [81]:

What one or both of the parties intended (if ascertainable) may be relevant to, but is not determinative of, the statutory question. There must be a continuing business relationship and the transaction must, for commercial purposes, be an integral part of that continuing business relationship. In objectively characterising those matters – whether, on all the facts, there is a continuing business relationship (and the transaction is, for commercial purposes, an integral part of that continuing business relationship), there is no longer such a relationship, or that relationship has ended and been replaced by another (as occurred in this case) – it is necessary to consider the whole of the evidence of the “actual business” relationship between the parties.

3. The Court then looked at each of the payments made during the relevant period in light of the business relationship including, for example, whether payments were made for the purpose of inducing further supply[4] or whether they were made after Gunns and Badenoch agreed that Badenoch would cease providing services (and the ongoing business relationship had therefore ended)[5].

Metal Manufactures Pty Limited v Morton [2023] HCA 1

What was the case about?

1. The Appellant, Metal Manufacturers, was paid a total of $190,000 by the respondent, MJ Woodman, within the six-month period prior to the winding up of MJ Woodman. The liquidator of MJ Woodman sought to recover that amount from the Appellant under section 588FF(1)(a) of the Act on the basis that such amount was an ‘unfair preference’ payment. In addition to that amount already paid to the Appellant, MJ Woodman owed further amounts to the Appellant in the sum of approximately $194,000. The Appellant sought to set-off, pursuant to section 553C of the Act, the additional outstanding debt against any liability it had in respect of the ‘preference payment’ action.
2. The Full Court of the Federal Court dismissed the claim, finding that the statutory set-off was not available to the Appellant in seeking to set-off a liquidator’s claim for the recovery of the unfair preference under 588FA of the Act.[6]

The Relevant Provisions of the Act

1. Like Badenach, Metal Manufacturers also concerned voidable transactions and in particular, unfair preferences.  Metal Manufacturers also concerned the application of the set-off regime in section 553C of the Act.  That section provides for a mutual credit and set-off regime by which mutual credits, debts or other dealings are accounted for and balanced as between the insolvent company and a creditor for the purposes of any claim made by the creditor who wishes to have a debt or claim admitted against the company. 

Mutual Credits, Mutual Debts and Mutual Dealings

1. In dismissing the appeal and upholding the decision of the Federal Court, the High Court considered:

(a) mutual credits, mutual debts or other mutual dealings must arise from circumstances that subsisted in some way or form before the commencement of the winding up;[7]

(b) immediately before the commencement of the winding up there was nothing to set off as between the appellant and MJ Woodman, and the inchoate or contingent capacity held by the liquidator to sue for an unfair preference could not and did not exist before then;[8]

(c) it would be a gross distortion of the statutory scheme of liquidation if a creditor could, in effect, avoid the consequences of having received a preferential payment by reason that it was also owed money by the company in liquidation.[9]

2. The Hight Court also considered that any liability for an unfair preference could not constitute a mutual credit, mutual debt or mutual dealing with the pre-existing amount owed by the company because:

(a) Firstly, the dealings are between different persons. In this regard, the liability created by section 588FF(1)(a) to repay an unfair preference is one which arises on an application by the liquidator, who does so in his or her own right, rather than as an agent of the company.[10] Whereas the pre-existing debt exists only as between the company in liquidation and the appellant creditor; and

(b) Secondly, there is no mutuality of interest. Any money recovered by the liquidator must be made available, amongst other things, for the making of priority payments and for distribution to creditors in accordance with the pari passu principle. That unique statutory interest is not comparable to a trading transaction whereby goods or services have been previously supplied to (and for the benefit of) the company.[11]

7. Key Takeaways from Badenach and from Metal Manufacturers

1. The ‘peak indebtedness’ rule, no longer has any application in Australian Law.  Liquidators cannot arbitrarily choose a date within the relation back period to maximise the net amount of an unfair preference.  Liquidators should now focus on carefully identifying when the ‘continuing business relationship’ ended and the ‘business character’ of each transaction.
2. Although liquidators’ claims might now be reduced by the abolition of the ‘peak indebtedness’ rule, creditors will not be able to set-off outstanding debts against unfair preference claims.

[1] Corporations Act 2001 (Cth), s588FF(1)(a).

[2] Corporations Act 2001 (Cth), s588FE(2).

[3] Corporations Act 2001 (Cth), s588FA(1).

[4]  At [91].

[5]  At [96]

[6] Morton v Metal Manufactures Pty Ltd (2021) 289 FCR 556 at 560 [5] per Allsop CJ (Middleton and Derrington JJ agreeing).

[7] At [45].

[8] At [46]

[9] At [51].

[10] At [52].

[11] At [54].

In RP Hardingham v RP Data Pty Ltd (Third Party Costs) [2023] FCA 480, an award of third party costs, in part on an indemnity basis, was made against the applicants’ third party funder upon the claim being dismissed.  The applicants were impecunious.  Significantly the court was underwhelmed by the funder’s submissions that, despite the commercial nature of the funder’s activity, an order for costs ought not be made against it, or alternatively for indemnity costs, given that its funding afforded the applicants “access to justice”.   Thawley wrote:

[1]  This is an application by the respondent, RP Data Pty Limited for costs against a third party litigation funder, Court House Capital Pty Ltd. It has been made because RP Data was successful in the underlying proceedings and the applicants have not satisfied a costs order previously made. They are apparently impecunious.

…

[18]  Section 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) relevantly includes:

43. Costs

(1) The Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which this or any other Act provides that costs must not be awarded …

…

(2) Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge.

[19]  It is not in dispute that the power under s 43 extends to making costs orders against non-parties: Knight v FP Special Assets Ltd [1992] HCA 28; 174 CLR 178 . Plainly enough, the power to order costs against a third party would only be exercised in circumstances where a non-party has a connection to the ligation which is sufficient to warrant exercise of the power: Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (No 4) [2012] FCAFC 50; 200 FCR 154 at [89] ; Skelin v Self Care Corporation Pty Ltd (No 2) [2022] FCA 50 at [21] .

[20]  One example of where a connection is typically insufficient is where family members provide financial support to an applicant in litigation in which the supporting family member has no commercial interest in the outcome; such assistance is founded in family or social ties and directed at facilitating access to justice for the purpose of vindicating rights — see, for example: Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 10) [2009] FCA 498 at [22] ; KSMC Holdings Pty Ltd (t/as Hubba Bubba Childcare on Haig) v Bowden (No 3) [2020] NSWCA 158 at [45] ; Skelin at [20], [63] to [70].

[21]  It has been said that an “order for costs against a non-party is only made in exceptional circumstances” : Dunghutti at [90]; or that it is rare and exceptional: Vestris v Cashman (1998) 72 SASR 449 at 467 ; see also: FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 at [214] ; PMWorks Pty Ltd v Management Services Australia Pty Ltd (t/as Peak Performance PM) [2018] NSWCA 168 at [39] . This is not intended as more than an observation that the costs consequences usually fall on the parties to the litigation or that such an order is outside of the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense — see: Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2004] UKPC 39; [2005] 4 All ER 195 at [25]; KSMC Holdings at [44]; Skelinat [19]. It is, accordingly, not particularly helpful to state that a third party costs order is rare and exceptional. When there is a sufficient connection between the litigation and a third party, and the circumstances are such that the making of a costs order is fair in all the circumstances, the making of a third party costs order is normal. Certainly, it is not exceptional to order costs against a litigation funder who facilitates litigation for their own commercial gain. Indeed, this has become increasingly common. As Hammerschlag J said in Mistrina Pty Ltd v Australian Consulting Engineers Pty Ltd — Costs [2020] NSWSC 633 at [26] :

… Dymocks was decided 16 years ago. Litigation funding is much more common now than it was then. It is an everyday feature of cases in this [Technology and Construction] List and the Commercial List in all types of claims, not only class actions. Applications of the present type are even less exceptional now than they were then.

[22]  There are many cases which recognise the fairness in ordering a party who funds litigation for their own commercial benefit to pay, if they fail, the successful party’s costs. This is so whether or not the funder has given an indemnity for the costs ordered against an unsuccessful applicant. Examples include: Dymocks; Carborundum Abrasives Ltd v Bank of New Zealand (No 2) [1992] 3 NZLR 757 ; Gore v Justice Corp Pty Ltd [2002] FCAFC 83; 119 FCR 429 ; Mistrina. In Dymocks at [26], the Privy Council quoted from the unreported judgment of 19 May 2000 of Fisher J of the High Court of New Zealand in Arklow Investments Ltd v McLean at [21] :

… [I]t is wrong to allow someone to fund litigation in the hope of gaining a benefit without a corresponding risk that that person will share in the costs of the proceedings if they ultimately fail.

[23]  In the context of ordering security for costs against a non-party, Hodgson JA observed in Green v CGU Insurance Ltd [2008] NSWCA 148; 67 ACSR 105 at [51] that “the court system is primarily there to enable rights to be vindicated rather than commercial profits to be made” and that “courts should be particularly concerned that persons whose involvement in litigation is purely for commercial profit should not avoid responsibility for costs if the litigation fails”. Those observations are equally applicable to the present circumstances.

[24]  The beginning and end point is the terms of s 43 of the FCA Act. The power to order costs is discretionary. It must be exercised judicially, not arbitrarily or capriciously or on grounds unconnected with the litigation, having regard to relevant principle and the justice of the case in all the circumstances: Minister for Immigration, Citizenship, Migrant Services & Multicultural Affairs v Mukiza [2022] FCAFC 105 at [4] .

[25]  Court House is a commercial litigation funder which sought to profit from the principal proceedings. It funded the principal proceedings (but not the appeals) in return for 15% of any damages plus repayment of the funding it provided. Whilst it rather grandly submitted that its activities promoted access to justice, this is but a consequence of its commercial activities. I do not infer that Courts House’s activities were motivated by any concern for access to justice.

[26]  Litigation funding is a legitimate and commonplace commercial activity. One obvious risk for any commercial litigation funder is that, if the funded litigation is unsuccessful, the funder might face an application that it pay the successful parties’ costs. That risk arises whether or not it has agreed to indemnify the applicant against an adverse costs order. Court House decided to fund the principal proceedings in return for 15% of any damages obtained. As evidenced by the terms of cl 3 of the Funding Agreement referred to at [2] above, it is unrealistic to think that, in deciding to enter into the funding arrangement and on what terms, Court House did not appreciate and consider the prospect that it would be ordered to pay the respondent’s costs if the applicants were unsuccessful.

[27]  Court House submitted that the proper course was for RP Data to have applied for security for costs in the primary proceeding. Whilst that was an available course, I do not agree that it was the only course available, or that the failure to make such an application operates to deny the relief which RP Data seeks. When the proceedings were commenced, there was nothing to indicate that funding arrangements existed. The evidence on this application does not establish that there was any reason for thinking that either Mr Hardingham or REMA was impecunious at or around the time the proceedings were commenced. The applicants’ inability to meet the costs orders made on 17 December 2019 was at least partly due to a business downturn caused by the COVID-19 pandemic and the resulting lockdowns in early 2020: [2020] FCA 868 at [6] ; [2020] FCA 1062 at [20] .

[28]  RP Data cannot be criticised for not bringing an application for security for costs at or around commencement of proceedings in circumstances where: (a) the participation of a litigation funder was not known; (b) there was no grounds for suspecting an inability to meet an adverse costs order; (c) one of the applicants was an individual against whom an order for security for costs was unlikely to be successful even if he was impecunious; (d) the claims of the corporate applicant entirely overlapped with those of Mr Hardingham such that an order for security against REMA was also unlikely: Brecher v Barrack Investments Pty Ltd [2018] FCA 472 at [28] , [29] ; [2020] FCA 1062 at [9] . The applicants’ claim was genuine, even if adventurous. Indeed, it found favour with a majority of the Full Court.

[29]  The involvement of a litigation funder became known on 25 March 2019, two days before the mediation. By this time, the litigation had substantially progressed, including by RP Data joining REA by way of cross-claim. Although there was no evidence about this, RP Data submitted that it requested a copy of the Funding Agreement on 4 April 2019, after the mediation, but that its request was refused. Later correspondence suggests that the solicitors for RP Data assumed that the Funding Agreement included an indemnity for an adverse costs order. This was a false assumption. It appears to have been based on a review of Court House’s website.

[30]  It was not necessary to bring a security for costs application after the mediation in the circumstances. The bringing of such an application after the mediation would only have increased costs and delay. If an application had been made and the Court was inclined towards making an order, which it probably would have done taking into account such matters as were referred to by Hodgson JA in Green, I have no doubt that Court House would have given an undertaking to meet a costs order or taken some other course to enable the proceedings to continue, probably by renegotiating upwards its 15% fee. Court House has adduced no evidence on this application to suggest otherwise.

[31]  RP Data’s failure to make an application for security for costs after the mediation does not tell against ordering Court House to pay RP Data’s costs of the proceedings excluding the cross-claim.

[32]  Court House submitted that it would be “disproportionate to the degree of funding provided” to order Court House to pay costs, including on an indemnity basis from 11am on 28 June 2019. Its funding was described as “partial funding” and it was submitted that a costs order would “punish” Court House for “assisting impecunious applicants to bring proceedings of merit” and that it would therefore be “penal in nature”. I do not accept these submissions. The point is that Court House decided to fund the litigation for its own commercial gain. The litigation was ordinary commercial litigation from the perspective of Mr Hardingham and REMA. It was plain from a statement of the essential facts that the claim was one which might well fail. It is fair that the Court House also wears the risk in seeking to profit from the litigation. Its level of funding was substantial. The Funding Agreement provided for Court House’s participation in settlement. A representative of Court House attended the mediation. There was no evidence to suggest that it was not consulted in relation to the circumstances giving rise to the indemnity costs order and the terms of the Funding Agreement suggest that it was.

[33]  Court House and its activities had a sufficient connection with the proceedings for it to be appropriate that a costs order be made against it.

…

(emphasis added)

Mark Martin KC, of the Queensland bar, appeared in such matter for the successful respondent seeking costs.

In GJA Kalra Pty Ltd v Amgade Pty Ltd [2023] NSWCA 119, in the course of unanimous dismissal of an appeal, one member of the New South Wales Court of Appeal, Brereton JA, wrote:

[4]  It is a fundamental element of a promissory estoppel that the representee, or person seeking to invoke the estoppel, has acted to its detriment in reliance upon the representation. For my part, I have little difficulty with the proposition that an estoppel can, in appropriate circumstances, run with the land. Illustrations of this are to be found in Ward v Kirkland [1966] 1 All ER 609; [1967] Ch 194; Plimmer v Wellington Corporation (1884) 9 App Cas 699; Hamilton v Geraghty (1901) 1 SR (NSW) Eq 81; (1901) 18 WN (NSW) 152 in this Court, and more recently in the decision of Needham J in Hill v AWJ Moore & Co Pty Ltd (1990) 5 BPR 11,359.

[5]  However, that does not mean that just because a promise concerning land is made, it somehow attaches to the land. In this case the appellant conducted the case on the basis that it, or at least a related company, had contracted to purchase the business and take an assignment of the lease on 10 June 2011, before it contends any relevant representation was made. If that contract be the relevant contract, and it contained a warranty by the vendor pertaining to relevant matters, then it is very difficult to see how a representation made after that contract could have been relied on by the appellant.

[6]  The appellant then contended that the representation became binding by reason of the first payment of rebate to the vendor of the business in August 2011. The problem with that proposition is that first, by that time, the promise had in any event been varied to be conditional upon prompt payment of rent and outgoings, which condition meant that any estoppel could not be enforced if it were not met: see, for example, the judgment of Needham J in Vinden v Vinden [1982] 1 NSWLR 618. Moreover, the allowance of a rebate by the landlord could not possibly be detrimental reliance by either the outgoing or incoming tenant such as to make the promise one from which the landlord could not resile.

[7]  The ultimate possible act of detrimental reliance was the completion of the purchase and taking of the assignment of the lease, apparently sometime in 2012; but by that time, not only had the promise been varied to make prompt payment of rent and outgoings a condition, but in addition, the appellant had specifically sought confirmation that it would receive a rebate, had not been given that confirmation, and entered into the assignment of the lease which contained terms quite inconsistent with any such promise.

A different scenario arises, however, in the event that the representor owner transfers their land and the transfer is registered, and the subject matter bears on the interest in land enjoyed by the representee.  An issue which will then arise concerns whether the plaintiff representee can invoke an exception to indefeasibility under a recognised cause of action arising out of the defendant proprietor’s conduct in acquiring or holding the registered interest eg deceit, misrepresentation, mistake, unconscionable conduct or duress.  Such proprietor’s conduct must amount to a breach of some obligation owed to the plaintiff, or otherwise be unconscionable:Farah Constructions Pty Ltd v Say-Dee Pty Ltd(2007) 230 CLR 89 at [193]-[195];  see also McGrath v Campbell (2006) 68 NSWLR 229 at [98].

In the recent case of Stellar Vision Operations Pty Ltd v Hills Health Solutions Pty Ltd [2023] NSWCA 102 (18 May 2023), the appellant (Stellar) and another company Questek Australia Pty Ltd (Questek) collaborated in tendering together to supply Patient Entertainment Systems to hospitals. 

The respondents – Hills Health Solutions Pty Ltd (Hills) – a publicly listed company, proposed to acquire Questek’s business and the parties agreed, amongst other things, that Hills would commence negotiations in good faith with Stellar in order to draft an agreement that suited both parties for a long-term relationship.. 

Hills subsequently entered into a supplier agreement with a proposed client of Stellar – Western Sydney Local Health District (WSLHD).  Stellar sued for breach of contract constituted by an Undertaking entered into between them, and for breach of fiduciary duties.  That claim was dismissed at first instance but that decision was overturned on appeal.  Despite the parties being a relatively early stage of their business relationship, the NSW Court of Appeal (comprising Bell CJ, Hammerschlag CJ in Eq and Adamson JA) found, inter alia, that fiduciary obligations did exist between parties.  The Court relevantly found as follows, including the setting out of features that made the parties relationship one of mutual trust and confidence:

FIDUCIARY DUTIES

85. Although it is not strictly necessary to do so, it is appropriate to deal with the fiduciary duty grounds of appeal because we consider that the primary judge erred in finding that the parties were not in a fiduciary relationship but more importantly, because as appears below, we consider that even if the Acknowledgement and Agreement was not binding, Hills nevertheless owed Stellar fiduciary obligations not to exclude Stellar from participation in the WSLHD project or take it for itself.

86. At trial (and on appeal), Stellar argued that its relationship with Hills was fiduciary in nature, even if the Acknowledgement and Agreement was not binding. It relied on the following passage in United Dominions Corporations Ltd v Brian [1985] HCA 49; (1985) 157 CLR 1 at 12; [1985] HCA 49 (“Brian”):

A fiduciary relationship can arise and fiduciary duties can exist between parties who have not reached, and who may never reach, agreement upon the consensual terms which are to govern the arrangement between them. In particular, a fiduciary relationship with attendant fiduciary obligations may, and ordinarily will, exist between prospective partners who have embarked upon the conduct of the partnership business or venture before the precise terms of any partnership agreement have been settled. Indeed, in such circumstances, the mutual confidence and trust which underlie most consensual fiduciary relationships are likely to be more readily apparent than in the case where mutual rights and obligations have been expressly defined in some formal agreement. Likewise, the relationship between prospective partners or participants in a proposed partnership to carry out a single joint undertaking or endeavour will ordinarily be fiduciary if the prospective partners have reached an informal arrangement to assume such a relationship and have proceeded to take steps involved in its establishment or implementation.

87. The primary judge’s dispositive reasoning in relation to Stellar’s contention that it and Hills were in a fiduciary relationship was:

465 The difficulty I have is that Stellar Vision and Hills Health Solutions never really progressed beyond “mere negotiation”. I accept that the parties had a mutual aim of working together in relation to the WSLHD project and other ventures but it is clear that they were not agreed as to the form that relationship should take. I do not accept that there was the mutual confidence in their relationship necessary to give rise to a fiduciary obligation.

466 In John Alexander’s Clubs at [87] the plurality approved the identification by Mason J in Hospital Products at 96-97 of the critical feature of a fiduciary relationship being that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense (from which power or discretion comes the duty to exercise it in the interests of the person to whom it is owed). That feature is missing in the present case.

467 Hence the fiduciary claim also fails.

88. Hospital Products concerned the relationship between a manufacturer and a distributor of medical products, a relationship which is not an established fiduciary one. In the oft-cited passage at 96-97 (referred to by the primary judge at PJ [466]), Mason J (as his Honour then was) observed that the accepted fiduciary relationships are sometimes referred to as relationships of trust and confidence or confidential relations, that the list of such relationships is not closed and that a critical feature of all such relationships is that the fiduciary undertakes or agrees to act for or on behalf of the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. His Honour observed that it is partly because the fiduciary’s exercise of the power or discretion can adversely affect the interests of the person to whom the duties are owed and because the latter is at the mercy of the former that the fiduciary comes under a duty to exercise a power or discretion in the interests of the person to whom it is owed. His Honour went on to say:

That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship. In these situations it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction.

The passage in John Alexander’s Clubs Pty Limited v White City Tennis Club Limited (2010) 241 CLR 1; [2010] HCA 19 (“John Alexander’s Clubs”) (cited by her Honour in the same paragraph) refers to what Mason J had said in Hospital Products.

89. We consider that her Honour fell into error both in finding that Stellar and Hills never progressed beyond mere negotiation and that they were not agreed as to the form their relationship should take. For the reasons set out earlier, they bound themselves by way of the Acknowledgement and Agreement which stipulates for the form and terms of their immediate relationship.
90. We consider that her Honour fell into error in finding that the relationship did not involve mutual confidence or an undertaking or agreement on Hills’ behalf to act for or on behalf of the interests of Stellar in the exercise of a power or discretion which would affect the interests of Stellar in a legal or practical sense.
91. Beyond the finding that the parties were not agreed as to “the form that relationship should take” (which we read as referring to the form of the prospective long-term relationship), her Honour’s reasons do not reveal the basis for a finding that mutual confidence or the required undertaking were not present.
92. In a well-known passage in Brian at page 10, Mason, Brennan and Deane JJ (as their Honours then were) observed that the term “joint venture” is not a technical one with a settled common law meaning and that, as a matter of ordinary language, it connotes an association for the purposes of a particular commercial or other financial undertaking or endeavour with the view to mutual profit, with each participant usually (but not necessarily) contributing money, property or skill. Such a joint venture will often be a partnership, however the term is apposite to refer to a joint undertaking or activity carried out through a medium other than a partnership.
93. It was further observed at page 11 that whether or not the relationship between joint venturers is fiduciary will depend on the form which the particular joint venture takes and upon the content of the obligations which the parties to it have undertaken. Any fiduciary duties will be moulded to the character of the particular relationship.
94. At least the following features of the parties’ relationship make it clear that it was necessarily one of mutual trust and confidence:

(a) the relationship commenced effectively with respect to the QCH project and was the subject of the Outline of Agreement. One provision of the Outline of Agreement was Questek’s warranty that it was Stellar’s fiduciary with respect to the technical know-how and intellectual property which Stellar was allowing Questek to use;

(b) the 24 October 2013 response to the RFP had both Questek and Stellar’s logos and referred to their combined resources offering a “true partnership”. The RFP itself made it clear that Questek and Stellar’s tender was a joint endeavour;

(c) the Undertaking acknowledged that the relevant tenders were joint, although Hills as the only named party in the contract with WSLHD would be the party to have the direct dealings with WSLHD;

(d) Stellar had contributed to the WSLHD tender by assisting with the technical specifications and providing information about its financial capacity, technical expertise and experience;

(e) the Due Diligence material specifically referred to in the Purchase Agreement included a document recording that if a joint venture agreement was not finalised, Stellar’s name would be on the contract;

(f) the Undertaking embodied a binding agreement with elements analogous to a partnership, in relation to the Annexure A contracts. Hills and Stellar agreed to each contribute 50% of all contract implementation costs; Stellar agreed to license the end user to use its software; both acknowledged that a core part of the value that they were contributing to the arrangement was Hills giving access to the Questek customer base and Stellar giving access to its software and related support services; they agreed to split the profit 50/50; and both parties were to have open access to all project and financial information as required; and

(g) Hills’ ASX announcement referred to a partnership with Stellar.

95. Having regard to these features, it can hardly be suggested that the parties’ relationship accommodated:

(a) Hills being entitled to pursue its own interests without regard to Stellar’s;

(b) Hills being entitled to use its position or otherwise exclude Stellar from participation in the WSLHD project;

(c) Hills being entitled to substitute some other person to provide the services which Stellar was entitled to provide;

(d) Hills being entitled to take the benefit of the WSLHD project for itself; or

(e) Hills being entitled to use its position to exclude Stellar from participating in the WSLHD project and take the benefit of the whole of it for itself or contract out to someone else for the provision of services which Stellar was entitled to provide.

96. It is self-evident that Stellar reposed trust and confidence in Hills not to act in this fashion.
97. As the party dealing directly with WSLHD and ultimately the only contracting party, Hills was manifestly in a position where it could exercise a discretion which would affect the interests of Stellar, both in a legal and practical sense. Proof of this resides in the mere fact that Hills was able to bring about the exclusion of Stellar from the WSLHD project and bring in Lincor in its place. It can hardly be suggested that Hills was free to act in this way or that it had not undertaken not to act in this way. So much follows from the mere fact that they were joint tenderers.
98. It also reveals the extent to which, in their relationship, Stellar was in a position of vulnerability to Hills’ breach. Such vulnerability may be a characteristic of those to whom fiduciary duties are owed (although on its own it is not sufficient to create a fiduciary relationship): John Alexander’s Clubs at [83].
99. Hills argued that the present case was distinguishable from Brian because there, the prospective parties had reached an informal arrangement to assume such a relationship and had proceeded to take steps involved in its establishment or implementation, whereas here, the parties did not proceed beyond mere negotiation. Even if, contrary to our view, as set out earlier, one could properly characterise the parties’ dealings as not having proceeded beyond mere negotiation, the nature of their dealings was such that the mutual confidence and trust which would underlie the most consensual fiduciary relationship, was readily apparent in this case.