Estate Agent's Fiduciary Duty

The assignment analyzes a scenario where Jeremy, an estate agent working for Aspirational Developments Pty Ltd, breaches his fiduciary duty. He takes advantage of confidential information to buy and sell units for personal profit, demonstrating conflicts of interest and a disregard for his employer's best interests. The assignment explores the legal implications of Jeremy's actions, including the consequences he faces for violating his duties of loyalty, confidentiality, and disclosure.

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Cover Sheet
Name of the student
Student ID
Word count

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Contents
Solution............................................................................................................................................3
Issue.............................................................................................................................................3
Law...............................................................................................................................................3
Application...................................................................................................................................4
Conclusion...................................................................................................................................5
Solution 2.........................................................................................................................................5
Issue.............................................................................................................................................5
Law...............................................................................................................................................5
Application...................................................................................................................................5
Conclusion...................................................................................................................................6
Bibliography....................................................................................................................................7

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Solution
Issue
An advice is furnished to the CEO of Golf Club Resort (company) whether the company is
required to pay the bill to Willow Landscaping?
Law
The relationship of an employer-employee or master-servant is very crucial mainly because it
decides whether the employer or the master can be held accountable for the actions of his
employee or servant.
In (NMFM Property Pty Ltd v Citibank Ltd (No 10)1, the law of agency is defined and it is held
by the court that when two people are in the relationship of principal/master/employer and
agent/servant/employee and such employee is acting on the directions and under the control of
the employer then any liability arising from such an action will fall upon the principal2.
The law of agency is based on the concept of vicarious liability wherein the employer is
accountable for his employee’s actions Scott v Davis3. The only requirement to make the
employer liable is that the employee is totally functioning within the powers that are delegated to
him. Thus, to make a person an agent of the principal, the main requirements are:4
i. The employee is within the services of the employer;
ii. The actions of the employee is directed and guided by the employer;
iii. The actions which are carried out by the employee are delegated to him by the
employer.
Now, the employer can gave power to his employee by three means. The same are:5
i. Actual express authority – An actual express authority is a kind of delegation wherein
the principal intentionally conveys powers to his employees so that the employee can
carry out work on his behalf. This kind of delegation is possible when the principal
either by way of agreement or by actions or verbally grants authority to the agent6.
ii. Actual implied authority – An actual implied authority is the authority for which the
principal does not have to make any actual efforts. But, when any tasks are allotted to
1 NMFM Property Pty Ltd v Citibank Ltd (No 10) (2000) 107 FCR 270.
2 Hassall, Douglas. "Dal Pont: Law of Agency." International Trade and Business Law Review 429, 2003.
3 Scott v Davis [2000] HCA 52.
4 MCCARTHY, LUKE. "VICARIOUS LIABILITY IN THE AGENCY CONTEXT." Vol 4 No 2 (QUTLJJ), 2004.
5 Krawitz, Alan. "Protecting Outsiders to Corporate Contracts in Australia." Murdoch University Electronic Journal of Law,
Volume 9, Number 3 (September 2002), 2002.
6 Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480.

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the agent then the power that is coupled with such tasks so that the agent can perform
such tasks adequately is an implied authority. For example, to take decisions when
the principal cannot be reach at and the decisions is for the benefit of the principal, to
act for the best interest of the principal etc7.
iii. Ostensible authority – The ostensible authority is the third kind of authority wherein
the power to take actions on behalf of the principal is not carried out under the any
actual or implied authority, but, this authority is gained by the agent because of a
representation that is made by the principal. When the principal makes a depiction in
front of an outsider to make an outsider believe that a specific person is the
authorized representative of the principal then an ostensible authority is granted to
such agent. When an outsider under such pretext of ostensible authority enters into a
contract with the agent, then, the principal cannot deny the authority on the part of the
agent and is bound by the transactions that are entered8.
However, if the outsider is aware of the defect in the authority, then, he cannot bound
the principal by the actions of the agent.
The above law is now applied to the facts of the case.
Application
Noora Norra Golf Club Resort is owned by Gabba Pty Ltd (company). Ricardo is working for
the company. Recently there is financial crunch so the Chief Executive officer of the company
has directed Ricardo that he is only authorized to enter into contract on the company behalf
provided the value of the contract should not exceed $ 10,000.
The situation reveal that the Chief Executive Officer has by words of mouth has given a power to
Ricardo that he can make contracts but has limited this power only to the extent of $ 10,000.
Thus, an actual express authority is given to Ricardo.
But, Ricardo violated his actual express authority and without telling the chief Executive Officer,
he makes a contract with an outsider, Willow Landscaping, who has no idea that the authority of
Ricardo to enter into contracts is limited to $ 10,000.
Now, Ricardo makes a landscaping contract with Willow Landscaping for an amount of $ 13,000
along with extra cost of $ 4,000 which makes the total cost of the project at $ 17,000. Ricardo is
not authorized to enter into contracts of such amounts.
When the Chief Executive Officer asks about the project, Ricardo only tells him about the
project and makes no mention to the extra cost. The Chief Executive Officer gave his approval
and tells Willow Landscaping that it can take the project forward with Ricardo.
7 Hely-Hutchinson v Brayhead Ltd. Hely-Hutchinson v Brayhead Ltd [1967] 1 QB 549.
8 Union Bank of Australia Ltd v Albert Ernest Rudder [1911] HCA 39.

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Thus, by stating this information to Willow Landscaping, the Chief Executive Officer has
actually given an apparent authority to Ricardo. Thus, Ricardo is now authorized to make a
contract with Willow Landscaping which is approved by the Officer on behalf of the company.
Conclusion
Thus, the contract made by Ricardo with Willow Landscaping is binding in nature and is
enforceable in law.
Solution 2
Issue
An advice is furnished to Aspirational Developments regarding Jeremy's conduct?
Law
As already submitted the relationship of an employer-employee or master-servant is very crucial
mainly because it decides whether the employer or the master can be held accountable for the
actions of his employee or servant.
However, it is not always that the master is accountable for the actions of his servant. The
servant is also under a scrutiny to conduct his actions in such manner so that he does not bring
any disadvantage to his master. So there are several duties that are imposed on a servant9.
A servant or an agent should act like a trustworthily person and makes sure that no actions
should be carried out by him which results in conflicting interest. If the interest conflicts then the
interest of the master must proceed the interest of the servant10.
An agent must make sure that the confidential information received by him during the tenure of
his service should not be given to any third party unless his principal has approved of the same11.
If the agent in order to bring gain to himself makes profits of secret nature then it is his duty to
pay back such profits to his master12.
His acts must be such which are carried out with honesty, trustworthiness, diligence and care.
He must act as per the wishes of his master.
If these duties are not fulfilled by the agent then he must face consequences for the same.
9 Adams, Michael. Essential Corporate Law: Second Edition. Cavendish Australia, 2002.
10 Re Smith and Fawcett Ltd. [1942] Ch 304.
11 Industrial Development Consultants Ltd v Cooley [1972] 1 WLR 443.
12 Regal (Hastings) Ltd v Gulliver. Regal (Hastings) Ltd v Gulliver [1942] UKHL 1.

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Application
It is submitted that Jeremy is the estate agent of Aspirational Developments Pty Ltd and is selling
high-rise units. He recently through one of his friends got the news that the other competitor is
into difficulties and thus the units he is selling can be sold at higher cost.
So, he secretly arrange funds and bought three units which he later sold and earn profits.
It is submitted that these actions of Jeremy is in violation of his fiduciary duty, he also made
secret profits which is not permitted. Also, there is conflict of interest and he preferred his own
interest to be superior of the company.
Further, he discloses the confidential information of the company for small payment and thus is
in breach of is duty to not to disclose secret information of the company.
Conclusion
Thus, Jeremy is on violation of several of his duties and thus must compensate the company.

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Bibliography
Books/articles/Journals
Adams, Michael. Essential Corporate Law: Second Edition. Cavendish Australia, 2002.
Hassall, Douglas. "Dal Pont: Law of Agency." International Trade and Business Law Review
429, 2003.
Krawitz, Alan. "Protecting Outsiders to Corporate Contracts in Australia." Murdoch University
Electronic Journal of Law, Volume 9, Number 3 (September 2002), 2002.
MCCARTHY, LUKE. "VICARIOUS LIABILITY IN THE AGENCY CONTEXT." Vol 4 No 2
(QUTLJJ), 2004.
Case laws
Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480.
Hely-Hutchinson v Brayhead Ltd. Hely-Hutchinson v Brayhead Ltd [1967] 1 QB 549.
Industrial Development Consultants Ltd v Cooley [1972] 1 WLR 443.
NMFM Property Pty Ltd v Citibank Ltd (No 10) (2000) 107 FCR 270.
Re Smith and Fawcett Ltd. [1942] Ch 304.
Regal (Hastings) Ltd v Gulliver. Regal (Hastings) Ltd v Gulliver [1942] UKHL 1.
Scott v Davis [2000] HCA 52.
Union Bank of Australia Ltd v Albert Ernest Rudder [1911] HCA 39.