Brunninghausen v Glavanics (1999) 46 NSWLR 538

Case Facts for Brunninghausen v Glavanics (1999):

Brunninghausen and Glavanics are brothers-in-law, the shareholders, and are the directors of a company their family owns. The two were also the shareholders of the company where Glavanics was awarded one-sixth of the company shares.

The shares did not cost him and these shares were awarded to him during the company formation. Nonetheless, a disagreement arose between the two, and Glavanics did not actively participate in the role. Specifically, Glavanics had a company competing against their company.

As they made peace, Glavanics sold his shares to Brunninghausen without the knowledge that Brunninghausen was already in the negotiation of selling the company at a higher price.

The company was then sold at a higher price, however, the shares of Glavanics was brought by Brunninghausen at a significantly lesser value.

Case Issue:

The issue is whether or now Brunninghausen had a fiduciary duty towards Glavanics to disclose the fact that Brunninghausen is selling the company at a higher price.

Case Decision:

The court ruled that Brunninghausen had a fiduciary duty to Glavanics in the process of informing him regarding the sale of the company.

This was so because Glavanics had been locked out from the activities of the company and he had no other means to know the real value of the shares he is selling.