Sentinel Springwood Retail Pty Ltd & Ors v Tomlinson & Ors [2021] QDC 159

Michael Creedon, Luke Trimarchi, Daniel Szabo

Key takeouts

Significant wrongful conduct could not be explained away by claiming that certain actions, including falsifying tenders and quotes, were carried out to prevent the employer’s breach of its obligation not to carry out building project management work without the appropriate licence under section 42(1) of the Queensland Building and Construction Commission Act (1991) (QBCC Act).

Facts

Mr Tomlinson was employed by Shield Property Services Pty Ltd (Shield), which provided services to companies in the Sentinel Group (Sentinel ).  Sentinel owned and operated commercial properties, and Shield organised building management and maintenance services on their behalf.  Mr Tomlinson’s role was to liaise with contractors to obtain quotes for building work on various properties and projects.  He was required to submit to Sentinel three quotes from contractors and recommend which contractor they should retain.

For eight different projects, instead of obtaining three quotes, Mr Tomlinson had sought only one quote and had then fabricated or amended quotes so that the genuine quote appeared to be the cheapest quote.  He also increased the genuine quotes so that Sentinel paid significantly more for building works than the contractors had originally quoted.  Two contractors, Bodel Projects Pty Ltd (Bodel) and Verus Construction Pty Ltd (Verus) gave Mr Tomlinson a financial reward after Sentinel accepted their inflated quotes.

Shield and Sentinel discovered Mr Tomlinson’s conduct and terminated his employment.  They sued Mr Tomlinson for the tort of deceit, breach of fiduciary duty, the tort of conspiracy, and breach of his employment contract.  They also claimed against three contractors, Bodel, Growth Australia Pty Ltd (Growth Australia) and Verus for accessory to the breach of fiduciary duties and the tort of conspiracy.

Sentinel claimed that, but for the conduct of Mr Tomlinson, they would have engaged contractors for a much lower price, and that they suffered loss of at least the difference between the original genuine quotes received from contractors and the inflated quotes which they accepted on Mr Tomlinson’s recommendation. Sentinel settled with Bodel and Growth Australia before trial and did not press those claims.  They maintained their claims against Mr Tomlinson and Verus.

Decision

• Mr Tomlinson had committed the torts of deceit and conspiracy and breached his fiduciary duties to the Sentinel plaintiffs;
• The Sentinel plaintiffs had not suffered loss with respect to the Bodel and Growth Australia projects, because of the settlement amounts received, and could not recover damages for those particular claims in deceit and conspiracy;
• Verus was an accessory to Mr Tomlinson’s breach of fiduciary duty for that project and had also committed the tort of conspiracy; and
• Mr Tomlinson was liable to account for the secret profit he received from contractors.

Sentinel were awarded damages against Mr Tomlinson and Verus for the difference between the original Verus quote and the altered Verus quote, and to recover the secret profits Mr Tomlinson received from contractors in breach of his fiduciary duty not to profit from his position as a fiduciary.

The court rejected Mr Tomlinson’s defences including that he carried out his conduct in order to prevent Shield from committing breaches of section 42(1) of the QBCC Act.

Section 42(1) of the QBCC Act provides that a person must not carry out, or undertake building work unless the person holds a contractor’s licence of the appropriate class under the QBCC Act.  A person who contravenes this section commits a crime and is liable to receive a penalty or, in extreme cases, imprisonment.

Mr Tomlinson argued he did not fraudulently create quotes in order to enrich himself or the successful contractors but instead to prevent his employer, Shield, from committing an offence under section 42(1) of the QBCC Act.  Mr Tomlinson claimed that he formed the view that Shield required a QBCC licence in order for it to provide project management services to Sentinel, as these works were ‘building works’ under the QBCC Act.  Therefore, by seeking multiple quotes, Shield would be acting unlawfully.  Mr Tomlinson claimed that, by fabricating quotes, he was merely trying to carry out his role in a lawful way.  He claimed the fabricated quotes were based off of calculations using software to estimate a real market price.

The court considered this argument as relevant to whether Mr Tomlinson had breached his fiduciary duty or conspired with contractors, and whether Sentinel did not suffer loss because the price approved was the true market price.

The court found Mr Tomlinson was not a credible or reliable witness.  Even if Mr Tomlinson’s purpose was to avoid breaching the QBCC Act, he admitted to concealing his deception and dishonest conduct from Shield and Sentinel, which satisfied those elements of the tort of deceit.  Further, Mr Tomlinson still enriched himself using his position, in breach of his fiduciary duties, which could not be justified by attempts to prevent Shield from breaching the QBCC Act.