IWC Industries Pty Ltd v Sergienko [2021] NSWCA 292

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: IWC Industries Pty Ltd v Sergienko [2021] NSWCA 292 Hearing dates: 4 August 2021 Date of orders: 1 December 2021 Decision date: 01 December 2021 Before: Bathurst CJ at [1] Ward JA at [2] Gleeson JA at [3] Decision: (1) Appeal dismissed. (2) Appellants to pay the first respondent's costs of the appeal. Catchwords: EQUITY – equitable interests in real property – priorities – where property purchased by trustee on trust for sole unitholder – competing claims of beneficiary under trust and equitable mortgagee – where beneficiary did not pay any monies towards purchase price of property or "fully paid" units in unit trust – where beneficiary's solicitor advised trustee was untrustworthy – where trust deed conferred wide powers on trustee, including power to mortgage trust assets for any contractual obligation – where trust deed precluded unitholder from lodging caveat against any trust property and no caveat was lodged – where equitable mortgage granted over property to respondent in breach of trust – whether merits of competing equities unequal – whether beneficiary's prior interest postponed to subsequent interest of equitable mortgagee EQUITY – equitable interests in real property – priorities – where unitholder issued "fully paid" units but no monies paid for units in trust or towards purchase of property – whether evidence that trustee borrowed funds for purchase of property – whether beneficiary has liability to trustee for units issued to it – whether beneficiary was a volunteer Legislation Cited: Merchant Shipping Act 1894, 57 & 58 Vic, c 60, s 56 Uniform Civil Procedure Rules 2005 (NSW), r 42.1 Cases Cited: Abigail v Lapin (1934) 51 CLR 58; [1934] AC 491 AG(CQ) Pty Ltd v A & T Promotions Pty Ltd [2011] 1 Qd R 306; [2010] QCA 83 Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd; Guan v Linfield Developments Pty Ltd [2017] NSWCA 99; 18 BPR 36,683 Australian Guarantee Corp (NZ) Ltd v CFC Commercial Finance Ltd [1995] 1 NZLR 129 Australian Property & Management Pty Ltd v Devefi Pty Ltd (NSWSC, Young J, 7 April 1997); (1997) 7 BPR [97,640] Betlehem v Keytown Constructions Pty Ltd (formerly known as Jadestar Investments Pty Ltd) [2007] WASC 38 Black v Garnock (2007) 230 CLR 438; [2007] HCA 31 Bradley v Riches [1876] 9 Ch D 189 Brocklesby v Temperance Permanent Building Society (1895) AC 173 Burgis v Constantine [1908] 2 KB 484 Cash Resources Australia Pty Ltd v BT Securities Ltd [1990] VR 576 Carritt v Real and Personal Advance Company (1889) 42 Ch D 263 Clark v Raymor (Brisbane) Pty Ltd (No 2) [1982] Qd R 790 Coleman v London County & Westminster Bank Ltd [1916] 2 Ch 353 Cory v Eyre (1863) 1 De GJ & S 149; 46 ER 58 CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; [2005] HCA 53 Dixon v Mucklestone (1872) LR 8 Ch App 155 Equuscorp Pty Ltd v Glengallen Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55 General Finance Agency & Guarantee Co Ltd v Perpetual Executors & Trustees Association Ltd (1902) 27 VLR 739 Gifford v Strang Patrick Stevedoring Pty Ltd (2003) 214 CLR 269; [2003] HCA 33 Heid v Reliance Finance Corp Pty Ltd (1983) 154 CLR 326; [1983] HCA 30 Hill v Peters [1918] 2 Ch 273 IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550; [1963] HCA 64 J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546; [1971] HCA 57 Koorootang Nominees Pty Ltd v Australia and New Zealand Banking Group Ltd [1998] 3 VR 16 Lapin v Abigail (1930) 44 CLR 166; [1930] HCA 6 Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liquidation) (1965) 113 CLR 265; [1965] HCA 17 Lintel Pines Pty Ltd v Nixon [1991] IVR 287 Meth v C.B.C. (NSWSC, Shepperd J, 8 December 1976, unreported); (1977-1978) CLC 40-302 Moffett v Dillon [1999] 2 VR 480; [1999] VSCA 32 Parsons v McBain (Trustee of estate of PF Parsons (a bankrupt)) [2001] FCA 376; (2001) 109 FCR 120 Perilya Broken Hill Pty Ltd v Valuer-General [2015] NSWCA 235; (2015) 10 APLR 235 Platzer v Commonwealth Bank of Australia [1997] 1 Qd R 266 Re Carter Holt Harvey Woodproducts (Australia) Pty Ltd (No 1) [2017] VSC 499 Rice v Rice (1853) 2 Drew 73; 61 ER 646 Rimmer v Webster [1902] 2 Ch 163 Shropshire Union Railways and Canal Co v The Queen (1875) LR 7 HL 496 Taylor v London and County Banking Co [1901] 2 Ch 231 Thorpe v Bristle Ltd (1997) 80 FCR 330 Valoutin Pty Ltd v Furst (1998) 154 ALR 119 Water Board v Moustakas (1988) 180 CLR 491; [1998] HCA 12 Texts Cited: B Edgeworth, Butt's Land Law (7th Ed, LawBook Co, 2017) Category: Principal judgment Parties: IWC Industries Pty Ltd (First appellant) DK Excavation and Concreting Pty Ltd (Second appellant) Sergei Sergienko (First respondent) AXL Financial Pty Ltd (Second respondent) Representation: Counsel: F Corsaro SC / T Rogan (Appellants) B Coles SC / D Meyerowitz-Katz (Respondents)