Bale v Kimberley Developments Pty Ltd [2022] NSWSC 820

Supreme Court New South Wales

Medium Neutral Citation: Bale v Kimberley Developments Pty Ltd [2022] NSWSC 820 Hearing dates: 3 – 9 September 2021; 6 December 2021 Date of orders: 23 June 2022 Decision date: 23 June 2022 Jurisdiction: Equity Before: Ward P Decision: 1. Set aside the transfer dated 21 February 2011 in relation to the property referred to in these reasons as the Forest Lodge Property. 2. Direct the first defendant (Kimberley Developments) within 28 days to transfer the title to the Forest Lodge Property, unencumbered, to the plaintiff (Ms Françoise Bale) as executor of the estate of the late Michel Schein. 3. Subject to order (11), order the plaintiff, as executor of the estate of the late Michel Schein, following transfer of the title to the Forest Lodge Property, to pay the sum of $288,242.63 to the sixth defendant (Super Start Batteries Pty Ltd) or at the direction of its director, the fifth defendant (Mr Theofanis Trigas), being the sum paid to discharge the Suncorp mortgage, plus interest calculated at the rate specified in the Suncorp mortgage. 4. Order that the sum payable pursuant to order (3) be charged on the Forest Lodge Property after its transfer to the plaintiff as executor of the estate of the deceased. 5. Declare that the first defendant as from 21 February 2011 held, and holds, the Forest Lodge Property on constructive trust for the deceased (and since his death, for the benefit of the deceased's estate). 6. Declare that the first defendant breached the trust on which the Forest Lodge Property was held by encumbering the property with the mortgage to NAB in 2012 and transferring the funds so borrowed to the sixth defendant (Super Start Batteries Pty Ltd) (and/or at the direction of the fifth defendant, Mr Theofanis Trigas) and not used for the purposes or benefit of the trust. 7. Declare that the fifth and sixth defendants had constructive notice of the matters giving rise to the constructive trust and of the breach of that trust and are liable for being knowingly concerned in the breach of that trust or in knowing receipt of trust property in breach of trust. 8. Order the fifth and sixth defendants to repay to Kimberley Developments, as constructive trustee of the deceased's estate's interest in the Forest Lodge Property, the funds received by the sixth defendant out of the facility secured by the NAB mortgage over the Forest Lodge Property and any interest thereon that is required in order to discharge the NAB mortgage (such amounts to be paid within 21 days in order to make good the trust funds transferred in breach of trust). 9. Order the plaintiff, as executor of the estate of the late Michel Schein, to pay to the first defendant such amounts as are determined by the Court appointed referee (to be appointed pursuant to order (12) below) to be properly referable to expenses reasonably incurred in the maintenance of the Forest Lodge Property since 2011. 10. Order the first defendant to account to the plaintiff, as executor of the estate of the late Michel Schein, for all amounts received by way of rent or other income in respect of the Forest Lodge Property since 21 February 2011 to date, and interest thereon pursuant to s 100 of the Civil Procedure Act 2005 (NSW). 11. Order that the sums payable in orders (3), (9) and (10) be offset against each other with the sum remaining to be paid to the relevant party within 21 days of determination by the Court appointed referee of that amount. 12. Order that the matter be referred to a Court appointed referee (at the cost of the parties to be borne proportionately) for determination of the amounts to be paid, and the offset amount, pursuant to the above orders. 13. Declare that the fourth defendant (Ms Chyna Schein, nee Richardson) is liable to the deceased's estate for breach of fiduciary duty in relation to entry into the sale transaction in respect of the Forest Lodge Property. 14. Order the fourth defendant to indemnify the deceased's estate for any loss sustained as a result of entry into the sale transaction in respect of the Forest Lodge Property. 15. Give liberty to the plaintiff to apply on reasonable notice for orders in relation to the implementation of the above orders. 16. Reserve the question of costs and direct the parties to file brief written submissions on costs within 21 days, with a view to determining the issue of costs on the papers. 17. Direct the parties within 7 days to forward to Ward P's associate the name of an agreed and suitably qualified person to be appointed as referee or, failing agreement, to submit three proposed names, with a view to the Court determining the identity of the person to be appointed as Court appointed referee in the absence of any such agreement. Catchwords: CONTRACTS – Formation – Intention to create legal relations – Whether agreement signed by the plaintiff constituted a binding contract – Whether unjust contract under the Contracts Review Act 1980 (NSW) EQUITY – Unconscionable conduct – Special disability or disadvantage – Independent advice – Inequality of bargaining power – Whether unconscientious advantage taken – Whether defences of laches and acquiescence applied – Whether Limitation Act 1969 (NSW) applied by analogy – Whether transaction ought to be set aside EQUITY – Trusts and trustees – Constructive trusts – Remedial – Breaches of trust – Whether a constructive trust arises – Whether knowing receipt of trust property – Whether encumbrance of trust property constitutes a breach of trust EQUITY – Fiduciary duties – Breach – Agent and principal – Whether donee of power of attorney acted in best interests of the plaintiff Legislation Cited: Australian Consumer Law, ss 20, 21, 22, 236 and 237 Competition and Consumer Act 2010 (Cth), ss 20, 21, 22 of Sch 2 Contracts Review Act 1980 (NSW), ss 7, 9 Conveyancing Act 1919 (NSW), s 54A Corporations Act 2001 (Cth), s 461 Evidence Act 1995 (NSW), ss 59, 69, 76-79, 80, 81, 82, 91, 135, 136 Limitation Act 1969 (NSW), ss 14, 16, 23, 36, 52 Powers of Attorney Act 2003 (NSW) Powers of Attorney Regulation 2016 (NSW), cl 7, Sch 2 Real Property Act 1900 (NSW), s 36 Cases Cited: 400 George Street (Qld) Pty Ltd v BG International Ltd [2010] 2 Qd R 302; [2010] QCA 245 ACCC v Samton Holdings Pty Ltd (2002) 117 FCR 301; [2002] FCA 62 Adnunat Pty Ltd v ITW Construction Systems Australia Pty Ltd [2009] FCA 499 Albrighton v Royal Prince Alfred Hospital & Ors (1980) 2 NSWLR 542 Amit Laundry v Jain [2017] NSWSC 1495 Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 Antov v Bokan [2018] NSWSC 1474 Australian Securities and Investment Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17 Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18 Baden Delvaux & Lecuit v Société Générale Pour Favoriser le Developpement du Commerce et de L'Industrie en France SA [1993] 1 WLR 509 Bank of Credit and Commerce International (Overseas) Ltd (in liq) v Akindele [2001] Ch 437 Barnes v Addy (1874) LR 9 Ch App 244 Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; [1998] HCA 59 Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59 Beatty v Guggenheim Exploration Co (1919) 122 NE 378 Blatch v Archer (1774) 1 Cowp 63 Blomley v Ryan (1956) 99 CLR 362; [1956] HCA 81 Breskvar v Wall (1971) 126 CLR 376; [1971] HCA 70 Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66 Brogden and Ors v The Directors of the Metropolitan Railway Company (1877) 2 App Cas 66 Burnside v Mulgrew; Re the Estate of Grabrovaz [2007] NSWSC 550 Capital Securities XV Pty Ltd (formerly known as Prime Capital Securities Pty Ltd) v Calleja [2018] NSWCA 26 Chase v Chase [2020] NSWSC 1689 Chen v Gu; Chen v Nguyen [2011] NSWSC 1622 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14 Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 Consul Development Pty Ltd v DPC Estate Pty Ltd (1975) 132 CLR 373; [1975] HCA 8 Cubillo v Commonwealth (2000) 103 FCR 1; [2000] FCA 1084 Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21 De Bortoli Wines Pty Ltd v HIH Insurance Ltd (in liq) (2011) 200 FCR 253; [2011] FCA 645 Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84 Edna May Collins by her next friend Glenys Lesley Laraine Poletti v May [2000] WASC 29 Elkofairi v Permanent Trustee Company Limited (2002) 11 BPR 20,841; [2002] NSWCA 413 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 Fodare Pty Ltd v Shearn [2010] NSWSC 737 Francis Gregory Hannigan v Inghams Enterprises Pty Limited [2019] NSWSC 321 Francis v Francis [1952] VLR 231 Garcia v National Australia Bank Ltd (1998) 194 CLR 395; [1998] HCA 48 Geyer v Redeland Pty Limited [2013] NSWCA 338 Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 Gray v Coles Supermarkets Australia Pty Ltd; Coles Supermarkets Australia Pty Ltd v Chandler Macleod Group Ltd [2020] NSWCA 209 Gregg v Tasmanian Trustees Ltd (1997) 143 ALR 328; [1997] FCA 128 Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 Guthrie v Spence (2009) 78 NSWLR 225; [2009] NSWCA 369 Halifax Building Society v Thomas [1996] Ch 217 Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41; [1984] HCA 64 Howard v Federal Commissioner of Taxation (2014) 253 CLR 83; [2014] HCA 21 In Re Sirrah Pty Ltd (In Provisional Liquidation) [2021] NSWSC 413 John Alexander's Clubs Pty Ltd v White City Tennis Club Pty Ltd (2010) 241 CLR 1; [2010] HCA 19 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Kakavas v Crown Melbourne Limited (2013) 250 CLR 392; [2012] HCA 25 Kalls Enterprises Pty Ltd (in liq) v Baloglow (2007) 63 ACSR 557; [2007] NSWCA 191 Kaye v Strandbags Group [2006] NSWSC 1015 KQ International Trading Pty Ltd v Yang [2016] VSC 146 Lancaster v The Queen (2014) 44 VR 820; [2014] VSCA 333 Lee v Sankey (1873) LR 15 Eq 204 Lithgow City Council v Jackson (2011) 244 CLR 352; [2011] HCA 36 Lopwell Pty Ltd v Clarke [2009] NSWCA 165 Lorretta Kistmah Craig and Ors v Kia Silverbrook and Ors [2013] NSWSC 1687 Louth v Diprose (1992) 175 CLR 621; [1992] HCA 61 Mackowik v Kansas City St J & C B R Co 94 SW 256 (1906) Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 Manly Council v Byrne [2004] NSWCA 123 Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361 Mclaughlin v Burrows [2021] NSWCA 170 McNab v Graham (2017) 53 VR 311; [2017] VSCA 352 Morrison v Coast Finance Ltd (1965) 55 DLR (2d) 710 Neilson v Letch (No 2) [2006] NSWCA 254 Organ v Sandwell [1921] VLR 622 (FC) Owen v Homan (1853) 4 HL Cas 997 at 1035; 10 ER 752 Owners of the Ship, Shin Kobe Maru v Empire Shipping Co Inc (1994) 181 CLR 404; [1994] HCA 54 Pavlis v Pavlis [2021] NSWSC 1117 Payne v Parker [1976] 1 NSWLR 191 Perpetual Trustee Co Ltd v Gibson [2013] NSWSC 276 Perpetual Trustee Limited v Khoshaba [2006] NSWCA 41 Phung v Phung [2019] NSWSC 117 Pipikos v Trayans (2018) 265 CLR 522; [2018] HCA 39 Quach v MLC Limited (No 6) [2021] FCA 271 Queensland v Masson (2020) 94 ALJR 785; [2020] HCA 28 R v Heyde (1990) 20 NSWLR 234 Re Cummings Engineering Holdings Pty Ltd [2014] NSWSC 250 Realm Resources Ltd v Aurora Place Investments Pty Ltd [2019] NSWSC 379 Rochefoucauld v Boustead [1897] 1 Ch 196 Rodriguez and Sons Pty Ltd v Queensland Bulk Water Supply Authority trading as Seqwater (No 13) [2018] NSWSC 565 RPS v R (2000) 199 CLR 620; [2000] HCA 3 Sergei Sergienko v AXL Financial Pty Limited [2021] NSWSC 297 Shafston Avenue Construction Pty Ltd, in the matter of CRCG-Rimfire Pty Ltd (subject to a deed of company arrangement) v McCann (No 3) [2021] FCA 938 Spence v Crawford [1939] SC (HL) 52 Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640; [1975] HCA 63 Stellar Vision Operations Pty Ltd v Hills Health Solutions Pty Ltd [2022] NSWSC 144 Stubbings v Jams 2 Pty Ltd (2022) 399 ALR 409; [2022] HCA 6 Sybil Dawne Hintze v Ratna Tsering & Anor [2018] NSWSC 1190 Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 Taheri v Vitek (2014) 87 NSWLR 403; [2014] NSWCA 209 Talevski v Talevski & Anor [2007] NSWSC 945 The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239 Trigas v Owners of Strata Plan [2019] NSWDC 473 Turner v O'Bryan-Turner (2022) 398 ALR 711; [2022] NSWCA 23 Turner v Windever [2003] NSWSC 1147 Turner v Windever [2005] NSWCA 73 Twigg v Twigg [2022] NSWCA 68 Urjraso v NRMA Insurance Ltd (unreported, Court of Appeal, NSW, CA 40353 of 1990, Mahoney CJ, Priestley and Handley JJA, 14 December 1992) Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102; [1995] HCA 14 Ward v Ward (No 2) [2011] NSWSC 1292 Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18 Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 Texts Cited: B Edgeworth, Butt's Land Law (7th ed, 2017, Lawbook Co) E Sykes, "The Doctrine of Constructive Trusts" (1941) 15 Australian Law Journal 171 Elder Law New South Wales (2015, LexisNexis) GE Dal Pont, Law of Agency (2020, 4th ed, LexisNexis) J McGhee, Snell's Equity (32nd edition, 2010, Sweet & Maxwell) J W Carter, Greg Tolhurst and Keith Mason, Mason & Carter's Restitution Law in Australia (2021, 4th ed, LexisNexis) JD Heydon, Cross on Evidence (2021, 13th ed, LexisNexis) Jeannie Marie Paterson, Corones' Australian Consumer Law (2019, 4th ed, Thomson Reuters) Michael Liu, 'Application of Limitation by Analogy: Equity Exceptions' (2016) 25 Australian Property Law Journal 150 P Butt, Land Law (6th ed, 2010, Thomson Reuters) P Young, C Croft, ML Smith, On Equity (2009, Thomson Reuters) Paul Finn, 'Equitable Doctrine and Discretion in Remedies' in William Cornish, Richard C Nolan, Janet O'Sullivan and G J Virgo, eds, Restitution: Past, Present and Future (1998, Hart Publishing) RP Meagher, J D Heydon and M J Leeming, Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (2002, 4th ed, LexisNexis) Category: Principal judgment Parties: Françoise Bale (Plaintiff) Kimberley Developments Pty Ltd (First Defendant) Albert Darwiche (Second Defendant) Martin Churchill (Third Defendant) Chyna Schein (Fourth Defendant) Theofanis Trigas (Fifth Defendant) Super Start Batteries Pty Ltd (Sixth Defendant) Representation: Counsel: DP O'Connor with J McEnaney (Plaintiff) R Perla (1st, 2nd, 5th, 6th Defendants)