Jaken Properties Australia Pty Ltd v Naaman [2023] NSWCA 214

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Jaken Properties Australia Pty Ltd v Naaman [2023] NSWCA 214 Hearing dates: 6 – 7 February 2023 Decision date: 08 September 2023 Before: Bell CJ at [1]; Leeming JA at [35]; Kirk JA at [228] Decision: 1. Grant leave to appeal. 2. Appeal allowed in part. 3. Set aside the answers to questions 1-4, 5(c) and (d), 6(b) and (c), 7, 8, 12, 14, 16(c) and (d), 17(b) and (c), 18, 19, 28(c) and (d), 29(b) and (c), 30, 31, 32, 33, 34, 35, 36, 37. 4. Set aside orders 1(b)-19 and 21 made on 1 July 2022. 5. Direct the parties to file and serve, within 14 days of today, an agreed form of answers to the questions, any order as to the costs of the appeal, and any other orders which this Court should make, or in default of agreement, the parties to file and serve within 14 days of today the answers and orders for which they contend accompanied by submissions not exceeding ten pages in support, and to file any submissions in response not exceeding five pages within 7 days thereafter, with a view to this Court resolving all outstanding issues on the papers. Catchwords: EQUITY – fiduciary duty – whether fiduciary duty owed by successor trustee to former trustee – nature of former trustee's entitlement to trust property to be indemnified for expenses properly incurred – whether former trustee vulnerable to exercise of power by successor trustee – whether former trustee only entitled to appointment of receiver and judicial sale and interlocutory relief – whether analogy with duty owed by mortgagee with surplus after exercising power of sale – Rothmore Farms Pty Ltd (in liq) v Belgravia Pty Ltd [2005] SASC 117 considered – whether property transferred to third parties in breach of asset preservation order – whether property transferred to third parties to defraud creditors Legislation Cited: Conveyancing Act 1919 (NSW), s 37A Corporations Act 2001 (Cth), s 500(2) Supreme Court Act 1970 (NSW), ss 101(2), 103 Trustee Act 1925 (NSW), s 63 UCPR, rr 28.2, 36.16 Cases Cited: Agusta Pty Ltd v Provident Capital Ltd [2012] NSWCA 26 Alexander v Perpetual Trustees WA Ltd (2004) 216 CLR 109; [2004] HCA 7 All Benefit Pty Ltd (in liq) v Registrar-General (1993) 11 ACSR 578 Ancient Order of Foresters in Victoria Friendly Society Limited v Lifeplan Australia Friendly Society Limited (2018) 265 CLR 1; [2018] HCA 43 Atkinson v Pengelly [1995] 3 NZLR 104 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 Barnes v Addy (1874) LR 9 Ch App 244 Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384; [1929] HCA 24 Bofinger v Kingsway Group Limited (2009) 239 CLR 269; [2009] HCA 44 Brambles Security Services Ltd v Bi-Lo Pty Ltd [1992] Aust Tort Rep 81-161; (Court of Appeal (NSW), 19 June 1992) Breen v Williams (1996) 186 CLR 71; [1996] HCA 57 Brown Brothers Waste Contractors Pty Ltd v Pittwater Council (2015) 90 NSWLR 717; [2015] NSWCA 215 Bruton Holdings Pty Limited (in liquidation) v Commissioner of Taxation (2009) 239 CLR 346; [2009] HCA 32 Caird Seven Pty Ltd v Mina Attia and Shopsmart Pharmacy Franchising Pty Ltd (No 3) (2016) 92 NSWLR 457; [2016] NSWSC 1452 Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth (2019) 268 CLR 524; [2019] HCA 20 Charles v Jones (1887) 35 Ch D 544 Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; [1998] HCA 4 CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; [2005] HCA 53 C-Shirt Pty Ltd v Barnett Marketing and Management Pty Ltd & Anor (1996) 37 IPR 315; [1996] FCA 1079 CSR Ltd v Eddy (2005) 226 CLR 1; [2005] HCA 64 Davis v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2023] HCA 10 Dodds v Tuke (1884) 25 ChD 617 Equity Trust (Jersey) Ltd v Halabi [2022] UKPC 36 Frame v Smith [1987] 2 SCR 99; (1987) 42 DLR (4th) 81 Grogan v Orr [2001] NSWCA 114 Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298; [2003] NSWCA 10 Hewett v Court (1983) 149 CLR 639; [1983] HCA 7 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64 Howard v Commissioner of Taxation (2014) 253 CLR 83; [2014] HCA 21 In re Hallett's Estate (1880) 13 Ch D 696 Jaken Properties Australia Pty Ltd v Naaman [2022] NSWSC 517 Jaken Properties Australia Pty Ltd v Naaman [2023] NSWSC 268 John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 Johnson v Buttress (1936) 56 CLR 113; [1936] HCA 41 Kemtron Industries Pty Ltd v Commissioner of Stamp Duties [1984] 1 Qd R 576 Kirkham v Peel (1880) 43 LT 171 LAC Minerals v International Corona Resources [1989] 2 SCR 574; (1989) 61 DLR (4th) 14 Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 Legal Services Board v Gillespie-Jones (2013) 249 CLR 493; [2013] HCA 35 Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd (2008) 74 NSWLR 550; [2008] NSWSC 1344 Leung v Fordyce [2019] NSWSC 18 Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560; [2019] HCA 32 McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 Meletsis v Yeo in his capacity as trustee of the bankrupt estate of Karas [2023] FCAFC 93 Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 Naaman v Sleiman [2014] NSWSC 1869 Naaman v Sleiman [2015] NSWCA 259 Norberg v Wynrib [1992] 2 SCR 226; (1992) 92 DLR (4th) 449 Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; [1979] HCA 61 Ramage v Waclaw (1988) 12 NSWLR 84 Re Glenvine Pty Ltd (in liq) [2020] NSWSC 866 Re Wadsworth (1886) 34 Ch D 155 Re Wakim: ex parte McNally (1999) 198 CLR 511; [1999] HCA 27 Reading v The King [1949] 2 KB 232 Residential Housing Corporation v Esber (2011) 80 NSWLR 69; [2011] NSWCA 25 Roam Australia Pty Ltd v Telstra Corp Ltd t/as Telecom Australia [1997] FCA 980 Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd; Carelli v FS Architects Pty Ltd [2008] NSWCA 39 Ron Kingham Real Estate Pty Ltd v Edgar [1999] 2 Qd R 439 Ronori Pty Ltd v ACN 101 071 998 Pty Ltd [2008] NSWSC 246 Ross v Lane Cove Council (2014) 86 NSWLR 34; [2014] NSWCA 50 Rothmore Farms Pty Ltd (in liq) v Belgravia Pty Ltd [2005] SASC 117 Rothmore Farms Pty Ltd (in liq) v Belgravia Pty Ltd (No 2) [2002] SASC 390 Rothmore Farms Pty Ltd (in prov liq) v Belgravia Pty Ltd [1999] FCA 745 Standard Chartered Bank v Antico (Nos 1 and 2) (1995) 38 NSWLR 290 Thynne v Sheringham [2023] NSWCA 181 Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319; [1945] HCA 37 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515; [2004] HCA 16 Yard v Yardoo Pty Ltd & Ors; Yard & Ors v Yard [2007] VSCA 35 Texts Cited: JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (LexisNexis, 5th Edition, 2015) L Smith "Prescriptive Fiduciary Duties" (2018) 37(2) University of Queensland Law Journal 261 N Palmer, Palmer on Bailment (3rd ed, Thomson Reuters, 2009) PD Finn, "The Fiduciary Principle" in TG Youdan, Equity, Fiduciaries and Trusts (Carswell, 1989) PD Finn, Fiduciary Obligations (Federation Press, 2016) Sykes & Walker, The Law of Securities (5th ed, 1993, Lawbook Co) Category: Principal judgment Parties: Jaken Properties Australia Pty Ltd as trustee for the Sly Fox Family Trust (First Appellant) Peter Sleiman (Second Appellant) Tony Sleiman (Third Appellant) Superior Family Investments Pty Ltd (Fourth Appellant) O'Malley's Hotel Pty Ltd (Fifth Appellant) PSJK Holdings Pty Ltd (Sixth Appellant) Powerhouse Corporation Pty Ltd (Seventh Appellant) Anthony Naaman (Respondent) Representation: Counsel: J C Kelly SC with A Maroya (Appellants) P Afshar (Respondent)