McNally v Harris [2008] NSWSC 659

New South Wales Supreme Court

CITATION : McNally v Harris [2008] NSWSC 659

HEARING DATE(S) : 19-23 November 2007; 26 November 2008

JUDGMENT DATE : 30 June 2008

JURISDICTION : Equity

JUDGMENT OF : White J

DECISION : Direct counsel for the plaintiffs to bring in short minutes of order in accordance with the reasons.

CATCHWORDS : TRUSTS – trustees – breach of trust – intentional breach by trustee company – liability of director who was the controlling mind of the trustee company – liable under both limbs of Barnes v Addy - TRUSTS – trustees – breach of trust – intentional breach by trustee company through a director – liability of a sleeping director – first limb of Barnes v Addy – whether receipt of trust property with knowledge of recipient company or notice of trust – must be aware of receipt – sufficient if an honest and reasonable person would have had knowledge – sleeping director signed share transfer without inquiry – whether put on inquiry because transfer was for nil consideration – no knowledge of trust – no such notice – whether property received for own use and benefit – insufficient that money from sale of shares was received into trustee company's account - TORTS – injurious falsehood – malice – malice may be shown by some indirect dishonest or improper motive or intention to injure – causation – need for harm of the kind intended or that was a natural and probable consequence of such actions – no loss resulted from notice to ASIC of change to officeholders – loss did result from lodging share transfer notice with company - DAMAGES – exemplary damages – punishment for conscious wrongdoing in contumelious disregard of plaintiff's rights – disregard not contumelious – compensatory damages sufficient - CORPORATIONS – directors – consent to act – whether consent necessary for person to become a director – an offence to fail to obtain signed consent under s 201D Corporations Act – premise of provision is that person may be a director even though consent not signed - PARTNERSHIPS – whether person knowingly suffered himself to be held out as a partner – no such knowledge where person unaware of matter suggesting partnership – where firm engaged due to pre-existing relationship between client and the 'partner' engaged – no credit given on the faith of any representation of partnership - TRUSTS – trustees – breach of trust – equitable compensation – contribution and indemnity – right of trustee to contribution where his breach of trust was fraudulent – unclean hands – equity will not grant relief – same rule applies to accessaries