Wambo Coal Pty Ltd v Stuart Karim Ariff & 1 Or [2007] NSWSC 589

Reported Decision : 63 ACSR 429 (2007) 25 ACLC 809

New South Wales Supreme Court

CITATION : Wambo Coal Pty Ltd v Stuart Karim Ariff & 1 Or [2007] NSWSC 589

HEARING DATE(S) : 02/11/06, 01/12/06

JUDGMENT DATE : 12 June 2007

JURISDICTION : Equity Division Corporations List

JUDGMENT OF : White J

DECISION : See paragraphs 70-73 of judgment.

CATCHWORDS : RESTITUTION – Mistake – Recovery of moneys paid under mistake – Where payments made to company in liquidation by mistake – Payment by mistake not in itself sufficient to impress moneys with constructive trust – Where order for restitution would be futile because company in liquidation with no assets remaining. - EQUITY – Trusts – Constructive trust – Breach of trust – Where payments made to company in liquidation by mistake – Where payer notified liquidator of mistaken payments – Where liquidator asserted company's entitlement to moneys without making enquiries which he knew would provide definitive answer as to whether or not such an entitlement existed – No constructive trust arising before company aware that not entitled to receive moneys – Constructive trust arising when company becomes aware that not entitled to receive moneys – Where liquidator wilfully and recklessly failed to make enquiries for fear of learning that company not entitled to retain moneys – Knowledge of facts which give rise to a constructive trust – Liquidator's state of mind that of the company, so that moneys received by company impressed with trust – Company in liquidation liable to account as trustee – Where order to account as trustee would be futile because company in liquidation with no assets remaining. - EQUITY – Trusts – Constructive trust – Breach of trust – Knowing receipt – Rule in Barnes v Addy – Where moneys paid by mistake impressed with trust – Where liquidator wilfully and recklessly failed to make enquiries for fear of learning that company not entitled to retain moneys – Knowledge of facts which give rise to a constructive trust – Where liquidator directed that payments due to him as liquidator be paid to third parties – Payments to third parties in satisfaction of debt owed to liquidator constitute payments received by liquidator – Payments to third parties constitute breach of fiduciary duties which duties arise because of circumstances giving rise to constructive trust – Held that liquidator liable to account for moneys received in breach of trust under first limb in Barnes v Addy.