George v Webb & ors [2011] NSWSC 1608

Supreme Court New South Wales

Medium Neutral Citation: George v Webb & ors [2011] NSWSC 1608 Hearing dates: 28 & 29 November 2011 Decision date: 20 December 2011 Jurisdiction: Equity Division Before: Ward J Decision: Judgment for the plaintiff on claim against first and second defendants for equitable compensation for breach of Quistclose trust and against third defendant for accessorial liability in respect of that breach of trust; claim against first and second defendants not an apportionable claim for purposes of statutory proportionate liability regime; judgment for cross-claimants on cross-claim against third defendant for misleading and deceptive conduct in breach of Fair Trading Act. Catchwords: EQUITY - TRUSTS - whether moneys paid into firm of solicitors' trust account was held on express trust for plaintiff as it was only to be used for a prescribed purpose - whether trust was breached by payment out of trust account of moneys for purposes other than prescribed purpose - whether plaintiff entitled to equitable compensation - whether third defendant liable as an accessory to breach of express trust or breach of Quistclose trust under the first and/or second limbs of Barnes v Addy - consideration of Quistclose trust - HELD - express trust in favour of plaintiff - breach of trust established - plaintiff entitled to equitable compensation - third defendant liable for receiving and becoming chargeable with trust property and for knowing assistance in breach of trust - TORTS - NEGLIGENCE - duty of care - whether firm of solicitors, as trustees under Quistclose trust owed plaintiff a duty of care in relation to moneys held in trust account and whether that duty has been breached - HELD - had this issue arisen breach of duty of care would have been established - CONTRACT - whether contract between plaintiff and third defendant and if so whether third defendant is liable to repay moneys pursuant to frustration of contract or on a failure of consideration - HELD - contract established between plaintiff and third defendant - had this issue arisen third defendant would have been liable on total failure of consideration or on frustration of contract - PROPORTIONATE LIABILITY - whether claim for equitable compensation for breach of trust is an apportionable claim pursuant to Part 4 of the Civil Liability Act 2002 (NSW) - HELD - liability for breach of trust where that liability not predicated on failure to take reasonable care is not an apportionable claim - FAIR TRADING ACT - whether cross-defendant liable for misleading and deceptive conduct - HELD liable to indemnify for loss caused by misrepresentation that funds were beneficially his - EQUITABLE CONTRIBUTION - whether power to order unequal contribution between concurrent wrongdoers - HELD - equitable contribution had it arisen in this case should be pro rata Legislation Cited: Civil Liability Act 2002 (NSW) Civil Procedure Act 2005 (NSW) Fair Trading Act 1987 (NSW) Fair Trading Amendment (Australian Consumer Law) Act 2010 (NSW) Law Reform (Miscellaneous Provisions) Act 1946 (NSW) Cases Cited: Acohs Pty Ltd v RA Bashford Consulting Pty Ltd (1997) 144 ALR 528 Albion Insurance Company Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 Armstrong v Commissioner of Stamp Duties (1967) 69 SR (NSW) 38 Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (In liq) (1978) 141 CLR 335 Baden Delvaux & Lecuit v Societe Generalepour Favoriser le Development du Commerce [1992] 4 All ER 161; [1993] 1 WLR 509 Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 Barnes v Addy (1874) LR 9 Ch App 244 Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239; (2008) 225 FLR 1 Bialkower v Acohs Pty Ltd & RA Bashford Consulting Pty Ltd (1998) 83 FCR 1; 154 ALR 534 Burke v LFOT Pty Limited [2002] HCA 17; (2002) 209 CLR 282 Chandra v Perpetual Trustees Victoria Ltd [2007] NSWSC 694; (2007) ANZ ConvR 481 Commonwealth Bank of Australia v Witherow [2006] VSCA 45 Consul Development Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 CLR 373 Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd [2007] FCA 1216; (2007) 164 FCR 450 Degiorgio v Dunn [No 2] [2005] NSWSC 3; (2005) 62 NSWLR 284 Dering v Winchelsea (1787) 1 Cox Eq Cas 318 Duke Group Ltd (In Liq) v Pilmer [1998] SASC 6529; (1998) 27 ACSR 1 El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685 Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 Fico v O 'Leary [2004] WASC 215 Flack v Chairperson, National Crime Authority (1997) 80 FCR 137; 150 ALR 153 Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Limited [1964] 2 QB 480; 1 All ER 630 Georges v Wieland [2009] NSWSC 733 Grupo Torras SA v Al-Sabah [No 5] [1999] CLC 1469 Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 In the matter of Travel House of Australia Pty Ltd; Browne v The Deputy Commissioner of Taxation (unreported, Supreme Court of Victoria, Murray J, 1978) James Hardie & Co v Wyong Shire Council [2000] NSWCA 107; (2000) 48 NSWLR 679 Jones v Dunkel (1959) 101 CLR 298 Jones v Mortgage Acceptance Nominees Ltd (1996) 63 FCR 418 Knight v Knight (1840) 3 Beav 148 Koorootang Nominees Pty Ltd v Australia and New Zealand Banking Group Ltd [1998] 3 VR 166 Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 Mahoney v McManus [1981] HCA 54; (1981) 180 CLR 370 Main Road Property Group Pty Ltd v Pelligra & Sons Pty Ltd [2010] VSC 5 McLean v Discount & Finance Limited (1939) 64 CLR 312 McManus RE Pty Ltd v Ward [2009] NSWSC 440; (2009) 74 NSWLR 662 Morgan Equipment Company v Rodgers (1993) 32 NSWLR 467 New Cap Reinsurance Corporation Ltd v General Cologne Re Australia Ltd [2004] NSWSC 781 Payne v Parker [1976] 1 NSWLR 191 Pearsons Barristers and Solicitors v Avison [2009] VSCA 54; (2009) 1 ASTLR 417 Peter Cox Investments Pty Ltd (in liq) v International Air Transport Association [1999] FCA 27; (1999) 161 ALR 105 Pilmer v The Duke Group Ltd (In Liq) [2001] HCA 31; (2001) 207 CLR 165 Re Armstrong (1960) VR 202 Re Associated Securities Ltd and the Companies Act [1981] 1 NSWLR 742 Re Elizabethan Theatre Trust, Lord v Commonwealth Bank of Australia (1991) 30 FCR 491 Re EVTR; Gilbert v Barber [1987] BCLC 646 Re Miles; Ex parte National Australia Bank Ltd v Official Receiver in Bankruptcy (1988) 85 ALR 216 Re Wall; Ex parte Official Receiver v Kemmis (1979) 25 ALR 615 Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187 Roxborough v Rothmans of Pall Mall Australia Ltd [1999] FCA 1535; (1999) 167 ALR 326 Salvo v New Tel Ltd [2005] NSWCA 281 Selangor United Rubber Estates Ltd v Craddock [No 3] [1968] 2 All ER 1073 Sky Channel Pty Ltd v Tszyu [No 2] [2000] NSWSC 1150 Spangaro v Corporate Investment Australia Funds Management Ltd [2003] FCA 1025; (2003) 54 ATR 241 Syrimi v Hinds (1996) 6 NTLR 1 Twinsectra v Yardley [2002] UKHL 12; 2 AC 164 Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505 Walker v Corboy (1990) 19 NSWLR 382 Walsh Bay Developments Pty Ltd v Federal Commissioner of Taxation (1995) 130 ALR 415 Walsh v Permanent Trustee Australia Ltd (1996) 21 ACSR 213 Wickman Tools v Schuler AG [1974] AC 235 Wright v Atkyns (1823) Turn & R 143 Texts Cited: Gummow, WMC 'Equity: Too Successful?' (2003) 77 Australian Law Journal 30 Gurr, A, 'Accessory Liability and Contribution, Release and Apportionment' (2010) 34, Melbourne University Law Review Ford and Lee, Principles of the Law of Trusts Harpum, C 'The Stranger as Constructive Trustee (Part 1)' (1996) Law Quarterly Review Heydon, JD, Cross On Evidence (online edn) Heydon and Leeming, Jacobs' Law of Trusts in Australia (7th edn) Meagher, Gummow and Lehane, Equity Doctrine and Remedies (4th edn) Mukerjea, S, 'Proportionate Liability for Economic Loss: The Story So Far' (2008) 19 Insurance Law Journal 279 Swadling, W (ed) The Quistclose Trust: Critical Essays (2004) Vann, V, 'Equity and proportionate liability', (2007) 1 Journal of Equity 199 Young, Croft and Smith, On Equity (2009) Category: Principal judgment Parties: Jane Anne George (Plaintiff) Lewis James Webb (First Defendant) Dennis Patrick Grogan (Second Defendant) Martin Geoffrey Burke (Third Defendant) Representation: Counsel J C Kelly SC (Plaintiff) I Griscti (First and Second Defendants) J Young (Third Defendant) Solicitors Uther Webster & Evans (Plaintiff) Gilchrist Connell (First and Second Defendants) Diamond Conway (Third Defendant) File Number(s): 09/291563