Sze Tu v Lowe [2014] NSWCA 462

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Sze Tu v Lowe [2014] NSWCA 462 Hearing dates: 27 - 28, 31 March, 1 - 3 April 2014 Decision date: 23 December 2014 Before: Meagher JA at [1]; Barrett JA at [2]; Gleeson JA at [4] Decision: 2013/107940 (Sunly and Gordon) (1) Appeal allowed. (2) Set aside orders 3, 4(a)(ii) and (iii), (c)(iv) and (v), 5, 6, 7, 8, 9 and 11. (3) In lieu thereof: (i) Dismiss the proceedings against the fifth and sixth defendants. (ii) Declare that the partnership, being the partnership declared by Smart AJ on 25 June 2010 (the Partnership), was dissolved on 1 July 1989. (iii) Declare that 90% of any profits (if any) derived by the late Kut Sze Tu from the Partnership Properties after just allowances (if any) since the date of their acquisition were and are held on constructive trust for the Partnership. (iv) Direct that an inquiry be held to identify what (if any) moneys the plaintiffs are entitled to from the late Kut Sze Tu by way of an account of profits after taking into account any just allowances, in respect of the benefits (if any) obtained by the late Kut Sze Tu through his ownership, possession and/or use of his respective interests in the Partnership Properties since their acquisition. (v) Order that the first defendant pay to the plaintiffs 20% of the amount of the benefits the late Kut Sze Tu obtained through his ownership, possession and/or use of the Partnership Properties since their acquisition as may be found to be due pursuant to the inquiry referred to in order (iv) above (vi) In these orders the reference to "Partnership Properties" has the same meaning as given to these words in order 1 made by Gzell J on 13 March 2013. (4) Reserve all questions of costs in this Court and below. (5) In default of agreement as to costs, direct: (a) the appellants to file and serve within 35 days of the date of delivery of judgment their proposed short minutes of order on the issue of costs in this Court and below together with written submissions not to exceed 8 pages; (b) the first and second respondents to file and serve their proposed short minutes of order on the issue of costs in this Court and below together with written submissions not to exceed 8 pages within 14 days after service on them of the appellants' submissions contemplated by the previous order; (c) the appellants to file and serve any written submissions in reply not to exceed 4 pages within 10 days after receiving the first and second respondents' submissions. (6) Note that the Court will determine the issue of costs on the papers. 2013/107472 (Margaret) (1) Appeal allowed. (2) Set aside orders 3, 4(b)(ii) and (c)(ii), 5, 6, 7, 8, 9 and 11. (3) In lieu thereof: (i) Dismiss the proceedings against the second defendant. (ii) Declare that the partnership, being the partnership declared by Smart AJ on 25 June 2010 (the Partnership), was dissolved on 1 July 1989. (iii) Declare that 90% of any profits (if any) derived by the late Kut Sze Tu from the Partnership Properties after just allowances (if any) since the date of their acquisition were and are held on constructive trust for the Partnership. (iv) Order that an inquiry be held to identify what (if any) moneys the plaintiffs are entitled to from the late Kut Sze Tu by way of an account of profits after taking into account any just allowances, in respect of the benefits (if any) obtained by the late Kut Sze Tu through his ownership, possession and/or use of his respective interests in the Partnership Properties since their acquisition. (v) Order that the first defendant pay to the plaintiffs 20% of the amount of the benefits the late Kut Sze Tu obtained through his ownership, possession and/or use of the Partnership Properties since their acquisition as may be found to be due pursuant to the inquiry referred to in order (iv) above (vi) In these orders the reference to "Partnership Properties" has the same meaning as given to these words in the order 1 made by Gzell J on 13 March 2013. (4) Reserve all questions of costs in this Court and below. (5) In default of agreement as to costs, direct: (a) the appellants to file and serve within 35 days of the date of delivery of judgment their proposed short minutes of order on the issue of costs in this Court and below together with written submissions not to exceed 8 pages; (b) the first and second respondents to file and serve their proposed short minutes of order on the issue of costs in this Court and below together with written submissions not to exceed 8 pages within 14 days after service on them of the appellants' submissions contemplated by the previous order; (c) the appellants to file and serve any written submissions in reply not to exceed 4 pages within 10 days after receiving the first and second respondents' submissions. (6) Note that the Court will determine the issue of costs on the papers. 2013/108447 (Helen) (1) Appeal allowed. (2) Set aside orders 3, 4 (c)(iii), 5, 6, 7, 8, 9 and 11. (3) In lieu thereof: (i) Dismiss the proceedings against the third defendant. (ii) Declare that the partnership, being the partnership declared by Smart AJ on 25 June 2010 (the Partnership), was dissolved on 1 July 1989. (iii) Declare that 90% of any profits (if any) derived by the late Kut Sze Tu from the Partnership Properties after just allowances (if any) since the date of their acquisition were and are held on constructive trust for the Partnership. (iv) Order that an inquiry be held to identify what (if any) moneys the plaintiffs are entitled to from the late Kut Sze Tu by way of an account of profits after taking into account any just allowances, in respect of the benefits (if any) obtained by the late Kut Sze Tu through his ownership, possession and/or use of his respective interests in the Partnership Properties since their acquisition. (v) Order that the first defendant pay to the plaintiffs 20% of the amount of the benefits the late Kut Sze Tu obtained through his ownership, possession and/or use of the Partnership Properties since their acquisition as may be found to be due pursuant to the inquiry referred to in order (iv) above (vi) In these orders the reference to "Partnership Properties" has the same meaning as given to these words in order 1 made by Gzell J on 13 March 2013. (4) Reserve all questions of costs in this Court and below. (5) In default of agreement as to costs, direct: (a) the appellants to file and serve within 35 days of the date of delivery of judgment their proposed short minutes of order on the issue of costs in this Court and below together with written submissions not to exceed 8 pages; (b) the first and second respondents to file and serve their proposed short minutes of order on the issue of costs in this Court and below together with written submissions not to exceed 8 pages within 14 days after service on them of the appellants' submissions contemplated by the previous order; (c) the appellants to file and serve any written submissions in reply not to exceed 4 pages within 10 days after receiving the first and second respondents' submissions. (6) Note that the Court will determine the issue of costs on the papers. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: EQUITY - Tracing - Onus and standard of proof - Where wrongdoer has mixed stolen moneys with own moneys - Black v Freedman claim attaches immediately to stolen money and its traceable product - Volunteer recipient of stolen funds, or traceable product, in no better position than the wrongdoer - Onus on wrongdoer and/or recipient to prove what contribution was from the wrongdoer's own moneys - Standard of proof in Briginshaw v Briginshaw and s140 Evidence Act applied LIMITATION OF ACTIONS - Partnership - Action for an account - Cause of action arises upon dissolution of partnership - Application of s15 Limitation Act directly or by analogy - Laches will not be available as a further defence in circumstances where the claim is subject to a statutory bar LIMITATION OF ACTIONS - Partnership - Action for an account of profits or to recover trust property -- Application of s 15 Limitation Act by analogy to an action for an account of profits in relation to trust assets - Application of s 47 Limitation Act directly or by analogy to an action to recover trust property or profits derived from trust property - When does time begin to run - When did the plaintiff first discover, or could have with reasonable diligence discovered, the facts giving rise to the cause of action and that the cause of action has accrued PARTNERSHIPS AND JOINT VENTURES - Partnerships - Actions by and against partners - Partnership funds mixed with funds of a partner and used to purchase residential and investment properties - Black v Freedman claim - Institutional constructive trust over the partnership moneys (or their traceable product) - Equitable obligations imposed at the time of theft or, in the case of a volunteer recipient, from the time that they acquire knowledge of the theft - Whether indefeasibility defence under s 42 Real Property Act available for volunteer recipient where acquired registered title prior to being placed on notice of the theft - Fraud exception to s42 not pleaded - Fraud cannot be raised as a new point on appeal - Whether any in personam exception to indefeasibility applicable PARTNERSHIPS AND JOINT VENTURES - Partnerships - Dissolution - Single adventure or undertaking - Whether a partnership operating two businesses can be considered a single venture - Whether separate termination dates for the businesses precludes the partnership being seen as a "single venture" PARTNERSHIPS AND JOINT VENTURES - Partnerships - Partnership Property - Application of ss20(1) and 21 Partnership Act - Deeming of property bought with partnership funds to be partnership property "held in trust for the partnership" - Statutory provisions do not create a trust "in the strict sense" nor are they sufficient to make the land "trust property" TRUSTS - General - Partnership funds mixed with funds of a partner and used to purchase residential and investment properties - Whether the moneys or the properties (as their traceable product) are subject to statutory, express, resulting, or constructive trusts - Whether proprietary and/or accounting relief available Legislation Cited: Civil Procedure Act 2005 (NSW) ss 88 and 89 Conveyancing Act 1919 (NSW) s 23C Evidence Act 1995 (NSW) ss 136 and 140 Evidence Act 1995 (Cth) Limitation Act 1939 (England) Limitation Act 1969 (NSW) ss 11, 15, 23, 24, 47, 48, 55, and 68A Limitation Act 1980 (England) Partnership Act 1898 (NSW) ss 1, 19, 20, 21, 22, 23, 29, 32, 33, s35, and 39 Real Property Act 1900 (NSW) s 42 Trustee Act 1925 (England) Uniform Civil Procedure Rules 2005 (NSW) r 14.14, 15.3, and 42.1 Wills Probate and Administration Act 1898 (NSW) s 18A Cases Cited: Agip (Africa) Ltd v Jackson [1990] Ch 265 Attorney-General v Cocke [1988] AC 414 Auzhair Supplies Pty Ltd v Gerace [2014] HCASL 231 Bahr v Nicolay [No 2] [1988] HCA 16; 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Lockey (1719) Prec Ch 518 Lowe v Pascoe [2010] NSWSC 388; 5 ASTLR 1 Lowe v Pascoe (Supreme Court (NSW), Smart AJ, 25 June 2010, unrep) Lowe v Pascoe [2012] NSWSC 151 Lowe v Pascoe [2012] NSWSC 740 Lowe v Pascoe (No 2) [2012] NSWSC 885 Lowe v Pascoe (No 3) [2011] NSWSC 192 Lowe v Pascoe (No 4) [2012] NSWSC 1493 Lowe v Pascoe (No 6) (Supreme Court (NSW), Gzell J, 13 March 2013, unrep) Lurgi (Australia) Pty Ltd v Gratz [2000] VSC 278 McCaughey v Commissioner of Stamp Duties (NSW) [1914] HCA 45; 18 CLR 475 Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 Mamo v Surace [2014] NSWCA 58; 86 NSWLR 275 Marshall v Bullock [1998] EWCA Civ J0327-15 Martin v Martin [1959] HCA 62; 110 CLR 297 Mayer v Coe [1968] 2 NSWR 747 Metwally v University of Wollongong [1985] HCA 28; 60 ALR 68 Moratic Pty Ltd v Gordon [2007] NSWSC 5 Multicon Engineering Pty Ltd v Federal Airports Corporation [1997] NSWCA 214; 47 NSWLR 631 Muschinski v Dodds [1985] HCA 78; 160 CLR 583 Napier v Public Trustee (WA) (1980) 55 ALJR 1; 32 ALR 153 National Westminster Bank Plc v Jones [2001] 1 BCLC 98 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; 67 ALJR 170; 110 ALR 449 Nelson v Nelson (1994) 33 NSWLR 740 Nolan v Nolan [2004] VSCA 109 Noyes v Crawley (1878) 10 Ch D 31 O'Brien v Komesaroff [1982] HCA 33; 150 CLR 310 Orr v Ford [1989] HCA 4; 167 CLR 316 Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400 Paulet v Stewart [2009] VSC 60 Pearl Milco Ltd v Ivy Tannery Co Ltd (1919) 1 KB 78 Perpetual Executors & Trustees Association of Australia Ltd v Federal Commissioner of Taxation (Thomas' Case) [No 2] [1955] HCA 66; 94 CLR 1 at 15 Pettitt v Pettitt [1970] AC 777 Port of Brisbane Corporation v ANZ Securities Ltd [2002] QCA 158 R v McNeil [1922] HCA 33; 31 CLR 76 R v Powell (1837) 7 Car & P 640 ; 173 ER 280 Re Fuller's Contract [1933] Ch 652 Re Hallett's Estate (1879) 13 Ch D 696 Re Howlett [1949] Ch 767 Re Lands Allotment Co [1894] 1 Ch 616 Re Oriental Inland Steam Co; Ex parte Scinde Railway Co (1874) LR 9 Ch App 557 Re Sharpe, Re Bennett, Masonic and General Life Assurance Co v Sharpe [1892] 1 Ch 154 Re Sutherland; French Caledonia Travel Service Pty Ltd [2003] NSWSC 1008; 59 NSWLR 361 Robb Evans of Robb Evans & Associates v European Bank Ltd [2004] NSWCA 82; 61 NSWLR 75 Ryan v Dries [2002] NSWCA 3 Ryder v Frohlich [2004] NSWCA 472 Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; 69 NSWLR 603 Sandhu v Gill [2006] Ch 456 Savage v Lunn [1998] NSWCA 203; BC9800548 Sharp v Union Trustee Co of Australia Ltd (1944) 69 CLR 539 Shephard v Cartwright [1955] AC 431 Short v Crawley (No 30) [2007] NSWSC 1322 Sidhu v Van Dyke [2014] HCA 19; 308 ALR 232 Stilbo Pty Ltd v MCC Pty Ltd [2003] TASSC 6; 11 Tas R 63 Stuart v Kingston [1923] HCA 17; 32 CLR 309 Summers v The Commonwealth [1918] HCA 33; 25 CLR 144 Super 1000 Pty Ltd v Pacific General Securities Ltd [2008] NSWSC 1222 Suttor v Gundowda Pty Ltd [1950] HCA 35; 81 CLR 418 Tara Shire Council v Garner [2002] QCA 232; [2003] 1 Qd R 556 Taylor v. 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