John Sheahan v Martin Thompson (No 2) [2015] NSWSC 871

Supreme Court New South Wales

Medium Neutral Citation: John Sheahan v Martin Thompson (No 2) [2015] NSWSC 871 Hearing dates: 4, 5, 6, 7 and 8 May 2015 Date of orders: 02 July 2015 Decision date: 02 July 2015 Jurisdiction: Equity Division - Commercial List Before: Rein J Decision: See [186] Catchwords: EQUITY - trusts - where payment to a unitholder a pre-condition to payment to other potential objects upon vesting - breach of trust - where payment made by trustees to a third party out of trust assets to settle separate proceedings against the trustees personally for misapplication of trust assets - whether the unitholder consented to the payment out of trust assets - whether consent fully informed- knowing receipt - first limb of Barnes v Addy - whether the defendant who received trust property had knowledge of the breach of trust - whether the first defendant's knowledge is to be treated as the knowledge of the corporate defendants which received trust property - whether rescission necessary in a claim in personam for knowing receipt of trust property- release - whether a trustee who has agreed to pay out trust money to a third party in breach of trust for its own benefit can give an effective release to the third party recipient - whether successor trustees bound by deed of release granted by original trustees to a third party - where releases contained in two separate deeds - whether rescission of both deeds a precondition to relief - whether defences of laches, acquiescence and delay can be established Legislation Cited: Limitation Act 1969 (NSW) Cases Cited: Addstead Pty Ltd (in liq) v Liddan Pty Ltd [1997] SASC 6369 Alati v Kruger (1955) 94 CLR 216 Armitage v Nurse [1998] Ch 241 Barnes v Addy (1874) LR 9 Ch App 244; (1874) 43 LJ Ch 513 Beach Petroleum NL v Johnson (1993) 43 FCR 1 Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 Clay v Clay [2001] HCA 9; (2001) 202 CLR 410 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 Cowan v Scargill [1985] Ch 270 Crossman v PILT Nominees Pty Ltd [2008] NSWSC 557 Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 Duke Group Ltd (in liq) v Pilmer (1999) 73 SASR 64 Entwells Pty Ltd v National & General Insurance Co Ltd (1991) 5 ACSR 424 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 Gartside v Inland Revenue Commissioners [1968] AC 553 Gerard Cassegrain & Co Pty Ltd (in liq) v Cassegrain [2013] NSWCA 455; (2013) 305 ALR 687 Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 Grimaldi v Chameleon Mining NL (No 2); Chameleon Mining NL v Murchison Metals Ltd [2012] FCAFC 6; (2012) 200 FCR 296 Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609 Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572 Hunting v Safford, 66 N.E 642 (Mass.1903) John v Dodwell & Company Ltd [1918] AC 563 at 569 John Sheahan v Martin Thompson [2015] NSWSC 535 Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 Londish v Sheahan [2009] NSWSC 1175 Maguire v Makaronis (1997) 188 CLR 449 McClaughry v McClaughry, 15 A. 613 (Pa. 1888) McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 Metropolitan Gas Co v Federal Commissioner of Taxation (1932) 47 CLR 621 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 110 ALR 449 Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; (2001) 53 NSWLR 116 Orr v Ford [1989] HCA 4; (1989) 167 CLR 316 Pannell v Hurley (1845) 2 Coll 241, 245; 63 ER 716 Petrossi Bros. Contracting Corp v Town of Greece, 29 N.Y.S.2d 305 (Sup. Ct. 1941) Plan B Trustees Ltd v Parker (No 2) [2013] WASC 216; (2013) 11 ASTLR 242 Ramage v Waclaw (1988) 12 NSWLR 84 Robins v Incentive Dynamics Pty Ltd (in liq) [2003] NSWCA 71; (2003) 175 FLR 286 Sheahan v Londish [2010] NSWCA 270; (2010) 244 FLR 64 Simmons v New South Wales Trustee and Guardian [2014] NSWCA 405 Spellson v George [1992] NSWCA 254; (1992) 26 NSWLR 666 Strang v Owens (1925) 42 WN (NSW) 183 Streeter v Western Areas Exploration Pty Ltd (No 2) [2011] WASCA 17; (2011) 82 ACSR 1 Tara Shire Council v Garner [2003] 1 Qd R 556 Tesco Supermarkets Ltd v Nattrass [1972] AC 153 Timan v Leland, 6 Hill 237 (N.Y. 1843) Vadasz v Pioneer Concrete (SA) Pty Ltd [1995] HCA 14; (1995) 184 CLR 102 Valofo Pty Ltd (Administrators Appointed) v PILT Nominees Pty Ltd [2011] NSWSC 134 Walker v Stones [2001] QB 902 Welch v Mandeville, 14 U.S. (1 Wheat.) 233 (1816), 18 U.S. (5 Wheat.) 277(1820) White v Overland [2001] FCA 1333 Wilson v Metro Goldwyn Mayer (1980) 18 NSWLR 730 Yeshiva Properties No 1 Pty Ltd v Marshall [2005] NSWCA 23; (2005) 219 ALR 112 Texts Cited: JD Heydon and MJ Leeming (eds) Jacobs' Law of Trusts in Australia (7th ed 2006, Lexis Nexis) JD Heydon, MJ Leeming and PG Turner (eds), Meagher, Gummow and Lehane's Equity: Doctrines & Remedies (5th ed 2015, LexisNexis) Austin Wakeman Scott, William Franklin Fratcher, Mark L Ascher, Scott and Ascher on Trusts (5th ed, 2008, Aspen Publishers) Category: Principal judgment Parties: John Sheahan (First Plaintiff) Ian Lock (Second Plaintiff) Valofo Pty Ltd (in liquidation) ACN 003 366 934 (Third Plaintiff) Martin Thompson (First Defendant) Michael Silas Chan (Second Defendant) Phillip Crossman (Third Defendant) Seniors Provident Pty Limited (Fourth Defendant) Metro Finance Pty Limited (Fifth Defendant) Pilt Nominees Pty Limited (Sixth Defendant) Ross Seller (Seventh Defendant) Peter Londish (Eighth Defendant) Metro Finance NZ Pty Limited (Ninth Defendant) Representation: Counsel: J.E Marshall SC with D. Sulan (First, Second and Third Plaintiffs) A.S Bell SC with D.F.C Thomas (Third, Fourth, Fifth and Ninth Defendants) No appearance for the First, Second, Sixth, Seventh and Eight Defendants)