Crossman v Sheahan [2016] NSWCA 200

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Crossman v Sheahan [2016] NSWCA 200 Hearing dates: 27 and 28 April 2016 Decision date: 23 August 2016 Before: Basten JA at [1]; Ward JA at [37]; Payne JA at [390] Decision: (1) Appeal allowed with costs. (2) Set aside the orders of Rein J made on 2 July 2013 and in lieu thereof order that: (a) The plaintiffs' Further Amended Commercial List Summons filed on 28 April 2014 be dismissed. (b) The first and second plaintiffs pay the costs of the third, fourth, fifth and ninth defendants. Catchwords: EQUITY – trusts – where payment made by trustees to third party out of trust assets to settle separate proceedings against trustees personally for misapplication of trust assets – whether beneficiary consented to breach of trust – knowing receipt – whether appellant who received trust property had knowledge of breach of trust so as to be liable under first limb of Barnes v Addy – where releases contained in two separate deeds – whether a knowing recipient of trust property can rely on release clauses excluding liability of trustees for breach of trust – whether rescission of both deeds a precondition to relief – whether entire agreement clauses in each deed precluded release in one deed operating in relation to claim for breach in respect of the other – whether substantial restitution possible – whether defences of laches, acquiescence, delay should have been upheld

APPEAL – apprehended bias – whether primary judge should have recused himself for having heard earlier application for appointment of new trustees Legislation Cited: Corporations Act 2001 (Cth), s 471B Trustee Act 1925 (NSW), s 63 Uniform Civil Procedure Rules 2005 (NSW), r 51.53 Cases Cited: Agricultural Land Management Ltd v Jackson (No 2) [2014] WASC 102 AH McDonald & Co Pty Ltd v Wells [1931] HCA 24; (1931) 45 CLR 506 Alati v Kruger [1955] HCA 64; (1955) 94 CLR 216 Amcor Packaging (Australia) Pty Ltd v Baulderstone Pty Ltd [2013] FCA 253 Armitage v Nurse [1998] Ch 241 Australian National Industries Ltd v Spedley Securities Ltd (In liq) (1992) 26 NSWLR 411 Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 247 CLR 345 Barnes v Addy (1874) LR 9 Ch App 244 Bathurst City Council v PWC Properties Pty Ltd [1998] HCA 59; (1998) 195 CLR 566 Beach Petroleum NL v Johnson (1993) 43 FCR 1 Bilta (UK) Ltd (in liq) v Nazir (No 2) [2015] UKSC 23; 2 WLR 1168 Blackmagic Design Pty Ltd v Overliese [2011] FCAFC 24; (2011) 191 FCR 1 Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283; [2011] HCA 2 Commonwealth Bank of Australia v Smith (1991) 42 FCR 390 Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd [2006] HCA 55; (2006) 229 CLR 577 Crossman v PILT Nominees Pty Ltd [2008] NSWSC 557 Crossman v PILT Nominees [2009] NSWSC 393 Daly v Sydney Stock Exchange Ltd [1986] HCA 25; (1986) 160 CLR 371 Duke Group Ltd (in liq) v Alamain Investments Ltd [2003] SASC 415 Duke Group (in liq) v Pilmer [1999] SASC 97; (1999) 73 SASR 64 Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 Gerard Cassegrain & Co Pty Ltd (in liq) v Cassegrain [2013] NSWCA 455; (2013) 305 ALR 687 Goodwin v Commissioner of Police [2012] NSWCA 379 Grant v John Grant & Sons Pty Ltd [1954] HCA 23; (1954) 91 CLR 112 Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; (2012) 200 FCR 296 Hancock Family Memorial Foundation Ltd v Porteous [2000] WASCA 29; (2000) 22 WAR 198 House v The King [1936] HCA 40; (1936) 55 CLR 499 Incitec Ltd v Alkimos Shipping Corporation [2004] FCA 698; (2004) 138 FCR 496 Inntrepreneur Pub Co v East Crown Ltd [2000] 2 Lloyd's Rep 611 Isbester v Knox City Council (2015) 255 CLR 135; [2015] HCA 20 Jackamarra v Krakouer [1998] HCA 27; (1998) 195 CLR 516 Johnson v Johnson (2000) 201 CLR 488; [2000] HCA 48 Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 Laws v Australian Broadcasting Tribunal [1990] HCA 31; (1990) 170 CLR 70 Leerac Pty Ltd v Garrick E Fay [2008] NSWSC 1082 Lightsource Technologies Australia Pty Ltd v Pointsec Mobile Technologies AB [2011] ACTSC 59 Livesey v NSW Bar Association (1983) 151 CLR 288 Londish v Sheahan – In re Valofo Pty Ltd [2010] NSWSC 337 Londish v Sheahan [2009] NSWSC 1175 Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449 Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184; (2014) 89 NSWLR 633 Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; (2011) 244 CLR 427 Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17; (2001) 205 CLR 507 Najjar v Haines (1991) 25 NSWLR 224 Nicholls v Michael Wilson & Partners Ltd [2010] NSWCA 222; (2010) 243 FLR 177 O'Donnell v Reichard [1975] VR 916 O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Orr v Ford [1989] HCA 4; (1989) 167 CLR 316 Payne v Parker [1976] 1 NSWLR 191 PILT Nominees Pty Ltd v Baltarna Pty Ltd [2009] NSWSC 656 R v Sussex Justices; Ex parte McCarthy [1924] 1 KB 256 R v Watson; Ex parte Armstrong 91976) 136 CLR 248; Re Dawson (dec'd) [1966] 2 NSWLR 211 Re JRL; Ex parte CJL (1986) 161 CLR 342 Re Lusink; Ex parte Shaw (1980) 55 ALJR 12; 32 ALR 47 RHG Mortgage Ltd v Rosario Ianni [2015] NSWCA 56 Rinehart v Welker [2012] NSWCA 95 Robins v Incentive Dynamics Pty Ltd (in liq) [2003] NSWCA 71; (2003) 175 FLR 286 RPS v The Queen [2000] HCA 3; (2000) 199 CLR 620 Segelov v Ernst & Young Services Pty Ltd [2015] NSWCA 156; (2015) 89 NSWLR 431 Sheahan v Londish [2010] NSWCA 270; (2010) 244 FLR 64 Sheahan v Thompson [2015] NSWSC 535 Sheahan v Thompson (No 2) [2015] NSWSC 871 Spellson v George (1992) 26 NSWLR 666 Streeter v Western Areas Exploration Pty Ltd (No 2) [2011] WASCA 17 Vakauta v Kelly [1989] HCA 44; (1989) 167 CLR 568 Valofo Pty Ltd (Administrators Appointed) v PILT Nominees Pty Ltd [2011] NSWSC 134 Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544 Webb v The Queen (1994) 181 CLR 41 Young v Murphy [1996] 1 VR 279 Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15; (2003) 212 CLR 484 Texts Cited: I Spry, Equitable Remedies (6th ed, 2001, LBC) JD Heydon, Cross on Evidence (10th ed, 2014, LexisNexis) JD Heydon and MJ Leeming, Jacobs' Law of Trusts (7th ed, 2006, LexisNexis) JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane's Equity Doctrines and Remedies (5th ed, 2015, LexisNexis) JW Carter, The Construction of Commercial Contracts (2013, Hart Publishing) ML Ascher, A Wakeman Scott, WF Fratcher, Scott and Ascher on Trusts (5th ed, 2008, Aspen Publishers) RP Meagher, JD Heydon and MJ Leeming, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (4th ed, 2002, LexisNexis) Category: Principal judgment Parties: Phillip Crossman (First Appellant) Seniors Provident Pty Ltd (Second Appellant) Metro Finance Pty Ltd (Third Appellant) Metro Finance (NZ) Pty Ltd (Fourth Appellant) John Sheahan (First Respondent) Ian Lock (Second Respondent) Valofo Pty Ltd (in liq) (Third Respondent) Ross Seller (Fifth Respondent) Peter Londish (Sixth Respondent) Representation: Counsel: Dr AS Bell SC with DFC Thomas (Appellants) JE Marshall SC with DR Sulan (First and Second Respondents)