EDMUNDS & ORS v PICKERING & ORS - [2000] SASC 267 - SASC 2000 case summary — Zoe

Parties

Applicant/Plaintiff:

# EDMUNDS & ORS

Respondent/Defendant:

PICKERING & ORS

Legislation Cited (8)

Enforcement of Judgments Act 1991(SA)s 13

Fisheries Act 1982

Limitations of Actions Act 1936s 31

Scheme of Management (Western Zone Abalone Fishery) Regulations 1984

Enforcement of Judgments Act 1991(SA)s 13

Fisheries Act 1982

Limitations of Actions Act 1936s 31

Scheme of Management (Western Zone Abalone Fishery) Regulations 1984

Cases Cited (26)

EDMUNDS & ORS v PICKERING & ORS (NO. 4) No. SCGRG-88-2452 [2000] SASC 267 (10 August 2000)

Enforcement of Judgments Act 1991 (SA) s 13;
Fisheries Act 1982 ;
Limitations of Actions Act 1936 s 31 and s 32;
Scheme of Management (Western Zone Abalone Fishery) Regulations 1984 , referred to.
A H McDonald & Co Pty Ltd v Wells [1931] HCA 24; (1931) 45 CLR 506;
Alati v Kruger [1955] HCA 64; (1955) 94 CLR 216;
Atlas Tiles Ltd v Briers [1978] HCA 37; (1978) 144 CLR 202;
Bank of Victoria Ltd v Mueller [1925] VicLawRp 74; [1925] VLR 642;
Bernard Elsey Pty Ltd v Federal Commissioner of Taxation [1969] HCA 46; (1969) 121 CLR 119;
British Transport Commission v Gourley [1955] UKHL 4; [1956] AC 185;
Colbeam Palmer Ltd v Stock Affiliates Pty Ltd [1968] HCA 50; (1968) 122 CLR 25;
Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447;
Duke Group Limited (In Liquidation) v Pilmer & Ors [1999] SASC 97; (1999) 73 SASR 64;
Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101;
Hamilton v Whitehead [1988] HCA 65; (1988) 166 CLR 121;
Harris v Jenkins [1922] HCA 54; (1922) 31 CLR 341;
Kalamazoo (Australia) Pty Ltd v Compact Business Systems Pty Ltd (1985) 84 FLR 101;
Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449;
McKenzie v McDonald [1927] VicLawRp 19; [1927] VLR 134;
Re Dawson (dec'd) 2 NSWR 211;
Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1; [1972] AC 153;
The Commonwealth v SCI Operations Pty Ltd [1998] HCA 20; (1998) 192 CLR 285;
Tito v Waddell [1977] Ch 106;
Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102;
Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544, applied.

In those circumstances the transaction will set aside at the election of the beneficiary: Tito v Waddell [1977] Ch 106 at 241; Harris v Jenkins [1922] HCA 54; (1922) 31 CLR 341 at 356. Such an election has been made by the issue of these proceedings and the claim for the relief.

The principle that the trustee is liable to restore trust property if purchased from a beneficiary other than in accordance with a trustee's obligations is consistent with the obligation generally of a defaulting trustee to restore trust property; Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449; Re Dawson (dec'd) (1966) 2 NSWR 211.

Of course before rescission can be ordered the parties seeking rescission must be able to restore the other party to the position that party was in. Precise restitutio in integrum is not necessary: as long as the court can do justice between the parties Alati v Kruger [1955] HCA 64; (1955) 94 CLR 216.

There must be a substantial restitution: McKenzie v McDonald [1927] VicLawRp 19; [1927] VLR 134 per Dixon AJ at 146; A H McDonald & Co Pty Ltd v Wells [1931] HCA 24; (1931) 45 CLR 506 at 512.

In my opinion, if restitution was to be ordered then the plaintiff Smoothpool Nominees Pty Ltd, would have to compensate Mr Pickering in respect of the payments by him in 1982/83 in the sum to which I have referred and that payment would have to be a condition of the order: Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102 at 114; Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 per Deane J at 481); Bank of Victoria Ltd v Mueller [1925] VicLawRp 74; [1925] VLR 642 at 659.

Dadeeton Pty Ltd did not commence its proceedings against any party until 25 September 1997 [1130]. In my opinion, because of its directors, it was aware of the breaches of trust and that Mr Pickering had acquired the Authority for less than full value since it came under the control of the Edmunds family. Mrs Edmunds became a director and secretary of Dadeeton Pty Ltd on 1 July 1982 and Mr Pickering on 1 July 1984. In my opinion Dadeeton Pty Ltd has been aware since 1 July 1982 of all of the matters of which Mr and Mrs Edmunds were aware. Dadeeton Pty Ltd was incorporated for the sole purpose of holding assets for the Edmunds family. The company's mind was that of Mr and Mrs Edmunds: Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1; [1972] AC 153; Hamilton v Whitehead [1988] HCA 65; (1988) 166 CLR 121; Bernard Elsey Pty Ltd v Federal Commissioner of Taxation [1969] HCA 46; (1969) 121 CLR 119.

Whilst it would be patently unfair to Mr Gregory Pickering to allow the plaintiff to have both the trust property and all of the proceeds of exploitation since either 18 June 1982 or 25 October 1982 it seems to me that Dadeeton Pty Ltd is entitled to an account of profits for some of the period between 1982 and trial. The plaintiff, in my opinion, is entitled to a pecuniary sum to compensate it for the inability to exploit the Authority over part of the period of time to trial. In this case I think that sum can be best calculated by having reference to the profits made by the defendants over a limited period of time: Maguire v Makaronis (supra). In this case it is easy enough to identify what it was that the trustee acquired and the beneficiary lost: Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544 at 565. If one has regard to the expenses incurred in the carrying on of the business, of the exploitation of the Authority and makes proper allowance for the efforts of the trustee in carrying on the business, an account of profits will not produce a result much different from an assessment of the plaintiff's loss. I think to have regard to the defendant's profits over a limited period would do justice between the parties.

The defendants argued during the trial that none of the plaintiffs ought not to have any remedies because of delay on the plaintiffs' part. They pleaded laches. I have found against the defendants in respect of that plea. [1488] However that does not mean, in my opinion, that Dadeeton Pty Ltd is thereby entitled to an account of profits for the whole of the period between 1982 and trial and indeed after trial. Plaintiffs who stand by or delay in seeking an account of profits may be deprived of a remedy for the whole or part of the period during which the trustee has profited: Colbeam Palmer Ltd v Stock Affiliates Pty Ltd [1968] HCA 50; (1968) 122 CLR 25 at 35; Kalamazoo (Australia) Pty Ltd v Compact Business Systems Pty Ltd (1985) 84 FLR 101; Warman International Ltd v Dwyer (supra).

If the award is taxable in the hands of the plaintiff then regard should be had to the amount of taxation which will be payable and the defendant must compensate the plaintiff for that sum unless, of course, the plaintiff would have paid income tax on that amount in any event; British Transport Commission v Gourley [1955] UKHL 4; [1956] AC 185; Atlas Tiles Ltd v Briers [1978] HCA 37; (1978) 144 CLR 202.

(1931) 45 CLR 506

(1955) 94 CLR 216

(1978) 144 CLR 202

(1969) 121 CLR 119

(1968) 122 CLR 25

(1983) 151 CLR 447

(1999) 73 SASR 64

(1999) 196 CLR 101

(1988) 166 CLR 121

(1922) 31 CLR 341

(1985) 84 FLR 101

(1997) 188 CLR 449

(1998) 192 CLR 285

(1995) 184 CLR 102

(1995) 182 CLR 544

EDMUNDS & ORS v PICKERING & ORS

At a glance

Court

Decision date

Before

Source

Judgment (53 paragraphs)

Parties

Legislation Cited (8)

Cases Cited (26)

EDMUNDS & ORS v PICKERING & ORS (NO. 4) No. SCGRG-88-2452 [2000] SASC 267 (10 August 2000)