[1993] HCA 54
Erlanger v New Sombrero Phosphate Company (1878) 3 App Cas 1218
Farah Construction Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89
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Catchwords
[1988] HCA 16
Black v S Freedman & Co (1910) 12 CLR 105[1910] HCA 58
Byrnes v Kendle (2011) 243 CLR 253[2011] HCA 26
Dart Industries Inc v Decor Corporation Pty Ltd (1992) 179 CLR 101[1993] HCA 54
Erlanger v New Sombrero Phosphate Company (1878) 3 App Cas 1218
Farah Construction Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89[2007] HCA 22
Geoffrey Alan Lowe v Scott Pascoe [2012] NSWSC 151
Giumelli v Giumelli (1999) 196 CLR 101[1999] HCA 10
Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296[2012] FCAFC 6
Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298[2003] NSWCA 10
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41[2017] NSWCA 114
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589[1981] HCA 45
Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75[2004] NSWCA 82
Sze Tu v Lowe (2014) 89 NSWLR 317[2014] NSWCA 462
Sze Tu v Lowe (2014) 89 NSWLR 317[2014] NSWCA 462
Sze Tu v Lowe (2014) 89 NSWLR 317[2014] NSWCA 462
Wallersteiner v Moir (No 2) [1975] QB 373
2 WLR 389
Warman International Ltd v Dwyer (1995) 182 CLR 544
[1995] HCA 18
Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669
[1996] UKHL 12
Williams v Central Bank of Nigeria [2014] AC 1189
[2014] UKSC 10
Wong v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 146 FCR 10
Judgment (36 paragraphs)
[1]
Introduction
These two proceedings, 262284 of 2005 (the Lowe Proceedings) and 325815 of 2017 (the FC Chow Proceedings), are concerned with certain actions of the late Kut Sze Tu (KST), who died intestate on 20 October 1997. The actions in question concerned the misappropriation by KST of funds of a partnership that commenced on 1 August 1975 and came to an end on 1 July 1989 (the Partnership). Before dealing with the issues in the two proceedings, it is convenient to describe the family of KST.
[2]
The family of KST
In October 1933, KST married his first wife, Tang Fung, in China. They had five children, namely, Mary, Janet, John, Margaret and Helen. Relevantly, Mary, is married to Mr Geoffrey Lowe, who provided professional accounting services to the Partnership. In March 1956, KST married his second wife, Fung Chun Chow (FC Chow), in Hong Kong. KST and FC Chow had three children, namely, Stella, Gordon and Sunly. Without intending any disrespect, it is convenient to refer to all members of KST's family by their respective first names.
In January 1994, FC Chow died intestate and Sunly was appointed as administrator of her estate. Tang Fung died in April 2004.
In October 1998, probate of a purported will of KST was granted to Mary, Helen and Sunly. On 26 March 2001, in proceedings No 118302 of 2000 brought by Mary in relation to that purported will (the Will Proceedings), the grant of probate to Mary, Helen and Sunly was revoked. In addition, Mr Scott Pascoe (the Administrator) was appointed interim receiver of the estate of KST. On 29 November 2001, the Administrator published a draft interim report in relation to the estate of KST (the Interim Report) and, on 13 May 2002, published a final report (the Final Report). Shortly after its publication, the Interim Report was received by Mary and Geoffrey. It has been alleged that, on 24 June 2002, the Final Report was served on Sunly as administrator of the estate of FC Chow. The significance of the receipt by those parties in relation to limitation of action questions will become apparent below.
On 22 November 2002, the Court ordered that Letters of Administration in the estate of KST be granted to the Administrator. At the same time, the Court ordered that Sunly, Helen, Gordon, Stella, Mary, John, Janet and Margaret perform and execute a deed of family arrangement (the Family Arrangement Deed). Geoffrey was not a party to the Family Arrangement Deed. The Administrator thereafter commenced administering KST's estate. [1]
By the Family Arrangement Deed, the parties, being the children of KST, acknowledge that KST died intestate and agreed that a grant of letters of administration in the estate of KST be granted to the Administrator. The principal operative provisions of the Family Arrangement Deed contained an agreement by the parties that the estate of KST was to be distributed in accordance with the provisions of cl 3. The effects of the clause may be stated as follows:
42,048 of 168,000 shares in the property known as 88 Harris Street, Fairfield (the Fairfield Property) and a one quarter share in a property in Wiley Park (the Wiley Park Property) were to be divided equally amongst Gordon, Sunly and Stella;
the residue of the estate was to be distributed as to 10% to Gordon and Sunly in equal shares and as to the balance equally among the parties to the Family Arrangement Deed;
any distribution of the assets of the estate of KST was to be brought to account "in accordance with the law" and the Administrator was then required to distribute the assets in accordance with the Family Arrangement Deed;
Mary was to pay the sum of $20,000 to Janet, John was to pay the sum of $20,000 to Janet and Gordon was to pay the sum of $10,000 to Janet out of their respective shares of the estate of KST.
The Family Arrangement Deed also contained other provisions dealing with taxation and stamp duty, costs, notices, governing law and the like.
[3]
KST's misappropriations
The members of the Partnership were as follows:
KST 20%
Mary 10%
Geoffrey 10%
Janet 10%
Margaret 10%
Helen 10%
FC Chow 30%.
The Partnership was evidenced by an agreement dated 1 August 1975 (the Partnership Agreement) signed by all the partners. It engaged in two businesses, being a general store/grocery business known as "Wing Yuen Tai" (WYT) and a butchery business known as "Yee Sing Butchery" (YS). The general store/grocery business closed down on 30 June 1989 and the butchery business was sold a short time before that time.
Misappropriated funds of the Partnership were applied by KST towards the purchase prices of three properties (the Partnership Properties). Specifically, a property situated in Haig Street, Maroubra was purchased in December 1978 (the Haig Street Property), a property situated in Maroubra Road, Maroubra Junction was purchased in February 1983 (the Maroubra Road Property) and a property situated in Queen Street, Campbelltown (the Campbelltown Property) was purchased in July 1988. KST applied some funds of his own towards the purchase of the Partnership Properties. However, the evidence did not establish how much of KST's own money was applied in the purchase prices. Accordingly, ultimately, a presumption was made that he contributed no more than 10% of the price for each of the Partnership Properties.
KST caused title to Partnership Properties to be registered in respect of himself and other members of his family. Thus, KST's interest in the Haig Street Property was a one third share and each of Gordon and Sunly had a one third share. KST's interest in the Maroubra Road Property was a four-fifths share and Margaret had a one fifth share. KST's interest in the Campbelltown Property was a six-tenths share and each of Gordon, Sunly, Margaret and Helen had a one tenth share. There was no evidence that any of those members of KST's family provided any consideration for the interests that they acquired.
In June 2004, the Administrator sold KST's interest in the Haig Street Property to Sunly and Gordon for full consideration. In September 2005, the Administrator sold KST's interest in the Maroubra Road Property to an unrelated third party. In November 2005, the Administrator sold KST's interest in the Campbelltown Property to Margaret and Helen for full consideration. The Administrator received all of the proceeds of those sales.
[4]
The parties' submissions
The parties have endeavoured to assist the Court by providing detailed written submissions, in addition to lengthy oral argument. However, because there are two proceedings and the alignment of parties changes from one set of proceedings to the other, the written submissions can be confusing. The submissions were as follows:
Submissions dated 13 July 2020 were provided by Mr Williams SC and Ms Little in relation to the FC Chow proceedings.
Submissions dated 14 July 2020 were provided by Mr Stoljar SC and Ms Hillman in relation to both the Lowe Proceedings and the FC Chow Proceedings.
On 27 July 2020, Mr Williams SC and Ms Little provided submissions in relation to the Lowe Proceedings.
Submissions dated 4 August 2020 were provided by Mr Williams SC and Ms Little in response to the submissions by Mr Stoljar SC and Ms Hillman in relation to the FC Chow proceedings.
On 3 August 2020, Mr Pesman SC and Mr Allen provided written submissions principally in relation to the Lowe Proceedings. However, the submissions made reference in paragraphs 6 to 16 to the FC Chow proceedings.
By submissions of 7 August 2020, Mr Williams SC and Ms Little responded to the submissions by Mr Pesman SC and Mr Allen of 3 August 2020 but, unhelpfully, referred to those submissions as being dated 10 August 2020.
On 17 August 2020, Mr Williams SC and Ms Little provided written submissions in relation to the FC Chow proceedings.
On 17 August 2020, Mr Stoljar SC and Ms Hillman provided written submissions in relation to both the Lowe Proceedings and the FC Chow proceedings.
On 17 August 2020, Mr Pesman SC and Mr Allen provided written submissions in relation to both the Lowe Proceedings and the FC Chow Proceedings. Paragraphs 6 to 16 repeated the submissions of 3 August 2020 concerning the FC Chow Proceedings. Apart from a "prologue", the submissions of Mr Pesman SC of 17 August 2020 reproduced the submissions of 3 August 2020 with amendments arising from the evidence admitted at the hearing.
[5]
The Lowe Proceedings
On 26 September 2005, solicitors acting for Mary and Geoffrey wrote to Sunly, in his capacity as administrator of the estate of the late FC Chow, notifying him of their claim that KST had misappropriated funds of the Partnership prior to his death and had applied them in the purchase of the Partnership Properties. On 7 November 2005, Geoffrey and Mary commenced the Lowe Proceedings. The Administrator, as administrator of the estate of KST, is the first defendant in the Lowe Proceedings. The other members of the Partnership are the other defendants.
On 17 April 2008, a submitting appearance in the Lowe Proceedings was filed on behalf of the estate of FC Chow. The significance of that fact will become apparent below.
Amended statements of claim were filed on 11 March 2008, 14 November 2008 and 17 August 2012. Judgments have been delivered as follows:
Smart AJ on 7 May 2010, [3] 25 June 2010 [4] and 24 March 2011; [5]
Bergin CJ in Eq on 29 February 2012; [6]
Gzell J on 29 June 2012 [7] , 3 August 2012, [8] 8 August 2012, [9] 5 December 2012 [10] and 13 March 2013; [11] and
Court of Appeal on 23 December 2014. [12]
The trial of the Lowe Proceedings began before Smart AJ in October 2008. On 25 June 2010, [13] Smart AJ made orders for reasons that his Honour had published on 7 May 2010. [14] Smart AJ did not decide all issues raised in the Lowe Proceedings and, on 29 February 2012, Bergin CJ in Eq directed that there be a further hearing in the Lowe Proceedings. The further hearing took place before Gzell J, who made orders on 13 March 2013 for reasons that his Honour published on 5 December 2012. [15] Mary and Geoffrey appealed to the Court of Appeal from the orders made by Smart AJ and Gzell J. On 23 December 2014, the Court of Appeal made orders for reasons published on that day. The Court of Appeal allowed the appeal in part and set aside certain orders made by Gzell J. An application to the High Court for special leave to appeal from the orders of the Court of Appeal was refused on 7 August 2015.
[6]
Conclusions of Smart AJ
Smart AJ recorded that the principal protagonists in the Lowe Proceedings were Mary and Geoffrey, on the one hand, and Margaret, Helen, Sunly and Gordon, on the other. [16] In those circumstances, the Administrator adopted a neutral position and left the contest to those protagonists.
Margaret and Helen denied that they had entered into a partnership with Mary, Geoffrey, KST, Janet and FC Chow and alleged that the Partnership Agreement was a sham or a device to protect KST's assets from possible claims by the Inland Revenue of the British Solomon Islands. They asserted that they only signed the Partnership Agreement because KST had signed it and because they were accustomed to acting in accordance with his wishes. However, Smart AJ recorded that, while they may have been intending to raise a defence of "non est factum", no amendment was made to their defences to plead that defence. [17]
Sunly and Gordon admitted that the Partnership Agreement had been signed by Geoffrey, Mary, KST, Margaret, Helen, Janet and FC Chow but contended that, to the extent that the Partnership Agreement bound any of its signatories, it referred only to the business of WYT and not to the business of YS. Sunly and Gordon did not admit that the signatories to the Partnership Agreement became partners in a partnership and did not admit that the Partnership Agreement was intended by the parties to operate as an effective partnership. [18]
Smart AJ found that KST was secretive about his financial affairs and business interests and did not tell anyone of all of the assets that he had and, in particular, did not tell anyone of the amount of cash that he had or his use of cash from the two businesses. His Honour considered that KST was unlikely not to have considerable resources, since he had been in business for a long time and he anticipated what was likely to happen in relation to taxation issues in the British Solomon Islands. His Honour considered that KST's non-disclosure of the receipt and use of cash tended to demonstrate that conclusion [19]
In his reasons of 7 May 2010, Smart AJ concluded, provisionally, that a declaration should be made that Geoffrey, Mary, KST, FC Chow, Margaret, Helen and Janet were partners from 1 August 1975 and operated both businesses pursuant to a partnership in the shares set out above. His Honour also considered that declarations should be made that five sixths of the Maroubra Road Property and the whole of the Campbelltown Property were acquired by KST using monies of the Partnership and that the legal interest of each of the first to seventh defendants, or the estates they represented, in five sixths of the Maroubra Road Property and the whole of the Campbelltown Property were held on trust for the Partnership. His Honour was not inclined to make a declaration as to portion of the Haig Street Property because that portion had not been defined. [20]
[7]
Conclusions of Gzell J
In his reasons of 5 December 2012, Gzell J concluded that an order dissolving the Partnership should be made. His Honour found that, in utilising money of the Partnership in the purchase of the Haig Street Property, the Maroubra Road Property and the Campbelltown Property, KST breached duties owed to his co-partners of good faith and honesty and a duty not to obtain a private advantage at the expense of co-partners without their full knowledge and consent. His Honour found that KST took money from the Partnership, that it was trust money and that it could be traced into his family's interest in the Partnership Properties and held that Partnership funds accounted for 90% of the purchase price of the three Partnership Properties. Therefore, his Honour held that 90% of the KST family's interest in the Haig Street Property and in the proceeds of sale of the Maroubra Road Property and the Campbelltown Property were held on trust for the members of the Partnership in proportion to their interests in the Partnership.
[8]
Conclusions of the Court of Appeal
The Court of Appeal found that, in January 1981, Geoffrey requested KST to distribute profits from the two businesses, telling KST that he wanted a distribution to enable him to purchase a new home. On 4 March 1981, KST provided Geoffrey with a cheque for $25,500. The Court of Appeal noted that there was a dispute at trial as to whether that amount was a repayment of money that Geoffrey claimed he had lent to the businesses in 1975 or a loan to him from the Partnership. Geoffrey contended that any loan from the Partnership had been repaid by 1984. [22] The Court of Appeal found that, in June 1989, the WYT business was closed by KST after its lease expired. At that time, the WYT business was losing money.
The Court of Appeal then referred to the Will Proceedings, saying that, following KST's death, Sunly, Margaret and Helen, together with others, "dishonestly prepared a false will" in the name KST and sought to obtain, and were initially granted, probate of that false will. [23] After referring to the appointment of the Administrator as receiver and subsequently as administrator of KST's estate, the Court of Appeal referred to the Interim Report, which disclosed to Mary and Geoffrey that the Partnership Properties had been purchased without finance. The Court of Appeal then observed that Smart AJ had found that reasonable diligence would not have enabled the facts giving rise to Mary and Geoffrey's cause of action in the Lowe Proceedings to be discovered earlier than November 2001, when the Interim Report was provided to them. [24]
The Court of Appeal observed that, following further investigations after November 2002, Mary and Geoffrey determined that the Partnership Properties had been purchased by KST using funds of the Partnership and, in November 2005, commenced the Lowe Proceedings. The Court of Appeal observed that the relief sought by Mary and Geoffrey was an order that they be paid their share, as members of the Partnership, of ownership of the Partnership Properties and an accounting in respect of profits of the Partnership. [25]
The Court of Appeal formulated the major issues before it into the following groups:
A. Whether the Partnership Properties were held on trust for the Partnership and, if so, the nature of the trust;
B. Whether Mary's and Geoffrey's claims for declaratory and accounting relief in respect of the Partnership Properties were barred by:
[9]
The effective orders
The substance of the orders still standing, following the decision of the Court of Appeal, can be restated as set out in the Schedule to these reasons (the Consolidated Orders). The essence is that the Partnership existed and was dissolved on 1 July 1989 and the parties to the Partnership and their shares were as stated above.
The effect of the declarations made by the Court of Appeal is that, in respect of each of the Partnership Properties:
90% of the net proceeds of the sale of KST's interests in the Partnership Properties is held on constructive trust for the Partnership (the Net Proceeds Trust); and
90% of the profits, if any, derived by KST from the Partnership Properties, after just allowances, if any, since the date of their acquisition, was and is held on constructive trust for the Partnership (the Profits Trust).
The Court directed that an inquiry be held (the Inquiry) to identify what (if any) moneys Mary and Geoffrey are entitled to from KST by way of an account of profits after taking into account any just allowances, in respect of the benefits (if any) obtained by KST through his ownership, possession and/or use of his respective interests in the Partnership Properties since their acquisition.
[10]
Claims on behalf of FC Chow
Stella acted as representative of the estate of FC Chow in the Lowe Proceedings. However, no substantive claim was made on behalf of the estate of FC Chow against KST in the terms that were made on behalf of Mary and Geoffrey, and, as I have said, Stella (as representative of FC Chow Estate) filed a submitting appearance on behalf of the estate FC Chow on 17 April 2008. Accordingly, no determination has been made in the Lowe Proceedings that KST has any liability to the estate of FC Chow.
However, based on the determination that FC Chow was a member of the Partnership and that KST misappropriated funds of the Partnership, Sunly, on behalf of the estate of FC Chow, claims to be entitled to be paid 30% of the amount determined in accordance with the taking of accounts. On 27 October 2017, Sunly, as administrator of the estate of FC Chow, commenced the FC Chow Proceedings, in which he seeks, in effect, orders in favour of FC Chow equivalent to those made in favour of Mary and Geoffrey in the Lowe Proceedings.
In particular, Sunly seeks an order that the Administrator pay to the estate of FC Chow 30% of the amount of the benefits that KST obtained through his ownership, possession and/or use of the Partnership Properties since their acquisition as may be found to be held on constructive trust for the Partnership pursuant to the Inquiry and the orders made in the Lowe Proceedings. The Administrator, as administrator of the estate of KST, is the first defendant in the FC Chow Proceedings. The other members of the Partnership are also defendants. On 23 November 2017, orders were made by consent that the Lowe Proceedings and the FC Chow Proceedings be heard together, with evidence in one being evidence in the other.
By notice of motion filed in the Lowe Proceedings on 27 October 2017 (the October Motion), Stella, as representative of the estate of FC Chow, sought an order that KST pay to FC Chow 30% of the amount found to be payable on the taking of accounts of the Partnership. The October Motion was opposed by the Administrator and Mary and Geoffrey on the basis of the submitting appearance filed by Stella on behalf of FC Chow. Accordingly, by notice of motion filed on 7 December 2017 (the Withdrawal Motion), the estate of FC Chow sought leave to withdraw the submitting appearance to the extent necessary to enable it to move on the October Motion. The Withdrawal Motion was also opposed by the Administrator and by Mary and Geoffrey.
[11]
The Inquiry Report
On 1 February 2017, orders were made for the conduct of the Inquiry. On 31 August 2017, the Administrator was ordered to prepare a report for the purposes of the Inquiry and, on 8 February 2018, the Administrator produced a report in accordance with that order (the Inquiry Report).
The Inquiry Report proceeds on the basis that the effect of the orders made by Smart AJ, Gzell J and the Court of Appeal is the creation of two trusts being the Profits Trust and the Net Proceeds Trust. The Inquiry Report concludes as follows:
1. the amount payable to Geoffrey and Mary with respect to the profits claim is nil;
2. the amount payable to Geoffrey and Mary with respect to the net proceeds claim is $423,224, which amount should be reduced by the Administrator's costs attributable to the net proceeds claim incurred after 31 January 2018; and
3. the maximum amount payable to Mary and Geoffrey with respect to costs is $550,000, [54] which amount should be reduced by the Administrator's costs attributable to the assessment of the costs incurred after the date of the Inquiry Report.
The references to "the profits claim" and "the net proceeds claim" are references to the claims made by Mary and Geoffrey in respect of the Profits Trust and the Net Proceeds Trust respectively.
Mary and Geoffrey take issue with several matters dealt with by the Administrator in the Inquiry Report. It will be convenient to deal with each of those issues separately. In the Lowe Proceedings, the protagonists have been Mary and Geoffrey, on the one hand, and the Administrator, on the other. The other defendants, being the other members of the Partnership, have not played an active part in the Inquiry.
In the FC Chow Proceedings, the protagonists have been Sunly in his personal capacity and as administrator of the estate of FC Chow, and Gordon on the one hand, and the Administrator, on the other. Once again, the other defendants, being the members of the Partnership, apart from Mary and Geoffrey, have not taken an active part other than to support the submissions of the Administrator. In the Lowe Proceedings, the contentions on behalf of the Administrator have been supported by Sunly, as administrator of the estate of FC Chow. In the FC Chow Proceedings, the contentions of the Administrator have been supported by Mary and Geoffrey. The principal question raised in the FC Chow Proceedings is the operation of the Limitation Act.
[12]
Issues in the Inquiry
The orders of the Court of Appeal require that the Inquiry is to identify what, if any, monies Mary and Geoffrey are entitled to from the estate of KST by way of an account of profits, after taking into account any just allowances in respect of the benefits, if any, obtained by KST through his ownership, possession and/or use of his respective interests in the Partnership Properties. The task in conducting the Inquiry is not to undertake a general inquiry into the assets and profits of the Partnership or an inquiry as to the net proceeds and the profits held on trust for the Partnership for the general benefit of the Partners. Rather, the Inquiry is to identify what, if any, monies Mary and Geoffrey are entitled to from KST. That is to be done by taking an account of profits, less just allowances, in respect certain benefits obtained by KST. The benefits in question are those obtained by KST through his ownership, possession and/or use of his interests in the three Partnership Properties. Thus, the first task is to identify the benefits, if any, obtained by KST through his ownership, possession and/or use of his interests in the three Partnership Properties.
[13]
Relevant principles
A defendant in proceedings for an account of profits is required to account for, and is then stripped of, profits that the defendant has derived by reason of infringement, which it would be unconscionable for the defendant to retain. Equity does not punish a fiduciary for misconduct by making the fiduciary account for more than the fiduciary actually received as a result of a breach of duty. [55] Rather, an account is confined to profits actually made, the purpose being to prevent the unjust enrichment of the defendant, not to punish the defendant. [56] Thus, requiring a fiduciary to account for profits should not result in a windfall for the plaintiff so as to constitute a vehicle for the unjust enrichment of the plaintiff. [57]
Where a trustee purchases a property with a mixed fund consisting of the trustee's own monies and trust monies, the identification of the benefit resulting from the breach of duty will normally be straightforward and uncontroversial. The fiduciary will normally be liable for the same proportion of any profit from the purchase as the trust monies bear to the total purchase price, reflecting the position that the sole source of profit in such a case is the capital used on the purchase. [58] However, difficulties will arise when there is uncertainty as to the extent to which an errant fiduciary has used his own moneys. As will appear, that is the present case. Thus, where mathematical exactitude is impossible in taking accounts, general standards and principles of accounting may be of assistance. [59]
An errant fiduciary who has occupied trust property rent free may be ordered to pay a market rent or occupation fee for that use of the property. That may require an inquiry as to the benefit derived by the fiduciary from the occupation or use.
In approaching the question of just allowances, the extent to which an errant fiduciary has been remunerated will be relevant. The denial of an allowance to the errant fiduciary should not leave the beneficiary unjustly enriched. Questions of the risk that might be borne by the parties may come into play. [60] The Court may in appropriate circumstances make an order, in favour of an errant fiduciary, that the fiduciary receive proper remuneration for the pains and trouble that he has been put to in the management of the trust property. [61]
[14]
The Inquiry Report
Following his appointment, the Administrator caused the assets of the estate of KST to be realised and the proceeds have since been held in a mixed fund. The assets of the estate included both the Partnership Properties and other assets. The result is that a single fund exists, which consists of the property of the Net Proceeds Trust, the property of the Profits Trust and the net proceeds and profits of KST's estate excluding the Partnership Properties and the profits derived from them (the Residual Estate). As at 30 June 2020, the value of the mixed fund was approximately $2,879,332.
In making the Inquiry Report, the Administrator addressed three distinct periods as follows:
Period 1, being from the date of purchase of each of the Partnership Properties to the date of the death of KST, 20 October 1997;
Period 2, being from 21 October 1997 to the appointment of the Administrator on 21 March 2001; and
Period 3, being from 21 March 2001 until the sale of each of the Partnership Properties.
In relation to each of the Maroubra Road Property and the Campbelltown Property, in respect of Period 1, the Administrator has accounted for:
actual rent received where the actual rent can be ascertained;
an estimate of rent likely to have been received where the actual rent cannot be ascertained;
income tax paid by KST on rental income;
interest earned by KST on rental income;
payments made to co-owners of the Partnership Properties and to other beneficiaries of KST's estate; and
just allowances, including for KST's services in procuring and managing those two Partnership Properties.
In relation to each of the Maroubra Road Property and the Campbelltown Property, in respect of Period 2, the Administrator has accounted for:
actual rent received;
income tax paid by KST on rental income;
interest earned by KST on rental income; and
payments made to co-owners of the Partnership Properties and to other beneficiaries of KST's estate.
In relation to each of the Maroubra Road Property and the Campbelltown Property, in respect of Period 3, the Administrator has accounted for:
[15]
Interest
Mary and Geoffrey, in accordance with directions given by the Court, filed points of claim in relation to the account for profits. In relation to the Maroubra Road Property they made, relevantly, the following assertions:
at all material times from the date of purchase to the date of sale, the Maroubra Road Property was fully or partially tenanted on a commercial basis and rent was paid by the tenants;
the net rent received, being the gross rent less expenses that were not paid by tenants, was received by KST during his lifetime and by the Administrator after KST's death and was deposited into interest bearing bank accounts from time to time by KST during his lifetime and by the Administrator after KST's death;
no portion of the net rent was distributed to any of KST's co-owners of the Maroubra Road Property by KST during his lifetime or by the Administrator subsequent to KST's death;
the rent received from the Maroubra Road Property is ascertainable from various sources;
to the extent that those sources do not provide a complete record of the rent received by KST it should be assumed that rent was received for the whole of the Maroubra Road Property for the whole of the period of time in question;
the amount of the event earned for which no records exist should be estimated based on various records;
the interest earned on the net rent received for the Maroubra Road Property from the date of receipt should be calculated by the application of the interest rate applicable to the bank accounts into which the rents were paid from time to time or, where there is no record of the actual interest rate applicable to the accounts in question, the interest earned should be estimated by reference to the interest rate applicable to equivalent bank accounts in the period in question;
the benefit that KST obtained from his ownership, possession and/or use of the Maroubra Road Property was the totality of the net rent received from the Maroubra Road Property as calculated or estimated above and the interest earned on the net rent from date of receipt to date of distribution to Mary and Geoffrey as calculated or estimated above.
Similar allegations were made in respect of the Campbelltown Property.
[16]
Expenses and remuneration
The Administrator allocated his expenses and remuneration by reference to the nature of the work undertaken by him and whether that work can fairly be said to relate to the maintenance and management of the Profits Trust, the Net Proceeds Trust or the Residuary Estate. There is now no issue about that allocation. However, Geoffrey and Mary contend that the whole of the Administrator's expenses and remuneration are tied to the order made by the Court that he administer KST's estate.
The Administrator asserts that he was legally responsible for, and was required to administer, all of the assets of KST's estate, including those in relation to which Mary and Geoffrey have an equitable claim. He asserts that they should not have a windfall by being relieved from paying their share of the expenses of, and remuneration in relation to, administering the whole of KST's estate, at least to the extent that such expenses and remuneration relate to assets of the Partnership. The Administrator contends that the expenses and remuneration attributable to the maintenance of the Partnership Properties is necessarily an amount that is to be allowed for in accounting for the profits generated by the Partnership Properties. That is to say, the profits could not have been generated without ongoing expenses specific to those assets.
The alternative would have been for a receiver or an administrator to be appointed separately in respect of the assets of the Partnership. That would have incurred expenses including remuneration, which would properly have been chargeable against the assets of the Partnership. I consider that the expenses and remuneration of the Administrator are properly to be brought into account for the purposes of the Inquiry.
[17]
Income tax
In calculating profit in the Inquiry Report, the Administrator deducted the tax actually paid by KST and by the Administrator in respect of rent received from the Partnership Properties and the interest earned on the proceeds of the sale of the Partnership Properties. Mary and Geoffrey dispute that treatment.
The Administrator takes the position that income tax was payable by KST by reason of the receipt by KST and the Administrator of income from KST's interest in the Partnership Properties in the form of rent and interest. The tax deducted by the Administrator is no more than the tax payable by reason of the receipt by KST of that income. The Administrator contends that the moneys actually received by KST and by the Administrator should be net of the liability for tax and that to ignore the tax paid would result in KST's estate bearing the income tax on the rent obtained from the Partnership Properties and the interest on the proceeds of sale whereas the members of the Partnership as a whole would receive the whole of the rent and interest derived. That, the Administrator asserts, would result in a windfall for the members of the Partnership.
KST and the Administrator paid income tax in respect of rent and interest received on the basis that the rent and interest was income beneficially derived by KST and the estate of KST as the case may be. In the light of the determinations now made, the rent and interest were not in fact derived beneficially by KST or the estate. Whether the estate of KST is entitled to file amended returns and recover the tax that was paid and for which neither KST nor the estate had any liability, is not presently a question before the Court.
However, it is clear that KST, and subsequently the Administrator as legal personal representative of KST, obtained benefits consisting of rent and income and that those benefits were obtained through ownership, possession and/or use by KST of his respective interests in the Partnership Properties after their acquisition. The fact that KST and the Administrator paid income tax on the basis that those benefits were received beneficially is not to the point. I consider that the benefits obtained by KST, and the Administrator as legal personal representative, extend to the gross amount of rent and interest and not simply the net amount after payment of tax for which KST was not liable.
[18]
Haig Street
As indicated above, the Haig Street Property was used as a family home by KST, FC Chow and their three children. It did not generate any rental income during KST's lifetime or during the course of the administration of KST's estate. Further, FC Chow was a member of the Partnership. In addition, Sunly and Gordon obtained indefeasible titles to their respective interests in the Haig Street Property.
Clearly enough, KST obtained a benefit through his ownership and possession of the Haig Street Property. However, ascertaining that benefit is complicated by Sunly and Gordon's indefeasible interests, which limited KST's interest to one third, of which 90% was held for the Partnership. Further, the Haig Street Property did not produce any rental income during KST's lifetime. On one view, the profit or benefit obtained by KST should reflect the fact that KST used the Haig Street Property as a family home. The Administrator contends that KST's interest was only one of five occupants of the property, and thus his interest should accordingly reflect that position.
Thus, the Administrator has allowed a 20% interest in the benefit that was thereby obtained by KST. That 20% interest is based on the fact that the Haig Street Property was occupied by not only KST, but also FC Chow and their three children such that, the Administrator contends, KST obtained one fifth of the benefit of the total occupation fee for that period. That is to say, KST was only one of five occupants of the Haig Street Property during the relevant periods.
However, the Court of Appeal found that KST provided the Haig Street Property as a home for his family consisting of FC Chow and their three children. Putting aside questions of limitation of action, it could not be thought that FC Chow and the three children could have been required to account for their occupation of the Haig Street Property. The realistic analysis is that the Haig Street Property was occupied by KST. FC Chow and their children were there as his licensees. There is no dispute about an appropriate occupation fee for the Haig Street Property during the periods in question. The Administrator should bring to account one third of 90% of that occupation fee.
[19]
Withdrawals from KST's estate after death
Following the death of KST and prior to the appointment of the Administrator, monies amounting to $1,333,242 that belonged to KST and formed part of his estate, were paid out from a St George interest bearing term deposit account and Citibank term deposits. The Administrator says there is no evidence as to whether the total amount of $1,333,242 represents rental actually received from the Partnership Properties.
In the Inquiry Report, the Administrator determined the net rent from Period 1 from Maroubra Road Property as $1,095,733 and from the Campbelltown Property as $546,074. The Administrator then included a figure for Haig Street of $37,578, giving a total rent for Period 1 of $1,679,385. That requires adjustment for the Haig Street Property. The Administrator also deducted income tax and just allowances. There is a question about just allowances to which I shall refer below. I have already dealt with income tax. The Administrator arrived at net benefits of $798,670. He then deducted the sum of $1,333,242, giving it a negative figure for Period 1 of $534,572.
In assessing the benefits that KST obtained from the Partnership Properties, the Administrator has taken the view that the funds that were paid out of the bank accounts were "stripped" from the accounts by the recipients without the consent of a legal personal representative, because there was none, and were therefore lost to KST's estate. Until the appointment of the Administrator, the legal ownership of the money was vested in the NSW Trustee and Guardian by the operation of s 61 of the Probate and Administration Act 1898 (NSW).
Clause 3.1 of the Family Arrangement Deed recorded an agreement that the estate of KST would be distributed generally in accordance with cl 3. Clause 3.4 relevantly provided that all distributions of the assets of the estate of KST would be brought to account in accordance with the law and that the Administrator would then distribute the assets in accordance with the Family Arrangement Deed. The Administrator understood that the persons who received the funds distributed out of the bank accounts that were assets of KST's estate were to account notionally for the distributions, and that the Administrator was not required to seek to bring those funds back into the estate.
The remedy of account is fundamentally different from, for example, an award of equitable compensation or damages, which looks at the position in which the plaintiff would have been but for the equitable wrong. Thus, a plaintiff obtaining an award of equitable compensation or damages is compensated for the whole of the loss. On the other hand, an account of profits requires attention to be given to events after the equitable wrong. Therefore, the Administrator says, the Court should examine whether, at the end of the day, a defendant who is being held to account has been successful or otherwise in earning and retaining a benefit from the misappropriated funds. The Administrator says that, if at the end of the day, there is no benefit, there is nothing to be gained by the plaintiff from the account. The Administrator draws an analogy between the position of the estate of KST, on the one hand, and a defendant who misappropriated funds and invested them in a business that was unsuccessful and ultimately returned no or only limited profit. He says that a defendant in that position who is ordered to give an account of profits is not required, for the purpose of that remedy, to indemnify or compensate the plaintiff for actual loss.
[20]
Capital gains tax
The Administrator, as legal personal representative of KST, paid capital gains tax on the disposition of the Partnership Properties as well as on the disposition of other properties owned by KST that were not purchased with funds of the Partnership. The Administrator also paid legal fees with respect to advice concerning liability for capital gains tax and those legal fees were allocated proportionately to the Haig Street Property and Maroubra Road Property. The total capital gains tax paid by the Administrator was as follows:
Haig Street Property $30,464;
Maroubra Road Property $151,805; and
Campbelltown Property $0.
Capital gains tax is in the same position as income tax. That is to say, if capital gains tax was not properly payable, because the properties were not owned beneficially by KST, there may be an entitlement to recover the tax paid from the Commissioner of Taxation. However, that is a different question entirely from whether or not KST obtained a benefit from the ownership, occupational and/or use of the Partnership Properties. There should be no allowance in respect of capital gains tax.
[21]
Allowance for KST's efforts
The Administrator considered that there were two categories of allowance that should be made in favour of the estate of KST with respect to the Partnership Properties. The first was the costs of maintaining the Partnership Properties, with the assistance of a managing agent, authorising expenditure, ascertaining suitable tenants and entering into leases with tenants. The second category concerned the effort involved in seeking out opportunities, assessing the opportunities and undertaking the purchase of the Partnership Properties.
There was no evidence that the latter were performed by any person other than KST. There were competing contentions as to the amount of work performed by KST in relation to the maintenance of the Partnership Properties. The Administrator had regard to the fees charged by a typical real estate investment fund that carries out activities similar to the categories of activity described above. The Administrator relied upon product disclosure statements of DomaCom Fund, a property investment fund that invests in residential real estate and small commercial and real estate, which disclose management fees of 0.88%. Typically, such a fund provides a platform for investment in various types of property, seeks out suitable properties for investment, acquires the properties and appoints and manages a professional property manager to manage the property. The Administrator ascertained that the majority of such funds charge acquisition fees in the range of between 1.25% and 2% of the purchase price and management fees in the range between 0.6% to 0.8% of the gross value of the assets managed.
The Administrator estimated just allowances for the categories of allowance described above on the basis of an acquisition fee of 1.75% and a management fee of 0.7%. That resulted in total allowances of $178,732 for the three Partnership Properties as follows:
Maroubra Road Property $97,947;
Campbelltown Property $70,591; and
Haig Street Property $10,194.
It is fair to say that the real issue is what value should be ascribed to the efforts of KST in finding the Partnership Properties and managing them. There was no evidence other than that of the Administrator as to the appropriate fee for the efforts of KST. The approach adopted by the Administrator does not appear to be unreasonable. In the circumstances, it is an appropriate allowance.
[22]
Issues in the FC Chow Proceedings
The bulk of the hearing was taken with the issues in the FC Chow Proceedings. All the defendants in the FC Chow Proceedings and their privies are bound by the judgments and orders made in the Lowe Proceedings. Sunly contends, as administrator of the estate of FC Chow, that the entitlement of the late FC Chow under the Partnership was declared and found in the Lowe Proceedings. Therefore, he asserts, there are no real issues in dispute in respect of the claims in chief in the FC Chow Proceedings and positive defences raised by the defendants must be established by them.
In the FC Chow Proceedings, Sunly seeks an order that the Administrator pay to the estate of the late FC Chow 30% of the amount of the benefits the late KST obtained through his ownership, possession and/or use of the Partnership Properties since their acquisition as may be found to be held on constructive trust for the Partnership pursuant to the Inquiry. That prayer is clearly based on the relief ordered in the Lowe Proceedings, the parties to which are the same as those in the FC Chow Proceedings. That is to say, the operative orders made in the Lowe Proceedings were declarations that 90% of the Partnership Properties was acquired on account of the Partnership and that 90% of the net proceeds of sale of the interests of KST in the Partnership Properties is held on trust for the Partnership.
The Administrator, in his capacity as legal personal representative of KST, holds property that did not belong to KST but to the members of the Partnership. If there were to be a surplus, after Geoffrey and Mary have been paid from the trust property held by the Administrator their entitlement as determined by the Inquiry, the beneficiaries of KST's estate would have the benefit of a significant windfall. However, the assets of KST's estate have been depleted in two ways. The first is as the consequence of the conclusion by the Court of Appeal that the interests of his children in the Partnership Properties were protected by indefeasibility under the Real Property Act. The second is by reason of the fact that funds held by KST were taken after his death by Sunly and Gordon and any prospect of recovery of those funds is statute barred. As a consequence, the assets of the estate of KST may well be inadequate to meet even the claims of Mary and Geoffrey, much less claims by other members of the Partnership, such as the estate of FC Chow. If the Administrator's stance in the FC Chow Proceedings were to prevail, Geoffrey and Mary could receive the whole or a substantial part of their claim, to the exclusion of all other members of the Partnership. I shall deal with those consequences below.
[23]
Pleadings
The further amended statement of claim filed in the FC Chow Proceedings on 11 March 2019 (the Chow Statement of Claim) made allegations that may be relevantly restated as follows:
In December 1975, the Haig Street Property was purchased by KST in the name of KST as to a one third interest.
In February 1983, the Maroubra Road Property was purchased by KST in the name of KST as to a 4/5th interest.
In July 1988, the Campbelltown Property was purchased by KST in the name of KST as to a 6/10th interest.
…
In May 2004, the Administrator sold KST's one third interest in the Haig Street Property.
In September 2005, the Administrator sold KST's 4/5th interest in the Maroubra Road Property.
In November 2005, the Administrator sold KST's 6/10th interest in the Campbelltown Property.
Mary and Geoffrey, Margaret, Helen, Janet, KST and FC Chow were partners as from 1 August 1975.
As from 1 August 1975 until the date of dissolution on 1 July 1989, FC Chow was a partner, holding a 30% share in the Partnership.
By reason of his relationship of partner, KST owed the other partners fiduciary duties in dealing with the Partnership's assets and funds.
The Partnership Properties were acquired by KST using his own funds as to 10% of the purchase price of each of the Partnership Properties.
90% of the purchase price of each of the Partnership Properties was contributed from funds of the Partnership.
26A. The Partnership Properties were purchased using the Partnership funds referred to in para 26 other than in the names of the partners and without the full knowledge and consent of the other partners.
26B. KST acquired the following legal interests in the Partnership Properties in his own name:
(a) Haig Street Property - one third interest;
(b) Maroubra Road Property - four fifths interest;
(c) Campbelltown Property - six tenths interest.
In utilising Partnership funds to purchase each of the three Partnership Properties, KST did not act in good faith, did not act honestly and obtained a private advantage at the expense of his co-partners and thereby breached his duties to his co-partners.
By reason of KST's breaches KST and, therefore, after his appointment the Administrator, hold the following on constructive trust for the Partnership:
1. 90% of the net proceeds of sale of a one third interest in the Haig Street Property;
2. 90% of the net proceeds of a four fifths interest in the Maroubra Road Property; and
3. 90% of the net proceeds of the sale of a six tenths interest in the Campbelltown Property.
[24]
Knowledge of FC Chow
There is limited documentary evidence available as to the knowledge, or lack of knowledge, of FC Chow as to KST's use of funds belonging to the Partnership to purchase the Partnership Properties. The Administrator asserts that such evidence as is available points to significant differences between the position of FC Chow, on the one hand, and the position of Geoffrey and Mary, on the other.
In the Partnership Agreement, FC Chow's occupation was described as "investor". At that time, she appears to have been living in Hong Kong. However, within a year, FC Chow and her children had arrived in Australia. Thereafter, FC Chow was one of the three members of KST's family who worked full time in the WYT and YS businesses. She continued to work in those businesses until they closed. From the time when the Partnership businesses commenced to trade, tax returns were lodged. Accordingly, distributions were made to FC Chow as a member of the Partnership. The distributions reflected the fact that she held the largest share in the Partnership.
FC Chow and her family lived in the Haig Street Property from the time when it was purchased by KST. By the time of her death, FC Chow had acquired a significant property portfolio in her own name, holding interests as a tenant-in-common in properties situated in Shoalhaven, Port Macquarie, Maroubra, Fairfield and Lakemba. Income statements for those properties indicate that the proportionate share of income from those properties was distributed to FC Chow in recognition of her interest in the properties.
It was the practice of KST not to borrow money in order to purchase property but to purchase property with money that was available to him. That is a matter about which KST often spoke. The Administrator says that an inference should be drawn by the Court that FC Chow was aware of that practice of KST's and that the only source of money to purchase the Partnership Properties was money belonging to the Partnership.
Sunly complains that the Administrator makes no attempt to prove any of the facts relied upon by him in answer to the allegations made in para 26A of FC Chow Statement of Claim. Rather, the Court is asked to infer knowledge on the part of FC Chow from matters that were the subject to findings in the Lowe Proceedings, which, he says, are not admissible as evidence in the FC Chow proceedings.
[25]
Estoppel
The doctrines of res judicata and issue estoppel are founded on the broad rules of public policy expressed in the maxims "nemo debet bis vexari pro una et eadem causa" [64] and "interest reipublicae ut sit finis litium". [65] It would be an abuse of process to allow parties to litigate repeatedly matters that have been finally determined by the Court. [66] Further, a party may be estopped from proceeding with a case where matters that are proposed to be relied upon in that case by that party were so relevant to the subject matter of an earlier action in which that party was a party that it was unreasonable not to rely upon those matters in the earlier proceedings. As a general rule, it will be unreasonable not to plead a defence if, having regard to the nature of the claim made by the plaintiff and its subject matter, it would be expected that the defendant would raise that defence and thereby enable relevant issues to be determined in one proceeding. [67]
Those principles are relied upon by both the Administrator and Sunly as administrator of the estate of FC Chow. The Administrator contends that it was unreasonable for the claims presently made in the FC Chow Proceedings not to have been raised in the Lowe Proceedings and that FC Chow's estate is estopped from making them. On the other hand, FC Chow's estate contends that the Administrator is estopped from denying many of the matters alleged in the FC Chow Statement of Claim on the basis that they were established in the Lowe Proceedings. I shall deal with each separately.
[26]
Abuse of process: failure to claim in the Lowe Proceedings
In his defence to the FC Chow Statement of Claim, the Administrator makes allegations that may be restated as follows:
In order to determine the interest, if any, that the estate of the late FC Chow had in the net proceeds of sale held by the Administrator, it would be necessary to determine what knowledge, if any, the late FC Chow had as to the use of the funds of the Partnership for the purpose of purchasing the Partnership Properties and what consent, if any, she provided for the use of funds of the Partnership for the purposes of purchasing the Partnership Properties.
Any application for determination of those matters ought to have been brought in the Lowe Proceedings.
In lieu of seeking a determination in the course of the Lowe Proceedings, Stella, the representative of the estate of the late FC Chow for the purposes of the Lowe Proceedings, filed a submitting appearance and, accordingly, the estate of the late FC Chow has foregone any opportunity for having a determination made as to its interest, if any, in the net proceeds of sale held by the Administrator.
By reason of the conduct of Stella in the Lowe Proceedings, no evidence was adduced in the Lowe Proceedings as to the knowledge of the late FC Chow as to the breaches of fiduciary duty committed by KST in relation to the Partnership, and her consent to those breaches.
The matters now raised in the FC Chow Proceedings were relevant to the Lowe Proceedings such that it was unreasonable not to rely on those matters in the Lowe Proceedings.
The estate of FC Chow is therefore estopped from bringing the claims that are the subject of the FC Chow Proceedings.
Sunly, as administrator of the estate of the late FC Chow seeks to ventilate in the FC Chow Proceedings claims that cannot be bought in the Lowe Proceedings by reason of the submitting appearance filed by Stella, which remains on foot in the Lowe Proceedings.
The claims sought to be brought in the FC Chow Proceedings could and should have been brought in the Lowe Proceedings.
Accordingly, the FC Chow Proceedings are an abuse of the Court's process and ought to be dismissed or permanently stayed.
Sunly asserts that, at all times during the course of the Lowe Proceedings, the conduct of all parties was consistent with the Lowe Proceedings being a claim made on behalf of the Partnership for the benefit of all members of the Partnership. Stella was appointed as representative of the estate of FC Chow for the purposes of the Lowe Proceedings, in lieu of himself as administrator of FC Chow's estate, because of the claim that interests of Sunly in the Partnership properties were held on constructive trust for the members of the Partnership. Sunly took an active part in the Lowe Proceedings in resisting that claim, which was in conflict with his role as administrator of the estate of FC Chow having regard to the distribution that he says the estate of FC Chow would receive if the Lowe Proceedings were successful.
[27]
Estoppel against the Administrator
Sunly asserts that, as a consequence of the orders made in the Lowe Proceedings, he is entitled, in his capacity as administrator of the estate of FC Chow, to compel the Administrator, as the legal personal representative of KST, to distribute to all members of the Partnership, including the estate of FC Chow, their respective shares in the funds now held on trust by the Administrator.
There can be no dispute as to the following matters:
the Partnership existed and was dissolved on 1 July 1989;
at all times up to the date of dissolution of the Partnership, FC Chow had a 30% share of the Partnership; and
KST owed fiduciary duties to the other members of the Partnership including to FC Chow.
Sunly also asserts that there can be no dispute as to the following additional matters:
in acquiring the Partnership Properties partly with funds belonging to Partnership, KST breached the fiduciary duties owed to all members of the Partnership, including FC Chow;
90% of KST's interest in the net proceeds of sale, and in the profits, if any, from the holding of the Partnership Properties, is held on constructive trust for all members of the Partnership, including FC Chow.
The Administrator disputes the last two matters on the basis that the Lowe Proceedings did not determine the question of whether the actions of KST complained about by Geoffrey and Mary in the Lowe Proceedings occurred without the knowledge or acquiescence of members of the Partnership other than Geoffrey and Mary. Thus, the Administrator resists the claim on behalf of the estate of FC Chow, in so far as it is based on estoppels arising from the Lowe Proceedings, on the basis that there is no evidence to support that allegation in para 26A that KST purchased the Partnership Properties without "the full knowledge and consent of his co-partners".
The essence of the approach adopted by Sunly in the FC Chow Proceedings, as legal personal representative of FC Chow, is that FC Chow was entitled to rely on the ultimate determination made in the Lowe Proceedings to the effect that the Partnership Agreement evidenced a partnership among the members of the Partnership in the proportions indicated above. Further, Sunly says, the result of the Lowe Proceedings was a determination that 90% of the net proceeds of the sale of KST's interests in the Partnership Properties and 90% of the profits derived by KST from the Partnership Properties are held on constructive trust for the Partnership. That conclusion gives rise to the Net Proceeds Trust and the Profits Trust, the property of which is held by the Administrator, albeit intermingled with the residue of the estate of KST.
[28]
Laches and delay
The Administrator accepts that mere delay is not, of itself, sufficient to establish a defence of laches. Rather, there must be a delay by the plaintiff in the institution or prosecution of an equitable claim in circumstances where the defendant alters its position or has otherwise suffered prejudice in reliance on the acceptance by the plaintiff of the status quo. A court of equity requires that those who come to it to ask for relief must use due diligence after there has been such notice or knowledge as to make it inequitable to lie by. [69]
It is necessary to demonstrate knowledge by the plaintiff of the impugned conduct, delay by the plaintiff in commencing proceedings and unconscionable prejudice by reason of the delay. Actual knowledge need not be proved, and the level of knowledge required is a matter of fact and degree. Thus, if a prospective plaintiff strongly suspects that there has been unconscionable conduct perpetrated and does nothing either to obtain more detail or to prevent the prospective defendant from proceeding on the basis that there will be no challenge to the conduct, a defence of laches may be available.
The types of prejudice that can ground a defence of laches include the loss of evidence by reason of death of witnesses, loss of written materials and the failing of memories. In the context of an account of profits, if a plaintiff knowingly stands by while a prospective defendant makes profits from the illicit use of property, it may be inequitable to allow recovery of those profits, when the property is recovered, if the prospective defendant has spent the profits. There may be acquiescence where there is deliberate and informed inaction by a prospective plaintiff or a standing by on the part of a prospective plaintiff, in circumstances that encourage the prospective defendant to believe, on reasonable grounds, that the conduct of the defendant was accepted, or not impugned, by the prospective plaintiff. [70]
The Solicitors for Mary and Geoffrey invited Stella, as the representative of the estate of FC Chow, to abide the outcome of the Lowe Proceedings. Having regard to the conclusion that I have reached above concerning knowledge or acquiescence on the part of FC Chow and the failure to claim in the Lowe Proceedings, the Administrator has failed to make out the defence of laches and delay as an answer to the claim on behalf of the estate of FC Chow.
[29]
Limitations
In further answer to the FC Chow Statement of Claim, the Administrator relies on the Limitation Act as follows:
47(a) From about the time of the acquisition of each of the Partnership Properties, FC Chow discovered the facts from which any misappropriation of funds of the Partnership by KST could be identified.
47(b) By 24 June 2002 at the latest the representative of the estate of the late FC Chow discovered the facts from which any misrepresentation of funds of the Partnership by the late KST could be identified.
In the circumstances, the FC Chow proceedings are barred by operation, either expressly or by analogy, of s 47 of the Limitation Act.
Thus, the Administrator's pleaded defence is based on s 47 of the Limitation Act on the basis of the knowledge of Sunly, as the representative of the estate of FC Chow, as at 24 June 2002. The pleaded defence alleges that the requisite knowledge was acquired, at the latest, on 24 June 2002, the date of alleged service of the Final Report.
Sunly complains that the Administrator is now attempting to rely upon a defence that is not pleaded, namely, that Sunly had acquired the requisite knowledge required by s 47 no later than 26 September 2005, by virtue of a letter of that date from the solicitors acting for Mary and Geoffrey written to Sunly as administrator of FC Chow. Sunly asserts that it is not open to the defendants to rely upon such a defence, which is not pleaded and is not part of the "justiciable controversy" now before the Court. In any event, Sunly says, the relationship between Sunly, on the one hand, and Geoffrey and Mary, on the other was strained as a result of the proceedings initiated by Mary as against her sibling in relation to the forged will and Mary's refusal to transfer the Wiley Park Property to the estate of KST "pursuant to the deed of trust".
The allegation of discovery by either FC Chow or the representative of the estate of the late FC Chow is particularised by reference to the matters alleged by the Administrator in answer to para 26A of the FC Chow Statement of Claim. That is to say, the Administrator relies upon the same allegations to support a contention that FC Chow knew of, or acquiesced in, the misappropriation of funds by KST and a contention that, even if there was no acquiescence or knowledge, FC Chow was aware of the misappropriation by KST such that the limitation period began running from the time of the acquisition of the Partnership Properties. For the reasons indicated above, I am not persuaded, on the balance of probabilities, that FC Chow had knowledge of any misappropriation by KST.
[30]
Characterisation of the claims in the FC Chow Proceedings
Sunly contends that the approach of the Administrator in relation to the Limitation Act involves a misapprehension or mischaracterisation of the nature of the claim made in the FC Chow Proceedings. Sunly characterises the claim as one that requires the Administrator, as trustee of an institutional constructive trust in favour of the members of the Partnership, to distribute to a member of the Partnership, namely, the legal personal representative of FC Chow, that member's share of that trust property, namely, 30%.
The term "constructive trust" is used in various senses when identifying a remedy available in a court of Equity. The trust institution involves both the holding of property by the trustee and a personal liability, on the part of the trustee, to account for the discharge the duties of the trustee. However, some constructive trusts do not create or recognise a proprietary interest but impose a personal liability to account in the same way as an express trustee has a liability to account. Thus, a personal liability will be imposed on one who dishonesty procures, or assists in, a breach of trust or fiduciary obligation by a trustee or another fiduciary. In other cases, however, a constructive trust will be proprietary in nature and attaches to identified property. Such a trust does not necessarily impose upon the trustee the various administrative duties and fiduciary obligations that would attend the settlement of property to be held by a trustee upon an express trust for successive interests. [72] In the case of a constructive trustee, the sole obligation of any practical significance is to restore the property that is the subject of the trust. [73] Sunly contends that the remedy sought in the FC Chow Proceedings is simply one to which s 47 of the Limitation Act has no application.
Sunly asserts that FC Chow's legal personal representative is entitled to compel the Administrator, being the legal personal representative of KST, the defaulting fiduciary and the constructive trustee holding the property of the Partnership, to distribute to FC Chow's estate FC Chow's share of the property of the Partnership. Sunly asserts that the Administrator's failure to distribute the property of the Partnership on demand is a continuing breach by the Administrator as a constructive trustee, such that there is no applicable limitation period capable of preventing the claim.
[31]
Estoppel in relation to Administrator's costs and trustees' indemnity
By way of further answer to the FC Chow Statement of Claim, the Administrator relies on an alleged estoppel in relation to funds that are the subject of payments for costs of administration by the Administrator of the estate of KST. The Administrator pleads that defence by making allegations that may be restated as follows:
50 The Administrator has incurred and continues to incur costs and expenses (the Administration and Trust costs), which include:
maintenance costs in respect of the Partnership Properties;
costs associated with managing, valuing, marketing and selling the Partnership Properties, including the costs of applying to the Court for the appointment of trustees or sale of the Maroubra Road Property and the Campbelltown Property;
taxes and duties;
general administration costs; and
the costs of the FC Chow Proceedings.
Notice of the Administration and Trust Costs was provided to affected parties, including Sunly and Stella, as administrator and representative of the estate of the late FC Chow, at or shortly after the time in which they were incurred.
No objection has been taken by Sunly or Stella to the Administration and Trust Costs.
Orders have been obtained from the Court from time to time approving the payment of the Administration and Trust Costs.
The Administrator will properly incur further costs in his capacity as administrator of the estate of KST and as trustee of the Net Proceeds Trust and the Profits Trust (Future Administration and Trust Costs) including the costs of the Inquiry.
With the knowledge of Sunly and Stella, the Administrator has paid the amounts ordered to be paid by the Court by utilising the funds held by him in his capacity as administrator of the estate of the late KST.
No objection was taken by Sunly or Stella to the Administrator effecting payments referred to above.
57 In reliance upon the matters alleged above, the Administrator has made payments and acted and continues to act as administrator of the estate of KST and trustee of the Net Proceeds Trust and the Profits Trust to progress the Inquiry.
58 In the circumstances, Sunly, as administrator of the estate of FC Chow, is estopped from making any claim to an entitlement to any part of the funds held by the Administrator in his capacity as administrator of the estate of the late KST that has been deployed to meet the payments referred to above.
59 From 26 March 2001, the Administrator has been the trustee of the Net Proceeds Trust and the Profits Trust.
60 As trustee of the Net Proceeds Trust and the Profits Trust, the Administrator is entitled to be indemnified out of the assets that are the subject of those trusts.
61 Pursuant to the indemnity referred to above, the Administrator has made the payments referred to above.
62 Pursuant to the indemnity referred to above, the Administrator is entitled to pay such part of the future administration costs as are attributable to his remuneration, costs and expenses incurred properly in his capacity as trustee of the Net Proceeds Trust and the Profits Trust, out of the respective assets that are the subject of those trusts.
[32]
Depletion of assets of KST's Estate
There are insufficient funds subject to the Net Proceeds Trust and the Profits Trust to meet claims on behalf of all members of the Partnership. But for the depletion of assets of the estate of KST, the dispute between Mary and Geoffrey, on the one hand, and the estate of FC Chow, on the other may have evaporated.
Funds of the Partnership were deployed in the acquisition of interests in the Partnership Properties by third parties, whose interests have been held by the Court of Appeal to be protected by indefeasibility under the Real Property Act. Those interests would have been part of the estate of KST but, because of the holding by the Court of Appeal, those interests have been lost to the estate of KST. Some of the parties who have been held to have acquired indefeasible interests by way of gift are beneficiaries under the estate of FC Chow.
Further, income received by KST from the Partnership Properties would have been included in the estate of KST. However, some of those funds were paid away from the estate of KST by persons who administered KST's estate before the appointment of the Administrator. Those persons are also beneficiaries under the estate of FC Chow.
The Administrator resists the claims on behalf of FC Chow's estate on the basis that those who would benefit from an order in favour of the estate of FC Chow are those who have otherwise received a benefit to the detriment of the estate of KST or have been responsible for the depletion of property that would have been part of the estate of KST and would have been subject to the Net Proceeds Trust and the Profits Trust. The Administrator seeks to rely on those circumstances as an answer to the claim on behalf of the estate of FC Chow.
Each of Gordon and Sunly received substantial funds that were the property of the Partnership. Thus, it is clear that each of Gordon and Sunly received substantial funds belonging to the Partnership prior to the appointment of the Administrator.
As indicated above, the Inquiry Report records that, following the death of KST and prior to the appointment of the Administrator, monies amounting to $1,333,242 that belonged to KST and formed part of his estate, were paid out from a St George interest bearing term deposit account and Citibank term deposits. The Administrator says there is no evidence as to whether the total amount of $1,333,242 represents rental actually received from the Partnership Properties. The likely source of at least 70% of those funds was money belonging to the Partnership. That follows from the fact that most of KST's rental income in the financial years ended 30 June 1995, 1996 and 1997 was derived from the Partnership Properties. Thus in 1995, $148,712 of the total rent of $205,123 was derived from the Maroubra Road Property and the Campbelltown Property. In 1996, $134,755 of a total of $182,354 was derived from the Maroubra Road Property and the Campbelltown Property and in 1997, $152,149 of $215,435 was derived from the Maroubra Road Property and the Campbelltown Property. All of those balances were distributed to Sunly, Gordon, Margaret and Helen prior to the appointment of the Administrator and the funds have been unavailable to the Administrator.
[33]
Conclusion
The Administrator should be directed to bring in short minutes of orders to reflect the conclusions that I have reached above, both in relation to the Inquiry and in relation to the FC Chow Proceedings. The proposed short minutes should be made available within 14 days of the publication of these reasons to all of the other parties to the Lowe Proceedings and the FC Chow Proceedings. Any party who objects to the orders proposed by the Administrator should within 14 days of receipt of the proposed orders specify in writing the nature of the objection and the reasons for the objection. The Administrator should within 14 days after receipt of the last of any such objections, file and serve a statement indicating his response to the objections. The proceedings will be listed for directions in order to resolve any dispute as to the orders and to make final orders. Leave to apply is reserved to the parties if there are difficulties in working out notional reimbursements and distributions.
[34]
The Schedule
A declaration that Geoffrey, Mary, Margaret, Helen, Janet, KST and FC Chow were partners as from 1 August 1975 and operated the businesses of Wing Yuen Tai and Yee Sing Butchery pursuant to the Partnership in the following shares:
1. Geoffrey as to a 10 per cent share;
2. Mary as to a 10 per cent share;
3. Margaret as to a 10 per cent share;
4. Helen as to a 10 per cent share;
5. Janet as to a 10 per cent share;
6. KST as to a 20 per cent share; and
7. FC Chow as to a 30 per cent share.
A declaration that each of the Partnership Properties was acquired by KST using his own funds as to 10% and funds of the Partnership as to 90%.
A declaration that by utilising partnership funds to purchase each of the Partnership Properties, KST breached the fiduciary duties he owed to the members of the Partnership, including Mary and Geoffrey.
A declaration that:
a. In respect of the Haig Street Property, 90% of the net proceeds of the sale of the one-third interest held by KST is held on constructive trust for the Partnership.
b. In respect of the Maroubra Road Property, 90% of the net proceeds of the sale of the four-fifth interest held by KST is held on constructive trust for the Partnership.
c. In respect of the Campbelltown Property, 90% of the net proceeds of the sale of the six-tenth interest held by KST is held on constructive trust for the Partnership.
Declare that 90% of any profits (if any) derived by KST 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.
Declare that the Partnership was dissolved on 1 July 1989.
Direct that an inquiry be held to identify what (if any) moneys Mary and Geoffrey are entitled to from KST by way of an account of profits after taking into account any just allowances, in respect of the benefits (if any) obtained by KST through his ownership, possession and/or use of his respective interests in the Partnership Properties since their acquisition.
Order that KST pay to Mary and Geoffrey 20% of the amount of the benefits KST 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 6 above.
[35]
Endnotes
See Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 at [76].
Ibid at [60].
Lowe v Pascoe [2010] NSWSC 388.
Lowe v Pascoe (Supreme Court (NSW), Smart AJ, 25 June 2010, unrep).
Lowe v Pascoe (No 3) [2011] NSWSC 192.
Geoffrey Alan Lowe v Scott Pascoe [2012] NSWSC 151.
Lowe v Pascoe [2012] NSWSC 740.
Lowe v Pascoe (No 2) [2012] NSWSC 885.
Lowe v Pascoe (No 3) [2012] NSWSC 907.
Lowe v Pascoe (No 4) [2012] NSWSC 1493.
Lowe v Pascoe (No 6) (Supreme Court (NSW), Gzell J, 13 March 2013, unrep).
Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462.
Lowe v Pascoe (Supreme Court (NSW), Smart AJ, 25 June 2010, unrep).
Lowe v Pascoe [2010] NSWSC 388.
Lowe v Pascoe (No 4) [2012] NSWSC 1493.
Lowe v Pascoe [2010] NSWSC 388 at [16].
Ibid at [19].
Ibid at [28].
Ibid at [107].
Ibid at [573]-[574].
Lowe v Pascoe (Supreme Court (NSW), Smart AJ, 25 June 2010, unrep) at [27].
Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 at [63].
Ibid at [73].
Ibid at [75].
Ibid at [78].
Ibid at [105].
Ibid at [141], citing Black v S Freedman & Co (1910) 12 CLR 105 at 108-110; [1910] HCA 58.
See Black v S Freedman & Co (1910) 12 CLR 105 at 109; [1910] HCA 58.
Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 at [147]-[148], citing Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 at 100; [2004] NSWCA 82 at [113].
Ibid at [162].
Ibid at [168]-[169].
Ibid at [172]-[174].
Smart AJ's findings also included Janet and "probably" FC Chow herself; see Lowe v Pascoe [2010] NSWSC 388 at [567].
Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462, at [175]-[177].
Ibid at [196].
Ibid at [195].
See Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 614; [1988] HCA 16 and Farah Construction Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [192].
[36]
Amendments
16 November 2022 - At [28] 'infeasibility of title' should read 'indefeasibility of title'
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 16 November 2022
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64
Lowe v Pascoe [2010] NSWSC 388
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 3) [2012] NSWSC 907
Lowe v Pascoe (No 4) [2012] NSWSC 1493
Lowe v Pascoe (No 6) (Supreme Court (NSW), Gzell J, 13 March 2013, unrep)
Lowe v Pascoe (No 7) [2018] NSWSC 333
Lowe v Pascoe (Supreme Court (NSW), Smart AJ, 25 June 2010, unrep)
Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45
Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75; [2004] NSWCA 82
Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462
Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462
Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462
Wallersteiner v Moir (No 2) [1975] QB 373; 2 WLR 389
Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18
Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669; [1996] UKHL 12
Williams v Central Bank of Nigeria [2014] AC 1189; [2014] UKSC 10
Wong v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 146 FCR 10; [2004] FCAFC 242
Texts Cited: Nil
Category: Principal judgment
Parties: Proceedings 2005/262284
Geoffrey Alan Lowe (First Plaintiff)
Mary Lowe (Second Plaintiff)
Scott Pascoe as Trustee of the Estate of the late Kut Sze Tu (First Defendant)
Margaret Sze Tu (Second Defendant)
Helen Sze Tu (Third Defendant)
Janet McNamara (Fourth Defendant)
Shiu Shing (Sunly) (Fifth Defendant)
Shie How (Gordon) Sze Tu (Sixth Defendant)
Shiu Shing (Sunly) Sze Tu as Administrator of the Estate of the late FC Chow (Seventh Defendant)
The Haig Street Property was purchased to provide a home for KST, FC Chow and their children, Stella, Gordon and Sunly. [2] From the time of its acquisition, the Haig Street Property was occupied by KST, FC Chow and their three children as their home. No rent or occupation fee was ever paid in respect of that occupation.
Each of the Maroubra Road Property and the Campbelltown Property was let out at commercial rents until sold by the Administrator. The Administrator received those rents after his appointment.
On 25 June 2010, Smart AJ made a declaration that Geoffrey, Mary, Margaret, Helen, Janet, KST and FC Chow were partners from 1 August 1975 and operated both businesses in the shares outlined above. His Honour directed that a copy of his judgment of 25 June 2010 be sent to the Australian Taxation Office. His Honour also listed the proceedings for further directions for the purpose of being told whether there would be a taxation review of KST's affairs. [21]
indefeasibility of title;
the Limitation Act 1969 (NSW) (the Limitation Act);
laches or delay; or
conventional estoppel.
C. Whether the Partnership came to an end in or about June 1989 and, if so, whether the claims for relief by way of inquiry and account were barred by the Limitation Act or should have been refused on discretionary grounds;
D. Whether KST applied any Partnership funds towards the acquisition of the Partnership Properties and, if so, whether that was a breach of his fiduciary duties and whether that conduct amounted to stealing from the Partnership and whether Partnership funds could be traced into the acquisition of the Partnership Properties and who had the onus of proof on that issue;
E. Whether the further hearing before Gzell J miscarried;
F. Relief. [26]
The Court of Appeal held that, where money has been stolen, it is trust money in the hands of the thief and the thief cannot divest it of that character. [27] Further, where the thief makes a gift of the funds to a third party, the volunteer recipient is amenable to equitable jurisdiction. [28]
Having found that KST held the Partnership Properties on trust, the Court of Appeal concluded that, whether the trust was more properly characterised as a resulting trust or as a constructive trust, it was properly viewed as being of an "institutional" rather than of a "remedial" character. The Court accepted that a trust in such a case arises because the conscience of the thief is bound and the thief holds any property into which the stolen property has been converted on trust in a manner that should be seen as "automatic". That is to say, the Court considered that, in such a case, a trust arises immediately upon the acquisition of the property, not when recognised by a court. [29] The Court concluded that, subject to consideration of grounds relating to defences raised by Mary and Geoffrey, and the challenge of the finding of breach of fiduciary duty by KST, there was no error on the part of Gzell J in concluding that the trust claim gave rise to an "institutional constructive trust" over the money of the Partnership or their traceable product. [30]
The Court of Appeal noted that it was common ground that, prior to the acquisition of the Haig Street Property, KST, FC Chow and their three children, Stella, Gordon and Sunly, lived with Janet and her family at Bondi. Smart AJ found that, although KST "was captivated by the economies of these arrangements", FC Chow became fed up with them. Following its acquisition, the Haig Street Property became the family home of FC Chow and their three children, two of whom, Sunly and Gordon, were included on the title by KST. The Court of Appeal concluded that an inference should be drawn that KST intended to acquire the Haig Street Property as a family home and not on account of the Partnership. [31]
Next, the Court of Appeal noted that it was not in dispute that Margaret and KST agreed to acquire the Maroubra Road Property jointly, as an investment. The Court considered that the findings by Smart AJ that KST and Margaret agreed to purchase an investment property jointly, together with the finding that Margaret was unaware of the source of the funds provided by KST towards the purchase of the Maroubra Road Property, were inconsistent with either KST or Margaret, as partners, having an intention to acquire the Maroubra Road Property on account of the Partnership. [32]
The Court of Appeal observed that Smart AJ found that none of Margaret, Helen, Sunly or Gordon was aware of the source of the funds provided by KST towards the purchase of the Campbelltown Property [33] and that an inference should be drawn, from the acts and declarations of KST, either before or at the time of purchase, that KST intended to acquire the Campbelltown Property as an investment property for himself and Margaret, Helen, Sunly and Gordon, and not on account of the Partnership. The Court therefore rejected an express trust claim based on cl 20 of the Partnership Agreement. [34]
Mary and Geoffrey contended that the presumption of advancement by KST to his children in acquiring the Partnership Properties had been rebutted. They asserted, therefore, that the interests of the children in the Partnership Properties were held on a resulting trust for the Partnership.
The Court of Appeal referred to:
the evidence of Margaret concerning the acquisition of the Maroubra Road Property jointly with KST as an investment;
the evidence of Margaret and Sunly concerning the statements made by KST in relation to the proposed acquisition of the Campbelltown Property for Sunly, Gordon, Margaret and Helen, each as to a 10% interest; and
the circumstances of the acquisition of the Haig Street Property as a family home for KST's second wife, FC Chow and their children.
The Court considered that the evidence supported the view that KST intended to make a gift to his children of their respective interests in the Partnership Properties. [35]
The Court of Appeal concluded that the materials relied upon by Mary and Geoffrey were not capable of demonstrating that KST's actual intention in acquiring the Partnership Properties was contrary to the presumption of advancement. [36] The Court of Appeal concluded that the matters to which Mary and Geoffrey referred were insufficient to rebut the presumption of advancement in favour of Margaret, Helen Sunly and Gordon. The Court therefore concluded that the resulting trust claim by Mary and Geoffrey must fail.
The Court of Appeal then considered the application of s 42 of the Real Property Act 1900 (NSW) (the Real Property Act). Section 42 relevantly provides that, notwithstanding the existence in any other person of any estate or interest that, but for the Real Property Act, might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the register, except in case of fraud, holds that estate or interest, subject to other estates and interests recorded in that folio, absolutely free from all other estates and interests that are not so recorded. Fraud, for the purpose of s 42, means something more than mere disregard of rights of which the person sought to be affected had notice. The phrase imports something in the nature of personal dishonesty or moral turpitude and involves dishonesty on the part of the registered proprietor in securing registration as proprietor. [37]
The Court of Appeal concluded that Mary and Geoffrey were not entitled, in the absence of any exceptional circumstances, to advance a fresh argument on appeal based on the fraud exception in s 42. The Court considered that no exceptional circumstances were demonstrated. [38] Ultimately, the Court of Appeal concluded that, since Helen and Margaret were unaware of the source of the funds that KST used to acquire the Maroubra Road Property and the Campbelltown Property, they were not primary wrongdoers attempting to ignore an obligation to share or convey the land with or to the Partnership. [39]
The Court of Appeal concluded that Sunly and Gordon, Margaret and Helen were entitled to the benefit of indefeasibility in respect of their respective registered interests in the three Partnership Properties. Accordingly, the Court concluded, the trust-based claims against them failed, even assuming that KST used Partnership funds in acquiring the Partnership Properties. Those conclusions were therefore sufficient to dispose of the appeals. Accordingly, the Court of Appeal set aside certain proprietary and accounting relief granted by Gzell J against Sunly and Gordon, Margaret and Helen.
The Court of Appeal then considered the conclusions reached by Gzell J concerning the Partnership. The Court concluded that the Partnership was dissolved on or about 1 July 1989 and that it followed that Gzell J erred in dissolving the Partnership as at the date of the order made by his Honour. The Court concluded that there should be a declaration that the Partnership was dissolved no later than 1 July 1989. The Court then considered the implications of that conclusion in relation to the limitation defences relied on.
Section 15 of the Limitation Act relevantly provides that an action on a cause of action for an account founded on a liability at law to account is not maintainable in respect of any matter if brought after the expiration of a limitation period of six years running from the date on which the matter arises. Section 47(1)(c) relevantly provides that an action on a cause of action to recover trust property, or property into which trust property can be traced, against a trustee or against any other person, is not maintainable by a trustee of the trust or by a beneficiary under the trust or by a person claiming through a beneficiary under the trust, if brought after the expiration of the only or later to expire of:
a limitation period of 12 years running from the date on which the plaintiff or a person through whom the plaintiff claims first discovers or may with reasonable diligence discover the facts giving rise to the cause of action and that the cause of action has accrued (s 47(1)(e)); and
the limitation period of the cause of action fixed by or under any provision of the Limitation Act other than s 47 (s 47(1)(f)).
Under s 11 of the Limitation Act, "trust" includes express, implied and constructive trusts, whether or not the trustee has a beneficial interest in the trust property, and whether or not the trust arises only by reason of a transaction impeached, and includes the duties incident of the office of personal representative but does not include the duties incident of the estate or interest of the mortgagee in mortgaged property. "Trustee" has a meaning corresponding to the meaning of "trust".
The Court of Appeal observed that the submissions of the parties were largely directed to the potential application of s 47(1)(c), either directly or by analogy. The Court observed that it appeared to have been assumed by the parties that a claim to recover profits from the trust property was also covered by s 47(1)(c). No attention was given by the parties to the possible application of s 47(1)(b). Section 47(1)(b) relevantly provides that an action on a cause of action for a remedy of the conversion to a person's own use of trust property received by the person while a trustee, against that person or against the person's successor, is not maintainable if brought after the expiration of the only or later to expire of the periods mentioned above in relation to s 47(1)(c).
The Court of Appeal observed that Mary and Geoffrey were not claiming as the trustee of a trust and said that the question whether a partner claiming to recover trust property on behalf of the partnership meets the description of either "a beneficiary under the trust" or "a person claiming through a beneficiary under the trust" is complicated by the nature of a partner's interest in partnership property. [40] The Court observed that the beneficiary of the trust over the Partnership Properties was declared by Gzell J to be the "Partnership". However, as the Court of Appeal observed, the Partnership is not a legal person. Accordingly, the beneficiaries of the trust must be taken to be the members of the Partnership themselves. Ordinarily, until there has been a taking of accounts, an individual partner cannot claim a specific interest in partnership property. However, where an action for taking of accounts between partners is time barred by the operation of s 15 of the Limitation Act, it might be thought that a partner claiming to recover specific property held on trust for the partners may meet the description of a beneficiary under the trust, since the taking of accounts to ascertain a partner's share of the partnership assets is no longer possible, nor required.
The Court of Appeal considered that it had received little assistance on that question when raised during oral argument and observed that Mary and Geoffrey suggested, without elaboration, that, if s 47(1)(c) applied, it was because Mary and Geoffrey were either beneficiaries under the trust, or persons claiming through a beneficiary under the trust. Nevertheless, as the Court of Appeal observed, if s 47 does not apply in its terms, it remains the statutory provision closest in kind to the circumstances of the case and should therefore apply by analogy. That was accepted by Mary and Geoffrey.
The Court of Appeal then considered the claims to recover trust property by Mary and Geoffrey, observing that, in so far as the claim involved proprietary relief by way of imposition of a constructive trust over the Partnership Properties, the claim was purely equitable. In the absence of a sound analogy, such a claim for equitable relief for a breach of fiduciary duty is not subject to any period of limitation. [41] However, if it were possible to ignore the claim by Mary and Geoffrey on behalf of the Partnership, and simply characterise their equitable claim as a claim for an account of profits, as Mary and Geoffrey contended, then the relevant analogy to be drawn would be between an action to account at law, to which s 15 would apply a limitation period of six years, and an action to account in equity. [42] However, the Court of Appeal considered that it would be unconscionable to allow reliance on s 15 by analogy prior to November 2001, since the action against KST was one alleging fraud and time would not run, in equity, until discovery of the fraud, which Smart AJ found did not occur before November 2001. [43]
On the other hand, if the equitable claim is properly characterised as an action to recover trust property, as the Court of Appeal considered it should be, s 47(1)(c) would be applied by analogy, giving a limitation period of 12 years running from the date when Mary and Geoffrey first discovered the facts from which the misappropriation of funds by KST could have been identified, namely, in late November 2001, when they received the Interim Report. The Lowe Proceedings were commenced within 12 years of that date and the claim was therefore not time barred. [44] The Court did not regard that conclusion as being in conflict with the general principle that it is necessary to bring an action for an account, if one partner is to recover from another. [45]
The Court of Appeal considered that, since there has never been an account between the members of the Partnership, and an account at law is no longer possible, having regard to the operation of s 15 of the Limitation Act, the entitlement of Mary and Geoffrey with respect to specific assets that were the subject of a trust claim, could not depend on ascertaining their share of the Partnership assets. Rather the Court concluded, Mary and Geoffrey have a claim to a 20% interest in specific assets, subject to just allowances, if any. [46]
The Court concluded that, if an entitlement to proprietary relief "by the Partnership" is made out by two partners, the absence of an account at law between partners to ascertain their shares of the partnership assets would not, in the circumstances of the case, be an impediment to Mary and Geoffrey recovering, directly for themselves "and their former partners", trust assets in the hands of one of the former partners, namely, KST, and any volunteer recipients of trust assets. [47]
The Court of Appeal then considered claims to recover profits from trust property and concluded that such claims were purely equitable, in so far as they involved accounting relief in respect of profits derived from the Partnership Properties since the date of their acquisition. [48] The Court concluded that the result, under s 47(1)(b), is the same as for s 47(1)(c). Applying s 47(1)(b), by analogy, the limitation period of 12 years would apply, running from the date in late November 2001, when Mary and Geoffrey first discovered the facts from which the misappropriation by KST could be discovered. [49]
The Court of Appeal then considered whether Mary and Geoffrey had the requisite knowledge prior to late November 2001 when they received the Interim Report. The Court considered that the cost of pursuing suspicions that might have been held by Mary and Geoffrey was undoubtedly relevant to whether they exercised reasonable diligence to discover the facts at the time when suspicions arose. Further, the Court said, in the context of a partnership between family members, the likelihood of a family upheaval, when the outcome of a full audit was unknown, was also relevant to whether Geoffrey and Mary had exercised reasonable diligence to discover the facts in December 1978. Finally, the Court concluded that there was no error on the part of Smart AJ in finding that, before undertaking the onerous task of collecting and analysing information, Mary and Geoffrey needed to be alerted that it was likely to be useful. [50]
The Court of Appeal concluded that, on the assumption that Sunly, Gordon, Margaret and Helen did not have the benefit of indefeasibility defences, the proprietary relief granted by Gzell J against them in respect of the Partnership Properties was not time-barred by s 47(1)(c), which applied to the claim at least by analogy. Further, the Court of Appeal said, the accounting relief in respect of the benefits derived by Sunly and Gordon, Margaret and Helen from the Partnership Properties was not time-barred by s 47(1)(b), which applied to the claim by Mary and Geoffrey, at least by analogy. The Court considered that the conclusions on limitation were the same as against the estate of KST. However, so far as the terms of the inquiry ordered by Gzell J involved the taking of accounts between the members of the Partnership, that relief was time barred by s 15 and by analogy. [51]
In the light of the conclusions above, the Court of Appeal considered that laches had no application in the case. Nevertheless, the Court concluded that the grounds of appeal directed to the defence of laches should be rejected. [52]
In my reasons for dismissing the Withdrawal Motion on 20 March 2018, [53] I indicated that I considered that leave to withdraw the submitting appearance should only be given on terms that FC Chow would not oppose KST and the other parties in the Lowe Proceedings raising by way of answer to the claims made in the October Motion any of the matters that could be raised by way of answer to the claims made in the FC Chow Proceedings. That being so, I did not consider there was any utility in the matters being ventilated in the Lowe Proceedings on the taking of accounts. I invited Sunly, as administrator of FC Chow's estate, to make any submissions on the utility of withdrawing the submitting appearance if such terms were to be imposed. No submissions have been made to suggest that, if those terms were to be imposed, there would be any utility in having the matters ventilated in the Lowe Proceedings rather than in the FC Chow Proceedings. It followed that the October Motion could not succeed.
In my reasons of 20 March 2018, I also ordered that Stella as representative of the estate of FC Chow, the seventh defendant in the Lowe Proceedings, be replaced by Sunly in his capacity as administrator of the estate of FC Chow. Thereafter, Stella has not participated in the Lowe Proceedings.
Actual rent received after 21 March 2001;
GST;
land tax and insurance costs;
income tax and accounting fees;
legal fees attributable to leasing costs and management of the Partnership Properties;
the Administrator's remuneration for the work performed in managing and accounting for the Partnership Properties; and
interest earned and tax on interest.
In relation to the Haig Street Property, in respect of Period 1, the Administrator has accounted for:
the rent that would have been received for the Haig Street Property if rented;
the costs that would have been incurred in respect of the Haig Street Property if rented;
the benefit that KST, as opposed to other members of his family using the Haig Street Property, received; and
just allowances, including for KST's services in procuring and managing the Haig Street Property.
In relation to the Haig Street Property, in respect of Period 2 and Period 3, the Administrator has accounted for the benefit that KST received, if any, after his death.
In relation to the Haig Street Property, Mary and Geoffrey asserted, relevantly, that at all material times from the date of purchase to the date of sale of the Haig Street Property, KST and, subsequent to his death, his estate, obtained a benefit equivalent to 90% of the reasonable or open market value of the rent that would have been attainable for the Haig Street Property had it not been occupied by KST and his family, less any necessary expenses that can be shown to have been incurred by KST in relation to the Haig Street Property.
The Administrator complains that a claim for interest now made on behalf of Mary and Geoffrey was not pleaded in those points of claim. The Administrator asserts that he worked out what interest was in fact earned on the rent as deposited into the relevant accounts and the whole of that has been accounted for. The Administrator points out that the claim is for an account of profits, meaning that Mary and Geoffrey are entitled to the rent actually received by KST or the Administrator together with interest that was in fact earned on that rent. There is no additional interest payable if KST and the Administrator did not in fact receive additional interest.
Mary and Geoffrey claim compound interest in respect of the period where there is no record of actual interest. Equity awards interest, they say, so that the wrongdoer does not profit from the wrongdoer's misuse, or assumed misuse, of partnership money. [62] Thus, simple interest is awarded unless the misappropriated assets have been used in trade or as working capital. In such cases, an award of compound interest is justified. [63]
Mary and Geoffrey assert that KST misappropriated cash from the two businesses and used it to buy the Haig Street Property and to invest in the Maroubra Road Property and the Campbelltown Property. The last two yielded rent, which KST banked. In each case, KST avoided the need to borrow, freeing up his own cash. Thus, they say, KST used most of the taken money for commercial gain. They say that a reasonable option is to use a rate of 1% above the official bank rate and compounding at yearly rests. Mary and Geoffrey contend that there is no particular reason why they should be shut out of compounding interest after the Administrator realised the Partnership Properties. Thus, they say, the funds that he received have no real relationship to the profits on which the interest has accrued. They assert that the calculation of compound interest should continue to accumulate up to the present time.
Mary and Geoffrey also assert that, to give effect to the Consolidated Orders, it is necessary to work out the rent received, less just allowances and to add interest.
I shall deal below with complaints made by Mary and Geoffrey concerning income tax, capital gains tax and distributions made to the beneficiaries of the estate of KST. Those questions, if resolved in favour of Mary and Geoffrey, have consequences in relation to the calculation of interest on the proceeds of sale and on rent and interest. If those amounts are not treated as deductions before the calculation of interest, a significant difference results in favour of Geoffrey and Mary.
I do not see any justification for allowing compound interest to Mary and Geoffrey. To the extent that there is a record of the interest derived by KST and the Administrator on rent received from the Partnership Properties, that is the extent of the benefit received by KST. Where there is no record of the rent received, and therefore interest derived from the rent, an estimate can be made by reference to the periods during which there are records. There is no justification for compound interest on any of those amounts.
Whether or not Mary and Geoffrey, or any other member of the Partnership for that matter, would be required to pay income tax on any amount that is received as a consequence of the Inquiry will be a matter between such members of the Partnership, on the one hand, and the Commissioner of Taxation, on the other.
The effect of the Family Arrangement Deed must be treated separately from the question of the account as to the benefit obtained by KST from the ownership, occupation and/or use of the Partnership Properties. If KST received rent and interest, the amounts of the rent and interest must be brought to account. Having arrived at a figure for the net rent received for the Partnership Properties, the manner in which KST, or his estate, dealt with that benefit, is irrelevant. The disposition of the monies after they were received by KST is not to the point. If KST had given the monies away during his lifetime, the position would be the same as if the monies were distributed after his death to those entitled to his estate. In the light of the conclusion that I have reached above, there should be no deduction of the sum of $1,333,242. Further, there should be no deduction for income tax. I shall address the question of just allowances below.
The effect of the Family Arrangement Deed is relevant only to the extent to which there are funds in the estate of KST to meet any claim by any of the members of the Partnership that might be found to be successful, whether that be Mary, Geoffrey or the estate of FC Chow. The effect of the Family Arrangement Deed may have some bearing on the outcome of the FC Chow Proceedings. I shall address that question below.
By reason of his breaches of fiduciary duty, 90% of any profits derived by KST from the Partnership Properties, after just allowances, were and are held on constructive trust for the Partnership.
By reason of FC Chow's 30% interest in the Partnership, the estate of FC Chow has a 30% interest in:
(a) the net proceeds of sale held on constructive trust for the Partnership as described in para 28;
(b) any profits held on constructive trust for the Partnership as described in para 29.
The Inquiry has been directed to be held and is being held to which all of the parties in the FC Chow Proceedings are a party.
The balance of the Lowe Proceedings, including the Inquiry, determined, by way of an account of profits, after taking into account just allowances, 20% of the benefits, if any, obtained by the late KST through his ownership, possession and/or use of his respective interests in the Partnership Properties since their acquisition held on constructive trust for the Partnership.
The balance of the Lowe Proceedings, including the Inquiry, determined, either expressly or implicitly, the net proceeds of sale held on constructive trust for the Partnership as described in para 28 above and, by way of an account of profits, after taking into account just allowances, 100% of the benefits, if any, obtained by the late KST through his ownership, possession and/or use of his respective interests in the Partnership Properties since their acquisition held on constructive trust for the Partnership.
The estate of FC Chow is entitled to 150% per cent of the amount to which Mary and Geoffrey are collectively entitled.
A significant issue thrown up by the defence filed on behalf of the Administrator is his response to para 26A of the Chow Statement of Claim, which alleges that the Partnership Properties were purchased using Partnership funds other than in the names of the members of the Partnership. The Administrator does not dispute the proportions in which each of the Partnership Properties was acquired by relevant parties. However, the Administrator disputes the allegation in para 26A that the Partnership Properties were purchased using Partnership funds "without the full knowledge and consent of KST's co-partners".
The Administrator makes allegations in his defence that may be restated as follows:
(i) Mary and Geoffrey did not have actual or inferred knowledge that KST had used funds of the Partnership to acquire any of the Partnership Properties prior to November 2001;
(ii) FC Chow had actual or inferred knowledge that KST had used funds of the Partnership to acquire each of the Partnership Properties from about the time of the acquisition of each of the Partnership Properties, by reason of the following:
(a) FC Chow's marriage to and co-habitation with KST;
(b) FC Chow's entry into the Partnership Agreement;
(c) FC Chow's employment in the business of the Partnership;
(d) FC Chow being a joint bank account holder with KST in relation to an account that held funds used for the business of the Partnership;
(e) FC Chow's legal interest in properties purchased by KST;
(f) the fact that FC Chow did not contribute any of her own assets or income to the purchase of any of the Partnership Properties;
(g) FC Chow's involvement in discussion concerning the title to the Campbelltown Property;
(h) the use of the Haig Street Property as FC Chow's family home, including for the purpose of providing a home for her three children; and
(i) the fact that, at the time when they were minor children under her care, Sunly and Gordon took legal title to the Haig Street Property and the Maroubra Road Property.
(iii) by no later than 24 June 2002, each member of the Partnership and the legal personal representative of the estate of FC Chow had actual knowledge that KST had used funds of the Partnership to acquire each of the Partnership Properties by reason of being served with the Final Report in the Will Proceedings.
The Administrator's defence also asserts that the alleged absence of knowledge on the part of FC Chow was not properly pleaded or particularised in the Chow Statement of Claim and was embarrassing. Otherwise, the allegations in para 26A are denied
In response to para 29 of the Chow Statement of Claim, the Administrator says that only those members of the Partnership who have brought proceedings within time to obtain the remedy of an inquiry as to the amounts to be paid to them out of the constructive trust on which the profits are held (namely, Mary and Geoffrey and only Mary and Geoffrey) are entitled to be paid out of the constructive trust in accordance with any findings by the Inquiry.
In response to para 30 of the Chow Statement of Claim, the Administrator says that the Partnership interest, if any, that the estate of the late FC Chow had in any profits held by the Administrator has never been determined and that, in order to determine the interest, if any, that the estate of the late FC Chow had in the profits, if any, held by the Administrator, an inquiry would need to have been made as to:
1. FC Chow's knowledge as to the use of Partnership funds for the purpose of purchasing the Partnership Properties;
2. FC Chow's consent to the use of the Partnership funds for the purpose of [purchasing] the Partnership Properties;
3. FC Chow's knowledge as to the use of any profits or benefits obtained by KST from the Partnership Properties;
4. FC Chow's consent provided to the use of the profits or benefits obtained from each of the Partnership Properties by KST; and
5. FC Chow's personal profit or benefits obtained through the use of the Partnership Properties including the use of the Haig Street Property as her residence.
The Administrator also says that the matters just referred to ought properly to have been raised for determination in the Lowe Proceedings but, in lieu of raising those matters in the course of the Lowe Proceedings, Stella, the representative of the estate of the late FC Chow for the purpose of the Lowe Proceedings, elected, on 8 April 2008, to file a submitting appearance in the Lowe Proceedings. In those circumstances, the Administrator says, the estate of the late FC Chow has foregone any opportunity that it had for a determination as to its interest in the profits held by the Administrator.
In response to para 31 of the Chow Statement of Claim, the Administrator says that the Inquiry is limited to identifying what, if any, monies Mary and Geoffrey are entitled to be paid from the estate of KST. The Administrator repeats that assertion in response to para 32 and para 33. In addition, in further response to para 33, the Administrator asserts that the Inquiry will not provide a formula or amount that equates to the amount to which members of the Partnership other than Mary and Geoffrey may be entitled because the Inquiry will not take into account, for example, the benefits already received by those other partners from the use of the Partnership Properties, including the benefit received by the late FC Chow by reason of her occupation of the Haig Street Property.
Further, the Administrator says, no person other than Mary and Geoffrey has applied for an order that would ascertain the amount payable in respect of the net proceeds of sale of the Partnership Properties. In addition, he says, the estate of FC Chow is barred from making any application in the Lowe Proceedings equivalent to the application made on behalf of Mary and Geoffrey in the Lowe Proceedings, for an order that the Administrator pay to them such amount as the Court may determine as constituting their share of 90% of the net proceeds of the sale of KST's interest in the Partnership Properties
Finally, the Administrator relies on the following matters in answer to the whole of the claim made by Sunly in the Chow Statement of Claim:
failure to claim in the Lowe Proceedings, laches and delay;
limitations;
estoppel in relation to funds the subject of payments for administration costs; and
trustees' indemnity.
It will be convenient to deal with those matters separately below. I shall deal first with the Administrator's response to the claim that KST misappropriated property of the Partnership without the consent of FC Chow.
The Administrator failed to call witnesses whose evidence would reasonably have been expected such as Margaret, Helen, Janet, Geoffrey Lowe and Jason Lowe (Geoffrey's son, a chartered accountant). I would draw the inference from that failure that such evidence would not have assisted the Administrator's case. Further, the Administrator failed to adduce evidence from witnesses who were called or were made available for cross-examination. Despite Sunly being available for cross-examination, no questions were asked of him and no proposition was put to him in relation to the question of FC Chow 's state of knowledge of KST's misappropriations.
There are inconsistencies in the evidence concerning the facts relied upon by the Administrator as giving rise to an inference that FC Chow had knowledge of KST's misappropriations. In relation to the contention that FC Chow worked in one or more of the businesses, Mary said in her affidavit evidence that FC Chow worked in both the WYT and YS businesses. Sometimes she described her involvement as being only with the WYT business and sometimes described FC Chow's involvement as "full-time" and other times described it as working half days, with FC Chow finishing work mid-afternoon to pick up her children from school.
FC Chow and KST had a joint bank account. However, FC Chow was not a signatory to the cheque accounts and did not make entries in the journals or record the takings in respect of the WYT business of cheques and cash. Mary gave evidence that FC Chow from time to time took cash from the businesses for deposit at the bank. Mary sometimes described the banking as being taken by FC Chow or KST and at other times by Mary, FC Chow or KST. At times she described FC Chow and KST as taking cash from the businesses to the bank. At times it was said that KST took cash to the bank and at other times it said that whoever it was convenient would take cash to the bank.
Sunly asserts that, even if the Court accepted the facts alleged in the Administrator's defence to para 26A, the facts would not lead to an inference that FC Chow had knowledge that KST used funds for the Partnership to acquire the Partnership Properties at the time of each acquisition.
Sunly also asserts that the facts alleged in relation to the knowledge of FC Chow were substantially applicable to the position of Geoffrey and Mary. Nevertheless, it was held that the appropriation of funds of the Partnership by KST occurred without the consent of Geoffrey and Mary. Thus, from time to time, Mary lived with KST, since she was his daughter. KST financially supported both families, including the family of which Mary was a part.
Up to 1981, Mary worked full time in the WYT business and from that time still assisted in the operations of WYT. She would prepare the monthly statements containing cheque and cash sales. Mary prepared and provided to the Partnership's accountant debtors lists, creditors lists, cheque butts, bank statements, wage books and cash receipts for the businesses of the Partnership. She also paid accounts from time to time on behalf of the WYT business. Mary kept the journals that recorded the takings of WYT of cheques and cash and prepared the deposit slips for the deposit of cash and cheques and prepared the monthly sales records irrespective of whether the sales were by cash or cheque.
Mary was a titleholder in respect of the Wiley Park Property and had access to information in respect of the rent received from the Wiley Park Property as well as from the Fairfield Property. Such information was shared with Geoffrey. In addition, Geoffrey from time to time took cash to the bank for deposit. He also used the office in the YS business premises as his office for several years from August 1978. Geoffrey's accounting firm completed the tax returns for the Partnership and completed accounting records from 1994 to 1997. Geoffrey liaised with the bank from time to time to arrange finance for the Partnership businesses as well as government departments to arrange for licences and sales tax exemptions. Geoffrey negotiated with landlords for the leases of premises for the Partnership businesses. He monitored the bank accounts and cash positions of the two businesses, kept the employee and payroll records for the two businesses and was a signatory on the cheque accounts.
Sunly points out that, despite that involvement of Geoffrey and Mary, giving rise to detailed insight into the businesses of the Partnership, their knowledge of the Partnership and their suspicions of the use of funds for the Partnership from 1978 at the latest, the Court of Appeal upheld the finding that neither Geoffrey nor Mary had the requisite knowledge to bring the Lowe Proceedings prior to November 2001, some seven years after the death of FC Chow.
There is no evidence that FC Chow understood that a partnership existed other than the existence of the Partnership Deed. In circumstances where FC Chow had only a basic understanding of English and could not read English and was accustomed to speak in a dialect of Chinese, no inference should be drawn from the mere signature of the Partnership Agreement that FC Chow was conscious of being a member of the Partnership. The Administrator is in effect inviting the Court to impute knowledge on the part of FC Chow of the actions of her husband, simply because they were married and from time to time did banking together.
In the Lowe Proceedings, a finding was made that KST applied funds of the Partnership in the purchase of the Partnership Properties. That was held to be a breach of fiduciary duties owed to the members of the Partnership. While the question of knowledge or acquiescence on the part of FC Chow was not an issue in the Lowe Proceedings, I consider that the determination made in the Lowe Proceedings must be understood as a finding that, unless there was knowledge and acquiescence on the part of a particular member of the Partnership, the actions of KST constituted a breach of fiduciary duties owed to all members of the Partnership, including FC Chow.
On that basis, I consider that the onus lay on the Administrator to establish knowledge and acquiescence on the part of FC Chow rather than for the estate of FC Chow to establish, on the balance of probabilities, that FC Chow did not know and acquiesce in the actions of KST. The Court should be slow to impute to a wife knowledge of her husband's misappropriation of money from a family partnership. Absent positive evidence of knowledge and acquiescence on the part of a wife, I would draw the inference that the findings made in the Lowe Proceedings established, at least prima facie, that the actions of KST were without the consent or acquiescence of any member of the Partnership. In the absence of positive evidence of knowledge and acquiescence on the part of FC Chow, I conclude that the misappropriation of funds of the Partnership by KST occurred without the knowledge, consent and acquiescence of FC Chow.
That conflict, he says, only existed to the extent that the estate of FC Chow would receive a benefit, in the form of a distribution of Partnership property, by reason of the Lowe Proceedings. Sunly says that, if he had believed that the estate of the late FC Chow would obtain no benefit by reason of the Lowe Proceedings, there would have been no conflict and he could have continued to represent the estate of FC Chow in the Lowe Proceedings. That is consistent with the stance adopted by Mary and Geoffrey on 14 April 2008 through their solicitors.
Thus, on that day, following Stella's appointment to represent the estate of FC Chow in the Lowe Proceedings, the solicitors for Mary and Geoffrey wrote to Stella's solicitors urging her, inter alia, to file a submitting appearance in the Lowe Proceedings. It was said that the estate of FC Chow would be enriched if the Lowe Proceedings were successful, having regard to FC Chow's 30% interest in the Partnership and given that there would be a distribution of assets of the Partnership to each member of the Partnership according to their respective entitlements. Specifically, the solicitors for Mary and Geoffrey said as follows:
"Should [Mary and Geoffrey]'s claims succeed, it is likely that a substantial value will be added to [the estate of FC Chow] to the benefit of the beneficiaries of that estate … [which was an] an obvious commercial benefit to the beneficiaries of [the estate of FC Chow] including your [Stella] herself."
Sunly also read the letter of 14 April 2008 on about the date on which it was received by Stella and understood that there was no controversy as to the proposition that, if the Lowe Proceedings were successful, any property declared to be property of the Partnership would be held for, and distributed to, all members of the Partnership according to their respective interests in the property of the Partnership. On 17 April 2008, three days after the letter in question, Stella filed a submitting appearance on behalf of the estate of FC Chow and the estate of FC Chow did not resist the granting of relief in the Lowe Proceedings.
On the other hand, Sunly and other active defendants in the Lowe Proceedings resisted the claims made by Mary and Geoffrey, denied the existence of the Partnership and denied any wrongdoing on the part of KST. Sunly asserts that the stance he took in the Lowe Proceedings was motivated by his desire to ensure that KST's "memory is honoured", since he did not believe that KST was guilty of wrongdoing.
The claims made in the Lowe Proceedings about the interests of Mary Lowe's siblings in the Partnership Properties failed. In addition, the claim to an account as between the members of the Partnership, beyond an account of the profits derived from the Partnership Properties, was held to be time-barred as against Sunly and Gordon. The taking of a general account as against the estate of the late FC Chow was also held by the Court of Appeal to be time-barred. For that reason, Geoffrey and Mary could not be compelled to account to the Partnership for the monies that they used to acquire their residential property at Vaucluse. [68]
Sunly contends that he became aware of a change of position on the part of Mary and Geoffrey no earlier than 21 March 2017, by reason of the response to a letter written on behalf of Helen to the Administrator, in which the Administrator was asked to confirm his intention to distribute the property of the Partnership to the members of the Partnership in accordance with their respective shares. In response, Geoffrey and Mary wrote to the Administrator denying any entitlement of any other member of the Partnership and asking for written confirmation on behalf of the Administrator that no such distribution would be made. Sunly asserts that that was the first time at which he understood that there was any controversy with respect to the entitlement of the estate of the late FC Chow to share in the property of the Partnership consistent with the final orders of the Court of Appeal. Of course, the question of distribution was a matter for the Administrator. However, in November 2017, the Administrator first denied claims on behalf of the members of the Partnership other than Mary and Geoffrey, thereby adopting Geoffrey and Mary's stance as to that matter.
In the circumstances, I do not consider that the filing of a submitting appearance in the Lowe Proceedings by Stella was unreasonable. I do not consider that it signalled an abandonment by the estate of FC Chow of a claim to share in any recovery that might result from the Lowe Proceedings. The commencement of the FC Chow Proceedings in circumstances where the withdrawal of the submitting appearance was vigorously opposed is not an abuse of the Court's process.
The difficulty for Sunly is that the Court of Appeal directed the Inquiry to be held to identify what, if any, monies Mary and Geoffrey are entitled to and ordered the Administrator to pay to Mary and Geoffrey 20% of the amount of the benefits that KST obtained through his ownership, possession and/or use of the Partnership Properties. No order of that character was made in favour of any other member of the Partnership. It is relevant, of course, that significant questions arose in the Lowe Proceedings between Mary and Geoffrey, on the one hand, and Margaret, Helen, Sunly and Gordon, on the other, as to their interests in the Partnership Properties. Those questions did not concern the estate of FC Chow, since FC Chow had no interest in any of the Partnership Properties.
Thus, the Administrator says, the Court of Appeal found that Geoffrey and Mary were able to maintain their claim against the estate of KST but only that claim, as opposed to relief in the nature of a general account in respect of the Partnership. The Administrator asserts that the decision of the Court of Appeal was made by reference to the personal knowledge of Mary and Geoffrey of matters that, with reasonable diligence, would have enabled them to discover the facts giving rise to the relevant cause of action. However, the Administrator asserts, the decision of the Court of Appeal did not give rise to any issue estoppel in favour of Sunly in his capacity as administrator of the estate of FC Chow, other than the right to a general account in respect of the Partnership, which was found to be time-barred.
The Administrator rejects the proposition that the claim brought by Mary and Geoffrey was necessarily brought on behalf of the members of the Partnership. Thus paras [391] and [392] of the reasons of the Court of Appeal merely identified that the fact that an account as between members of the Partnership is statute barred did not, of itself, operate to prevent Mary and Geoffrey from recovering trust assets on the basis of a claim in trust. The Administrator rejects the proposition that para [392] demonstrates that Geoffrey and Mary had brought a claim on behalf of all members of the Partnership. Rather, the Administrator says, the reasoning of the Court of Appeal was that Mary and Geoffrey had successfully proven their right to be paid out of the assets of KST's estate, an amount equivalent to their share of the net proceeds of KST's interest in the Partnership Properties and they were not time-barred from doing so.
The Lowe Proceedings involved a claim for relief on behalf of the Partnership, which included FC Chow, or her estate, as a member of the Partnership. The claim was made in respect of property of the Partnership and a declaration was sought, inter alia, that the estate of FC Chow had a 30% share in the Partnership as well as a declaration that each of the Partnership Properties was held on constructive trust for the Partnership, of which FC Chow was a member. Further, in the Lowe Proceedings, a declaration was sought that the profits derived by the use of the Partnership Properties were held on constructive trust for the Partnership, of which FC Chow was a member. Finally, orders were sought for a partnership account and a determination of the respective interests of the members of the Partnership, including FC Chow as well as orders that the estate of KST account to the Partnership on a wilful default or alternatively a common form basis and that FC Chow, Sunly and Gordon account for the benefits that they had allegedly obtained through KST's breaches of fiduciary duty.
Sunly asserts that, in those circumstances, it was unreasonable for Mary and Geoffrey, in the Lowe Proceedings, not to challenge the entitlement of FC Chow to any interest in the Partnership because:
FC Chow had actual or inferred knowledge of the misappropriation by KST;
FC Chow was given benefits as a consequence of the misappropriation;
FC Chow ought to account to the Partnership for those benefits;
KST did not breach his fiduciary duties to FC Chow such that the assets held on constructive trust acquired by reason of his breaches of duty were not held on trust to the extent of FC Chow's interest in the Partnership; and
FC Chow did not suffer any loss.
The Administrator and all other parties to the Lowe Proceedings had ample opportunity to adduce evidence and make submissions or otherwise pursue such allegations as those outlined above, either by resisting the declarations sought by Mary and Geoffrey as to FC Chow's 30% interest in the Partnership or by resisting any finding that KST breached fiduciary duties owed to one or more of the members of the Partnership. Sunly asserts that the Administrator forewent the opportunity that he had to challenge the interest of the estate of FC Chow in the property held by him on behalf of the Partnership and to challenge the finding and declaration that KST breached his fiduciary duty to all members of the Partnership.
Nevertheless, I consider that no issue estoppel arises as to FC Chow's knowledge of KST's misappropriations because no determination as to her knowledge of relevant events was necessary in order to determine the entitlement of Geoffrey and Mary to the relief that they claimed in the Lowe Proceedings. Accordingly, a determination must be made as to FC Chow's knowledge as to the use made of property of the Partnership to purchase the Partnership Properties before it can be determined that FC Chow had a right to an account as against KST in respect of those funds.
An issue estoppel would only arise to prevent a party being vexed by having to litigate an issue twice. The question of FC Chow's knowledge was not litigated at all in the Lowe Proceedings. It might have been but for the fact of the submitting appearance filed by Stella on behalf of the estate of FC Chow. In so far as it is an element in the claim made on behalf of the estate of FC Chow that the misappropriation by KST of funds of the Partnership occurred without the acquiescence or knowledge of FC Chow, that is an issue that has not been litigated. It follows that there is no issue estoppel in relation to that question.
However, the Administrator is estopped from denying the following matters:
the Partnership existed and was dissolved on 1 July 1989;
at all times up to the date of dissolution of the Partnership, FC Chow had a 30% share of the Partnership;
KST owed fiduciary duties to the other members of the Partnership, including FC Chow; and
KST acquired the Partnership Properties partly with funds belonging to the Partnership.
Those matters have been established in the Lowe Proceedings, to which, as I have said, all of the parties to the FC Chow proceedings were also parties. The question remaining, apart from defences of laches and delay and limitations, is whether, qua FC Chow, KST breached the fiduciary duties that he owed to her as a member of the Partnership. That turns on the question of knowledge and acquiescence of FC Chow. If FC Chow did not know of and acquiesce in the actions of KST, 30% of the KST's interest in the net proceeds of sale and in the profits, if any, from the holding of the Partnership Properties would be held by the Administrator on trust for FC Chow.
The alternative basis upon which the Limitation Act is relied upon is acquisition by Sunly, as representative of the estate of the late FC Chow, on 24 June 2002, of facts from which misappropriation by KST could be identified. That is the date on which the Final Report is said to have been served on the representative of FC Chow's estate.
Sunly holds a tertiary degree in science and has worked as a stockbroker. From 2003 to 2008, he was an authorised representative of a financial services licensee and is a director of multiple private companies. He has been a member of a partnership with his siblings since 2005. The Administrator points to the fact that, in an affidavit in which he purported to address his knowledge and understanding of partnership matters, Sunly disclosed none of his education or experience. Rather, he referred only to his current occupation as a cleaner. In cross-examination, he was unable to recall how long he had been in that occupation. Those matters tend to tell against the credibility of Sunly's evidence.
From 8 December 1996, Sunly was the administrator of FC Chow's estate. He knew, from 1997 at the latest, that the Partnership Properties had been purchased without borrowing. By 2001, he had a copy of the Partnership Deed and received legal advice at that time. It is alleged that he received the Final Report on 24 June 2002. The only evidence of service of the Interim Report on the legal personal representative of FC Chow is a letter from the Administrator's solicitor to the Administrator dated 24 June 2002. The letter was written by Mr Petrucco but, although Mr Petrucco swore an affidavit in the FC Chow Proceedings, he gave no direct evidence of service. Sunly invites the Court to draw the inference that Mr Petrucco could not give such evidence. It was not put to Sunly that, at that time, he had received the Final Report and comprehended its contents. However, Sunly says, the Final Report, alleged to have been served on 24 June 2002, was different from the Interim Report, which was given to Geoffrey and Mary on 29 November 2001.
Sunly asserts that he could not have been aware, in June 2002, that his father owed fiduciary duties as a member of the Partnership, let alone that he had breached such duties by the misappropriation of funds of the Partnership. Nothing on the face of the Final Report allegedly served on Sunly on 24 June 2002 disclosed the existence of a Partnership. Sunly actively disputed the allegation in the Lowe Proceedings of the existence of the Partnership and only accepted the existence of the Partnership when declarations were made on 25 June 2010 by Smart AJ.
In his capacity as administrator of the estate of FC Chow, Sunly received a letter of 26 September 2005 identifying the claims that Mary and Geoffrey proposed to make in relation to the Partnership Properties. He agreed that he read the letter carefully. Sunly then sought to review the Partnership Deed, not because he was unaware of the significance of its meaning but rather to test its authenticity. The Administrator also draws attention to the fact that Stella, who was the representative of the estate of FC Chow for the purpose of the Lowe Proceedings, did not give evidence in the FC Chow Proceedings. I draw the inference that Stella's evidence would not have assisted the case on behalf of FC Chow's estate.
Sunly said that, by 26 September 2005 at the latest, he intensely distrusted Geoffrey and Mary and believed that they were dishonest and that they would lie in order to obtain a financial advantage. Sunly asserts that, in those circumstances, it is quite credible that he would not blindly accept the allegations by Geoffrey and Mary as fact based simply on a three-page letter and an attached document. The letter relied upon provided no details or documents or explanation to substantiate the allegation that KST used funds belonging to the Partnership to which he did not have an entitlement. The only document attached to the letter was the Partnership Deed. None of the research, investigations, property searches, spreadsheets, or calculations that were available to Geoffrey and Mary, was provided with the letter. Indeed, the investigations by Mary and Geoffrey had not yet been concluded in so far as the letter asserted that Geoffrey and Mary believed that the dispute was a complex one and said that they were in the process of collating and preparing documents in anticipation of the commencement of proceedings against the estate of KST.
Sunly asserts that, even if the Administrator and Geoffrey and Mary could rely on an unpleaded defence based on knowledge as at 26 September 2005, the Court should not find that, at that stage, Sunly had discovered the facts giving rise to the cause of action that is now the subject of the FC Chow Proceedings. Thus, he says, the letter did not contain those facts but constituted no more than the contentions and unsubstantiated allegations advanced by Mary and Geoffrey, in circumstances where Sunly intensely distrusted both of them.
In the Lowe Proceedings, in determining the applicability of the Limitation Act to the claims made by Mary and Geoffrey, the Court of Appeal held that a claim for the general taking of an account as between the members of the Partnership, on the one hand, and the estate of KST, on the other, was barred by the operation of s 15 of the Limitation Act, time having begun to run from the date of dissolution of the Partnership on 1 July 1989. Secondly, the Court of Appeal concluded that a claim for proprietary relief by way of the imposition of a constructive trust in respect of the Partnership Properties had to be brought within 12 years running from the date on which the claimant first discovered the facts from which the misappropriation of monies by KST could have been identified. In the case of Mary and Geoffrey, that time was November 2001. Finally, the Court of Appeal concluded that a claim for accounting relief in respect of the profits derived from the use of the Partnership Properties needed to be brought within 12 years running from the date on which the claimant first discovered the facts from which the misappropriation of monies by KST could have been discovered. That is the claim to which the FC Chow Proceedings correspond.
The Court of Appeal held that time began to run for Geoffrey and Mary from the date on which they were served with the Interim Report. The Administrator contends that the limitation period in respect of the claims made in the FC Chow Proceedings was 12 years from the date on which a relevant representative of the estate of FC Chow was served with a copy of the Final Report. The Administrator asserts that the Final Report was served on the administrator of FC Chow's estate on 24 June 2002. Accordingly, the Administrator says, any cause of action on the claims now made in the FC Chow Proceedings expired, at the latest, on 24 June 2014. However, the FC Chow proceedings were not commenced until 27 October 2017.
Sunly responds that, if the Final Report was sufficient to put Sunly on notice of the facts giving rise to the cause of action now pursued in the FC Chow Proceedings, the action is purely equitable, in so far as it is a claim for proprietary relief by way of imposition of a constructive trust over the Partnership Properties [71] and s 47 of the Limitation Act would apply only by way of analogy. He asserts that the application of s 47 of the Limitation Act in the present circumstances would be unconscionable for several reasons.
First, the limitation would allow a defaulting fiduciary to retain 80% of the proceeds of his breach of fiduciary duty, being proceeds that were held on an institutional constructive trust for the members of the Partnership. Further, the limitation would preclude the distribution of FC Chow's partnership share of the assets that are the subject of the constructive trust to the estate of FC Chow. In addition, it would allow Mary and Geoffrey to obtain the benefit of bringing an equitable claim on behalf of the Partnership, to recover trust property, without recognising the interests of the other members of the Partnership and would allow Mary and Geoffrey to exhaust the assets of the estate of KST to the detriment of all other members of the Partnership, including the estate of KST.
Sunly asserts that none of the circumstances pertaining to Geoffrey and Mary apply to him. He was not aware of the existence of the Partnership and was not a member of the Partnership. He had not signed the Partnership Deed and was not an accountant and did not in fact suspect KST of any wrongdoing, as Geoffrey and Mary did. Even with their suspicions, resources and accounting expertise, Geoffrey and Mary had not, as late as 26 September 2005, concluded their own investigations. Their conclusion that KST had misappropriated funds of the Partnership was not arrived at until after considerable forensic and accounting investigation. They only discovered that KST had misappropriated property of the Partnership in 2005 when they initiated the Lowe Proceedings, on 7 November 2005. Geoffrey's evidence was that, in or about 2005, he and Mary discovered that KST had misappropriated the assets of the Partnership.
Mary sworn an affidavit in the proceedings initiated by her in respect of the forged will in the name of KST while she was an executor of KST's estate. While that affidavit annexed a copy of the Partnership Deed, the sole purpose of the annexure, as stated in the affidavit, was to provide evidence of the way in which KST signed documents, namely, in English. The affidavit itself provides no information as to the character of the document annexed and does not describe the agreement as pertaining to or having anything to do with the Partnership. Sunly's evidence was that he did not consider the substance of the document annexed to Mary's affidavit, other than to look at the alleged signature, written in English. His oral evidence was, at all times, consistent with his not having a recollection of actually seeing the Partnership Deed when it served, because he only looked at the document in a way consistent with its stated purpose as described in Mary's affidavit.
Sunly asserts that there is no evidence that he had sufficient knowledge of KST's financial affairs to be able to come to a view as to personal funds to which KST might have had access. In particular, Sunly did not have information regarding the quantum of rent that KST was receiving from the properties at Wiley Park and Fairfield. Unlike Mary, Sunly was not the holder of any legal interest in those properties and did not manage them as Mary did.
Sunly points out that the FC Chow Proceedings were commenced within 12 years after the commencement of the Lowe Proceedings and within 12 years of service of the original statement of claim in the Lowe Proceedings. He says that that is the earliest time when it could be said that he was aware of the circumstances and facts giving rise to the claim now being made in the FC Chow Proceedings. I am not persuaded that the Administrator has made out a defence under the Limitation Act.
Next, Sunly asserts, to the extent that, contrary to his contention, there is no continuing breach, the claim made in the FC Chow Proceedings accrued, at its earliest, when the Administrator denied the entitlement of the estate of the late FC Chow in relation to the Partnership, thereby preferring the interests of Geoffrey and Mary, and Sunly became aware of those facts. He says that, prior to that time, he did understand that there was any controversy as to the entitlement of the members of the Partnership to their respective interests in the property held by the Administrator on constructive trust. Thus, Sunly asserts, the Administrator's denial was made expressly for the first time no earlier than November 2017. Prior to that time, the Administrator remained silent as to whether he would distribute the assets of the Partnership held by him to all members of the Partnership. As indicated above, the FC Chow Proceedings were commenced on 27 October 2017.
The Administrator's response to Sunly's contention that there has been a misapprehension or mischaracterisation of the claim made in the FC Chow Proceedings is that, if the contention were correct, every time a declaration is made by a court of a breach of fiduciary duty, a fresh cause of action would be created for a party to the proceeding who chose not to allege or admit such breach of duty to obtain a remedy for himself, herself or itself. It would follow, the Administrator says, that any such new cause of action, grounded in such a declaration, could never be the subject of a limitation period insofar as a fresh demand would give rise to the commencement of a new limitation period.
The Administrator asserts that at least one purpose of the Limitation Act is to permit persons to ascertain when they are free from the risk that a cause of action may be pursued against them and that there is an obvious public interest in such an outcome. There is no sound reason to create an extraordinary loophole for litigants who had a chance to pursue a claim as a party to a proceeding but elected not to do so but wished, belatedly, to construct a new claim on the basis of a Court's declaration that they had contended should not be made and in respect of which they sought no relief in the earlier proceeding.
Thus, Sunly contends, the claim on behalf of the estate of FC Chow is directed at the property held by the Administrator, in his capacity as legal personal representative of KST. Finally, Sunly asserts that the Administrator has a fiduciary duty to the late FC Chow as a beneficiary of the institutional constructive trust and is acting in breach of that duty in refusing to recognise her claims to 30% of the assets held on institution constructive trust for the Partnership and is preferring the interests of Mary and Geoffrey. In those circumstances, Sunly asserts, the Administrator is in a position of conflict in that he has conflicting duties to the members of the Partnership and to the beneficiaries of the estate of the late KST.
Having regard to the conclusion that I have reached in relation to the Limitation Act, it is not strictly necessary to consider this question.
I do not understand there to be any dispute on the part of Sunly, as administrator of the estate of FC Chow, as to the Administrator's entitlement to be reimbursed for the Administration and Trust Costs and expenses and the Future Administration and Trust Costs.
In addition to those distributions, Sunly and Gordon acquired interests in the Haig Street Property and the Campbelltown Property, which were held to be indefeasible by the operation of the Real Property Act. Nevertheless, those interests were derived from the funds belonging to the Partnership. The Partnership Properties have been sold and Gordon and Sunly have received part of the proceeds of sale in proportion to their indefeasible interests.
Gordon and Sunly are beneficiaries under the intestate estate of FC Chow. I consider that, in order to do justice between the parties, the amounts received by them from the proceeds of sale of the Partnership Properties should be added notionally to the Net Proceeds Trust. As I have said above, the sums received by Sunly and Gordon from the estate of KST should notionally be added to the Net Profits Trust.
The balance of the Net Proceeds Trust and the Profits Trust would be distributed pro rata to the members of the Partnership according to their respective interests. The estate of FC Chow would be treated notionally as having received distributions in the amounts notionally added to the Net Proceeds Trust and the Profits Trust as indicated above. That is the effect of the Family Arrangement Deed. To the extent that, after that deemed distribution, there are funds remaining for actual distribution to the estate of FC Chow, those funds would fall for distribution in the administration of the estate of FC Chow.
The amounts received by Sunly and Gordon, referred to above as having been added notionally to the Net Proceeds Trust and the Profits Trust, would be treated as amounts distributed to Sunly and Gordon in the administration of the estate of FC Chow. I do not have detailed evidence as to the financial position of the estate of FC Chow and it is possible that some modification of the scheme outlined above would be required if there are liabilities of the estate to be taken into account.
Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 at [223].
Ibid at [245].
Ibid at [373].
Ibid at [386].
Ibid at [387].
Ibid at [388].
Ibid at [389].
Ibid at [390].
Ibid at [391].
Ibid at [392].
Ibid at [393].
Ibid at [395].
Ibid at [411].
Ibid at [412]-[413].
Ibid at [415], [430].
Lowe v Pascoe (No 7) [2018] NSWSC 333.
Following agreement after the date of the Inquiry Report.
See Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 109; [1984] HCA 64.
See Dart Industries Inc v Decor Corporation Pty Ltd (1992) 179 CLR 101 at 111; [1993] HCA 54.
See Warman International Ltd v Dwyer (1995) 182 CLR 544 at 561; [1995] HCA 18.
See Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 at [515].
See Dart Industries Inc v Decor Corporation Pty Ltd (1992) 179 CLR 101 at 111; [1993] HCA 54.
See Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 at [531].
See Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298; [2003] NSWCA 10 at [311].
See Wallersteiner v Moir (No 2) [1975] QB 373 at 388, 397 and 406; [1975] 2 WLR 389.
See Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 702; [1996] UKHL 12.
A person ought not be vexed twice for one and the same claim.
It is in the interests of the State that there be an end to litigation.
See Wong v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 146 FCR 10; [2004] FCAFC 242 at [36].
See Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 602-603; [1981] HCA 45.
See Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 at [521]-[522].
See Erlanger v New Sombrero Phosphate Company (1878) 3 App Cas 1218 at 1279 and Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114 at [32].
See Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 at [79].
See Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 at [386], [389], [393] and [395].
See Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 at [4]-[5].
See Williams v Central Bank of Nigeria [2014] AC 1189; [2014] UKSC 10 at [31].