Abdalla v Jarvis J Pty Ltd

[2025] NSWSC 1084

Supreme Court

New South Wales

Medium Neutral Citation:

Abdalla v Jarvis J Pty Ltd [2025] NSWSC 1084

Hearing dates:

9 September 2025

Date of orders:

22 September 2025

Decision date:

22 September 2025

Jurisdiction:

Equity - Real Property List

Before:

Pike J

Decision:

Second defendant holds one half of his interest in the Land on trust for plaintiff. Judicial sale to be ordered.

Catchwords:

EQUITY – Tracing – where signature on land transfer forged and initial recipient of land held the interest in land on Black v S Freedman type trust – where land then transferred to third party – whether third party is a bona fide purchaser for value without notice – whether order for judicial sale should be made – no question of principle

Legislation Cited:

Evidence Act 1995 (NSW), s 91

Cases Cited:

Amirbeaggi as trustee of the bankrupt estate of Hanna v Hanna (No 3) [2024] FCA 1171

Amirbeaggi as trustee of the bankrupt estate of John Mamdouh Hanna v Kamel [2019] FCA 1965

Fistar v Riverwood Legion and Community Club Ltd (2016) 91 NSWLR 732; [2016] NSWCA 81

Golden Mile Property Investments Pty Ltd (in liq) v Cudgegone Australia Pty Ltd (2015) 89 NSWLR 237; [2015] NSWCA 100

Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Hedra Fayez Nashed Abdalla (Plaintiff)
Jarvis J Pty Ltd (First Defendant)
Anthony John Hanna (Second Defendant)
Registrar General of NSW (Third Defendant)
Commonwealth Bank of Australia (Fourth Defendant)

Representation:

Counsel:
D Allen (Plaintiff)

Solicitors:
SKM Lawyers (Plaintiff)
Longton Blackwell (Second Defendant)

File Number(s):

2020/00024822

Publication restriction:

Nil

JUDGMENT

1. These proceedings were commenced as long ago as January 2020.

2. The essence of the relief sought by the plaintiff (Mr Abdalla) is that each of the first defendant (Jarvis J) and the second defendant (Anthony Hanna) hold a half interest in land located at Unit 16/7 Altair Place, Hinchinbrook, New South Wales being folio identifier 17/SP93648 (Land) on trust for Mr Abdalla.

3. The third defendant is the Registrar General of New South Wales who has not taken an active role in the proceedings. Counsel for Mr Abdalla stated at the commencement of the hearing that he did not know why the Registrar General had been made a party to the proceedings.

4. The fourth defendant is the Commonwealth Bank of Australia (Commonwealth Bank) who is the registered first mortgagee on the title to the Land. On 1 October 2020, Darke J ordered that the Commonwealth Bank be excused from further attendance in the proceedings. This was on the basis, as was noted by Darke J, that the remaining parties agreed that no orders made by the Court would affect the Commonwealth Bank’s mortgage.

5. The precise reason why the proceedings took so long to come on for hearing was not completely explained although it appears to be primarily as a result of certain related proceedings in the Federal Court of Australia which were ultimately determined by Goodman J on 17 October 2024. I explain these proceedings later in these reasons.

6. The proceedings were heard on 9 September 2025. Mr D Allen of counsel appeared for Mr Abdalla. There was no appearance for Jarvis J. This is because, as I explain below, the claim against Jarvis J was determined adverse to Jarvis J by Goodman J in the Federal Court proceedings. No relief was sought against Jarvis J at the hearing. Mr M Wang, solicitor appeared for Anthony Hanna.

7. For the reasons set out below, I have determined that Anthony Hanna is not a bona fide purchaser for value without notice of the Land and that Anthony Hanna holds a one half interest in the Land on trust for Mr Abdalla. Orders for the judicial sale of the land should be made. The parties should seek to agree orders to give effect to these reasons with any remaining issues to be determined on the papers.

The facts

8. Mr Abdalla and Mr John Mhanna (sometimes referred to as Mr John Hanna Snr) were in partnership together engaged in property development activities.

9. John Mhanna is Anthony Hanna’s father. Mr Mhanna’s wife (Anthony Hanna’s mother) is Eman Shonoda (Ms Shonoda).

10. There were relevantly two development sites, one at Hinchinbrook (which included the Land) and another at Lawson.

11. According to Ms Shonoda, she kept an account of the expenses incurred at both Hinchinbrook and Lawson. A spreadsheet maintained by Ms Shonoda showed that Mr Abdalla paid an extra amount of $112,356.74 in relation to the Hinchinbrook development. The spreadsheet also states that the net amount due to Mr Abdalla from Mr Mhanna “for Lawson” is $135,000.

12. On or about 4 April 2017, a deed was prepared between Mr Mhanna, Mr Abdalla (as Mortgagee) and Ms Shonoda (First Mortgagor and Guarantor) (Deed). The Deed is described on its cover page as an “Equitable Mortgage”.

13. The Recitals to the Deed are as follows:

A   Mhanna and Abdalla are, the proprietors of the following properties which are held by them as tenants in common:

i.   The property located at 16/7 Altair Place, Hinchinbrook in the State of New South Wales, being Folio Identifier 17/SP93648 (hereinafter “17/SP93648”)

ii.   The property located at 21/7 Altair Place, Hinchinbrook in the State of New South Wales, being Folio ldentifier·22/SP93648 (hereinafter “22/SP93648”)

iii.   The property located at 328 Great Western Highway, Lawson in the State of New .South Wales being Folio Identifier 34/116686 (hereinafter “34/116686”)

(Collectively referred to hereinafter as “the Properties”)

B.   Mhanna agrees to transfer his part interest in the properties to the First Mortgagor for nil consideration.

C.   Abdalla agrees to transfer his part interest in the properties to the First Mortgagor for a total consideration in the sum of $247,356.74 (hereinafter referred to as “the Advance”).

D.   The First Mortgagor is therefore hereby indebted to Abdalla in the sum of the Advance which is due and payable pursuant to the ‘Terms of Repayment’ set out herein.

E.   For the purposes of this Agreement, Abdalla is also referred to as “the Mortgagee”.

F.   The Terms of Repayment of the Advance, which will be payable by the First and Second Mortgagor are as follows:

i.   The first instalment in the sum of $112,356.74 is payable on the date six (6) weeks from the date of this agreement.

ii.   The second instalment in the sum of $135,000.00 is payable on the on the date twelve (12) weeks from the date of this agreement.

G.   For the purpose of securing the Advance, the First Mortgagor has agreed to execute this agreement and thereby consent to the form of security set out hereunder.

H.   The First Mortgagor hereby consents to the-security in the nature of an unregistered mortgage not registered by Caveat in favour of the Mortgagee over the following properties to which the First Mortgagor and Guarantor is the sole registered proprietor thereof:

i.   The property located at 8·Stynes Avenue, Kellyville in the State of New South Wales, being Folio Identifier 31/1166499

ii.   The property located at 17 Bresnihan Avenue, Kellyville in the State of New South Wales, being Folio Identifier 43/1166499

(Collectively referred to hereinafter as “the Security”)

I.   The First Mortgagor and Guarantor hereby consents to the registering of Caveats over the Security by the Mortgagee.

J.   Upon the Mortgagee banking and receiving clear funds of the second instalment and any interest if any payable, he shall hand to the Mortgagor a duly executed Withdrawal of Caveat, in registrable form.

14. Notwithstanding what is contained in the Recitals, the substantive terms of the Deed did not provide for the transfer of the properties by Mr Abdalla or the payments to him.

15. The operative provisions deal with the security provided by Ms Shonoda with respect to the payments to be made to Mr Abdalla.

16. In any event, Mr Abdalla agreed in cross-examination that he had agreed to transfer his interest in the properties to Ms Shonoda in accordance with the Recitals in the Deed.

17. It would appear that there were originally eight units in the Hinchinbrook development. As at the time of the Deed, Mr Abdalla and Mr Mhanna were registered proprietors of Unit 16 (Land) as tenants in common for 50% each.

18. Mr Mhanna was made bankrupt on or about 11 July 2017.

19. On or about 13 July 2017, it would appear that Anthony Hanna, at the request of Ms Shonoda, withdrew $112,000 from an account he operated with ANZ Bank and caused that money to be paid to Osama Botros. The payment was apparently at the request of Mr Abdalla and appears to have been intended as part payment of moneys owing under the Deed.

20. On or about 30 August 2017, Anthony Hanna withdrew a further amount of $100,000 from his ANZ Account at the request of his mother. The money was paid to Ada Boyan (Ms Boyan). Again, the payment was apparently requested by Mr Abdalla and was intended as part payment of the moneys going to him under the Deed. Mr Abdalla had purchased a property from Ms Boyan in Mars Street, Revesby.

21. Mr Abdalla agreed that he asked for the payments to be made but that he did not know that Anthony Hanna was the source of the funds.

22. After the two payments above, Ms Shonoda says she tried to obtain finance to complete the purchase of the land at Lawson. She could not obtain the finance and decided not to complete the purchase. ANZ, as mortgagee in possession, subsequently sold the land at Lawson. Mr Abdalla apparently received $4,342.24 from the proceeds of sale.

23. On 16 January 2018, by registered transfer AN40118X, the Land was transferred to Jarvis J. It was not in dispute that Jarvis J was at all material times a company controlled by Ms Shonoda. The stated consideration on the transfer was $650,000, although it was not in dispute that no such consideration was paid for the transfer.

24. Mr Abdalla contends, and I find, that he did not sign the transfer or authorise it to be signed. He was unaware at the time that the transfer had been executed and the Land transferred. His signature was forged.

25. Mr Abdalla gave evidence in these proceedings that he did not sign the transfer and he was not seriously challenged in this respect. I accept his evidence.

26. Mr Abdalla’s evidence is also supported by a report of a handwriting expert, Melanie Holt.

27. Mr Allen also placed reliance on certain statements made by Mr Mhanna outside Court in these proceedings on 28 January 2020 to the legal representatives for Mr Abdalla, as well as to Henry J on that day. The statements were to the effect that Mr Mhanna had spoken to his son and was authorised to speak on his behalf on that occasion and that he – Mr Mhanna – admitted to forging Mr Abdalla’s signature on the transfer.

28. Anthony Hanna did not, at the hearing before me, dispute that his father had authority to speak on his behalf on 28 January 2020 and made the statements that he did.

29. It is not necessary for me to reach a final view on whether Mr Mhanna’s statements are to be held as an admission against Anthony Hanna in these proceedings. The evidence – which was not objected to – is to the effect that Mr Mhanna forged the signature. Mr Mhanna made an affidavit in the proceedings on behalf of Anthony Hanna but it was ultimately not read. No explanation was advanced as to why not. There was thus no denial by Mr Mhanna of what he had previously told Henry J that he was the person that forged Mr Abdalla’s signature.

30. Consistent with orthodox principles, I can and do more readily accept the direct evidence from Mr Abdalla.

31. On 19 February 2018, Mr Abdalla, through SKM Lawyers, wrote to Mr Mhanna and Ms Shonoda in the following terms:

We refer to the abovementioned and that we act for Mr Hedra Fayez Nashed Abdalla.

Deed of Equitable Mortgage

We refer to the Deed of Equitable Mortgage dated 4 April 2017, to which you and our client are parties (the Deed).

We advise that you are in serious breach of the Deed. We set out below the facts relating to your breach. If you do not remedy the same forthwith we are instructed to commence proceedings against you.

The Deed purports to be an agreement that our client and Mr Mhanna were to transfer their interests in the following properties to Ms Shenoda:

i.   The property located at 16/7 Altair Place, Hinchinbrook in the-State of New South Wales, being Folio Identifier 17/SP93648 (the Hinchinbrook Property)

ii.   The property located at 21/7 Altair Place, Hinchinbrook in the State of New South Wales, being Folio Identifier 22/SP93648

iii.   The property located at 328 Great Western Highway, Lawson in the State of New South Wales, being Folio Identifier 34/116686 (the Lawson Property)

Our client agreed to accept the sum of $247,356.74 in consideration for the transfer of his interests in the aforementioned properties.

The Hinchinbrook Property

We refer to Transfer AN40118X (the Transfer) relating to the Hinchinbrook Property.

The signature on the Transfer does not belong to our client. Our client suspects his signature has been forged by Mr Mhanna. We note that the said signature was witnessed by Ms Shenoda.

We have advised our client to report this matter to NSW Police unless you provide a valid explanation for the above immediately.

We draw your attention to the following:

1.   Our client was not notified of, and does not consent to, the transaction referred to in the Transfer.

2.   Our client has received no consideration pursuant to the Transfer for his interest in the Hinchinbrook Property.

3.   The Transfer breaches Clause 6.1 (a) of the Deed be [sic] granting an interest the Hinchinbrook Property to an unrelated third party.

4.   You have breached the Deed by failing to transfer the Hinchinbrook property to Ms Shenoda, but rather to an entity, referred to as Jarvis J Pty Ltd, not a party to nor mentioned in the Deed.

5.   You have breached the Deed by failing to pay to our client the sum specified in the Deed.

The Lawson Property

Pursuant to the Deed, the parities are required to take reasonable steps to give effect to the transfer of the Lawson Property to Ms Shenoda.

We are instructed that despite our clients repeated demands you have you have [sic] taken no steps to give effect to the subject transfer provided for in the Deed.

Further we are instructed that in the interim, Mr Mhanna has reneged on his obligations to the Mortgagee. As a result of your delay and Mr Mhanna’s conduct, our client has been solely responsible for loan repayments and ongoing over the past 12 months in the sum of $15,000.00 he has made on your behalf.

Our client demands that you repay him for the loan repayments and attend to your obligations to pay the loan repayments until such time as the Deed is given effect.

Mhanna’s Bankruptcy

We further note that as a result of the bankruptcy NSW2536 of 2017/5, caveats have been recorded against the Hinchinbrook and Lawson properties by the liquidator, being for your personal debts to the Australian Taxation Office.

We note that this is a further breach of Clause 6.1 (b) of the Deed.

Despite our client’s insistence you have failed to remedy such.

Demand

Our client demands that you remedy the aforementioned breaches immediately. We require that you pay to our client following amounts within seven (7) days:

1.   $35,356.74 outstanding pursuant to the Deed.

2.   $15,000.00 for loan repayments paid by our client for the Lawson property.

We advise that should you fail to attend to the same and ignore this correspondence we are instructed to:

a.   Commence legal proceedings for breach of the deed with no further notice to you, in addition to a claim for damages and costs. Please note that our client has suffered loss and damage from your breaches which he has quantified as an estimated $44,000.00;

b.   Report your conduct to the NSW Police.

We will rely on this correspondence on the question of costs.

32. The letter clearly put Ms Shonoda and Mr Mhanna on notice of the forged signature and that the Land had been transferred without Mr Abdalla’s consent.

33. On 3 April 2019, Jarvis J transferred the Land to Anthony Hanna. As set out above, it is admitted in the proceedings that Ms Shonoda was the controlling mind of Jarvis J.

34. It is also admitted that Ms Shonoda procured the transfer to Anthony Hanna. The stated consideration on the transfer was $600,000 although Anthony Hanna admitted that this consideration was not paid.

35. At [20] of his defence, Anthony Hanna contended that although Ms Shonoda procured the transfer, he held the interest “to the property (not on behalf of Ms Shonoda) as I have paid the full required consideration.”. The only matters pointed to in this regard were the two payments made in about mid 2017 of $112,000 and $100,000.

36. No evidence was given, or submission made, linking the transfer to Anthony Hanna in 2019 to the earlier payments made in 2017. The highest the evidence went is that in 2017 Anthony Hanna was asked by his mother to make the payments which were said to be in regards to the purchase of the “property of 16 Hinchinbrook - sorry, correction, unit 16 of 7 Altair Place, Hinchinbrook”. Anthony Hanna said in his oral evidence in chief that his “memory is a little bit faulty in this area” and he “can’t recall specifics”.

37. On the same day that the Land was transferred to Anthony Hanna, he took out a mortgage with the Commonwealth Bank. Anthony Hanna admitted that his parents facilitated or assisted him in taking out the loan with the Commonwealth Bank. He also admitted that a substantial part of the moneys advanced was used to make a payment to Mr Mhanna’s bankruptcy trustee.

38. In cross-examination, Anthony Hanna denied that he was holding the Land on trust for his mother. He said that it was his investment property.

39. Ms Shonoda was asked one question in cross-examination:

40. In re-examination, Ms Shonoda was asked what document she was referring to when she said “deed” to which she responded “to the deed…. that was arranged on the 4^th of April 2017, Exhibit A … Exhibit 1”.

41. These proceedings were commenced in January 2020 by Summons. They clearly put Anthony Hanna on notice of the forgery of Mr Abdalla’s signature.

The Federal Court proceedings

42. Prior to the commencement of these proceedings, Mr Mhanna’s bankruptcy trustee commenced proceedings in the Federal Court. On 21 November 2019, Yates J gave default judgment against Jarvis J on a cross-claim filed by Mr Abdalla in the sum of $325,000 for unpaid moneys for the transfer of the Land: see Amirbeaggi as trustee of the bankrupt estate of John Mamdouh Hanna v Kamel [2019] FCA 1965.

43. On 11 October 2024, Goodman J gave judgment in the Federal Court in which he considered a number of claims including a further claim by Mr Abdalla against Jarvis J: see Amirbeaggi as trustee of the bankrupt estate of Hanna v Hanna (No 3) [2024] FCA 1171. Goodman J relevantly held:

1. that at the time Jarvis J received the Land it was not aware of the forgery of Mr Abdalla’s signature;

2. that he was not satisfied that Jarvis J was a purchaser for value. Rather, Jarvis J received the Land as a volunteer;

3. Ms Shonoda and therefore Jarvis J was on notice of the forgery from about 19 February 2018 upon receipt of the letter I have set out above;

4. as such, Jarvis J held Mr Abdalla’s interest in the Land on trust for him and is liable to him for dealing with that trust property by transferring it to Anthony Hanna. The appropriate remedy is the payment by Jarvis J of the value of that interest as at about the date of the transfer, namely $315,000.

44. On 16 May 2025, Needham J ordered that the appeal brought by Jarvis J against Mr Abdalla be dismissed “on the basis of objection to competency”.

45. Although the judgment of Goodman J was admitted before me without objection, I did not understand Mr Allen to ultimately contend that the findings made by Goodman J were somehow binding on me. I do not think that they are binding on me: see s 91 of Evidence Act 1995 (NSW). In any event, the evidence adduced before me has established the facts relevant to the claims pursued in these proceedings.

Claims made in the proceedings and defences

46. The claims ultimately advanced by Mr Abdalla against Anthony Hanna (who was the only defendant proceeded against given that the claim against Jarvis J was determined by Goodman J) was relatively simple: Anthony Hanna was not a bona fide purchaser for value of the Land. He received trust property and subsequently acquired notice of the trust at the time of the commencement of the proceedings and, in denying any interest of Mr Abdalla in the Land, is dealing with the trust property in a manner inconsistent with the trust. Reliance in this regard was placed on authorities such as Fistar v Riverwood Legion and Community Club Ltd (2016) 91 NSWLR 732; [2016] NSWCA 81 at [45] per Leeming JA (Fistar) and Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 at [141]-[162] per Gleeson J (Sze Tu).

47. No written submissions were provided on behalf of Anthony Hanna prior to the hearing.

48. In his oral submissions, Mr Wang relied on the following bases to oppose the relief sought:

1. first – Anshun estoppel – contending that Anthony Hanna should have been joined to the Federal Court proceedings before Goodman J and “this should have been dealt with together with those proceedings for equitable tracing to be from Mr Abdalla to Jarvis to Anthony”;

2. second, Mr Abdalla should not be granted the equitable relief that he seeks because he does not come with clean hands in that he has already received $212,000 which he has not returned;

3. third, as I understood the submission, the $212,000 paid in 2017 was consideration for the transfer in 2019 to Anthony Hanna. The contention in this regard was that Jarvis J was effectively the middle man between Mr Abdalla and Anthony Hanna;

4. fourth, the amount of $212,000 already paid should be set off against any money judgment awarded in Mr Abdalla’s favour.

49. In response, Mr Allen contended that, apart from the third matter of Anthony Hanna providing consideration, none of the bases set out above were pleaded and Mr Hanna should not be permitted to run them now. Mr Wang accepted that the three matters were not pleaded but contended that there was no prejudice to Mr Abdalla in permitting the points to be run now.

50. I am not satisfied that Anthony Hanna should be able to rely on the three unpleaded bases set out above.

51. The starting point is that although Anthony Hanna has been unrepresented for a substantial part of the proceedings, a notice of appointment of solicitor was filed on 14 May 2025, nearly four months ago. Mr Wang’s firm has been on the record since this time.

52. Mr Wang did not advance any cogent reason as to why the three unpleaded bases were not pleaded.

53. In relation to the claim of Anshun estoppel, at the time that the solicitors for Anthony Hanna came on the record, the proceedings had already been listed by me for final hearing and Anthony Hanna was prosecuting a motion that the proceedings against him should be dismissed either for want of due despatch or on the grounds of res judicata. That motion was not continued after solicitors commenced acting for Anthony Hanna. Mr Wang informed me that there was no utility to the want of due despatch claim because the proceedings had been listed for final hearing and the res judicata claim was dropped because Anthony Hanna was not a party to the Federal Court proceedings.

54. As I have said above, no cogent reason was advanced by Mr Wang as to why any Anshun defence was not pleaded. As Mr Allen submitted, any Anshun defence would open up factual issues in relation to why the Supreme Court proceedings were not progressed whilst the Federal Court proceedings continued (which conduct Anthony Hanna was said to have acquiesced in) or why the Supreme Court proceedings were not transferred to the Federal Court. I accept these submissions.

55. Allowing an Anshun defence to be run would likely have necessitated an adjournment of the hearing. In my view it would not be in the interests of justice for this to occur.

56. In relation to unclean hands and set off, it is clear that any claim in relation to the $212,000 would be at the suit of Ms Shonoda, being the person on whose behalf the monies were apparently paid to Mr Abdalla. She is not a party to these proceedings and thus has obviously not made such a claim.

57. As presently constituted, such claims in these proceedings have no prospects.

58. Further, the points not having been raised until now, there is presumptive prejudice to Mr Abdalla in permitting the claims to be made and expecting them to be immediately dealt with. In circumstances where there is no good reason as to why the matters could not have been raised much earlier so as to enable them to be and dealt with, I do not regard it as being in the interests of justice to enable them to be run at this stage.

59. The parties also agreed that I should defer, for later consideration, if Mr Abdalla was otherwise successful in his contention that Anthony Hanna held a half interest in the Land on behalf of Mr Abdalla and that the Land should be sold, the quantum of any equitable compensation to be paid to Mr Abdalla from the proceeds of sale.

Determination

60. It must be appreciated at the outset, as is perhaps obvious, that I am determining the present case on the basis of the evidence before me and the arguments advanced.

61. The facts as proven before me establish that:

1. Mr Abdalla did not consent to the Land being transferred to Jarvis J in January 2018 and was not aware at the time that it was being transferred – that his signature on the transfer was forged;

2. the stated consideration on the transfer was not paid. Jarvis J was a volunteer and held a 50% interest in the Land on trust for Mr Abdalla once Jarvis J became aware of the forgery by the February 2018 letter;

3. the entire amount of $247,356.74 that was apparently meant to be paid by Ms Shonoda to Mr Abdalla for the two Hinchinbrook properties and the Lawson property was not paid. Only $212,000 was paid;

4. whilst Anthony Hanna paid, from his bank account and at the request of his mother, the $212,000 that was paid for the benefit of Mr Abdalla, there is nothing at all to suggest that at this stage – July and August 2017 – that Anthony Hanna was to have any interest in the Land;

5. Mr Abdalla had no knowledge that the $212,000 was sourced from a bank account in the name of Anthony Hanna;

6. the Land was transferred to Anthony Hanna in April 2019 after the receipt of the February 2018 letter putting Mr Mhanna and Ms Shonoda on notice of the forgery;

7. the consideration stated on the transfer of the Land from Jarvis J to Anthony Hanna was not paid and Anthony Hanna otherwise provided no consideration for the transfer. I reject the contention that the payments from Anthony Hanna’s bank account in July/August 2017 were somehow linked to the transfer to him nearly two years later. There is no support in the evidence for this contention;

8. Anthony Hanna did not have notice of the forgery at the time of the transfer of the Land to him but he was put on notice of it by the commencement of these proceedings in January 2020.

62. In the circumstances I am satisfied that Anthony Hanna is not a bona fide purchaser for value of the Land. He holds one half of his interest in the Land on trust for Mr Abdalla. Anthony Hanna was a volunteer, has knowledge of the breach of trust, and still holds the Land.

63. In Fistar, Leeming JA (with whom Bathurst CJ and Sackville AJA agreed) stated at [43] to [47]:

[43]   Most claims against third parties based on title are equitable. Cases at law are relatively rare, because commonly what is stolen is money, or assets which are converted into money, and there are limitations upon tracing at common law. On any view, the equitable rules are more developed and permit the assertion of a property right in respect of the traceable proceeds of trust property in the hands of a third party. Those principles were reviewed extensively by Campbell J in Re Sutherland; French Caledonia Travel Service Pty Ltd (in liq) [2003] NSWSC 1008; 59 NSWLR 361, and their detail is not presently material. It suffices to observe that if the recipient is not a bona fide purchaser for value without notice (because, say, the recipient is a volunteer or has at least constructive notice), then the recipient’s title is potentially liable to be defeated by a superior title of the beneficiary.

[44]   For the purposes of identifying why Ms Fistar’s submission is unsound, two points are presently relevant. The first is that claims based on title are quite different from claims under the first limb of Barnes v Addy. The latter turn upon conscience, rather than property: Grimaldi at [267].

[45]   The second is that liability under the first limb of Barnes v Addy is not the only way in which a recipient of trust property may become bound in conscience to account for it. A person who receives trust property, otherwise than as a bona fide purchaser for value without notice, but innocently, and thereafter acquires notice of the trust and deals with it in a manner inconsistent with the trust, will also be liable as a constructive trustee. Although this is similar to first limb Barnes v Addy liability, it is conceptually distinct, because it is the subsequent dealing, rather than the receipt of property, that founds liability, as Professors Dietrich and Ridge have observed: J Dietrich and P Ridge, Accessories in Private Law, (2015, Cambridge University Press) at 203. This class of liability was identified by Millett J in Agip (Africa) Ltd v Jackson [1990] Ch 265 at 291 and by the Court of Appeal in Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391 at 474; see also L Tucker et al, Lewin on Trusts (19th ed 2015, Sweet & Maxwell) at 2103-9. The distinction drawn by Millett J in Agip was cited with evident approval in Sze Tu at [143].

[46]   An unstated premise of Ms Fistar’s submission that personal liability for money had and received could not co-exist with liability under the first limb of Barnes v Addy was that that was the only way in which recipients of trust property could be liable. The premise is not established. It is not established once one bears in mind claims at law for the recovery of chattels (see McKeown v Cavalier Yachts Pty Ltd (1988) 13 NSWLR 303 at 307-8). It is not established once one bears in mind proprietary claims in equity based on a better equitable title. And it is not established even if one confines attention to equitable claims based on the conscience of the recipient, as opposed to the property rights of the victim, because inconsistent dealing is different from knowing receipt.

[47]   Given all those well-established forms of liability, there is nothing antithetical or incoherent about there being a further species of liability on the part of a volunteer who receives trust property, or the traceable proceeds of trust property, and who subsequently learns the true position, such that he or she is obliged in equity to account for the identifiable property remaining: Heperu at [92], [143]-[155]; Sze Tu v Lowe at [142]-[145]. To the contrary, the liability of an innocent volunteer to account for the traceable proceeds insofar as they remain in his or her possession is a natural extension of inconsistent dealing, and it is to be noted that Allsop P in Heperu expressly distinguished between the liability of a volunteer and the liability that would be imposed in accordance with Barnes v Addy: see at [154].

(see also the discussion by Gleeson JA in Sze Tu at [141]ff).

64. The payment of $212,000 to Mr Abdalla does not assist Anthony Hanna. Although sourced from his bank account it was not consideration paid by him for the transfer to him of the Land in 2019.

65. In any event, Mr Abdalla could not be compelled to transfer the Land until the full amount of $247,356.74 was paid to him. The full amount was never paid: see Golden Mile Property Investments Pty Ltd (in liq) v Cudgegone Australia Pty Ltd (2015) 89 NSWLR 237; [2015] NSWCA 100 at [98] to [105] per Emmett JA (Macfarlan and Gleeson JJA agreeing).

66. Mr Abdalla’s interest in the Land was defeated by the fraudulent transfer. Jarvis J thus held 50% of the Land on trust for Mr Abdalla. As a volunteer, now being aware of the true position and still owning the Land, Anthony Hanna holds 50% oof the Land on trust for Mr Abdalla.

Relief

67. No submissions were advanced on behalf of Anthony Hanna to the effect that if I formed the view (as I have) that Anthony Hanna holds a one half interest in the Land on trust for Mr Abdalla, that I should not order judicial sale for the Land, or in opposition to the orders proposed by Mr Abdalla for the means by which that should occur including that Mr Abdalla sell the Land.

68. I note, however, that an order for vacant possession is sought on a date to be determined by the Court. I have not heard from the parties as to an appropriate time. In my view, 30 days is likely too short.

69. As set out above, the parties agreed that the question of the amount of equitable compensation to be paid to Mr Abdalla was deferred for later consideration.

70. In the circumstances, I propose to direct the parties to seek to agree orders to give effect to these reasons, failing which I will determine any remaining issues on the papers.

71. As regards costs, absent any application for a special costs order, my view is that costs should follow the event and the second defendant should be ordered to pay the plaintiff’s costs of the proceedings to date. I will direct the parties to seek to agree a costs order, failing which I will determine any remaining issue on the papers.

Orders

72. The orders of the Court are:

1. Direct the parties to confer and seek to agree final orders to give effect to these reasons, including as to costs.

2. Direct the parties to provide any agreed orders, or competing orders, to my Associate by no later than 5pm on 29 September 2025.

3. In the event there is no agreement, including as to costs, direct the parties to provide to my Associate by no later than 5pm on 29 September 2025 any submissions and supporting material, such submissions not to exceed 3 pages.

4. Direct the parties to provide to my Associate by no later than 5pm on 7 October 2025 any submissions and supporting material in reply, such submissions not to exceed 3 pages, whereupon the remaining issues will be determined on the papers.

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Decision last updated: 22 September 2025