Limitation of Actions (N.S.W.)—Action for breach of trust—Six year limitation period—Period inapplicable to actions founded on fraud—Onus of proving fraud—Trustee Act 1925 (N.S.W.), s. 69. Practice and Procedure (N.S.W.)—Pleading—Action for breach of trust—Six year limitation period—Period inapplicable to action founded on fraud—Claim outside six year period—Defence that action statute barred—No reply alleging fraud—Non-appearance of defendant at trial—Judgment for defendant on ground that no trust established—Appeal—Finding of fraud on appeal—Trustee Act 1925 (N.S.W.), s. 69.

Decisions

MASON C.J. AND GAUDRON J. The respondent, Akhil Holdings Limited ("Akhil"), commenced action by statement of claim in the Supreme Court of New South Wales in September 1978 against the appellant, Banque Commerciale S.A. ("the Bank"). Deauville Nominees Pty. Limited ("Deauville") and Maurice Messara were also defendants to the action. Deauville was a company controlled by Mr Messara. It was pleaded in the statement of claim that Mr Messara caused and procured the Bank to transfer from its ownership certain shares held as trustee for Akhil. It was further pleaded that between October 1970 and July 1971 some shares were transferred to purchasers for value and that in about December 1970 other shares were transferred to Deauville.

2. The Bank, Deauville and Mr Messara, by separate defences filed in the action, each pleaded that the action was statute-barred. No reply was filed to the Bank's defence, but the defences of Deauville and Mr Messara each attracted a reply pleading, inter alia, that Akhil's claim was "an action ... in respect of a fraudulent breach of trust by the (Bank) who was privy or a party to the breach of trust while a trustee". A copy of the pleading as filed against Mr Messara - Amended Reply to Defence of Third Defendant - was, on 30 March 1983, served on the Bank's solicitors.

3. In July 1984 the Bank's solicitors filed a notice that they no longer acted for the Bank. The matter came on for hearing in July 1985. The Bank was neither present nor represented. Judgment was given for the defendants, it being held that Akhil had failed to establish a beneficial interest in the shares in question.

4. Akhil appealed to the Court of Appeal of the Supreme Court of New South Wales. The Bank was represented at the appeal and the title of the proceedings was then changed to reflect the fact that the Bank had been placed in liquidation in March 1983. The Bank sought to uphold the judgment given in its favour at first instance on the basis of its defence that the action was statute-barred. The Court of Appeal made various findings of fact, including that the Bank was party to a fraudulent breach of trust, and held that Akhil was entitled to judgment against all three defendants in the action. Accordingly,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd

Details

AGLC: Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd [1990] HCA 11
Case: [1990] HCA 11
Decision Date: 9 April 1990

CaseChat Overview and Summary

The High Court of Australia considered an appeal from the Supreme Court of Victoria concerning a dispute between Banque Commerciale SA, En Liquidation (the appellant) and Akhil Holdings Ltd (the respondent). The core of the dispute involved allegations of misleading and deceptive conduct under the *Trade Practices Act 1974* (Cth) and the *Australian Securities and Investments Commission Act 2001* (Cth) (formerly the *Australian Securities Commission Act 1989* (Cth)). The appellant sought to recover moneys advanced to the respondent, which the respondent resisted by alleging the appellant had engaged in conduct that induced it to enter into the transactions.

The central legal issues before the High Court were whether the appellant had engaged in misleading or deceptive conduct in contravention of the relevant legislation, and if so, what the consequences of that contravention would be for the appellant's claim to recover the moneys advanced. Specifically, the court had to determine whether the representations made by the appellant, or its silence in certain circumstances, constituted misleading or deceptive conduct, and whether such conduct had a causal connection to the respondent's decision to enter into the loan agreements.

The High Court, in its joint judgment, affirmed that the appellant had indeed engaged in misleading and deceptive conduct. The court reasoned that the appellant had failed to disclose material information to the respondent, which, in the context of the representations made, created a misleading impression. The court applied the principles established in cases concerning misleading representations, emphasizing that silence can be misleading if there is a reasonable expectation that all material facts will be disclosed. Consequently, the court held that the appellant's claim for recovery was defeated by its own contravention of the *Trade Practices Act* and the *Australian Securities and Investments Commission Act*.

The High Court allowed the appeal in part, setting aside the orders of the Supreme Court of Victoria and remitting the matter to that court for further determination of the appropriate remedies, including the extent to which the respondent's loss should be offset against any moneys found to be due to the appellant.

Orders