Binnie v Ng

[2025] NSWSC 598

Supreme Court

New South Wales

Medium Neutral Citation:

Binnie v Ng [2025] NSWSC 598

Hearing dates:

5 June 2025

Decision date:

05 June 2025

Jurisdiction:

Equity

Before:

Kunc J

Decision:

Judgment for plaintiffs

Catchwords:

CONTRACTS — Breach of contract — Consequences of breach — Right to damages — Joint venture agreement

EQUITY — Trusts and trustees — Breaches of trust — Remedies

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW)

Category:

Principal judgment

Parties:

John Robert Binnie (First Plaintiff)
Anthony Fiatarone (Second Plaintiff)
Frederick Richard Victor Palmer (Third Plaintiff)
Robert James Thomas Bourne (First Defendant)
Mun Sook Ng (Second Defendant)

Representation:

Solicitors:
D Manca (Solicitor) (Plaintiffs)

File Number(s):

2022/52330

Publication restriction:

Nil

EX TEMPORE JUDGMENT (revised)

Summary

1. The plaintiffs - Messrs Binnie, Fiatarone and Palmer - entered into a venture with the (now deceased) originally named defendant, Mr Bourne, to develop and operate a business known as Duttons Tavern in Gosford. To give effect to their venture, they entered into:

1. A trust deed under which Mr Bourne came to hold part of the land on which the business operated in trust for the plaintiffs; and

2. a joint venture agreement.

2. It cannot be seriously doubted - and the Court has concluded - that Mr Bourne breached his obligations as trustee by making the land available to the Bank of Western Australia Limited (Bankwest) as security for debts unrelated to the business, and that he breached the agreement by failing to pay the plaintiffs their share of the operating profits of the business. Bankwest appointed a receiver to the business, which was sold to satisfy Mr Bourne's substantial debts (most of which were unrelated to the business). There was no surplus for creditors, and the plaintiffs lost their entire investment in the business.

3. The Court finds the plaintiffs are entitled to equitable damages and common law damages in the amounts determined by these reasons. As I shall explain in what follows, today's hearing proceeded with no appearance for the defendant.

4. Mr D Manca, solicitor, appeared for the plaintiffs. The Court acknowledges with gratitude Mr Manca's careful preparation of the evidence and detailed exposition of the plaintiffs’ case. I will direct that a copy of Mr Manca's submissions remain on the file. Save to the extent of any inconsistency between these reasons and those submissions, the Court accepts those submissions.

Procedural history

5. The statement of claim was filed on 22 February 2022 seeking this relief:

“1   A declaration that the defendant breached his obligations as trustee.

2   Damages.

3   Pre-judgment and post-judgment interest.

4.   Costs”

6. Mr Bourne, acting for himself, filed his defence on 29 September 2022. Beyond denying the plaintiffs’ entitlement to relief, the defence relevantly consisted of non-admissions. He did, however, admit that he had interests in property and hotel businesses other than the business, and that he did cause mortgages and other security interests to be granted in favour of Bankwest. Neither limitation nor any other special defences (equitable or otherwise) were pleaded.

7. The interlocutory progress of the matter was delayed, it would appear, by Mr Bourne's ill-health. The plaintiffs filed and served their evidence. There were a number of extensions to the time by which Mr Bourne was to file his evidence. He did not comply. On 29 April 2024, Mr Bourne appeared in person before Pike J who made a guillotine order which gave Mr Bourne until 1 June 2024 to file his evidence.

8. Mr Bourne died on 18 May 2024. No evidence was filed in his case.

9. There was a further delay while the issue of representation of Mr Bourne's estate was resolved, no application for probate having been made. On 28 March 2025, on the plaintiffs’ application, Brereton J joined Ms Mun Sook Ng as a defendant to the proceedings in substitution for Mr Bourne pursuant to the Uniform Civil Procedure Rules2005 (NSW) Part 6 r 6.30(2). His Honour was satisfied that Ms Ng is Mr Bourne's executor and de facto spouse.

10. Ms Ng has declined to play any part in the proceedings. No evidence has been filed for the defence. I am satisfied by evidence read today by Mr Manca that Ms Ng has been properly put on notice of today's hearing.

The facts

11. The essential facts may be briefly stated.

12. Mr Bourne was an experienced hotelier with a number of hotels in the Gosford area.

13. In early 2001, the plaintiffs funded the acquisition of the land.

14. By a written declaration of trust made on 6 April 2001, a Mr David Charles Stendell became trustee of the land for the plaintiffs as beneficiaries in the following shares: Mr Binnie – 37.5%; Mr Fiatarone – 37.5%; and, Mr Palmer – 25%.

15. The agreement to operate the business was made some time in 2006 between Mr Bourne, his company Bo-Jean Pty Ltd, and the trustee companies of each of the plaintiffs, with their interests in the joint venture being specified as follows:

1. Mr Binnie's company Clincher Pty Ltd - 18.75%;

2. Mr Fiatarone's company, Vitality Holdings Pty Ltd - 18.75%; and

3. Mr Palmer's company, Questaco Pty Ltd - 12.5%.    

16. The agreement included these provisions.

“1.   DEFINITIONS AND INTERPRETATION

1.1   Definitions

Unless the contrary intention appears:

…

“Business” means the business of owning, managing, exploiting and/or operating the hotel business known as the Duttons Hotel in Gosford.

"Business Costs" means all costs incurred in carrying on the Business.

…

"Joint Venture Interest" means in respect of:

(a)   Bojean - 25%;   

(b)   Bourne - 25%;

(c)   Clincher - 18.75%;   

(d)   Vitality - 18.76%; and    

(e)   Questaco - 12.5 %;

…

"Net Surplus" means the net profits (Including, without limitation, capital gains) of the Joint Venture disclosed in the Accounts for the relevant period.

…   

"Relevant Proportion" means, in respect of each Joint Venturer, the Joint Venture Interest of the relevant Joint Venturer.

…

2.5   Commitment to the Joint Venture

Each Joint Venturer:

(a)   is committed to the Business and will use its best endeavours to carry out and complete its obligations in accordance with the terms of this Agreement; and

(b)   shall act in good faith to the other Joint Venturers In relation to the Joint Venture and the Joint Venture Activity, including:

(i)   be just, faithful and honest in all activities and dealings with the other Joint Venturers;

(ii)   co-operate with the other Joint Venturers; and

(iii)   perform its obligations under this Agreement in a competent manner.

...

2.8   Restrictions on Joint Venture Activity

Without limiting the generality of clause 2.7, no Joint Venturer shall without the written consent of the other Joint Venturers:

…

(d)   enter into any bond or become bail surety or security with or for any person or do or knowingly cause or suffer to be done anything whereby the Joint Venture property or any part thereof may be seized attached or taken in execution;

…

(f)   assign, mortgage, encumber or charge its Joint Venture Interest or any part of it except as required in connection with the consent of the other Joint Venturers; or

…

2.9   Surplus and Deficiency

(a)   As soon as practicable after the end of each month and each financial year ending 30 June, or a later date if agreed between the parties, the Proceeds will be distributed as follows:

(i)   first, to pay moneys due under any financing;

(ii)   secondly to pay any other outstanding Business Costs;

(iii)   thirdly, to pay the Net Surplus to the Joint Venturers in their respective Relevant Proportions;

(v)   fourthly, to repay the equity contributed by Joint Venturers as per their respective contributions.

(b)   Subject to prudent reserves for future Business Costs and taxation, each of the amounts referred to in paragraph (a) are to be paid out of the Proceeds as and when those proceeds are received.

(c)   Any Net Deficiency will be paid or met by the Joint Venturers In their respective Relevant Proportions.

…

9.2   Bourne and Bojean

(a)   Bourne unconditionally and irrevocably guarantees to the Joint Venturers the due and punctual performance by Bojean of all of its obligations under this Agreement.

(b)   Bojean unconditionally and irrevocably guarantees to the Joint Venturers the due and punctual performance by Bourne of all of his obligations under this Agreement.

(c)   Each of Bourne and Bojean jointly and severally Indemnifies each other Joint Venturer against any claim, action, damage, loss, liability, cost, charge, expense, outgoing or payment which that other Joint Venturer suffers, incurs or for which that Joint Venturer is liable, as a result of any default or breach by Bourne, or failure by Bourne to pay when due any indebtedness owing, due or payable, under any loan or financial facility secured over any of the Joint Venture Assets.

…

17.11   Benefit of this Deed

This Agreement and the Indemnities contained herein inure for the benefit of the parties as well as for the benefit of John Binnie, Tony Fiatarone and Frederick Palmer to the extent they have an interest in the Joint Venture Assets. Bourne and Bo-Jean acknowledge that John Binnie, Tony Fiatarone and Frederick Palmer are entitled to this benefit and may enforce this Agreement accordingly (and in this regard such benefit is held by JV Party 2 as its agent and nominee).”

17. The Court accepts Mr Manca's submission that the plaintiffs have standing to sue Mr Bourne directly under the agreement by reason of cl 17.11.

18. By a Deed of Retirement and Appointment of Trustee made on 14 January 2008, Mr Stendell retired as trustee and Mr Bourne became trustee of the trust. This enabled Mr Bourne to be registered on the title of the land as its registered proprietor.

19. By a mortgage dated 30 January 2008, Mr Bourne mortgaged the land to Bankwest as part of a larger facility he had with Bankwest for an amount that came to exceed $12 million. By reason of standard cross-collateralisation provisions, the land became available as security for Mr Bourne's debts, including those completely unrelated to the business.

20. On the evidence before the Court, Mr Bourne did not tell the plaintiffs of the mortgage, nor did he put Bankwest on notice that he held the land as trustee.

21. In 2015, the Commonwealth Bank of Australia (CBA), which had acquired Bankwest, appointed receivers to the business as part of recovery action against Mr Bourne for his entire debt formerly owed to Bankwest.

22. On 22 January 2016, the receivers completed their sale of the land and business for $6,841,000.37.

23. There was no surplus for creditors after the CBA had been paid the nett proceeds of the sale.

24. The plaintiffs also had never received any distributions of profit under the agreement.

Damages for breach of trust

25. There can be no doubt - and the Court finds - that by granting the mortgage Mr Bourne breached his obligations to the plaintiffs as trustee of the trust. In the events which happened, a straightforward way of analysing the breach is that Mr Bourne breached the no conflict rule by unconscientiously taking the benefit of the value of the land to meet his personal debts unconnected with the business.

26. Mr Bourne is liable to account to the plaintiffs for that benefit. There is no relevant difference whether the amount is described as equitable damages or compensation. I shall refer to it as damages. However, Mr Manca correctly, in my respectful opinion, accepted that an allowance had to be made for the fact that some of the CBA’s debt had been incurred for the purposes of the business. The best evidence of this is a letter dated 22 April 2014 in which Bankwest told Mr Bourne that it would release its security over the business (which I took to include the land) for $2,300,000.

27. Accordingly, the Court finds that the plaintiffs are proportionately entitled (in the proportions set out in [14] above) to damages against Ms Ng, as representative of Mr Bourne's estate, in the sum of $3,700,841.37 (the proceeds of the receivers’ sale less the amount referred to in [26] above) with prejudgment interest to run from 22 January 2016.

28. In reaching this conclusion, I have not overlooked that a proportion of the sale proceeds was for the business (which was the subject of the agreement) as opposed to the land (which was the subject of the trust). But given the permissible flexibility of equitable damages, and noting that, first, the substantial majority of the sale price was attributed to the land and, second, Mr Bourne plainly also breached his fiduciary and contractual obligations under the agreement in relation to the operation of the business, I do not think it is necessary to endeavour to separate the two for the purposes of this calculation.

Damages for breach of the agreement

29. The Court finds that Mr Bourne also breached his fiduciary duties to the plaintiffs under the agreement by granting the mortgage. Damages for that breach would be the same as the damages for the breach of trust which I have found in the preceding paragraphs, and double recovery will not be permitted. Nor was it sought.

30. However, the Court also finds Mr Bourne breached his contractual obligation to the plaintiffs by failing to make annual profit distributions under the agreement for the period the business operated, being April 2003 to April 2015. Through no fault of the plaintiffs - and, the Court is satisfied, due to the fault of Mr Bourne - accurate financial information for the business is not available to the plaintiffs. However, by reference to valuations and bank records tendered by the plaintiffs, the Court find that the profits of the business for the following years were:

Period	Profit (Loss)
2006/2007	$166,572.18
2007/2008	$65,000.00
2008/2009	$205,000.00
2009/2010	$212,000.00
2010/2011	$326,929.47
2011/2012	$290,140.44

31. The Court finds that the plaintiffs are entitled to damages for those years by reference to those amounts.

32. The question then becomes what is to be done about the years in respect of which there are no available records. The average of the annual profits that have been proven is $210,940.35. There are two reasons why the Court is satisfied that is the proper amount of damages to be awarded in respect of those years for which records are not available but during which the business traded.

33. First, such records as are available show that the business made substantial sums every year from poker machines. On the basis of those figures alone, the Court infers that the business would have been profitable in each year of its operation. Second, where the lack of information available to the plaintiff and the Court is attributable to the fault of the defendant, the Court is entitled to be robust in its assessment.

34. It follows that, for the years of the operation of the business the plaintiffs are entitled to judgment against Ms Ng, as the representative of Mr Bourne's estate, in their respective shares in the joint venture as set out in [15] above, in accordance with paragraphs [30] to [32] above. Prejudgment interest is to be awarded and calculated on each amount from 30 June in the year for which the relevant profit distribution should have occurred.

Conclusion

35. There will be judgment for each of the plaintiffs calculated in accordance with the Court's conclusions that I have set out in [27] and [34] above. I will direct the plaintiffs to prepare orders to give effect to these reasons. The plaintiffs are also entitled to an order that Ms Ng, as representative of Mr Bourne's estate, pay the plaintiffs’ costs of the proceedings.

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Decision last updated: 11 June 2025