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Break Fast Investments Pty Ltd v Giannopoulos

Break Fast Investments Pty Ltd v Giannopoulos

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Supreme Court

New South Wales

Medium Neutral Citation: Break Fast Investments Pty Ltd v Perikles Giannopoulos (also known as Perry Giannopoulos) & Anor (No 5) [2011] NSWSC 1508
Hearing dates: 17 - 19 October 2011, 27 October 2011, 1-3 November 2011
Decision date: 09 December 2011
Jurisdiction: Equity Division
Before: Black J
Decision:
Claim in unjust enrichment established; opportunity for further submissions as to quantum of relief

Catchwords: EQUITY - trusts - constructive trust - liability for knowing receipt and knowing assistance
REAL PROPERTY - indefeasibility - in personam exceptions to indefeasibility - whether available in respect of claim for monies received by volunteer and applied to reduction of mortgage
RESTITUTION - monies had and received - liability of volunteer recipient of funds
Legislation Cited: - Corporations Act 2001 (Cth) ss 128, 129
- Civil Procedure Act 2005 (NSW)
- Real Property Act 1900 (NSW) s 42
Cases Cited: - Austotel Pty Ltd v Franklins Self-Serve Pty Ltd (1989) 16 NSWLR 582
- Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; (1988) 164 CLR 662
- Australian Capital Television Pty Ltd v Minister for Transport and Communications (1989) 86 ALR 119
- Bahr v Nicolay [No 2] [1988] HCA 16; (1988) 164 CLR 604
- Banque Belge Pour L'Etranger v Hambrouck [1921] 1 KB 321
- Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221
- Barclays Finance Holdings Ltd v Sturgess & Ors (1985) 3 ACLC 662
- Barnes v Addy (1874) LR 9 Ch App 244
- Bell Resources Holdings Pty Ltd v Commissioner of The ACT Revenue Collections (1990) 22 FCR 178; 2 ACSR 211
- Black v S Freedman & Co [1910] HCA 58; (1910) 12 CLR 105
- Belmont Finance Corp Ltd v Williams Furniture Ltd (No 2) [1980] 1 All ER 393
- Bofinger v Kingsway Group Ltd [2009] HCA 44; (2009) 239 CLR 269
- Boscawen v Bajwa [1996] 1 WLR 328
- Briginshaw v Briginshaw (1938) 60 CLR 336
- Burston Finance Ltd v Speirway Ltd [1974] 1 WLR 1648
- Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd [2003] NSWSC 1072; (2003) 59 NSWLR 452; 12 BPR 22,257
- Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] Ch 105
- Ciaglia v Ciaglia [2010] NSWSC 341; (210) 269 ALR 175
- Cochrane v Cochrane (1985) 3 NSWLR 403
- Commonwealth Bank of Australia v Mohamed Saleh [2007] NSWSC 903
- Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394
- Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373
- Cook v Italiano Family Fruit Co Pty Ltd (in liq) [2010] FCA 1355; (2010) 190 FCR 474
- David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
- Fabre v Arenales (1992) 27 NSWLR 437
- Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22;

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.

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Details

Case: [2011] NSWSC 1508
Decision Date: 09 December 2011

CaseChat Overview and Summary

The plaintiff, Break Fast Investments Pty Ltd, initiated proceedings against the defendant, Mr. Giannopoulos, to recover funds that were transferred to him and applied to reduce the mortgage on a property. The dispute centred around the propriety of the transfer of funds and whether Mr. Giannopoulos could be held liable for knowingly receiving and assisting in the receipt of these funds. The matter was heard in the Supreme Court of New South Wales. The central legal issue before the court was whether a constructive trust could be imposed on Mr. Giannopoulos for his receipt of funds that were subsequently applied to the mortgage on the property. Additionally, the court needed to determine whether an in personam exception to the indefeasibility of title applied in this context and if a volunteer, such as Mr. Giannopoulos, could be held liable for receiving and applying those funds.

The court found that Mr. Giannopoulos could be held liable for knowingly receiving and assisting in the receipt of the funds. It was established that he had acted as a volunteer in the transaction, receiving the funds with full knowledge that they were intended to reduce the mortgage on the property. The court held that such conduct gave rise to an equitable obligation to account for the funds. The indefeasibility of title did not prevent the imposition of a constructive trust in these circumstances. The court reasoned that an exception to indefeasibility could apply where the volunteer had knowledge of the circumstances surrounding the receipt of the funds. Given Mr. Giannopoulos's involvement and his awareness of the true nature of the transaction, he could be held accountable for the funds. Consequently, the court ordered Mr. Giannopoulos to account for the monies received and applied to the mortgage, effectively imposing a constructive trust in favour of the plaintiff.

Orders