Appeal Outcome: Special leave application dismissed with costs 1 May 2009 (S546/2008)
New South Wales
Court of Appeal
CITATION: Carantinos v Magafas [2008] NSWCA 304 HEARING DATE(S): 12-13 March 2008
JUDGMENT DATE:
14 November 2008JUDGMENT OF: Hodgson JA at 1; Campbell JA at 117; Handley AJA at 153 DECISION: See par [116]. CATCHWORDS: EQUITY – FIDUCIARY OBLIGATIONS – PARTNERSHIP – PROCEDURE – Clean hands defence – Whether conduct must be directed against defendant – Whether conduct had sufficiently close relationship to the equity sued for – Whether conditional relief appropriate – Remedies – Account – Whether accounting party should account for whole of proceeds of sale of property of which he was not proved to have total beneficial ownership – Whether party whose beneficial interest in the property was not excluded should be a party to the accounting – Whether appropriate to reserve substantive issues for further consideration. CATEGORY: Principal judgment CASES CITED: Armstrong v Sheppard & Short Ltd [1959] 2 QB 384
Australian Hardboards Limited v Hudson Investment Group Ltd [2007] NSWCA 104
Baden Delvaux & Lecuit v Societe General pour Favoriser le Developpement [1983] BCLC 325
Barnes v Addy (1874) LR 9 Ch App 244
Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060
Breen v Williams (1996) 186 CLR 71
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89
Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215
Kettles & Gas Appliances Ltd v Anthony Hordern & Sons Ltd (1934) 35 SR(NSW) 108
Lucas v Cutts (Vice Chancellor, 24 February 1853)
McGrory v Alderdale Estate Company Limited [1918] AC 503
Meehan v Glazier Holdings Pty Ltd [2002] NSWCA 22; (2002) 54 NSWLR 146
Meyers v Casey (1913) 17 CLR 90
National Broach and Machine Co v Churchill Gear Machines Ltd [1965] 1 WLR 1199
Nelson v Nelson (1995) 184 CLR 538
Official Trustee in Bankruptcy v Tooheys Ltd (1993) 29 NSWLR 641
Pawsey v Armstrong (1881) 18 Ch D 698
Poulton v Adjustable Cover and Boiler Block Company [1908] 2 Ch 430
Say-Dee Pty Ltd v Farah Constructions Pty Ltd [2005] NSWCA 309
In Re Wrightson [1908] 1 Ch 789TEXTS CITED: Meagher Gummow and Lehane’s Equity Doctrines and Remedies, 4th ed (2002), Butterworths LexisNexis, par [25-035]
AG Neville & AW Ashe, Equity Proceedings With Precedents (NSW) (1981) Butterworths at 235, 237, 239
Lindley & Banks on Partnership, 18th ed (2002) Sweet & Maxwell, pars 23 124 and 23-125PARTIES: Peter CARANTINOS (First Appellant)
Fotini CARANTINOS (Second Appellant)
Anthony MAGAFAS (First Respondent)
PAC-COM PTY LTD (Second Respondent)
ARTESIAN PTY LTD (Third Respondent)
Athena TOURIKI (Fourth Respondent)
Gregory GAV (Fifth Respondent)FILE NUMBER(S): CA 40611/07 COUNSEL: J C KELLY SC/ A J BOWEN (Appellants)
T A ALEXIS SC/ S GOLLEDGE (First and Second Respondents)
------ (Third Respondent)
T Blyth (submitting appearance) (Fourth Respondent)
[submitting appearance] (Fifth Respondent)SOLICITORS: Munro Lawyers (Appellants)
Rockliffs (First and Second Respondents)
------ (Third Respondent)
Middletons (Fourth Respondent)
Nicholas G…
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- AGLC
- Carantinos v Magafas [2008] NSWCA 304
- Case
- [2008] NSWCA 304
- Decision Date
CaseChat Overview and Summary
The Court of Appeal was required to determine whether the first defendant held his interest in the Dulwich Hill property and its sale proceeds on trust for the partnership, and whether he was liable to account to the first plaintiff for those proceeds. Further issues included the appropriate declarations regarding the parties' respective interests in the partnership, and the extent to which further consideration of various claims and questions should be reserved. The Court also considered the "clean hands" defence, the relationship between conduct and the equity sued for, and the appropriateness of conditional relief.
The Court allowed the appeal in part, altering the primary judge's orders. It declared that the first defendant held his interest in the Dulwich Hill property and the proceeds of its sale on trust for the partnership, and that he was liable to account to the first plaintiff for those proceeds. The Court also substituted declarations regarding the respective interests of the first plaintiff and first defendant in the partnership. Crucially, the Court reserved further consideration of a range of matters, including claims by the first defendant regarding payments made for the benefit of the second defendant, the entitlement of the second plaintiff to property subject to the Karafas Trust, the winding-up of the second plaintiff and the Karafas Trust, interrelationships concerning other properties and businesses, and the distribution of assets of another entity. The Court also made specific orders regarding costs and the payment of partnership assets.
Orders
Orders of the court
We were informed that the preparation of the accounts had already commenced pursuant to the orders made by the primary judge, so those orders should only be amended to the extent made necessary by this Court’s decision. I would propose the following orders:
(1) Appeal allowed only to the extent of making the following alterations to the orders of the primary judge made on 30 August 2007 and amended on 6 September 2007.
(2) Delete declaration 4 and in lieu thereof declare:
4. That the first defendant held his interest in the property known as 43 Riverside Crescent, Dulwich Hill and his share of the proceeds of sale on trust for the partnership. (3) Delete declaration 7 and in lieu thereof declare:
7. That the first defendant is liable to account to the first plaintiff in relation to the proceeds of sale of the property 43 Riverside Crescent, Dulwich Hill. (4) Delete order 8(d) and in lieu thereof substitute:
(d) the respective interests of the first plaintiff and the first defendant in the partnership. (5) Delete order 9 and in lieu thereof substitute:
9. Reserve further consideration generally, and specifically in relation to the following matters:
(a) claims by the first defendant that he has discharged any obligations in relation to his dealing with proceeds of sale of 43 Riverside Crescent by making payments for the benefit of the second defendant.
(b) determination of whether or not any property to which the second plaintiff is entitled is or is not subject to the Karafas Trust.
(c) questions concerning the winding-up of the second plaintiff and/or the Karafas Trust and the distribution of net assets thereof.
(d) questions as to the interrelationship between the purchase, ownership and sale of Felton Woods Manor and the operation of the hotel business by Felton Woods Manor Pty Limited.
(e) questions as to the distribution of the net assets of the fifth defendant (Artesian).
(f) the making of any orders for immediate payment of money to the first plaintiff.
(6) Delete order 21 and in lieu thereof order:
21 (a) that the first plaintiff pay the costs of the second defendant, being costs exclusively referrable to the claim against that defendant.
(b) that the first defendant reimburse the first plaintiff for the costs which the first plaintiff pays to the second defendant. (7) The first appellant to pay 80 per cent of the first and second respondents’ costs of the appeal, and the costs of the other respondents on a submitting basis. No order as to the costs of the second appellant.
(8) Order that no payment be made to either respondent or at the direction of either respondent of any part of the entitlement of either respondent arising from or in relation to the partnership assets without the leave of the Court.
(9) Direct the Registrar to send a copy of this judgment to the Commissioner of Taxation.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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