Chong v Chanell - [2009] NSWSC 765

CITATION: Chong v Chanell [2009] NSWSC 765

HEARING DATE(S): 19-25 & 28 May 2009

JURISDICTION: Equity Division

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 25 May 2009

DECISION: Plaintiff entitled to judgement against the first defendant. Plaintiff entitled to a charge over the first defendant’s property. Judgment for second defendant. First defendant to pay plaintiff’s costs. No order as to costs as between plaintiff and second defendant.

CATCHWORDS: TRUSTS AND TRUSTEES - Plaintiff advances funds from China to first defendant in Australia to be applied in accordance with his directions – where first defendant applies moneys in payment to second defendant and in reduction of her home loan – whether in accordance with instructions of the plaintiff – questions of fact – where first defendant claims plaintiff authorised her application of trust funds – Onus of proof – Held: first defendant bears onus of proof and must account for moneys admittedly received as trustee. - REMEDIES – Tracing – Whether funds transferred from the first defendant to the second defendant can be traced in equity - whether second defendant aware of breach of trust - whether second defendant was a volunteer - whether assets still exist in a traceable form - Held: not established that second defendant aware of breach of trust - plaintiff failed to establish that property still exists in traceable form – Where funds used by the first defendant to pay down her own mortgage - Held: plaintiff entitled to equitable charge over first defendant’s property. - RESTITUTION – moneys had and received – tracing – whether in personam remedy available against second defendant – defence of change of position – where second defendant gambled away moneys advanced to him – Held: change of position established – not established that second defendant did not act in good faith - restitutionary remedy not available. - COSTS: Departing from general rule – Bullock order – where effect would be to create asset and corresponding liability of husband and wife who are engaged in family property adjustment proceedings.

CATEGORY: Principal judgment

CASES CITED: Amalgamated Association v Danielson (1964) 128 NW 2d 9
Cambridge Electronics Australia Pty Ltd v McMaster [2005] NSWSC 198
David Securities v Commonwealth Bank of Australia [1992] HCA 48, (1992) 175 CLR 353
Gray v Gray [2004] NSWCA 408
Heydon v Perpetual Executors Trustees & Agency Company (WA) Ltd [1930] HCA 26, (1930) 45 CLR 111
Lipkin Gorman v Karpnale [1991] 2 AC 548, [1992] 4 All ER 512, [1991] 3 WLR 10
Pit v Cholmondeley (1754) 2 Ves Sen 565, (1954) 28 ER 360
Re Diplock Estates [1948] Ch 465, [1948] 2 All ER 318
Schmierer & Anor v Taouk [2004] NSWSC 345, (2004) 207 ALR 301

TEXTS CITED: R P Meagher and W M C Gummow, Jacob's Law of Trusts in Australia, 5th ed (1986), Butterworths
G P Stuckey KC and C D Irwin, Parker's Practice in Equity, 2nd ed (1949) Law Book Co of Australia
Lexis Nexis, Ritchie’s Uniform Civil…

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 Chong v Chanell

Details

AGLC: Chong v Chanell [2009] NSWSC 765
Case: [2009] NSWSC 765
Decision Date: 25 May 2009

CaseChat Overview and Summary

In Chong v Chanell, the plaintiff sought to recover funds advanced from China to the first defendant in Australia. The plaintiff alleged that the first defendant misused the trust funds by applying them to pay the second defendant and reduce her home loan, contrary to the plaintiff's instructions. The case was heard in a court of equity. The primary legal issues were whether the first defendant had the onus of proving that the application of the trust funds was in accordance with the plaintiff's instructions, and whether the plaintiff could trace the funds to the second defendant and seek restitutionary relief.

The court determined that the first defendant bore the onus of proving that the application of the trust funds was in accordance with the plaintiff's instructions. Since the first defendant could not meet this burden, she was required to account for the funds received as trustee. Regarding the tracing of funds, the court held that it was not established that the second defendant was aware of the breach of trust, nor was it proven that the property still existed in a traceable form. However, the court found that the plaintiff was entitled to an equitable charge over the first defendant's property for the amount used to pay down her mortgage.

Regarding the restitutionary remedy, the court found that the second defendant had established a change of position, having gambled away the funds. The court also held that it was not established that the second defendant did not act in good faith. Consequently, a restitutionary remedy was not available against the second defendant. The court further addressed costs, departing from the general rule and making a Bullock order, which would avoid creating an asset and corresponding liability for the husband and wife who were engaged in family property adjustment proceedings.

Orders