Coolbrew Pty Ltd v Westpac Banking Corporation - [2015] NSWCA 135

Court of Appeal
Supreme Court

New South Wales

Case Name:	Coolbrew Pty Ltd v Westpac Banking Corporation
Medium Neutral Citation:	[2015] NSWCA 135
Hearing Date(s):	18 March 2015; 4 May 2015
Decision Date:	22 May 2015
Before:	Leeming JA, Bergin CJ in Eq, Sackville AJA
Decision:	1. Appeal dismissed. 2. The appellant pay the costs of the appeal of the first respondent (Westpac Banking Corporation) and the second respondent (Deputy Commissioner of Taxation).
Catchwords:	EQUITY – trusts – bank lends funds to a company – the funds are used by the company to enable an individual to deposit funds in a term deposit with the bank – the deposit is security for a loan by the bank to a related company – whether the first company and the depositor intended to create a trust attracting the principles stated Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 – short form judgment
Legislation Cited:	Bankruptcy Act 1966 (Cth), s 58(3)(b) Taxation Administration Act 1953 (Cth), Sch 1, s 260-5 Supreme Court Act 1970 (NSW), s 45(4) Uniform Civil Procedure Rules 2005 (NSW), r 51.55
Cases Cited:	Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 Collins v Tabart [2007] NSWCA 78 Collins v Tabart [2008] HCA 23; 82 ALJR 1521 Coolbrew Pty Ltd v Westpac Banking Corporation [2014] NSWSC 1108 Re Australian Elizabethan Theatre Trust; Lord v Commonwealth Bank of Australia (1991) 30 FCR 491
Category:	Principal judgment
Parties:	Coolbrew Pty Ltd (Appellant) Westpac Banking Corporation (First Respondent) Deputy Commissioner of Taxation (Second Respondent) Paul Leroy as trustee of the Bankrupt estate of Martin Swift (Third Respondent)
Representation:	Counsel: J T Johnson (Appellant) S Docker (First Respondent) Ms S Foda (Second Respondent) Submitting appearance (Third Respondent) Solicitors: Beazley Singleton Lawyers (Appellant) K&L Gates (First Respondent) Review and Dispute Resolution, Australian Taxation Office (Second Respondent) Hicksons Lawyers (Third Respondent)
File Number(s):	2014/269698
Decision under appeal:
Court or Tribunal:	Supreme Court
Jurisdiction:	Equity Division
Citation:	Coolbrew Pty Ltd v Westpac Banking Corporation [2014] NSWSC 1108
Date of Decision:	15 August 2014
Before:	Darke J
File Number(s):	2014/138918

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE
[This headnote is not to be read as part of the judgment]
Mr Swift deposited money into a bank account with the respondent (Westpac) in his own name as security for an advance by Westpac to an associated company. The appellant (Coolbrew) provided the funds to Mr Swift to pay into the bank account. The debt to Westpac having been discharged, the Deputy Commissioner of Taxation served notices on Westpac under the Taxation Administration Act 1953 (Cth) requiring Wespac to remit to the Commissioner…

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: [2015] NSWCA 135
Decision Date: 22 May 2015

CaseChat Overview and Summary

Coolbrew Pty Ltd appealed to the Court of Appeal of New South Wales against a decision concerning a term deposit held with Westpac Banking Corporation. The dispute arose from a complex arrangement where Westpac lent funds to Coolbrew, which then used those funds to enable an individual, Mr. Gribbles, to deposit money into a term deposit with Westpac. This term deposit was subsequently used by Westpac as security for a loan it provided to a company related to Mr. Gribbles. Coolbrew contended that this arrangement gave rise to a trust over the term deposit, attracting the principles established in *Barclays Bank Ltd v Quistclose Investments Ltd*.

The central legal issue before the Court of Appeal was whether the circumstances surrounding the deposit of funds by Mr. Gribbles into the term deposit with Westpac, facilitated by the loan from Westpac to Coolbrew, evinced an intention to create a trust of the deposit in favour of Coolbrew. Specifically, the court had to determine if the funds were advanced by Westpac to Coolbrew for a specific purpose, with the intention that if that purpose could not be fulfilled, the funds would be held on trust for Coolbrew, thereby engaging the *Quistclose* trust principles.

The Court of Appeal dismissed the appeal, finding that the evidence did not support the existence of a *Quistclose* trust. The court reasoned that the arrangement did not demonstrate the necessary intention to create a trust. The loan from Westpac to Coolbrew was for the purpose of enabling Mr. Gribbles to make the deposit, and the deposit itself was intended to secure a loan to a related company. There was no indication that the funds were segregated or that Westpac, as the bank holding the deposit, accepted them on terms that would give rise to a trust obligation in favour of Coolbrew, particularly in the event of the primary purpose failing. The court applied the principles of trust law, emphasizing the requirement for clear intention to create a trust, which was absent in the commercial realities of the transaction.

Consequently, the appeal was dismissed, and Coolbrew Pty Ltd was ordered to pay the costs of the appeal of Westpac Banking Corporation and the Deputy Commissioner of Taxation.

Orders

Orders of the court

1. Appeal dismissed.

2. The appellant pay the costs of the appeal of the first respondent (Westpac Banking Corporation) and the second respondent (Deputy 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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