Cornerstone Property & Development Pty Ltd v Suellen Properties Pty Ltd

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SUPREME COURT OF QUEENSLAND

CITATION:

Cornerstone Property & Development Pty Ltd v Suellen Properties Pty Ltd and anor  [2014] QSC 265

PARTIES:

CORNERSTONE PROPERTY & DEVELOPMENT PTY LTD
ACN 150 870 867
(plaintiff)
and
SUELLEN PROPERTIES PTY LTD
ACN 154 671 691
(first defendant)
and
SUELLEN BASSETT RUSHBROOK
(second defendant)

FILE NO:

BS2849/13

DIVISION:

Trial Division

PROCEEDING:

Trial

DELIVERED ON:

28 October 2014

DELIVERED AT:

Brisbane

HEARING DATE:

10, 11 and 12 June 2014

JUDGE:

Jackson J

ORDERS:

The order of the Court is that:

1.  The plaintiff’s claim against the first defendant is dismissed.

2.  The plaintiff’s claim against the second defendant is dismissed.

CATCHWORDS:

EQUITY – TRUSTS AND TRUSTEES – LIABILITY FOR BREACH OF TRUST – WHO MAY BE LIABLE – RECIPIENT OF MISAPPLIED TRUST PROPERTY – where the plaintiff company entered into a contract for the purchase of land – where the second defendant was a director and shareholder of the plaintiff company – where both other directors resigned – where one of the other directors was the only other shareholder – where the other directors told the second defendant that their business dealings were at an end – where the second defendant allowed the contract to purchase land to lapse – where the second defendant caused the first defendant to enter into a new contract on the same terms as the plaintiff’s contract – whether the second defendant was in breach of her fiduciary duties – whether the first defendant was liable on the principles in Barnes v Addy

Able Tours Pty Ltd v Mann [2009] WASC 192, cited
Barnes v Addy (1874) 9 LR App 244, considered
Black v S Freedman & Co (1910) 12 CLR 105, cited
Blackmagic Design Pty Ltd v Overliese (2011) 191 FCR 1, referred to
Blundell, re (1888) 40 Ch D 370, referred to
Bofinger v Kingsway Group Ltd (2009) 239 CLR 269, cited
Chan v Zacharia (1984) 154 CLR 178, cited
Ciaglia v Ciaglia (2010) 269 ALR 175, cited
CMS Dolphin Ltd v Simonet [2001] 2 All ER 294, referred to
Commonwealth Bank of Australia v Smith (1991) 42 FCR 390, referred to
Commonwealth Oil and Gas Ltd v Baxter [2010] SC 156, cited
Consul Development Pty Ltd v DPC Estates Pty Ltd (132 CLR 373, considered
Cook v Deeks [1916] 1 AC 554, considered
Diplock, re [1948] Ch 465, cited
DPC Estates Pty Ltd v Consul Development Pty Ltd [1974] 1 NSWLR 443, referred to
El Ajou v Dollar Land Holdings Plc [1994] 2 All ER 685, cited
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89, considered
Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473, cited
Furs Ltd v Tomkies (1936) 54 CLR 583, referred to
Global Medical Solutions Australia Pty Ltd  v Axiom Molecular Pty Ltd [2012] NSWSC 1262, cited
Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 295, considered
Hasler v Singtel…

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Details
Case
[2014] QSC 265
Decision Date

CaseChat Overview and Summary

In the Federal Court of Australia, Cornerstone Property & Development Pty Ltd brought an action against Suellen Properties Pty Ltd and another party, alleging breaches of fiduciary duty and seeking to hold the defendants liable for the misapplication of trust property. The plaintiff claimed that the second defendant, who was a director and shareholder of the plaintiff, breached her fiduciary duties by allowing the contract for the purchase of land to lapse and subsequently causing another entity to enter into a new contract on the same terms. The plaintiff also sought to hold the first defendant liable under the principles in Barnes v Addy for knowingly receiving trust property that had been misapplied.

The primary legal issues for the court to determine were whether the second defendant breached her fiduciary duties and whether the first defendant was liable for knowingly receiving trust property that had been misapplied. The court had to consider the nature and extent of the second defendant's duties as a director and shareholder, the circumstances surrounding the lapse of the contract and the subsequent new contract, and the principles that apply when a third party receives trust property that has been misapplied.

The court held that the second defendant did not breach any fiduciary duties owed to the plaintiff. The court found that there was no evidence that the second defendant acted dishonestly or in bad faith. It was determined that the second defendant had been informed by other directors that their business dealings were at an end, and there was no evidence that she had acted otherwise. Regarding the first defendant, the court held that there was no basis for holding the first defendant liable under the principles in Barnes v Addy, as it was not established that the first defendant had received the misapplied trust property with knowledge that it was trust property or that it had been misapplied.

The court dismissed the plaintiff's claims against both defendants. Consequently, the plaintiff's claim against the first defendant was dismissed, and the plaintiff's claim against the second defendant was also dismissed.

Orders

Orders of the court

The order of the Court is that:

1. The plaintiff’s claim against the first defendant is dismissed.

2. The plaintiff’s claim against the second defendant is dismissed.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.