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Corporate Systems Publishing Pty Ltd v Lingard [No 4]

Corporate Systems Publishing Pty Ltd v Lingard [No 4]

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Case Copied 28 February 2008 83 min read

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JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: CORPORATE SYSTEMS PUBLISHING PTY LTD -v- LINGARD [No 4] [2008] WASC 21

CORAM: BEECH J

HEARD: 17 - 19 & 21 SEPTEMBER, 5 - 8 & 12 NOVEMBER 2007 & 15 FEBRUARY 2008

DELIVERED : 28 FEBRUARY 2008

FILE NO/S: CIV 1788 of 2003

BETWEEN: CORPORATE SYSTEMS PUBLISHING PTY LTD (ACN 009 412 622)
First Plaintiff
NICK CHRISTOU
Second Plaintiff
AND
KEITH GRAEME LINGARD
First Defendant
STANTON PARTNERS AUSTRALASIA PTY LTD (ACN 085 103 206)
Second Defendant
STANTON ACCOUNTANTS & ADVISORS PTY LTD (ACN 085 059 909)
Third Defendant
NEIL KEVIN JOYCE
Fourth Defendant
DEMANDEM HOLDINGS PTY LTD (ACN 009 258 664)
Fifth Defendant
GLENLEA ENTERPRISES PTY LTD (ACN 065 274 544)
Sixth Defendant

Catchwords:

Trusts - Express trust - Breach of trust - Defence of consent to breach of trust

Contract - Written contract - Construction of contract - Whether conditional - Identification of parties - Whether implied term

Equity - Recipient liability - First limb of Barnes v Addy - Whether defendants had sufficient knowledge of breach of trust

Equity - Assistance - Based liability - Second limb of Barnes v Addy - Whether trustee acted with dishonest and fraudulent design - Whether defendants had sufficient knowledge of breach of trust

Partnership - Partnership terminated - Whether winding up order should be made

Legislation:

Trustees Act 1962 (WA), s 65(7)

Result:

Monetary claims against all defendants dismissed
Order for winding up of partnership
Counterclaim upheld

Category: B

Representation:

Counsel:

First Plaintiff                :     Mr P G Clifford
Second Plaintiff            :     Mr P G Clifford
First Defendant             :     Mr M L Bennett
Second Defendant         :     Mr M L Bennett
Third Defendant           :     Mr M L Bennett
Fourth Defendant          :     Mr M L Bennett
Fifth Defendant            :     Mr M L Bennett
Sixth Defendant            :     Mr M L Bennett

Solicitors:

First Plaintiff                :     Alan Rumsley
Second Plaintiff            :     Alan Rumsley
First Defendant             :     Lavan Legal
Second Defendant         :     Lavan Legal
Third Defendant           :     Lavan Legal
Fourth Defendant          :     Lavan Legal
Fifth Defendant            :     Lavan Legal
Sixth Defendant            :     Lavan Legal

Case(s) referred to in judgment(s):

Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1973) 129 CLR 99
Baden v Societe Generale Pour Favoriser Le Developpement du Commerce et de L'Industrie en France SA [1993] 1 WLR 509
Barnes v Addy (1874) LR 9 Ch App 244
Barroora Pty Ltd v Provincial Insurance Ltd (1992) 26 NSWLR 170
Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153
Briginshaw v Briginshaw (1938) 60 CLR 336
Chemeq Ltd v Shepherd Investments International Ltd [2007] WASCA 117
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337
Cummings v Lewis (1993) 41 FCR 559
Farah Constructions Pty Ltd v Say‑Dee Pty Ltd [2007] HCA 22; (2007) 81 ALJR 1107
Foran v Wight (1989) 168 CLR 385
Hancock Family Memorial Foundation Ltd v Porteous [1999] WASC 55; (1999) 151 FLR 191
Hatt v Magro [2007]…

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: [2008] WASC 21
Decision Date: 28 FEBRUARY 2008

CaseChat Overview and Summary

The case of Corporate Systems Publishing Pty Ltd v Lingard [No 4] involved several parties, including the plaintiffs, Corporate Systems Publishing Pty Ltd, and multiple defendants, including Lingard. The dispute centred around issues of breach of trust, the enforceability of assignments, and potential fraudulent conduct by trustees. The legal issues the court had to resolve included whether there was a genuine commercial interest in the assignment of a claim for damages, the validity of the defendants' defence of consent to a breach of trust, and the appropriateness of winding up a partnership. The court also needed to determine if the defendants had sufficient knowledge of a breach of trust to be held liable under the first limb of Barnes v Addy and whether the trustee's actions involved a dishonest and fraudulent design as per the second limb of Barnes v Addy.

The court approached the matter by examining the totality of the circumstances surrounding the assignment, particularly the genuine commercial interest of the assignee. The court held that there was sufficient doubt about the enforceability of the assignment in question, particularly concerning claims for damages in tort and claims by a company against its directors. The plaintiffs did not present substantive submissions on the merits of the defences raised by the defendants, and the court found it necessary to consider whether the assignment could be enforced without infringing on the prohibition against assigning a bare right to litigation. In addressing the winding up of the partnership, the court concluded that an order for winding up was appropriate given the circumstances of the case. The court ultimately upheld the counterclaim and dismissed the monetary claims against all defendants.

In summary, the court dismissed the monetary claims against all defendants, upheld the counterclaim, and ordered the winding up of the partnership. The reasoning was based on the enforceability of the assignment in question, the lack of substantive submissions from the plaintiffs, and the appropriateness of winding up the partnership.

Orders

Orders of the court

Monetary claims against all defendants dismissed

Order for winding up of partnership

Counterclaim upheld

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

The plaintiffs did not, on the delivery of the reasons, advance any substantive submissions in relation to the merits of the defence which they now seek to raise. The plaintiffs seek that leave be given and that, subsequently, they be given an opportunity to put on submissions in support of the plea that the assignment was unenforceable. In their final written submissions in reply to the defendants' submissions as to the orders to be made following the reasons, the plaintiffs referred to the proposition that 'the prohibition against assigning a bare right to litigation still remains a fundamental principle of our law': Trendtex Trading Corporation v Credit Suisse [1982] AC 679, 703; Clairs Keeley v Treacy [2003] WASCA 299; (2003) 28 WAR 139 [141]. In Trendtex (703) it was held that an assignee who has a genuine commercial interest in taking the assignment and enforcing it for his own benefit, can enforce an assignment without infringing any prohibition against assigning a bare right of litigation. That principle has been applied and considered in many cases in Australia: see, for example, Re Timothy's Pty Ltd and the Companies Act [1981] 2 NSWLR 706, 711; Beatty v Brashs Pty Ltd [1998] 2 VR 201; Re Daley; ex parte National Australia Bank Ltd (1992) 37 FCR 390, 394; Monk v Australia and New Zealand Banking Group Ltd (1994) 34 NSWLR 148. There is, at the least, doubt as to whether a claim for damages in tort can be effectually assigned to a party with a 'genuine commercial interest'; compare Monk and National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514. There may also be room for doubt as to whether a genuine commercial interest would permit an effective assignment of a claim by a company for breach of duty by its director (see, generally, Meagher RP, Gummow WMC and Lehane JRF, Equity: Doctrines and Remedies (4th ed, 2002) [6‑480]). The decision of the High Court in Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41; (2006) 229 CLR 386 does not determine the questions which would arise in this case if leave were granted. In determining whether an assignee has a genuine interest in taking the assignment, the court may look at the totality of the circumstances surrounding the transaction: Seddon NC and Ellinghaus MP, Cheshire & Fifoot's Law of Contract (8th Aust ed, 2002) [8.7]. In opposing the plaintiffs' application to amend their defence to counterclaim, the fifth and sixth defendants submit that they would plead by way of reply that they had a genuine commercial interest in taking the assignment and say that they would adduce evidence in support of that plea. While the defendants have not identified such evidence with any specificity, I am unable to be satisfied that the granting of leave to amend Mr Christou's defence to counterclaim would not give rise to the need for the trial to be re‑opened so that further evidence could be led. Mr Christou's application for leave to amend his defence to the counterclaim, after the delivery of reasons after trial, must be viewed in the context of the history of this litigation. The action was commenced in 2003. In September 2007 the action came on for trial. It was listed to be heard in five days from 17 to 21 September 2007. The plaintiffs opened their case on 17 September 2007. Following submissions from both parties on 18 September 2007, I made rulings, as a result of which the plaintiffs applied for leave to amend their statement of claim to plead a fraudulent and dishonest design on the part of the trustees. The plaintiffs first attempted to move for an amendment on 19 September 2007 and were ultimately granted leave on 21 September 2007. The result was that the trial was adjourned to November 2007.