Crossman v Sheahan

Case [2016] NSWCA 200

Court of Appeal


Supreme Court


New South Wales

  • Summary available
Medium Neutral Citation: Crossman v Sheahan [2016] NSWCA 200
Hearing dates:27 and 28 April 2016
Decision date: 23 August 2016
Before: Basten JA at [1];
Ward JA at [37];
Payne JA at [390]
Decision:

(1)   Appeal allowed with costs.
(2)   Set aside the orders of Rein J made on 2 July 2013 and in lieu thereof order that:
(a)   The plaintiffs’ Further Amended Commercial List Summons filed on 28 April 2014 be dismissed.
(b)   The first and second plaintiffs pay the costs of the third, fourth, fifth and ninth defendants.

Catchwords:

EQUITY – trusts – where payment made by trustees to third party out of trust assets to settle separate proceedings against trustees personally for misapplication of trust assets – whether beneficiary consented to breach of trust – knowing receipt – whether appellant who received trust property had knowledge of breach of trust so as to be liable under first limb of Barnes v Addy – where releases contained in two separate deeds – whether a knowing recipient of trust property can rely on release clauses excluding liability of trustees for breach of trust – whether rescission of both deeds a precondition to relief – whether entire agreement clauses in each deed precluded release in one deed operating in relation to claim for breach in respect of the other – whether substantial restitution possible – whether defences of laches, acquiescence, delay should have been upheld

  APPEAL – apprehended bias – whether primary judge should have recused himself for having heard earlier application for appointment of new trustees
Legislation Cited: Corporations Act 2001 (Cth), s 471B
Trustee Act 1925 (NSW), s 63
Uniform Civil Procedure Rules 2005 (NSW), r 51.53
Cases Cited: Agricultural Land Management Ltd v Jackson (No 2) [2014] WASC 102
AH McDonald & Co Pty Ltd v Wells [1931] HCA 24; (1931) 45 CLR 506
Alati v Kruger [1955] HCA 64; (1955) 94 CLR 216
Amcor Packaging (Australia) Pty Ltd v Baulderstone Pty Ltd [2013] FCA 253
Armitage v Nurse [1998] Ch 241
Australian National Industries Ltd v Spedley Securities Ltd (In liq) (1992) 26 NSWLR 411
Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 247 CLR 345
Barnes v Addy (1874) LR 9 Ch App 244
Bathurst City Council v PWC Properties Pty Ltd [1998] HCA 59; (1998) 195 CLR 566
Beach Petroleum NL v Johnson (1993) 43 FCR 1
Bilta (UK) Ltd (in liq) v Nazir (No 2) [2015] UKSC 23; 2 WLR 1168
Blackmagic Design Pty Ltd v Overliese [2011] FCAFC 24; (2011) 191 FCR 1
Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541
British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283; [2011] HCA 2
Commonwealth Bank of Australia v Smith (1991) 42 FCR 390
Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd [2006] HCA 55; (2006) 229 CLR 577

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AGLC
Crossman v Sheahan [2016] NSWCA 200
Case
[2016] NSWCA 200
Decision Date

CaseChat Overview and Summary

The appeal in *Crossman v Sheahan* concerned a dispute between beneficiaries of a trust and a third party, Mr Sheahan, who had received payments from the trust assets. The beneficiaries alleged that the trustees had misapplied trust assets to settle separate proceedings brought against them personally for breach of trust. The appeal was heard by Basten, Ward and Payne JJA of the New South Wales Court of Appeal.

The central legal issues before the Court of Appeal were whether Mr Sheahan, as a recipient of trust property, was liable for knowing receipt of those assets, and whether he could rely on release clauses contained within two deeds to exclude his liability. The court also had to consider whether the beneficiaries' claim was precluded by defences such as laches, acquiescence, or delay, and whether rescission of the deeds was a necessary precondition to relief. Furthermore, the court examined whether entire agreement clauses within the deeds prevented the release in one deed from operating in relation to a breach of trust concerning the other, and whether substantial restitution was possible. An additional issue raised was whether the primary judge had demonstrated apprehended bias by having previously heard an application for the appointment of new trustees.

The Court of Appeal allowed the appeal, setting aside the orders of the primary judge. The court found that the beneficiaries' summons should be dismissed. The reasoning, though not detailed in the provided text, ultimately led to the conclusion that the beneficiaries were not entitled to the relief they sought against Mr Sheahan. The court ordered that the beneficiaries pay the costs of Mr Sheahan and other defendants.

Orders

Orders of the court

(1) Appeal allowed with costs.

(2) Set aside the orders of Rein J made on 2 July 2013 and in lieu thereof order that:

(a) The plaintiffs’ Further Amended Commercial List Summons filed on 28 April 2014 be dismissed.

(b) The first and second plaintiffs pay the costs of the third, fourth, fifth and ninth defendants.

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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