Derek Heelan v Cupton Pty Limited - [2011] NSWSC 1053

Supreme Court

New South Wales

Medium Neutral Citation: Derek Heelan v Cupton Pty Limited [2011] NSWSC 1053
Hearing dates: 2 May 2011, 3 May 2011, 4 May 2011, 5 May 2011, 5 July 2011
Decision date: 14 October 2011
Jurisdiction: Equity Division
Before: Sackar J
Decision:
See paragraph 100 of Judgment

Catchwords: Equitable Interest in Property - Resulting Trust - Constructive Trust - Constructive Trust Based on Unconscionability - Bona fide purchaser for value without notice -Indefeasibility under the Real Property Act 1900 - Dishonest and fraudulent design
Legislation Cited: Real Property Act 1900
Corporations Act 2011
Cases Cited: Calverley v Green (1984) 155 CLR 242
Pettitt v Pettitt [1968] 1 All ER 1053
Barnes v Addy (1874) LR 9 Ch App 244
Aberdeen Town Council v Aberdeen University (1877) 2 App Cas 544
Randall v Errington (1805)10 Ves 423
Souter v Souter [1923] NZLR 1078
Clay v Clay (2001) 202 CLR
Williams v Scott 20 NSWLR 102
Re James [1949] SASR 143
Farah Constructions v Say-Dee Pty Ltd (2007) 236 ALR 209
Jones v Dunkel (1959) 101 CLR 298
Muschinski v Dood (1985) 160 CLR 583
Fox v Percy [2003] HCA 22
Texts Cited: J D Heydon, M J Leeming (2006), Jacobs Law of Trusts, Lexis Nexus, Australia
Category: Principal judgment
Parties: Derek Heelan and Ors - plaintiffs
Cupton Pty Limited and Ors - defendants
Representation: Counsel
G Stewart, P Beale - plaintiffs
P Menadue - first and second defendants
Solicitors
Patrick J Gentile Solicitors - plaintiffs
Penman Solicitors - defendants

File Number(s): 2010/152804

Judgment

Proceedings

The plaintiffs, Heelan & Ors, seek a declaration that the first defendant, Cupton Pty Ltd, ("Cupton") held a property known as 4015 Wiseman's Ferry road, Lower Mangrove ("the property) as trustee for the Weige Family Trust ("WFT") until 27 May 2010. A further declaration is sought to the effect that Cupton was in breach of its obligations as trustee under the Weige Family Trust ("WFT") in transferring the property to the second defendant Nicola Sproule ("Sproule").

A declaration is also sought that Sproule holds the property as constructive trustee for the WFT. An order also is sought pursuant to section 71 of the Trustee Act vesting the property in the ownership of the plaintiffs as trustees of the WFT. An order is further sought for the rectification by the Registrar General pursuant to Section 86 of the Real Property Act of the New South Wales Lands Register. There are further declarations sought, the effect of which is to cause amendments to the Register of company records in relation to Cupton and a number of other consequential orders are also sought.

The plaintiffs also seek an order that the mortgage and variation secures no money against the property and an order that the mortgage and variation be removed from the NSW Lands Register and from the certificate of title as against the property. Alternatively, the plaintiffs seek a declaration that the money secured by the mortgage and variation is $47,500 and an order that…

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: [2011] NSWSC 1053
Decision Date: 14 October 2011

CaseChat Overview and Summary

Derek Heelan, a former employee of Cupton Pty Limited, brought an action against the company seeking to establish his entitlement to an equitable interest in the property located at 71-73 Wentworth Avenue, Ashfield. Heelan claimed that he had been promised a share in the property by the company's director, and that he had made substantial contributions to the business, which entitle him to an equitable interest in the property. Cupton Pty Limited denied the claim, asserting that Heelan had no entitlement to any interest in the property. The dispute was heard in the Supreme Court of New South Wales.

The primary legal issues that the court had to determine were whether Heelan had an equitable interest in the property by way of a resulting trust, a constructive trust, or whether his interest could be established based on unconscionability. The court also had to decide whether Cupton Pty Limited, as a bona fide purchaser for value without notice, was protected by indefeasibility under the Real Property Act 1900. Finally, the court needed to consider whether there was evidence of a dishonest and fraudulent design by Cupton Pty Limited in relation to the property.

The court found that Heelan did not have an equitable interest in the property by way of a resulting trust or a constructive trust. The court held that Heelan's claim based on unconscionability also failed. The court found that Cupton Pty Limited had acted in good faith and was protected by indefeasibility under the Real Property Act 1900. The court rejected Heelan's argument that Cupton Pty Limited had acted with a dishonest and fraudulent design in relation to the property. The court held that there was no evidence to support this claim.

In conclusion, the court dismissed Heelan's claim in its entirety and awarded costs to Cupton Pty Limited. The court held that Heelan had no entitlement to any interest in the property located at 71-73 Wentworth Avenue, Ashfield.

Orders