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Du v Georgiadis

Du v Georgiadis

Case [2020] VSCA 306 30 November 2020

Limitation Periods

Breach of Trust

Equitable Compensation

Equitable Relief

Trusts & Equity

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2020 0004

HONG HONG DU	Applicant
v
PAVLOS GEORGIADIS	Respondent

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JUDGES:	KYROU and McLEISH JJA and MACAULAY AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	21 October 2020
DATE OF JUDGMENT:	30 November 2020
MEDIUM NEUTRAL CITATION:	[2020] VSCA 306
JUDGMENT APPEALED FROM:	[2019] VCC 1911 (Judge Murphy)

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LIMITATION OF ACTIONS – Breach of trust established by arbitral award – Claim for equitable compensation – Whether action to enforce award barred by s 5(1)(c) of Limitation of Actions Act 1958 – Whether leave required to enforce award under s 33 of Commercial Arbitration Act 1984 – Tridon Australia Pty Ltd v ACD Tridon Inc [2004] NSWCA 146, considered – Award established trust but did not provide for equitable relief for breach – Claim for equitable compensation not action to enforce award – Limitation of Actions Act 1958 ss 5(1)(a), 5(1)(c), Commercial Arbitration Act 1984, s 33.

LIMITATION OF ACTIONS – Claim for equitable compensation in respect of conversion of trust property – Whether action in respect of breach of trust barred by s 21(2) of Limitation of Actions Act 1958 – Action in respect of breach of trust to which s 21(2) prima facie applies – Whether exception in s 21(1)(b) of Limitation of Actions Act 1958 engaged – Whether action by beneficiary under trust – Nolan v Nolan [2004] VSCA 109, applied – Whether action for recovery of trust property – In re Timmis, Nixon v Smith [1902] 1 Ch 176, JJ Harrison (Properties) Ltd v Harrison [2001] EWCA Civ 1467, Burnden Holdings (UK) Ltd v Fielding [2016] EWCA Civ 557, Burnden Holdings (UK) Ltd v Fielding [2018] AC 857, considered – Exception extends to action for equitable compensation in respect of conversion of trust property – Limitation of Actions Act 1958 s 21 – Appeal dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr M O’Connor	Ryan Solicitors
For the Respondent	Mr T Messer with Mr A Silver	Madgwicks Lawyers

KYROU JA

McLEISH JA
MACAULAY AJA:

Introduction

This case raises the question whether certain claims arising from an alleged breach of a trust created under an arbitral award were able to be brought more than six years after the alleged breach in question.

The applicant, Mr Du, and the respondent, Mr Georgiadis, were business partners. After agreeing to dissolve the partnership, they empowered an arbitrator to determine the manner of dissolution. The arbitrator determined that Mr Du would buy out the interest of Mr Georgiadis. The arbitral award provided that, after a certain date, Mr Du would hold the partnership ‘interests and activities’ on trust for both himself and Mr Georgiadis. It was ordered that the net assets be valued, and that Mr Du pay Mr Georgiadis half of the valued amount as a part of the payment to buy out Mr Georgiadis (‘the remaining assets amount’). Mr Du took over the business and made other payments due under the award, but did…

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

AGLC: Du v Georgiadis [2020] VSCA 306
Case: [2020] VSCA 306
Decision Date: 30 November 2020

CaseChat Overview and Summary

The case of Du v Georgiadis involves a dispute concerning an arbitral award establishing a trust, which was later found to have been breached. The matter was heard by the Supreme Court of Victoria, where the primary issue was the enforceability of the award and the availability of equitable compensation for the breach of trust. Specifically, the court had to determine whether the action for equitable compensation was barred by the Limitation of Actions Act 1958 (Vic) and whether leave was required to enforce the award under the Commercial Arbitration Act 1984 (Vic).

The legal issues before the court included whether the action for equitable compensation was an action to enforce the award, which would be subject to a six-year limitation period under s 5(1)(c) of the Limitation of Actions Act 1958. Additionally, the court had to decide if leave was required under s 33 of the Commercial Arbitration Act 1984 to enforce the award. The court also examined whether the action for equitable compensation in respect of the conversion of trust property was barred by s 21(2) of the Limitation of Actions Act 1958, and if an exception applied under s 21(1)(b) of that Act.

The Supreme Court held that the action for equitable compensation was not an action to enforce the arbitral award, and thus was not subject to the six-year limitation period under s 5(1)(c) of the Limitation of Actions Act 1958. The court relied on the decision in Tridon Australia Pty Ltd v ACD Tridon Inc, where it was held that an award establishing a trust does not provide for equitable relief for breach of that trust. Furthermore, the court found that the exception in s 21(1)(b) of the Limitation of Actions Act 1958 applied, allowing the action for equitable compensation to proceed. The court applied the decision in Nolan v Nolan, and found that the action was by a beneficiary under a trust and for the recovery of trust property, thus falling within the exception. The appeal was dismissed.

Orders