Dyamond Developments Pty Limited v Puddick

[2020] NSWCA 32

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Dyamond Developments Pty Limited v Puddick [2020] NSWCA 32

Hearing dates:

29 November 2019

Date of orders:

06 March 2020

Decision date:

06 March 2020

Before:

Bathurst CJ at [1];
Macfarlan JA at [2];
Emmett AJA at [3]

Decision:

Appeal dismissed with costs.

Catchwords:

APPEAL — whether primary judge failed to properly consider all objective evidence

  EQUITY — Trusts and trustees — Resulting trusts — Quistclose trusts — Obligation to return monies when purpose for which trust was set up has failed

Category:

Principal judgment

Parties:

Dyamond Developments Pty Limited (First Appellant)
George Hatzipapas (Second Appellant)
Gaks Investment Holdings Pty Ltd (Third Appellant)
John Puddick (First Respondent)
Justin Puddick (Second Respondent)

Representation:

Counsel:

 

M Klooster (Appellants)
E Peden SC with T Bateman (Respondents)

 

Solicitors:

JT Law Pty Ltd t/as Tomaras Lawyers (Appellants)
O’Loughlin Westhoff (Respondents)

File Number(s):

2019/193459

 Decision under appeal 

Court or tribunal:

Supreme Court of NSW

Jurisdiction:

Equity

Citation:

[2019] NSWSC 431

Date of Decision:

18 April 2019

Before:

Robb J

File Number(s):

2018/185865

HEADNOTE

[This Headnote is not to be read as part of the judgment]

The respondents, Mr Justin Puddick and Mr John Puddick, each paid a sum of $100,000 to the first appellant, Dyamond Developments Pty Ltd. This followed an oral arrangement made with the second appellant, Mr George Hatzipapas, a director and shareholder of Dyamond. The sums were received by Dyamond and applied to share purchases in various companies.

In June 2018, the respondents commenced proceedings in the Equity Division against the appellants seeking repayment of their respective payments. The issue in those proceedings and this appeal concerns the terms of the arrangement by which the sums were paid. The third appellant, Gaks Investment Holdings Pty Ltd, was joined to those proceedings in aid of a tracing order.

The respondents contend that the arrangement was that the sums be applied exclusively to an investment in a proposed initial public offering (IPO) of Gravity Consulting Pty Ltd, and if that proposal failed, that their money would be returned. Mr Hatzipapas contends that the sums paid under the arrangement could be applied in other investments pending the IPO’s completion. The proposed IPO deal did not ultimately proceed.

In April 2019, the primary judge found in favour of the respondents. His Honour found that the money was paid under express agreements with Mr Hatzipapas that he would use it to pay for interests to be issued to the respondents and that Dyamond was not entitled to use the money for any other purpose than to invest it in Gravity on behalf of the respondents.

The primary judge principally grounded the judgment on the objective evidence, but also found the respondents credible witnesses and accepted their evidence. Accordingly, upon the failure of the IPO deal, Dyamond held $100,000 on trust for each of the respondents. Further, Dyamond applied the money for unauthorised purposes and was obliged as a defaulting trustee to replenish the…