Evans and Associates v Citibank Ltd - [2003] NSWSC 204

CITATION: Evans & Associates v Citibank Ltd and Ors [2003] NSWSC 204

HEARING DATE(S): 3-6 and 10 & 11 February, 2003

JUDGMENT DATE:
27 March 2003

JURISDICTION:
Equity Division

JUDGMENT OF: Palmer J

DECISION: Judgment for Defendants on Plaintiff's Statement of Claim; judgment for Cross Defendant on Cross Claim.

CATCHWORDS: PRIVATE INTERNATIONAL LAW - CORPORATIONS - RECEIVERS - PENAL AND PUBLIC LAWS - ENFORCEMENT - Plaintiff appointed as Receiver of assets of certain Defendants by United States Court upon application of United States Federal Trade Commission pursuant to United States Federal Trade Commission Act - Plaintiff seeks to enforce claims against Defendants in Australia - whether claims of Receiver are directly or indirectly for enforcement of foreign penal or public law - character of Receiver's claims under Federal Trade Commission Act - principles discussed. HELD: Receiver's claims were for direct enforcement of foreign public law and were unenforceable in Australian Courts. - BANKING AND FINANCE - TRUST - Money deposited by Vanuatu corporation on interest bearing deposit with Vanuatu bank - Vanuatu bank in turn invests money with Australian bank - Vanuatu bank issues confirmation note to Vanuatu corporation which discloses its deposit with Australian bank - whether Vanuatu bank declared itself express trustee of the deposit with Australian bank. HELD: No express trust. - BANKING AND FINANCE - FRAUD - KNOWING RECEIPT - CONSTRUCTIVE TRUST - Proceeds of fraud deposited with Vanuatu bank which in turn invests with Australian bank - whether Australian bank receives money as mere depository - whether mere depository is a "recipient" for purposes of first limb of Barnes v Addy - principles discussed. HELD: Australian bank was a mere depository of the fund - a mere depository is not chargeable as a "recipient" of misapplied trust funds. - BANKING AND FINANCE - FORCE MAJEURE CLAUSE - CONSTRUCTION - Vanuatu bank makes deposit in US dollars with Australian bank - deposit effected by crediting and debiting accounts of correspondent banks of parties in United States - funds standing to credit of Australian bank in United States seized by FBI - whether Australian bank "prevented" from repaying deposit in US dollars. HELD: Australian bank prevented from repaying within the meaning of Force Majeure clause. - BANKING AND FINANCE - WORDS AND PHRASES - "DUE PERFORMANCE" - Practice of bankers in international banking transactions. HELD: "Due performance" means performance in manner expected or intended by bankers in accordance with international banking practice.

LEGISLATION CITED: - United States Federal Trade Commission Act (15 USC 45)
- Vanuatu International Companies Act
- Vanuatu Serious Offences (Confiscation of Proceeds) Act - s.20

CASES CITED: - Agip (Africa) Ltd v Jackson [1992] 4 All ER 385
- Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 10 NSWLR 86; (1988) 165 CLR 30
- Attorney-General (NZ) v Ortiz [1984] AC 1
- Barnes v Addy (1874) LR 9 Ch App 244
- Black v S. Freedman & Co (1910) 12 CLR 105
- Charter Reinsurance Co Ltd (in liq) v…

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: [2003] NSWSC 204
Decision Date: 27 March 2003

CaseChat Overview and Summary

The case of Evans and Associates v Citibank Ltd involved the plaintiff, Evans and Associates, which had been appointed as a Receiver by a United States Court to manage the assets of certain defendants. The dispute centred around whether Evans and Associates' claims against the defendants, sought to be enforced in Australia, were directly or indirectly for the enforcement of foreign penal or public law, specifically under the Federal Trade Commission Act. Additionally, the case considered whether a Vanuatu bank, which had deposited money with an Australian bank, had declared itself an express trustee of the deposit. The case also examined whether the Australian bank, which had received proceeds of fraud from the Vanuatu bank, was a "recipient" for the purposes of the first limb of Barnes v Addy. Furthermore, the case involved a force majeure clause in a deposit agreement between the Vanuatu bank and the Australian bank, focusing on whether the Australian bank was prevented from repaying a deposit in US dollars when the funds were seized by the FBI.

The court was required to determine the character of Evans and Associates' claims under the Federal Trade Commission Act and whether they were for the direct enforcement of foreign public law, which would render them unenforceable in Australian courts. The court also had to decide if the Vanuatu bank had declared itself an express trustee of the deposit with the Australian bank, and whether the Australian bank was a "recipient" of misapplied trust funds. Additionally, the court had to interpret the force majeure clause in the deposit agreement to determine if the Australian bank was prevented from repaying the deposit in US dollars.

The court found that Evans and Associates' claims were for the direct enforcement of foreign public law, and therefore, they were unenforceable in Australian courts. The court held that the Vanuatu bank had not declared itself an express trustee of the deposit with the Australian bank, and that the Australian bank was merely a depository of the funds. The court held that a mere depository was not chargeable as a "recipient" of misapplied trust funds under the first limb of Barnes v Addy. The court also found that the Australian bank was prevented from repaying the deposit in US dollars within the meaning of the Force Majeure clause, as the funds were seized by the FBI. The court interpreted "due performance" in the context of international banking transactions as performance in a manner expected or intended by bankers in accordance with international banking practice.

The court made several orders, including that Evans and Associates' claims were unenforceable in Australian courts, that the Vanuatu bank had not declared itself an express trustee of the deposit with the Australian bank, that the Australian bank was not a "recipient" of misapplied trust funds, and that the Australian bank was prevented from repaying the deposit in US dollars within the meaning of the Force Majeure clause.

Orders