Foottit v No Moo Pty Ltd - [2022] VSC 157

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY AND PROBATE LIST

S ECI 2021 02695

WAYNE FOOTTIT	First plaintiff
ALIDA FOOTTIT	Second plaintiff
v
NO MOO PTY LTD (ACN 623 955 831)	First defendant
NIKI FLOROPOULOS	Second defendant
BILL FLOROPOULOS	Third defendant

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JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	8 February 2022
DATE OF JUDGMENT:	30 March 2022
CASE MAY BE CITED AS:	Foottit & Anor v No Moo Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2022] VSC 157

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PRACTICE AND PROCEDURE – Settlement of proceedings – Application for orders enforcing deed of settlement – Whether deed of settlement enforceable – Where settlement deed alleged to have been entered into under undue influence – Where Plaintiffs had no actual or constructive notice of the facts giving rise to the alleged undue influence – Deed of settlement enforceable.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Ms V Bell	Duxton Hill
For the First and Second defendants	Mr J Ribbands	Melbourne Legal Chambers
For the Third defendant	Mackay Chapman

HER HONOUR:

Introduction

In around March 2021 the plaintiffs decided to invest their retirement savings in what appeared to be JP Morgan high yield fixed rate corporate bonds for a term of one year.

The plaintiffs subsequently established that the website advertising the investment opportunity was not a legitimate JP Morgan website. The two JP Morgan representatives that the plaintiffs spoke to were not from JP Morgan at all and the Commonwealth Bank of Australia (‘the CBA’) account they ultimately transferred $500,000 to was an account held by the first defendant (‘No Moo’) and not JPM Holdings Ltd as they had been told. Similarly, the bond certificate purportedly signed by the chief executive officer of JP Morgan that was sent by Mr Paul Uren on 29 March 2021 to the first plaintiff was false.

By writ filed 30 July 2021, the plaintiffs claim they were induced by fraudulent representations to transfer $500,000 to No Moo’s bank account. No Moo did not have any entitlement to retain the funds yet as soon as the funds were received they were transferred for its own use or to others. The plaintiffs sought recovery of $500,000 or any traceable proceeds against No Moo and the second defendant on the grounds of money had and received against No Moo, a claim in equity based on the constructive trust with which the funds were impressed in No Moo’s hands and a claim for accessory liability for knowing assistance against the second defendant.

By summons filed 30 July 2021 the plaintiff sought freezing orders against No Moo and the second defendant. On 30 July 2021 freezing orders were made against No Moo and the second defendant up to the unencumbered value of $550,000.

Settlement of the proceeding

On 3 September 2021, the parties, the second defendant’s husband, Mr Bill Floropoulos (‘Mr Floropoulos’) and the second defendant’s mother, Mrs Veloudo Dernikos (‘the defaulting parties’) entered into a deed of settlement…

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: [2022] VSC 157
Decision Date: 30 March 2022

CaseChat Overview and Summary

The case of Foottit v No Moo Pty Ltd involved the enforceability of a deed of settlement between the parties. The dispute arose from a contractual agreement and the subsequent application by the plaintiff to enforce the terms of the settlement. The matter was heard in the Supreme Court of New South Wales. The plaintiff, Foottit, sought to enforce a deed of settlement which had been entered into with the defendant, No Moo Pty Ltd. The defendant contested the enforceability of the settlement, claiming that it was entered into under undue influence. The central legal issue before the court was whether the deed of settlement was enforceable given the defendant’s allegation of undue influence. The court had to determine whether the plaintiffs had actual or constructive notice of the facts that gave rise to the alleged undue influence at the time the deed was executed.

The court examined the nature of undue influence and the requisite knowledge or notice the plaintiffs needed to have to invalidate the settlement. It was established that for a settlement to be unenforceable due to undue influence, the party seeking to avoid the contract must demonstrate that the other party had actual or constructive notice of the circumstances that facilitated the undue influence. In this case, the court found that the plaintiffs had no actual or constructive notice of the facts giving rise to the alleged undue influence at the time the deed was executed. The evidence presented did not show that the plaintiffs had any reason to suspect or be aware of the undue influence. The court held that the settlement deed was enforceable as the plaintiffs were not privy to the circumstances that could have potentially vitiated the agreement.

Consequently, the court ruled in favour of the plaintiff, enforcing the terms of the deed of settlement. The defendant’s application to set aside the settlement on the grounds of undue influence was dismissed. The court's decision was based on the lack of actual or constructive notice on the part of the plaintiffs, thereby upholding the validity and enforceability of the settlement deed.

Orders