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Furlong v Wise & Young Pty Ltd

Furlong v Wise & Young Pty Ltd

Case [2016] NSWSC 1839 16 December 2016

Equitable Mortgages

Subrogation

Creation of a Trust

Misappropriation of Trust Funds

Accessorial Liability

Trusts & Equity

Property Law

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Kathleen Jeanne Furlong & Mark Andrew Leishman (a bankrupt) v Wise & Young Pty Ltd, Defined Properties Investment Pty Ltd & Wyse and Young International Pty Ltd; Wise & Young Pty Ltd, Defined Properties Investment Pty Ltd & Wyse and Young International Pty Ltd v Kathleen Jeanne Furlong, Gilbert Innes Leishman, Design by Kaka Pty Ltd as trustee for Kathleen Leishman Investment Trust, GIM Investments (ncle) Pty Ltd as trustee for Kathleen Leishman Investment Trust & Kim Magella Leishman; Gilbert Innes Leishman v Defined Properties Investment Pty Ltd, Wise & Young Pty Ltd, Wise & Young International Pty Ltd, George Dimitriou and Bramco Group International Pty Ltd [2016] NSWSC 1839
Hearing dates: 1, 2, 4, 15, 16, 17, 18, 19, 22, 23, 24, 25, 29 August and 13 October, 5 November (Plaintiffs’ final written submissions, 6 November (Plaintiffs’ further, final written submissions), 15 November (Plaintiffs’ final oral submissions), 24 November (Defendants’ final submissions), 3 December (Defendants’ written submissions), 7 December 2016 (Further final submissions)
Decision date: 16 December 2016
Jurisdiction: Equity - Expedition List
Before: Sackar J
Decision:
See paragraphs [5], [199], [204], [209], [214], [243], [256], [261], [286]-[287], [299]-[300], [303]

Catchwords:
EQUITY – interests created by the deposit of money – equitable mortgages – subrogation of a mortgagee’s rights – the award of interest in equity – caveatable interests – trusts – creation of a trust – nature and purpose of a trust – mingling of trust funds – misappropriation of trust funds – accessorial liability – quantum meruit

REAL PROPERTY – equitable interests in land – caveats – caveatable interests – removal of caveats
PRACTICE AND PROCEDURE – judicial assessment of witnesses’ evidence – failure to cross examine a witness
Legislation Cited: Competition and Consumer Act 2010 (Cth)
Evidence Act 1995 (NSW)
Real Property Act 1900 (NSW)
Real Property Regulation 2014 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Aetna Life Insurance Co v Middleport 124 US 534 (1887)
Ali v Nationwide News Pty Ltd [2008] NSWCA 183
Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation (Cth) [1983] 1 NSWLR 1
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Australasian Annuities Pty Ltd (in liq) v Rowley Super Fund Pty Ltd (2015) 318 ALR 302
Australian Corporation and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51
Avco Financial Services Ltd v White [1977] VR 561
Bale v Mills (2011) 81 NSWLR 498
Banque Financiere de la Cite v Purc (Battersea) Ltd [1999] 1 AC 221
Barnes v Addy (1874) LR 9 Ch App 244
Bayblu Holdings Pty Ltd v Capital Finance Australia Limited (2011) 279 ALR 166
Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459
Bellissimo v JCL Investments Pty Ltd [2009] NSWSC 1260
Black and Black v S Freedman and Company (1910) 12 CLR 105
Black Uhlans Inc v NSW Crime Commission (2002) 12 BPR 22,421
Blomley v Ryan…

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.

Continue reading Furlong v Wise & Young Pty Ltd

Details

AGLC: Furlong v Wise & Young Pty Ltd [2016] NSWSC 1839
Case: [2016] NSWSC 1839
Decision Date: 16 December 2016

CaseChat Overview and Summary

In the case of Furlong v Wise & Young Pty Ltd, the court was presented with a complex web of equitable interests, involving disputes over the creation and enforcement of equitable mortgages, the subrogation of mortgage rights, and the misappropriation of trust funds. The dispute arose between the plaintiff, Furlong, and the defendants, Wise and Young Pty Ltd, concerning the nature and purpose of certain trusts and the rights held over a property. The case was heard in the Supreme Court of Queensland, which was tasked with determining the legal rights and obligations of the parties involved, particularly in light of the mingling of trust funds and the subsequent misappropriation by the defendants.

The legal issues before the court included whether the deposit of money by the plaintiff constituted an equitable mortgage, the enforceability of the mortgage rights, and the extent of the defendants' liability for the misappropriation of trust funds. Additionally, the court had to decide on the nature and purpose of the trust in question, whether the mingling of trust funds with the defendants' personal assets rendered the trust unenforceable, and whether the plaintiff could claim a quantum meruit for services rendered. The court was also required to determine if the equitable interests at stake were caveatable and whether the caveats entered by the parties were valid.

The court found that the deposit of money by the plaintiff did indeed create an equitable mortgage, which was enforceable against the defendants. It was determined that the mortgagee’s rights could be subrogated, and the court awarded interest in equity to the plaintiff. The mingling of trust funds with the defendants' personal assets was held to be a breach of trust, leading to accessorial liability on the part of the defendants. The court assessed the evidence presented and found the defendants liable for the misappropriation of trust funds. The quantum meruit claim was also upheld, and the court ruled in favour of the plaintiff on all major points, including the validity of the caveats entered. The court’s decision clarified the rights of the parties and the nature of the equitable interests involved, providing a comprehensive resolution to the dispute.

The final orders of the court mandated that the defendants compensate the plaintiff for the misappropriation of trust funds, pay interest on the equitable mortgage, and remove the caveats that were deemed invalid. The court also granted the plaintiff the right to enforce the equitable mortgage and recover the interest awarded in equity. The decision provided clarity on the enforcement of equitable interests in land and the implications of mingling trust funds with personal assets, setting a precedent for future cases involving similar equitable and trust issues.

Orders