Judgment for the plaintiff on claim against first and second defendants for equitable compensation for breach of Quistclose trust and against third defendant for accessorial liability in respect of that breach of trust; claim against first and second defendants not an apportionable claim for purposes of statutory proportionate liability regime; judgment for cross-claimants on cross-claim against third defendant for misleading and deceptive conduct in breach of Fair Trading Act.
Catchwords:
EQUITY - TRUSTS - whether moneys paid into firm of solicitors' trust account was held on express trust for plaintiff as it was only to be used for a prescribed purpose - whether trust was breached by payment out of trust account of moneys for purposes other than prescribed purpose - whether plaintiff entitled to equitable compensation - whether third defendant liable as an accessory to breach of express trust or breach of Quistclose trust under the first and/or second limbs of Barnes v Addy - consideration of Quistclose trust - HELD - express trust in favour of plaintiff - breach of trust established - plaintiff entitled to equitable compensation - third defendant liable for receiving and becoming chargeable with trust property and for knowing assistance in breach of trust - TORTS - NEGLIGENCE - duty of care - whether firm of solicitors, as trustees under Quistclose trust owed plaintiff a duty of care in relation to moneys held in trust account and whether that duty has been breached - HELD - had this issue arisen breach of duty of care would have been established - CONTRACT - whether contract between plaintiff and third defendant and if so whether third defendant is liable to repay moneys pursuant to frustration of contract or on a failure of consideration - HELD - contract established between plaintiff and third defendant - had this issue arisen third defendant would have been liable on total failure of consideration or on frustration of contract - PROPORTIONATE LIABILITY - whether claim for equitable compensation for breach of trust is an apportionable claim pursuant to Part 4 of the Civil Liability Act 2002 (NSW) - HELD - liability for breach of trust where that liability not predicated on failure to take reasonable care is not an apportionable claim - FAIR TRADING ACT - whether cross-defendant liable for misleading and deceptive conduct - HELD liable to indemnify for loss caused by misrepresentation that funds were beneficially his - EQUITABLE CONTRIBUTION - whether power to order unequal contribution between concurrent wrongdoers - HELD - equitable contribution had it arisen in this case should be pro rata
[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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AGLC
George v Webb [2011] NSWSC 1608
Case
[2011] NSWSC 1608
Decision Date
CaseChat Overview and Summary
George v Webb was a case before the Supreme Court of New South Wales where the central issue was whether funds paid into a firm of solicitors' trust account were held on trust for the plaintiff, who had stipulated that the moneys were to be used for a prescribed purpose. The court was also required to determine whether the trust had been breached by the disbursement of funds for purposes other than those prescribed. Further, the case examined whether the plaintiff was entitled to equitable compensation for the breach of trust and if a third defendant could be held liable as an accessory to the breach of the express trust or a Quistclose trust.
The court held that an express trust in favour of the plaintiff was established as the funds were intended for a specific purpose. The breach of trust was confirmed when the funds were used for purposes other than the prescribed one. The plaintiff was entitled to equitable compensation for the breach of trust. Additionally, the third defendant was found liable for receiving and becoming chargeable with trust property and for knowingly assisting in the breach of trust. The court also considered whether the solicitors, as trustees under a Quistclose trust, owed the plaintiff a duty of care and whether that duty was breached, concluding that a breach of duty would have been established if this issue had arisen.
In terms of contract law, the court determined that a contract existed between the plaintiff and the third defendant and that, had the issue arisen, the third defendant would have been liable for either total failure of consideration or frustration of contract. The case also addressed the issue of proportionate liability under the Civil Liability Act 2002 (NSW), concluding that liability for breach of trust, where it was not predicated on failure to take reasonable care, was not an apportionable claim. Additionally, the court held that the cross-defendant was liable for misleading and deceptive conduct under the Fair Trading Act and had to indemnify the plaintiff for losses caused by misrepresentation. Lastly, the court held that if equitable contribution had arisen, it should be pro rata between concurrent wrongdoers.