Gudmundsen v Carrington - [2012] NSWSC 147

Supreme Court

New South Wales

Medium Neutral Citation: Gudmundsen v Carrington [2012] NSWSC 147
Hearing dates: 2 February 2012 - 3 February 2012
Decision date: 28 February 2012
Jurisdiction: Equity Division
Before: Stevenson J
Decision:
Dr Gudmundsen is entitled to equitable compensation from Ms Carrington in relation to the funds she transferred from the Business Account to her accounts between 2 July 2008 and 8 August 2011 with exceptions.

Catchwords: EQUITY - equitable compensation - misappropriation of funds - employer and employee - unauthorised payments - whether misappropriated funds used by employee for benefit of employer
Legislation Cited: Evidence Act 1995
Cases Cited: Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd and Others (1992) 67 ALJR 170,
Sutherland Shire Council v Dietz [2004] NSWCA 53,
De Gioia v Darling Island Stevedoring & Lighterage Co Ltd [1941] 42 SR (NSW),
Breen v Williams (1995) 186 CLR 71
Texts Cited: Young, Croft, Smith On Equity (Lawbook Co 2009)
Category: Principal judgment
Parties: Dr Ken Joseph Gudmundsen T/A Lismore Skin Clinic (Plaintiff)
Nina Carrington (Defendant - no appearance)
Representation: Mr Julian O'Sullivan (Plaintiff)
Streeterlaw (Plaintiff)

File Number(s): 2011/382554

Judgment

The plaintiff, Dr Ken Gudmundsen, is a dermatologist and operates a specialist medical practice under the name "Lismore Skin Clinic" ("the Clinic") at 186 Molesworth Street, Lismore.

In early 2006, Dr Gudmundsen engaged the defendant, Ms Nina Carrington, as his bookkeeper at the Clinic.

In January 2008, Dr Gudmundsen appointed Ms Carrington as his practice manager on a full time 5 day a week basis.

In the proceedings, Dr Gudmundsen claims that Ms Carrington has misappropriated from him some $490,000.00 and seeks equitable compensation in that amount.

The proceedings

The proceedings were commenced on 30 November 2011. On that day White J made an asset freezing order against Ms Carrington and adjourned the proceedings until 2 December 2011.

On 2 December 2011, White J extended the freezing order until 7 December 2011 and adjourned the proceedings to that date. White J ordered that the summons, and Mr Gudmundsen's affidavit of 30 November 2011 be taken to have been served on Ms Carrington on 1 December 2011.

On 7 December 2011, Bergin CJ in Eq fixed the matter for hearing on 2 February 2012 and extended the freezing order until 5pm that day.

Ms Carrington has, at no time, appeared in the proceedings. She did not appear when called at the commencement of the hearing before me on 2 February 2012.

Furthermore, Ms Carrington has not been personally served with any documents in the proceedings. However, the Summons and Dr Gudmundsen's affidavit (and its exhibits) were left at a property she owns at Highland Park in Queensland, and she has received by email, and acknowledged, the Amended Summons and Dr Gudmundsen's affidavit of 11 January 2012 (and its exhibits). She has also received from Dr Gudmundsen's solicitors SMS notifications to her mobile telephone of the progress of the litigation, the making and extension of the freezing order, and the fixing of 2…

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: [2012] NSWSC 147
Decision Date: 28 February 2012

CaseChat Overview and Summary

The case of Gudmundsen v Carrington was heard in the Supreme Court of New South Wales. Gudmundsen, the employer, sued Carrington, the employee, for equitable compensation following the misappropriation of funds by Carrington. The dispute centred on whether the misappropriated funds were used for the benefit of the employer, which would affect the quantum of compensation owed.

The primary legal issue was whether the misappropriated funds were used for the employer's benefit, which would reduce the amount of compensation owed. The court considered whether the funds were used for the employer's benefit, as this would impact the equitable compensation owed by the employee. This involved examining the circumstances under which the funds were misappropriated and the extent to which they were used for the employer's benefit.

The court found that the misappropriated funds were not used for the employer's benefit, and therefore, the full amount of the misappropriated funds was owed as equitable compensation. The court considered the evidence presented and concluded that the employee had not demonstrated that the misappropriated funds were used for the employer's benefit. The court emphasised the importance of the employer proving that the misappropriated funds were used for their benefit to reduce the amount of compensation owed.

The court ordered Carrington to pay equitable compensation to Gudmundsen in the amount of the misappropriated funds. The court found that the employee had failed to demonstrate that the misappropriated funds were used for the employer's benefit, and therefore, the full amount of the misappropriated funds was owed as equitable compensation.

Orders