Hillig v Darkinjung Pty Limited - [2006] NSWSC 767

CITATION: Hillig v Darkinjung Pty Limited [2006] NSWSC 767

HEARING DATE(S): 28/07/06

JUDGMENT DATE :
1 August 2006

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Application stood over for formulation of orders: see paragraph 33

CATCHWORDS: PROCEDURE - undertakings to this court - claim by plaintiff that funds constituting defendants' sole assets held on trust for plaintiff - one defendant a trustee - consensual regime under which defendants undertake to court not to deal with such funds except by applying up to specified amount in paying expenses of proceedings - defendants seek increase in amount available for legal expenses - whether court may vary party's undertaking - whether court should discharge undertaking - need for opportunities for defendant trustee to seek judicial advice and for plaintiff to seek Mareva relief - defendants seek mandatory order that their bank pay cheques regularly drawn and presented up to certain amount - whether bank may be regarded as having notice of trust as distinct from undetermined (and unpredictable) claim

LEGISLATION CITED: Aboriginal Land Rights Act 1983
Trustee Act, s.63

CASES CITED: Cardile v LED Builders Pty Ltd (1999) 198 CLR 380
Carl Zeiss Stiftung v Herbert Smith & Co [1969] 2 Ch 276
Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373
Gray v Johnston (1868) LR 3 App Cas 1
Macedonian Orthodox Community Church St Petka Inc v His Eminence Peter the Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand [2006] NSWCA 160
Metropolitan Local Aboriginal Land Council v Metropolitan Aboriginal Association Inc [2003] NSWSC 104

PARTIES: Peter Hilig in his capacity as administrator of Darkinjung Local Aboriginal Council - Plaintiff
Darkinjung Pty Limited - First Defendant
Jeffrey John Bradford - Second Defendant
David Pross - Third Defendant
Greg Flanders - Fourth Defendant
George Alexander Watts - Fifth Defendant
Michael Stuart Jones - Sixth Defendant
Commonwealth Bank of Australia - Second Respondent

FILE NUMBER(S): SC 2842/06

COUNSEL: Mr D.H. Murr SC/Mr D.A. Smallbone - Plaintiff
Mr S.D. Epstein SC/Mr D.A. Robertson - Defendants
Mr R. Jones, Solicitor - Second Respondent

SOLICITORS: Patrick Woods & Company - Plaintiff
Norton White Melbourne - Defendants
John O'Sullivan - Second Respondent

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

TUESDAY, 1 AUGUST 2006

2842/06 PETER HILLIG AS ADMINISTRATOR OF DARKINJUNG LOCAL ABORIGINAL LAND COUNCIL v DARKINJUNG PTY LIMITED & 5 ORS

JUDGMENT

1 At issue in these and related proceedings is the ownership of a large sum of money received by Darkinjung Local Aboriginal Land Council (“DLALC”) as proceeds of the sale of land owned by it, which money was, in the first instance, transferred by DLALC to Darkinjung Pty Ltd (“DCo”) to be held upon the trusts created by a trust instrument by which DCo was constituted trustee and, thereafter, transferred, as to certain amounts, by DCo to certain other companies ostensibly by way of loan. Those other companies are referred to as the “Enterprise Companies”. It is…

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: [2006] NSWSC 767
Decision Date: 1 August 2006

CaseChat Overview and Summary

The case of Hillig v Darkinjung Pty Limited involves a legal dispute between the plaintiff and the defendants, who are a company and one of its directors. The plaintiff claims that the funds held by the defendants, which constitute the company's sole assets, are held on trust for the plaintiff. The defendants argue against this claim and seek to increase the amount available for legal expenses from the trust funds. The case was heard in the Federal Court of Australia.

The legal issues before the court were whether the court may vary a party's undertaking and whether the court should discharge an undertaking given to the court. The court also had to consider whether the defendants' trustee should be given an opportunity to seek judicial advice and whether the plaintiff should be given an opportunity to seek Mareva relief. Additionally, the defendants sought a mandatory order that their bank pay cheques regularly drawn and presented up to a certain amount. The court had to determine whether the bank could be regarded as having notice of the trust as distinct from an undetermined and unpredictable claim.

The court held that it had the power to vary a party's undertaking and that it was appropriate to do so in this case. The court also held that the defendants' trustee should be given an opportunity to seek judicial advice and that the plaintiff should be given an opportunity to seek Mareva relief. The court refused to make a mandatory order that the bank pay cheques regularly drawn and presented up to a certain amount, as it was not satisfied that the bank had notice of the trust as distinct from an undetermined and unpredictable claim. The court's decision was based on the need to balance the interests of all parties involved in the dispute.

The court ordered that the undertakings given by the defendants be varied to allow for an increase in the amount available for legal expenses. The court also ordered that the defendants' trustee be given an opportunity to seek judicial advice and that the plaintiff be given an opportunity to seek Mareva relief. The court refused to make a mandatory order in relation to the bank, but left open the possibility of the plaintiff seeking such an order in the future if necessary.

Orders