Jalmoon Pty Ltd (in liq) v Bow - [1996] QCA 516

IN THE COURT OF APPEAL	[1996] QCA 516
SUPREME COURT OF QUEENSLAND

Appeal No. 49 of 1995.

Brisbane
[Jalmoon P/L (in Liq.) v. Bow]

BETWEEN:

JALMOON PTY LTD (IN LIQUIDATION)

(Plaintiff) Appellant

AND:

KEITH ROBERT BOW

(Defendant) Respondent

____________________________________________________________
_______

Pincus J.A. Ambrose J. Helman J.

___________________________________________________________________________

Judgment delivered 13 December 1996

Joint Reasons for Judgment of Pincus J.A. and Helman J.; separate concurring Reasons for
Judgment of Ambrose J.
___________________________________________________________________________

1.         APPEAL ALLOWED WITH COSTS.
2.         JUDGMENT ENTERED BELOW SET ASIDE, AND IN LIEU JUDGMENT ENTERED FOR THE PLAINTIFF IN THE SUM OF $108,905 PLUS INTEREST.
3.         ORDER THAT THE PARTIES BE ALLOWED 14 DAYS TO EITHER AGREE AS TO THE AMOUNT OF INTEREST OR TO MAKE FURTHER WRITTEN SUBMISSIONS AS TO THE RATE, PERIOD AND CALCULATION OF INTEREST.

___________________________________________________________________________

CATCHWORDS: Trusts - whether a solicitor holds funds on trust for a client when the funds are received by the solicitor on behalf of a client - money paid into solicitor trust account - Trust Accounts Act 1973, s. 76 - acted honestly and reasonably and ought fairly to be excused - knowledge of insolvency - fiduciary relationship.

Company law - doctrine of unanimous consent - sole director and shareholder.

Counsel:	Mr R Bain Q.C. for the appellant. Mr J McKenna for the respondent.
Solicitors:	Stephens & Tozer for the appellant Allen Allen & Hemsley (formerly Feez Ruthning) for the respondent.
Hearing date:	14 July 1995

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 49 of 1995.

Brisbane

Before Pincus J.A.
Ambrose J.

Helman J.

[Jalmoon P/L (in Liq.) v. Bow]

BETWEEN:

JALMOON PTY LTD (IN LIQUIDATION)

(Plaintiff) Appellant

AND:

KEITH ROBERT BOW

(Defendant) Respondent

JOINT REASONS FOR JUDGMENT OF PINCUS J.A. AND HELMAN J.

Judgment delivered 13 December 1996

This appeal concerns a claim by the appellant company ("the plaintiff"), now in liquidation, against its former solicitor to recover a sum of $111,205 which the plaintiff says was received by the defendant on trust for the plaintiff, but wrongly paid out to one Howard Ross Ivory. One of the questions is the right of the beneficial owner of a one-man company to direct the disposition of its funds.

By the statement of claim, it was alleged that the plaintiff instructed the defendant as its solicitor to sue Walker Civil Engineering (Qld) Pty Ltd ("Walkers") to recover the sum in question, that the claim was compromised and the terms of settlement reduced to writing, that under the settlement $111,205 was to be paid by Walkers to the plaintiff, that the defendant was constituted a trustee for the plaintiff of that sum, but the defendant paid the money to Ivory in breach of the trust. Although it is not explicit in the pleading, the plaintiff’s case was that the sum in question was paid by Walkers to the plaintiff by way of cheques drawn in favour of the defendant. The defence admits that there was an action brought on behalf of…

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: [1996] QCA 516
Decision Date: 13/12/1996

CaseChat Overview and Summary

The case before the Court of Appeal involved a claim by Jalmoon Pty Ltd, a company in liquidation, against its former solicitor, Keith Robert Bow. The company alleged that Bow had wrongly paid out $111,205 to Howard Ross Ivory, which the company claimed was received on trust for it. Bow admitted receiving the money from Walker Civil Engineering (Qld) Pty Ltd pursuant to a deed of settlement, but contended that if he had breached any trust, he had acted honestly and reasonably and should be excused. The primary judge had ruled in Bow's favour, finding that Bow had not held the money on trust for Jalmoon Pty Ltd.

The Court of Appeal allowed the appeal, setting aside the judgment below and entering judgment for Jalmoon Pty Ltd for $108,905 plus interest. The court found that Bow had held the money on trust for Jalmoon Pty Ltd when he received it, or at least held it in a fiduciary capacity. The court held that Bow had no legal justification for paying the money to Ivory, as Ivory did not have the authority to direct the payment. The court also found that Bow's conduct in paying the money to Ivory was not reasonable, as Bow knew Jalmoon Pty Ltd was insolvent and that paying Ivory would facilitate a breach of fiduciary duty by Ivory.

The court further found that Bow had breached his duty as trustee by assisting Ivory in preferring his claim over other creditors of the insolvent company. The Court of Appeal ordered that the parties be allowed 14 days to either agree on the amount of interest or make further written submissions on the rate, period and calculation of interest.

Orders