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Jarrett v Perpetual Trustee Co Ltd

Jarrett v Perpetual Trustee Co Ltd

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Case Copied 14 November 2007 56 min read

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Reported Decision:
64 ACSR 552

New South Wales

Supreme Court

CITATION: JARRETT & ORS v PERPETUAL TRUSTEE CO LIMITED [2007] NSWSC 1231

HEARING DATE(S): 12 to 16 February 2007; 24 May 2007

JUDGMENT DATE :
14 November 2007

JURISDICTION: Equity

JUDGMENT OF: Hall J at 1

DECISION: (1) On the findings made, I conclude that: (a) The disputed dividends claimed by the plaintiffs in the Second Further Amended Statement of Claim were validly determined and paid as dividends with the informed consent of the directors of RH & M, Elwood and UIGI. Those companies subsequently affirmed the dividends and ratified their payment by crediting them in the relevant accounts. The members of the respective companies, RAH No 1 and RAH No 2, also ratified the dividends and their payment. (b) Payment of the disputed dividends, the subject of the plaintiffs’ claim under the Second Amended Statement of Claim, was not made under a mistake as therein alleged. (c) On the above conclusions, the amounts paid by way of dividend to Mrs Jarrett during her lifetime are not recoverable by the plaintiffs by way of action at law for money had and received or in equity. (d) The disputed dividends having, on the findings made, being duly declared or determined and paid, there was no power in the plaintiffs companies to revoke or rescind them. (e) Accordingly, there is to be judgment entered in favour of the defendant in relation to such dividends. (2) On the findings made in respect of the cross-claim, I have concluded: (a) The evidence does not establish that a meeting of directors of RH & M took place on or after 10 December 2001 at which an interim dividend in the amount of $6,600,000 was declared or determined. (b) The evidence does not establish that a meeting of directors of Elwood occurred on or after 10 December 2001 at which an interim dividend in the amount of $500,000 (or for $496,096.31) was declared or determined. (c) That the monies repaid by Mr Milsom to Elwood on 12 November 2002 and to RH & M on 19 November 2002 were not repaid by him upon the basis of a mistaken assumption. (d) The evidence does not establish that the reimbursement of monies referred to in the preceding paragraph arose as a consequence of the “RH & M representations” and/or the “Elwood representations” relied upon by the cross-claimant in its Amended Statement of Cross-Claim. On that basis, no contraventions of s.52 of the Trade Practices Act or of s.42 of the Fair Trading Act arose as alleged in the cross-claim. (e) It follows from the above findings that the payments made by re-imbursement to RH & M and Elwood from the estate bank account with Westpac Banking Corporation were not payments of monies held on trust for the benefit of the estate as claimed by the cross-claimant on the cross-claim. (3) The parties are requested to lodge short minutes of order.

CATCHWORDS: Whether disputed dividends purportedly made…

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: [2007] NSWSC 1231
Decision Date: 14 November 2007

CaseChat Overview and Summary

The case of Jarrett v Perpetual Trustee Co Ltd involved the deceased, Mr. Jarrett, who was a director of several companies during their lifetime, and Perpetual Trustee Co Ltd, which acted as the trustee for various trusts related to the companies. The dispute centred on whether dividends that were allegedly declared to trustee companies during Mr. Jarrett's lifetime were validly declared. Specifically, the question arose as to whether the meetings of directors and members that purportedly approved these dividends were indeed held and whether the existing minutes of meetings established that such resolutions were passed. The case also examined whether the dividends conformed with the constitutions of the companies and what constituted the "payment" of dividends, particularly whether crediting dividends in loan accounts constituted such payment.

The court was tasked with determining the validity of the dividend declarations and their subsequent payments. It had to assess whether the minutes of the meetings were sufficient evidence of the meetings' occurrence and the passing of resolutions. Furthermore, the court needed to interpret the legal definitions of "meeting" and "payment" of dividends, and whether the crediting of dividends in loan accounts amounted to payment. The court also considered whether the crediting of loan accounts created a liability on the part of the companies and whether these credits effectively ratified or confirmed the loans granted by the deceased director to the companies.

The court concluded that the dividend declarations were valid and that the minutes of meetings were sufficient to establish that the resolutions were passed. The court held that the crediting of dividends in loan accounts did constitute payment, despite the lack of strict adherence to the companies' constitutions. The court found that the crediting of loan accounts gave rise to a liability on the part of the companies and that the cross-claims between the companies were settled by mutual agreement. The court applied the doctrine of unanimous consent to find that the dividends had been determined prior to the director's death for the relevant year, based on circumstantial evidence and subsequent conduct of the directors. The court ultimately ruled in favour of the trustee, confirming the validity of the dividend payments.

Orders