Kekatos v Stafford

The dispute in *Kekatos v Stafford* concerned the beneficial ownership of interests in a charge over the assets of a jointly owned company, which in turn owned land. The respondents had transferred their interests in the charge to the appellant. The central question was whether the appellant acquired absolute title to these interests or held them on trust for the respondents. The matter was heard on appeal in the Court of Appeal of New South Wales.

The Court of Appeal was required to determine whether the appellant held the transferred interests in the charge as an absolute owner or as a trustee for the respondents. This involved considering whether an express trust had been created, given the absence of a trust document and the face of the transfer. The court also had to assess whether the doctrine of equitable estoppel applied, preventing the appellant from asserting absolute ownership, and how the proceeds derived from the assignment, specifically royalties from the land's use and settlement funds from its sale, should be treated.

The Court of Appeal reasoned that while no express trust was evident on the face of the transfer, the circumstances surrounding the assignment, particularly the parties' original intention, supported the existence of a trust. The court applied the principles of equitable estoppel, finding that the appellant was estopped from denying that they held the interests as a trustee. The failure of the underlying business agreement did not negate the operation of the deed of assignment. The court concluded that the appellant held the products of the assignment, namely the royalties and settlement proceeds, on trust for the parties in proportion to their original intentions.

The appeal was dismissed with costs. Any application to vary the order for costs was required to be made by notice of motion filed and served within seven days.