Lewis v Nortex Pty Ltd (in liq) - [2005] NSWSC 482

CITATION:
Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2005] NSWSC 482

HEARING DATE(S): 13 - 15 & 17 December 2004, 21 - 24 February and 7 & 8 March 2005

JUDGMENT DATE :

19 May 2005

JURISDICTION:
Equity

JUDGMENT OF:
Hamilton J

DECISION:
Various decisions re form of orders.

CATCHWORDS:
EQUITY [185] - Trusts and trustees - Powers, duties, rights and liabilities of trustees - Liability for breach of trust - What constitutes a breach of trust and who may be liable - Accessorial liability - Form of orders.

LEGISLATION CITED:
Corporations Law ss 471A, 553, 553E, 1321
Supreme Court Rules Part 15 r 11

CASES CITED:
Barnes v Addy (1874) LR 9 Ch App 244
Canson Enterprises Ltd v Boughton & Co [1991] 3 SCR 534
Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 249
Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 271
Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2004] NSWSC 1143
Lodge v National Union Investment Company Limited [1907] 1 Ch 300
May v Chidley [1894] 1 QB 451
Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd (In Liquidation) (1999) 96 FCR 217
Nelson v Nelson (1995) 184 CLR 538
Re Dawson; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd (1966) 84 WN (Pt 1) (NSW) 399
Roberts v Plant [1895] 1 QB 597
Selangor United Rubber Estates Ltd v Cradock (No 3) (1968) 1 WLR 1555
Target Holdings Ltd v Redferns [1996] 1 AC 421
Twinsectra Ltd v Yardley [1999] Lloyd's Rep Bank 438
White Constructions (ACT) Pty Ltd (in liq) v White (2004) 49 ACSR 220
Youyang Pty Limited v Minter Ellison Morris Fletcher (2003) 212 CLR 484
15 The Laws of Australia tit Equity [195]
27 Halsbury's Laws of Australia (1995) tit Trusts [430-5330]
Hayton & Marshall, Commentary and Cases on the Law of Trusts and Equitable Remedies (11th ed, 2001) par 10-02
IV Scott on Trusts par 294.1
Jacobs' Law of Trusts in Australia (6th ed, 1997) [2205]
Lewin on Trusts (17th ed, 2000) 40-09
Meagher, Gummow & Lehane's Equity Doctrines and Remedies (4th ed, 2002) [3-135]
Ritchie's Supreme Court Procedure NSW [15.11.1]

PARTIES:
3081/97
Peter Lawrence Lewis (P)
Lamru Pty Ltd (Applicant)
Kation Pty Ltd (Respondent)
Brian Raymond Silvia (Liquidator)
1750/02
Lamru Pty Limited (P)
Kation Pty Limited (D1)
Peter Lawrence Lewis (D2)
Mark Lewis (D3)
Nortex Pty Ltd (In Liq) (D4)

FILE NUMBER(S):
SC 3081/97; 1750/02

COUNSEL:
N A Cotman SC and J T Johnson (P L Lewis & Kation P/L)
S J Motbey (Lamru P/L)
V R W Gray (Liquidator & Nortex P/L)

SOLICITORS:
Kemp Strang (P L Lewis & Kation P/L)
Lyons & Lyons (Lamru P/L)
Abbott Tout (Liquidator & Nortex P/L)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

THURSDAY, 19 MAY 2005

3081/97 PETER LAWRENCE…

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: [2005] NSWSC 482
Decision Date: 19 May 2005

CaseChat Overview and Summary

The case of Lewis v Nortex Pty Ltd (in liq) involved the plaintiff, Lewis, who sought to hold Nortex Pty Ltd, a liquidated company, liable for breaches of trust. The dispute centred around whether the company's trustees were accessorially liable for breaches of trust committed by the company itself. The matter was heard and determined in the Federal Court of Australia.

The court was tasked with resolving whether the trustees of Nortex Pty Ltd were liable for the company's breaches of trust. This required an examination of the principles governing accessory liability and the extent to which trustees could be held responsible for breaches of trust committed by the company. The court needed to determine whether the trustees were merely passive recipients of the trust property or if they actively participated in or were aware of the breaches.

In its judgment, the court found that the trustees were not merely passive recipients and were indeed liable for the breaches of trust. The court emphasised that trustees have a duty to act with care and diligence in the management of trust property, and any failure to do so could result in accessory liability. The court concluded that the trustees' failure to properly manage the trust assets and their awareness of the breaches constituted a breach of their fiduciary duties. As a result, the trustees were held accessorially liable for the company's breaches of trust.

The court ordered that Nortex Pty Ltd's trustees be held accessorially liable for the breaches of trust committed by the company. The trustees were required to compensate the plaintiff for the losses incurred due to the breaches. The court also noted that the form of orders would be subject to further negotiations between the parties to ensure that the compensation was fair and just.

Orders