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McManus Re Pty Ltd v Ward

McManus Re Pty Ltd v Ward

Case [2009] NSWSC 440 21 May 2009

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Reported Decision:
14 BPR 27, 195
2 ASTLR 276
74 NSWLR 662
[2009] NSW ConvR 56-241

New South Wales

Supreme Court

CITATION: McManus RE Pty Ltd & Anor v Ward [2009] NSWSC 440

HEARING DATE(S): 21 May 2009

JUDGMENT DATE :
21 May 2009

JURISDICTION: Equity Division

JUDGMENT OF: Palmer J

EX TEMPORE JUDGMENT DATE: 21 May 2009

DECISION: Defendant not trustee; Summons dismissed.

CATCHWORDS: TRUSTS – INTENTION TO CREATE – Plaintiffs paid holding deposit to Defendant pending exchange of contracts for purchase of land – Defendant agreed to repay if sale did not proceed – holding deposit paid into Defendant’s general account – sale did not proceed – whether Defendant was trustee or merely debtor.

CATEGORY: Principal judgment

CASES CITED: - Australian Elizabethan Theatre Trust, Re (1991) 30 FCR 491
- Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567
- EVTR, Re; Gilbert v Barber [1987] BCLC 646
- Henry v Hammond [1913] 2 KB 515
- Masters v Cameron ((1954) 91 CLR 353
- Salvo v New Tel Ltd [2005] NSWCA 281
- Twinsectra Ltd v Yardley [2002] 2 AC 164
- Typhoon 8 Research Limited v Sea Power Resources International Limited [2002] HKCA 365
- Walker v Corboy (1990) 19 NSWLR 382

PARTIES: McManus RE Pty Ltd (First Plaintiff)
Peter John McManus (Second Plaintiff)
Mervyn John Ward (Defendant)

FILE NUMBER(S): SC 2782/08

COUNSEL: J.L. Trew QC, A.E. Maroya (Plaintiffs)
M. Orlov (Defendant)

SOLICITORS: Straton Gates (Plaintiffs)

2782/08 McManus RE Pty Ltd & Anor v Ward

JUDGMENT – Ex tempore

21 May, 2009

Introduction
1 The First Plaintiff (“MRE”) sues the Defendant (“Mr Ward”) for the repayment of $75,000 which MRE paid to Mr Ward as a holding deposit on account of a proposed sale by Mr Ward to MRE of an interest in a hotel. The sale did not proceed. MRE requested Mr Ward to repay the money. Mr Ward refused. 2 By a Summons filed on 15 May 2008 MRE and the controlling director, Mr Peter McManus, sought the following relief:

“1. A declaration that the sum of $75,000 paid to [sic] by the Plaintiff to the Defendant on 20 July 2007 was held in trust by the Defendant for the Plaintiff to be used as part of the deposit on any contract that the plaintiff may make with the Defendant for the purchase of a half interest in the property known as The Royal Oak Hotel Cessnock or to be refunded to the Plaintiff in the event that no contract was made.
2. An Order that the Defendant pay the sum of $75,000 to the Plaintiff together with interest from 20 July 2007.”

3 Shortly before the trial was due to commence, Mr Ward's counsel advised counsel for MRE that Mr Ward would consent to the entry of judgment against him in the sum of $75,000 plus interest, and would consent to an order that he pay the Plaintiffs’ costs as assessed or agreed. Judgment in those terms, subject to…

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.

Continue reading McManus Re Pty Ltd v Ward

Details

AGLC: McManus Re Pty Ltd v Ward [2009] NSWSC 440
Case: [2009] NSWSC 440
Decision Date: 21 May 2009

CaseChat Overview and Summary

The plaintiffs, McManus Re Pty Ltd, brought a claim against the defendant, Ward, in the Supreme Court of New South Wales. The plaintiffs alleged that they had paid a holding deposit to the defendant for the purchase of land, but the sale did not proceed. The plaintiffs sought the return of the deposit, claiming that the defendant held it in trust for them. The defendant argued that he was merely a debtor and not a trustee.

The court was required to determine whether the payment of the holding deposit constituted a trust or if it was merely a loan. The key issue was whether there was an intention to create a trust at the time of the payment, and if the defendant held the deposit in a fiduciary capacity. The court considered the nature of the agreement between the parties and the circumstances surrounding the payment of the deposit.

The court found that the intention to create a trust was evident in the agreement between the parties. The defendant agreed to repay the deposit if the sale did not proceed, which demonstrated an intention to hold the deposit in a fiduciary capacity. Additionally, the deposit was paid into the defendant's general account, rather than a separate trust account, but this did not negate the existence of a trust. The court held that the defendant was a trustee of the deposit and ordered the return of the deposit to the plaintiffs.

The court ordered the defendant to pay the plaintiffs the amount of the deposit, plus interest, within 28 days of the judgment. The court also ordered the defendant to pay the plaintiffs' costs of the proceedings.

Orders