Moriah War Memorial College Association v Augustine Robert Nosti

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Supreme Court


New South Wales

Medium Neutral Citation: Moriah War Memorial College Association v Augustine Robert Nosti [2020] NSWSC 942
Hearing dates: 23, 24, 29 June 2020
Decision date: 23 July 2020
Jurisdiction:Equity - Commercial List
Before: Hammerschlag J
Decision:

(1) Declaration that the first defendant breached his fiduciary duties to the plaintiff and judgment for the plaintiff against the first defendant for $7,337,282.

(2) Judgment for the plaintiff against the second defendant for $77,905.

Catchwords:

EQUITY – Fiduciary duties – First defendant was the financial controller of the plaintiff school and dishonestly transferred money from the plaintiff’s bank account and diverted the plaintiff’s tax refunds into various bank accounts in his and the second defendant’s name – Barnes v Addy first limb claim against the second defendant for knowing receipt – Whether the second defendant was a recipient of trust property – Whether the second defendant had sufficient knowledge of the trust and its breach to render her personally liable – Alternative restitutionary claim against the second defendant for the benefit of the misappropriations received by her as a volunteer and retained after notice of the plaintiff’s claim – HELD – First defendant breached his fiduciary duties to the plaintiff and is liable to the plaintiff for damages in the amount he stole – HELD – Not established that the second defendant had sufficient knowledge for the purposes of the Barnes v Addy claim – Second defendant liable for restitutionary claim but not for knowing receipt

Cases Cited:

Artcraft Pty Limited v Dickson [2014] SASC 108

Baden v Société Générale pour Favoriser le Dévelopment du Commerce et de l'Industrie en France [1993] 1 WLR 509

Barnes v Addy (1874) LR 9 Ch App 244

Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1

Black v S Freedman and Company (1910) 12 CLR 105

Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373

Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89

Fistar v Riverwood Legion and Community Club Ltd [2016] NSWCA 81

Grimaldi v Chameleon Mining NL & Another (No 2) (2012) 200 FCR 296

Hancock Family Memorial Foundation Ltd v Porteous (1999) 151 FLR 191

Heperu Pty Ltd v Belle (2009) 76 NSWLR 230

Koorootang Nominees Pty Ltd v Australian and New Zealand Banking Group Ltd [1998] 3 VR 16

National Commercial Banking Corporation v Batty (1986) 160 CLR 251

Silversea Cruises Australia Pty Ltd v Abellanoza [2019] NSWCA 306

Spangaro v Corporate Investment Australian Fund Management Ltd (2003) 54 ATR 241

Sze Tu v Lowe (2014) 89 NSWLR 317

Category:Principal judgment
Parties: Moriah War Memorial College Association - Plaintiff
Augustine Robert Nosti - First Defendant
Melynda Maree Nosti - Second Defendant
Christine Anne Padovan - Third Defendant
Representation:

Counsel:
D Sulan with K Sutton - Plaintiff
Submitting appearance - First Defendant
K J Young - Second Defendant

Solicitors:
Arnold Bloch Leibler - Plaintiff
Dormer Stanhope - Second defendant
File Number(s): 2019/346423

JUDGMENT

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Details
Case
[2020] NSWSC 942
Decision Date

CaseChat Overview and Summary

In the case of Moriah War Memorial College Association v Augustine Robert Nosti, the plaintiff, a school, alleged that the first defendant, who was their financial controller, had breached his fiduciary duties by dishonestly transferring money from the school’s bank account and diverting the school’s tax refunds into various bank accounts in his and the second defendant’s name. The plaintiff sought to hold the second defendant liable under the first limb of Barnes v Addy for knowingly receiving trust property and also brought an alternative restitutionary claim for the benefit of the misappropriations received by the second defendant as a volunteer and retained after notice of the plaintiff’s claim.

The legal issues the court was required to decide were whether the second defendant was a recipient of trust property, whether she had sufficient knowledge of the trust and its breach to render her personally liable under the first limb of Barnes v Addy, and whether she was liable for the alternative restitutionary claim. The court had to assess whether the second defendant was a volunteer who had received the misappropriations with knowledge of the plaintiff’s claim and whether she had retained the benefit of the misappropriations after being notified of the plaintiff’s claim.

The court found that the first defendant had breached his fiduciary duties to the plaintiff and was liable to the plaintiff for damages in the amount he stole. The court determined that it had not been established that the second defendant had sufficient knowledge for the purposes of the Barnes v Addy claim. However, the court held that the second defendant was liable for the alternative restitutionary claim. The court found that the second defendant had received the misappropriations as a volunteer and had retained the benefit of the misappropriations after being notified of the plaintiff’s claim. The court ordered the second defendant to pay restitution to the plaintiff for the amount of the misappropriations received and retained.

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