Nathan v Williams

Case [2020] QCA 138


SUPREME COURT OF QUEENSLAND

CITATION:

Nathan v Williams & Anor [2020] QCA 138

PARTIES:

JULIAN PAUL ELIZER NATHAN
(appellant)
v
DANIEL SATKUNAM BALARAJAN WILLIAMS
(first respondent)
NATHAN LAWYERS BRISBANE PTY LTD (IN LIQUIDATION)
ACN 154 104 426
(second respondent)

FILE NO/S:

Appeal No 7325 of 2019
SC No 12663 of 2018

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane – [2019] QSC 127; [2019] QSC 150 (Boddice J)

DELIVERED ON:

23 June 2020

DELIVERED AT:

Brisbane

HEARING DATE:

22 October 2019

JUDGES:

Sofronoff P and Philippides JA and Brown J

ORDERS:

1.   Order 1(b) of the Orders made on 14 June 2019 is set aside;

2.   The appeal is otherwise dismissed; and

3.   The parties are to provide submissions of no more than three pages as to costs within 14 days of these reasons being published.

CATCHWORDS:

EQUITY – TRUSTS AND TRUSTEES – IMPLIED TRUSTS – CONSTRUCTIVE TRUSTS – COMMON INTENTION – where the second respondent was an incorporated legal practice – where the appellant and first respondent had agreed to operate separate practices through the second respondent – where the appellant and first respondent each held equal shareholding in the second respondent – where the second respondent was ordered to be wound up – where the first respondent contended the second respondent held each practice for the appellant and first respondent under a common intention constructive trust – where the trial judge found that the second respondent held the separate practices on constructive trust for the appellant and first respondent – where the appellant contends that the second respondent did not hold each practice on trust for the appellant and first respondent – where the appellant contends that the corporate structure governed the distribution and the appellant and first respondent are entitled to 50 per cent of the surplus assets of the second respondent – where the trial judge found the appellant was not a credible witness – whether objective facts not considered – whether the second respondent held the separate practices on trust for the appellant and first respondent

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – JUDGMENTS AND ORDERS – AMENDING, VARYING AND SETTING ASIDE JUDGMENTS AND ORDERS – LIBERTY TO APPLY – GENERAL PRINCIPLES – where the learned trial judge found that a debt of a third party was not a debt of the second respondent – where the third party creditor was not a party to the proceeding – where the appellant contended that orders should not have been made in the absence of an entity whose rights were directly affected – whether the learned trial judge erred in ordering that the debt should not be admitted by the liquidators of the second respondent

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – JUDGMENTS AND ORDERS – AMENDING, VARYING AND SETTING ASIDE JUDGMENTS AND ORDERS – LIBERTY TO APPLY – GENERAL PRINCIPLES – where orders excluded prospective and contingent creditors of the first respondent and…

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AGLC
Nathan v Williams [2020] QCA 138
Case
[2020] QCA 138
Decision Date

CaseChat Overview and Summary

In the case of Nathan v Williams, the appellant, Nathan, appealed against the decision of the trial judge which found that the second respondent, an incorporated legal practice, held separate practices for Nathan and the first respondent, Williams, under a common intention constructive trust. Nathan and Williams had equal shareholding in the second respondent and had agreed to operate separate practices through it. Following the winding up of the second respondent, Williams contended that it held the separate practices for Nathan and himself under a common intention constructive trust. The trial judge found in favour of Williams and ordered the second respondent to hold the practices on constructive trust for Nathan and Williams. Nathan contested this finding, arguing that the corporate structure governed the distribution and that he and Williams were entitled to 50 per cent of the surplus assets of the second respondent. Nathan also challenged the trial judge’s finding that he was not a credible witness and that objective facts were not considered.

The court was required to decide whether the second respondent held the separate practices on trust for Nathan and Williams and whether the trial judge erred in ordering that a debt of a third party should not be admitted by the liquidators of the second respondent. The court also needed to determine whether the orders were inconsistent with the common intention constructive trust and whether they were discriminatory against Nathan.

The court found that Nathan had failed to substantiate his appeal on all grounds, save in respect of ground 8 relating to the BOQ Debt and order 1(b) of the orders of the Court below made on 14 June 2019. The court held that the reference to “actual drawings” in the trial judge’s decision may have been referring to profit and was therefore in error, but it had no consequence for the overall findings. The court found that the orders were not inconsistent with the common intention constructive trust and that there was no evidence of discrimination against Nathan. The court concluded that the orders should be set aside in part and the appeal should otherwise be dismissed. The parties were to provide submissions of no more than three pages as to costs within 14 days of these reasons being published.

Orders

Orders of the court

1. Order 1(b) of the Orders made on 14 June 2019 is set aside;

2. The appeal is otherwise dismissed; and

3. The parties are to provide submissions of no more than three pages as to costs within 14 days of these reasons being published.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

It is submitted by Nathan that “actual drawings” must refer to profit. There was no evidence that any profits had been drawn and a dividend paid to the shareholders. However, there was evidence that each partner determined the wages that they each would draw from their respective practice accounts without consulting the other. While that reference by his Honour may have been referring to profit and was therefore in error, it had no consequence for his Honour’s overall findings such that it requires the decision be set aside.Conclusion Nathan has failed to substantiate its appeal on all grounds, save in respect of ground 8 relating to the BOQ Debt and order 1(b) of the orders of the Court below made on 14 June 2019. The parties should be permitted to make submissions as to costs. In my view the orders should be:1.Order 1(b) of the Orders made on 14 June 2019 is set aside;2.The appeal should be otherwise dismissed; and3.The parties should provide submissions of no more than three pages as to costs within 14 days of these reasons being published.

Ratio Decidendi

Legal Principle Established

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