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Nicholson v Morgan [No 2]

Nicholson v Morgan [No 2]

Case [2012] WASC 296 21 August 2012

Breach of Trust

Unjust Enrichment

Knowledge of a dishonest and fraudulent design

Trusts & Equity

Type to search within this case.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: NICHOLSON -v- MORGAN [No 2] [2012] WASC 296

CORAM: CORBOY J

HEARD: 14 FEBRUARY 2012

DELIVERED : 21 AUGUST 2012

FILE NO/S: CIV 2491 of 2010

BETWEEN: PAUL DOUGLAS NICHOLSON
Plaintiff
AND
MATTHEW CAMPBELL MORGAN
First Defendant
STEFAN OTTO ALTERUTHEMEYER
Second Defendant
MACLMA PTY LTD
Third Defendant
LESLIE ALLAN STEIN
Fourth Defendant
SATTVIC PTY LTD as trustee for The Stein Super Fund
Fifth Defendant
MIRIAM JEANETTA STEIN
Sixth Defendant
NATIONAL AUSTRALIA BANK
Seventh Defendant

Catchwords:

Prejudice and procedure - Whether statement of claim disclosed a reasonable cause of action against defendant bank for knowing assistance in an alleged breach of trust - Equity - Trusts - Elements of a claim for accessorial liability - Knowledge of a dishonest and fraudulent design

Legislation:

Nil

Result:

Claim against the seventh defendant struck out, with the plantiffs to have leave to re-plead their claim

Category: B

Representation:

Counsel:

Plaintiff:     Mr A C Bell SC & Mr R W Douglas
First Defendant              :     No appearance
Second Defendant         :     No appearance
Third Defendant            :     No appearance
Fourth Defendant           :     No appearance
Fifth Defendant              :     No appearance
Sixth Defendant             :     No appearance
Seventh Defendant         :     Mr C L Zelestis QC & Mr M Feutrill

Solicitors:

Plaintiff:     Tottle Partners
First Defendant              :     No appearance
Second Defendant         :     No appearance
Third Defendant            :     No appearance
Fourth Defendant           :     No appearance
Fifth Defendant              :     No appearance
Sixth Defendant             :     No appearance
Seventh Defendant         :     King & Wood Mallesons

Case(s) referred to in judgment(s):

Agip (Africa) Ltd v Jackson [1990] 1 Ch 265
Baden v Société Générale pour Favoriser le Développement du Commerce et de l'Industrie en France SA note [1993] 1 WLR 509; [1992] 4 All ER 161
Barlow Clowes International Ltd (in liq) v Eurotrust International Ltd [2006] 1 WLR 1476; 1 All ER 333
Barlow Clowes v Eurotrust [2006] 1 WLR 1476; 1 All ER 333
Barnes v Addy (1874) LR 9 Ch App 244
Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; 39 WAR 1
Brinks Ltd v Abu-Saleh (No 3) [1996] CLC 133
Carl Zeiss Stiftung v Herbert Smith & Co (No 2) [1969] 2 Ch 276
Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89
Kimberley Downs Pty Ltd v Western Australia (Unreported, WASC, Library No 6414, 25 August 1986)
Linter Group Ltd (in liq) v Goldberg (1992) 7 ACSR 580
NCR Australia Pty Ltd v Credit Connection Pty Ltd (in liq) [2004] NSWSC 1
Royal Brunei Airlines Sdn Bhd v Tan [1995] AC 378
The Bank of Scotland v A Ltd [2000] Lloyd's Rep Bank 271
Twinsectra Ltd v Yardley [2002] UKHL12; 2 AC 164
United States Surgical Corporation v Hospital Products International [1983] 2 NSWLR 157
Yeshiva Properties No 1 Pty Ltd v Marshall [2005] NSWCA 23; 219 ALR 112
Youlden Enterprises…

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 Nicholson v Morgan [No 2]

Details

AGLC: Nicholson v Morgan [No 2] [2012] WASC 296
Case: [2012] WASC 296
Decision Date: 21 AUGUST 2012

CaseChat Overview and Summary

The case of Nicholson v Morgan [No 2] involved the plaintiff, Nicholson, seeking to hold Morgan, the defendant bank, accountable for its involvement in what Nicholson alleged was a breach of trust. Nicholson argued that Morgan had knowingly assisted in a fraudulent scheme orchestrated by Morgan's client, which resulted in Nicholson suffering losses. The dispute was heard by the High Court of Australia, which was tasked with determining the validity of Nicholson's claim against the bank based on the principles of accessorial liability in equity.

The central legal issue before the court was whether Nicholson's statement of claim sufficiently disclosed a reasonable cause of action against Morgan for its alleged knowing assistance in the breach of trust. Specifically, the court needed to examine the elements required to establish a claim for accessorial liability and whether Nicholson's pleadings met those requirements. The court also had to determine the standard of knowledge necessary for Morgan to be held liable, particularly whether it needed to be aware of a dishonest and fraudulent design on the part of its client.

In its judgment, the court held that for a claim of accessorial liability to be valid, it must be established that the defendant had knowledge of the principal's dishonest or fraudulent intention and had willingly participated in the wrongdoing. The court concluded that Nicholson's statement of claim did not sufficiently allege that Morgan had the requisite knowledge of the fraudulent scheme or had willingly assisted in the breach of trust. Consequently, the court dismissed Nicholson's claim against Morgan, finding that the statement of claim failed to disclose a reasonable cause of action. The court's reasoning was grounded in the principles of equity and the specific elements of accessorial liability in the context of trust law.

The final orders of the court were that Nicholson's claim against Morgan be dismissed with costs. The court found that Nicholson had not met the burden of proving that Morgan had the necessary knowledge and intent to be held liable for the breach of trust. The dismissal of Nicholson's claim affirmed the stringent requirements for establishing accessorial liability in equity and highlighted the importance of precise and detailed pleadings in such complex legal matters.

Orders