O'Neill v Hanel - [2007] SADC 58

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
O'NEILL v HANEL & ANOR
[2007] SADC 58
Judgment of His Honour Judge Robertson
17 May 2007
STATUTES - ACTS OF PARLIAMENT - ENFORCEMENT OF STATUTORY RIGHTS AND REMEDIES
Claim against First Defendant under Section 197 of Corporations Act- breach of lease by trust company - company unable to meet liability for breach - not proved Plaintiff failed to mitigate loss - First Defendant a Director of trustee company - Trust Deed granted indemnity from Trust Fund to Trustee - indemnity not available as Trustee held no asssets - held that First Defendant personally liable for trustee company's liability.
Claim against Second Defendant under Section 86 of Law of Property Act - claim that a conveyance of property made with intent to defeat creditors - distribution of profits from Unit Trust to holder of the Units - distribution done by accounting entry - Unit Trust held no assets at the time - accounting entry distribution not "property" under Section.
Corporations Act 2001 s 197; Law of Property Act 1936 ss 7, 86; Bankruptcy Act 1966 s 121; Income Tax Assessment Act s 99A, referred to.
British Westinghouse Electric and Manufacturing Company Limited v Underground Electric Railways of London Limited (1912) AC 673; Barton v Deputy Federal Commissioner of Taxation (1974) 131 CLR 370; DM Cannane v J Cannane Pty Ltd (in liquidation) (1998) 192 CLR 557; PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515; Freeman v Pope (1870) 5 Ch App 538; Hanel v O'Neill [2003] SASC 409; Halsbury's Laws (4th Ed.) Vol 6 Para 1, applied.
Noakes v J Harvy Holmes & Son (1979) 26 ALR 297, considered.

O'NEILL v HANEL & ANOR
[2007] SADC 58
Judge Robertson
Civil
Claim Against First Defendant

The Plaintiff, Mr John O’Neill, is the Trustee for the O’Neill Family Trust No 2. He brings these proceedings in his capacity as Trustee of that Trust.
The first Defendant, Kerry Hanel (“Mr Hanel”) was, at all relevant times, the Director of Daroko Pty Ltd (“Daroko”), which company was at all relevant times the Trustee of the Daroko Unit Trust. When I refer to “Daroko” in these Reasons, I mean Daroko as the Trustee of the Daroko Unit Trust, unless otherwise expressly stated.
In early June 1999, the Plaintiff, as Trustee of the O’Neill Family Trust No 2, purchased a building on Belair Road at Hawthorn, which contained suites of offices, from Illalong Pty Ltd (“Illalong”). At that time, Daroko leased a suite of offices in the building from Illalong under a written five year Lease which commenced on 1 October 1998 (“Lease”). That Lease was assigned by Illalong to the Plaintiff at the time of the purchase of the building.
Daroko continued to occupy the suite of offices leased by it until 30 June 2001, when it vacated those offices. The Plaintiff received rent for the lease of the offices until that time. No rent has been paid since. It…

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 O'Neill v Hanel

Details

AGLC: O'Neill v Hanel [2007] SADC 58
Case: [2007] SADC 58
Decision Date: 17 May 2007

CaseChat Overview and Summary

In the matter of O'Neill v Hanel, the plaintiff, O'Neill, brought a claim against the first defendant, Hanel, for a breach of lease by a trust company, and against the second defendant for a conveyance of property with intent to defeat creditors. The case was heard in a relevant Australian court, with the primary focus on statutory enforcement of rights and remedies under the Corporations Act and the Law of Property Act. The plaintiff argued that the first defendant, as a director of the trustee company, was personally liable for the company's liability due to its inability to meet the breach of lease liability. Furthermore, O'Neill contended that the distribution of profits from a unit trust to the unit holder was a conveyance of property with intent to defraud creditors.

The court had to determine whether the first defendant was personally liable for the trustee company's liability, considering that the company held no assets and could not provide an indemnity as stipulated in the Trust Deed. Additionally, the court examined whether the distribution of profits from the unit trust, made through an accounting entry rather than a transfer of property, constituted a conveyance of property under the Law of Property Act. The central issue was whether the distribution could be considered as "property" for the purposes of the Act, particularly since the unit trust held no assets at the time of the distribution.

The court found that the first defendant was indeed personally liable for the trustee company's liability, as the trust company had no assets to cover the breach of lease liability. Consequently, the indemnity granted by the Trust Deed was not available. Regarding the second defendant, the court ruled that the distribution of profits from the unit trust was not a conveyance of property under the Law of Property Act, as the distribution was made through an accounting entry and not through a transfer of tangible property. Since the unit trust had no assets, the court concluded that the distribution did not constitute "property" for the purposes of the Act.

The court's final orders were that the first defendant was held personally liable for the trustee company's liability, while the claim against the second defendant was dismissed, as the distribution of profits was not considered a conveyance of property under the Law of Property Act.

Orders