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Puddick v Dyamond Developments Pty Ltd (No 2)

Puddick v Dyamond Developments Pty Ltd (No 2)

Case [2019] NSWSC 738 19 June 2019

Resulting Trust

Costs

Unconscionable Conduct

Property Law

Trusts & Equity

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Puddick v Dyamond Developments Pty Ltd (No 2) [2019] NSWSC 738
Hearing dates: 24 May 2019
Date of orders: 24 May 2019
Decision date: 19 June 2019
Jurisdiction: Equity
Before: Robb J
Decision:
(1) Declare that the transfer by the first defendant to the third defendant of 19,500,000 shares in Pacifico Minerals Ltd was for no consideration.
(2) Order the defendants to pay the plaintiffs’ costs of the proceedings on the ordinary basis.
Catchwords:
JUDGMENTS AND ORDERS — Consequential orders — First defendant transferred shares to third defendant for no consideration — Issue sufficiently litigated to justify a declaration to that effect – Parties did not contest the issue of whether the third defendant holds the shares on a resulting trust for the first defendant – No declaration to that effect
COSTS — Party/Party — Bases of quantification — Ordinary vs indemnity basis — Ordinary basis appropriate because the defendants’ conduct the subject of the proceedings cannot of itself found an entitlement to indemnity costs, and the defence itself was not conducted with the requisite degree of delinquency to justify indemnity costs
Legislation Cited: Civil Procedure Act 2005 (NSW)
Cases Cited: Hypec Electronics Pty Ltd (in liq) v Mead; BL & GY International Co Ltd v Hypec Electronics Pty Ltd (2004) 61 NSWLR 169; [2004] NSWSC 731
Puddick v Dyamond Developments Pty Ltd [2019] NSWSC 431
Category: Costs
Parties: Justin Frank Puddick (First Plaintiff)
John Edward Puddick (Second Plaintiff)
Dyamond Developments Pty Ltd (First Defendant)
George Hatzipapas (Second Defendant)
Gaks Investment Holdings Pty Ltd (Third Defendant)
Representation:
Counsel:
Dr E Peden (Plaintiffs)
Solicitors:
O’Loughlin Westhoff (Plaintiffs)
Tomaras Lawyers (Defendants)

File Number(s): 2018/185865

Judgment

The Court delivered judgment in these proceedings on 18 April 2019: see Puddick v Dyamond Developments Pty Ltd [2019] NSWSC 431.
The plaintiffs substantially succeeded in obtaining the relief that they sought.
The Court made final orders on 24 May 2019 in terms that were agreed between the parties.
The parties were in disagreement as to whether the Court should make two of the orders sought by the plaintiffs. The Court received written submissions and heard oral argument on 24 May 2019.
The first order as to which there was disagreement was in the following terms:

4. A declaration that the Third Defendant holds 19,500,000 shares in Pacifico Minerals Limited (PMY), or if those shares have been disposed of by the Third Defendant, the value of those shares as at 3 May 2019, on trust for Dyamond Developments Pty Ltd.

The effect of this declaration, if made, would be to establish that the third defendant holds the PMY shares on trust for the first defendant. Alternatively, if the third defendant has disposed of the PMY shares, the effect of this declaration would be to establish that the third defendant would hold the value of those shares on trust for the first defendant. I observe in passing that it is difficult to see how…

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 Puddick v Dyamond Developments Pty Ltd (No 2)

Details

AGLC: Puddick v Dyamond Developments Pty Ltd (No 2) [2019] NSWSC 738
Case: [2019] NSWSC 738
Decision Date: 19 June 2019

CaseChat Overview and Summary

In this case, Puddick v Dyamond Developments Pty Ltd (No 2), the plaintiff sought various declarations and orders in relation to the transfer of shares in a company, Dyamond Developments Pty Ltd, from the first defendant to the third defendant. The court was asked to determine whether the third defendant holds the shares on a resulting trust for the first defendant and to make consequential orders regarding the transfer. The case was heard in the Supreme Court of New South Wales.

The central legal issue before the court was whether a declaration should be made that the transfer of shares from the first defendant to the third defendant was for no consideration and that the third defendant holds the shares on a resulting trust for the first defendant. The court had to consider the extent to which the issue of resulting trust had been sufficiently litigated to justify a declaration and whether it was appropriate to make such a declaration in the circumstances. The court also needed to determine the appropriate basis for assessing costs, considering whether the ordinary or indemnity basis was applicable.

The court found that the issue of whether the third defendant holds the shares on a resulting trust for the first defendant was sufficiently litigated to justify a declaration that the transfer of shares was for no consideration. However, since this issue was not contested by the parties, the court declined to make a declaration regarding a resulting trust. The court reasoned that while the defendants' conduct was the subject of the proceedings, it did not in itself establish an entitlement to indemnity costs. The defence was not conducted with the requisite degree of delinquency to justify indemnity costs, and thus, the ordinary basis was deemed appropriate for assessing costs.

The court made a declaration that the transfer of shares from the first defendant to the third defendant was for no consideration. No declaration was made regarding the resulting trust. Costs were assessed on the ordinary basis.

Orders