Raulfs v Fishy Bite Pty Ltd; Fishy Bite Pty Ltd v Raulfs [2012] NSWCA 135
Hearing dates:
27 March 2012
Decision date:
11 May 2012
Before:
Campbell JA at [1] Meagher JA at [113] Barrett JA at [114]
Decision:
(1) Appeal dismissed with costs.
(2) Grant leave to cross-appeal.
(3) Cross-appeal allowed with costs.
(4) Set aside the orders in the court below that Mr Ajaka and Fishy Bite pay the costs of Ms Ablett of the hearing, and in lieu thereof order that Mrs Raulfs pay the costs of Ms Ablett of the hearing.
(5) Grant Mrs Raulfs a certificate under the Suitors' Fund Act 1951 concerning her costs of the application for leave to cross-appeal and the cross-appeal.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:
TRUSTS AND TRUSTEES - express trusts constituted inter vivos - Quistclose trust - partner paid money into capital of partnership - money subsequently misappropriated - whether misappropriated fund subject to Quistclose trust - existence of Quistclose trust depend on the circumstances - moneys paid and held for purposes of partnership - no Quistclose trust
TRUSTS AND TRUSTEES - constructive trusts - Muschinski v Dodds trust - capital contribution made to partnership which failed prematurely - specific terms of partnership agreement providing for division of assets on its termination - no Muschinski v Dodds trust
TRUSTS AND TRUSTEES - tracing - partnership monies misappropriated and applied to discharge joint liability of a director of partner and third party - whether other partner entitled to personal remedy against third party and proprietary remedy against her property - partner's beneficial interest in partnership assets not entitle partner to claim traceable proceeds or personal rights against owner of traceable proceeds
PRACTICE AND PROCEDURE - costs - Sanderson orders - principles to be applied
[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.
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AGLC
Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135
Case
[2012] NSWCA 135
Decision Date
CaseChat Overview and Summary
The case of Raulfs v Fishy Bite Pty Ltd concerned a dispute between partners regarding misappropriated partnership funds. One partner, Mrs Raulfs, had paid money into the capital of the partnership, which was subsequently misappropriated. Mrs Raulfs sought to establish that the misappropriated funds were subject to a Quistclose trust or a Muschinski v Dodds trust, and also pursued tracing remedies against a third party who received some of the funds. The appeal was heard by Campbell, Meagher and Barrett JJA in the Court of Appeal of New South Wales.
The primary legal issues before the court were whether a Quistclose trust had been constituted over the funds paid into the partnership, and whether a Muschinski v Dodds trust arose given the premature failure of the partnership. Additionally, the court had to determine if Mrs Raulfs was entitled to a personal remedy against a third party and a proprietary remedy against her property, in relation to the misappropriated partnership monies that had been applied to discharge a joint liability of a director of the partner and that third party. The court also considered principles relating to Sanderson orders in relation to costs.
The Court of Appeal held that no Quistclose trust had been established, as the moneys were paid and held for the purposes of the partnership, not for a specific purpose with a default destination upon failure. Similarly, the court found that no Muschinski v Dodds trust arose, as the partnership agreement contained specific terms for the division of assets upon termination. Regarding tracing, the court determined that Mrs Raulfs' beneficial interest in partnership assets did not entitle her to claim traceable proceeds or personal rights against the owner of those traceable proceeds. The appeal was dismissed, but leave to cross-appeal was granted and the cross-appeal was allowed, resulting in a variation of the costs orders made by the court below.
Orders
Orders of the court
(1) Appeal dismissed with costs.
(2) Grant leave to cross-appeal.
(3) Cross-appeal allowed with costs.
(4) Set aside the orders in the court below that Mr Ajaka and Fishy Bite pay the costs of Ms Ablett of the hearing, and in lieu thereof order that Mrs Raulfs pay the costs of Ms Ablett of the hearing.
(5) Grant Mrs Raulfs a certificate under the Suitors' Fund Act 1951 concerning her costs of the application for leave to cross-appeal and the cross-appeal.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]