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Seoud v Fortythird Garland Pty Ltd

Seoud v Fortythird Garland Pty Ltd

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Case Copied 26 March 2019 42 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY & PROBATE LIST

S CI 2017 01072

CHRISTIAN BRIAN SEOUD, a minor (by RUSANNE JOURDAN, his litigation guardian)	Plaintiff
-and-
FORTYTHIRD GARLAND PTY LTD (ACN 064 743 291) as Trustee of the Seoud Family Trust	Defendant
-and-
THE PRACTICE PTY LTD (ACN 081 017 174)	Third Party

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JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	29 August 2018
DATE OF JUDGMENT:	26 March 2019
CASE MAY BE CITED AS:	Seoud v Fortythird Garland Pty Ltd
MEDIUM NEUTRAL CITATION:	[2019] VSC 192

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PRACTICE AND PROCEDURE — Statutory interest on sum recovered in proceeding — Where consent orders provide for trustee to pay an amount into Court as part of terms of compromise between the trustee and beneficiary — Whether beneficiary is a ‘creditor’ of the trustee — Dimos v Willetts (2000) 2 VR 170 — Whether entries of drawings in financial statements of trust constitute an admission or acknowledgment of debt by trustee — Chianti Pty Ltd v Leume Pty Ltd (2007) 35 WAR 488 — Whether a judgment is required for an amount to be ‘recovered’ — Consideration of at which ‘date of time certain’ the sums were payable — Whether a ‘good cause’ for reducing entitlement to interest — Supreme Court Act 1986, s 58.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr C Simpson with Ms R Grayson Morison	Somerville Laundry Lomax
For the Defendant	Mr P Pascoe	Pearce Webster Dugdales
For the Third Party	No appearance	Moray & Agnew

HER HONOUR:

Introduction

The Seoud Family Trust (‘the trust’) was established in 1976. The trust was utilised for the business interests of Nassim Seoud (‘Mr Seoud’) and Zarife Seoud (‘Mrs Seoud’), both of whom are now deceased. The trustee of the trust for all relevant periods was Fortythird Garland Pty Ltd (‘the trustee’).

The plaintiff is the grandson of Mr Seoud and a beneficiary of the trust. He is a minor and his litigation guardian is his mother, Ms Rusanne Jourdan.

A dispute arose between the plaintiff and the trustee in relation to the plaintiff’s share of the income of the trust for the financial years 2009 to 2014, with the plaintiff claiming he had not been paid the amounts to which he was entitled.

Pursuant to a compromise, certain amounts were paid by the trustee to the Senior Master Funds in Court to be invested for the plaintiff’s benefit until further order. An amount of $194,913.50 was paid into Court in respect of the resolution of the 2009 to 2011 and 2013 financial years. Subsequently, a further amount of $100,000 was paid into Court in respect of the resolution of the 2012 and 2014 financial years (collectively, ‘the principal sums’). The parties reserved their positions in relation to the plaintiff’s entitlement to interest on the principal sums.

The plaintiff now seeks an order for interest on the principal sums, pursuant to s 58 of the Supreme Court Act

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.

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Details

Case: [2019] VSC 192
Decision Date: 26 March 2019

CaseChat Overview and Summary

Seoud v Fortythird Garland Pty Ltd involved a dispute regarding the calculation of statutory interest on a sum recovered in proceedings between the parties. The case was heard in the Supreme Court of Western Australia. The primary issue before the Court was whether statutory interest was applicable on amounts paid by the trustee to the beneficiary under consent orders, which were part of a compromise agreement. The Court had to determine if the beneficiary was a ‘creditor’ of the trustee, whether the entries of drawings in the financial statements constituted an admission or acknowledgment of debt by the trustee, and if a judgment was necessary for an amount to be considered ‘recovered.’ The Court also needed to consider at what ‘date of time certain’ the sums were payable and if there was ‘good cause’ for reducing the entitlement to interest.

The Court examined the relevant statutory provisions and case law to address these issues. It held that for statutory interest to apply, the amount must be a debt owed by the trustee to the creditor, and the creditor must be a person who has a right to enforce payment of the debt. The Court found that the beneficiary was not a creditor in the conventional sense, but rather a party to a compromise agreement. The Court also concluded that the entries of drawings in the financial statements did not constitute an admission or acknowledgment of debt by the trustee. Additionally, the Court found that a judgment was not necessary for an amount to be considered ‘recovered,’ as the consent orders served as the equivalent of a judgment. The Court determined that the sums were payable at the date of the consent orders and found no ‘good cause’ for reducing the entitlement to interest.

Following this reasoning, the Court held that statutory interest was not payable on the amounts paid by the trustee to the beneficiary under the consent orders. The Court ordered that the amounts paid by the trustee to the beneficiary were not subject to statutory interest. The decision clarifies the application of statutory interest in the context of compromise agreements and the role of consent orders in determining when sums are payable.

Orders