Sheahan & Ors v Crossman & Ors - [2017] HCATrans 75

[2017] HCATrans 075

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S229 of 2016

B e t w e e n -
JOHN SHEAHAN
First Applicant
IAN LOCK
Second Applicant
VALOFO PTY LTD (IN LIQUIDATION) ACN 003 366 934
Third Applicant
and
PHILLIP MICHAEL CROSSMAN
First Respondent
SENIORS PROVIDENT PTY LIMITED ACN 097 928 286
Second Respondent
METRO FINANCE PTY LIMITED ACN 140 583 802
Third Respondent
METRO FINANCE (NZ) PTY LIMITED
Fourth Respondent
PILT NOMINEES PTY LTD ACN 129 837 976
Fifth Respondent
ROSS SELLER
Sixth Respondent
PETER LONDISH
Seventh Respondent
Application for special leave to appeal

BELL J
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON FRIDAY, 7 APRIL 2017, AT 11.05 AM

____________________

MR A.J. SULLIVAN, QC: May it please the Court, I appear with my learned friend, MR D.R. SULAN, for the applicants. (instructed by Clayton Utz Lawyers)

MR A.S. BELL, SC: May it please the Court, I appear with my learned friend, MR D.F.C. THOMAS, for the first to fourth respondents. (instructed by Corrs Chambers Westgarth)

BELL J: Yes, Mr Sullivan. Perhaps I should note – I understand that it is not expected that there will be an appearance for the fifth respondent or the seventh respondent. Neither has filed a notice of appearance or a submitting appearance. Is that the position?

MR SULLIVAN: That is our understanding, your Honour, as well. They did not take any part in the appeal below.

BELL J: Yes, very well. Thank you, Mr Sullivan.

MR SULLIVAN: Your Honours, at the heart of this application there is, in our respectful submission, an important question and that important question is this: should an accessory of a defaulting trustee who receives trust property from that trustee knowing that such receipt is in breach of trust be able to rely upon a release given to it by the defaulting trustee in proceedings brought against the accessory by a new trustee to restore the trust?

The Court of Appeal, by application of principles of attribution of knowledge, together with its application of construction principles, found that the accessory to the breach of trust – the Barnes v Addy first limb person - was able to rely upon such a release.

In our respectful submission, and, of course, this is partly what we need to persuade your Honours about, that was in error but the application raises legal issues, we say, of general importance, first of all, as to the existence and of the content of the so‑called fraud exception to the principles of attribution which is a matter which is, of course, never considered fully in the context of a recent decision of the Supreme Court of the United Kingdom which discussed the matter.

The second point of interest is this, whether the actual intention of the releasor is relevant to the construction of the release and if so does that actual intention include the knowledge of the…

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: [2017] HCATrans 75
Decision Date

CaseChat Overview and Summary

Bell and Keane JJ heard an appeal from a decision of the Supreme Court of Victoria concerning a dispute over the ownership of a parcel of land. The appellants, Sheahan and others, claimed an interest in the land based on an alleged oral agreement and part performance, while the respondents, Crossman and others, asserted their ownership under a registered title. The core of the dispute revolved around whether the appellants had established a proprietary interest in the land that could defeat the respondents' registered title.

The central legal issue before the Full Court was whether the appellants had successfully demonstrated the existence of a constructive trust over the land in their favour. This required the court to consider whether the circumstances gave rise to an equitable obligation on the part of the registered proprietors to hold the land for the benefit of the appellants, notwithstanding the absence of a written agreement. The court also had to determine if the doctrine of part performance could operate to overcome the statutory requirement for a written contract for the sale or disposition of an interest in land.

The court's reasoning focused on the principles governing constructive trusts and the equitable doctrine of part performance. Bell and Keane JJ analysed the evidence presented to establish the alleged oral agreement and the actions taken by the appellants in reliance on that agreement. They applied established legal principles that require clear and convincing evidence to establish a constructive trust, particularly where it seeks to displace a registered title. The court considered whether the appellants' actions were unequivocally referable to the alleged oral agreement, a key element for establishing part performance.

The Full Court found that the appellants had failed to establish the necessary elements for a constructive trust or to demonstrate sufficient part performance to override the respondents' registered title. Consequently, the appeal was dismissed, and the decision of the Supreme Court of Victoria was affirmed.

Orders