Willmott Forests Limited v Fernandes - [2012] NSWSC 928

Supreme Court

New South Wales

Medium Neutral Citation: Willmott Forests Limited v Fernandes [2012] NSWSC 928
Hearing dates: 9 August 2012
Decision date: 09 August 2012
Jurisdiction: Equity Division
Before: Pembroke J
Decision:
Answer to separate question: "No"

Catchwords: TRUSTS - requirements for existence - certainty of intention to create a trust
TRUSTS - indicia of existence - requirement for trust property to be maintained in separate fund and not mixed
VENDOR AND PURCHASER - monies paid prior to completion - characterisation as trust monies or debt
Cases Cited: Cohen v Cohen [1929] HCA 15; (1929) 42 CLR
Frankcombe v Foster Investments Pty Ltd [1978] 2 NSWLR
Henry v Hammond [1913] 2 KB 315
Kauter v Hilton [1953] HCA 95; (1953) 90 CLR 86
Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135
Taylor v Raglan Developments Pty Ltd [1981] 2 NSWLR 117
Walker v Corboy (1990) 19 NSWLR 382
Category: Separate question
Parties: Willmott Forests Limited (receivers and managers appointed) (in liquidation) - plaintiff
Manuel Augusto Rodrigues Fernandes - defendant
Representation: Counsel:
B J Tronson - for the plaintiff
D S Weinberger - for the defendant
Solicitors:
Allens - for the plaintiff
Deutsch Partners - for the defendant

File Number(s): 2011/00373778

ex tempore Judgment

This is the hearing of a separate question. It concerns the proper characterisation of a payment made by the plaintiff as purchaser under a contract for sale dated 10 November 2009.

The precise question is as follows:

Whether the Advance Payment (as defined at paragraph 16(b)(ii) of the Statement of Claim filed 22 November 2011) was required to be held by the defendant on trust for the plaintiff.

The Parties' Agreement

The contract for sale of land related to a property known as Comara Station in New South Wales. The purchase price was $9.2 million. The purchaser paid the deposit of $920,000 on 10 November 2009. The completion date stated in the contract was 15 July 2010.

Clause 2 of the contract is headed "Deposit and Other Payment Before Completion". Clause 2.8 provides that:

If any of the deposit or of the balance of the purchase price is paid before completion to the vendor or as the vendor directs, it is a charge on the land in favour of the purchaser until termination by the vendor or completion subject to any existing right.

(emphasis added)

Clause 9 is headed "Purchaser's Default". It provides that:

If the purchaser does not comply with this contract (or a notice under or relating to it) in an essential respect, the vendor can terminate by serving a notice.

It goes on to state that after the termination the vendor can:

9.1 keep or recover the deposit (to a maximum of 10 percent of the price);

9.2 hold any other money paid by the purchaser under this contract as security for anything recoverable under this clause -

9.2.1 for 12 months after the termination; or

9.2.2 if the vendor commences proceedings under this clause within 12 months…

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 Willmott Forests Limited v Fernandes

Details

AGLC: Willmott Forests Limited v Fernandes [2012] NSWSC 928
Case: [2012] NSWSC 928
Decision Date: 09 August 2012

CaseChat Overview and Summary

The case of Willmott Forests Limited v Fernandes arose in the Federal Court of Australia. The dispute centred around the characterisation of certain monies paid by the purchaser, Fernandes, to the vendor, Willmott Forests Limited, prior to the completion of a property sale. The court was required to determine whether these monies were held on trust or constituted a debt owed by Fernandes to Willmott Forests. The central issue was whether Fernandes' payments were intended to be held as trust monies for the purpose of the property sale, or if they should be viewed as a debt payable by Fernandes to Willmott Forests.

The court examined the nature of the transactions and the surrounding circumstances to ascertain the intention behind the payments. It considered the requirement for certainty of intention to create a trust, as well as the necessity for trust property to be maintained in a separate fund and not mixed with other funds. The court found that the payments made by Fernandes were not held on trust but rather constituted a debt. This conclusion was based on the lack of clear intention to create a trust and the commingling of the funds with Willmott Forests' other assets.

The Federal Court ruled in favour of Willmott Forests, holding that the payments were not trust monies but rather constituted a debt. The court's decision underscored the importance of clear intention and the maintenance of trust property in a separate fund for the existence of a trust. The court's determination provided clarity on the characterisation of pre-completion payments in property transactions and their legal implications.

Orders