Youyang Pty Ltd v Minter Ellison - [2001] NSWCA 198

CITATION: Youyang v Minter Ellison [2001] NSWCA 198

FILE NUMBER(S): CA 40740/00

HEARING DATE(S): 25 June 2001

JUDGMENT DATE:
8 October 2001

PARTIES :

Youyang Pty Limited (As Trustee of Bill Hayward Discretionary Trust)
v
(The persons listed in Schedule 1 trading as Minter Ellison Morris Fletcher, and later as Minter Ellison)

JUDGMENT OF: Handley JA at 1; Hodgson JA at 25; Young CJ in Eq at 44

LOWER COURT JURISDICTION : Supreme Court - Equity Division

LOWER COURT
FILE NUMBER(S) : ED 50083/99

LOWER COURT
JUDICIAL OFFICER : Brownie AJ

COUNSEL: A S Martin SC (Appellant)
I M Jackman/T M Faulkner (Respondents)

SOLICITORS: Carneys (Appellant)
Mallesons Stephen Jaques (Respondents)

CATCHWORDS: BREACH OF TRUST - causation - effect of consequential breach - equitable compensation. D.

CASES CITED:
Target Holdings Ltd v Redferns [1996] AC 421
Greater Pacific Investments Pty Ltd v Australian National Industries Ltd (1996) 39 NSWLR 143
O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262
Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1
Maguire v Makaronis (1997) 188 CLR 449
Smith v Cock [1911] AC 317
Alexander & Ors (trading as Minter Ellison) v Perpetual Trustees WA Ltd & Anor [2001] NSW CA 240
Scholefield Ltd v Zyngier [1986] AC 562
TCN Channel 9 Pty Limited v Antoniadis [No 2] (1999) 48 NSWLR 381
Medlin v State Government Insurance Corporation (1995) 182 CLR 1
United Australia Ltd v Barclays Bank Ltd [1941] AC 1
McKenzie v McDonald [1927] VLR 134
Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488
Mense v Milenkovic [1973] VR 784
Green v Weatherill [1929] 2 Ch 213
Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129

DECISION: Appeal dismissed with costs. Cross-appeal allowed in part. Orders made

40740/00

ED 50083/99

HANDLEY JA

HODGSON JA

YOUNG CJinEQ

YOUYANG PTY LIMITED (as Trustee of the Bill Hayward Discretionary Trust) v The Persons Listed in Schedule 1 trading as Minter Ellison Morris Fletcher and later as MINTER ELLISON

The proceedings arose from an investment made by the plaintiff with EC Consolidated Capital Ltd (ECCCL) in 1993. The investment agreement provided for Minter Ellison, ECCCL’s solicitors, to receive the plaintiff’s funds in trust and to disburse them in accordance with the agreement. The firm procured from Dresdner Bank AG (with whom some of the plaintiff ’s funds were to be invested) a certificate of deposit which did not comply with the agreement because it was not payable to bearer. The plaintiff was not informed of the breaches of duty. The plaintiff later executed a deed poll consenting to the release of the monies held by Dresdner. The deed poll instructed ECCCL to withdraw the funds but did not bind it to invest the funds in a specific way, and the plaintiff simply trusted ECCCL. ECCCL was wound up, and the plaintiff lost the whole of its investment.

The plaintiff commenced proceedings against the firm to recover equitable compensation for their breaches of trust. The Judge upheld…

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: [2001] NSWCA 198
Decision Date: 8 October 2001

CaseChat Overview and Summary

Youyang Pty Ltd (the plaintiff) brought proceedings against Minter Ellison (the defendant), a law firm, alleging breach of trust and seeking equitable compensation. The dispute arose from the defendant's conduct in relation to a transaction involving the plaintiff. The matter was heard in the Court of Appeal of New South Wales.

The primary legal issues before the court were whether the defendant had breached its trust obligations to the plaintiff and, if so, whether that breach caused the loss for which the plaintiff sought compensation. The court also considered the effect of a consequential breach on the assessment of equitable compensation.

The Court of Appeal affirmed the trial judge's finding that Minter Ellison had breached its trust obligations. However, the court clarified the principles of causation in equity, particularly in the context of a breach of trust. It held that for equitable compensation to be awarded, the plaintiff must demonstrate a causal link between the breach of trust and the loss suffered. The court found that while the initial breach by Minter Ellison was established, the plaintiff had failed to prove that this breach directly caused the entirety of the loss claimed. The court applied established equitable principles regarding the assessment of compensation for breaches of trust, focusing on restoring the plaintiff to the position it would have been in had the breach not occurred.

The appeal by Youyang Pty Ltd was dismissed with costs. The cross-appeal by Minter Ellison was allowed in part, and consequential orders were made by the court.

Orders

Orders of the court

Appeal dismissed with costs. Cross-appeal allowed in part. Orders made

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Youyang v Minter Ellison [2001] NSWCA 198
FILE NUMBER(S):	CA 40740/00
HEARING DATE(S):	25 June 2001
JUDGMENT DATE:	8 October 2001
PARTIES :	Youyang Pty Limited (As Trustee of Bill Hayward Discretionary Trust) v (The persons listed in Schedule 1 trading as Minter Ellison Morris Fletcher, and later as Minter Ellison)
JUDGMENT OF:	Handley JA at 1; Hodgson JA at 25; Young CJ in Eq at 44

LOWER COURT JURISDICTION :	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S) :	ED 50083/99
LOWER COURT JUDICIAL OFFICER :	Brownie AJ

COUNSEL:	A S Martin SC (Appellant) I M Jackman/T M Faulkner (Respondents)
SOLICITORS:	Carneys (Appellant) Mallesons Stephen Jaques (Respondents)
CATCHWORDS:	BREACH OF TRUST - causation - effect of consequential breach - equitable compensation. D.
CASES CITED:	Target Holdings Ltd v Redferns [1996] AC 421 Greater Pacific Investments Pty Ltd v Australian National Industries Ltd (1996) 39 NSWLR 143 O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 Maguire v Makaronis (1997) 188 CLR 449 Smith v Cock [1911] AC 317 Alexander & Ors (trading as Minter Ellison) v Perpetual Trustees WA Ltd & Anor [2001] NSW CA 240 Scholefield Ltd v Zyngier [1986] AC 562 TCN Channel 9 Pty Limited v Antoniadis [No 2] (1999) 48 NSWLR 381 Medlin v State Government Insurance Corporation (1995) 182 CLR 1 United Australia Ltd v Barclays Bank Ltd [1941] AC 1 McKenzie v McDonald [1927] VLR 134 Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488 Mense v Milenkovic [1973] VR 784 Green v Weatherill [1929] 2 Ch 213 Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129
DECISION:	Appeal dismissed with costs. Cross-appeal allowed in part. Orders made