YOUYANG PTY LIMITED as Trustee of the Bill Hayward Discretionary Trust APPELLANT
AND
The persons listed in Schedule 1 trading as MINTER ELLISON MORRIS FLETCHER and later as Minter Ellison RESPONDENT
Youyang Pty Limited v Minter Ellison Morris Fletcher
[2003] HCA 15
3 April 2003 S237/2002
ORDER
1. Appeal allowed with costs.
2.Orders 1, 2, 3, 4, 5, 7 and 8 made by the New South Wales Court of Appeal on 8 October 2001 are set aside and, in their place, order that:
a) the appeal to that Court is allowed with costs and the cross-appeal is dismissed with costs,
b) Orders 3, 4, 5 and 6 made by Brownie AJ on 16 August 2000 are set aside,
c) the respondent pay the costs of the appellant at first instance, and
d) Order 1 made by Brownie AJ on 16 August 2000 is varied so as to replace the amount of $414,009 with $500,000, together with interest thereon pursuant to s 94, Supreme Court Act 1970 (NSW) from 24 September 1993 to the date of these orders.
3.The parties have 28 days within which to file a proposed consent order to supplement order 2(d), by fixing the actual sum for interest under s 94, Supreme Court Act 1970 (NSW). In the absence of such a proposed consent order, each party is at liberty to restore the matter to a single Justice of this Court for further directions.
On appeal from the Supreme Court of New South Wales
Representation:
D F Jackson QC with A S Martin SC for the appellant (instructed by Carneys Lawyers)
T F Bathurst QC with I M Jackman SC for the respondent (instructed by Mallesons Stephen Jaques)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Youyang Pty Limited v Minter Ellison Morris Fletcher
Trusts – Express trust – Money received by firm of solicitors to be held for a specific purpose and in accordance with specific conditions – Misapplication of funds by firm – Breach of express trust – Liability of firm as trustee – When breaches of trust occurred – Remedies – Restoration of trust fund – Causation – Whether appellant suffered a recoverable loss in consequence of firm's breaches of trust – Whether appellant would not have suffered loss but for breach of trust – When loss is to be assessed.
GLEESON CJ, McHUGH, GUMMOW, KIRBY AND HAYNE JJ. The appellant company ("Youyang") was trustee of a discretionary trust formed in 1974 and styled "the Bill Hayward Discretionary Trust". Mr William Hayward and his wife, Mrs Alison Hayward, were the directors of Youyang. The secretary of Youyang was Mr Peter Fowler, the Hayward family accountant and investment adviser. Mr Hayward acted on behalf of Youyang in the events giving rise to this litigation.
The ECCCL proposal
Mr Hayward was born…
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 Youyang Pty Ltd v Minter Ellison Morris Fletcher
The High Court of Australia considered an appeal by Youyang Pty Ltd against Minter Ellison Morris Fletcher, a firm of solicitors. The dispute concerned the misapplication of funds held by the solicitors under an express trust. Youyang alleged that Minter Ellison had breached its trust obligations by misusing money entrusted to it for a specific purpose and subject to particular conditions.
The central legal issues before the High Court were whether breaches of trust had occurred, when those breaches took place, and what remedies were available to Youyang. Specifically, the Court had to determine if Youyang had suffered a recoverable loss as a consequence of the firm's breaches and whether such loss would not have occurred "but for" those breaches. The timing of the assessment of any loss was also a key consideration.
The High Court reasoned that the solicitors, by receiving funds for a specific purpose and failing to apply them as directed, had breached their express trust obligations. The Court affirmed that the measure of a trustee's liability for breach of trust is the restoration of the trust fund to the position it would have been in had the breach not occurred. This principle requires an assessment of the loss suffered by the trust as a direct consequence of the trustee's actions. The Court found that Youyang had indeed suffered a loss directly attributable to the breaches of trust.
The High Court allowed the appeal, setting aside the orders of the New South Wales Court of Appeal. The Court ordered that Minter Ellison Morris Fletcher pay Youyang Pty Ltd the sum of $500,000, together with interest calculated from 24 September 1993 to the date of the orders. The parties were given 28 days to agree on the precise interest amount, failing which they could seek further directions from the Court.
Orders
Orders of the court
1. Appeal allowed with costs.
2. Orders 1, 2, 3, 4, 5, 7 and 8 made by the New South Wales Court of Appeal on 8 October 2001 are set aside and, in their place, order that:
a) the appeal to that Court is allowed with costs and the cross-appeal is dismissed with costs,
b) Orders 3, 4, 5 and 6 made by Brownie AJ on 16 August 2000 are set aside,
c) the respondent pay the costs of the appellant at first instance, and
d) Order 1 made by Brownie AJ on 16 August 2000 is varied so as to replace the amount of $414,009 with $500,000, together with interest thereon pursuant to s 94, Supreme Court Act 1970 (NSW) from 24 September 1993 to the date of these orders.
3. The parties have 28 days within which to file a proposed consent order to supplement order 2(d), by fixing the actual sum for interest under s 94, Supreme Court Act 1970 (NSW). In the absence of such a proposed consent order, each party is at liberty to restore the matter to a single Justice of this Court for further directions.