Zeng v Mossensons [2014] NSWSC 1101

Zeng v Mossensons [2014] NSWSC 1101

The final deed required the $1,800,036 paid into the Mossensons controlled moneys account to be held on trust for Shandong and permitted only $100,000 to be used before the Release Date for requotation purposes. The further payments directed by Mr Ehrenfeld were unauthorised breaches of trust and contract, were gross, flagrant and repudiatory, and entitled the plaintiffs to terminate the final deed and interlinked agreements. Because the Release Date had not occurred and would not occur, the balance held in trust had to be repaid to the payers; SDT and Fundamental Capital were liable to repay amounts they received for failed purposes; and Mr Ehrenfeld was liable for the misapplied...

Jurisdiction
Australia
Judgment Date
21 August 2014
Procedural Posture
Equity Proceedings Involving Express Trust, Contract, Deeds, Breach of Trust and Cross Claims / Principal Judgment After Hearing; Directions for Final Orders
Outcome
Plaintiffs substantially succeeded against the relevant defendants; Mossensons succeeded on its indemnity cross-claim; the cross-claims by Mr Ehrenfeld and Fundamental Capital failed and were to be dismissed; proceedings stood over for final orders.
Legal Topics
['express Trust' 'breach of Trust' 'repudiation and Termination' 'resulting Trust on Failure of Purpose' 'total Failure of Consideration' 'account of Trust Monies' 'constructive Trustee Liability' 'indemnity for Procured Breach of Trust' 'leave to Amend Pleadings' 'construction of Deeds']
['trusts' 'contracts' 'practice and Procedure' 'deeds' 'corporations'] ['express Trust' 'breach of Trust' 'repudiation and Termination' 'resulting Trust on Failure of Purpose' 'total Failure of Consideration' 'account of Trust Monies' 'constructive Trustee Liability' 'indemnity for Procured Breach of Trust' 'leave to Amend Pleadings' 'construction of Deeds']

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Procedural Posture

Equity Proceedings Involving Express Trust, Contract, Deeds, Breach of Trust and Cross Claims / Principal Judgment After Hearing; Directions for Final Orders

Legal Issues

  1. 1 ['Whether payments made out of the Mossensons controlled moneys account were authorised by the final deed or were breaches of trust and contract.' 'Whether the breaches by Mr Ehrenfeld and SDT were fundamental and repudiatory, entitling the plaintiffs to terminate the final deed and related agreements.' 'Whether the balance of the share money held in trust should be returned to the plaintiffs after termination and failure of the Release Date.' 'Whether amounts paid under the acquisition agreement and related agreements were recoverable for failure of purpose or total failure of consideration.' 'Whether Mr Ehrenfeld was a party to and bound by the final deed despite signing only as a director of Tilapia and SDT.' 'Whether leave should be granted to amend pleadings during the hearing to seek rectification of the final deed.' 'Whether Mossensons was entitled to indemnity from SDT and Mr Ehrenfeld for settlement liabilities arising from payments made in breach of trust.' 'Whether the cross-claims by Mr Ehrenfeld and Fundamental Capital against the plaintiffs should succeed.']

Ratio Decidendi

The final deed required the $1,800,036 paid into the Mossensons controlled moneys account to be held on trust for Shandong and permitted only $100,000 to be used before the Release Date for requotation purposes. The further payments directed by Mr Ehrenfeld were unauthorised breaches of trust and contract, were gross, flagrant and repudiatory, and entitled the plaintiffs to terminate the final deed and interlinked agreements. Because the Release Date had not occurred and would not occur, the balance held in trust had to be repaid to the payers; SDT and Fundamental Capital were liable to repay amounts they received for failed purposes; and Mr Ehrenfeld was liable for the misapplied...

Court Disposition

Plaintiffs substantially succeeded against the relevant defendants; Mossensons succeeded on its indemnity cross-claim; the cross-claims by Mr Ehrenfeld and Fundamental Capital failed and were to be dismissed; proceedings stood over for final orders.

Orders

  • ['The plaintiffs are to prepare and submit to the defendants by 5pm on 22 August 2014 a draft minute of the orders sought in pursuance of the conclusions stated.' 'Mossensons is to prepare and submit to Mr Ehrenfeld by 5pm on 22 August 2014 a draft minute of the orders it seeks in pursuance of the conclusions.' 'The...