Harrington & Anor v Harrington Services Pty Ltd (In liq) & Ors [2003] NSWSC 29

Harrington & Anor v Harrington Services Pty Ltd (In liq) & Ors [2003] NSWSC 29

Plaintiffs are entitled to the balance held by the liquidators as the net proceeds of sale, not the full $2 million; due to the effect of s.16-11(b) Aged Care Act 1997 (Cth) which expunges the transferor's liabilities for accommodation bonds upon transfer, so only the net proceeds (after accommodation bond and GST deductions) are to be paid to plaintiffs as beneficiaries under express trust or as damages/constructive trust.

Parties
First Plaintiff: Kenneth Harrington; Second Plaintiff: Jacqueline Dorothy Harrington; First Defendant: Harrington Services Pty Ltd (In liq); Second Defendant: Robert William Whitton; Second Defendant: David John Frank Lombe
Jurisdiction
Australia
Judgment Date
11 February 2003
Procedural Posture
Equity Division Proceedings / Post Judgment; Further Orders Following Earlier Substantive Judgment
Outcome
Plaintiffs entitled to some, but not all, of relief claimed. Declaration made as to ownership and entitlement to net proceeds, but not to full amount; payment of $824,466 plus interest ordered; directions as to GST payment required. Other declarations and orders refused.
Legal Topics
Implied Terms in Leases, Constructive Trust, Express Trust, Statutory Construction, Accommodation Bonds, Transfer of Allocated Places Under Aged Care Act 1997 (cth), Damages for Breach of Lease, Unjust Enrichment
Equity Trusts Aged Care Law Implied Terms in Leases Constructive Trust Express Trust Statutory Construction Accommodation Bonds +3 more

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Parties

Kenneth Harrington

First Plaintiff

Jacqueline Dorothy Harrington

Second Plaintiff

Harrington Services Pty Ltd (In liq)

First Defendant

Robert William Whitton

Second Defendant

David John Frank Lombe

Second Defendant

Procedural Posture

Equity Division Proceedings / Post Judgment; Further Orders Following Earlier Substantive Judgment

Legal Issues

  1. 1 Whether plaintiffs are entitled to proceeds of sale of fifty Aged Care Act allocated places as damages, under trust, or otherwise
  2. 2 Whether proceeds held by liquidators are trust property for plaintiffs or general assets in liquidation
  3. 3 Construction and effect of s.16-11(b) Aged Care Act 1997 (Cth) regarding liabilities for accommodation bonds on transfer of allocated places

Ratio Decidendi

Plaintiffs are entitled to the balance held by the liquidators as the net proceeds of sale, not the full $2 million; due to the effect of s.16-11(b) Aged Care Act 1997 (Cth) which expunges the transferor's liabilities for accommodation bonds upon transfer, so only the net proceeds (after accommodation bond and GST deductions) are to be paid to plaintiffs as beneficiaries under express trust or as damages/constructive trust.

Court Disposition

Plaintiffs entitled to some, but not all, of relief claimed. Declaration made as to ownership and entitlement to net proceeds, but not to full amount; payment of $824,466 plus interest ordered; directions as to GST payment required. Other declarations and orders refused.

Orders

  • Declaration that as at 1 October 1997 and at all material times thereafter all fifty allocated Aged Care Act places at Trentham Nursing Home were legally and beneficially owned by plaintiffs.
  • Declaration that plaintiffs entitled to receive proceeds of sale of allocated places calculated in accordance with Schedule 1 of Sale Agreement as per reasons.