Kathleen Jeanne Furlong & Mark Andrew Leishman (a bankrupt) v Wise & Young Pty Ltd, Defined Properties Investment Pty Ltd & Wyse and Young International Pty Ltd; Wise & Young Pty Ltd, Defined Properties Investment Pty Ltd & Wyse and Young International Pty Ltd v Kathleen Jeanne Furlong, Gilbert Innes Leishman, Design by Kaka Pty Ltd as trustee for Kathleen Leishman Investment Trust, GIM Investments (ncle) Pty Ltd as trustee for Kathleen Leishman Investment Trust & Kim Magella Leishman; Gilbert Innes Leishman v Defined Properties Investment Pty Ltd, Wise & Young Pty Ltd, Wise & Young International Pty Ltd, George Dimitriou and Bramco Group International Pty Ltd (No 2) [2018] NSWSC 1987

Kathleen Jeanne Furlong & Mark Andrew Leishman (a bankrupt) v Wise & Young Pty Ltd, Defined Properties Investment Pty Ltd & Wyse and Young International Pty Ltd; Wise & Young Pty Ltd, Defined Properties Investment Pty Ltd & Wyse and Young International Pty Ltd v Kathleen Jeanne Furlong, Gilbert Innes Leishman, Design by Kaka Pty Ltd as trustee for Kathleen Leishman Investment Trust, GIM Investments (ncle) Pty Ltd as trustee for Kathleen Leishman Investment Trust & Kim Magella Leishman; Gilbert Innes Leishman v Defined Properties Investment Pty Ltd, Wise & Young Pty Ltd, Wise & Young International Pty Ltd, George Dimitriou and Bramco Group International Pty Ltd (No 2) [2018] NSWSC 1987

The trustee (DPI, acting through Mr Dimitriou) failed to discharge the onus to account for or substantiate certain disputed payments from trust funds, specifically the 'unsubstantiated sums,' 'Paragraph 17 items' (except for one conceded item), and 'Column E items.' The court accepted the independent referee's findings where documentation or explanation was lacking, and applied equitable principles to compel the trustee to account for and restore these amounts to the trust/beneficiaries, less any conceded legitimate repayments. The trustee’s and defendants’ fee claims were rejected for lack of proper evidence. The costs were apportioned between the parties, reflecting their partial success.

Parties
First Plaintiff and First Cross Defendant: Kathleen Jeanne Furlong; Second Plaintiff: Mark Andrew Leishman (a bankrupt); First Defendant, First Cross Claimant and Second Cross Defendant in the Second Cross Claim: Wise & Young Pty Ltd; Second Defendant, Second Cross Claimant and First Cross Defendant in the Second Cross Claim: Defined Properties Investment Pty Limited; Third Defendant, Third Cross Claimant and Third Cross Defendant in the Second Cross Claim: Wyse & Young International Pty Limited; Second Cross Defendant and First Cross Claimant in the Second Cross Claim: Gilbert Innes Leishman; Third Cross Defendant: Design by Kaka Pty Ltd as trustee for Kathleen Leishman Investment Trust; Fourth Cross Defendant: GIM Investments (ncle) Pty Ltd as trustee for Kathleen Leishman Investment Trust; Fifth Cross Defendant: Kim Magella Leishman; Fourth Cross Defendant in the Second Cross Claim: George Dimitriou; Fifth Cross Defendant in the Second Cross Claim: Bramco Group International Pty Ltd
Jurisdiction
Australia
Judgment Date
19 December 2018
Procedural Posture
Equity Trusts and Trustees (consequential Orders) / Consequential Orders Following Primary Judgment and Referee Report
Outcome
Trustee held liable to account for unsubstantiated and disputed amounts (excluding one item conceded); Defendants ordered to pay 50% of Plaintiffs' costs; Cross Defendants ordered to pay 60% of Second Cross-Claimant's costs; Specific sums and cost percentages to be formalised after parties submit short minutes...
Legal Topics
Trustee Liability, Accounting for Trust Funds, Mingling of Trust and Personal Funds, Breach of Trust, Onus of Proof for Trustee, Costs Apportionment
Equity Trusts Civil Procedure Costs Trustee Liability Accounting for Trust Funds Mingling of Trust and Personal Funds Breach of Trust +2 more

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Parties

Kathleen Jeanne Furlong

First Plaintiff and First Cross Defendant

Mark Andrew Leishman (a bankrupt)

Second Plaintiff

Wise & Young Pty Ltd

First Defendant, First Cross Claimant and Second Cross Defendant in the Second Cross Claim

Defined Properties Investment Pty Limited

Second Defendant, Second Cross Claimant and First Cross Defendant in the Second Cross Claim

Wyse & Young International Pty Limited

Third Defendant, Third Cross Claimant and Third Cross Defendant in the Second Cross Claim

Gilbert Innes Leishman

Second Cross Defendant and First Cross Claimant in the Second Cross Claim

Design by Kaka Pty Ltd as trustee for Kathleen Leishman Investment Trust

Third Cross Defendant

GIM Investments (ncle) Pty Ltd as trustee for Kathleen Leishman Investment Trust

Fourth Cross Defendant

Kim Magella Leishman

Fifth Cross Defendant

George Dimitriou

Fourth Cross Defendant in the Second Cross Claim

Bramco Group International Pty Ltd

Fifth Cross Defendant in the Second Cross Claim

Procedural Posture

Equity Trusts and Trustees (consequential Orders) / Consequential Orders Following Primary Judgment and Referee Report

Legal Issues

  1. 1 What sums must the trustee account for due to undisputed or unsubstantiated expenditures from trust funds?
  2. 2 Has the trustee discharged the onus to explain the disputed transactions?
  3. 3 Are the Defendants entitled to fees for services allegedly rendered to the Bramco entities?

Ratio Decidendi

The trustee (DPI, acting through Mr Dimitriou) failed to discharge the onus to account for or substantiate certain disputed payments from trust funds, specifically the 'unsubstantiated sums,' 'Paragraph 17 items' (except for one conceded item), and 'Column E items.' The court accepted the independent referee's findings where documentation or explanation was lacking, and applied equitable principles to compel the trustee to account for and restore these amounts to the trust/beneficiaries, less any conceded legitimate repayments. The trustee’s and defendants’ fee claims were rejected for lack of proper evidence. The costs were apportioned between the parties, reflecting their partial success.

Court Disposition

Trustee held liable to account for unsubstantiated and disputed amounts (excluding one item conceded); Defendants ordered to pay 50% of Plaintiffs' costs; Cross Defendants ordered to pay 60% of Second Cross-Claimant's costs; Specific sums and cost percentages to be formalised after parties submit short minutes...

Orders

  • Trustee (DPI and Dimitriou) to account for $44,743.07 (unsubstantiated items), $45,760.53 (Kangoo café), $6,160 (Ms Huybers), $9,000 (Kremnizer art), $25,437.52 (Baccus Investments), and $49,643.96 (Column E items); item 231 ($79,620) excluded as conceded, total amount accounted for $180,745.08;
  • Defendants to pay 50% of Plaintiffs' costs;