Commonwealth Bank of Australia v Iinvest Pty Ltd (In Liq) [2014] NSWSC 1257

Commonwealth Bank of Australia v Iinvest Pty Ltd (In Liq) [2014] NSWSC 1257

The declarations of trust executed by the company with respect to Blackburn and Brecon did not validly create a trust for the Harker-Mortlock Family Trust or its beneficiaries; instead, they purported to create a trust for the company itself, which is legally ineffective. Therefore, neither the properties nor the related choses in action are trust property, and Mr Harker-Mortlock lacks standing to defend or cross-claim based on the trust. Consequently, the application to set aside default judgment for possession is refused, and summary judgment in favour of the bank is appropriate.

Parties
Plaintiff: Commonwealth Bank of Australia; First Defendant: Iinvest Pty Ltd (In Liquidation); Second Defendant: James Harker-Mortlock
Jurisdiction
Australia
Judgment Date
15 September 2014
Procedural Posture
Application to Set Aside Default Judgment and Related Motions / Post Judgment, Applications to Set Aside Default Judgment and Summary Judgment Motions
Outcome
Application to set aside default judgment refused; defence and cross-claim struck out; summary judgment for possession confirmed; leave granted for second defendant to re-plead in his own right; costs awarded to plaintiff; writs of possession previously stayed, now dissolved.
Legal Topics
Default Judgment for Possession, Trust Property Status, Standing of Beneficiary When Trustee Insolvent, Unconscionable Conduct, Misleading and Deceptive Conduct, Effectiveness of Lease Against Mortgagee
Property Law Equity and Trusts Default Judgment for Possession Trust Property Status Standing of Beneficiary When Trustee Insolvent Unconscionable Conduct Misleading and Deceptive Conduct Effectiveness of Lease Against Mortgagee

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Parties

Commonwealth Bank of Australia

Plaintiff

Iinvest Pty Ltd (In Liquidation)

First Defendant

James Harker-Mortlock

Second Defendant

Procedural Posture

Application to Set Aside Default Judgment and Related Motions / Post Judgment, Applications to Set Aside Default Judgment and Summary Judgment Motions

Legal Issues

  1. 1 Whether default judgment for possession should be set aside
  2. 2 Whether properties and associated rights are held on trust
  3. 3 Standing of Mr Harker-Mortlock to bring claim as beneficiary when trustee is insolvent

Ratio Decidendi

The declarations of trust executed by the company with respect to Blackburn and Brecon did not validly create a trust for the Harker-Mortlock Family Trust or its beneficiaries; instead, they purported to create a trust for the company itself, which is legally ineffective. Therefore, neither the properties nor the related choses in action are trust property, and Mr Harker-Mortlock lacks standing to defend or cross-claim based on the trust. Consequently, the application to set aside default judgment for possession is refused, and summary judgment in favour of the bank is appropriate.

Court Disposition

Application to set aside default judgment refused; defence and cross-claim struck out; summary judgment for possession confirmed; leave granted for second defendant to re-plead in his own right; costs awarded to plaintiff; writs of possession previously stayed, now dissolved.

Orders

  • Application to set aside default judgment for possession entered on 3rd July 2013 refused.
  • Stay of the writs of possession in respect of two properties dissolved.