In the matter of Phoenix Rising Investments Pty Limited (ACN 123 623 754) [2015] NSWSC 2063

In the matter of Phoenix Rising Investments Pty Limited (ACN 123 623 754) [2015] NSWSC 2063

The plaintiff did not prove the dividend surcharges because the cheque-butt descriptions were not sufficient to displace the inference from year-end accounts. The objections to superannuation fund payments were upheld because the amounts withdrawn might not reflect Deborah Grace's and Julienne Grace's true entitlements, given errors in attributing fund investment increases. For Etham Avenue, the agreed 68.9% share of capital gain was accepted and a further account of receipts and expenses was required, but allowances for Julienne Grace's financial support to other Grace Group companies were outside the property account. For Birrell Street, most falsifications based on insufficient...

Jurisdiction
Australia
Judgment Date
02 June 2015
Procedural Posture
Equity Proceeding Concerning Accounts, Inquiries, Surcharges, Objections and Falsifications / Ex Tempore Principal Judgment on Defendants' Accounts and Related Objections
Outcome
Dividend surcharges disallowed; superannuation payment objections upheld in principle; Etham Avenue capital gain proportion agreed and account directed; Birrell Street falsifications mostly disallowed with land tax objections allowed in part.
Legal Topics
['equitable Accounts and Inquiries' 'surcharges' 'falsification of Accounts' 'trust and Quasi Trustee Accounting' 'superannuation Fund Payments' 'just Allowances' 'dividends']
['equity'] ['equitable Accounts and Inquiries' 'surcharges' 'falsification of Accounts' 'trust and Quasi Trustee Accounting' 'superannuation Fund Payments' 'just Allowances' 'dividends']

Case Brief

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Procedural Posture

Equity Proceeding Concerning Accounts, Inquiries, Surcharges, Objections and Falsifications / Ex Tempore Principal Judgment on Defendants' Accounts and Related Objections

Legal Issues

  1. 1 ['Whether payments recorded on cheque butts as dividends should be treated as additional dividends for which the defendants should be surcharged.' 'Whether payments or rollovers from the Nevilda Investments superannuation fund to Deborah Grace or Julienne Grace after appointment of a provisional liquidator should be objected to and repaid or accounted for.' 'What proportion of the capital gain on 41/10 Etham Avenue, Darling Point represented benefits derived from the use of 272 Birrell Street, and how rents and expenses for that property should be accounted for.' 'Whether Julienne Grace was entitled to just allowances in the Etham Avenue account for financial support or accommodation allegedly provided to other Grace Group companies.' 'Whether items in the Birrell Street account should be falsified for insufficient evidence, cross-loan payment issues, Waverley Council rates, or land tax overstatement.']

Ratio Decidendi

The plaintiff did not prove the dividend surcharges because the cheque-butt descriptions were not sufficient to displace the inference from year-end accounts. The objections to superannuation fund payments were upheld because the amounts withdrawn might not reflect Deborah Grace's and Julienne Grace's true entitlements, given errors in attributing fund investment increases. For Etham Avenue, the agreed 68.9% share of capital gain was accepted and a further account of receipts and expenses was required, but allowances for Julienne Grace's financial support to other Grace Group companies were outside the property account. For Birrell Street, most falsifications based on insufficient...

Court Disposition

Dividend surcharges disallowed; superannuation payment objections upheld in principle; Etham Avenue capital gain proportion agreed and account directed; Birrell Street falsifications mostly disallowed with land tax objections allowed in part.

Orders

  • ['The surcharges for additional alleged dividends were disallowed in principle.' 'The objections to payments from the Nevilda Investments superannuation fund to Deborah Grace, Julienne Grace or Phoenix Rising Investments Pty Ltd were upheld in principle.' 'The inquiry under Order 40 was answered by agreement that...