Mao v Bao [2023] NSWCA 278

Mao v Bao [2023] NSWCA 278

The Court, by majority, held that the requirements for equitable set-off were not met because there was no sufficient connection or interdependence between the unrelated loan by Mr Mao and the account claim by Mr Bao regarding the Vaucluse Property. Intuitive unfairness and mere temporal or subject-matter associations alone did not suffice, and there was no evidence that Mr Bao would have agreed to a set-off or repaid the loan if an account had been rendered. The Brickenden principle did not preclude Mr Mao from raising lack of connection as a defence to equitable set-off. Thus, the appeal was allowed; the cross-appeal for equalising interest was dismissed.

Jurisdiction
Australia
Judgment Date
21 November 2023
Procedural Posture
Appeal / Judgment of NSW Court of Appeal on Appeal and Cross Appeal From Supreme Court Orders
Outcome
Appeal allowed; cross-appeal dismissed
Legal Topics
['equitable Set Off' 'trusts' 'fiduciary Duties' 'breach of Trust' 'pre Judgment Interest']
['equity' 'civil Procedure'] ['equitable Set Off' 'trusts' 'fiduciary Duties' 'breach of Trust' 'pre Judgment Interest']

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Procedural Posture

Appeal / Judgment of NSW Court of Appeal on Appeal and Cross Appeal From Supreme Court Orders

Legal Issues

  1. 1 ["Whether the requirements for equitable set-off were satisfied between Mr Mao's loan claim and Mr Bao's account claim for the Vaucluse Property proceeds" 'Whether the Brickenden principle applies to preclude counterfactuals by a defaulting fiduciary when addressing connection necessary for equitable set-off' "Whether interest on amounts due to Mr Bao should accrue at the contractual rate as for Mr Mao's loan claim under s 100 Civil Procedure Act 2005 (NSW)"]

Ratio Decidendi

The Court, by majority, held that the requirements for equitable set-off were not met because there was no sufficient connection or interdependence between the unrelated loan by Mr Mao and the account claim by Mr Bao regarding the Vaucluse Property. Intuitive unfairness and mere temporal or subject-matter associations alone did not suffice, and there was no evidence that Mr Bao would have agreed to a set-off or repaid the loan if an account had been rendered. The Brickenden principle did not preclude Mr Mao from raising lack of connection as a defence to equitable set-off. Thus, the appeal was allowed; the cross-appeal for equalising interest was dismissed.

Court Disposition

Appeal allowed; cross-appeal dismissed

Orders

  • ["Allow the appellant's appeal with costs." "Set aside the orders made by the primary judge on 16 December 2022 and instead order that judgment be entered for the appellant against the respondent in the sum of $3,401,289.50, comprising: (i) the value of the appellant's claim as at 5 May 2014 ($2,069,020) plus...