In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (all in liq) [2021] NSWSC 966

In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (all in liq) [2021] NSWSC 966

The Court held that liability for breach of trust or fiduciary duty under the rule in Barnes v Addy extends to knowing assistants and is joint and several unless clearly abrogated by statute. Section 95 of the Civil Procedure Act 2005 (NSW) does not abrogate joint liability in equity. In certain cases, Quistclose or express trusts can arise over payments based on intention, and attribution of knowledge to corporations is possible where officers are involved in contraventions. The release rule in equity, the requirement of causation, and statutory directors' duties were also authoritatively addressed.

Parties
First Plaintiff: Mitchell Warren Ball in his capacity as liquidator of Earth Civil Australia Pty Ltd (in liq); Second Plaintiff: Earth Civil Australia Pty Ltd (in liq); First Defendant: Michael Abou-Antoun; First Defendant: Banq Accountants and Advisors Pty Ltd; First Plaintiff: Mitchell Warren Ball in his capacity as liquidator of RCG CBD Pty Ltd (in liq); Second Plaintiff: RCG CBD Pty Ltd (in liq); First Plaintiff: Mitchell Warren Ball in his capacity as liquidator of Bluemine Pty Ltd (in liq); Second Plaintiff: Bluemine Pty Ltd (in liq); Defendant: Gino Cassaniti; First Plaintiff: Mitchell Warren Ball in his capacity as liquidator of Diamondwish Pty Ltd (in liq); Second Plaintiff: Diamondwish Pty Ltd (in liq); First Plaintiff: Mitchell Warren Ball in his capacity as liquidator of Rackforce Pty Ltd (in liq); Second Plaintiff: Rackforce Pty Ltd (in liq)
Jurisdiction
Australia
Judgment Date
06 August 2021
Procedural Posture
Principal Judgment (civil, Equity, Corporations, Trusts, Restitution) / Judgment on Substantive Hearing, Directions for Final Orders and Costs
Outcome
Reserved for final short minutes of order, with directions for further submissions and minutes regarding proposed orders and costs.
Legal Topics
Fiduciary Duties, Breach of Trust, Barnes V Addy Liability, Directors' Duties, Voidable Transactions, Unjust Enrichment
Equity Corporations Restitution Fiduciary Duties Breach of Trust Barnes V Addy Liability Directors' Duties Voidable Transactions +1 more

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Parties

Mitchell Warren Ball in his capacity as liquidator of Earth Civil Australia Pty Ltd (in liq)

First Plaintiff

Earth Civil Australia Pty Ltd (in liq)

Second Plaintiff

Michael Abou-Antoun

First Defendant

Banq Accountants and Advisors Pty Ltd

First Defendant

Mitchell Warren Ball in his capacity as liquidator of RCG CBD Pty Ltd (in liq)

First Plaintiff

RCG CBD Pty Ltd (in liq)

Second Plaintiff

Mitchell Warren Ball in his capacity as liquidator of Bluemine Pty Ltd (in liq)

First Plaintiff

Bluemine Pty Ltd (in liq)

Second Plaintiff

Gino Cassaniti

Defendant

Mitchell Warren Ball in his capacity as liquidator of Diamondwish Pty Ltd (in liq)

First Plaintiff

Diamondwish Pty Ltd (in liq)

Second Plaintiff

Mitchell Warren Ball in his capacity as liquidator of Rackforce Pty Ltd (in liq)

First Plaintiff

Rackforce Pty Ltd (in liq)

Second Plaintiff

Procedural Posture

Principal Judgment (civil, Equity, Corporations, Trusts, Restitution) / Judgment on Substantive Hearing, Directions for Final Orders and Costs

Legal Issues

  1. 1 Whether liability under Barnes v Addy is joint and several
  2. 2 Whether s 95 Civil Procedure Act 2005 (NSW) abrogates joint liability
  3. 3 Application and scope of the release rule in equity

Ratio Decidendi

The Court held that liability for breach of trust or fiduciary duty under the rule in Barnes v Addy extends to knowing assistants and is joint and several unless clearly abrogated by statute. Section 95 of the Civil Procedure Act 2005 (NSW) does not abrogate joint liability in equity. In certain cases, Quistclose or express trusts can arise over payments based on intention, and attribution of knowledge to corporations is possible where officers are involved in contraventions. The release rule in equity, the requirement of causation, and statutory directors' duties were also authoritatively addressed.

Court Disposition

Reserved for final short minutes of order, with directions for further submissions and minutes regarding proposed orders and costs.

Orders

  • Parties to file and serve written submissions as to costs within 21 days.
  • Plaintiffs to file and serve within 14 days short minutes of order as to proposed orders; defendants to respond within 7 days.