Rheem Australia Pty Ltd v McInnes (No 2) [2020] NSWSC 1665

Rheem Australia Pty Ltd v McInnes (No 2) [2020] NSWSC 1665

Rheem was entitled to judgment against the first defendant for the fraudulently misappropriated sum with statutory pre-judgment interest, and to equitable charges over assets or monies into which its funds could be traced. Because a charge elected over a mixed asset should provide proprietary relief of full economic value, the charges secured both the traceable principal amounts and pre-judgment interest. The December 2018 payments to the second defendant were void under s 37A of the Conveyancing Act 1919 (NSW), so the monies in Court were declared owned by the first defendant, subject to Rheem's equitable charge for the traceable amount and interest. Rheem elected s 37A relief and...

Jurisdiction
Australia
Judgment Date
23 November 2020
Procedural Posture
Equity Proceedings Concerning Tracing, Restitution, Equitable Charges, Dispositions to Defraud Creditors and Costs / Further Judgment Giving Reasons for Final Relief Orders Made on 6 November 2020 and for Costs Orders
Outcome
Final relief and costs orders made for the plaintiff in part against both defendants; ordinary costs ordered against the first defendant and limited costs against the second defendant up to 10 July 2020.
Legal Topics
['tracing Into Mixed Funds and Property' 'equitable Charge' 'pre Judgment Interest' 'disposition to Defraud Creditors' 'calderbank Offer' 'party/party Costs' 'separately Represented Defendants']
['equity' 'restitution' 'costs' 'property' 'civil Procedure'] ['tracing Into Mixed Funds and Property' 'equitable Charge' 'pre Judgment Interest' 'disposition to Defraud Creditors' 'calderbank Offer' 'party/party Costs' 'separately Represented Defendants']

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Procedural Posture

Equity Proceedings Concerning Tracing, Restitution, Equitable Charges, Dispositions to Defraud Creditors and Costs / Further Judgment Giving Reasons for Final Relief Orders Made on 6 November 2020 and for Costs Orders

Legal Issues

  1. 1 ['Whether equitable charges over assets acquired or liabilities discharged with traceable misappropriated monies should secure pre-judgment interest as well as principal traceable amounts.' 'Whether interest on the Menai property charge should run from the mortgage repayment date or from the date the second defendant was joined.' 'What relief should be made under s 37A of the Conveyancing Act 1919 (NSW) for payments totalling $405,000 made by the first defendant to the second defendant.' 'Whether Rheem had to elect between s 37A relief and restitutionary judgment against the second defendant concerning the December 2018 payments.' 'Whether Rheem acted unreasonably in rejecting Calderbank offers so as to affect costs.' 'What costs orders should be made against separately represented defendants.']

Ratio Decidendi

Rheem was entitled to judgment against the first defendant for the fraudulently misappropriated sum with statutory pre-judgment interest, and to equitable charges over assets or monies into which its funds could be traced. Because a charge elected over a mixed asset should provide proprietary relief of full economic value, the charges secured both the traceable principal amounts and pre-judgment interest. The December 2018 payments to the second defendant were void under s 37A of the Conveyancing Act 1919 (NSW), so the monies in Court were declared owned by the first defendant, subject to Rheem's equitable charge for the traceable amount and interest. Rheem elected s 37A relief and...

Court Disposition

Final relief and costs orders made for the plaintiff in part against both defendants; ordinary costs ordered against the first defendant and limited costs against the second defendant up to 10 July 2020.

Orders

  • ['Judgment for the plaintiff against the first defendant in the principal sum of $2,098,608, together with pre-judgment interest of $937,984, totalling $3,036,592.' 'Judgment for the plaintiff against the second defendant, jointly with the first defendant, in the principal sum of $237,480, together with pre-judgment...