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Up-dates to Radan & Stewart, Principles of Australian Equity and Trusts, 3rd ed,

LexisNexis, 2016

CHAPTER 5At the end of 5.68 add the following :

In the light of these cases, in Recoveries Corporation Group Ltd v American Express Australia Ltd1 Emmett AJA said:

[W]here a taxpayer assigns, by way of gift, all the interest derived during a year of income from a loan made by the taxpayer, the future interest on the loan was merely an expectancy or possibility, which could not be effectively assigned without consideration. The interest would therefore be assessable income of the taxpayer … On the other hand, where a taxpayer who is entitled under a licence agreement to royalties directly proportionate to the number of products manufactured by a licensee, an assignment by way of gift of the taxpayer’s right, title and interest in and to a fixed proportion of the income that might accrue under the licence agreement is a present assignment of an existing chose in action and not an assignment of an expectancy or a covenant to assign future property. Accordingly, the proportion of the royalties in question would not be part of the assessable income of the taxpayer.

1 [2016] NSWSC 771 at [85].


The duty of confidence must be owed to the claimant. If the duty is owed to a person other than the claimant, the claimant will fail.2 Thus, in Fraser v Evans,3 the claimant was a public relations consultant for the Greek government who sought an injunction to prevent publication of one of his reports by the Sunday Times. The claim failed because any duty of confidence that was owed, was owed not to the claimant, but to the Greek government.

At the end of 9.82 add the following :

Thus, in an employment relationship, the employee may be a fiduciary and may also owe obligations of confidence with respect to information that he or she receives in the context of the employment relationship.4

2 Axon v Ministry of Defence [2016] EWHC 787 (QB) at [68].3 [1969] 1 QB 349.4 Lifeplan Australia Friendly Society Ltd v Woff [2016] FCA 248 at [333].


However, where there is a partnership agreement, the relationship will be largely governed by the contract. In Chan v Zacharia5 Deane J said the following:

As between partners, the rights and duties of the members of a partnership are primarily contractual, flowing from the express or implied terms of the particular partnership agreement. Questions of illegality aside, the implication, by statute or the general law, of general or particular obligations or standards is, as between the partners, ordinarily subject to any contrary provision in the agreement between them. It is conceivable that the effect of the provisions of a particular partnership agreement, in the context of the nature of the particular partnership, could be that any fiduciary relationship between the partners was excluded. As a general rule however, the relationship is a fiduciary one.

At the beginning of 10.95 insert the following :

Notwithstanding suggestions in some cases to the contrary,6 the relationship of employer and employee is not an accepted fiduciary relationship.


In Fenwick v Naera,7 Glazebrrok J, speaking for the majority of the Supreme Court of New Zealand said:

Liability for the breach of the no conflict rule is generally strict. It is usually no defence to show that any unauthorised profit was made ‘“honestly” or in good faith’ or that the transaction was fair. The use of strict liability in the context of a fiduciary relationship stems from fiduciary law’s traditional prophylactic approach: it is thought that prevention is better than cure in that this provides good protection to beneficiaries and removes temptation from fiduciaries.


In relation to whether a fiduciary has acted in breach of this sub-rule, in SBA Music Pty Ltd v Hall (No 3)8 Wigney J said:

A fiduciary cannot divert to him or herself, or another person or company with whom or with which he or she is associated, a maturing business opportunity which the company is actively pursuing. A maturing business opportunity often takes the form of an opportunity to supply some services or goods which is approaching the stage where a contract can be formed but has not yet reached it; an unconscionable diversion of such an opportunity amounts to a breach of the [the misuse of position sub-rule] … A fiduciary’s position inhibits him or her not only in respect of

5 (1984) 154 CLR 178 at 196; 53 ALR 417 at 431.6 Lifeplan Australia Friendly Society Ltd v Woff [2016] FCA 248 at [327]; Mimmo v Fernando [2016] VSC 510 at [60], [236].7 [2016] 1 NZLR 354 at 377.8 [2015] FCA 1079 at [23]-[25].

business opportunities that the company is actively pursuing, but also opportunities in which the company might reasonably be expected to be interested, given its current line of business.

At the beginning of 10.154 insert the following :

In Crossman v Sheahan9 Ward JA observed that ‘[t]he requisite disclosure may be given at different times and in different ways, and sufficiency of disclosure can depend on the sophistication and intelligence of the persons to whom disclosure must be made’.


In the context of an employee who owes fiduciary obligations to an employer who is a corporation, the employee, in order to obtain the consent of the employer, must obtain the informed consent of the board of directors. It is not enough that he or she obtains the informed consent of some of the members of the board of directors.10

9 [2016] NSWCA 200 at [366].10 Coope v LCM Litigation Fund Pty Ltd (2016) 333 ALR 524 at 560.


In relation to the two varieties of proprietary estoppel, in Priestley v Priestley11 White J noted that ‘the same basal principles apply … to cases of proprietary estoppel, whether the estoppel be characterised as estoppel by encouragement, being based upon a representation by the party claimed to be estopped that induced the plaintiff to change his position to his detriment, or estoppel by acquiescence consisting of the person claimed to be estopped standing by whilst the plaintiff alters his position to his detriment in the belief that he has or will acquire an interest in the subject property. The act of standing by without correcting the plaintiff’s mistaken belief is itself an act of encouragement’. In Doueihi v Construction Technologies Australia Pty Ltd12 the Court of Appeal said that ‘[e]stoppel by encouragement is generally recognised as an “active” form of estoppel, whereas estoppel by acquiescence is generally considered a “passive” form of estoppel’.


Thus, as was noted by Keane JJ in Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd,13 ‘the categories of promissory and proprietary estoppel serve a common purpose of protecting a party from a detriment which ‘would flow from a party’s change of position if the assumption (or expectation) that led to it were deserted’.

Delete 14.49 -14.56 and replace with the following :

14.49 To establish a case based upon principles of equitable estoppel, there needs to be a promise or a sufficiently clear and unambiguous representation. In Low v Bouverie,14 Bowen LJ said:

[T]he language upon which the estoppel is founded, must be precise and unambiguous. That does not necessarily mean that the language must be such that it cannot possibly be open to different constructions, but that it must be such as will be reasonably understood in a particular sense by the person to whom it is addressed.

The promise or representation can be either express or implied. In Legione v Hateley,15 Mason and Deane JJ said:

The requirement that a representation as to existing fact or future conduct must be clear … does not mean that the representation must be express. Such a clear representation may properly be seen as implied by the words used or to be adduced from either the failure to speak where there was a duty to speak or from conduct. Nor is it necessary that

11 [2016] NSWSC 1096 at [109]. 12 [2016] NSWCA 105 at [133].13 [2016] HCA 26 at [139].14 [1891] 3 Ch 82 at 106.15 (1983) 152 CLR 438–9; 46 ALR 1 at 23–4.

a representation be clear in its entirety. It will suffice if so much of the representation as is necessary to found the propounded estoppel satisfies the requirement.

However, there can be no promise or representation by mere silence during pre-contractual negotiations.16

14.50 The rationale for this requirement of clarity stems from the fact that equitable estoppel is founded on the principle of unconscientiousness and unconscientiousness is difficult to establish if the representation is ambiguous or unclear.17

14.51 The critical question with respect to the clarity of the representation is whether different standards of clarity or certainty apply in relation to promissory estoppel, on the one hand, and proprietary estoppel, on the other.

14.52 In Westpac Banking Corporation v The Bell Group Ltd (in liq) (No 3) ,18 Drummond AJA expressed the view that a higher standard of clarity was necessary in cases of promissory estoppel. His Honour stated that ambiguity or lack of clarity will be fatal to any promissory estoppel case. However, this was not necessarily so in proprietary estoppel cases, where ‘vague and imprecise conduct is often enough to give rise to an equitable proprietary estoppel’. His Honour19 observed that this was so because, unlike promissory estoppel cases, proprietary estoppel cases ‘do not depend on proof of clear representations or promises but on conduct with respect to property of the parties said to be estopped that is often diffuse and ambiguous, but which is sufficient, in the circumstances of the particular case, to attract the intervention of equity’.

Drummond AJA’s views on promissory estoppel are seemingly echoed in Closegate Hotel Development (Durham) Ltd v McLean,20 where Richard Snowden QC, after an analysis of relevant English cases on the matter, said:

[I]t seems to me that the weight of authority is to the effect that for a plea of promissory estoppel to succeed, there must have been a clear and unequivocal statement; and that if ambiguous words were used which could reasonably be interpreted in several ways (one of which would not support the alleged estoppel) then those words will not found an estoppel unless the representee seeks and obtains clarification of the statement.

14.53 A similar view to that of Drummond AJA was taken by Keane J in Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd.21 In that case His Honour22 expressed the view that the test of clarity in promissory estoppel cases ‘should be no

16 Blackley Investments Pty Ltd v Burnie City Council (No 2) (2011) 21 Tas R 98 at 111–2.17 Australian Crime Commission v Gray [2003] NSWCA 318 at [200].18 (2012) 44 WAR 1 at 310; 270 FLR 1 at 308.19 Westpac Banking Corporation v The Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1 at 311; 270 FLR 1 at 309.20 [2013] EWHC 3237 (Ch) at [57].21 [2016] HCA 26.22 Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26 at [147].

less … than would be required for an effective contractual variation’. His Honour23 justified this view as follows:

Observance of this limit on the operation of estoppel in equity ensures that it is not allowed to operate to underwrite unrealistic expectations or wishful thinking. Such an operation would be especially pernicious in a commercial context; but even in a non-commercial context estoppel should not be allowed to operate as an instrument of injustice.

14.54 On the other hand, in Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd.24 Nettle J25 took a contrary view when he said that ‘[t]he notion that it takes a representation of contractual certainty to found a promissory estoppel is misplaced’. His Honour26 was of the view that the test of certainty is the same for both promissory estoppel and proprietary estoppel. His Honour27 justified his view as follows:

The foundational principle on which equitable estoppel in all its forms is grounded is that equity will not permit an unjust or unconscionable departure by a party from an assumption or expectation of fact or law, present or future, which that party has caused another party to adopt for the purpose of their legal relations. Consequently, the notion that there is or should be some a priori distinction between the degree of objective certainty required to found a promissory estoppel compared to a proprietary estoppel runs counter to principle. … [I]n as much as the recognised categories of equitable estoppel are instances of the operation of the more general foundational principle, the determination of whether it is unconscionable for the charged party to depart from an assumption or expectation created in the mind of the claimant must always depend on the particular facts and circumstances of the case.

14.55 Although there is a divergence of views on the test for clarity or certainty of a representation in the context of promissory estoppel, there is agreement that in cases of proprietary estoppel, the test is less than that that is required for contract formation or variation. Thus, in the context of a proprietary estoppel case, in Sullivan v Sullivan,28 Hodgson JA said:

It has been said that in some respects at least more certainty is required for an estoppel than for a contractual variation; but it is also the case that a promise or representation may support an estoppel even though it is not sufficiently certain to operate as a contract. Generally, a promise or representation will be sufficiently certain to support an estoppel if it was reasonable for the representee to interpret the representation or promise in a particular way and to act in reliance on that interpretation, thereby suffering detriment if the representor departs from what was represented or promised. Generally, if there is a grey area in what is represented or promised, but it was reasonable for the representee to interpret it as extending at least to the lower limit of the grey area and to act in reliance on it as so understood, I see no reason why the Court should not regard the representation or promise as sufficiently certain up to this lower limit.

23 Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26 at [153].24 [2016] HCA 26.25 Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26 at [211].26 Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26 at [215].27 Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26 at [217].28 [2006] NSWCA 312 at [84]–[85]. See also Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd [2008] VSCA 86 at [178].

14.56 In proprietary estoppel cases, whether the relevant representation is sufficiently clear and unambiguous is, as Lord Walker of Gestingthorpe observed in Thorner v Major,29 ‘hugely dependent on context’. In that case, in the context of a family relationship, an expectation generated by somewhat oblique remarks was sufficiently clear and certain to establish a proprietary estoppel claim. However, in Saravinovksa v Saravinovski (No 6)30 Kunc J held, in the circumstances of that case, that ‘a representation that ‘I am going to give you one of my properties’, rather than referring to a specific and identifiable property, was not sufficiently clear and unequivocal to support an estoppel claim. The result might be different if the identity of the property was objectively ascertainable from other facts’.


Although Brennan J’s statement was made in the context of a promissory estoppel case, the principles are also applicable to proprietary estoppel cases.31 In Smilevska v Smilevska (No 2),32 Slattery J rephrased these elements in the context of proprietary estoppel claims as follows:

The necessary elements of a proprietary estoppel are well established. The plaintiff must show: (1) the owner of property encouraged or induced in the plaintiff an expectation of obtaining an interest in property; (2) the expectation has arisen reasonably from the defendant’s conduct; (3) knowledge by the defendant of the plaintiff’s expectation or belief; (4) the plaintiff altered his or her position in reliance on the expectation; (5) the plaintiff would suffer an identifiable detriment from his or her change of position were the expectation not fulfilled; (6) the circumstances render it unconscionable for the defendant to disappoint the expectation.

At 14.61 , delete the last sentence and replace with the following :

However, for a failure to fulfil such a promise to give rise to liability in equitable estoppel, in DHJPM Pty Limited v Blackthorn Resources Limited33 Meagher JA stressed that there had to be some encouragement by the representor to the relying party that the promise would be performed. On the basis of this ruling, in Arfaras v Vosnakis34 an equitable estoppel case was established in relation to a promise to transfer a burial licence.

On the other hand, while it may well be the case that, in promissory estoppel cases, the relying party needs to show that he or she assumed that a particular legal relationship existed or would exist between the parties, this is not necessarily the case with proprietary estoppel cases. This is made clear in Doueihi v Construction Technologies Australia Pty Ltd35 where the Court of Appeal said:29 (2009) 3 All ER 945 at 964.30 [2016] NSWSC 964 at [331].31 Pirana v Pirana Holdings Pty Limited [2015] NSWSC 1899 at [48].32 [2016] NSWSC 397 at [112].33 (2011) 83 NSWLR 728 at 741; 285 ALR 311 at 324.34 [2016] NSWCA 65 at [87]-[89].35 [2016] NSWCA 105 at [154].

Authority establishes that the circumstances in which a proprietary estoppel will arise include those in which assurances are given so as to create or encourage an assumption that ‘a particular legal relationship would be established’ or ‘an interest’ would be granted. (Emphasis added.)

In relation to the situation where the assumption is that an ‘interest’ would be granted, the Court of Appeal36 went on to say that it could arise could arise ‘in circumstances where the parties did not believe they needed to enter into a contract or otherwise contemplate formalising their legal relationship’.

36 Doueihi v Construction Technologies Australia Pty Ltd [2016] NSWCA 105 at [159].


Ultimately, whether the agent is also a trustee in this context depends upon the intention of the parties. That intention is derived from ‘the contract [of agency], or in some cases from their conduct’.37


A further illustration of the broad application of Quistclose trusts is the decision in Djemal v Cemal.38 In that case a mother agreed with her son and daughter-in-law that the mother would sell her home and that the proceeds of sale would be used to purchase a vacant block of land upon which a house would be built as a home for the mother, her son, and her daughter-in-law. The land was purchased from the proceeds of sale of the mother’s home and the balance of sale proceeds were deposited into a special bank account to be used for building the new home. The new home was never built because of a breakdown of the relationship between the mother and her son and daughter-in-law. In relation to funds in the special bank account White J39 held that, because the funds were to be used exclusively for the specific purpose of constructing a house, a Quistclose trust arose once that purpose had failed.


In relation to the differences between an equitable lien and a trust, in Truthful Endeavour Pty Ltd v Condon,40 the Full Court of the Federal Court said:

[T]he rights acquired by the holder of a lien are different from the rights acquired by a beneficiary under a trust of any kind. A lien gives the holder an equitable interest in the property but, in contrast to a trust, no beneficial ownership which would enable her or him to use and enjoy the property and take action in respect of it. A lienee has only a security interest. He or she may only resort to the charged property to satisfy a liability. In contrast to a trust, the value of an equitable lien is not tied to the value of the property over which it is fixed. A beneficiary under a trust is entitled to the income of the property. A lienee is not. A trustee’s duties in relation to the trust property are far more onerous than are the lienor’s over the charged property. And the available remedies are different. A beneficiary under a trust may proceed in equity for performance of the trust but not for the sale of the trust property. A lienee, on the other hand, may.

37 Bailey v Angove’s Pty Ltd [2016] UKSC 47 at [19].38 [2015] NSWSC 1125.39 Djemal v Cemal [2015] NSWSC 1125 at [28]-[30].40 (2015) 233 FCR 174 at 195-6; 321 ALR 483 at 504.


In Clayton v Clayton,41 the Supreme Court in New Zealand held that a court ‘can find that the deed creating a trust is a sham if the parties are shown to have intended it to be a pretence. But there is no basis to extend the sham concept to encompass a trust created under a document that was not intended to be a pretence but that the Court considers is otherwise reprehensible in some way’.

41 [2016] 1 NZLR 551 at 581.


In City of Mandurah v Australian Flying Corps & Royal Australian Air Force Association (WA Division)42 Buss JA, speaking for a unanimous Court of Appeal said:

The practice of the courts has been to determine, by reference to the Preamble to the Statute of Charitable Uses, whether a purpose is charitable in law. The Preamble does not contain a definition of charitable purposes. Rather, it lists numerous purposes. Those purposes and all other purposes which, by analogy, ‘are deemed within [the Preamble's] spirit and intendment’ are, in law, charitable. The spirit and intendment of the Preamble should not be given a narrow or archaic construction. Also, the understanding of judges in the community in which they live of what a particular activity involves may be accepted as a proper understanding of the nature of that activity. The legal concept of charitable purposes must be ascertained from ‘the conditions of the [contemporary] age’ and an historical review reveals ‘the ever widening scope’ of purposes which are charitable in law. The range of charitable purposes is dynamic, not static.


In Sharp v Attorney General of NSW43 the deceased was a well-known and significant artist who, in his will left his estate, which included his house which was known as Wirian, to his trustees to carry out his instructions that ‘“Wirian” be a place where people can be educated not only in relation to art and artists but in my work, the as yet unrecognised significance of Luna Park and the work of Tiny Tim whom I regard as an under-appreciated artist’. Stevenson J upheld this as a valid trust for the advancement of education.

42 [2016] WASCA 185 at [42]-[44].43 [2015] NSWSC 1580.


In The Lutheran Laypeople’s League of Australia Inc44 Hinton J said the following:

The authorities indicate that the inherent power is one to clarify, supplement or alter the machinery or means identified in a trust instrument by which the trust objects, or ends, are to be achieved. The Court does no more than complete “the trusts to carry out objects which ... have been indicated in sufficiently clear terms” by the settlor.45 That is, the Court “carries into effect the wishes and intentions of the founder of the charity; and where it sees that those intentions have not been carried into effect, it rectifies the existing administration of the charity for that purpose”.46 In In re Mason’s Orphanage and London and North Western Railway Co,47 Stirling J observed that historically schemes for the administration of a charitable trust –

... were made mainly in three classes of cases: (1.) Where the directions contained in the instrument of foundation were ambiguous, imperfect, or otherwise insufficient; (2.) Where the directions, though originally precise and complete, had become under altered circumstances unsuitable to carry out the general intention of the founder; and (3.) Where a scheme sanctioned by the Court itself had in like manner become unsuitable for that purpose.

On an application for an order imposing a scheme for the regulation of the administration of a charitable trust, the question is whether, having regard to the trust objects, it is expedient to regulate the administration of the trust in accordance with a proposed scheme. In answering this question two cardinal principles are controlling. First, the function of the Court is to enforce the charitable trust and secure the intended public benefit. Second, the Court has no authority to change the trust objects nor to alter by a scheme the benefit that such objects intend. Thus any scheme must operate within the ambit of the trust objects.


In The Lutheran Laypeople’s League of Australia Inc48 the court ordered an administrative scheme to enable a charity to gain registration with the Australian Charities and Not-for-Profit Commission. This registration enabled the charity to gain tax exemption status.


If the named beneficiary has merely changed its name or its formal structure it will

44 [2016] SASC 106 at [30]-[31].45 In Re Robinson; Besant v The German Reich [1931] 2 Ch 122 at 128-9.46 The Attorney-General v The Governors of the Free Grammar School of Queen Elizabeth in Dedham (1857) 53 ER 138 at 140.47 [1896] 1 Ch 54 at 57-8.48 [2016] SASC 106 at [56]-[57].

generally not be seen to have ceased to exist.49 In Re Coulson50 McMillan J said:

[W]hen it comes to charities, a simple dissolution and reincorporation may not result in the charity ceasing to exist. Incorporation in a particular jurisdiction or in a particular manner is merely the machinery by which the charity operates. If the charity organisation continues its work through a new body corporate, it may not have ceased to exist. This will depend on the objects and purposes, and arrangements upon dissolution, of the two organisations. This principle recognises that a charitable organisation may have conducted its charitable work continuously, yet made changes to its legal form depending on the vicissitudes of government regulatory policy or the benefits of incorporation in different jurisdictions. In such situations the charity organisation has not truly ceased to exist.


In Estate Polykarpou; Re a charity51 Lindsay said that ‘an evident object of s 10(2) is to reverse the onus of proof on the question of “general charitable intention” in determining, if and when required for a determination of, the validity of a trust for charitable purposes’.


On the other hand, in Knowles v Attorney-General52 the court approved a scheme for a nursing home to amalgamate with another nursing home, in circumstances where the new entity’s constitution provided for purposes that varied from the original purposes of the first nursing home.

49 Melba Support Services Inc v Bell [2014] VSC 425 at [42]-[43].50 [2014] VSC 353 at [43].51 [2016] NSWSC 409 at [84].52 [2016] TASSC 25.


The power to appoint a trustee is fiduciary in nature and cannot be delegated to another person unless the trust instrument expressly authorises such a delegation.53 A person appointed as a trustee does not take up the office until he or she has accepted the trust. However, that person cannot be compelled to accept the appointment, but musty disclaim the trust before he or she does anything which indicates an intention to accept the appointment.54


In Benson v Doloraine Pty Ltd55 Porter J said:

[F]riction or hostility between the trustee and the beneficiaries is not of itself a reason for the removal of the trustee, particularly where the point of view of the impugned trustee was honestly held, arguable and tenable. But where the hostility is grounded on the mode in which the trust has been administered, it is a factor not to be disregarded … [C]ircumstances in which trustees have been removed … include where the trustee has refused to execute the trust, where a trustee is not impartial, ‘and generally where the court has been satisfied that the trust property would not be safe in the trustee’s hands and the trust executed in the interests of the beneficiaries’.56


In Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand57 the different approaches in Gatsios Holdings v Nick Kritharas Holdings (in liq)58 and Nolan v Collie59 were referred to, but not resolved, by the High Court.60


Where there are a number of trustees, costs of separate legal representation will only be permitted in special circumstances.61 Such circumstances include ‘[i] when

53 New Zealand Maori Council v Foulkes [2016] 2 NZLR 337 at 344-5.54 ACN 005 490 540 Pty Ltd v Robert Frederick Jane Pty Ltd [2016] VSC 219 at [25].55 Benson v Doloraine Pty Ltd [2015] TASSC 41 at [105].56 J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia, 7th ed, LexisNexis Butterworths, Sydney, 2006, pp 353.57 (2008) 237 CLR 66 at 112 (fn 156); 249 ALR 250 at 286 (fn 156).58 [2002] NSWCA 29. The approach in this case was cited with apparent approval in Moloney v Marler & Darvall [2004] QSC 228 at [57]-[58] and Re Great Southern Managers Australia Ltd (recs & mgrs apptd) (in liq) (No 2) [2011] FCA 958 at [49].59 (2003) 7 VR 287. The approach in this case was followed in Wales v Wales [2015] VSCA 345 at [41].60 Park & Muller (Liquidators of L M Investment Management Ltd) v Whyte [2015] QSC 287 at [110].61 Gaunt v Taylor (1840) 2 Beav 346 at 347.

one of the trustees has a personal interest which conflicts with his or her duty as a trustee … [ii] when one trustee can admit facts which the trustees believe not to be true …[iii] when allegations of fraud or improper conduct are made against one trustee but not others’.62


In Re: Application of the Anglican Property Trust Diocese of Bathurst,63 Slattery J noted that the trust estate would not be available to meet a trustee’s legal expenses in defending proceedings if expending such assets would be ‘futile’ or fruitless’.


In Fischer v Nemeske Pty Ltd64 the High Court held that, in a discretionary trust in which the trustees had the power ‘to pay ot to apply’ the trusts’ capital or income ‘for the maintenance education advancement in life or benefit’ of certain beneficiaries, this could be done by means of creating a debt in favour of the benefiaries and that there was no need for funds to to be actually transferred out of the trust and to the specified beneficiaries.

At the end of the first sentence in 26.104 insert the following :

The duty to keep trust funds separate from other funds has been described as a ‘hallmark duty of a trustee’,65 although ‘money in a mixed fund may be held on trust, and that a trust of money can be created without an obligation to keep it in a separate account’.66


In Silkman v Shakespeare Haney Securities Ltd,67 Hammershlag J, following Schmidt v Rosewood Pty Ltd,68 said:

Absent clear appellate guidance, I propose to follow the Schmidt approach. A consideration of the authorities reveals that the Londonderry approach has jurisprudential difficulties which the Schmidt approach does not have, including:

ascribing a workable and principled definition of the term ‘trust documents’;

divining the nature of the beneficiary’s so-called proprietary interest in such documents. In

62 Teo v Buckeridge [2016] WASC 164 at [8].63 [2016] NSWSC 13 at [14].64 (2016) 330 ALR 1.65 Puma Australia Pty Ltd v Sportsman's Australia Ltd (No 2) [1994] 2 Qd R 159 at 162; Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) (2000) 202 CLR 588 at 605; 171 ALR 568 at 579.66 Re Lehman Bros International (Europe) (in admin) [2012] 3 All ER 1 at 59; Davis v Perry O’Brien Engineering Pty Ltd [2016] QSC 202 at [50].67 [2011] NSWSC 148 at [27].68 [2003] 2 AC 709; [2003] 3 All ER 76.

Hartigan Nominees v Rydge69 Sheller JA articulated this difficulty by describing this ‘trail as unhelpful if not false’;

that on the Londonderry70 approach a discretionary beneficiary who has no lesser interest in the due administration of the trust (but who has no proprietary interest in the assets) should, illogically, be denied disclosure;

that authorities which have taken the Londonderry71 approach have limited the beneficiary’s right to disclosure by reference to the interests of third parties in maintaining confidentiality. It is difficult to reconcile this limitation with the principle for which Londonderry72 stands; and

reconciling a beneficiary’s entitlement to documents such as a settlor’s statement of intention or a constituent trust deed (which undoubtedly a beneficiary should properly have) with the fact that these instruments are themselves not assets or appurtenant to assets of the trust.


On the other hand, in Deutsch v Trumble73 Hargrave J, after a detailed analysis of the cases, declined to follow the approach in Schmidt v Rosewood Pty Ltd.74 His Honour was of the view that dicta in the High Court and the weight of other Australian authority meant that the proprietary approach set out in O’Rourke v Darbishire75 should be followed. However, his Honour76 noted that the proprietary approach is ‘subject to the exception[s] that a trustee need not produce documents disclosing reasons for the exercise of discretionary powers … [and that a] trustee is not required to produce documents containing confidential information of third parties’.


In relation to being properly informed when reaching a decision, a trustee’s duty does not extend to doing the impossible. In Alcoa of Australia Retirement Plan Pty Ltd v Frost77 Nettle JA said:

So to say does not mean that a trustee is required to do the impossible. Nor is it to suggest that a trustee is expected to go on endlessly in pursuit of perfect information in order to make a perfect decision. The reality of finite resources and the trustee’s responsibility to preserve the fund for the benefit of all beneficiaries according to the terms of the deed means that there must be a limit … I accept that a trustee is not under an obligation to go on endlessly seeking more and more information. It may also be that a trustee is not

69 (1992) 29 NSWLR 405 at 444.70 Re Londonderry’s Settlement; Peat v Walsh [1965] Ch 918; [1964] 3 All ER 855.71 Re Londonderry’s Settlement; Peat v Walsh [1965] Ch 918; [1964] 3 All ER 855.72 Re Londonderry’s Settlement; Peat v Walsh [1965] Ch 918; [1964] 3 All ER 855.73 [2016] VSC 263 at [46]-[73].74 [2003] 2 AC 709; [2003] 3 All ER 76.75 [1920] AC 581 at 626.76 Deutsch v Trumble [2016] VSC 263 at [73].77 (2012) 36 VR 618 at 633.

required to undertake any inquiries until and unless a claimant puts forward sufficient material to show that there is a case to be investigated.


In Re Tracey,78 Boddice J said:

The rule in Saunders v Vautier operates as an exception to the normally strict requirements for adherence to the terms of a trust [I]ts genesis was the prevention of inappropriate restriction on alienation and the postponement of vesting or possession or the imposition of restrictions on the enjoyment of an absolute vested interest. The rule embodies a principle that it is the right of beneficiaries of a trust, who are sui juris and together absolutely entitled to the trust property, to exercise their proprietary rights to defeat the intention of a testator or settlor to subject property to the continuing trusts, powers and limitations of a Will or trust instrument. In the case of a sole beneficiary, the rule provides that where the sole beneficiary’s interest in the trust property is vested and that beneficiary is sui juris, the beneficiary may put an end to the trust by directing the trustees to transfer the trust property to the beneficiary or a nominee, notwithstanding any directions to the contrary in the trust instrument.

The rule has been acknowledged to be a ‘remarkable exception’ to the general principle that a donee or legatee can only take what is given, on the terms on which it is given. Being an exception, application of the rule has been restricted to those cases where both pre-conditions are met: first, that every beneficiary be sui juris, and second, that those beneficiaries have between them an absolute, vested and indefeasible interest in the capital and income of the property. The rule has no operation unless all persons who have any present or contingent interest in the property are sui juris and provide consent … A person is sui juris if that person has attained the age of majority and has full legal capacity.


However, equitable fraud, such as breach of fiduciary obligations, undue influence, and unconscionable bargains, is not within the meaning of fraud for this purpose.79

78 [2016] QCA 194 at [74]-[76].79 Wilden Pty Ltd v Green (2009) 38 WAR 429 at 467; Horwood v Davenport [2014] WASC 436 at [52].


However, a declaration affecting the interest of third parties should not be made unless they are parties to the application.80

Delete 28.21 and replace with the following :

28.21 It may seem difficult to reconcile this generally accepted principle with the propensity of courts to make declarations concerning future rights and liabilities, even where those may be dependent upon the occurrence of some contingency. The fact that the court is asked to make a declaration order as to future legal rights when its purpose is to regulate the future conduct of parties, does not necessarily render the question hypothetical. In this respect in CGU Insurance Limited v Blakeley,81 Nettle J said:

[T]he court does not lack jurisdiction to make a declaration concerning a theoretical issue, in the sense of an issue that does not presently exist but which is likely to arise in future, where the issue is productive of a real and pressing dispute, is of real practical importance or is one in which the claimant has a real commercial interest. Thus, for example, it is now well established that, where a claimant intends to take action which would subject him or her to a ‘theoretical’ possibility of being subjected to legal process, the risk of being so subjected to that process is sufficient to ground standing to claim a declaration that the basis of the process (in that case, the offence) is invalid and, co-ordinately, that in such cases there is a matter upon which the court has jurisdiction to adjudicate. Similarly, where a claimant has a real commercial interest in establishing the claimant’s legal status or entitlement in relation to proposed commercial conduct and there is a real controversy with some contradictor as to the existence or extent of the claimant's legal status or entitlement, the claimant may have standing to obtain, and the court co-ordinately will have jurisdiction to grant, a declaration as to the existence or extent of the status or entitlement.

The following two cases are illustrative.


However, as was noted by Croft J in Patrick Stevedores Operations (No 2) Pty Ltd v Port of Melbourne Corporation,82 ‘[a]lthough [a] Court will always endeavour to avoid a multiplicity of proceedings, the fact that a declaration may not finally conclude the dispute between the parties can hardly ever be, of itself, a proper ground for not making a declaration’.


80 Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825 at [924]-[945]; Martin v Nalder [2016] WASC 138 at [90].81 [2016] HCA 2 at [102].82 [2016] VSC 528 at [66].

However, despite the logic of this approach, the practice of making declarations confirming a past breach of statute seems to have been approved of by the High Court in Rural Press Ltd v Australian Competition and Consumer Commission83 and, as Gray J admitted in Australian Competition and Consumer Commission v Francis,84 is now “established”. Despite his Honour’s opinion that the requested declaration was “pointless” in a situation such as this where the parties had already settled the matter, his Honour granted it just the same. In Australian Competition and Consumer Commission v A Whistle & Co (1979) Pty Limited,85 a case concerning breaches of the Australian Consumer Law, Yates J, in holding that declaratory satisfied the requirement of utility, said:

This case has been brought to promote fair trading and to protect the public from dishonest practices. [Declaratory] relief will have utility by describing the contravening conduct with sufficient detail so that the public will know that the conduct has occurred and understand the basis on which other relief has been granted. Declaratory relief will also serve to convey the Court’s disapproval of the respondent’s conduct and to assist in deterring others from engaging in similar conduct.

In Cruse v Multiplex Ltd,86 a case involving breaches of the Workplace Relations Act 1996 (Cth), Goldberg and Jessup JJ said that courts, in exercising their discretion, could refuse declaratory relief in cases of this type in the following situations:

1. Where the dispute said to underlie the proceeding as a whole is entirely hypothetical …

2. Where … the underlying dispute has been settled, and it is part of the settlement that the court should be asked to make particular orders by consent.

3. As in situation 2, but where the parties are not agreed on the remedial orders which should be made (albeit that the facts and law are agreed or not controversial).

4. Where the terms of the declaration sought record the result of the case, but do not establish the content of the parties’ ongoing rights or obligations.

5. Where the declarations sought are in the form of what Gummow, Hayne and Heydon JJ described as “a bad precedent” in Rural Press Limited v Australian Competition and Consumer Commission.87

83 (2003) 216 CLR 53; 203 ALR 217.84 (2004) 142 FCR 1 at 36.85 [2015] FCA 1447 at [30]. See also Director of Consumer Affairs Victoria v Mecon Insurance Pty Ltd [2016] VSC 42 at [28].86 (2008) 172 FCR 279 at 296.87 Rural Press Limited v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [90].


For example, in the context of a vendor’s application to specifically enforce a contract for the sale of land, such disproportionate hardship will not arise merely because the purchaser has difficulty in finding the money to complete the purchase. Such difficulty is but a factor to be taken into account as to whether the facts and circumstances of the case establish the defence of hardship.88


In Love v Simmons89 the Court of Appeal said the following in relation to the requirement that a party be ready, willing, and able to perform:

The content of the requirement depends upon a proper construction of the contract to which the requirement is applied. Once the contract has been construed, the question of whether the party is ready, willing and able to perform the contract is essentially a question of fact.

Readiness and willingness in this context imports both the capacity to perform, as well as the disposition to perform. The question of a party's disposition to perform involves, essentially, a consideration of the party’s intention to perform. In Rawson [v Hobbs90], Dixon CJ said:

One must be very careful to see that nothing but a substantial incapacity or definitive resolve or decision against doing in the future what the contract requires is counted as an absence of readiness and willingness. On the other hand it is absurd to treat one party as tied to the performance of an executory contract although the other has neither the means nor intention of performing his part when his turn comes, simply because his incapacity to do so is not necessarily final or logically complete.


On the other hand, in Syzmanska v Syzmanski (No 2),91 the payment of money by one co-owner of land to the other, where the first co-owner also resided in the property, did not amount to sufficient acts of part performance of a contract for the sale of the second co-owners interest in the land to the first co-owner. In relation to the first co-owners residence in the property, Blue J92 held that his ‘act of … continuing to reside in the property is not referable to an agreement for the sale of an interest in property: as co-owner [he] had a right to possession of the property’.

88 Boyarsky v Taylor [2008] NSWSC 1415 at [34]-[35]; Hera Project Pty Ltd v Bisognin [2016] VSC 591 at [23].89 [2016] WASCA 176 at [42]-[43].90 (1961) 107 CLR 466 at 481.91 [2015] SASC 191.92 Syzmanska v Syzmanski (No 2) [2015] SASC 191 at [58].


However, in Despot v Registrar General of New South Wales,93 following an analysis of cases on this issue, the Court of Appeal in New South Wales reaffirmed the approach set out by the High Court in Sunbird Plaza Pty Ltd v Maloney.94

93 [2016] NSWCA 5 at [113]-[115].94 (1988) 166 CLR 245; 77 ALR 205.


Thus, in the context of the enforcement of a reasonable restraint of trade clause, in Amalgamated Pest Control Pty Ltd v SM & SE Gillece Pty Ltd95 Jackson J, speaking for the Court of Appeal, said:

The reasons why damages are often inadequate in such cases include: (i) the difficulty of detection of breaches of the obligations; (ii) the difficulty of establishing causation between any loss of business with customers and any actions of the ex-employee; and (iii) the difficulty of the calculation of the quantum of any damage arising from loss of business.


In Twinside Pty Ltd v Venetian Nominees Pty Ltd,96 Beech J said that ‘[t]he phrase “prima facie case” does not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed. It is sufficient that the plaintiff show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending the trial’.


In Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 8),97 Tottle J said:

[The] court can take into account the rights or interests of third parties that may be detrimentally affected if an interlocutory injunction is granted, and those which may be affected if such an injunction is refused. That said, the assessment of the balance of convenience is heavily dependent on the circumstances of the case at hand and … third party interests will rarely be a decisive consideration.


On the other hand, a ‘consideration which will be relevant in evaluating the balance of convenience will be whether, if the injunction is not granted, the plaintiff will suffer irreparable injury for which damages will not be adequate compensation’.98

At the end of the third sentence in 30.52 insert the following :

95 [2016] QCA 260 at [41].96 [2008] WASC 110 at [9].97 Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 8) [2015] WASC 473 at [58].98 XY v WA Country Health Service [2016] WASC 202 at [15].

On the other hand, in Hera Project Pty Ltd v Bisognin,99 a case in which the plaintiff’s undertaking was likely to be worthless, the court nevertheless granted the interlocutory injunction. In coming to his decision, Macaulay J100 said:

I take the law to be that the question whether the undertaking as to damages is likely to be sufficient to enable the enjoined party enforce an award of damages if such an award is later granted, is to be considered as part of the totality of factors when determining the balance of convenience. It is not a step that is considered separately from or before weighing that balance. It follows that it is not an inflexible requirement for the grant of an interlocutory injunction.


The jurisdiction of the court to make such orders ‘operates in personam to restrain a party from conducting proceedings in a foreign court …[and] rests upon the inherent power of the Court to protect its own processes once set in motion … and upon its equitable jurisdiction’.101

99 [2016] VSC 591 at [40]-[42].100 Hera Project Pty Ltd v Bisognin [2016] VSC 591 at [39].101 Jones v Treasury Wine Estates Ltd [2016] FCAFC 59 at [21].


In PT Bayan Resources TBK v BCBC Singapore Pte Ltd,102 the High Court cited, with approval, the following passage from the speech of Lord Nicholls of Birkenhead in Mercedes Benz AG v Leiduck,103 in where his Lordship said:

Although normally granted in the proceedings in which the judgment is being sought, [a freezing order] is not granted in aid of the cause of action asserted in the proceedings, at any rate in any ordinary sense. It is not so much relief appurtenant to a money claim as relief appurtenant to a prospective money judgment. It is relief granted to facilitate the process of execution or enforcement which will arise when, but only when, the judgment for payment of an amount of money has been obtained.


In CC Containers Pty Ltd v Lee (No 10),104 Ginnane J observed that ‘[b]reaches of freezing orders are serious matters’, that constitute contempt of court. In this respect, in Asia Islamic Trade Finance Fund Ltd v Drum Risk Management Ltd,105 Popplewell J said;

(1) In contempt cases the object of the penalty is to punish conduct in defiance of the court's order as well as serving a coercive function by holding out the threat of future punishment as a means of securing the protection which the injunction is primarily there to achieve. (2) In all cases it is necessary to consider (a) whether committal to prison is necessary; (b) what is the shortest time necessary for such imprisonment; (c) whether a sentence of imprisonment can be suspended; and (d) that the maximum sentence which can be imposed on any one occasion is two years. (3) A breach of a freezing order, and of the disclosure provisions which attach to a freezing order is an attack on the administration of justice which usually merits an immediate sentence of imprisonment of a not insubstantial amount. (4) Where there is a continuing breach the court should consider imposing a long sentence, possibly even a maximum of two years, in order to encourage future cooperation by the contemnors.

The standard of proof required to establish contempt is the criminal standard of beyond reasonable doubt.106 In CC Containers Pty Ltd v Lee (No 10),107 in relation to what were found to be ‘particularly serious breaches’ of a freezing order, Ginnane J imposed a sentence of two months imprisonment.


102 PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 325 ALR 168 at 179, 183.103 [1996] AC 284 at 306; [1995] 3 All ER 929 at 945.104 [2015] VSC 757 at [31].105 [2015] EWHC 3748 (Comm) at [7]. 106 JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2016] EWHC 192 (Ch) at [41].107 [2015] VSC 757 at [32], [41].

On the other hand, in cases that are not ones involving ‘private litigation between private parties for their own private purposes’ the court can dispense with the need to require an undertaking as to damages.108 Such cases could include ones in which the Australian Competition and Consumer Commission, given that it ‘is a Commonwealth regulator performing and exercising statutory functions and powers in the public interest and for the benefit of the public’.109 However, ‘the absence of such an undertaking is an important matter to be taken into account in the balance of convenience and the prejudice to the prospective respondents caused by the freezing orders that will not be ameliorated by any undertaking’.110


It can be noted that the ‘mere assertion that a defendant [is] likely to put assets beyond the plaintiff’s reach [is] inadequate’ to sustain a freezing order.111 However, the absence of evidence establishing a positive intention to frustrate a judgment does not mean that a freezing order cannot be made.112


On the other hand, in National Australia Bank Ltd v Bond Brewing Holdings Ltd,113 Mason CJ, Brennan and Deane JJ observed that a freezing order could be obtained even where there was not shown to be a positive intention by the party against whom the order was sought to frustrate any judgment.


These different formulations are substantively different. In Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH & Co KG,114 it was stated that a good arguable case is one ‘which is more than barely capable of serious argument, and yet not necessarily one which the Judge believes would have a better than 50% chance of success’. The good arguable case test, which has been regularly applied in

108 Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd [2016] FCA 976 at [49].109 Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd [2016] FCA 976 at [50].110 Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd [2016] FCA 976 at [59].111 Clifton v Wuxi Suntech Power Co Limited [2016] FCA 1014 at [16].112 Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014 at [10].113 (1990) 92 ALR 49 at 51.114 [1984] 1 All ER 398 at 404.

Australia,115 is less stringent than the prima facie case test,116 which means “that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief”.117 On the other hand, the good arguable case test is more demanding than the serious question to be tried test.118

At the end of the second dot point in 31.23 add the following :

In this respect, in Michael Wilson & Partners, Ltd v Emmott,119 Lewison LJ said:

[T]he repayment in good faith by a defendant of pre-existing liabilities is a transaction that the court is likely to permit. A second principle of relevance is the approach to the interpretation of a freezing order. It has been frequently said that such an order must be ‘strictly construed’ and that if there are two possible interpretations of it a defendant who acts in accordance with one possible interpretation should not be held to be in contempt. The words of the order must be given their ordinary meaning, but the purpose for which freezing orders are made will influence that meaning … [I]t is not helpful to substitute for the phrase ‘ordinary course of business’ synonyms (or approximate synonyms) like ‘routine’ or ‘recurring’. A transaction which is neither of those may well be properly regarded as being in the ‘ordinary course of business’.

115 Curtis v NID Pty Ltd [2010] FCA 1072 at [6]; Groeneveld Australia Pty Ltd v Nolten Vastgoed BV [2011] VSC 18 at [49]–[60]; Bhushan Steel Ltd v Severstal Export GmbH [2012] NSWSC 583 at [100]-[103]; BCBC Singapore Pte Ltd v PT Bayan Resources TBK (No 3) (2013) 276 FLR 273 at 295; Fletcher v Fortress Credit Corp (Australia) 11 Pty Ltd [2011] QSC 30 at [17]; Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49 at 49; Malvina Park Pty Ltd t/as Firths the Superannuation Lawyers v Pollard [2015] NSWSC 578 at [9]; Insolvency Guardian Melbourne Pty Ltd v Carlei [2016] FCA 72 at [18]; Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd [2016] ACTSC 49 at [75].116 Westpac Banking Corporation v McArthur [2007] NSWSC 1347 at [22].117 Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622.118 Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd [2016] ACTSC 49 at [50].119 [2015] EWCA Civ 1028 at [22].

http://www.austlii.edu.au/cgi-bin/LawCite?cit=%5B1991%5D%202%20VR%2049

http://www.austlii.edu.au/au/cases/qld/QSC/2011/30.html

http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/583.html#para103

http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/583.html#para100

http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/583.html

http://www.austlii.edu.au/au/cases/cth/FCA/2010/1072.html


However, prior to the court order being made a successful plaintiff does not have an interest in property that is the subject of the constructive trust. Thus, for example, in the context of land, such a plaintiff does not have a caveatable interest prior to the court declaring the existence of a constructive trust.120


In relation to this issue, in PSAL Pty Ltd v Raja121 Pritchard J said the following:

There has been considerable debate in the cases in relation to the nature of the ‘interest’ acquired by a purchaser pursuant to a contract for the sale of land, prior to the point at which the contract becomes specifically enforceable (for example, prior to payment of the purchase price in full, or prior to satisfaction of any conditions precedent). The debate has concerned whether, upon entry into the contract, the vendor becomes a trustee of the land for the purchaser, pursuant to a constructive trust, or whether the availability of specific performance is an essential prerequisite to the existence of a constructive trust. Much extra-judicial and academic ink has been spilled in respect of that question …

Whatever may be the position prior to the time when a contract for the sale of land becomes specifically enforceable on the application of the purchaser, many authorities establish the proposition that once such a contract becomes specifically enforceable, the purchaser becomes the ‘equitable’ or ‘beneficial’ owner of the land, or in other words becomes entitled in equity to the land, and the vendor becomes a bare trustee who holds the land on a constructive trust for the benefit of the purchaser.

More recently, the High Court has indicated that references in the authorities to a purchaser's ‘equitable interest’ in the land may more accurately be said to mean that equity will afford relief in the nature of specific performance to the purchaser to protect and enforce the purchaser's rights under the contract for sale of the land.122 In this context, to say that the contract must be ‘specifically enforceable’ does not refer to an order for specific performance only in the strict sense. Rather, specific enforcement in this context encompasses all of the remedies available to a purchaser in equity to protect the interest which he or she has acquired under the contract, including relief by way of injunction, as well as specific performance in the strict sense.

The weight of contemporary authority tends to suggest that the relief that equity will afford to a purchaser or vendor at the point when the parties enter into a contract for the sale of land will be different from the relief available at the point at which all conditions precedent have been established and all of a party’s obligations have been performed. At the point at which the purchaser has satisfied all of his or her obligations, including payment, in full, of the purchase price, and all conditions precedent have been satisfied, the purchaser's position in equity amounts to that of a beneficial owner of the land, as the only step remaining to perform the contract will be the vendor's transfer of the title. At

120 Choi v Kim [2013] NSWSC 1774 at [5]; L J Carroll v T J Carroll [2016] NSWSC 390 at [24].121 [2016] WASC 295 at [65]-[68].122 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315.

that point, equity will grant relief in the nature of specific performance (such as an order compelling the vendor to transfer the title, or an injunction to restrain conduct contrary to that obligation) to ensure that the purchaser’s contractual right to the transfer of the title, and acquisition of legal ownership of the land, is vindicated.


In Fistar v Riverwood Legion and Community Club Ltd123 Leeming JA, speaking for a unanimous Court of Appeal, after reviewing the authorities concluded that ‘there can be no doubt that the position in Australia that a thief holds stolen property on trust is settled law’.


It can be noted that if a thief uses stolen money to repay a loan owed to a third party who has no notice of the theft, the third party is not a volunteer, and therefore no claim can be made against the third party.124


In Bailey v Angove’s Pty Ltd125 the Supreme Court in the United Kingdom said the following in relation to the circumstances in which payments of money from one person to another may give rise to a constructive trust:

[W]here money is paid with the intention of transferring the entire beneficial interest to the payee, the least that must be shown in order to establish a constructive trust is (i) that that intention was vitiated, for example because the money was paid as a result of a fundamental mistake or pursuant to a contract which has been rescinded, or (ii) that irrespective of the intentions of the payer, in the eyes of equity the money has come into the wrong hands, as where it represents the fruits of a fraud, theft or breach of trust or fiduciary duty against a third party. One or other of these is a necessary condition, although it may not be a sufficient one.

123 [2016] NSWCA 81 at [39].124 Fistar v Riverwood Legion and Community Club Ltd [2016] NSWCA 81 at [79].125 [2016] UKSC 47 at [30].


In Body Corporate 162791 v Gilbert,126 the Court of Appeal in New Zealand said the following in relation to a receiver’s powers and liabilities:

A receiver can be appointed by a secured creditor if the debtor company defaults in its obligations under the security agreement. On appointment the receiver takes charge of such of the company’s assets as are subject to the security agreement; he or she can run the business and/or sell off the company’s assets to repay the creditor. The primary role of a privately appointed receiver is to act in the interests of the creditor or creditors on whose behalf he or she has been appointed. Although appointed by a secured creditor or creditors, a receiver appointed under a security agreement is at law the agent of the

debtor company, unless the relevant documentation provides otherwise. It is however a limited agency. While the receiver is the agent of the debtor company, he or she carries out his or her duties for the benefit of the secured creditor. A privately appointed receiver’s powers are derived primarily from the security agreement … The appointment

of the receiver does not affect the debtor company’s liability under existing contracts. The company remains liable, and subject to various statutory exceptions, the receiver does not, on appointment, become liable for pre-receivership contracts.

Delete 38.17 and replace with the following:

38.17 All Australian jurisdictions have statutory provisions enabling a court to appoint a receiver in all cases in which it appears to be just or convenient to do so.127

The words ‘just or convenient’ mean ‘where it is practicable and the interests of justice require it’.128 In McLean v McKinlay129 Johnson J said that ‘[t]he role of a receiver is to take possession of the property … with the duty of dealing with it fairly in the interests of all the parties to the proceedings’. In order to persuade a court to make an appointment under this statutory power, ‘generally an applicant must show a right which will be protected and enforced by the appointment and that no other available remedy is adequate for that purpose’.130 However, this does not mean that a receiver cannot be appointed in aid of a money judgment already obtained by the plaintiff. In this respect, in Caird Seven Pty Ltd v Mina Attia and Shopsmart Pharmacy Franchising Pty Ltd (No 3) 131Emmet AJA said:

A court of equity may, in certain circumstances, appoint a receiver in aid of a money

126 [2015] 3 NZLR 601 at 609.127 Supreme Court Act 1933 (ACT) s 34A; Supreme Court Act 1970 (NSW) s 67; Supreme Court Act 1979 (NT) s 69; Supreme Court Act 1995 (Qld) s 246; Supreme Court Act 1935 (SA) s 29(1); Supreme Court Civil Procedure Act 1932 (Tas) s 11(12); Supreme Court Act 1986 (Vic) s 37; Supreme Court Act 1935 (WA) s 25(9).128 Sandy v Tindjibarndi Aboriginal Coroproation RNTBC (No 2) [2016] WASC 75 at [65].129 [2004] WASC 2 at [29].130 Liquor National Wholesale Pty Ltd v The Redrock Co Pty Ltd [2009] NSWSC 1418 at [98].131 [2016] NSWSC 1452 at [16]-[18].

judgment, but only where legal remedies are insufficient. Where property of a judgment debtor is not capable of being reached by a common law process, a court exercising equitable jurisdiction may intervene. For example, where a judgment debtor has an equitable interest in property which could not be reached by common law processes, a court of equity may intervene by appointing a receiver in aid of that judgment … Even in the case of a money judgment, it may be that a receiver will be appointed to legal property on the application of a judgment creditor if it can be shown that, because of special circumstances, other methods of execution would be inadequate or extremely inconvenient.

The Court has a wide jurisdiction to superintend the performance or working out of an order for specific performance. There is no doubt that, where a plaintiff obtains an order for specific performance, the Court may substitute other forms of relief where the decree of specific performance is not complied with. There is no reason in principle why the Court should not have jurisdiction to make such orders as are appropriate to secure the proper performance of orders that it has already made. Once an order for specific performance has been made, the contractual rights of the parties are not superseded. However, the future exercise of those rights is under the control of the Court and, accordingly, the working out of the order for specific performance is under the control of the Court. There is every reason in principle for concluding that the appointment of a receiver is a step open to the Court to ensure compliance with its orders for the specific performance of a contract.

In Fonu v Merrill Lynch Bank and Trust Company (Cayman) Ltd,132 the Privy Council stated that the following principles applied in relation to the statutory power to appoint receivers:

(1) the demands of justice are the overriding consideration in considering the scope of the jurisdiction …; (2) the court has power to … appoint receivers in circumstances where … no … receiver [would have been] appointed before [the Supreme Court of Judicature Act 1873 (UK)]; (3) a receiver by way of equitable execution may be appointed over an asset whether or not the asset is presently amenable to execution at law; and (4) the jurisdiction to appoint receivers by way of equitable execution can be developed incrementally to apply old principles to new situations.

132 [2011] 4 All ER 704 at 718.


In Erlanger v New Sombrero Phosphate Co133 Lord Blackburn, after citing the above passage by Lord Selborne, went on to say:

I have looked in vain for any authority which gives a more distinct and definite rule than this; and I think, from the nature of the inquiry, it must always be a question of more or less, depending on the degree of diligence which might reasonably be required, and the degree of change, which has occurred, whether the balance of justice or injustice is in favour of granting the remedy or withholding it. The determination of such a question must largely depend on the turn of mind of those who have to decide, and must therefore be subject to uncertainty; but that, I think, is inherent in the nature of the inquiry.


Waiver is often confused with the doctrines of election and estoppel. In relation to these three principles, in Foote v Barton Property Partnership No 2,134 The Court of Appeal in the Australian Capital Territory said:

Election is concerned with choosing between inconsistent rights. Waiver involves the unilateral abandonment or renunciation of a right. Estoppel prevents the unjust departure by one party from an assumption adopted by the other party as the basis for an act or omission which, unless the assumption is adhered to, would operate to that other’s detriment.

Similarly, in Commonwealth v Verwayen,135 Brennan J said:

These distinct doctrines serve different purposes: election (in either species) ensures that there is no inconsistency in the enforcement of a person’s rights; estoppel or equitable estoppel ensures that the party who acts in reliance on what another has represented or promised suffers no unjust detriment thereby; waiver recognises the unilateral divestiture of certain rights.

133 (1878) 3 App Cas 2118 at 1279-80.134 [2015] ACTCA 53 at [58].135 (1990) 170 CLR 394 at 423.

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