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Sender:
Joshua Getzler
Date:
Tue, 12 Oct 1999 14:09:00 +0100
Re:
Presumed resulting trusts following invalid contracts in Australia

 

An Australian application of the doctrines stated in Westdeutsche Landesbank appears in HCK China Investments Ltd v Solar Honest Ltd (1999) 165 Australian Law Reports 680. The facts are complex and obscure and a highly compressed summary follows. Shares in a target company were transferred from HCK to Solar by deed, in anticipation of a wider corporate merger involving payments by HCK to Solar's principal. The merger struck difficulties and HCK paid a sum of $100,000 as an extension fee, also under a deed covenant. The merger ultimately failed, and HCK sought to recover the shares and the extension payment. Solar argued that the deeds were effective to transfer both assets, and that the deed agreements citing that consideration had been proffered for both transfers should now govern the parties' rights. Hely J found that under the legislation governing HCK's corporate capacities, both the deeds were invalid due to irregular execution in the absence of HCK's director. The indoor management rule could not cure this type of irregularity. In the absence of any alternative explanation for the share transfer and the $100,000 payment, such as an intention to make a gift, HCK could demand the return of both assets or their value. Hely J was prepared to ignore the various contractual considerations stated in the invalid agreements, and held that the shares could come back on resulting trust under either a Vandervell presumed or automatic resulting trust; and moreover that the money should be paid back as either debt or through restitution of an unjust enrichment. Hely J was not overly concerned to sharpen the doctrinal tools he used to engineer restitution of the assets.

A web report is found at: HCK China Investments Ltd v Solar Honest Ltd [1999] FCA 1156 (23 August 1999)

http://www.austlii.edu.au/do/disp.pl/au/cases/cth/ federal_ct/1999/1156.html?query= hck

On a topic outside restitution but perhaps of interest nonetheless: the High Court of Australia delivered its major statement on economic loss in tort in Perre v Apand (1999) 164 ALR 604. The report giving the seven judgments of the full court occupies 117 pages, and broaches much comparative law and academic analysis. Those looking for a clear ratio will be disappointed.

Web report at: Perre v Apand Pty Ltd [1998] HCA 63 (15 September 1998)

http://www.austlii.edu.au/do/disp.pl/au/cases/cth/ high_ct/1999/36.html?query= perre

 


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