Carantinos v Magafas

[2008] NSWCA 304

NSW Court of Appeal

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Interrogate

Catchwords

1. Equity
2. › Fiduciary Obligations
3. › Partnership
4. › Breach of fiduciary duty
5. › Account of profits
6. › Whether accounting party should account for whole of proceeds of property not wholly beneficially owned
1. Equity
2. › Clean hands defence
3. › Disentitling conduct
4. › Whether conduct must be directed against defendant
5. › Whether conduct had sufficiently close relationship to equity sued for
6. › Whether conditional relief appropriate
1. Equity
2. › Remedies
3. › Account
4. › Scope of accounting
5. › Whether party whose beneficial interest not excluded should be party to accounting
6. › Whether appropriate to reserve substantive issues for further consideration
1. Partnership
2. › Dissolution
3. › Taking of accounts
4. › Whether profits on each venture should be treated as capital contributions to next venture
5. › Whether new point can be raised on appeal

Quick Take

The clean hands defence does not require that the disentitling conduct be directed at the defendant; it is sufficient that the conduct has a sufficiently close relationship to the equity sued for. Where a plaintiff's case is tainted by fraud on the revenue, relief may be granted subject to conditions requiring disclosure to tax authorities and payment of any tax, penalties and interest. In partnership accounting, where a fiduciary has caused property to be acquired partly in the name of a third party and the claim against that third party has failed, the accounting party may still be required to account for the whole of the proceeds, with the third party's beneficial interest to be determined at the accounting stage.