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Alexander v Perpetual Trustees WA Ltd

Alexander v Perpetual Trustees WA Ltd

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HIGH COURT OF AUSTRALIA
GLEESON CJ,
McHUGH, GUMMOW, KIRBY, HAYNE AND CALLINAN JJ
CHARLES DELIUS SOMERVILLE ALEXANDER
& ORS trading as MINTER ELLISON APPELLANTS
AND
PERPETUAL TRUSTEES WA LIMITED & ANOR RESPONDENTS
Alexander v Perpetual Trustees WA Limited [2004] HCA 7
12 February 2004
S509/2002
ORDER
Appeal dismissed with costs.
On appeal from Supreme Court of New South Wales
Representation:
B J Shaw QC and T M Faulkner for the appellants (instructed by Mallesons Stephen Jaques)
D F Jackson QC with S D Robb QC for the respondents (instructed by Phillips Fox)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

GLEESON CJ, GUMMOW AND HAYNE JJ. This appeal is brought from the New South Wales Court of Appeal (Stein JA, Davies AJA, Ipp AJA)[1] which upheld the decision of the Supreme Court (Rolfe J)[2]. The proceedings at trial and in the Court of Appeal involved a range of issues but in this Court the appeal turns upon the construction of Pt IV of the Wrongs Act 1958 (Vic) ("the Act") and its application to a claim for contribution under the statute made by trustees.
[1]Alexander and Ors (t/as Minter Ellison) v Perpetual Trustees WA Ltd and Perpetual Trustee Co Ltd [2001] NSWCA 240; [2002] NSWCA 101.
[2]Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642.
Part IV of the Act (ss 23A-24AD) is headed "CONTRIBUTION" and ss 23B and 24 operate to create both a new right and a remedy for the recovery of what s 23B identifies as contribution from any person "liable in respect of the same damage" as the claimant for contribution[3]. The Act has its provenance in British legislation, the Civil Liability (Contribution) Act 1978 (UK) ("the UK Act"), and reference will be made to decisions construing that statute.
[3]cf James Hardie & Coy Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53 at 64‑65 [22]-[24].
It is essential to recognise at the outset that both the Act and the UK Act provide for contribution where the claimant and the person from whom contribution is sought are each liable to a common plaintiff. Neither Act provides for contribution between those who may have had some role in an interconnected set of transactions but who are not both liable to a common plaintiff. Nothing in the text of either the Act or the UK Act, or any law reform or other material which preceded either Act, suggests that the aim of the legislation was to provide for contribution between those who were parties to the same transaction or a series of related transactions. It is, therefore, wrong to proceed, whether from general notions of "distributive justice" or otherwise, as if the legislative purpose or object were wider than providing for contribution between those liable to a common plaintiff. These reasons demonstrate that the parties to the appeal in this Court were not liable to a…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] HCA 7
Decision Date: 12 February 2004

CaseChat Overview and Summary

The appeal concerned a cross-claim brought by a firm of solicitors, Alexander, against Perpetual Trustees WA Ltd and Perpetual Trustee Company Limited (the respondents). The dispute arose from the misapplication of funds by Alexander, which had been entrusted to them by the respondents for specific investment purposes. Beneficiaries of the trusts, of which the respondents were trustees, suffered losses when the investments failed due to the absence of required security. The respondents, as trustees, were sued by these beneficiaries, and in turn, Alexander sought contribution from the respondents under the Wrongs Act 1958 (Vic), Part IV.

The central legal issues before the High Court were whether Alexander was entitled to claim contribution from the respondents in respect of the damage suffered by the beneficiaries, and whether the respondents were liable to the beneficiaries for the same damage. This involved determining the nature of the beneficiaries' rights against Alexander, particularly in relation to breaches of trust and potential misleading or deceptive conduct, and whether the respondents' liability to the beneficiaries precluded a claim for contribution.

The High Court reasoned that the beneficiaries' entitlement to compensation from Alexander was a prerequisite for any claim for contribution. The Court noted that the lower courts had rejected the proposition that the beneficiaries were entitled to recover compensation from Alexander for the damage suffered, and that the respondents were liable to the beneficiaries for the same damage. Furthermore, even if Alexander were liable, one of the judges in the Court of Appeal had determined that it would not be just and equitable to order contribution, and that the respondents were entitled to full indemnity from Alexander. The High Court ultimately dismissed the appeal.

Orders

Orders of the court

Appeal dismissed with costs.

Background

Background to the litigation

The Act has no precise analogue in other Australian jurisdictions. The litigation giving rise to this appeal was conducted in the courts of New South Wales, not in those of Victoria. It is not now disputed that Pt IV of the Act was applicable in the New South Wales litigation if its terms otherwise were satisfied. Section 23B(6) states that references in the section to liability in respect of any damage are to liability which has been or could be established in an action brought in Victoria, and that it is immaterial that any issue in that litigation would be determined, in accordance with the rules of private international law, by reference to the law of a place outside Victoria. The various breaches of trust which were committed appear to have occurred in Victoria[4] and, in any event, there are no relevant differences in the principles of trust law in Victoria and New South Wales.[4]cf John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503.The facts The relevant facts are not disputed and may shortly be stated. However, for a proper appreciation of the issues of law which arise it is necessary to bear in mind that there were transactions involving what may be described as two different levels of trusts. There were trusts of which the respondents were trustees, and trusts of which the appellants were trustees. The first respondent, Perpetual Trustees WA Limited ("PTWA"), was a trustee company enjoying special status conferred by the Trustee Companies Act 1987 (WA)[5] and the second respondent, Perpetual Trustee Company Limited ("PT"), had that status under the Trustee Companies Act 1964 (NSW)[6]. The companies were members of what was described in the evidence as the Perpetual Group.[5]s 4(1) and Sched 1.[6]s 3(1) and the Third Schedule. PTWA and PT were trustees of certain managed superannuation funds. These trusts may be identified as the first level trusts. Some of the beneficiaries thereunder may themselves have been acting as trustees, for example, of family trusts, but with that level of trusts (if any) we are not concerned. Between 1993 and 1995 a number of beneficiaries under the managed funds directed that moneys be invested by the trustees in EC Consolidated Capital Limited ("ECCCL"). The total amounts so invested were $2,377,400 (by PTWA) and $7,179,700 (by PT). Each investment by PTWA and PT was in the sum of $500,000 or a greater amount; the refusal by ECCCL of investments in a sum less than $500,000 removed the requirement of compliance by ECCCL with the prospectus provisions of the then Corporations Law[7]. However, the sums provided by the individual beneficiaries, before they were pooled by PTWA and PT for investment with ECCCL, in each case were less than $500,000.[7]See Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 77 ALJR 895 at 897 [4]; 196 ALR 482 at 484. The terms on which the moneys were to be invested by PTWA and PT called for the provision of security by the issue of a bearer certificate of deposit. In breach of their duties as trustees, PTWA and PT failed to ensure that the manner in which the moneys were invested conformed with these terms and, in particular, PTWA and PT did not ensure that the investments were secured by bearer certificates of deposit. On 15 July 1997, ECCCL was placed in liquidation. As a result of the absence of the certificates, the investments were lost.The plaintiffs sue PTWA and PT

Evidence

Evidence Before The Court

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Decision

Reasons for decision

GLEESON CJ, GUMMOW AND HAYNE JJ HUGH J KIRBY J

Minters' submission is to the effect that "any damage" identifies interference with any legal or equitable right or interest. The "interference" would include the infliction of injury to proprietary interests and the infliction of personal injury as an interference with the interest in bodily integrity[24]. Understood in this fairly broad sense, the submission by Minters may be accepted for present purposes, without finally ruling on the question[25]. That is because, even on the basis that the relevant interests damaged were those conferred by law upon the beneficiaries of trusts, the appeal must fail.[24]See Mahony v J Kruschich (Demolitions) Pty Ltd (1985) 156 CLR 522 at 527.[25]cf Tame v New South Wales (2002) 211 CLR 317 at 373‑375 [168]-[172].Conclusions respecting breaches of trust Here, the claim under s 23B proceeds upon the basis that Minters is liable in respect of certain damage, and that, although it has never been sued, it is entitled to recover contribution from the respondents, who are said to be persons liable in respect of the same damage. The relevant damage is said to be damage suffered by the plaintiffs and other investors who were beneficiaries of the first level trusts, of which PTWA and PT were trustees. The liability in respect of that damage exists if the plaintiffs and the other investor-beneficiaries were entitled to recover compensation from Minters in respect of that damage. The proposition that the plaintiffs and the other investor-beneficiaries were entitled to recover compensation from Minters in respect of damage, and the proposition that the respondents were liable to the plaintiffs and others in respect of the same damage, are contested, and were rejected by Rolfe J and the Court of Appeal. Additionally, Davies AJA in the Court of Appeal, with whom Ipp AJA agreed, said that, in the circumstances of the case, it was not just and equitable, within the meaning of s 24(2), that an order for contribution be made and that the respondents were entitled to be fully indemnified by Minters in respect of any damages which might otherwise fall within the provisions of s 23B. In dealing with the claim for contribution, Rolfe J said[26]:"If the case turned on the negligence of [Minters] then, in my opinion, it would be appropriate to consider whether PTWA and PT had been guilty of contributory negligence. If that was a matter I had to consider I would have come to the conclusion, essentially for the reasons I have given in articulating why they are liable to the plaintiffs, that they had been guilty of contributory negligence and, as between them and [Minters] I would have apportioned the damages as to 40% and 60% respectively.If I had come to the conclusion that the matter turned on the Fair Trading Act, I would have found that [Minters] engaged in misleading conduct and it would have been necessary for me to mould relief conformably with the decision of the Court of Appeal in Akron Securities Ltd v Iliffe[27]. My inclination, prima facie, would have been to grant relief reflecting the culpability between the parties in the terms to which I have referred in considering contributory negligence. It is not necessary to reach a final conclusion on this point.In my view, the highest duty owed by [Minters] to PTWA and PT was as trustee and, accordingly, I am of the view that PTWA and PT are entitled to judgment against [Minters] for the full amount required to replenish the trusts, together with compound interest on yearly rests on the trustee basis and for costs."[26](1998) 29 ACSR 642 at 756‑757.[27](1997) 41 NSWLR 353.

Ratio Decidendi

Legal Principle Established

Established by: GLEESON CJ, GUMMOW AND HAYNE JJ, HUGH J, KIRBY J

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