Alston v Cormack Foundation Pty Ltd - [2018] FCA 895

FEDERAL COURT OF AUSTRALIA
Alston v Cormack Foundation Pty Ltd [2018] FCA 895

File number: VID 1270 of 2017

Judge: BEACH J

Date of judgment: 14 June 2018

Catchwords:
TRUSTS AND TRUSTEES – Trust over shares in corporation – express trust – objective theory as to ascertaining intention – whether intention to create trust in the future or with immediate effect – whether a trust over directors’ powers – validity or enforceability of trust – trust in favour of unincorporated association – whether a trust for members – whether a non-charitable purpose trust – whether a trust with ascertained object(s) – “contract holding” theory discussed in Neville Estates Ltd v Madden [1962] Ch 832 – whether immediate or postponed vesting – rule against perpetuities – “wait and see” approach – necessarily implied “lives in being” in terms and context of relevant trust instrument – breach of trust – causal consequences flowing from breach of trust – innocent third parties – scope of equitable remedies

CORPORATIONS – Cancellation of shares – validity of cancellation where trust thwarted or breached –
re-instatement of shares and rectification of the register – s 140(2) and s 175(1) of the Corporations Act 2001 (Cth)

Legislation:
Corporations Act 2001 (Cth) ss 140(2), 175(1), 258D

Perpetuities and Accumulations Act 1968 (Vic) s 6

Cases cited:
Bacon v Pianta (1966) 114 CLR 634

Bahr v Nicolay [No 2] (1988) 164 CLR 604

Barnes v Addy (1874) LR 9 Ch App 244

Byrnes v Kendle (2011) 243 CLR 253

Fistar v Riverwood Legion and Community Club Ltd (2016) 91 NSWLR 732

Gambotto v WCP Limited (1995) 182 CLR 432

In re Kayford Ltd (in liq) [1975] 1 WLR 279

In re Schebsman, Deceased; Ex parte Official Receiver v Cargo Superintendents (London) Ltd [1944] Ch 83

Leahy v Attorney-General for New South Wales (1959) 101 CLR 611

Legal Services Board v Gillespie-Jones (2013) 249 CLR 493

Neville Estates Ltd v Madden [1962] Ch 832

Registrar of the Accident Compensation Tribunal v Commissioner of Taxation (1993) 178 CLR 145

Date of hearing: 19, 20 and 21 March 2018

Registry: Victoria

Division: General Division

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Corporate Insolvency

Category: Catchwords

Number of paragraphs: 328

Counsel for the Plaintiffs: Mr BW Walker SC and Mr MD Wyles QC with
Mr CE Shaw and Dr COH Parkinson

Solicitor for the Plaintiffs: Hope Earle

Counsel for the Defendants: Mr AJ Myers QC and Dr IJ Hardingham QC with
Mr JS Graham and Mr MD Tehan

Solicitor for the Defendants: John Edgar Frenkel Partners

Table of Corrections

18 June 2018 In paragraph 244, the word “beneficially” has been replaced with “non-beneficially”.

ORDERS

VID 1270 of 2017

BETWEEN:
RICHARD KENNETH ROBERT ALSTON

First Plaintiff

ALAN ROBERT STOCKDALE

Second Plaintiff

RUSSELL DAVID HANNAN

Third Plaintiff

AND:
CORMACK FOUNDATION PTY LTD (ACN 006 935 119)

First Defendant

CHARLES BARRINGTON GOODE

Second Defendant

PETER ALGERNON FRANC HAY (and others named in the Schedule)

Third Defendant

JUDGE:

BEACH J

DATE OF ORDER:

14 JUNE 2018

THE COURT ORDERS THAT:
1.Within 7 days of the date of these orders, the plaintiffs file and serve minutes of proposed orders and short submissions (limited to 3 pages) to give effect to these reasons and on the question of costs.
2.Within 7 days of receipt of the plaintiffs’ minutes of proposed orders and submissions, the defendants file and serve minutes of proposed orders and short submissions (limited to 3 pages) to give effect to these reasons and on the question of costs.
3.Costs reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT
BEACH J:

The present proceeding has been brought by the plaintiffs as trustees of the Liberal Party of Australia (Victorian Division) (the Liberal Party); I will elaborate on this trustee capacity later. The Liberal Party is separately registered as a political party under Pt XI of the Commonwealth Electoral Act 1918 (Cth).
The claims made by the plaintiffs concern various asserted trust interests and breaches of trust involving the assets held by and the shares in the first defendant, Cormack Foundation Pty Ltd (the Cormack Foundation). The wealth of the Cormack Foundation was originally derived from the proceeds of sale of the radio station 3XY licence. But its continuing and compounding financial strength has been due to the financial and investment talents of its directors from time to time. The second to seventh defendants are the current shareholders and directors of the Cormack Foundation. The eighth and ninth defendants are former shareholders and directors.
The federal matter enlivening this Court’s jurisdiction concerns the rectification of the Cormack Foundation’s share register under s 175(1) of the Corporations Act 2001 (Cth) in the event that the plaintiffs’ trust claims, which are in the accrued jurisdiction, succeed. Other aspects of the trust claims also require consideration of ss 140(2) and 258D of the Corporations Act in relation to the cancellation of shares in the Cormack Foundation previously held by the eighth and ninth defendants that the plaintiffs assert were held in trust for the Liberal Party.
The plaintiffs’ case as originally instituted gave rise to the following trust possibilities.
First, did the Cormack Foundation act only as a trustee in respect of its assets such as to hold those assets on trust for the Liberal Party? Now the case as opened by Mr Bret Walker SC for the plaintiffs did not pursue such a possibility. Indeed, the sequence of events that I will describe in more detail later makes it apparent that such a possibility is not reasonably open. Shortly prior to the establishment of the Cormack Foundation, such a trust possibility was considered and rejected. Moreover, the commercial transactions and accounts of the Cormack Foundation from its establishment demonstrate that it was only ever acting in its own right. This was also reflected in its objects, as set out in its initial memorandum and articles of association and later constitution. Further, the case maintained by the plaintiffs that certain shares in the Cormack Foundation were held on trust for the Liberal Party is in one sense an alternative to the Cormack Foundation itself acting as a trustee for the Liberal Party.
Second, were all of the shares in the Cormack Foundation held on trust for the Liberal Party? Such a case is also not maintainable given that on any view of the evidence at least one-third of the issued capital at inception was held by Mr Stanley Guilfoyle in his own right and not as a trustee.
Third, were two-thirds of the shares in the Cormack Foundation from inception held on trust for the Liberal Party? Such a case, being the plaintiffs’ principal case, was predicated on taking the initial two-thirds shares, being those shares issued to Mr John Calvert-Jones (the eighth defendant) and Mr Hugh Morgan (the ninth defendant), asserting that they were at all times held on trust for the Liberal Party, and seeking orders rectifying the register of members of the Cormack Foundation to reflect that reality, alternatively seeking orders which would result in 100% of the issued share capital of the Cormack Foundation now being held on trust for the Liberal Party given that, incidentally, Mr Guilfoyle’s shares have now been cancelled.
In essence, the plaintiffs have said the following. The Cormack Foundation had three foundation shareholders, namely, Mr Calvert-Jones (holding 33 shares), Mr Morgan (holding 33 shares) and Mr Guilfoyle (holding 33 shares), each of whom was also appointed a director. In May 1988, Mr Calvert-Jones and Mr Morgan each signed an undertaking to the Liberal Party in identical terms in which each made declarations, so the plaintiffs say, as to the terms of the express trust upon which each held his shares. Accordingly, two-thirds of the issued share capital in the Cormack Foundation was held on an express trust for the Liberal Party. It is also said that since May 1988, the Cormack Foundation and each of its directors from time to time has had knowledge that Mr Calvert-Jones and Mr Morgan had given their undertakings and the terms thereof, and had knowledge that two-thirds of the issued share capital in the Cormack Foundation was held on an express trust for the Liberal Party.
Subsequently, new shares were issued and changes to directors were made resulting in a diminution in the relative significance of Mr Calvert-Jones’ and Mr Morgan’s shareholding, which was held on trust for the Liberal Party, and resulting in an effective loss of control by the Liberal Party of the Cormack Foundation structure. It was said that this was all done in breach of trust.
Further, the plaintiffs say that by 2006 and without the Liberal Party’s consent or approval, the Cormack Foundation’s memorandum and articles of association had been replaced by a constitution, which included changes to the effect that:
(a)upon the death of a shareholder or his termination of office as a director, the board had to cancel without consideration the shares registered in his name; and
(b)directors could be appointed by a majority decision of the directors.
Further, as at the start of June 2017 the directors of the Cormack Foundation were Mr Calvert-Jones, Mr Morgan, Mr Charles Goode (the second defendant), Mr Peter Hay (the third defendant), Mr Frederick Grimwade (the fourth defendant), Mr Richard Balderstone (the fifth defendant), Mr David Williamson (the sixth defendant) and Mr Stephen Spargo (the seventh defendant), with each holding 33 shares.
In late June 2017, the Liberal Party wrote to Mr Calvert-Jones and Mr Morgan, which the plaintiffs say the other directors of the Cormack Foundation had knowledge of:
(a)directing Mr Calvert-Jones and Mr Morgan to transfer their shares to the Liberal Party’s nominees, being Mr Richard Alston (the first plaintiff) and Mr Alan Stockdale (the second plaintiff); and
(b)requesting that the shares issued to Mr Goode, Mr Hay, Mr Grimwade, Mr Balderstone, Mr Williamson and Mr Spargo, such issue being without the Liberal Party’s consent or approval, be cancelled and that those persons resign as directors.
On or about 28 June 2017, Mr Calvert-Jones and Mr Morgan resigned as directors of the Cormack Foundation and their shares were purportedly cancelled pursuant to r 31 of the constitution. But the plaintiffs say that Mr Calvert-Jones’ and Mr Morgan’s shares were not issued on terms that they could be cancelled upon Mr Calvert-Jones’ and Mr Morgan’s resignation as directors. Accordingly, it is said that the purported cancellation was invalid. Further, it is said that even if Mr Calvert-Jones and Mr Morgan expressly agreed that their shares would be bound by r 31 of the constitution and thus capable of cancellation, that agreement was voidable because it was made in breach of the express trust upon which two-thirds of the issued share capital was held for the Liberal Party. It is said that such an agreement is now voided. Further, it is said that if contrary to the foregoing Mr Calvert-Jones’ and Mr Morgan’s shares were subject to r 31 of the constitution, then r 31 was invalid. It is said that the plain effect of r 31 of the constitution was to destroy the subject of the express trust upon which two-thirds of the issued share capital was held for the Liberal Party.
Further, it is said that pursuant to the terms of the express trust and the direction of the Liberal Party, Mr Calvert-Jones and Mr Morgan were obliged to transfer their shares to Mr Alston and Mr Stockdale respectively. In consequence, it is said that the register of members of the Cormack Foundation should be rectified to name each as holding 33 shares.
Further, it is said that the resolutions effecting the issue of shares to Mr Goode, Mr Hay, Mr Grimwade, Mr Balderstone, the transferor to Mr Williamson, and Mr Spargo, and the relevant impugned amendments to the Cormack Foundation’s constitution, were for the ulterior dominant purpose of ensuring that the sitting directors and their nominees, and not the Liberal Party through the express trust upon which two-thirds of the issued share capital was held for it, controlled the Cormack Foundation. It is said that such a purpose was an impermissible purpose and accordingly that the issue of shares and the amendments to the constitution to achieve such a purpose were voidable and now voided.
Relatedly, it is said that the resolutions effecting the issue of shares to Mr Goode, Mr Hay, Mr Grimwade, Mr Balderstone, the transferor to Mr Williamson, and Mr Spargo were passed with knowledge that each resulted in a breach of Mr Calvert-Jones’ and Mr Morgan’s express trust upon which two-thirds of the issued share capital was held for the Liberal Party by:
(a)the destruction of trust property by issuing new shares and thereby diluting the Liberal Party’s two-thirds holding for no commercial purpose; and
(b)the transfer of control of the Cormack Foundation from the Liberal Party to Mr Goode, Mr Hay, Mr Grimwade, Mr Balderstone, Mr Williamson and Mr Spargo.
By reason of the foregoing, the plaintiffs say that they are entitled to the following relief:
(a)A declaration that the 66 shares in the Cormack Foundation registered in the names of Mr Calvert-Jones and Mr Morgan were held on trust for the Liberal Party and are held, when re-instated, on such a trust albeit now to be registered in the names of Mr Alston and Mr Stockdale.
(b)A declaration that the purported forfeiture and cancellation of the said 66 shares was invalid.
(c)An order that the register of members be rectified so that Mr Alston’s and Mr Stockdale’s names are entered in the register in relation to 33 shares each.
(d)An order that the register of members be further rectified by the removal of the names of Mr Goode, Mr Hay, Mr Grimwade, Mr Balderstone, Mr Williamson and Mr Spargo in respect of their shares, that their share certificates be delivered up and cancelled, and that the Cormack Foundation repay to each of them the consideration each paid for their shares.
(e)A declaration that the relevant impugned amendments to the memorandum and articles of association and then the constitution of the Cormack Foundation are invalid.
The effect of this suite of remedies sought under this third option would be to give the Liberal Party a beneficial interest in 100% of the issued share capital of the Cormack Foundation. This is even beyond the two-thirds beneficial interest as reflected in the trust(s) it asserts as at the inception of the Cormack Foundation. It arises because one-third of the shares held by Mr Guilfoyle in his own right at inception have now been cancelled and the Liberal Party does not now contend that they should be re-instated.
In summary, I have rejected this third option. Even if one accepts that Mr Calvert-Jones’ and Mr Morgan’s shares were held on trust, and that they should be re-instated to the register although now in the names of Mr Alston and Mr Stockdale, I cannot unwind the other share issues, the appointments of directors, or the various impugned changes to the original memorandum and articles of association and now constitution of the Cormack Foundation. Equitable principles and remedies have no transmutational properties that would justify me re-writing corporate law principles dealing with directors’ and shareholders’ powers and duties concerning the issue of share capital, the appointment of directors and alterations to a company’s constitution. If later share issues and the appointment of directors have been brought about by any act or omission of Mr Calvert-Jones or Mr Morgan, assuming for the sake of the argument only that any such act or omission was in breach of trust, that is a matter for the Liberal Party to take up with those two individuals, if at all. The alchemy of equity cannot assist. But I would say now that I have not made and do not need to make any such finding of breach of trust at least on that aspect and putting to one side the June 2017 events, as I will explain later. Let me now address the fourth option.
Fourth, and as a permutation of the third trust possibility, were the shares held by Mr Calvert-Jones and Mr Morgan in the Cormack Foundation (putting to one side their relative significance as a percentage of the issued share capital) held on trust for the Liberal Party? If so, was their cancellation invalid? If so, should those shares be restored to the register but with no other changes to the register? Now such an outcome would result in a quarter, rather than two-thirds or indeed 100%, of the issued share capital of the Cormack Foundation being held on trust for the Liberal Party. The shares of Mr Calvert-Jones and Mr Morgan being 33 shares each (66 shares) that would be re-instated would be impressed with a trust in favour of the Liberal Party. The other six shareholders being Mr Goode, Mr Hay, Mr Grimwade, Mr Balderstone, Mr Williamson and Mr Spargo, would each hold 33 shares, totalling 198 shares. Hence the total shares on issue and after the re-instatement of Mr Calvert-Jones’ and Mr Morgan’s shares would be 264 shares, with 66 shares impressed with a trust in favour of the Liberal Party.
For the reasons that I will now discuss in more detail, I have concluded that this fourth option is the correct solution to the present problem. But first it is necessary to elaborate on some background matters.
BACKGROUND
It is convenient to set out some background on the following matters:
(a)The history of Station 3XY Pty Ltd;
(b)The sale of the 3XY licence and the origins of the Cormack Foundation;
(c)Michael Kroger’s knowledge and involvement;
(d)The activities of the Cormack Foundation;
(e)The Cormack Foundation’s constitution; and
(f)The Liberal Party’s constitution.
(a) The history of Station 3XY Pty Ltd
In 1932, an application was made on behalf of the Young Nationalist Organisation (YNO) and the United Australia Party (UAP) for a radio broadcasting licence. It was perceived by those organisations that such a licence was necessary because Trades Hall had a radio station and it was thought necessary for the YNO and the UAP to have a similar facility. On 30 September 1932, a group representing the UAP visited the Director-General of the Postmaster-General’s department seeking a radio broadcasting licence for the UAP.
On 4 April 1934, Mr Robert Archdale Parkhill (who was knighted 2 years later), the Postmaster-General, wrote to the Acting Postmaster-General, making an enquiry about a radio broadcasting licence in Melbourne. On 14 August 1934, Mr Parkhill prepared a note stating that Federal Cabinet was favourably disposed towards an application by the UAP in Victoria for a radio broadcasting licence. It was recommended that a licence be issued to Mr EW Willis, the organising secretary of the UAP and its representative in Victoria. Further, on 29 August 1934, Mr Francis William Thring (father of the later well-known stage and film actor Frank Thring) wrote to Mr Parkhill advising that Mr Willis anticipated that a licence would be issued to the UAP, but that the UAP would be prepared to enter into a reciprocal arrangement with Mr Thring for him to operate the proposed radio station on lease, which arrangement was satisfactory to Mr Thring.
On 6 December 1934 in Federal Parliament, Mr John McEwen (later Prime Minister of Australia from 19 December 1967 to 10 January 1968 and knighted in 1971) referred to the announcement by the then Prime Minister, Mr Joseph Lyons, that the UAP in Victoria was to be given a radio broadcasting licence. In an exchange between them, Mr Lyons confirmed that such a licence was to be issued to the UAP and that this was as a result of a Cabinet decision.

On 16 May 1935, a radio broadcasting licence (the 3XY licence) was issued to Station 3XY Pty Ltd for an initial period of 3 years from 17 May 1935 to 16 May 1938. Station 3XY Pty Ltd had been incorporated as a separate legal entity on 24 October 1934 for the purpose of holding such a licence. The 3XY licence contemplated that the location of the station was to be in the ballroom of the Princess Theatre building, Spring Street, Melbourne. On 2 May 1935, Station 3XY Pty Ltd entered into an agreement with Efftee Broadcasters Pty Ltd (Mr Thring’s company) to operate the 3XY licence.
As stated in the 3XY licence, it was issued pursuant to the powers and authorities conferred on the Postmaster-General by s 5 of the Wireless Telegraphy Act 1905-1919 (Cth), and by the regulations under that Act. At the time the 3XY licence was issued, reg 4(6) of the Wireless Telegraphy Regulations 1924 (Cth) provided:
Except with the consent in writing of the Postmaster-General or an authorized officer, a licensee shall not assign, sublet, or otherwise dispose of or admit any other person or firm to participate in any of the benefits of the licence, powers or authorities granted.
That regulation was retained in similar terms in the subsequent version of the regulations being reg 16 of the Wireless Telegraphy Regulations 1942 (Cth). There is nothing to suggest that any such consent was ever sought or given save in relation to the position of Efftee Broadcasters Pty Ltd.
As stated in the original memorandum of association of Station 3XY Pty Ltd, the objects for which it was established were general objects which did not mention the UAP or any other political party or organisation (cl 3). Further, the objects of the company contemplated inter-alia amalgamation (cl 3(13)) and the distribution of property amongst members (cl 3(27)). Further, the articles of association did not include discharging the function of trustee in respect of its assets; further, arts 103 and 124 were not consistent with such a trustee only status.
The memorandum and articles of association of Station 3XY Pty Ltd were signed by Mr Kingsley Anketell Henderson, Mr Roy Cedric Staughton and Mr Raymond Walter Tovell. Mr Henderson had much to do with persuading Mr Lyons (Prime Minister of Australia from 1932 to 1939) to leave the Australian Labor Party and accept leadership of the non-Labor political forces. He was, for a time, chairman of the central council of the UAP and was a close friend of Mr Lyons. Mr Tovell became a Liberal Party member for Brighton in the Legislative Assembly in 1945. Mr Staughton was employed by Mr Henderson at his architectural practice and became a partner of that firm in 1935. He took over the firm when Mr Henderson died in 1942.
From time to time further shares were transferred or allotted in Station 3XY Pty Ltd. New shareholders (and directors) included Mr Edmund Francis Herring (later Chief Justice of the Supreme Court of Victoria and knighted) from 1939 to 1945, Senator John Armstrong Spicer (later knighted) from 1940 to 1942, Mr Clarence Roy Taylor from 1942 to 1974, Mrs Elizabeth May Ramsay Couchman (later a dame) from 1942 to 1972, and Mr William Hewson Anderson (later knighted) from 1953 to 1969. Mr Herring joined the YNO in 1932, unsuccessfully sought pre-selection for the UAP in 1932 and stood as an unendorsed UAP candidate in 1935. Senator Spicer was a friend of Mr Robert Menzies (later knighted and Prime Minister of Australia from 1939 to 1941 and 1949 to 1966), was a founder of the YNO and later Victorian President. In 1940 he was elected to the Senate as a UAP candidate. Mrs Couchman had been the President of the Australian Women’s National League and agreed that that League should merge with the Liberal Party in 1944, notably securing in negotiations equal representation for women at all levels of the Liberal Party. She was later a metropolitan Vice President of the Liberal Party. Mr Anderson had formed the Services and Citizens Party and was the first President of the Liberal Party.
In 1944, the non-Labor political forces in Australia, including the YNO and the UAP, agreed to disband and join the new Liberal Party of Australia. The YNO had formed in 1929 as the youth wing of the Nationalist Party (i.e. the party which formed the governments of Mr William Morris Hughes and Mr Stanley Melbourne Bruce (later a viscount) from 1917 to 1929) and kept its name when the Nationalist Party otherwise merged into the UAP in 1932. It kept its separate name despite its association with the UAP before merging into the Liberal Party.
Let me move forward somewhat in the chronology.
The application for renewal of the 3XY licence on 16 May 1959 showed that Mr Staughton, Mr Tovell, Mr Taylor, Mrs Couchman and Mr Anderson were understood to be nominees of the Liberal Party. Further, the 1961 to 1964 applications showed the same for Mr Tovell, Mr Taylor, now Dame Elizabeth Couchman and Mr Anderson. Later, Senator Magnus Cormack (subsequently knighted) replaced Mr Tovell as a shareholder and director. He became a member of the Liberal Party in 1946 and was elected as a Senator for Victoria in 1951. The 1967 application for renewal of the 3XY licence shows that Senator Cormack, Mr Taylor, Dame Elizabeth Couchman and Sir William Anderson were understood to be nominees of the Liberal Party.
In 1960, David Syme & Co Limited purchased part of the Thring family interests and became the owner of 50% of the shares in Efftee Broadcasters Pty Ltd, which leased the 3XY licence from Station 3XY Pty Ltd and operated the 3XY radio station. The lease payments made to Station 3XY Pty Ltd were paid on to the Liberal Party.
Now the plaintiffs referred to a number of communications from about the mid-1960s which suggested that Station 3XY Pty Ltd was owned by the Liberal Party. Let me refer to some of them. Some of them assist, some do not.
On 6 December 1966, in a letter to Mr Robert Southey the then President of the Liberal Party, Senator Cormack said that he regarded himself as a trustee for the Liberal Party in the matter of the 3XY licence. Senator Cormack wrote:
I regard myself as Trustee for Party in the matter of the licence of 3XY Station and as Trustee I remitted the whole of the monies that were distributed to me in accordance with the Articles of Association; the agreement with the Commissioner of Taxation and requirements of the Companies’ Act. I realise that you have some misgivings about the Station and I am prepared to discuss this with you at any time upon the basis of mutual confidence but not upon the basis of divulging matters that are private to a Boardroom which you will acknowledge does not lie within my competence.
But there was correspondence from the same time frame supporting the contrary position. For example, in a letter to Senator Cormack dated 14 December 1966, Mr Southey stated inter-alia:
I fully understand that, for historical reasons, 3XY is not the property of the Party, and the Party has no legal right whatever to control it. Whether there is any moral right would seem to be one of the points at issue. The present directors, if I am correct, “inherited” the Station from what might be termed the ancestors of the Liberal Party of Australia, and it seems (if I have my facts straight) that when the Liberal Party was formed no steps were taken to ensure that the control of the Station passed to the Liberal Party, though it remained in the hands of persons loyal to, and holding important positions in, the Party.
Further, I would note that Mr Southey foresaw the potential problems that could arise from the uncertain relationship and the historical background when he stated that “one must envisage the possibility that at some time in the future ‘a Pharaoh might arise who knew not Joseph’”.
On 11 October 1967 Mr Southey wrote to Senator Cormack posing the question: “Is [the sudden death of multiple directors] covered in the Articles of Association in such a manner that the interest of the Liberal Party (insubstantial though it be in legal terms) is protected?”.
On 21 August 1969 Mr Southey wrote to Senator Cormack stating: “The President’s Standing Committee recognised that the Directors of 3XY, of which you are Chairman and Managing Director, are not under any legal obligation to consult the Liberal Party as to the management of the Company or the disposal of its assets”.
Further, in a memorandum dated 18 November 1969, Mr Southey wrote (emphasis in original):
1.The original licence was granted to 3XY Pty. Ltd. acting on behalf of the “ancestors” of the Liberal Party in 1934. The original directors included R. W. Tovell and Dame Elizabeth Couchman. Sir William Anderson became a director in the early ‘50’s.
2.When the Liberal Party was formed, no steps were taken to transfer the asset to the Liberal Party; indeed at that time the Nationalist Party organisation was not fully co-operative, and this being so the Liberal Party felt it would operate best by starting de novo, without deals with, or obligations to, its predecessors.
3.Successive directors however (notably Sir William Anderson, Senator Cormack and Dame Elizabeth Couchman) have regarded themselves as trustees for the Liberal Party and the financial benefit of the licence has been passed on to the Party.
4.The Directors of 3XY have consulted with the Party from time to time and the appointment of the Hon. Murray Hamilton to the Board was done, for example, with the State President’s concurrence and the endorsement of the Federal and State Parliamentary Leaders.
5.The legal situation with regard to ownership is that –
a)        the Directors (as shareholders) are the legal owners
b)        the Directors have treated the Party as beneficial owners BUT
c)it is possible that there are persons still living connected with the “ancestors” of the Liberal Party, who could establish a better claim at law to beneficial ownership than the Liberal Party.
6.        It should be clear from the above that
a)the State Executive has no present legal claim to hold the Directors of 3XY accountable;
b)if the State Executive took steps to establish a legal claim, they could fail, and the benefit could accrue to persons outside the Party.
7.In the light of the above, it may well be asked whether the Executive should not continue to accept the status quo (as it has done for 25 years). It is, after all, in what might be considered an enviable position, since it is treated as being morally entitled to advantages to which, legally, its claim is very tenuous indeed.
8.It would seem desirable to lay aside, once and for all, the erroneous idea that the Liberal Party “owns” 3XY. It doesn’t, and to act as if it does would be to risk losing the advantages and privileges which the Party now possesses.
During the period April to July 1972, Mr Alan Missen (later a Senator for Victoria from 1974) also gave considered advice to the Liberal Party concerning Station 3XY Pty Ltd and the ownership question; he was married to the champion debater and English literature scholar and teacher, Mollie Missen. He was best known for his work in civil liberties at a time before it became fashionable to use what he would have described as tautological marketing labels such as “human rights lawyer”; a lawyer is by definition a human rights specialist whether dealing with natural persons or humanistic collective constructs. He gave corporate legal advice on the matter that I am now addressing. But again it reflected considerable uncertainty on the Liberal Party’s interest (if any).
On 4 March 1977 Senator Cormack wrote to the then President of the Liberal Party, Mrs Joy Mein, noting that he had reformed the composition of the board of Station 3XY Pty Ltd to provide a director nominated by each of the Prime Minister and Premier of the day. He also noted that at that time each member of the board was or had been a member of the State Executive of the Liberal Party.
Now later shareholders in Station 3XY Pty Ltd included Mr Guilfoyle. He gave evidence in the proceeding in which he said that he had been a member of the Liberal Party for about 70 years, had been a branch chairman, and had been a member of the State Executive and assistant treasurer. His wife, Dame Margaret Guilfoyle, was a Liberal Senator for Victoria and Minister for Education, Minister for Social Security and Minister for Finance in the Fraser Government. Mr Guilfoyle was a shareholder and director of Station 3XY Pty Ltd from 7 August 1972 until that company was deregistered in 2014, save for a period between August 1987 and July 1989. Mr Murray Hamilton was also a shareholder and director from 1968 to 1987. He was President of the McKinnon branch of the Liberal Party from 1955 to 1967, a member of the State Executive of the Liberal Party from 1962 to 1967, and a Liberal Member of the Legislative Council of Victoria from 1967 to 1982.
Now it is well apparent from this incomplete chronology that the members and directors of Station 3XY Pty Ltd from time to time were “loyalists” and “friends”, if not members and officeholders, of YNO/UAP and, subsequently, the Liberal Party. But at no stage was there any trust deed or declaration of trust in respect of the 3XY licence in favour of YNO or UAP, or in favour of the Liberal Party after it was formed in 1944. There was also no trust deed or declaration of trust by any Station 3XY Pty Ltd shareholder in respect of his or her shares in favour of YNO, UAP or the Liberal Party. In a letter dated 24 August 1977 from Mr Guilfoyle to the then Prime Minister Malcolm Fraser, and in a letter dated 27 September 1977 from Senator Cormack to Mrs Mein, the history and status of Station 3XY Pty Ltd were described and it was confirmed that at no time since the formation of Station 3XY Pty Ltd had any shareholder (or director) held any shares as trustee or agent for any political party.
It is worth extracting the following parts of Mr Guilfoyle’s letter to Mr Fraser of 24 August 1977:
Association with the Liberal Party of Australia (Victorian Division)
At no time since the formation of the Company in 1934 has any shareholder (or director) held any shares as trustee or agent for any political party before 1945 or the Liberal Party since its formation.
The first shareholder who endeavoured to secure some funds for the Liberal Party was (Sir) William H. Anderson in 1953. It was not until 22nd March, 1974 with the resignation of Mr. C. R. Taylor and the appointment of Mrs. A. T. H. Reader that all members of the Board were also members of the Liberal Party.
Since 1970 each shareholder is required under the Act to swear a statutory declaration that he holds the share on his own behalf. This has been observed.
Since Sir Magnus Cormack became a director in 1966 there has been a close association with each President of the Party. The first in-depth study took place with (Sir) Robert Southey and in 1968 he was nominated by the Board of 3XY to be an additional director. However, Southey did not accept the nomination.
The following extract from a letter dated 21st August, 1969 by (Sir) Robert Southey to Sir Magnus Cormack seems relevant.
“The Presidents’ Standing Committee recognises that the Directors of 3XY of which you are Chairman and Managing Director are not under any legal obligation to consult the Liberal Party as to the management of the Company or the disposal of its assets.”
During 1968 Sir Magnus and the Prime Minister of the day the Rt. Hon. J. G. Gorton exchanged letters on 3XY. A copy of a letter dated 9th July, 1968 from the Prime Minister to Sir Magnus is attached. (Attachment 1.)
In 1972 Sir Magnus invited Mr. P. D. Hardie to join the Board.
One share was transferred from Dame Elizabeth Couchman to Peter Hardie on 7th August, 1972 and he retained ownership of this share until 9th November, 1973. The purpose of Hardie becoming a shareholder was for him to become a Director of the Company. He eventually rejected the invitation based on the fact that he was quite satisfied with the relationship between the Party and 3XY.
In 1976 with the election of Mrs. I. P. Mein as President both the Chairman and Executive Director have briefed her on the affairs of the Company. Early this month Mrs. Mein stated that she had no problem with 3XY or had any unanswered questions.
On 3 June 1976, the articles of association of Station 3XY Pty Ltd were altered so as to prohibit any distribution by Station 3XY Pty Ltd to any member or relative of any member. On 25 June 1976, some new objects were inserted in the memorandum of association which again did not mention the Liberal Party or any function as trustee. But the 1976 amendments to cl 3 did insert the following as objects of Station 3XY Pty Ltd:
(11)To maintain liberty of speech, religion and association and to preserve the freedom of the press.
(12)To promote and preserve the element of individual enterprise as an integral part of the structure of society and to promote the interests of employees or employers or capitalists or others engaged in any trade or business.
On 6 June 1977, the articles of association were replaced and then provided inter-alia that upon a winding up or dissolution of Station 3XY Pty Ltd, any surplus property would be given or transferred to some institution(s) having similar objects and a prohibition on distributions to members, such institution(s) to be determined by the members with a default mechanism, and otherwise to some charitable object (art 79). The replacement articles contained provisions (arts 11 to 13) to address broadcasting legislation requirements introduced in June 1969, and which inter-alia required incoming shareholders to deliver to the company a statutory declaration as to whether any third person had a beneficial interest in their shares (art 12). In this regard, s 90M of the Broadcasting and Television Act 1942–1969 (Cth) as amended by the Broadcasting and Television Act (No 2) 1969 (Cth) required that the management of a radio licence holder make and lodge a statutory declaration with the relevant regulator stating the name and address of any person with a “prescribed interest” in a licence, which included a person in a position to exercise control, including as a result of or by means of a trust, of the licence or the licensee through relevant shareholding of more than 15% including where held beneficially. Relatedly, s 90N provided that any trust in a share of a company which held a licence was deemed invalid for any purpose unless notice was given to the company within 3 months of the prescribed date (relevantly 31 December 1969) in writing, of the existence and nature of the trust, and the name of the beneficiary. The declarations in evidence before me relating to these legislative requirements do not name the Liberal Party as a beneficiary or having any prescribed interest.
Now from the perspective of the Liberal Party, the limitations of the structure that I have just described became apparent over the years as the Liberal Party attempted to assert more control over Station 3XY Pty Ltd. But the directors and shareholders of Station 3XY Pty Ltd, particularly Senator Cormack and Mr Guilfoyle, resisted those attempts. This caused ongoing tensions and disputes between Station 3XY Pty Ltd and the Liberal Party.
In the late 1970s a dispute arose between the executive of the Liberal Party and the directors of Station 3XY Pty Ltd as to the relationship of the two organisations. For example, in 1978 the Liberal Party sought to have the directors and shareholders of Station 3XY Pty Ltd sign a declaration of trust stating that each director’s shareholding was held by him/her as trustee for the Liberal Party. But they refused to sign. After much negotiation, on 28 May 1979 an agreement was signed by the directors of Station 3XY Pty Ltd and representatives of the Liberal Party. By that agreement, a panel was to be established consisting of two representatives of the Liberal Party and two representatives of Station 3XY Pty Ltd. Unanimous approval of the panel was required to appoint a replacement director. It was agreed that the number of shareholders and directors would not increase beyond four and when all the present directors ceased to hold office, the right of future election of directors would reside with the Trustees of the Liberal Party. I will explain the role of a Trustee of the Liberal Party later, which role is recognised under the Liberal Party’s constitution. I will capitalise that title to distinguish it from the more generic description of a trustee that I will be making use of later.

The agreement specifically provided:
1.Panel to be established forthwith consisting of 2 representatives of the Party (being 2 Trustees or State President and 1 Trustee) and 2 representatives of the Directors of whom 1 shall be the Chairman or Acting Chairman of Directors.
2.So long as any of the existing Directors holds office the Panel by unanimous vote is to have exclusive right to appoint a replacement Director whether an existing Director or a new Director when he/she dies, becomes permanently incapable of discharging duties as Director or resigns or if the Panel unanimously decides to replace such Director.
3.Either side may submit names for consideration as replacement Directors. In a case of deadlock the Chairman of Vapold shall fill the vacancy until the Panel can decide on a permanent replacement.
4.Directors and Shareholders will not increase numbers of Directors beyond 4.
5.Where practicable a Director shall give the Panel 3 months notice of intended retirement.
6.When all present Directors have ceased to hold office, right of future election of Directors to reside with Trustees.
7.If so agreed between present Directors and Party, the Panel may appoint a fifth Director.
8.Any member of the Panel may convene a meeting of the Panel by giving to each member 21 days prior notice in writing of the date and time of the meeting and of the business to be dealt with thereat.
But members of the panel were never appointed. And there is nothing in the evidence before me to suggest that the panel was ever constituted on or after that time.
Mr Alston gave evidence concerning the 28 May 1979 agreement. In 1970 he became a member of the Liberal Party. Between 1977 and 1979, he was an elected member of the State Executive, which at that time was the body responsible for the day to day management of the Liberal Party. In 1979 he was elected President of the Liberal Party, and was subsequently re-elected in each of the following two years, in all, serving for the then conventional term of three years. In 1984, he was appointed a Trustee of the Liberal Party, and remained so until he became a Senator for Victoria in May 1986. He was a Senator during the period 6 May 1986 to 10 February 2004; he held various Cabinet portfolios from 1996 to 2003. He was also the Australian High Commissioner to the United Kingdom between 2005 to 2008. In 2015, he was again appointed a Trustee of the Liberal Party and he continues to hold that position. Between June 2014 and June 2017 he was the Federal President of the Liberal Party of Australia. He gave evidence regarding a dispute between the shareholders of Station 3XY Pty Ltd and the Liberal Party concerning whether the shareholders held their shares beneficially or on trust for the Liberal Party. I do not need to descend into the detail save to discuss his evidence concerning the 28 May 1979 agreement.
He said that he saw the memorandum dated 28 May 1979 on various occasions while he was President of the Liberal Party. He understood the effect of the memorandum to be that the Liberal Party (via the President and Trustees) would come to control the appointment of directors to Station 3XY Pty Ltd (and its subsidiary), which in turn confirmed the Liberal Party’s power over the ownership of Station 3XY Pty Ltd’s shareholding. So far as he was then concerned, the memorandum of 28 May 1979 ensured that the Liberal Party had effective control over Station 3XY Pty Ltd and, with the effluxion of time, each shareholder would hold his or her shares pursuant to a signed declaration of trust. He said that as each of the then shareholders was a loyal member of the Liberal Party who had given his or her word as to their future conduct in relation to the shareholding of Station 3XY Pty Ltd, he considered the issue of the Liberal Party’s control and ownership of Station 3XY Pty Ltd and the 3XY licence to be concluded by that memorandum. Now I accept that all of this may have been Mr Alston’s genuinely held belief but in my view such a belief is not substantially probative let alone determinative of the issues that I have to consider.
In summary, it seems to me that the material in evidence concerning Station 3XY Pty Ltd and the 3XY licence through to the time of the sale of the 3XY licence in 1986 that I will discuss in a moment does not support the proposition either that Station 3XY Pty Ltd was acting as a trustee for the Liberal Party or that the 3XY licence was an asset in which the Liberal Party held a beneficial interest. Moreover, the material in evidence does not establish that any shares in Station 3XY Pty Ltd were held on trust for the Liberal Party, although there was a perception within the Liberal Party that it had some sort of “moral claim” to them or at the least the right to influence who was appointed as a director.
(b) Sale of the 3XY licence and the origins of the Cormack Foundation
On 3 November 1986, Station 3XY Pty Ltd, as vendor, entered into an agreement for the sale of shares and a sale of the 3XY licence with Paul Dainty Properties Pty Ltd, as purchaser. Station 3XY Pty Ltd agreed to sell, inter-alia, the 3XY licence and all the issued shares in Radio 3XY Pty Ltd for the sum of $18.75 million. Radio 3XY Pty Ltd was a wholly owned subsidiary of Station 3XY Pty Ltd and had operated the radio station since 1 July 1978.
At around this time it was contemplated that a substantial proportion of that sum ($15 million) would be placed in a trust for the purposes of the Liberal Party. A draft “3XY Trust Deed” was prepared.
In October 1986, Mr Calvert-Jones was the Treasurer of the Liberal Party; he held that position from 1984 to 1989. In that role and on 30 October 1986 Mr Calvert-Jones retained Mr Alan Cornell (then the senior partner at Blake & Riggall), to advise the Liberal Party on a structure to be employed for receiving the proceeds of sale of the 3XY licence. Mr Cornell is currently a special counsel with Hope Earle Solicitors. Having been admitted to practise in 1962, he became a partner of Blake & Riggall (now Ashurst) in 1966. He worked as a commercial and litigation lawyer. From 1966 to 1986, Mr Cornell acted as solicitor for the then Stock Exchange of Melbourne. In that capacity he met Mr Calvert-Jones, who was a committee member of the exchange and vice president. Because the then Liberal Party’s principal solicitors Weigall & Crowther were acting for the purchaser of the 3XY licence, Mr Cornell was engaged by Mr Calvert-Jones to advise the Liberal Party on the transfer of the proceeds of sale, initially into a trust for the benefit of the Liberal Party to be controlled by Liberal Party nominees.
Mr Morgan, then a member of the State Finance Committee and a Trustee of the Liberal Party, was also involved in giving instructions to Mr Cornell. He held the position as a member of the State Finance Committee and as a Trustee from 1983 to 1993. Mr Morgan has held a number of corporate director positions over his career, most notably Western Mining Corporation where he was chief executive officer from 1990 to 2003. He has a long association with the Business Council of Australia, including serving as its president from 2003 to 2005. He also has a long association with the Minerals Council of Australia, serving as the chairman of various committees (1976 to 1998), as president (1981 to 1983) and as senior vice president (2002 to 2003). He has twice been a board member of the Reserve Bank of Australia (1981 to 1984 and 1996 to 2007). Mr Morgan has been a member of the Liberal Party since around 1980.
In terms of the disposition of the proceeds of sale of the 3XY licence, initially what was anticipated was a trust to hold the funds for the benefit of the Liberal Party. That trust was to be controlled by the Liberal Party’s nominated trustees. Mr Cornell prepared a draft trust deed which provided that its principal objects were to support the maintenance of liberty of speech, religion and association and to promote and preserve the element of individual enterprise, with an object of the trust being to “[assist] the Liberal Party of Australia to defray the costs of administration of that organisation or any division thereof”. The draft trust deed provided that in the event of a winding up the net assets would be transferred to the “trustees of the Liberal Party of Australia”. A perpetuity period of 80 years was stipulated. Both Mr Calvert-Jones and Mr Morgan were to be trustees of that trust, as too was Mr Guilfoyle. The draft trust deed was sent to each of Mr Morgan and Mr Calvert-Jones on or around 12 December 1986.
On 5 January 1987, Mr Morgan wrote to Mr Cornell in relation to the proposed trust deed as follows (emphasis in original):
Many thanks for your letter of 12th December. I think the draft deed that you have prepared is a vast improvement on anything we have seen previously. In respect of the comments that I would proffer, they are as follows:
(1)In 2.(4) the presumption I have from the manner in which this is drafted is that all funds will end up with the Liberal Party for there is absolutely no doubt in my mind that the Liberal Party will find ways in which to spend all of the money available. While this is the Liberal Party’s intention, it may be a stumbling block with Stan Guilfoyle and the present 3XY trustees/directors. If it requires amendment we should, I believe, be “flexible”, for so long as we have control of the trustees I believe there will be no practical problem.
(2)A point made to me by Charles Goode is that the Liberal Party sought to be benefitted is the Liberal Party of Victoria.
(3)Clause 4.(4) refers to the appointment of three trustees. I think there is a difficulty in limiting it to three because two of the original three trustees are clearly dedicated to representing the Liberal Party of Victoria, namely myself and John Calvert-Jones but that is not the case for Stan Guilfoyle. In the event that either John or myself were no longer to act as a trustee there may be a conundrum as to the appointment of the third by the remaining two. Consequently, I would suggest clause 4 should contemplate there being not less than three trustees nor more than five. This has the advantage of:
(a) avoiding there ever being a deadlock; and
(b)enabling the existing three trustees to arrange for the appointment of one or more additional trustees.
Given that John and I will participate we will then be able to ensure such additional trustees are acceptable to the Liberal Party. As you are aware, it is both my and John’s intention to let the Liberal Party of Victoria have our resignations from this trust so that the Liberal Party can remain in control of our appointment as trustees.
Thank you again for the draft. I am sure it is a most helpful contribution to having this matter resolved.
It would seem that Mr Morgan may have shown a copy of the draft trust deed to Mr Goode, also then a member of the State Finance Committee and a Trustee of the Liberal Party (see para (2) of the letter); Mr Goode served in those two positions from 1986 to 2017. Apparently, Mr Morgan discussed the arrangements for the $15 million with Mr Goode and consistently with Mr Goode’s suggestion, the ultimate beneficiary was made the “Liberal Party of Victoria”, which in these reasons I have defined as the “Liberal Party”.
Now around this time Mrs Eda N Ritchie was President of the Liberal Party; she held that position until 24 July 1987. Mr Calvert-Jones reported to meetings of the Liberal Party’s Administrative Committee and State Finance Committee throughout 1987 about how these negotiations were progressing. Mr Michael Kroger’s evidence was that from the time he took over as President from Mrs Ritchie, Mr Calvert-Jones reported to and took instructions from the Administrative Committee as to these negotiations. Mr Kroger gave evidence that it was his belief that by reason of the 1979 agreement between the shareholders of Station 3XY Pty Ltd and the Liberal Party, which I have previously discussed, that entity was effectively owned by the Liberal Party and that what was happening was a transfer of assets from one Liberal Party vehicle to another. That may have been his sincere belief. The legal significance and characterisation of relevant events is another matter.
Now apparently the draft trust deed was subject to negotiations with the directors of Station 3XY Pty Ltd. But it appears that the directors of Station 3XY Pty Ltd insisted that the deed not specifically name the Liberal Party as a beneficiary or provide that the funds be paid to it in the event of a winding up. On 12 May 1987, Mr Cornell had a conference with Mr Calvert-Jones at which the latter gave Mr Cornell a draft trust deed designated draft 12.5.87 and marked “Master Copy”. Although this document had Mr Cornell’s reference on it, it was not a document that he prepared and was in a different font from documents that he had prepared at that time. Mr Calvert-Jones instructed him to incorporate the changes embodied in the “Master Copy” into a new draft trust deed. Mr Cornell did as instructed and produced a new draft. In his covering letter to Mr Calvert-Jones dated 12 May 1987, which enclosed the new draft, Mr Cornell noted the omission of the Liberal Party from cll 2(4) and 9. Mr Cornell does not now recall what specific reason Mr Calvert-Jones gave him for the omission of the Liberal Party from cll 2(4) and 9, however his best recollection is that the document designated “Master Copy” incorporated amendments sought by one or more of the directors of Station 3XY Pty Ltd.
Mr Cornell was very concerned about the deletion of the Liberal Party from cll 2(4) and 9 as it contradicted the instructions that he had received from Mr Calvert-Jones on 30 October 1986. As he said in evidence, specific reference to the Liberal Party had been included in all drafts of the trust deed up to that point in time, save for the “Master Copy” produced by Mr Calvert-Jones.
Because of this development, Mr Cornell took the view that to protect the interests of the Liberal Party, each trustee of the new trust should sign an undertaking which committed each trustee to, inter-alia, use their best endeavours to ensure that all available income from the trust would be applied for the benefit of the Liberal Party. Mr Cornell accordingly prepared undertakings to this effect. Further, at about this time Mr Cornell was instructed by Mr Calvert-Jones to include the names of Mr Cornell and Mr Goode as trustees in the execution copies of the trust deed.
On 28 May 1987, a trust deed to be executed together with a form of undertaking to be executed by each trustee was forwarded by Mr Cornell to Mrs Ritchie. At this time the trustees were to be Mr Morgan, Mr Calvert-Jones, Mr Goode and Mr Cornell, but not Mr Guilfoyle. And as I have indicated, to protect the interests of the Liberal Party Mr Cornell prepared undertakings for each trustee to sign. The undertakings provided for each trustee to:
(a)use his best endeavours to ensure that all available income from the trust would be applied for the benefit of the Liberal Party;
(b)use his best endeavours to ensure that a condition precedent to the appointment of any new trustee would be that the nominee would first sign an undertaking in like terms; and
(c)resign as a trustee if so required by the Liberal Party.
According to a note on Mr Cornell’s file, he received the deed signed by the four trustees on 29 May 1987. He later sent the trust deed to Mr Calvert-Jones in duplicate signed by the four trustees.
On 4 August 1987, Mr Cornell received a telephone call from Mr Calvert-Jones in which he asked him to draft an indemnity for the shareholders and directors of Station 3XY Pty Ltd to protect them from any liability as a result of any payment that might be made by Station 3XY Pty Ltd to any new trust from the proceeds of sale of the 3XY licence.
On 12 August 1987, Mr Cornell received a further telephone call from Mr Calvert-Jones who confirmed that Mr Guilfoyle had said that he wanted an indemnity for each director and shareholder of Station 3XY Pty Ltd in respect of the handover of any money to any new trust.
On 27 August 1987, the board of Station 3XY Pty Ltd resolved to apply its property towards the promotion of its objects by paying the sum of $7 million (of the $7,750,000 which it then had under its control) to the “Magnus Cormack Enterprise Trust”.
Also on 27 August 1987, Mr Cornell had a conference with Mr George Raitt of Blake & Riggall who informed him that there had been yet another proposed change to the trustees.
On 28 August 1987, Mr Cornell wrote to Mr Calvert-Jones in which he expressed concern as to the ultimate control of the trust. Further, in a memorandum prepared by Mr Cornell on 29 August 1987 to one of his partners who was to handle the file whilst he was overseas, Mr Cornell recorded his instructions as:
It is absolutely essential that a majority of the new Trustees execute a similar undertaking otherwise the basic problem of 3XY, which refused to acknowledge it had any obligation to the Liberal Party, will be perpetuated.
On 1 October 1987, it was decided by the Liberal Party’s Administrative Committee that there would be three trustees and that they would now be Mr Calvert-Jones, Mr Morgan and Mr Guilfoyle. As I have already explained, Mr Guilfoyle was a director and shareholder of Station 3XY Pty Ltd, but he would not sign any undertaking. This decision was communicated to Mr Cornell by Mr Calvert-Jones in a telephone conversation that day. Mr Cornell’s file note of 1 October 1987 records that when Mr Cornell pointed out to Mr Calvert-Jones that Mr Guilfoyle had not signed a resignation or an undertaking, Mr Calvert-Jones said that a 2:1 vote would protect the Liberal Party’s position.
On 2 October 1987, Mr Calvert-Jones instructed Mr Cornell to provide him with execution copies of the trust deed. On 14 October 1987, Mr Cornell wrote to Mr Calvert-Jones enclosing a new deed for execution with some minor amendments.
On 20 October 1987, Mr Cornell was instructed by Mr John Ridley, the State Director of the Liberal Party, to brief senior counsel for his opinion in respect of the proposed trust. Now the need for this arose in the following way.
The proposed version of the trust deed at this point in time had objectives that were broadly consistent with the Liberal Party’s objectives, but without specific reference to the Liberal Party, let alone as an object. But this gave rise to doubts as to the validity of the proposed trust. This question had been the subject of legal advice given by Blake & Riggall. Mr Alan Stewart, who was a consultant at Blake & Riggall, had reviewed the then proposed trust deed against the requirement of the three certainties necessary for the creation of a valid trust including the certainty of object(s). As the draft trust deed provided to him did not name the Liberal Party as an object, he expressed the following view:
In the case of the 3XY Trust there are no individual beneficiaries nor do I see how the Court could enforce and supervise the Trusts and therefore there is the gravest reason to doubt the validity of the document as a valid declaration of Trust.
Now he discussed the rule against perpetuities but thought there was no difficulty given the 80 year stipulation in cl 8. Rather, the problem that he identified was one concerning the uncertainty of the identity of the object(s). It was in that context that it was proposed to seek the opinion of Mr Alan Goldberg QC, an eminent commercial silk and later a member of this Court.
On 22 October 1987, Mr Cornell briefed Mr Goldberg QC to advise upon the validity of the trust deed. Those instructions asked for counsel’s opinion as to whether income from the trust could be paid to the Liberal Party. Let me set out those instructions:
1.        Observations for Counsel
(1)Your instructing solicitors act for The Magnus Cormack Enterprise Trust which is about to be constituted by a Trust Deed.
(2)Counsel will recently be aware that Station 3XY Pty Limited sold Station 3XY Pty Ltd for the sum of $A15 million. The purchase price is payable in two instalments, the first having been paid and the second being due at the end of this month.
(3)It is proposed that Station 3XY Pty Limited will pay to the Trustees of The Magnus Cormack Enterprise Trust the sum of $15 million to be applied by them in accordance with the Trust Deed.
2.        Documents for Counsel
Counsel is handed herewith –
(1)The Trust Deed of The Magnus Cormack Enterprise Trust designated, Final Draft 21.10.87.
(2)Memorandum and Articles of Association of Station 3XY Pty Limited.
3.        Instructions for Counsel
Counsel is asked to consider the enclosed documents and to advise whether the Trustees are entitled to apply the income from the Trust by paying same pursuant to clause 2.(9) to the Liberal Party of Australia (Victorian Division).
In the first draft of this Deed prepared by Blake & Riggall we had inserted in what is now “Secondly” in clause 2.(9) the following –
“secondly, in assisting the Liberal Party of Australia to defray the cost of administration of that organisation or any division thereof; and
thirdly in furthering the objects of the Trust Funds by such means as the Trustees shall determine;”
In the view of your instructing solicitors this puts the matter beyond doubt, but our instructions are that the Trust Deed should contain no specific reference to the Liberal Party of Australia (Victorian Division).

On 23 October 1987, Mr Cornell wrote a memorandum to Mr Geoffrey Hone (also a partner of Blake & Riggall). He recorded that the original draft of the trust deed, which included the Liberal Party as a named beneficiary, had been settled by Mr Beamish Brett and had been looked at by Mr Alan Stewart. He recorded that over the ensuing months, Mr Calvert-Jones had instructed that the clause naming the Liberal Party as a beneficiary be removed. He recorded that Mr Calvert-Jones was then having second thoughts and had sought senior counsel to be instructed on the point. Mr Cornell then stated: “Subject to your comments, I propose to provide Mr Stewart’s memorandum to [Mr Goldberg QC]. In my view it is not embarrassing – the omission of a specific object was on specific instructions”.
On 26 October 1987, Mr Cornell provided a further brief to Mr Goldberg QC. Let me set out the further instructions:
1.        Documents for Counsel
Counsel is handed herewith –
(1)       Memorandum, undated and signed “AAS”.
(2)Extract from “The Law of Charitable Trusts in Australia” pages 101 to 105.
(3)Producers’ Defence Fund 1954 VLR 246 (Smith J.)
2.        Instructions for Counsel
Counsel is also asked to advise on the matters raised in Mr Stewart’s memorandum and, in particular, whether the Trust is valid despite the lack of a specific legal entity as a beneficiary.
As I have indicated, Mr Stewart had opined upon a version of the amended trust deed that did not name the Liberal Party as an object of the trust. Mr Stewart’s memorandum concluded that because the proposed trust had “no individual beneficiaries”, there was “the gravest reason to doubt the validity of the document as a valid declaration of Trust”. According to Mr Cornell’s evidence, Mr Goldberg QC apparently gave telephone advice to Mr Cornell on or around 4 November 1987 agreeing with Mr Stewart. Mr Cornell then formed the view that the trust structure could not proceed without a residual beneficiary.
Now I agree with the plaintiffs that the suggestion made by the defendants before me, namely, that Mr Goldberg QC was not opining upon the validity of a trust absent the Liberal Party as an object but rather opining on the validity of the trust assuming that the Liberal Party was a named object, is incorrect. That was not the scenario then in contemplation and that was not what Mr Stewart had been considering. At the time it was contemplated that the Liberal Party was not to be an object. Hence the trust problem; there was a perceived lack of certainty of object. Mr Stewart was concerned with uncertainty as to object where the Liberal Party was not an object. Mr Goldberg QC was briefed with the documents identified in the instructions to advise dated 22 October 1987 and the instructions to further advise dated 26 October 1987, but those documents did not include the Liberal Party’s constitution, which (if the defendants were correct) counsel would have needed to have been briefed with to express any view about whether the Liberal Party could be the object of a trust if it was contemplated that the Liberal Party was to be an object. But the documents and the evidence given by Mr Cornell well demonstrate that the concern at the time related rather, as the plaintiffs correctly contend, to the absence of an object or residual beneficiary. And it is apparent that this difficulty arose because although the original trust structure was contemplated to have the Liberal Party as the beneficiary, this was removed at the request of the directors of Station 3XY Pty Ltd as a condition of transferring the proceeds of sale over to any new structure.
In November 1987, it having been ascertained that the contemplated trust would fail as a non-charitable purpose trust, it was then proposed to form a proprietary company to receive the proceeds of sale. This was suggested by Mr Hone on or around 25 November 1987.
As matters evolved, the structure proposed was a company (the Cormack Foundation) with three shareholders, each with one-third of the shares, and each with a right to appoint one director. The authorised capital of the Cormack Foundation was to be limited to $99.00, consisting of 99 shares of $1.00 each. A special resolution was to be required to increase the authorised capital (a concept later abolished from 1 July 1998). It was proposed that the memorandum and articles of association would prohibit the payment of dividends to shareholders, but would permit payments for purposes aligned with the Liberal Party’s purposes.
Ultimately, on 2 February 1988 Mr Cornell provided to Mr Calvert-Jones a letter in the following terms discussing the four options that had been considered to that point in time including the latest option being the corporate structure:
We have pleasure in enclosing what we trust is the final draft of the Memorandum & Articles of Association of The Magnus Cormack Foundation Pty Ltd (Draft 2.2.88). This document should be read carefully by you before it is agreed to as it will govern the investment of, and disposition of the income on, $15 million for many years to come. While change to the Articles of Association is possible, it is unlikely to occur in the short term because of the checks and balances involved in the document before you. In reviewing this document you should have in mind the other possibilities which have been canvassed in the past 15 months and have been incapable of achievement for various reasons.
The first option was for the directors of Station 3XY Pty Limited to give $15 million to the Liberal Party of Australia (Victorian Division). The sum could then have been placed in a special account and invested. As a matter of negotiation, this option has not been capable of achievement.
The second option discussed was the formation of a trust into which would be paid the sum of $15 million. The drafting of the Trust Deed and the accompanying negotiations with interested parties took place over a period of nearly 12 months. However, during the negotiations all references to the Liberal Party of Australia (Victorian Division) were removed from the Trust Deed with the result that the Trust had no object and, accordingly, could have failed for uncertainty. This option was, therefore, not proceeded with.
The third option was that Station 3XY Pty Ltd could be placed in liquidation and the moneys distributed to the persons beneficially entitled thereto. This option would have required a 75% vote by the shareholders which may not have been forthcoming and then there would have been a dispute as to who was entitled to the moneys on liquidation. Accordingly, this option has not been seriously examined.
The fourth option is that one which is presently before you. This is the incorporation of a new company which will have as its objects the support of Liberal objectives and, as a result, will be enabled to pay to the Liberal Party of Australia (Victorian Division) the income from the $15 million, subject to the value of the fund being maintained in real terms. This option is not an ideal solution as it involves the creation of a new legal entity and with it shareholders and directors who are not controlled by the Liberal Party of Australia (Victorian Division).
At a meeting of the Administrative Committee on 4 February 1988, attended by Mr Kroger, Mr Cornell, Mr Calvert-Jones and others, Mr Cornell explained the options that he had set out in his 2 February 1988 letter. The minutes record the following:
7. RADIO 3XY
The Administrative Committee accepted the resolution put forward by Alan Cornell that the formation of a 3XY Foundation be set up to manage the proceeds of 3XY (this was accepted by the majority of the Admin Committee).
Mr Kroger gave evidence that Mr Cornell advised the Administrative Committee that a company was being set up to house the 3XY sale proceeds that would be controlled by the Liberal Party. Mr Kroger gave evidence that Mr Calvert-Jones had told the Administrative Committee that the 3XY sale proceeds would effectively be held on trust for the Liberal Party. At all events, it would seem that the Administrative Committee resolved to proceed with the fourth option referred to in Mr Cornell’s letter of 2 February 1988.
By letter dated 5 February 1988, Mr Cornell sent to Mr Calvert-Jones a copy of a memorandum to counsel also dated 5 February 1988 sent to Mr Goldberg QC, and stated to Mr Calvert-Jones “I have explained to [Mr Goldberg] the background to the proposed compromise and he has undertaken to examine the documents which I trust will be agreed to by Sir Magnus Cormack”.
Let me reproduce that memorandum prepared by Mr Cornell for Mr Goldberg QC:
1.        Observations for Counsel
(1)Counsel is referred to his Brief herein dated 22nd October 1987 and our subsequent conference. Since that conference the concept of a Trust has been abandoned on the basis that it was not possible for the Liberal Party of Australia (Victorian Division) to be specifically referred to as an object and, as a result, the Trust may have failed for uncertainty. The compromise which has been proposed by the shareholders of Station 3XY Pty Limited is that a new company be incorporated with similar objects to Station 3XY Pty Limited and that the $15 million received from the sale of Radio 3XY Pty Limited be paid across to that company.
(2)This is clearly a compromise solution to the dispute and, as a result, has a number of drawbacks. However, your instructing solicitors believe that it is the best that can be achieved in the circumstances.
2.Documents for Counsel
Counsel is handed herewith –
(1)       Letter dated 2nd February 1988 to Mr J.A. Calvert-Jones.
(2)Memorandum and Articles of Association of The Magnus Cormack Foundation Pty Limited.
[(3)]     Deed of Indemnity.
3.        Instructions for Counsel
Counsel is requested to examine the enclosed documents and make any comments he deems appropriate.
Counsel will note that the initial shareholders will be Messrs J.A. Calvert-Jones, S.M.L. Guilfoyle, and H.M. Morgan. Both Mr Calvert-Jones and Mr Morgan have indicated that they will give an executed Deed of Trust in favour of the Liberal Party of Australia (Victorian Division) and undertake to deal with their shares as directed by the Liberal Party of Australia (Victorian Division). In addition, they will hand to the Liberal Party of Australia (Victorian Division), blank share transfer forms together with undated signed resignations as directors.
Mr Guilfoyle, a director and shareholder of Station 3XY Pty Ltd, was to be one of the three shareholders and directors, and Mr Calvert-Jones and Mr Morgan were put forward by the Liberal Party as the other two shareholders and directors. Now it is not apparent on the evidence before me what precise advice Mr Goldberg QC then provided. It was put to Mr Cornell in cross-examination by Mr Allan Myers QC for the defendants that Mr Goldberg QC advised that the same problems existed with a deed of trust over the shares as existed with the proposed deed of trust over the assets of the company, but Mr Cornell could not recall. Now there are two points to be noted. First, at this time it was contemplated that there would be some trust over the shares of Mr Calvert-Jones and Mr Morgan. Second, the same uncertainty of object problem did not arise. The previous proposed deed did not have the Liberal Party as an object. But the proposed undertakings did, although a more subtle problem arose which I will discuss later when dealing with the validity or enforceability of the trust(s) asserted. Further, it is interesting that what then occurred over the next few months was very close to what was contemplated in the instructions to counsel, although of course no formal deed of trust over the shares was ever executed. But in terms of intention, in my view it would seem that a trust over Mr Calvert-Jones’ and Mr Morgan’s shares was contemplated in favour of the Liberal Party. Now several months after this time undertakings were given and signed blank share transfer forms and undated resignations as directors were given over by Mr Calvert-Jones and Mr Morgan. I doubt that Mr Goldberg QC gave the advice suggested by counsel for the defendants. If he had it is likely that a different course of events would have transpired.
Now there was then a delay caused apparently by the directors of Station 3XY Pty Ltd refusing to adopt the proposed structure. The minutes of a meeting of the Administrative Committee held on 3 March 1988 record the following:
Discussion followed on the budget papers, as attached and included considerable comment on the 3XY situation – it was agreed that Alan Castleman and Eda Ritchie liaise closely with John Calvert-Jones and express the views of the Committee in this matter.
Concern at:
•the 2 extra Directors now sought
•proposal to give some funds to another body
See if the Hon Andrew Peacock is prepared to talk to Sir Magnus Cormack.
Mr Kroger gave evidence that the nature of this dispute between the directors of Station 3XY Pty Ltd and the Liberal Party was about who would control the allocation of income going forward. Mr Kroger also gave evidence that when Mr Calvert-Jones told him that this dispute had been resolved in favour of the Liberal Party, Mr Calvert-Jones said nothing about the elected officials of the Liberal Party having no control over the funds.
The Cormack Foundation was incorporated on 10 March 1988 for the purpose of receiving a gift of the sale proceeds from Station 3XY Pty Ltd. The original subscribers and directors were Mr Calvert-Jones, Mr Guilfoyle and Mr Morgan, who each paid $33.00 for their 33 shares, as Mr Cornell had requested them to do by his letter dated 7 March 1988. At the time Mr Calvert-Jones was Treasurer, and Mr Morgan was a Trustee, of the Liberal Party. Station 3XY Pty Ltd had by this time been renamed “Station Enterprise Pty Ltd”.
As set out in the memorandum and articles of association of the Cormack Foundation and adopted upon its incorporation, the objects for which the Cormack Foundation was established and to which its income and capital were to be applied were general objects which did not refer to the Liberal Party or any other person or organisation, but did include objects that appear to me to be associated with the political philosophy of liberalism (cll II and VII of the memorandum and art 69). According to Mr Cornell, cl II(5) of the memorandum of association of the Cormack Foundation was based on para 4 of the objectives of the Liberal Party of Australia as set out in the Official Federal Platform of the Liberal Party of Australia (approved by the Federal Council on 15 November 1960). The memorandum prohibited distributions to members or to any person claiming through them (cl VII), and provided that upon a winding up any surplus property was to be given or transferred to some institution(s) having similar objects and prohibition on distributions to members, such institution(s) to be determined by the members or pursuant to a default mechanism, and otherwise to some charitable object (cl VIII). The articles provided inter-alia the following: shares could be issued by unanimous decision of the directors (art 3); directors could refuse to register any transfer of shares (art 11(3)); each shareholder holding at least one third of the issued shares could appoint one director, and any further appointments were to be made by unanimous decision of the directors (art 38); the directors had no entitlement to receive remuneration (art 41); and acts done by the directors were not invalidated by any defect in appointment of directors (art 60).
Mr Cornell gave evidence that with the assistance of Mr Raitt, he drafted the memorandum and articles of association of the Cormack Foundation. In drafting the memorandum and articles of association, he intended that the structure should to the extent feasible reflect the intended structure when there was to be a trust rather than a company. Accordingly, there were to be three directors and shareholders of the Cormack Foundation: Mr Calvert-Jones, Mr Morgan and Mr Guilfoyle.
He intended that each of Mr Calvert-Jones and Mr Morgan would execute an undertaking similar to that proposed when the vehicle was to be structured as a trust, with appropriate changes to reflect the fact that the structure was now a company; it was well apparent to Mr Cornell that Mr Guilfoyle was not prepared to give any undertaking. He provided that the authorised capital of the Cormack Foundation would be $99.00, consisting of 99 shares of $1.00 each, all of which would be issued upon incorporation. Each of Mr Calvert-Jones, Mr Morgan and Mr Guilfoyle would be issued with 33 shares. Further, if the authorised capital was to be increased this would at the least require the acquiescence of either Mr Calvert-Jones or Mr Morgan. He also provided in art 38 of the articles of association that the holder of one-third of the shares could appoint a director, thereby ensuring that Mr Calvert-Jones and Mr Morgan (and anyone to whom their shares were transferred) could appoint themselves a director.
So far as Mr Cornell was concerned, this all meant that the money from the sale of the 3XY licence would come into a company that was controlled by the Liberal Party, particularly as Mr Calvert-Jones and Mr Morgan were senior office holders in the Liberal Party and were prepared to sign an undertaking. The Cormack Foundation would be controlled by Mr Calvert-Jones and Mr Morgan, who would sign undertakings to inter-alia use their best endeavours to ensure the income of the Cormack Foundation was applied for the benefit of the Liberal Party, use their best endeavours to ensure that a condition precedent to a person becoming a director of the Cormack Foundation or having shares allotted or transferred to them was to sign a like undertaking, to resign as a director if required by the Liberal Party and use their best endeavours to have its nominee appointed and to, if required by the Liberal Party, transfer their shareholding to a person or corporation nominated by the Liberal Party. In this way, as he understood it, the Liberal Party would maintain control of the Cormack Foundation.
I have extracted below relevant clauses from the memorandum of association:
II.       The objects for which the company is established are –
(1)       to promote the private sector, supported by a spirit of self endeavour;
(2)to support the maintenance of liberty of speech religion and association and the preservation of freedom of the press and other media;
(3)to promote and preserve the element of individual enterprise as an integral part of the structure of society and to promote the interests of employees and employers or others engaged in any trade or business;
(4)to promote the recognition by society of merit at the earliest possible age and encourage its development;
(5)to promote an intelligent free and liberal Australian democracy in which –
(a)       executive government is responsible to Parliament;
(b)       the rule of law is paramount;
(c)       the judiciary is independent of government;
(d)freedom of the individual is recognized, subject to the rights of others;
(e)       people are protected against exploitation;
(f)       individual initiative and enterprise or [sic] encouraged; and
(g)a national spirit in Australia is developed to the fullest extent possible.
(6)to promote and support by financial grants or otherwise any corporation institution association or body or any division thereof having as one or more of its objects one or more of the objects of the Company;
(7)to receive any gift of money or property for any of the purposes and objects of the Company whether subject to any special trust condition or obligation whatsoever or not but so that the Directors may nevertheless decline to accept any gift or donation or to take over any property which has annexed to it any condition or obligation not approved of by the Directors;
(8)to give any guarantee for payment of money or the performance of any contract obligation or undertaking by any person firm company corporation or association;
(9)to indemnify and keep indemnified any person firm company corporation or association against any claim, demand, suit or cause of action whatsoever, and the costs and expenses thereof;
(10)to subscribe to any local or other charity and to grant donations for any public purpose or for any object of the Company;
(11)to establish and support any company for the purpose of holding any investment or for any other purpose incidental or conducive to any of the above objects;
(12)to do all such other things as are incidental or conducive to the attainment of the above objects or any of them.
…
V.The capital of the Company is $99 divided into 99 shares of $1 each with power to increase the same and to issue any shares in the original capital or any new capital with any preferential special deferred or qualified rights privileges or conditions attached to them.
…
VII.The income and property of the Company whencesoever derived shall be applied solely towards the promotion of the objects of the Company as set forth in this Memorandum of Association. No part of the income or property of the Company shall be paid or transferred directly or indirectly to the members of the Company or to persons who at any time have been members of the Company or to any person claiming through any of them. No fees shall be paid or given to any director of the Company for acting as a director of the Company. PROVIDED THAT nothing herein shall prevent: –
(a)the payment in good faith of reasonable and proper remuneration to any director or the Company or to any member of the Company or to any other person in return for any services (other than as a director) actually rendered to the Company or for goods supplied in the ordinary or usual course of business; or
(b)the payment of interest on monies borrowed from a director or member of the Company at a rate not exceeding interest at the rate for the time being charged by the Company’s Bankers in Melbourne for overdrawn accounts on money lent;
(c)reasonable and proper rent for premises demised or let to the Company by any director or a member of the Company; or
(d)the repayment or reimbursement of any expenses properly incurred by any director of the Company in or about the Company business.
VIII.If upon the winding up or dissolution of the Company there remains, after satisfaction of all its debts and liabilities any property whatsoever, the same shall not be paid to or distributed amongst the members of the Company but shall be given or transferred to some institution or institutions having objects similar to the objects of the Company and the Memorandum of Association or constitution of which prohibits the distribution of its or their income and property among its or their members to an extent at least as great as is imposed upon the Company under or by virtue of Clause VII of this Memorandum of Association, such institution or institutions to be determined by the members of the Company at or before the time of dissolution, and in default thereof by such Judge of the Supreme Court of Victoria as may have or shall acquire jurisdiction in the matter and if and so far as effect cannot be given to the aforesaid provisions then to some charitable object.

It is said that Mr Calvert-Jones and Mr Morgan each thereby breached the terms of their trust in favour of the Liberal Party. They appointed Mr Goode a director and caused the Cormack Foundation to issue shares to him without first informing the Liberal Party that it was about to lose control of the board and potentially control of any general meeting of the Cormack Foundation.
It is said that but for Mr Calvert-Jones’ and Mr Morgan’s breaches of the undertakings in relation to Mr Goode, 66 of 99 shares in the Cormack Foundation would still be held on trust for the Liberal Party.
The plaintiffs contend that the counterfactual is what Mr Goode would have done if asked to sign an undertaking in like terms to Mr Calvert-Jones’ and Mr Morgan’s undertakings as a precondition to becoming a director in 1992 in the Cormack Foundation. Now Mr Goode’s evidence is that he would have refused to sign the undertaking if requested to do so. The plaintiffs then say that if Mr Calvert-Jones and Mr Morgan had told the Liberal Party that they would nonetheless have persisted in the appointment of Mr Goode, the Liberal Party would have replaced them with people nominated by the Liberal Party. It is also said that given Mr Morgan’s evidence in relation to his attitude to new appointments to the Cormack Foundation, namely, that he and the other directors could appoint whomever they liked regardless of the Liberal Party’s direction and that the Liberal Party could always exercise his and Mr Calvert-Jones’ undertakings if it wished to replace them, it is likely that the Liberal Party would have replaced Mr Calvert-Jones and Mr Morgan with other Liberal Party nominees.
It is also said by the plaintiffs that even if it is assumed that Mr Goode would in any event have been appointed a director of the Cormack Foundation without signing an undertaking because the Liberal Party needed his financial expertise to grow the Cormack Foundation’s funds, the counterfactual then is what Mr Goode would have done if he had been asked to sign an undertaking but refused as a precondition to taking shares in 2000 in the Cormack Foundation. From 1996, Mr Goode knew that Mr Calvert-Jones and Mr Morgan had signed the undertakings and their terms. Mr Goode knew that the Liberal Party could have called for the transfer of each of their shares and appointed directors to replace them. Mr Goode accepted that the Liberal Party’s right to have the shares transferred was a valuable right. Now Mr Goode was a Trustee of the Liberal Party and the plaintiffs say that he accepted that he had a conflict of interest as a Trustee in taking shares in the Cormack Foundation personally. He said that had he seen the conflict, which he did not previously see, he would not have taken any shares himself if otherwise he had to give an undertaking.
Let me divert from the plaintiffs’ pleaded case for a moment and say something on this conflict of interest question, which I might say no one on either side seems to have turned their minds to until the trial before me.
In the cross-examination of Mr Goode by Mr Michael Wyles QC for the plaintiffs, which transcended the boundaries of the pleaded case and the plaintiffs’ opening, Mr Goode was questioned about the possibility of a conflict of interest arising between his position as a Trustee of the Liberal Party and as an actual or potential shareholder of the Cormack Foundation but without giving any undertaking. Now as a Trustee, Mr Goode was required to protect the property of the Liberal Party, which I accept would have included any trust interest in the shares held by Mr Calvert-Jones and Mr Morgan arising from their undertakings. Now when Mr Goode was offered shares in the Cormack Foundation in 2000, he was not asked to give any undertaking in favour of the Liberal Party and, as he said, even if he had been asked he would not have done so. And in those circumstances he never turned his mind to any potential conflict of interest. But the effect of the issue of shares to him was that the proportion of the Cormack Foundation’s shares captured by the undertakings was diluted from two-thirds (66 of 99 shares) to one half (66 of 132 shares). And this also resulted in the consequence that Mr Calvert-Jones’ and Mr Morgan’s shareholding could only appoint two of a potential four directors. These circumstances were put to Mr Goode as the basis for a conflict of interest between his position as a Trustee of the Liberal Party and as a shareholder of the Cormack Foundation without giving any undertaking:
If I could take you back to just for fairness, let’s say around May 2000, if you had turned your mind to the effect of the undertaking which you knew Mr Calvert-Jones and Mr Morgan had given, it would have occurred to you that you had a conflict of interest between the party’s position and your position in not wanting to give an undertaking before you received shares; that’s correct? — I didn’t think of it. There was harmony between the party and Cormack. I imagine we changed the articles so that a quarter holding could nominate a director to preserve their position. Otherwise if we hadn’t changed the articles, they would have been under a third and wouldn’t have been able to nominate any director.
Okay. But can we just deal with the question I’m putting to you please, Mr Goode, because what we’re trying to do is understand. You accept now that looking back, I think you said to me before that looking back you can understand how there was a conflict between your position as a trustee of the party with this undertaking right being valuable to the party and your position as Mr Charles Goode, the person who is happy to be a shareholder in Cormack, provided you do not have to give the same undertaking; that’s correct? — Yes.
Now I accept that Mr Goode gave frank and honest evidence on this topic and in a manner one would expect from a man of his considerable distinction in the commercial community. And I accept that these issues might raise a possible question regarding whether Mr Goode found himself in a conflict of interest in 2000. But that is as far as the matter goes. It was not asserted by the plaintiffs in their pleadings that there was such a conflict of interest. Moreover, in their closing submissions they expressly disclaimed wanting to introduce such a cause of action. In such circumstances, I can set this all to one side. Such allegations could have been introduced by the plaintiffs at an earlier point in time (assuming no limitation period that would bar such a claim or associated remedy), but they chose not to pursue this.
Further and more generally, Mr Kroger and Ms Kroger both gave evidence that as Presidents and if they had been made aware of all relevant circumstances they would have taken all necessary steps to stop the Liberal Party losing control of the Cormack Foundation. It is said that it cannot reasonably be suggested that if the Liberal Party had ever been told that it would lose its control of the Cormack Foundation, that the Liberal Party would have acquiesced to that course.
Further, it is also said that while each new share issue to Mr Rayner in 2002 (his shares were transferred to Mr Williamson in 2015), to Mr Hay in 2005, to Mr Grimwade in 2012, to Mr Balderstone in 2013, and to Mr Spargo in 2015, involved breaches of the undertakings, the Liberal Party’s control was lost with Mr Goode taking shares in the Cormack Foundation.
In summary, it is said that the effect of Mr Calvert-Jones’ and Mr Morgan’s breaches was the Liberal Party’s loss of control of the Cormack Foundation. It is said that the removal of the Liberal Party’s control of the Cormack Foundation, which control had otherwise been conferred by the trusts upon which each of Mr Calvert-Jones and Mr Morgan held their shares in the Cormack Foundation, was achieved only because those two trustees each repudiated their duties as trustee. It is said that if they had performed their trust obligations to the Liberal Party, they would have informed the Liberal Party that Mr Goode was not giving an undertaking to hold on trust for the Liberal Party the shares to be issued to him. If that had happened, Mr Calvert-Jones and Mr Morgan would not have continued to hold their shares. Their shares would have been transferred to trustees who would have refused to cause the Cormack Foundation to issue the shares to Mr Goode, alternatively who would have insisted that Mr Goode agree to hold the shares on trust and sign the undertaking before the shares were issued. It is said that such breaches of trust can only be rectified by restoring the position that prevailed prior to the appointment of Mr Goode as a director and prior to the issue of shares to him.
Now let me assume in favour of the plaintiffs for the sake of the argument only that Mr Calvert-Jones and Mr Morgan did act in breach of trust as contended for. I do not need to determine the matter as it goes nowhere in terms of giving the plaintiffs the remedy they seek in terms of the Cormack Foundation and the share register save and except in relation to re-instating their shares which were cancelled which I will discuss later when dealing with the second category of breach of trust. I say this for the following reasons.
First, if there was a breach of trust by Mr Calvert-Jones and Mr Morgan, that does not impact upon any directors’ resolutions or any shareholders’ resolutions of the Cormack Foundation dealing with the appointment of directors, the issue of shares or changes to the constitution. The validity of none of the resolutions has been successfully impugned in terms of plain vanilla corporate law principles. The Cormack Foundation under its constitution has never been bound to consider equitable interests in shares. Further, the resolutions of directors from time to time concerning appointments and share issues have been in their capacity as directors, and such directors’ powers are not and cannot be held on trust for anyone as I have already said.
Second, it may be accepted that later resolutions and new share issues have diluted the “value” of the shareholdings of Mr Calvert-Jones and Mr Morgan. But that is not a diminution in or destruction of trust property as such. It was not disputed that one could have a trust over a share. But a share is a bundle of rights or a chose in action rather than a chose in possession, giving the shareholder the rights conferred under the company’s constitution or by legislation and subjecting him to the liabilities (if any) arising thereunder; see also in this regard s 140(1) of the Corporations Act. Of course, in the present case the rights of shareholders in the Cormack Foundation to receive capital or income were removed. But a share in the sense that I have described is personal property and, subject to the company’s constitution, is transferable and transmissible (see also s 1070A of the Corporations Act). Now if the trust property is shares, an issue of new shares to third parties which may dilute the relative significance of the trust shares does not change the trust property. It still remains the trust shares, with the shares subject to the rights under the constitution from time to time. Further, if the constitution is modified to change the rights attaching to shares, the trust property has not changed as such. The shares are only ever the “bundle of rights” as varied from time to time.
Third, the plaintiffs say that they have established that had Mr Calvert-Jones and Mr Morgan not acted in breach of the trust, the plaintiffs would now hold 66 of 99 shares in the Cormack Foundation. It is said that where there has been a breach of trust, the nature of the case will determine the appropriate remedy available for selection by a plaintiff. They say that the objective to which equity will strive upon breach of trust is the restoration of the trust fund. It is said that equity’s jurisdiction to restore a trust can be invoked in relation to property in the hands of third parties. They also say that a recipient of trust property may become bound to account for it independently of the operation of the first limb in Barnes v Addy (1874) LR 9 Ch App 244. And they have also prayed in aid the pellucid analysis of Leeming JA in Fistar v Riverwood Legion and Community Club Ltd (2016) 91 NSWLR 732 at [45] where he explained:
[L]iability under the first limb of Barnes v Addy is not the only way in which a recipient of trust property may become bound in conscience to account for it. A person who receives trust property, otherwise than as a bona fide purchaser for value without notice, but innocently, and thereafter acquires notice of the trust and deals with it in a manner inconsistent with the trust, will also be liable as a constructive trustee. Although this is similar to first limb Barnes v Addy liability, it is conceptually distinct, because it is the subsequent dealing, rather than the receipt of property, that founds liability … [emphasis in original]
Further, the plaintiffs say that there is an analogy here with a “straightforward” constructive trust, where an innocent recipient takes property and later becomes aware of the breach and cannot then maintain those property rights.
Further, they say that where a wrongful act is conducted by the director of a company through the company, the director’s knowledge is imputed to the company, thus making the company’s conduct unconscionable, thus justifying an equitable remedy against the company.
It is said that each of these analytical pathways justifies my exercising a discretion as to the treatment of the shares in the hands of each of Mr Goode, Mr Hay, Mr Williamson, Mr Grimwade, Mr Balderstone and Mr Spargo. The plaintiffs say that in order to vindicate the plaintiffs’ rights which have been infringed in the events that have transpired, it is just and equitable to strip from each of Mr Goode, Mr Hay, Mr Williamson, Mr Grimwade, Mr Balderstone and Mr Spargo their shares. It is said that they are not bona fide purchasers for value without notice of the Liberal Party’s interest.
But I agree with the defendants that even if there did exist a trust over the shares of Mr Calvert-Jones and Mr Morgan as the plaintiffs allege, and Mr Calvert-Jones and Mr Morgan breached their duties as trustees, which I have not decided, that does not afford any continuing basis for relief. Before it can be said that the Cormack Foundation bears responsibility for a breach of trust or a breach of fiduciary duty of another, the second limb of the rule in Barnes v Addy must be properly invoked and it must be shown that the relevant breach of trust or fiduciary duty was dishonest or fraudulent. But as the defendants correctly point out, the plaintiffs have not alleged any involvement by the other directors and shareholders in the alleged breaches of trust by Mr Calvert-Jones and Mr Morgan and they have identified no juridical basis for obtaining relief against those other persons or the Cormack Foundation as a consequence of the alleged breaches of trust. It is not alleged that the other directors and shareholders or the Cormack Foundation itself knowingly induced the breaches of trust or knowingly assisted in the breaches of trust. Moreover, the Cormack Foundation was entitled to treat the registered holder of any share as the absolute owner of the share and not bound to recognise any equitable or other claim to or interest in the share on the part of any other person. I also agree with the defendants that the recipient of trust property scenario also has little to do with the present case; diluting the relative significance of the trust shares by the issue of new shares to third parties does not change the trust property let alone give rise to recipient liability in someone else.
Further, with respect to the company in general meeting, at all times the members of the Cormack Foundation had power to amend the constitution, which they did in each instance by unanimous resolution in a valid exercise of the said power.
Further, the alleged conflict of interest which it is said Mr Goode had does not provide the plaintiffs with any basis to impugn the decision of the directors acting in that capacity and in the best interests of the Cormack Foundation to issue Mr Goode with shares. The directors in 2000 were free to do so.
Further, I also agree with the defendants that even if that decision could now be impugned by the plaintiffs, it would not render ineffective or invalid the subsequent decisions by the board to appoint further directors and issue them with shares, nor would it render invalid any of the amendments to the company’s constitution which the members have resolved to make.
In summary, if there has been any breach of trust on this aspect, in my view it does not sound in any remedy against the Cormack Foundation or the current directors or shareholders, and putting to one side Mr Calvert-Jones or Mr Morgan.
(b) Breach of trust – failure to transfer
The other dimension to the plaintiffs’ case is that it is said that each of Mr Calvert-Jones and Mr Morgan in June 2017 breached their trusts by failing to act in accordance with cll 3 and 4 of their undertakings, that is, failing to “use my best endeavours to have [the Liberal Party’s] nominee appointed in my place” as a director and failing to “transfer my shareholding to a person or corporation nominated by the Liberal Party”. I agree with the plaintiffs that there was non-compliance with the undertakings by Mr Morgan and Mr Calvert-Jones in June 2017. The more difficult question is the one of remedy.
Now the plaintiffs have pointed to the following matters.
On 21 and 22 June 2017, the Liberal Party called upon Mr Calvert-Jones’ and Mr Morgan’s undertakings and directed each to transfer his shares to the Liberal Party’s nominees. So much is not in doubt.
On 28 June 2017, Mr Calvert-Jones and Mr Morgan resigned as directors of the Cormack Foundation and their shares were purportedly cancelled pursuant to r 31 of the Cormack Foundation’s constitution. The plaintiffs point out that although the Cormack Foundation purportedly cancelled these shares on 28 June 2017, it wrote to Mr Kroger simply noting that the Liberal Party’s directions to Mr Calvert-Jones and Mr Morgan were tabled and discussed at the Cormack Foundation’s board meeting that morning. No reference was made at that time to the share cancellations. It was not until 6 July 2017 that Mr Kroger and the Liberal Party were informed of the share cancellations, after ASIC notification had been given. Now so much is also true.
The plaintiffs say that in 2006, the shareholders of the Cormack Foundation without the Liberal Party’s consent or approval amended the Cormack Foundation’s constitution by the replacement of r 31, by which the board must, upon the death of a shareholder or his termination of office as a director, cancel, without consideration, the shares registered in the names of the shareholder or the director in question. So much is also apparent.
Now the first point that the plaintiffs make is that Mr Calvert-Jones’ and Mr Morgan’s shares were not issued on terms that they could be cancelled upon Mr Calvert-Jones’ and Mr Morgan’s resignation as directors. Accordingly, the purported cancellation was invalid and contrary to s 258D of the Corporations Act. Section 258D relevantly provides:
A company may, by resolution passed at a general meeting, cancel shares that have been forfeited under the terms on which the shares are on issue.
The second point that the plaintiffs make is that if Mr Calvert-Jones’ and Mr Morgan’s shares were subject to r 31 of the constitution, Mr Calvert-Jones’ and Mr Morgan’s agreement that their shares be bound by r 31 is voidable and voided because it was made in breach of trust, being a breach of cll 3 and 4 of the undertakings, and to the knowledge of the Cormack Foundation.
The third point that the plaintiffs make is that even if the constitution could be read to operate under r 31 retrospectively to cause the cancellation of existing shares, there is no evidence that either Mr Morgan or Mr Calvert-Jones agreed in writing that their shares were to be bound by that rule. In this regard, reference was made to s 140(2) of the Corporations Act which provides as follows:
Unless a member of a company agrees in writing to be bound, they are not bound by a modification of the constitution made after the date on which they became a member so far as the modification:
(a) requires the member to take up additional shares; or
(b)increases the member’s liability to contribute to the share capital of, or otherwise to pay money to, the company; or
(c)imposes or increases restrictions on the right to transfer the shares already held by the member, unless the modification is made:
(i)in connection with the company’s change from a public company to a proprietary company under Part 2B.7; or
(ii)to insert proportional takeover approval provisions into the company’s constitution.

The fourth point that the plaintiffs make is that even if it were said that Mr Calvert-Jones and Mr Morgan somehow did agree that their shares were to be bound by r 31, in circumstances where Mr Calvert-Jones and Mr Morgan held their shares on trust for the Liberal Party their first duty was to protect the trust property. Thus any agreement by them for their shares to be bound by the modification to the constitution which enabled those shares to be cancelled upon their resignation as directors of the Cormack Foundation was a breach of trust. Accordingly, any such agreement is voidable by the Liberal Party, has now been avoided and consequently the purported cancellation of their shares is void.
Accordingly, the plaintiffs seek a declaration that the purported cancellation of Mr Calvert-Jones’ and Mr Morgan’s shares is void and an order that the register be rectified. In addition, in accordance with the requests of the Liberal Party of 21 and 22 June 2017 they seek an order that Mr Calvert-Jones and Mr Morgan transfer their shares to Mr Stockdale and Mr Alston respectively. The plaintiffs also seek orders that Mr Alston’s and Mr Stockdale’s names be entered in the register in relation to 33 shares each. Further, the plaintiffs also contend that the rights attaching to those shares at issue, namely the appointment of a director, must be re-instated.
Now in my view r 31 did not apply to the shares held by Mr Calvert-Jones and Mr Morgan at the time r 31 was modified or at any later time. It seems to me that the r 31 modification in essence imposed or increased restrictions on the right to transfer the shares already held by those members. By providing that the shares were to be automatically cancelled on the termination of office as a director, r 31 effectively imposed or increased restrictions on the right to transfer. Moreover, I am not satisfied that Mr Calvert-Jones or Mr Morgan gave any agreement in writing to be bound. I am not convinced that the method of passing the relevant resolution in 2006 amending r 31 sufficiently constitutes such an “[agreement] in writing to be bound”. Indeed, for all I know a member then voting on the resolution may have considered it to have prospective effect. In any event, one could vote on a resolution applying generally but consider that one’s own shares were grand-fathered. At all events, s 140(2) is not expressed in terms “unless a member votes in favour of the resolution effecting the modification …”. In my view there must be an individual act by the member manifesting in writing an agreement that his shares are now to be so restricted. The general agreement to a resolution is not sufficient. Now I accept that an instrument constituting a circular resolution under s 249A of the Corporations Act may also serve the dual function of being an “[agreement] in writing to be bound” within the meaning of s 140(2), but the instrument must make that dual function clear. Not without some hesitation, in my view the signed instruments of circular resolution in the present case did not make such a dual function clear. They referred to being in favour of a special resolution to amend r 31, and of course s 140(2) assumes that there is the necessary resolution to make the constitutional modification. But something more was required by s 140(2). They did not separately stipulate that r 31 was agreed to as a restriction on the rights to transfer Mr Morgan’s and Mr Calvert-Jones’ shares.
As r 31 does not apply to Mr Calvert-Jones’ and Mr Morgan’s shares, they ought not to have been cancelled. Accordingly, their shares should be re-instated to the register. Moreover, in circumstances where in my view they always held their shares on trust for the Liberal Party and in circumstances where they did not in late June 2017 comply with the directions of the Liberal Party contemplated under the undertakings and transfer their shares to new nominees, in my view Mr Calvert-Jones and Mr Morgan should execute transfers of their shares in favour of the Liberal Party’s nominees and the shares on re-instatement to the register should be registered in the names of such nominees.
Having reached this conclusion, I do not need to concern myself further with questions as to whether the current directors of the Cormack Foundation had by 28 June 2017 been put on notice of any breach of trust, whether they were bound to take notice of any such trust or breach of trust, or indeed whether even if they were bound to do so, r 31 automatically operated in any event (if it applied to Mr Morgan’s and Mr Calvert-Jones’ shares, which I have now found otherwise) so that as directors they were bound to cancel the shares under r 31.
Now the defendants have contended that r 31 did apply to Mr Calvert-Jones’ and Mr Morgan’s shares, but as I say I have taken the contrary view. But there is one aspect of the defendants’ submissions that I agree with concerning whether, as the plaintiffs argued, the resolution effecting the modification to r 31 was invalid.
In my view the plaintiffs’ argument based on the principle discussed in Gambotto v WCP Limited (1995) 182 CLR 432 fails. The circumstances considered in that case are different from the present case.
In Gambotto v WCP Limited, the purpose of the amendment to the articles was to enable the majority shareholders to immediately expropriate the minority-held shares. As was recognised by Mason CJ, Brennan, Deane and Dawson JJ, circumstances which do not involve an expropriation of valuable property rights attaching to shares would not offend the principle (at 444):
It seems to us that, in such a case not involving an actual or effective expropriation of shares or of valuable proprietary rights attaching to shares, an alteration of the articles by special resolution regularly passed will be valid unless it is ultra vires, beyond any purpose contemplated by the articles or oppressive as that expression is understood in the law relating to corporations.
Further, even if there was an expropriation, there is the following exception to the principle (at 445):
In our view, such a power can be taken only if (i) it is exercisable for a proper purpose and (ii) its exercise will not operate oppressively in relation to minority shareholders. In other words, an expropriation may be justified where it is reasonably apprehended that the continued shareholding of the minority is detrimental to the company, its undertaking or the conduct of its affairs – resulting in detriment to the interests of the existing shareholders generally – and expropriation is a reasonable means of eliminating or mitigating that detriment.
In my view the resolution achieving the modification to r 31 did not of itself achieve an expropriation of the type contemplated in Gambotto v WCP Limited. Moreover, it was for a proper purpose and did not operate oppressively in relation to minority shareholders. On its face, the modification applied and operated generally, subject of course to the point I have made concerning s 140(2). In summary, the modification to r 31 is not invalid.
Let me finally deal with two other points.
First, I reject the plaintiffs’ case under s 258D. As the defendants correctly contend, the plaintiffs’ reliance upon s 258D is misplaced. That section is directed to the particular circumstance where shares that “have been forfeited under the terms on which the shares are on issue” are cancelled by resolution passed at a general meeting. That is not the present case, where the shares were not “forfeited” in the ordinary sense of a forfeiture arising from a failure to pay monies owing on partially-unpaid shares, but rather were cancelled by the board purportedly under r 31. Moreover, s 258D is merely permissive. It does not establish an exhaustive mechanism by which forfeited shares may be cancelled. Moreover, it does not prohibit the cancellation of shares in other permissible circumstances.
Second, the plaintiffs assert that the rights attaching to Mr Calvert-Jones’ and Mr Morgan’s shares at issue, namely, the right to appoint a director, must be re-instated. I disagree. The resolutions which effected relevant changes to the constitution decoupling shareholding from an entitlement to appoint directors have not been shown to be invalid. Moreover s 140(2) has no application. The decoupling has removed an entitlement. It has not imposed or increased a restriction. Moreover, this decoupling has nothing to do with the right to transfer. The plaintiffs’ challenge requires establishing a causal chain justifying a remedy commencing with a breach of trust and ultimately leading to the infection of the relevant resolutions. But none of this works for the reasons I have previously explained.
CONCLUSION
In summary, I have reached the following overall conclusions.
First, Mr Calvert-Jones and Mr Morgan have at all relevant times held their shares in the Cormack Foundation on trust for the Liberal Party.
Second, the cancellation of those shares should be set aside, those shares should be transferred to nominees of the Liberal Party, and the register of members of the Cormack Foundation should be rectified accordingly with such nominees being entered in the register as the shareholders.
I will hear further from the parties as to the precise form of orders to give effect to these reasons. On the question of costs, I am inclined to make no order as to costs as each side has had some measure of success. But I will give the parties an opportunity to make submissions on that question if they so choose.

I certify that the preceding three hundred and twenty-eight (328) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach.
Associate:
Dated: 14 June 2018

SCHEDULE OF PARTIES

VID 1270 of 2017

Defendants

Fourth Defendant:

FREDERICK SHEPPARD GRIMWADE

Fifth Defendant:

RICHARD TYREE BALDERSTONE

Sixth Defendant:

DAVID ALISTAIR WILLIAMSON

Seventh Defendant:

STEPHEN CHARLES SPARGO

Eighth Defendant:

JOHN CALVERT-JONES

Ninth Defendant:

HUGH MATHESON MORGAN

File number:	VID 1270 of 2017
Judge:	BEACH J
Date of judgment:	14 June 2018
Catchwords:	TRUSTS AND TRUSTEES – Trust over shares in corporation – express trust – objective theory as to ascertaining intention – whether intention to create trust in the future or with immediate effect – whether a trust over directors’ powers – validity or enforceability of trust – trust in favour of unincorporated association – whether a trust for members – whether a non-charitable purpose trust – whether a trust with ascertained object(s) – “contract holding” theory discussed in Neville Estates Ltd v Madden [1962] Ch 832 – whether immediate or postponed vesting – rule against perpetuities – “wait and see” approach – necessarily implied “lives in being” in terms and context of relevant trust instrument – breach of trust – causal consequences flowing from breach of trust – innocent third parties – scope of equitable remedies CORPORATIONS – Cancellation of shares – validity of cancellation where trust thwarted or breached – re-instatement of shares and rectification of the register – s 140(2) and s 175(1) of the Corporations Act 2001 (Cth)
Legislation:	Corporations Act 2001 (Cth) ss 140(2), 175(1), 258D Perpetuities and Accumulations Act 1968 (Vic) s 6
Cases cited:	Bacon v Pianta (1966) 114 CLR 634 Bahr v Nicolay [No 2] (1988) 164 CLR 604 Barnes v Addy (1874) LR 9 Ch App 244 Byrnes v Kendle (2011) 243 CLR 253 Fistar v Riverwood Legion and Community Club Ltd (2016) 91 NSWLR 732 Gambotto v WCP Limited (1995) 182 CLR 432 In re Kayford Ltd (in liq) [1975] 1 WLR 279 In re Schebsman, Deceased; Ex parte Official Receiver v Cargo Superintendents (London) Ltd [1944] Ch 83 Leahy v Attorney-General for New South Wales (1959) 101 CLR 611 Legal Services Board v Gillespie-Jones (2013) 249 CLR 493 Neville Estates Ltd v Madden [1962] Ch 832 Registrar of the Accident Compensation Tribunal v Commissioner of Taxation (1993) 178 CLR 145
Date of hearing:	19, 20 and 21 March 2018
Registry:	Victoria
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Category:	Catchwords
Number of paragraphs:	328
Counsel for the Plaintiffs:	Mr BW Walker SC and Mr MD Wyles QC with Mr CE Shaw and Dr COH Parkinson
Solicitor for the Plaintiffs:	Hope Earle
Counsel for the Defendants:	Mr AJ Myers QC and Dr IJ Hardingham QC with Mr JS Graham and Mr MD Tehan
Solicitor for the Defendants:	John Edgar Frenkel Partners
Table of Corrections
18 June 2018	In paragraph 244, the word “beneficially” has been replaced with “non-beneficially”.

VID 1270 of 2017
Defendants
Fourth Defendant:	FREDERICK SHEPPARD GRIMWADE
Fifth Defendant:	RICHARD TYREE BALDERSTONE
Sixth Defendant:	DAVID ALISTAIR WILLIAMSON
Seventh Defendant:	STEPHEN CHARLES SPARGO
Eighth Defendant:	JOHN CALVERT-JONES
Ninth Defendant:	HUGH MATHESON MORGAN