Cardaci v Filippo Primo Cardaci as Executor and Trustee of Marco Antonio Cardaci
[2018] WASC 100
•11 APRIL 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: CARDACI -v- FILIPPO PRIMO CARDACI AS EXECUTOR AND TRUSTEE OF MARCO ANTONIO CARDACI [2018] WASC 100
CORAM: LE MIERE J
HEARD: 14 DECEMBER 2017
DELIVERED : 11 APRIL 2018
FILE NO/S: CIV 1750 of 2017
MATTER: Section 77 of the Trustees Act 1962
The Washburn Trust and the Marc Cardaci Testamentary Trust
BETWEEN: MAE CARDACI
Plaintiff
AND
FILIPPO PRIMO CARDACI AS EXECUTOR AND TRUSTEE OF MARCO ANTONIO CARDACI
First Defendant
WASHBURN PTY LTD ATF WASHBURN PTY LTD
Second Defendant
RECTANGULAR PTY LTD ATF MARCO ANTONIO CARDACI TESTAMENTARY TRUST
Third Defendant
ONGOLD CORPORATION PTY LTD
Fourth Defendant
Catchwords:
Procedure - Application for summary judgment - Whether defence is strong enough on the merits to grant summary judgment
Procedure - Strike out application - Whether paragraphs of statement of claim should be struck out for disclosing no reasonable cause of action - Whether prejudice, embarrassment or delay of fair trial
Trusts - Amendment of trust deed - Appointment of guardian - Whether valid exercise of power by guardian in appointing subsequent guardian - Whether substratum of trust is altered
Procedure - Subpoena - Application to set aside subpoena - Whether subpoena documents are relevant
Legislation:
Trustees Act 1962 (WA), s 7
Result:
Application for summary judgment dismissed
Strike out application allowed in part
Application to set aside subpoena dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr C G Colvin SC |
| First Defendant | : | Mr S Penglis |
| Second Defendant | : | Mr S Penglis |
| Third Defendant | : | Mr S Penglis |
| Fourth Defendant | : | Mr S Penglis |
Solicitors:
| Plaintiff | : | Herbert Smith Freehills |
| First Defendant | : | Bennett + Co |
| Second Defendant | : | Bennett + Co |
| Third Defendant | : | Bennett + Co |
| Fourth Defendant | : | Bennett + Co |
Case(s) referred to in decision(s):
Ashville Investments Ltd v Elmer Contractors Ltd [1989] QB 488
Bride v Australian Bank Ltd (Unreported, WASCA, Library No 950632AC, 1995)
Commonwealth of Australia v Chubb Security Australia Pty Ltd [2004] NSWCA 77
Coxon v Wilson [2016] WASCA 48
Jenkins v Ellett [2007] QSC 154
Mercanti v Mercanti [2015] WASC 297
Mercanti v Mercanti [2016] WASCA 206
Mickelberg v 6PR Southern Cross Radio Pty Ltd [2002] WASCA 270
Newsholme Bros v Road Transport & General Insurance Co Ltd [1929] 2 KB 356
Pedlar v Road Block Gold Mines of India Ltd [1905] 2 Ch 427
Re Sichel's Settlements, Sichel v Sichel [1916] 1 Ch 358
Re Wheeler and De Rochow [1896] 1 Ch 315
Serventy v Commonwealth Bank of Australia [No 2] [2016] WASCA 223
Statewide Developments Pty Ltd (in liq) v Azure Property Group (Holdings) Pty Ltd (2012) 84 NSWLR 133
TSW Analytical Pty Ltd v The University of Western Australia [2017] WASCA 67
Wilcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515
Winter v Rudge (1847) 60 ER 751
Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd (2006) 33 WAR 1
LE MIERE J:
Summary
The plaintiff is the widow of Marco Cardaci (Marc). The first defendant (Philip) is the brother of Marc. This action concerns two trusts that were controlled by Marc in his lifetime ‑ the Washburn Trust and Marc's Testamentary Trust, a trust established by the will of Grace Cardaci, the mother of Marc and Philip.
In his lifetime Marc had been the trustee of the Washburn Trust and the sole director and shareholder of the trustee of Marc's Testamentary Trust, the fourth defendant (Ongold). Marc died on 7 November 2015. Philip was appointed Marc's executor by his will. Since Marc's death Philip has assumed control over the trusts and now exercises that control through the second defendant (Washburn) in respect of the Washburn Trust and the third defendant (Rectangular) in respect of Marc's Testamentary Trust.
Marc's estate is now being administered in insolvency. Whether Marc's estate is insolvent depends upon the validity of certain loans allegedly due by Marc to parties forming part of the wider Cardaci family interests. The plaintiff has commenced separate proceedings in this Court (CIV 3186 of 2016) seeking better provision for the plaintiff under Marc's will in which there is alternative relief sought removing Philip as trustee of the trust established by the will.
The plaintiff challenges the validity of certain of the steps by which Washburn and Rectangular have been appointed and claims, in any event, that they and Ongold should be removed as trustees. Conduct engaged in by Philip in the administration of Marc's estate is part of the conduct relied upon by the plaintiff to support the removal of Washburn, Ongold and Rectangular as trustees of the Washburn Trust or Marc's Testamentary Trust.
The relief sought by the plaintiff includes declarations to the effect that the plaintiff and not Philip is the guardian of the Washburn Trust and there is no trustee of the Washburn Trust. That claim for relief is based on the claim that two deeds of variation which appointed Philip as guardian and Washburn as trustee respectively are invalid or ineffective. In relation to Marc's Testamentary Trust the plaintiff claims that Rectangular is not the trustee. That claim is based upon the claim that the appointment of Rectangular as trustee of Marc's Testamentary Trust by a deed was invalid or ineffective.
The plaintiff alternatively claims that Washburn and Rectangular be removed as trustees of the Washburn Trust and Marc's Testamentary Trust respectively. The plaintiff also claims Ongold, which was appointed by Marc as trustee of Marc's Testamentary Trust prior to the deed which appointed Rectangular, be removed as trustee of Marc's Testamentary Trust.
The defendants have brought two applications. The first is for summary judgment in respect of the causes of action pleaded in [13] and [15] and Prayers for Relief A and B of the substituted statement of claim on the grounds that the defendants have a good defence on the merits or alternatively that those paragraphs and Prayers for Relief be struck out on the ground they disclose no reasonable cause of action. Paragraphs 13 and 15 of the substituted statement of claim plead that the amendment to the definition of guardian in the schedule to the Trust Deed effected or purported to be effected by a deed of variation (the Amendment) was invalid to the extent that it purported to amend the provisions of the schedule, but was a valid exercise of the power of Marc as guardian to nominate the plaintiff during his lifetime as guardian, and upon the death of Marc the plaintiff became the guardian of the Washburn Trust. Alternatively the defendants say the Amendment was invalid to the extent that it purported to nominate a person other than Marc who would become guardian in the lifetime of Marc by reason that any such amendment would alter the substratum of the trust. Prayers A and B seek corresponding relief.
Secondly, the defendants seek summary judgment in respect of the causes of action pleaded in [21], [22] and [23] and Prayer for Relief A in the substituted statement of claim on the grounds that they have a good defence on the merits, or alternatively that those paragraphs and prayer for relief be struck out on the ground they disclose no reasonable cause of action. Those paragraphs of the substituted statement of claim plead that the appointment by Philip of Washburn as trustee of the Washburn Trust is invalid.
Thirdly, the defendants apply to strike out [14], [40], [41] and [42] (insofar as they refer to Ongold), [45], [47] and [48] (insofar as they refer to advances of capital), [53] and [54] (insofar as they refer to distributions of income) and [59] ‑ [65] of the substituted statement of claim on the ground that they disclose no reasonable cause of action or may prejudice, embarrass or delay the fair trial of this action. That part of the defendant's application is a challenge to the form of the pleading.
Fourthly, the defendants apply that [76] ‑ [83], [85], [86] and [87] ‑ [94] of the substituted statement of claim be struck out on the grounds they disclose no reasonable cause of action, may prejudice, embarrass or delay the fair trial of the action or are otherwise an abuse of the process of the court. That part of the plaintiff's claim is also a challenge to the form of the pleading.
The defendants have also applied to set aside a subpoena issued to Australia and New Zealand Banking Group Ltd (ANZ). The subpoena requires ANZ to produce four classes of documents. The defendants accept that [45] of the substituted statement of claim makes the documents described in [1], [2] and [3] of the schedule to the subpoena apparently relevant but have applied to strike out that paragraph in their strike out application. Accordingly, the parties accept that the defendants' challenge to that part of the subpoena depends on the outcome of the defendants' strike out application. The defendants maintain that the documents described in [4] of the schedule to the subpoena in any event are not relevant and that part of the subpoena should be set aside.
For the reasons which follow I find that the defendants' application for summary judgment should be dismissed and [14] and [21] - [23] of the substituted statement of claim should be struck out, but otherwise the defendants' application to strike out paragraphs of the substituted statement of claim should be dismissed. The defendants' application to set aside the subpoena should be dismissed.
Overview of defendants' summary judgment and strike out applications
First, the defendants apply for summary judgment in respect of the causes of action pleaded in [13] and [15] of the substituted statement of claim or alternatively that those paragraphs be struck out. In essence, the defendants say that the plaintiff's case that the relevant deeds of variation are ineffective to appoint Philip as guardian and Washburn as trustee of the Washburn Trust is inconsistent with my decision as trial judge in Mercanti v Mercanti [2015] WASC 297 and, on appeal, the decision of the Court of Appeal in Mercanti v Mercanti [2016] WASCA 206.
Secondly, in relation to [21] ‑ [23] of the substituted statement of claim, the defendants say that the appointment by Marc of Washburn as trustee of the Washburn Trust was effected pursuant to s 7(1) of the Trustees Act 1962 (WA) (Trustees Act) and the plaintiff's challenge to the appointment is based upon an untenable construction of that statutory provision.
Thirdly, the defendants say that [40] ‑ [58] of the substituted statement of claim should be struck out on the ground that they plead breaches of duty in relation to distributions of income and advances of capital but plead no facts which can give rise to any breach of duty in relation to the advances of capital.
Fourthly, the defendants say that [59] ‑ [65], [76] ‑ [83], [85] ‑ [86], and [87] ‑ [94] of the substituted statement of claim should be struck out on the ground that these paragraphs plead matters against Philip as administrator of Marc's estate but he is not sued in that capacity.
I will start by outlining the context of the plaintiff's claims in relation to the Washburn Trust and Marc's Testamentary Trust.
The Washburn Trust
The Washburn Trust was established in 1995 by the Trust Deed. The trustee, guardian and appointor are defined in the schedule to the Trust Deed. Marc was the trustee, guardian and appointor.
On 21 December 2012 Marc executed a deed of variation (the first deed of variation). The parties to the first deed of variation are Marc as the trustee and Marc as the guardian of the trust. The first deed of variation recites that the parties are desirous of amending the Trust Deed pursuant to the power of variation in cl 29 of the Trust Deed, which confers on the trustee the power to vary the trusts provisions terms and conditions contained in the Trust Deed. The first deed of variation amended, or purported to amend, the Trust Deed by amending the description in the schedule of guardian (the Amendment) by removing the definition of guardian and substituting a provision which had the effect of appointing Philip as guardian. Marc, as guardian, consented to the Amendment. Thus, on the death of Marc, there was no trustee and Philip was, or purported to be, the guardian.
On 24 December 2015 Washburn and Philip, as the appointor and guardian or purported appointor and guardian, executed a deed of variation of trust (the second deed of variation). The second deed of variation provides that Philip, as appointor, in the exercise of the power given by the Trustees Act and contained in cl 22 of the Trust Deed appoints Washburn as the trustee and Philip, as guardian, consents to the appointment. Clause 22 of the Trust Deed provides for the removal and appointment of the trustee. Philip was, or purported to be, the appointor. The definition of appointor in the schedule to the Trust Deed defines the appointor to be Marc during his lifetime and after his death then such other person as may be nominated in writing by him during his lifetime but failing any such appointment then Philip.
Also on 24 December 2015 Washburn as trustee and Philip as guardian executed a deed of variation of trust (the third deed of variation). The third deed of variation provides that the Trust Deed is amended by removing the plaintiff from the descriptions of appointor and guardian in the schedule to the Trust Deed.
The plaintiff's claim that the Amendment is invalid
The plaintiff says that the Amendment effected by the first deed of variation is invalid to the extent that it purported to amend the provisions of the schedule.
Trust Deed - power of trustee to amend
The power of amendment is in cl 29 which is in these terms:
29. REVOCATION AND AMENDMENT OF TRUST DEED
Subject to clause 11 hereof the Trustee may at any time and from time to time by deed vary all or any of the trust provisions terms and conditions contained in this Deed (as varied from time to time by any previous deed) provided that the rule known as the Rule against Perpetuities is not thereby infringed and provided that any such variation insofar as it creates new beneficial interests in the Trust Fund or any part thereof shall be for the benefit of all or any one or more of the General Beneficiaries or the General Beneficiaries as a whole or any one or more persons born or unborn being lineal descendants of whatever degree (or the spouse of any lineal descendant) of any grandparent of any general Beneficiary but:
29.1shall not be in favour of or result in any benefit to any member of the excluded class;
29.2shall not affect the beneficial entitlement to any amount set aside for any beneficiary prior to the date of the variation; and
29.3shall not (save as provided in sub‑clause 29.1 hereof) enlarge the number of persons capable of falling within the description beneficiary' hereinbefore contained.
Save as provided in this clause these presents shall not be capable of being varied.
In this clause 'vary' includes revoke add to or amend and 'variation' and 'varied' have a corresponding meaning.
The plaintiff's argument depends upon the proper construction of cl 11 of the Trust Deed. Clause 11 reads:
11. WHERE GUARDIAN'S CONSENT IS NECESSARY
Subject always to any express provision to the contrary herein contained every discretion vested in the Trustee shall be absolute and uncontrolled and every power vested in the Trustee shall be exercisable at the Trustee's absolute and uncontrolled discretion PROVIDED that notwithstanding anything contained in this Deed:
11.1the Trustee may before exercising any discretion or power vested in the Trustee or making any determination hereunder consult the wishes of the Guardian (if any);
11.2the Trustee may subject to this clause by instrument in writing revocably or irrevocable wholly or partially release abandon or restrict any power conferred on the Trustee by this Deed;
11.3subject to sub clause 11.5 hereof the Trustee shall not when there is a Guardian exercise the reserved powers or the restricted powers except with the consent of the Guardian;
11.4where a Guardian is named in the Schedule and there ceases to be a Guardian the Trustee shall not:
11.4.1exercise the reserved powers; or
11.4.2exercise the restricted powers in such manner as to impair or diminish the expectations of any Specified Beneficiary or of any other person or person upon whom in the events which happen or pursuant to any appointment validly made pursuant to clause 4 hereof the Trust Fund is to devolve on the Vesting Day
PROVIDED NEVERTHELESS that the Trustee shall have power to make a declaration pursuant to the second provisos to clauses 1.8 or 1.9 hereof in respect of any General Beneficiary who is adult and sui juris and who requests the Trustee to do so;
11.5the Guardian may at any time by instrument in writing revocably or irrevocably declare that thenceforth all or any of the reserved powers or the restricted powers:
11.5.1shall cease to be reserved powers or restricted powers as the case may be and after any such declaration the Trustee shall be entitled to exercise such power or powers as though no Guardian had been named in the Schedule; or
11.5.2shall be prohibited to the Trustee and after any such declaration the Trustee shall not be entitled to exercise such power or powers;
11.6where no Guardian is named in the Schedule the Trustee may unless otherwise expressly provided in the Schedule exercise all the reserved powers and the restricted powers in the Trustee's absolute and uncontrolled discretion and without the consent of any other person;
11.7In this clause:
11.7.1'reserved powers' means:
…
11.7.1.9the power contained in sub clause 11.2 hereof
11.7.1.10 the power contained in clause 29 hereof;
…
Plaintiff's construction argument
This part of the plaintiff's case depends upon the proper construction of the Trust Deed. In [9(a)] of the substituted statement of claim the plaintiff pleads that upon the proper construction of the Trust Deed in the lifetime of Marc, the power to amend the deed could not be exercised to amend cl 11 or the definition of guardian or the applicable description in the schedule so as to name a person as guardian unless that person had been nominated by Marc in his lifetime to be the guardian upon Marc's death.
The plaintiff's argument is essentially as follows. Clause 11.3 provides that the Trustee shall not (when there is a guardian) exercise the reserved powers, which includes the power in cl 29 to amend the Trust Deed, except with the consent of the guardian. The guardian named in the schedule was Marc 'during his lifetime and after his death then such other person as may be nominated in writing by him during his lifetime but failing any such appointment then [Philip]'. The power to amend the Trust Deed could not be exercised so as to alter the identity of the guardian in a manner that was not expressly permitted by the deed itself. It could not be exercised so as to appoint a different person as guardian during the lifetime of Marc. The exercise of the reserved powers was subject to the control, or consent, of the guardian. Marc was the guardian during his lifetime and had the power to nominate a person to succeed him as guardian, but did not have power to appoint a different guardian during Marc's lifetime. This construction is supported by cl 11.6 which provides what is to happen when no guardian is named in the schedule. In that event the trustee may exercise all the reserved powers without the consent of any other person. The provision does not contemplate the introduction of a guardian by amendment. The construction is also supported by cl 11.5 which empowers the guardian to irrevocably declare that any of the reserved powers shall cease to be reserved powers and thereafter the trustee shall be entitled to exercise such powers as though no guardian had been named in the schedule. The existence of such a mechanism is inconsistent with the deed allowing for an amendment to achieve that object or to entrust those reserved powers to a different guardian to that named in the schedule who may bring the role of the guardian to an end.
A further argument by the plaintiff is that the Amendment was invalid to the extent that it purported to nominate a person other than Marc who could become guardian in the lifetime of Marc because any such amendment would alter the substratum of the trust (see [15] of the substituted statement of claim).
The defendants' argument concerning the amendment power
The defendants say that the plea that the Amendment was invalid to the extent that it purported to amend the provisions of the schedule is directly inconsistent with Mercanti, both at first instance and on appeal. The defendants say, and the plaintiff did not dispute, that the relevant provisions of the Trust Deed are identical to the relevant provisions of the MMF Trust Deed considered in Mercanti. At first instance in Mercanti I concluded that, on the proper construction of the MMF Trust Deed, the trustee was empowered to vary the contents of the schedule to the MMF Trust Deed so as to replace the guardian and appointor and appoint a new guardian and appointor. That conclusion was upheld by the Court of Appeal. Therefore, the defendants have a good defence on the merits and summary judgment should be entered for the defendants. Alternatively, the cause of action pleaded in [13] of the substituted statement of claim should be struck out.
Paragraph 14 of the substituted statement of claim pleads that alternatively to [13], the first deed of variation operated to the extent of the nomination of the plaintiff as a nomination in writing of the person to become the guardian of the trust. That plea is predicated on the first deed of variation being invalid. If the Amendment was not invalid then [14] does not disclose how the appointment of Philip as guardian is to be ignored and the plaintiff become guardian upon Marc's death. Therefore, [14] should be struck out.
Paragraph 15 pleads, in the alternative to [13] and [14], that the Amendment was invalid to the extent that it purported to nominate a person other than Marc who could become guardian in the lifetime of Marc by reason that any such amendment would alter the substratum of the trust. That plea is inconsistent with the rejection of a similar contention in Mercanti and inconsistent with the court's reasons for decision both at first instance and on appeal. Therefore, summary judgment should be entered for the defendant with respect to the cause of action that is the subject of [15], or alternatively [15] should be struck out as disclosing no reasonable cause of action.
Binding effect of decisions in Mercanti
The basic rule of precedent requires that a first instance judge is bound to apply the principles and rules of law laid down by the Court of Appeal. The binding part of a decision is the ratio decidendi, that is the principle upon which the case was decided, not the actual decision or holding in the case. The point was explained by McHugh J in Wilcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515:
The common law distinguishes between the holding of a case, the rule of the case and its ratio decidendi. The holding of a case is the decision of the court on the precise point in issue ‑ for the plaintiff or the defendant. The rule of the case is the principle for which the case stands ‑ although sometimes judges describe the rule of the case as its holding. The ratio decidendi of the case is the general rule of law that the court propounded as its reason for the decision [59].
The proper construction of a written contract, or a deed, is a question of law: Lewison and Hughes, The Interpretation of Contracts in Australia (Lawbook Co, 2012) [4.01] and the cases cited at footnote 2. Since the decision of the court on the meaning of a contract (or deed) decides a question of law, the doctrine of stare decisis theoretically means that any inferior court is bound by the point of law decided: Lewison and Hughes [4.07]. However, a deed must be construed according to its particular terms and its unique setting, including the matrix of surrounding circumstances at the time of making the deed. A decision about the legal effect of a document is not a binding precedent in relation to the legal effect of a different document executed by different parties in different circumstances even when the documents contain similar or even the same words. In Commonwealth of Australia v Chubb Security Australia Pty Ltd [2004] NSWCA 77 Palmer J, with whom Handley and Beazley JJA agreed, said:
In this court the parties repeated the submissions which they had made below. I am unable to agree with the conclusion reached by the judge. With respect, it does not seem to me that the judge has paid sufficient attention to the precise words of cll 9.1.1 and 9.1.2. If his Honour was influenced in the approach which he took by the decision in Patricia Lyons v Fondi Investments (although he does not refer again to that case in his reasoning) then, in my opinion, he was incorrect to do so: as I have observed, the relevant words to be construed in that case, although concerned with the same general subject matter as the present case, were materially different from the words in cll 9.1.1 and 9.1.2. It has repeatedly been said by the courts that, saving the case of terms of art, terms of accepted custom and usage or standard form contracts commonly used in a trade or industry, the construction placed by a court on the words of one contract are no precedent for the construction of similar words in another contract between different parties. That is because the intention of contracting parties as expressed in their contract is determined, where there is any ambiguity, according to the words they have chosen to use as coloured by the matrix of surrounding circumstances in which they happen to be placed at the time of making the contract. Accordingly, similar or even the same words in different contracts can have different meanings in different contexts [11].
In Ashville Investments Ltd v Elmer Contractors Ltd [1989] QB 488 May LJ said:
In these circumstances I think that it is necessary carefully to consider the role of precedent and the doctrine of stare decisis in a case such as this, in which a question of construction is in truth the fundamental issue between the parties. In my opinion the doctrine of precedent only involves this: that when a case has been decided in a court it is only the legal principle or principles on which that court has so decided that bind courts of concurrent or lower jurisdictions and require them to follow and adopt them when they are relevant to the decision in later cases before those courts. The ratio decidendi of a prior case, the reason why it was decided as it was, is in my view only to be understood in this somewhat limited sense.
Thus, in the present context it has been decided and is a principle of law that an arbitrator does not have jurisdiction, nor can the arbitration agreement be construed to give him jurisdiction to rule on the initial existence of the contract. On the other hand, given an appropriate arbitration clause, an arbitrator does in general have jurisdiction to rule on the continued existence of the contract (see Heyman v Darwins Ltd and Mustill and Boyd, Commercial Arbitration (1982) pp 78–81).
Similarly it is a principle of law that the scope of an arbitrator’s jurisdiction and powers in a given case depend fundamentally on the terms of the arbitration agreement, that is to say on its proper construction in all the circumstances.
However, I do not think that there is any principle of law to the effect that the meaning of certain specific words in one arbitration clause in one contract is immutable and that those same specific words in another arbitration clause in other circumstances in another contract must be construed in the same way. This is not to say that the earlier decision on a given form of words will not be persuasive, to a degree dependent on the extent of the similarity between the contracts and surrounding circumstances in the two cases. In the interests of certainty and clarity a court may well think it right to construe words in an arbitration agreement, or indeed in a particular type of contract, in the same way as those same words have earlier been construed in another case involving an arbitration clause by another court. But in my opinion the subsequent court is not bound by the doctrine of stare decisis to do so (494 - 495).
There is authority that on a question of construction of a document, no judge is bound by the decision of another judge, for example in Pedlar v Road Block Gold Mines of India Ltd [1905] 2 Ch 427, Warrington J at 437 ‑ 438 referred to statements of Sir George Jessel that he should not regard himself as bound by the decision of a previous judge on the construction of the identical document and the identical passage of the document which he had to construe. However, if the material facts in a subsequent case are substantially similar to those in a previous case decided by a higher court, in which the ratio was that those facts have a certain legal consequence, the lower court is bound to conclude that this consequence follows in the subsequent case: see for example, Newsholme Bros v Road Transport & General Insurance Co Ltd [1929] 2 KB 356, 375 (Scrutton LJ).
Mercanti
Michael Mercanti (Michael) established the MMF Trust pursuant to the MMF Trust Deed. Slondia Nominees Pty Ltd (Slondia), a company of which he and his wife were directors, was the trustee. The appointor and guardian were defined in a schedule to the MMF trust deed. In 2004 Slondia, as trustee, executed a deed of variation pursuant to which it amended the definitions of appointor and guardian in the schedule so that Michael's son, Tyrone Mercanti (Tyrone), replaced Michael as the appointor and guardian of the trust. Subsequently Tyrone, as appointor executed a notice that removed Slondia as trustee and appointed Parradele Pty Ltd (Parradele), a company he controlled, in its place. One of the issues at trial was whether the deed of variation executed in 2004 by Slondia, in its capacity as trustee, pursuant to which Slondia amended the definitions of appointor and guardian in the schedule to the trust deed and substituted new provisions defining Tyrone as the guardian and appointor was valid and effective.
Michael contended that the deed of variation was invalid because cl 28 did not empower the trustees to amend the definitions of appointor and guardian in the schedule so as to remove Michael as appointor and guardian. Michael submitted that the words 'trusts terms and conditions' mean the terms and conditions of the trusts and hence the amending power did not extend to amending the terms and conditions of the trust deed. As trial judge, I rejected that argument and found that the words 'trusts terms and conditions' mean the trusts and the terms and the conditions contained in the trust deed. Michael further argued that the definitions of guardian and appointor in the schedule come after cl 28 and are therefore not trust terms and conditions 'hereinbefore' contained. I did not accept that argument and found that the items in the schedule should be read as incorporated into cl 1, the definition clause, of the trust deed. Next, Michael argued that the proviso to the definition of appointor in cl 21, which is in the same terms as cl 22 of the Trust Deed, provides that the trustees may declare that any person who has not yet become appointor but who would or might but for the proviso at some time become appointor shall not become appointor. Michael argued that if cl 28 (the amending clause, which is in the same terms as cl 29 of the Trust Deed) empowers the trustees to remove an appointor and appoint a new appointor then the proviso to the definition of appointor would have no work to do and that would be inconsistent with the intent of the definition. Further, the express conferral on the trustees of the power to declare that any person who has not yet become appointor but who would or might but for the proviso become appointor shall not become appointor suggests that a wider power for the trustees to remove or appoint an appointor was deliberately omitted. I did not accept that argument. I found that cl 28 should not be read down in the manner advocated by Michael.
Finally, Michael argued that the scope of the power of amendment in cl 28 did not extend to removing the appointor and guardian and appointing a new appointor and guardian because to allow the trustee to use cl 28 (the amending power) to amend the definition of appointor in the schedule, when the trust deed provides for the appointor to supervise the trustees by giving the appointor the power to remove and replace trustees, would destroy the substratum of the trust deed. In advancing that argument Michael relied upon the decision of Douglas J in Jenkins v Ellett [2007] QSC 154 (Jenkins). I found that the power of the trustees to replace the appointor and guardian of the MMF Trust did not destroy the substratum of the trust deed and rejected that argument.
In summary, I found that on its proper construction the MMF trust deed empowered the trustees to vary the contents of the schedule to the deed so as to replace the guardian and appointor and appoint a new guardian and appointor.
On appeal Michael (and the other appellant) advanced three grounds of appeal arguably relevant to these applications. Ground 1 alleged that the trial judge erred in law in concluding that the MMF trust deed empowers the trustee to amend the trust deed to remove the appointor and appoint a new appointor in its place. Ground 2 alleged, alternatively, that the trial judge erred in law in concluding that the MMF trust deed empowers the trustee to amend the schedule to the trust deed so as to remove the appointor and appoint a new appointor in his place. Ground 4 alleged that the trial judge erred in law in concluding that the MMF Trust deed of variation did not constitute a fraud on the power to amend the trust deed and thus was not a breach of Slondia's fiduciary duty as trustee of the MMF Trust.
The Court of Appeal dismissed the appeal and each of the grounds of appeal. Buss P delivered the first judgment. Newnes and Murphy JJA delivered joint reasons for decision. Each of the judgments held as follows. First, on its proper construction cl 28 of the MMF trust deed empowered the trustee to amend the trust deed to remove the appointor and appoint a new appointor in his place. Secondly, the provisions of the schedule in which persons are named, described or defined as the appointor were to be read and construed as if they were embodied in the definition of appointor contained in cl 1 of the trust deed. The power of amendment in cl 28 extended to the schedule and the 2004 deed of variation validly deleted and replaced the relevant provisions relating to the appointor in the schedule. Thirdly, the phrase 'the trusts terms and conditions hereinbefore contained' referred to the trusts created or declared in the provisions of the trust deed appearing before cl 28, and to the other provisions of the trust deed appearing before cl 28. Buss P found that it would not derogate from the fundamental purpose for which the power to amend was created if cl 28 extends to empowering the trustee to remove and replace the person occupying the office of appointor or a person who would in future occupy the office and that the decision in Jenkins is distinguishable on its facts. Newnes and Murphy JJA also distinguished Jenkins and held that the exercise of the reserved power under cl 28 to remove the appointor did not destroy or affect the substratum of the MMF trust deed. Their honours found it unnecessary to examine the question of whether authorities to the effect that a power to vary a trust deed does not include a power which could alter the substratum of the trust, are no more than illustrations of the application of the equitable principle of fraud on the power.
Summary judgment, strike out and case management principles
Before considering whether the plaintiff's case is inconsistent with the decisions at first instance or of the Court of Appeal in Mercanti, it is necessary to refer to the principles relevant to summary judgment, the power to strike out and case management. The court must exercise great caution in exercising the power to grant summary judgment. It is only in the clearest of cases when there is a high degree of certainty about what the ultimate outcome of the proceedings would be if they went to trial, that an application for summary judgment should be granted. The court may determine any question of law that arises on such an application, but it will usually be appropriate to leave the determination of difficult questions of law for trial: Serventy v Commonwealth Bank of Australia [No 2] [2016] WASCA 223 [12] (Serventy). In Serventy the court at [62] said that there was no impediment to the court determining the proper construction of the relevant agreement in an appeal against the grant of summary judgment; there was no reason to expect that any extrinsic evidence could inform the construction issue in that case.
Generally speaking, a statement of claim should not be struck out unless the propositions advanced are really not arguable. Great care must be exercised to ensure that the plaintiff is not improperly deprived of her opportunity for the trial of her case, although argument, even extensive argument, may be necessary to demonstrate that the plaintiff's case is so clearly untenable that it cannot succeed. As a general rule, a plaintiff is entitled as of right to have her case heard, to have the facts found and then to argue the question of law as it arises before the trial judge upon the facts as found. The pleading should only be struck out where it can be seen from the outset that however the facts might be found, there is no basis for the legal conclusion contended for by the plaintiff. The court at first instance should be careful not to risk stifling the development of the law by the summary rejection of a claim which might raise the possibility that, as the law develops, the cause of action will be found to lie: Mickelberg v 6PR Southern Cross Radio Pty Ltd [2002] WASCA 270 [29] (Steytler J, Malcolm CJ & Murray J agreeing); Coxon v Wilson [2016] WASCA 48 [13] (Buss JA).
The court must manage and supervise matters in accordance with a system of positive case flow management with the objects of the just resolution of litigation as quickly, inexpensively and efficiently as possible. A party should only bring, and the court should only determine, interlocutory applications which advance those fundamental objects. In many cases, the time and expense on the part of both parties and the court involved in the consideration and resolution of interlocutory disputes, particularly disputes relating to pleading issues, is entirely disproportionate to their significance to the just and effective resolution of the case as a whole by mediation or trial: Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd (2006) 33 WAR 1. In TSW Analytical Pty Ltd v The University of Western Australia [2017] WASCA 67 (TSW Analytical) Mitchell JA referred to the undesirability of arguments about what is arguable. At [86] his Honour said that that case illustrated the threat which disputes about the existence of an arguable case or defence posed to the fair and efficient resolution of civil litigation. His Honour observed that the ultimate resolution of the action had been delayed by over two years while the issue of whether the defendant had an arguable defence had been resolved. His Honour said that the years taken to determine whether TSW had an arguable defence would have been more productively spent by the parties and the court working towards determining whether or not the defence was actually made out. His Honour observed at [88] that while there may be cases where summary determination is appropriate they will not involve complex and contestable issues of fact or law.
On the other hand, the court has power, whether inherent or under O 16 of the Rules of the Supreme Court 1971 (WA), to summarily dismiss part of a claim: Bride v Australian Bank Ltd (Unreported, WASCA, Library No 950632AC, 1995). As Mitchell JA observed in TSW Analytical an application for summary judgment may delay proceedings while resolving whether the plaintiff has an arguable case. Nevertheless, some applications for summary judgment and strike out applications may result in a narrowing of the issues in dispute and avoid the waste of time and resources of the parties and the court in litigating unmeritorious claims.
Is the plaintiff's case inconsistent with Mercanti?
The plaintiff says that her claim is not inconsistent with the decision of the Court of Appeal in Mercanti for two reasons. First, a claim of the kind that the plaintiff advances in this action was not considered by the Court of Appeal in Mercanti. The plaintiff's broad claim in Mercanti that the MMF trust deed did not empower the trustees to remove the appointor and the guardian and appoint a new appointor or guardian was rejected at first instance. However, on appeal, Newnes and Murphy JJA dealt only with four specific arguments as to why the decision at first instance was said to be in error. None of those arguments are advanced by the plaintiff in this case. The fourth argument on appeal in Mercanti was to the effect that the power to amend could not be exercised to remove and replace the appointor. The argument was rejected because the consent of the guardian was required. Therefore, it could not be said that the substratum of the trust would be removed by the trustee exercising the power to amend to replace the appointor with the consent of the guardian as such an amendment was expressly contemplated and authorised by the deed itself. However, an argument of that kind in relation to the guardian was not put or considered. The appeal was confined to a challenge to the decision below only insofar as it concerned the amendment to replace the appointor. The decision of the Court of Appeal did not deal with the more fundamental question whether a guardian appointed for life and with express power only to appoint a successor on death could during his or her lifetime authorise his removal and replacement as guardian. The plaintiff says that is the issue raised in this case.
Further, there was an issue in the appeal as to whether the authorities to the effect that a power to vary a trust deed does not include a power which could alter the substratum of the trust are no more than illustrations of the application of the equitable rule of fraud on the power. Newnes and Murphy JJA found that it was unnecessary to deal with the question. Buss P found that such authorities were no more than an application of the equitable doctrine of fraud on the power, however that statement was unnecessary for the decision and hence was obiter. Accordingly, the plaintiff says there remains an open question as to whether, in the case of a trust instrument, there is a separate principle over and above the proper construction of the instrument, to be applied in considering the terms of the trust which is to the effect that a power of amendment cannot be exercised in a manner that will alter the substratum of the trust that has been established. The plaintiff says that the point is important when it comes to trusts established under an instrument that appoints a guardian who has ultimate authority over the exercise of reserved powers, including the power to amend the trusts established by the trust instrument and the power to amend the deed provisions concerning the identity of the appointor. In such instances, a question arises as to whether the guardian is part of the substratum of the trust as its ultimate protector such that the identity of the guardian can only be changed in accordance with express provisions of the trust instrument. The guardian can discharge the express function of consenting to amendment to the trust instrument and the trusts that it establishes by approving a new appointor who can remove and replace the trustee but cannot go so far as to entrust to another the role of guardian, especially where the trust instrument expressly allows the appointment of a successor but only on death of the guardian. The plaintiff says that obiter views as to this issue were expressed by Buss P but the issue was not decided by the Court of Appeal. Further, the plaintiff says that the decision at first instance did not deal with arguments formulated in that manner.
I am not satisfied that the plaintiff is precluded by the decision of the Court of Appeal, or the trial judge, in Mercanti, from advancing the arguments referred to above to the effect that in the lifetime of Marc the power under cl 29 to amend the Trust Deed could not be exercised to amend cl 11 or the definition of guardian or the description in the schedule so as to name a person as guardian unless that person had been nominated by Marc in his lifetime to be the guardian upon Marc's death. Nor am I satisfied that the plaintiff is precluded by the decisions in Mercanti from advancing the arguments referred to above to the effect that the Amendment was invalid to the extent that it purported to nominate a person other than Marc who could become the guardian in the lifetime of Marc by reason that any such amendment would alter the substratum of the trust.
I am not bound as a matter of precedent to find that on the proper construction of the Trust Deed cl 29 empowers the Trustee to amend the definition of guardian in the schedule so as to appoint as guardian a person other than the person appointed guardian by cl 11 and the definition of guardian in the schedule. That issue was not determined by the Court of Appeal in Mercanti. That was found by me at first instance in Mercanti but I am not bound, as a matter of precedent, to follow the construction of a different trust deed made by different parties in different circumstances notwithstanding that the words of the trust deed are similar or the same. The decisions in Mercanti are persuasive. However, they do not determine the different arguments advanced by the plaintiff in this case. The issues concerning the construction of the Trust Deed and whether the power of amendment can be exercised in a manner that will alter the substratum of the trust, and whether a particular purported amendment does so, involve complex and contestable issues of law and possibly of fact. The summary determination of those issues risks injustice to the plaintiff by denying her a full opportunity of presenting her case. Those issues should be determined at trial after full argument.
Accordingly, I will not grant summary judgment in respect of the causes of action pleaded in [13] and [15] of the substituted statement of claim nor strike out those paragraphs.
Paragraph 14 should be struck out
Paragraph 14 of the substituted statement of claim is pleaded in the alternative to the plea in [13] that the Amendment was invalid to the extent that it purported to amend the provisions of the schedule. Paragraph 14 is premised upon the Amendment being valid. The plaintiff says that [14] is an alternate legal characterisation of the matters pleaded in [1] ‑ [12]. The alternate legal characterisation is that the Amendment took effect as an exercise of the power under Item 10 of the schedule for Marc in his lifetime to nominate a person to succeed him as guardian upon his death. That legal characterisation is unarguable. In the event that the amendment is valid, which [14] assumes, the amendment to the schedule makes redundant the concept of Marc making a nomination in writing because those words were removed by the Amendment.
Paragraphs 21, 22 and 23
In [9(c)] and [9(d)] of the substituted statement of claim the plaintiff pleads that on the proper construction of the Trust Deed there was no power for the appointor to appoint a new trustee upon the death of the trustee and the power of the appointor to appoint a new trustee was confined to instances where a trustee had resigned or ceased to be a trustee by operation of the law. In [21] the plaintiff pleads that Philip's act in purporting to act as appointor and exercise a power under s 7(1) of the Trustees Act to appoint Washburn as trustee of the Washburn Trust was invalid because the appointor is not a 'person nominated for the purpose of appointing new trustees by' the Trust Deed. That plea raises a question of the proper construction of s 7 of the Trustees Act.
In short, the plaintiff says that where a trust deed confers on an appointor a special or limited power to appoint a trustee in specific circumstances but not others, s 7(1) does not authorise the appointor to appoint a trustee in circumstances not specified in the trust deed.
A trust instrument may nominate a person to appoint new trustees either generally or in specific circumstances. In the latter case, the circumstances might be wider or narrower than the circumstances mentioned in s 7(1). Before the enactment in 1860 of Lord Cranworth's Act, which was the first Act to provide a non‑judicial power to appoint new trustees in the place of an existing trustee, it was necessary for the trust instrument 'to indicate seriatim the various events in which the power was to be exercised': Re Wheeler and De Rochow [1896] 1 Ch 315, 320 (Kekewich J) (Re Wheeler). In Re Wheeler Kekewich J considered that the words 'the person or persons nominated for the purpose of appointing new trustees by the instrument' in Trustees Act 1893 (UK) (Trustees Act (UK)) s 10(1) refer to the person or persons nominated for the purpose of appointing new trustees in the particular event which has happened.
In Re Sichel's Settlements, Sichel v Sichel [1916] 1 Ch 358 Neville J disapproved of the decision of Kekewich J in Re Wheeler but followed it because it had been treated as an authority to that effect since. Neville J considered that Kekewich J's decision was founded upon an interpretation placed upon Trustees Act (UK) s 10(5) which says:
This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and shall have effect subject to the terms of that instrument and to any provisions therein contained.
Neville J disapproved of that interpretation stating:
In my opinion the words of sub-s 1 of s 10 are quite plain and give to the persons nominated in the instrument for the purpose of appointing new trustees the power to appoint in the cases referred to in the early part of the sub-section, unless in the instrument is to be found a contrary intention expressed, and that, I think does not mean a case where the words are not co‑extensive in the instrument with the words of the Act. I think that is not the expression of a contrary intention at all (page 364).
The Trustees Act does not contain a 'contrary intention' provision like s 10(5) of the UK Act. Section 7(8) of the Trustees Act extends the power of a person nominated for the purpose of appointing new trustees by enabling the person to appoint new trustees not only in cases specified in the trust instrument, but also in the cases specified in s 7(1). As a result, s 7(8) overcomes the restriction imposed by the English decisions.
The authorities and commentary referred to by the plaintiff (Winter v Rudge (1847) 60 ER 751; Heydon JD and Leeming MJ, Jacobs Law of Trusts in Australia (8th ed, 2016) [15‑04]; Statewide Developments Pty Ltd (in liq) v Azure Property Group (Holdings) Pty Ltd (2012) 84 NSWLR 133 [15]) do not support the construction advanced by the plaintiff. In my opinion the law is correctly set out in Ford and Lee, Principles of the Law of Trusts (2017) at [8170]:
The question arises whether the statutory powers [of appointment of new trustees] override or are limited by the provisions in the trust instrument. For instance, if a power to appoint trustees is given by the instrument only in the case of the death or desire to be discharged of a trustee, does the statute give the person nominated to appoint trustees power to appoint in the other cases specified in the statute? At first the answer to this question was in the negative and this is still the rule in Tasmania: s 13(1)(a) expressly restricts the power to appoint new trustees to the cases specified in the instrument. In South Australia (s 14(1)) and the Northern Territory (s 11) the wording is the same as the English wording, which was held to be restricted to the cases specified in the instrument in Re Wheeler and De Rochow [1896] 1 Ch 315, followed reluctantly in Re Sichel's Settlements [1916] 1 Ch 358 at 364. But in the other jurisdictions there is an express provision: Trustee Act 1925 (NSW) s 6(10); (ACT) s 6(10); (Qld) s 12(8); (Vic) s 42(10); (WA) s 7(8)) enabling the person nominated in the cases specified in the instrument to nominate in the cases specified in the statute.
In any event, if an appointor with limited power to appoint new trustees in specified circumstances is not 'the person nominated for the purpose of appointing new trustees by the instrument … creating the trust' then s 7(1) provides that 'if there is no such person … then … the personal representatives of the last surviving or continuing trustee, made by writing appoint a person or persons … to be a trustee or trustees'. Therefore, if s 7(1) did not authorise Philip as 'the person nominated for the purpose of appointing the new trustees by the instrument … creating the trust' to appoint Washburn as trustee then s 7(1) authorised him to do so as the personal representative of the last surviving trustee, Marc.
The pleadings in [21], [22] and [23] of the substituted statement of claim disclose no reasonable cause of action. They should be struck out.
Advances of capital
Paragraph 40 of the substituted statement of claim pleads that each of Washburn as trustee of the Washburn Trust and Ongold, alternatively Rectangular, as trustee of Marc's Testamentary Trust has power to make distributions of income and power to make advances of capital to beneficiaries of those trusts. Those powers are described as the Distribution Powers. Paragraphs 41 and 42 plead that each of Washburn and Ongold, alternatively Rectangular, as trustee of the Washburn Trust and Marc's Testamentary Trust respectively owed a duty:
41.… to the beneficiaries of those trusts including the plaintiff to consider from time to time whether to exercise the Distribution Powers and to give the actual exercise of the Distribution Powers real and genuine consideration;
42.… to exercise the Distribution Powers solely for the purpose for which it was conferred, namely for the benefit of the beneficiaries of those trusts.
Paragraphs 43 and 44 plead matters relating to distributions of income from the Washburn Trust. Paragraph 45 which is important to the defendants' application to set aside the subpoena, pleads that the Washburn Trust has net assets of many millions of dollars. Paragraphs 47 and 48 plead that since Marc's death the plaintiff has received no distribution of income or advance of capital from the Washburn Trust or Marc's Testamentary Trust. Other paragraphs plead statements and conduct by Philip and other trusts which were controlled by Marc in his lifetime and now controlled by Philip which are called the Cardaci Trusts. It is pleaded that the Cardaci Trusts control considerable wealth in the many millions of dollars and that since Marc's death no distributions of income or capital have been made to the plaintiff from the Cardaci Trusts.
Paragraph 58 pleads that by reason of the matters pleaded in [40] ‑ [57] Washburn and Rectangular, or alternatively Ongold, has acted in breach of the duties pleaded in [41] and [42].
The defendants object to this pleading for a number of reasons. First, [45] and, insofar as they refer to advances of capital, [47] and [48], plead matters which do not go to any pleaded cause of action and raise false issues. The defendants say there is no reference in the pleading to the exercise of the power to advance capital or pleas with respect to the advance of capital.
The plaintiff says that the matters pleaded concerning the financial circumstances of the Washburn Trust, Marc's Testamentary Trust and the Cardaci Trusts support the overall case for removal of the trustees. The plaintiff says they are part of the context in which to evaluate whether there has been due consideration whether to exercise the Distribution Powers under the Washburn Trust and Marc's Testamentary Trust in favour of the plaintiff. It is said that the greater the wealth that is available for distribution to the plaintiff the more available the inference, in the context of other matters pleaded, that there has not been real and genuine consideration whether to do so. Secondly, the plaintiff says the extent of the wealth forms part of the matter to be brought to account in deciding whether the terms of settlement offered by Philip, as pleaded in [36], were favourable to Philip (as pleaded in [56] and [57]) and to the evaluation as to whether the oral statements pleaded in [55] were made by Philip.
The plaintiff says that the expression 'advance of capital' should be understood as being the same as 'distribution of capital'. The plaintiff's case is that there have not been distributions of income or capital. As to the objection that there is no plea of a power to make distributions of capital, the plaintiff says there is a plea of power to make advances of capital, defined together with a power to distribute income as Distribution Powers in [40].
I am not satisfied that [40] ‑ [58] fail to disclose any reasonable cause of action or are likely to prejudice, delay or embarrass the trial of the action.
Paragraphs 59 to 65 - Philip as administrator of Marc's estate
Paragraphs 59 to 65 plead matters relating to Philip in his capacity as administrator of Marc's estate in relation to which no relief is sought in these proceedings. The defendants say these paragraphs should be struck out as disclosing no reasonable cause of action for which relief is sought or alternatively that they may prejudice, embarrass or delay the fair trial of the action or are otherwise an abuse of process of the court.
I do not accept the defendants' submission. The plaintiff says that part of her case as to the unsuitability of Washburn, Ongold and Rectangular as trustees is the involvement of Philip as the controlling mind and his behaviour as administrator of the estate of Marc. Those matters are arguably relevant as to whether orders should be made for the removal of Washburn, Ongold and Rectangular as trustees.
Paragraphs 76 to 83
The defendants object to these paragraphs on the ground that they plead matters against Philip in a capacity other than that in which he is joined, namely as administrator of Marc's estate in respect of which no relief is sought in these proceedings. I reject the defendants' submission for the same reasons I reject their submissions in relation to [59] ‑ [65].
Paragraphs 85 and 86 - Philip as administrator of Marc's estate
The defendants object to these paragraphs on the same grounds that they object to [59] ‑ [65]. I reject their submissions for the same reasons that I rejected their submissions in relation to [59] ‑ [65].
Paragraphs 87 to 94
The defendants object to these paragraphs on the same grounds that they object to [59] ‑ [65]. I reject their submissions for the same reasons I reject their submissions in relation to [59] ‑ [65].
The defendants, in the alternative, object to [91]. Paragraphs 87 to 94 refer to Castlemaine Superannuation Pty Ltd (Castlemaine) of which Marc was previously the sole director and shareholder. Paragraphs 89 and 90 plead that the Castlemaine documents, which issued to Philip a share in Castlemaine and appointed him as a director of Castlemaine, were signed by Marc in the presence of Philip, without him reading them, without the nature of the documents being explained to him and when he was in a semi‑conscious state due to heavy medication. Paragraph 91 pleads that by reason of the matters set out earlier the signature of Marc was of no effect. The defendants say that that plea is irrelevant to any reasonable cause of action and the relief sought in this action.
The plaintiff says that the plea in [91] is 'a key part of their foundation for the pleas that follow which raise matters that bear upon the suitability of [Washburn], Ongold or Rectangular as trustees given the involvement of Philip as their guiding mind'. I am not satisfied that [91] is irrelevant to any reasonable cause of action or may prejudice, embarrass or delay the fair trial of the action or is otherwise an abuse of the process of the court. It will not be struck out.
Conclusion on summary judgment and strike out application
For the reasons stated [14] and [21] ‑ [23] of the substituted statement of claim will be struck out. The defendants' application will otherwise be dismissed.
Subpoena not set aside
The defendants have applied for an order that the subpoena issued to the ANZ be set aside. The defendants initiated their application before the plaintiff amended her statement of claim by introducing [45] of the substituted statement of claim. The defendants accept that [45], if it stands, makes relevant the documents referred to in [1], [2] and [3] of the schedule to the subpoena. The defendants accept that if [45] is not struck out the defendants' application falls away with respect to the documents referred to in [1], [2] and [3] of the schedule to the subpoena. I have declined to strike out [45] of the substituted statement of claim. Accordingly, I will not set aside, or strike out, [1], [2] and [3] of the schedule to the subpoena.
The defendants mount a separate challenge to [4] of the schedule to the subpoena. The documents identified in [4] are:
Any Financial Statement for any Company, valuation of any Company or any Document which describes or depicts the ownership of any Company, in connection with the financing in or around 2012 of the CFC Group's Acquisition that year of assets in the Cape Crushing business.
Company means any of 11 named companies.
'Document' and 'Financial Statement', bear common meanings.
The defendants say that nothing in the substituted statement of claim, including [45], gives apparent relevance to the documents identified in [4] of the schedule to the subpoena. That paragraph relates to a period prior to the matters the subject of the substituted statement of claim and relates to an acquisition nowhere referred to in the substituted statement of claim. Further, the defendants say that not only are the documents subpoenaed not relevant to the plaintiff's claims and relief sought but contain third party confidential commercial information of private companies who are not party to the proceedings.
The defendants do not say that documents relating to the companies are irrelevant. Rather, they claim that there is no relevance to the transaction referred to in [4] of the schedule. The plaintiff says that the reference to the transaction is simply a convenient and known means by which to identify a category of documents relating to the financial affairs of the companies. It is their character as documents relating to those financial affairs of the companies that makes them relevant for the purposes of these proceedings. The plaintiff does not seek every document in relation to the acquisition of equity or assets in the Cape Crushing business. It seeks only financial statements, valuations and descriptions of ownership. The plaintiff says that these are documents of the same character sought by categories 1, 2 and 3 and are relevant for the same reason.
ANZ has not objected to the subpoena. It appears to have no difficulty in identifying the documents referred to in [4] of the schedule to the subpoena. The significance of 2012 is not that particular transactions occurring in or around that year are of themselves significant. What is significant is that the documents disclose assets and the financial position of the relevant companies. That is relevant to the pleas in the substituted statement of claim. I will not set aside or strike out [4] of the schedule to the subpoena.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RK
ASSOCIATE TO LE MIERE J11 APRIL 2018
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