Crossman v PILT Nominees Pty Ltd

[2008] NSWSC 557

CITATION:	Crossman v PILT Nominees Pty Ltd [2008] NSWSC 557
HEARING DATE(S):	27 May 2008
JUDGMENT DATE :	27 May 2008
JURISDICTION:	Equity
JUDGMENT OF:	Hamilton J
DECISION:	Interlocutory injunction granted.
CATCHWORDS:	EQUITY [220] – Trusts and trustees – The cestui que trust – Right to bring action in name of a beneficiary - Right to sue without joining trustee – Trustee will not sue.
CATEGORY:	Procedural and other rulings
CASES CITED:	Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 McLean v Burns Philp Trustee Company Pty Ltd (1985) 2 NSWLR 623 Ramage v Waclaw (1988) 12 NSWLR 84 Spellson v George (1987) 11 NSWLR 300
PARTIES:	Phillip Michael Crossman (P) PILT Nominees Pty Limited (D1) Baltarna Pty Limited (D2) Ross Edward Seller (D3)
FILE NUMBER(S):	SC 2847/08
COUNSEL:	R J H Darke SC and J B Spinak (P) D K L Raphael and J A Watson (Ds)
SOLICITORS:	Allens Arthur Robinson (P) AT Lawyers Pty Limited (Ds)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

TUESDAY, 27 MAY 2008

2847/08 PHILLIP MICHAEL CROSSMAN v PILT NOMINEES PTY LIMITED & ORS

JUDGMENT

1 HIS HONOUR: The plaintiff claims to restrain a proposed borrowing of $11.5 million by the trustee of the PILT Trust constituted by a trust deed dated 5 December 1995, which is in evidence. The complex provisions of that trust deed have been the subject of extensive but not exhaustive submissions by counsel for both sides.

2 One of the difficulties that the plaintiff faces in his case is that he is not a beneficiary of that trust. His position is indeed quite remote from it. He is a discretionary beneficiary of a trust called the BC Trust, which until 6 March this year was itself a discretionary beneficiary of a trust known as the Baltarna Trust, which is a beneficiary of the PILT Trust.

3 Arguments have been put on the defendants’ behalf by Mr D K L Raphael, leading counsel for the defendants, with his usual vigour and I have been assisted by clear written and oral argument on both sides. Mr Raphael presses on me that it is clear that the plaintiff has no standing to move for the injunctive relief sought and that, what is more, upon a consideration of the trust deed and various events which have occurred, even if he had standing it would be clear that he had no case to establish that the transaction of which he complains was a breach of that trust.

4 On the other hand, it is put to me by Mr Darke, of Senior Counsel for the plaintiff, that the plaintiff does indeed have standing to bring the proceedings, although the BC Trust is no longer a discretionary beneficiary of the Baltarna Trust. The plaintiff says that the removal of the BC Trust from the category of discretionary beneficiaries of the Baltarna Trust in March of this year was in breach of the plaintiff’s rights as a discretionary trustee of the BC Trust and the BC Trust should be treated for present purposes as entitled to be treated as a discretionary beneficiary of that Trust.

5 As I have said on more than one occasion during the argument, there is considerable force in several of the submissions put to me by Mr Raphael. However, the difficult questions that are raised in this case are not to be determined by me upon this interlocutory injunction application. I refer, not for the first time, to the principles laid down by McLelland J in Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 535 - 536 as follows:

“As I see it, the position is as follows. Where a plaintiff's entitlement to ultimate relief is uncertain, the Court, in deciding to grant or refuse an interlocutory injunction, must consider what course is best calculated to achieve justice between the parties in the circumstances of the particular case, pending the resolution of the uncertainty, bearing in mind the consequences to the defendant of the grant of an injunction in support of relief to which the plaintiff may ultimately be held not to be entitled, and the consequences to the plaintiff of the refusal of an injunction in support of relief to which the plaintiff may ultimately be held to be entitled: see, eg, Appleton Papers Inc v Tomasetti Paper Pty Ltd [1983] 3 NSWLR 208 at 216; A v Hayden (No 1) (1984) 59 ALJR 1 at 4-5; 56 ALR 73 at 79. Where the uncertainty depends in whole or in part on a contested question of fact it is not appropriate for the Court to decide that question on the interlocutory application. Where the uncertainty depends in whole or in part on a contested question of law, it may or may not be appropriate for the Court to decide that question on the interlocutory application, depending on circumstances, eg, whether the question is novel or difficult, or is susceptible of resolution on the present state of the evidence, or whether the urgency of the matter renders it impracticable to give proper consideration to the question: see, eg, A v Hayden (No 1) (at 4; 78); Cohen v Peko-Wallsend (1986) 61 ALJR 57 at 59; 68 ALR 394 at 397. If the Court does decide the question of law the uncertainty is to that extent removed.

Unless the plaintiff shows that there is at least a serious question to be tried which if resolved in its favour would entitle it to final relief, then the requirements of justice as between the parties will dictate that an interlocutory injunction should be refused: Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (1982) 57 ALJR 425; 46 ALR 398; Tableland Peanuts Pty Ltd v Peanut Marketing Board (1984) 58 ALJR 283; 52 ALR 651; A v Hayden (No 1) ; Castlemaine-Tooheys Ltd v South Australia (1986) 60 ALJR 679; 67 ALR 553 and Cohen v Peko-Wallsend Ltd .

Apart from this, although normally the Court ‘does not undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case’ ( Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622), there are some kinds of case in which for the purpose of seeing where lies the balance of convenience (or more specifically ‘the balance of the risk of doing an injustice’ — see per May LJ in Cayne v Global Natural Resources plc [1984] 1 All ER 225 at 237, cf per Brennan J in Brayson Motors Pty Ltd v Federal Commissioner of Taxation (1983) 57 LJR 288 at 292; 46 ALR 279 at 285), it is desirable for the Court to evaluate the strength of the plaintiff's case for final relief: see, eg, Brayson Motors Pty Ltd v Federal Commissioner of Taxation (at 292; 285); Castlemaine-Tooheys Ltd v South Australia at 682; 559. One class of case to which this applies is where the decision to grant or refuse an interlocutory injunction will in a practical sense determine the substance of the matter in issue: see, eg, NWL Ltd v Woods [1979] 1 WLR 1294 at 1306-1307; [1979] 3 All ER 614 at 625-626 per Lord Diplock; Cayne v Global Natural Resources plc .”

6 The situation is that Mr Raphael has not succeeded in persuading me that Mr Darke has enunciated no arguable case at all. I am unable to negative that the arguments put forward by Mr Darke both as to the plaintiff’s standing and as to the allegation that the borrowing contemplated would be a breach of the PILT Trust are propositions which are maintainable in the requisite way. They are certainly not to be determined by me upon an application such as the present.

7 In coming to this conclusion on the question of standing, I refer to what was said about questions of standing by Young J (as his Honour then was) in McLean v Burns Philp Trustee Company Pty Ltd (1985) 2 NSWLR 623 at 636 - 638 and by Powell J in Ramage v Waclaw (1988) 12 NSWLR 84 at 91. As to the rights of discretionary beneficiaries see what was said by Powell J in Spellson v George (1987) 11 NSWLR 300 at 316.

8 As I have found that there are serious questions to be tried raised by the plaintiff, I proceed to the question of the balance of convenience. I conclude that, if the plaintiff’s rights are as he claims them to be, they would or could be seriously compromised by the raising at this stage of the proposed loan of $11.5 million.

9 Mr Raphael has proferred on the defendants’ behalf an undertaking that, if the loan were allowed to be raised it would be drawn down only to the extent of $2.5 million to pay obligations which have been mentioned from the Bar table, but which are not dealt with in the evidence. However, there really is no evidence to support any inconvenience of substance on the defendants’ part if the injunctive relief sought is granted.

10 In light of what Mr Raphael has told me about the possibility of a proposal for borrowing alternative to that shown in the evidence, I shall say specifically that leave will be granted to the defendants to apply to the Court to discharge or vary the injunction in relation to a proposal for borrowing different from the proposal for an $11.5 million borrowing that is the proposal in the evidence before me.

11 My conclusion is that I propose to grant appropriate injunctive relief. I shall now proceed to discuss with counsel the ambit and form of that relief.

…oOo…

[After discussion]

12 There will be orders in accordance with form of order initialled by me and placed with the papers.

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