Dalian Huarui Heavy Duty Industry International Company Ltd v Clyde & Co Australia (a Firm) [No 3] - [2020] WASC 312

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   DALIAN HUARUI HEAVY INDUSTRY INTERNATIONAL COMPANY LTD -v- CLYDE & CO AUSTRALIA (A FIRM) [No 3] [2020] WASC 312
CORAM:   KENNETH MARTIN J
HEARD:   26 AUGUST 2020
DELIVERED          :   2 SEPTEMBER 2020
FILE NO/S:   CIV 1279 of 2020
BETWEEN:   DALIAN HUARUI HEAVY INDUSTRY INTERNATIONAL COMPANY LTD
Plaintiff
AND
CLYDE & CO AUSTRALIA (A FIRM)
First Defendant
DURO FELGUERA AUSTRALIA PTY LTD
Second Defendant
CLYDE & CO AUSTRALIA (A FIRM)
Plaintiff by Counterclaim
AND
DALIAN HUARUI HEAVY INDUSTRY INTERNATIONAL COMPANY LTD
Defendant by Counterclaim

Catchwords:

Practice and procedure - Directions on Trustee's chamber summons - Conferral pursuant to Rules of the Supreme Court 1971 (WA) O 59 r 9(1) - Whether adequate conferral prior to filing of chamber summons - Application for Trustee's costs of trial participation and interim accounts - Trustee's costs issues as to trial referred to a Registrar for a passing of accounts - Breach of duty allegations against Trustee referred to arbitral tribunal by plaintiff - Issue as to forum for allegations to be pursued - Application by Trustee under Trustees Act 1962 (WA) s 92 for advice as to whether to pursue anti-arbitration application - Procedural consideration of Trustee's application for advice - Directions to issue

Legislation:

Rules of the Supreme Court 1971 (WA)
Trustees Act 1962 (WA)

Result:

Directions to issue

Category: B

Representation:

Original Action

Counsel:

Plaintiff	:	Mr J D MacLaurin SC
First Defendant	:	Mr S K Dharmanada SC & Mr T J Porter
Second Defendant	:	No appearance

Solicitors:

Plaintiff	:	Squire Patton Boggs (AU)
First Defendant	:	Assured Legal Solutions
Second Defendant	:	Ashurst Australia

Counterclaim

Counsel:

Plaintiff by Counterclaim	:	Mr S K Dharmananda SC & Mr T J Porter
Defendant by Counterclaim	:	Mr J D Maclaurin SC

Solicitors:

Plaintiff by Counterclaim	:	Assured Legal Solutions
Defendant by Counterclaim	:	Squire Patton Boggs (AU)

Case(s) referred to in decision(s):

Dalian Huarui Heavy Industry International Company Ltd v Clyde & Co Australia (a firm) [2020] WASC 132
Dalian Huarui Heavy Industry International Company Ltd v Clyde & Co Australia (a firm) [No 2] [2020] WASC 245

KENNETH MARTIN J:

A chamber summons of the first defendant (Clyde & Co) seeking various interlocutory orders in this action was filed on 13 August 2020 and made returnable in chambers on 26 August 2020. Prior to the return of the summons Clyde & Co and the plaintiff (Dalian) had produced and exchanged sharply divergent minutes of proposed orders. Essentially, the parties could agree on nothing. Furthermore, lengthy affidavits were filed on both sides.
Clyde & Co and Dalian, through their respective lawyers, have also exchanged written submissions supporting their respective rival positions concerning the different issues which have arisen at the first return of the chamber summons. Given the volumes of materials filed at the last minute and the continuing wide divergence as between the two parties over almost all aspects of Clyde & Co's application, it became necessary for me to reserve to fully consider all that material before issuing any orders and directions to resolve the parties' interlocutory disputation.
I note at his point that the second defendant (Duro) sought, and was granted, leave to not participate in this application. As such, unless explicitly stated, a reference to 'the parties' in these reasons does not include Duro.
As background I refer to two sets of my reasons for decision which I have delivered within this action to date. First, I refer to my 24 April 2020 reasons: see Dalian Huarui Heavy Industry International Company Ltd v Clyde & Co Australia (a firm) [2020] WASC 132 (24 April 2020 reasons).
Subsequently, there followed further reasons in Dalian Huarui Heavy Industry International Company Ltd v Clyde & Co Australia (a firm) [No 2] [2020] WASC 245, delivered ex tempore on 29 May 2020 but then revised and published on 1 July 2020 (Dalian [No 2]).

Some background to the previously ventilated breach of trust assertions in this action by Dalian

The present issues arising between Dalian and Clyde & Co essentially relate to what I described in the 24 April 2020 reasons from [53] through [63] as Dalian's foreshadowed breach of trust claims as then articulated against Clyde & Co. At [63] I had observed in relation to those claims:
Needless to say, however, these breach of trust grievances as articulated and foreshadowed by Dalian as against Clyde & Co, present as something of a lesser order of priority. The greater focus of Dalian at 12 March 2020 was to obtain the Trust Amount, and sort such other matters out later.
In those 24 April 2020 reasons at [42] - [49], I explained the stance then taken (at 12 March 2020) in the action by Clyde & Co. At that stage, the primary dispute was the rival claims of Dalian and Duro to the amount of $AUD27 million as security then held in Clyde & Co's Australian trust account. That arose as a result of PO 15 as issued by an international Singapore seated Tribunal on 30 September 2019. At [42] and [43], I said this as to Clyde & Co's position:
42On 12 March 2020 it was evident through the submissions of Mr Porter for Clyde & Co Australia that the stance then articulated for that firm saw it effectively seeking to 'interplead', as regards the Trust Amount, under the terms of the Trust Agreement.
43As named trustee of the Trust Amount as trust property, it was foreshadowed by Mr Porter that Clyde & Co as trustee would be seeking advice from the court as to those funds, in accord with s 92 of the Trustees Act, within Pt 7 div 3 thereof, so as, in effect, to be protected as regards a dealing with the funds (see s 95).
Within the 24 April 2020 reasons I made it clear that I was not then dealing with any of those (then) lesser tier breach of trust contentions as they had at then been ventilated by Dalian against Clyde & Co. Under its commencing originating summons process in this court (see par 1(b) thereof) Dalian was seeking a declaration that the security moneys held in trust ought to have been earlier paid over by Clyde & Co to Dalian and that Dalian was entitled to a payment of interest from Clyde & Co on the trust moneys from that obligation date until the payment. (The terms of the Trust Agreement by which the security moneys were held stated that interest on the funds was to be for the benefit of Duro until, in effect, the obligation to pay the security money over to the proper recipient was engaged - see [61] of my 24 April 2020 reasons.)
Affidavits filed by one of Dalian's locally engaged lawyers of record, Squire Patton Boggs, namely a Mr O'Shannassy, in support of Dalian's arguments had then displayed multiple contended breach of obligation assertions against Clyde & Co as regards the continued retention of the Trust Amount in asserted breach of trust.
Towards all those breach contentions as had presented at the time of the trial, under my 24 April 2020 reasons at [91] - [94] I upheld, in effect, the objection taken by Clyde & Co to the effect of their (then) irrelevance (see [91] and [92]). At [93] and [94] in that section of the reasons I said:
93Obviously, Clyde & Co should have a full opportunity to answer those matters in due course, once all such grievances of Dalian are assembled, pleaded and particularised.
94The evidentiary materials received from Dalian upon the present application have been received only to the extent of addressing the primary issue concerning the $AUD27 million rival claims to that Trust Amount and for resolving Clyde & Co's counterclaim that seeks the advice of the court as trustee.

My orders of 8 May 2020 giving effect to the 24 April 2020 reasons

In the wake of the 24 April 2020 reasons favouring Dalian against Duro, all the parties then had an opportunity to confer and to make submissions concerning appropriate orders. That occurred on 8 May 2020. On that day, after considerable further argument from counsel for Dalian, Duro and Clyde & Co, I duly issued orders in the following terms:
PRIMARY PROCEEDINGS
1.The First Defendant is hereby ordered to pay to the Plaintiff by no later than on Monday, 11 May 2020 by payment to the Plaintiff's Australian solicitor's (Squire Patton Boggs') nominated trust account, the sum of $AUD26,420,000.00 being trust moneys under the Trust Agreement (Funds).
2.Without prejudice to any claims of the Plaintiff against the First Defendant in respect of the nonpayment of the Funds prior to the date of payment pursuant to Order 1 herein, by no later than Monday, 11 May 2020, the First Defendant is further ordered to pay to the Plaintiff, by payment to the Plaintiff's Australian solicitor's (Squire Patton Boggs') nominated trust account, all interest accrued on the $AUD27 million original amount held on trust since 24 January 2020 until these payments (Interest).
3.By Wednesday, 13 May 2020, the Second Defendant may file any application by chamber summons to prevent the Plaintiff in periods beyond the dates as mention [sic] in Order 4 below, from disposing of, encumbering or otherwise dealing with or diminishing the Funds and Interest, or removing any part of the Funds or Interest from Australia (Application), following payment of the Funds and Interest by the First Defendant to the Plaintiff's solicitor's nominated trust account under Orders 1 and 2.
4.Upon and following the payment of the Funds and Interest by the First Defendant to the Plaintiff's solicitor's nominated trust account under these Orders 1 and 2, the Plaintiff is hereby restrained until Friday, 29 May 2020 or until further order, by itself, its servants, and its agents, from disposing of, encumbering or otherwise dealing with or diminishing the value of the Funds and Interest, or by removing or directing the removal of any part of the Funds or Interest from Australia.
5.By Friday, 15 May 2020, the Second Defendant is to file and serve any evidence on which it intends to rely for the Application.
6.By Friday, 22 May 2020, the Plaintiff is to file and serve any evidence on which it intends to rely in relation to the Application.
7.By Wednesday, 27 May 2020, the Plaintiff and the Second Defendant are to file written submissions of not more than 10 pages in support of their positions regarding the Application.
8.The Application as between the Plaintiff and the Second Defendant is listed for hearing for 1 day on Friday, 29 May 2020 at 10.15am.
9.The Second Defendant is to pay the Plaintiff's costs in these proceedings to date and, subject to Order 10 below, to be assessed on a party/party basis, and taxed, if not agreed.
10.By Friday, 15 May 2020, the Plaintiff may file and serve any application (and materials in support) to obtain special costs orders pursuant to section 280(2) of the Legal Professions Act 2008 (WA) in respect of an upwards adjustment of, or a removal of aspects of the costs scale contained in the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2018 (WA), for the purposes of a taxation of its costs awarded against the Second Defendant under Order 9 above.
ADVICE ON COUNTERCLAIM & FURTHER DIRECTIONS
11.The Court's advice, as sought by the First Defendant's counterclaim pursuant to 92(1) of the Trustees Act 1962 (WA) upon questions (as amended and varied in accordance with the reasons for decision), is hereby provided as follows:
(a)Question 1:
Is Clyde & Co as the named Trustee under the written Agreement made between Dalian, the second defendant (Duro) and Clyde & Co dated 23 October 2019, and order 2 of the Procedural Order Number 17 dated 24 January 2020, obliged to pay the sum of $AUD27 million presently held by Clyde & Co (fund), to Dalian or Duro?
(b)Answer 1:
Subject to the matters addressed under the answer to Question 3 below, to the Plaintiff (Dalian).
(c)Question 2:
If so, from when was Clyde & Co so obliged?
(d)Answer 2:
From the time of Clyde & Co's receipt of a written direction the subject of (PO17) issued by the Tribunal on 24 January 2020, upon a timeous ascertainment and verification that such written instruction was given in accord with cl 4 and cl 6 of the Trust Agreement (as it was), then from that time Clyde & Co was so obliged as regards Dalian.
(e)Question 3:
Does Clyde & Co's obligation continue in circumstances where voluntary administrators have been appointed for Duro on 28 February 2020?
(f)Answer 3:
In the circumstances, the answer is Yes, but subject to Clyde & Co's right as trustee, in equity and under s 71 of the Trustees Act, to be indemnified out of the trust fund amount of $AUD27 million for its:
(i) actual legal costs properly incurred in respect of these proceedings to date and provisionally assessed for the purposes of retention from the trust fund pending further order, at $AUD80,000.00; and
(ii) contingent future legal costs of defending proceedings foreshadowed by the Plaintiff in an amount provisionally assessed for the purposes of retention from the trust fund pending further order, at $AUD500,000.00.
12.As per Orders 1 and 2, the First Defendant is to pay on or before Monday, 11 May 2020 to the nominated trust account of Squire Patton Boggs on behalf of the Plaintiff the amount of AUD$26,420,000.00 that it holds on trust pursuant to the trust agreement dated 23 October 2019 and the Interest. The First Defendant may retain $AUD580,000.00 of the Trust Amount on account of its:
(a)actual legal costs properly incurred to in respect of these proceedings to date and provisionally assessed for the purposes of retention from the trust fund pending further order, at $AUD80,000.00; and
(b)contingent future legal costs of defending the proceedings foreshadowed by the Plaintiff and provisionally assessed in the amount of $AUD500,000.00.
13.The obligation of the Plaintiff to file and serve a statement of claim, with full particulars, in respect of any allegation of breach of trust against the First Defendant, as trustee is temporarily suspended pending further directions.
14.Within CIV 1279 of 2020, leave is granted to the First Defendant to counterclaim for further relief as a trustee pursuant to the provisions of Pt 7 Div 3 of the Trustees Act.
15.The matter as between the Plaintiff and the First Defendant is listed on Tuesday, 2 June 2020 at 2.15pm, for programming directions as to costs orders and as to the filing and service of evidence and submissions in respect of the First Defendant's application under s 92 of the Trustees Act, and for a listing of that application for hearing if necessary.
Particularly relevant to the present disputation between Dalian and Clyde & Co are the orders I issued requiring Clyde & Co to remit to Dalian's Australian lawyers the net sum of $AUD26,420,000 (order 1) and retaining the amount of $AUD580,000, which was the subject of my ensuing orders 11 and 12(a) and (b).
By reference to order 2 of 8 May 2020, I also ordered that all interest which had accrued upon the moneys held in trust ($AUD27 million) from 24 January 2020 be remitted as well (ie, with the $26,420,000) to Dalian's Australian lawyers.
I also observe that by reference to orders 3 through 8 of those 8 May 2020 orders, I had dealt with a foreshadowed further application by the second defendant, Duro, claiming, in effect, freezing order relief over the funds to be remitted by way of an interruption of their remission otherwise from out of Australia by Dalian's Australian lawyers, to the People's Republic of China. The fate of that application became the subject of my Dalian [No 2] reasons delivered ex tempore on 29 May 2020, and then revised and published on 1 July 2020.
The consequence of my two earlier decisions essentially saw most of the Trust Amount once held as security in Australia by Clyde & Co, plus all interest accrued on all of the security sum since 24 January 2020 (otherwise the Trust Agreement stipulated that the interest accrued from the time the funds were held by Clyde & Co in Australia, ie, about 28 October 2018 - see the 24 April 2020 reasons at [127]), be remitted to Dalian's Australian lawyers, Squire Patton Boggs. What remained with Clyde & Co of the Trust Amount then essentially were only the two retained amounts of $AUD80,000 and $AUD500,000, the subject of orders 11 and 12 of those orders.

Inadequate conferral

The first issue which arises upon the chamber summons is whether there has been a sufficient level of conferral effected as between the parties' lawyers prior to the bringing of the application in order to meet the conferral requirements of Rules of the Supreme Court 1971 (WA) (RSC) O 59 r 9(1). This was raised and disputed by Dalian's written submissions towards Clyde & Co and its New South Wales based lawyers, Assured Legal Solutions.
It is the case that Clyde & Co's lawyers (see electronic document 66) filed a formal memorandum as to conferral, on 13 August 2020 and which, on its face, refers to events said to meet that obligation. The conferral memorandum says:
The parties have conferred to try to resolve the matters giving rise to this application as follows:
(a)Correspondence passing between the parties in the period from about April 2020 to 12 August 2020.
(b)Conferral during mediation between Principal Registrar Strk on 24 June 2020.
The affidavit materials filed for the purposes of Clyde & Co's application make reference to a considerable amount of passing lawyer to lawyer correspondence between the parties. Much of that formal communication by letters is, as I wade through it, seen to be expressed in inflammatory or tendentious terms. Likewise, the reference to participation in a mediation which occurred on 24 June 2020 (under my subsequent orders of 2 June 2020, then referring Clyde & Co and Dalian to an urgent mediation for all residual issues in the present action), is inadequate. Clearly, the unsuccessful mediation in June 2020 was, in a temporal sense, insufficiently proximate to the filing of the chamber summons and the relief sought under the application of Clyde & Co of 13 August 2020.
This court has said on previous occasions that a genuine conferral to meet the requirements of RSC O 59 r 9 ought, at minimum, to be conducted by a person to person telephone conversation in circumstances where a face to face conferral between the engaged lead counsel involved (the optimum mode of conferral) cannot practically be achieved. That did not happen here. I need to reiterate then, lest there be any level of lingering doubt over this, that the court's requirement for a genuine pre‑application conferral will not be met adequately, or at all, merely by a passing exchange of written communications between the rival lawyers - let alone an exchange effected by high handed or inflammatory lawyer to lawyer correspondence. A genuine conferral requires the highest level legal decision makers engaged to converse in a sensible, civil and professional way to seek out common ground and, if not to be conducted face to face, then at minimum, by phone.
Nevertheless, under present circumstances it is apparent that by the time of the hearing before me on 26 August 2020, senior counsel on each side had belatedly communicated that morning (at last) upon the application of Clyde & Co. In those circumstances, nothing is to be gained by delaying matters any further in this regard - especially where some sensible progress is called for. Consequently, I will, under what are these less than satisfactory conferral circumstances, waive what I assess to be the inadequacy of conferral presenting in present circumstances by my utilisation of RSC O 59 r 9(2).

First - Clyde & Co's costs of the trial

I can turn then to the first controversial order as is sought by Clyde & Co under its chamber summons. It seeks relief in the following terms:
1.Further to Order 12(a) of the orders dated 8 May 2020, the First Defendant (the Trustee) may recover its legal costs of the proceedings, in the amount of $99,263.54 (including GST) [$93,983.54 (including GST)], from the trust fund.
This order is sought in the wake of my determination of the primary issue between Dalian and Duro under my 24 April 2020 reasons and the 8 May 2020 orders (particularly under order 11(f) thereof - by my answer to Question 3 posed under the request for judicial advice given in that respect). Clyde & Co seeks, as a trustee, to receive its actual legal costs as properly incurred in respect of these proceedings to date to be paid from out of the funds which were held on trust and had been retained.
It had been evident, of course, that as regards the trial conducted between Duro and Dalian, that Clyde & Co as trustee was then, essentially, abiding the outcome of the disputation between Dalian and Duro - that was ultimately resolved in Dalian's favour. To that end, I had issued a costs award of that trial against Duro and favouring Dalian in respect of the costs of the proceedings - see order 9 of the 8 May 2020 orders. That costs order made against Duro would, of course, extend to Dalian's obligation to meet the legal costs of Clyde & Co from its trust funds, as ascertained.
As regards the costs of Clyde & Co, in respect of that trial, I had accepted at 8 May 2020, in effect, that Clyde & Co, as a trustee of the Trust Amount held as security by reference to implementing the PO 15 orders of the Tribunal of 30 September 2019, should, as a trustee, receive its properly incurred out of pocket legal costs associated with is involvement in the trial. That was so, albeit Clyde & Co was only really communicating that it was abiding by the ultimate decision of the court as to the ultimate destination of the trust money it held.
For some unclear reason, there now looks to be a level of disputation over Clyde & Co's trial costs entitlement from Dalian. Under Dalian's rival minute it has proposed various counter orders as to trial costs ascertainment and verification which it is unnecessary to recite. Those orders are not appropriate.
For the purposes of the present application, Clyde & Co filed two supporting affidavits of Mr Kirk William Warwick each sworn on 25 August 2020. One affidavit deals with the trustee's costs and carrying the heading 'Quantification of Trustee's Indemnity'. The other deals with 'Procedural History'.
As to these trial costs of Clyde & Co I am dealing, in effect, with an application of a trustee for indemnification out of (retained) trust assets as regards its incurred out of pocket legal fees associated with the trial. Consequently, I am of the view that any issues as to Clyde & Co's trial costs ought to be addressed on a basis that they be treated, in effect, as the application by a trustee, seeking to have this court approve a passing of its account in terms of a dealing with trust funds.
Consequently, by reference to RSC O 45 r 2, I propose to order that Clyde & Co's as submitted claim for trial costs, in respect of its limited participation within the trial over primary issues, be referred to a Registrar of this court for the purpose of the trustee seeking approval of its as submitted costs claim in the amount of $AUD93,983.54 (seen claimed in Mr Warwick's costs affidavit). As an accompanying direction towards that exercise, I would direct as well that there should be submitted to the Registrar for the purposes of that enquiry, in addition to the materials found within Mr Warwick's costs affidavit, (a) the account(s) for costs as actually submitted for payment to Clyde & Co by its engaged lawyers of record, Assured Legal Solutions (but redacting, if necessary, any legal advice contained or to be inferred from the text of the account); and further, (b) evidence that Clyde & Co has actually paid the account(s) of Assured Legal Solutions.

Second issue - Clyde & Co's interim accounts

The next controversial issue that emerges between the parties concerns order 2 of Clyde & Co's chamber summons which, by reference to the terms of my 8 May 2020 order 12(b), seeks relief expressed in these terms:
2.Further to Order 12(b) of the orders dated 8 May 2020, the Trustee may recover its legal costs incurred since 8 May 2020 in respect of the Plaintiff's claims, in the amount of $74,424.07 (including GST) [$88,178.48], from the trust fund.
By reference to the 8 May 2020 orders (my Answer 3 by Order 11(f)(ii), see also Order 12(b)), there was provision for further amounts claimed as costs of the trustee since the making of those orders. Mr Warwick deals with this issue under par 7 and following of his costs affidavit, including by reference to his annexure KWW-2, which he refers to as:
... a bill of costs that has been prepared from data extracted from [Assured Legal Solutions'] time recording system, showing costs for work performed by ALS up to and including 12 August 2020.
To this, Mr Warwick says:
The First Defendant is liable to pay to ALS all of the costs listed in the spreadsheet.
However, Mr Warwick does not say that any related account has been issued to, let alone met by, its client Clyde & Co in respect of the time record charging information as seen at KWW-2. On its face, KWW-2 looks to be a series of computer generated timesheet/time charging amounts by sundry persons at Assured Legal Solutions, mainly Mr Warwick, referred to as 'User' at variously seen hourly rates specified by reference to decimal hourly components of recorded time (see between pages 12 - 17 of Mr Warwick's costs affidavit).
Unlike in respect of the order I have to date issued (on 8 May 2020) favouring Clyde & Co as regards its trial costs, being its 'actual legal costs properly incurred in respect of these proceedings to date', that position, of course, is not the case in relation to what is a distinct issue of the 'contingent future legal costs of defending the proceedings foreshadowed by the Plaintiff' under order 12(b) and Answer 3 under Order 11(f)(ii) to the revised questions posed under Clyde & Co's claim for judicial advice as a trustee.
A question of interpretation thus arises as to whether, in fact, my orders of 8 May 2020 either expressly or impliedly sanctions a course of interim charging regarding Clyde & Co in respect of its future exposures to legal costs as regards its defence of foreshadowed breach of trust grievances put against it by Dalian, as I identified under Orders 11(f)(ii) and 12(b) - which Clyde & Co refutes.
Dalian, of course, on the present application, opposes any interim payments.
Indeed, Dalian, of course, as the materials reveal, goes further, and has since sought to refer its breach of trust grievances over to the same arbitral Tribunal by its Notice of Arbitration with Clyde & Co, issued on 10 July 2020. Thereby, Dalian is, in effect, seeking to have its breach of trust grievances against Clyde & Co, which it had earlier foreshadowed, determined by that Tribunal, not this court. That attempted choice by Dalian of the Tribunal as the forum to resolve such breach of trust grievances is objected to and is strongly challenged by Clyde & Co. The divide is the subject of further disputation arising out of subsequent orders sought under the chamber summons of Clyde & Co.
For present purposes, however, as to the issue of Clyde & Co's interim costs, the question is whether the 8 May 2020 orders allow a payment out of the $AUD500,000 amount which was ordered then to be retained effectively as Australian funds in security for future costs of Clyde & Co as trustee, in it potentially needing to deal in future with the foreshadowed breach of trust grievances of Dalian put against it.
To that end, I have reviewed the transcript of argument, particularly what was said by respective counsel prior to the issuing of orders on 8 May 2020. It needs to be said that the particular issue of an interim access to those funds of $AUD500,000 set aside as now presents, very understandably, as not then given direct attention. The question then is whether my 8 May 2020 orders as framed do allow for what is, in effect, the interim payment from out of the $AUD500,000 of Clyde & Co's legal fees from these retained trust funds to meet interim accounts it receives for legal fees. Further, can there be payments prior to any determination yet being heard, let alone reached (either by this court or by the Tribunal) as to the ultimate merits or demerits of Dalian's breach of trust grievances (which, of course, are strongly refuted by Clyde & Co as to every such expressed grievance to date).
If I were presently of the view that an interim drawing against those security funds of $AUD500,000 was allowable, then I would, as I now have with costs order 1, take the same course (see [28] above). In other words, I would refer such claims for payment from the $AUD500,000 amount held over to a Registrar for approval, in effect, as the submitted account of a trustee for passing by the court.
However, my present assessment is that such a step is premature. There has not yet been any level of determination reached over the breach of trust grievances of Dalian as articulated to date within the present proceedings and the subject of my orders (or their determination by the Tribunal, if that is appropriate). I am of the view that absent any further order by this court sanctioning such a course for good reason, it is not presently open or appropriate to allow any drawings against the $AUD500,000 security amount - until a breach determination is reached one way or the other, either by the Tribunal or in this court. The issue of Dalian's grievances in the way of asserted breach of trust needs, in my view, to be resolved one way or the other, before allowing access to those funds. In other words, if, for instance, in due course any of those breach of trust grievances were to be significantly established, then it is possible that a recourse to those retained trust funds by Clyde & Co might then be denied. Of course, I do not suggest now that such an end outcome looms as likely. The position is simply that I assess it as too early to address the position of drawings against the $AUD500,000 amount over an unresolved issue, let alone interim drawings.

Third issue - further judicial advice

The third tier of issues in dispute between the parties concerns proposed orders 3 and 4 of Clyde & Co's chamber summons, foreshadowing it as a trustee seeking further judicial advice.
Dalian first objects to the form by which the advice is sought. Dalian suggests instead that the application ought to be made by a freshly issued originating summons by Clyde & Co. However, that submission overlooks my Order 14 issued on 8 May 2020 (at the behest of Clyde & Co at the time) in terms that:
14.Within CIV 1279 of 2020, leave is granted to the First Defendant to counterclaim for further relief as a trustee pursuant to the provisions of Pt 7 Div 3 of the Trustees Act.
Consequently, subject to an issue in due course (by that leave) of an amended counterclaim by Clyde & Co articulating the basis of a request as trustee for further judicial advice as a trustee, then the objection of form raised by Dalian must be dismissed.
As regards a counterclaim to relief in reference to s 92 of the Trustees Act 1962 (WA) by Clyde & Co as trustee, see my observations in the 24 April 2020 reasons at [48] - [51].
That resolves the procedural objection raised by Dalian.

Resolution: pars 3 and 4

More substantively, it is necessary to turn to see pars 3 and 4 of Clyde & Co's chamber summons. They seek orders in the following terms:
3.In the face of the Plaintiff's conduct in issuing a Notice of Arbitration dated 10 July 2020 claiming, from the Trustee, its legal costs of these proceedings, the Trustee is justified in bringing an application pursuant to s 92(1) of the Trustees Act 1962 (WA) seeking:
(a)A declaration that the proper forum for the determination of the parties' entitlement (if any) to recover their costs of these proceedings is the Supreme Court of Western Australia.
(b)A declaration that the parties have not agreed to refer to arbitration the determination of the parties' entitlement (if any) to recover their costs of these proceedings.
(c)A declaration that:
(i)the Trustee sought judicial advice pursuant to s 92(1) of the Trustees Act 1962 (WA) in respect of its obligation to make a payment to the Plaintiff under clause 4 of the Trust Agreement dated 23 October 2019;
(ii)by order 12 of the orders dated 8 May 2020, the Court directed the Trustee to pay the Plaintiff the sum of AUD$26,420,000 before 11 May 2020;
(iii)if the Trustee acted in accordance with order 12 of the orders dated 8 May 2020, it is deemed under s 95 of the Trustees Act 1962 (WA), so far as its own responsibility, to have discharged its duty as Trustee in respect of the subject matter of the Court's direction, being the obligation of the Trustee to make a payment to the Plaintiff under clause 4 of the Trust Agreement.
4.The Trustee is justified in bringing an application seeking an order restraining the Plaintiff from taking any step in the arbitration proceeding commenced by Notice of Arbitration dated 10 July 2020.
At the heart of the controversy around pars 3 and 4 of the chamber summons is the dispute resolution express provision that was inserted within the Trust Agreement. Of course, Dalian, Duro and Clyde & Co all consensually entered the Trust Agreement in 2019 in their mutual endeavours to meet the requirements of PO 15 as it had been issued by the Tribunal on 30 September 2019. PO 15 was directed towards a provision of security in Australia for the benefit of Dalian, upon a contingency that it may prove to be successful against Duro in that arbitration in obtaining an award for funds in excess of the security amount (as it eventually was) in due course from the Tribunal.
It will be remembered, of course (see [126] of my 24 April 2020 reasons) that the Tribunal had ordered the security sum of $AUD27 million to be paid 'in a bank account in the joint names of the solicitors for Duro and [Dalian] to be dealt with in accordance with the agreement of the parties or the direction of the Tribunal'. Subsequently, of course, and in effect, as a matter of all round convenience, the eventual Trust Agreement was entered in the terms as recorded within my 24 April 2020 reasons (see particularly [149] - [162]) and providing, in effect, for the Trust Amount to be held not jointly, but solely by Clyde & Co in Australia.
In essence, the current dispute is raised over whether or not Dalian can or should be injuncted, in effect, by Clyde & Co by an anti‑arbitration suit order from this court - stopping Dalian from advancing the freshly notified breach of trust dispute grievances sought to be put before the Tribunal and not to this court. The injunction would be sought, on the basis, in effect, that Dalian's conduct to date within the present action amounts to conduct in the nature of a waiver of any right it once held to ventilate such breach of trust matters under arbitration and confining Dalian, in effect, to proceeding to ventilate such grievances, should that be its wish, only in this court in this proceeding as was once foreshadowed. To that end, I observe, cl 9 of the trust agreement had said:
This agreement shall be governed by and construed in accordance with the law of Western Australia and any dispute, controversy or claim arising out of or relating to this agreement, or the breach, termination or invalidity thereof shall be settled by arbitration. The arbitral tribunal shall be the Tribunal in the Arbitration unless that Tribunal is functus officio, in which case the following applies. The apportioning authority shall be the Singapore International Arbitration Centre. The number of arbitrators shall be 3. The seat of the arbitration shall be Singapore. The language used in the arbitration shall be English. (my emphasis in bold)
Clearly, the arbitral Tribunal is not yet functus officio. The question then is whether the wide terms of cl 9 of the Trust Agreement in terms of 'controversies' or 'claims' 'arising out of or relating to it or its 'breach' 'shall be settled by arbitration' are now closed off to Dalian given the events of this litigation.
Because Clyde & Co is a trustee it also seeks, in order to further protect its position via s 95 of the Trustees Act to obtain the court's advice. As I assess it, by par 4 of its chamber summons, Clyde & Co seeks the further advice of the court for it as a trustee, towards its bringing of an anti-arbitration suit injunction application, rather than it proceeding now to simply file such an application, immediately.
To that end of further advice as a trustee, Clyde & Co's minute of orders as submitted for the purposes of the present application towards the seeking of judicial advice had proposed, in effect, an exchange of affidavit and written submissions as between Dalian and itself under a timetable to be set towards the obtaining of such further judicial advice.
As I indicated to counsel at the directions hearing of the summons, were I to determine such a further judicial advice request made by Clyde & Co (which seems to be the obvious course given my familiarity with the parties and their issues presenting to date), then, hypothetically, were it to be my advice to sanction the bringing by Clyde & Co of an anti-arbitration suit injunction, then clearly some other judicial officer of this court ought then to render any required determination upon that injunction issue. For present purposes, however, the question only is as to the procedural timetabling steps towards an obtaining of the further judicial advice by Clyde & Co.
By my assessment, with an important modification, proposed orders 4, 5 and 6 of Clyde & Co's minute of orders of 25 August 2020 are appropriate as regards such a timetable.
But a required modification is necessary because, on my view, whilst a seeking of further advice in the terms of par 4 of Clyde & Co's chamber summons presents as appropriate, I do take a different view in terms of the declarations foreshadowed by Clyde & Co under par 3. In short, they seem to me to be 'over the top' and unnecessary. Clearly, this court is the only forum for the proper determination of parties' costs entitlement as regards the trial proceeding conducted before it. The foreshadowed declarations sought in respect of a recovery of costs not being agreed to be referred to arbitration looks to me to be bound up with the essential question as to whether or not it is now too late for Dalian to ventilate its foreshadowed breach of trust grievances against Clyde & Co before that Tribunal. If the end answer to that question is favourable to Dalian, then the Tribunal will obviously proceed to determine issues properly before it. And vice versa.
Finally, the foreshadowed declarations seen as sought under par 3(c) present to me to raise what on the face of it would present as self evident matters which it is again unnecessary to determine. Consequently, the scope of any further judicial advice requested ought be confined only to the question as foreshadowed for further advice under order 4 of Clyde & Co's chamber summons, only.

Last issue - an application under s 75 of the Trustees Act

The final relief the subject of Clyde & Co's chamber summons presents under its proposed par 5 in the following terms:
In respect of the allegations of breach of trust articulated in the Plaintiff's originating summons dated 25 February 2020 and in the affidavits of Mr O'Shannassy dated 25 February 2020, 12 March 2020, 17 March 2020 and 18 March 2020, to the extent that those allegations are established and the Court considers that the First Defendant is or may be personally liable for any such breaches, the trustee seeks relief under s 75 of the Trustees Act 1962 (WA).

A potential invocation of s 75 of the Trustees Act is understandably enough identified as a potential recourse for Clyde & Co. Presently, however, there are a host of antecedent issues which require an earlier resolution. Not least of these is whether this court will provide advice sanctioning Clyde & Co as trustee in bringing an anti-arbitration injunction suit against Dalian. Were that to be so and then were Clyde & Co to succeed upon such an injunction application (assuming Clyde & Co succeeded and an injunction issued against Dalian continuing with the arbitration were maintained in the face of potential appeal), the next step would be towards a substantive determination and resolution concerning the breach of trust grievances by this court. Assuming that process were undertaken and to be resolved favourably to Clyde & Co against a breach of trust (and maintained on any appeal) then there would look to be no need for recourse to s 75 of the Trustees Act. But on an opposite future outcome hypothesis, only then would a recourse, allowing again for a contingency of appeal and its resolution, to get the protection of s 75 at then, become a live issue.
Consequently, at highest, the present orders on this issue might simply provide for the liberty to Clyde & Co to seek in future, relief under s 75 of the Trustees Act in the wake of whatever future contingencies may unfold - in terms of whatever forum ultimately resolves Dalian's underlying breach of trust grievances, namely, either the Tribunal or this court as things eventuate. Whatever the outcome, a recourse to s 75, if that were ever to be necessary, for the present seems a step that can be left on the horizon.

Orders to issue

Consequently, the orders and directions that should issue upon the chamber summons of Clyde & Co of 13 August 2020, should be as follows:
1.The requirements of conferral under O 59 r 9(1) of the Rules of the Supreme Court 1971 (WA) (RSC), are waived.
2.Further to Order 12(a) of the orders dated 8 May 2020, and pursuant to O 45 r 2 RSC, all issues relating to the first defendant recovering its legal costs of the trial in this proceeding be referred to a Registrar for the purposes of approving a passing of accounts.
3.Further to Order 2 above, the first defendant is to file and serve:
(a)The account for costs as actually submitted for payment to it by its lawyers of record, Assured Legal Solutions (with any legal advice to be redacted); and
(b)Any evidence that it has paid that account of Assured Legal Solutions.
4.There be no order further to Order 12(b) of the orders dated 8 May 2020.
5.By 11 September 2020, the first defendant file and serve its submissions in support of the judicial advice sought under par 4 of its chamber summons of 13 August 2020.
6.By 18 September 2020, the plaintiff file and serve any submissions in reply.
7.The matter be listed for further directions on a date after 18 September 2020, at which the Court will issue directions about whether the first defendant's application, as stated in par 4 of the chamber summons, will be determined on the papers or whether, and when, it will be listed for a hearing.
8.There be liberty for the first defendant to seek relief under s 75 of the Trustees Act 1962 (WA) at the appropriate time.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DW
Associate to the Honourable Justice Martin
2 SEPTEMBER 2020