Franks, M. v Morton, J.R.C

[1994] FCA 683

683      Ci't

JUDGMENT NO. -me--

COURT OF AUSTRALIA	)
) No NG 378 of 1 9 9 4

BETWEEN:	RA FRANKS U bustees for the W A and Barbara A
v  First Applicants
MARK FRANKS

Second Applicant

VIDEO RESOURCE GROUP INCORPORATW

Third Applicant

m:  J FFR

F~rst Respondent

BUDLYRE PTY LIMITED

Second Respondent

-

Third Respondent

TRUEFEAT PTY JtIMITED

Fourth Respondent

HILL J SYDNEY

4 JULY 1 9 9 4

When the matter came before me it became apparent Morton would determine all the issues between the parties. On

that a decision as to the ownership of the shares held by Mr

this basis I gave directions for the filing of evidence limited to the issue of the beneficial ownership of the shares and stood over the matter until today before me, giving certain interim relief to the applicants.

When the matter came on this morning counsel for Mr Morton indicated that his client did not propose to file any evidence. I then inquired whether the matter should not then proceed to hearing today as the only evldence was that which the applicants had filed. With some reluctance, counsel for Mr Morton acceded to this course. Evidence was read and objections hotly taken to matters which related to the beneficial ownership of the shares.

At a late stage in the evidence counsel for the applicants tendered a declaration of trust signed by Mr Morton in favour or a Mr Schaffel. After instructions had been taken, and so far as I can now recall, around about 11.15 or

leave to adduce evidence which would go to an argument that 11.30 counsel for Mr Morton indicated that he proposed to seek

the declaration of trust was void on certain grounds, including representations that had been made at the time of signature to Mr Morton . Ultimately the evidence of the applicants was concluded and application was made to adduce the evidence that had not been filed in accordance with the directions.

From what I was told at the bar table it appeared that a notice to produce had been served upon the solicltors for Mr Morton at approximately 2.30 pm on Friday, 1 July. This notice brought forth the declaration of trust which, on the face of it, was totally adverse to the position which Mr MortOn appeared to have taken, being that he was the absolute beneficial owner of the shares. The notice to produce had led, it was said, to the production of an affidavit from Mr Morton which counsel sought to read, going to the matters to which I have referred.

It appeared also that the information in that affidavit must have been obtained at a stage earlier than the notice to produce although the affidavit itself may not have been prepared untll after the notice had been served. What clearly emerges, and I do not suggest there is anything improper about this, is that the respondent, Mr Morton, desired to put to proof the applicants on the basis of the

was no evidence upon which such a trust relationship could be existence of a trust relationship hoping to submit that there found to exist. This was done in the knowledge that there was

a declaration of trust in the possession of the respondents

which, on its face, appeared to favour the case of the applicants. It was only when this was flushed out that Mr Morton sought to put himself in a position where, if necessary, he could call evidence which accepted the existence of the declaration of trust but went to its validity. It was not sought to deal with the matter at the outset, presumably in the mistaken hope that the declaration of trust would not be tendered, and it was only once it became apparent that, absent any cross-claim or other evidence, Mr Morton's case was doomed that the question arose.

I indicated that I would only be prepared to accept this evidence being read at a late time and the consequent adjournment which would become necessary to enable it to be met, upon certain conditions. One of these, which is not opposed, is that a receiver be appointed to manage the affairs of Truefeat Pty Limited until the ultimate dispute between the parties is resolved.

The question now arises as to whether I should make, as a condition to the adducing of that evidence and the ultimate adjournment, that the applicants pay the costs of today whatever the ultimate outcome. It seems to me that the

respondents have adopted a particular position in the litigation for tactical reasons. I say nothing about the

morality of it, but the fact remains that for some time during the day the Court was led to believe that the only issue was the existence of a trust relationship between Mr Morton and Mr Franks. It was only during the day when the declaration was ultimately tendered, as was inevitable and must have been accepted as inevitable, that application was foreshadowed for the reading of an affidavit in these circumstances. Although

ultimately, it may be that today's time has not been totally wasted, it is my view that the first respondent should bear the applicants' costs of today and I will so order.

I note the undertaking as to damages which has previously been given to the Court and which continues.

I certify that this and the

preceding four (4) pages
are a true copy of the Reasons
for Judgment herein of his Honour

Mr ~ustzce Hill.

Associate:

Date:  6 S e p t e m h h

Counsel and Solicitors	NA Cotman instructed by
for Applicants:	Hunt & Hunt
Counsel and Solicitors	GO Reynolds instructed by
for Respondents:	Watsons
Date of Hearing:	4 July 1994
Date Judgment Delivered:	4 July 1994

EX TEMPORE REASONS FOR JUDGMENT

The applicants in these proceedings claim, inter alia, declarations that certain shares presently registered in the name of the first respondent, Jeffrey Roy Charles Morton are held as trustee for them. Other relief is also sought.