Goulston v Bogasi Pty Ltd; Bogasi Pty Ltd v Sundell; Tamara Jane Goodwin as Administrator of the Estate of James Ralph Sundell v Bogasi Pty Ltd as Trustee for the James Ralph Sundell Trust

[2025] NSWSC 989

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Goulston v Bogasi Pty Ltd; Bogasi Pty Ltd v Sundell; Tamara Jane Goodwin as Administrator of the Estate of James Ralph Sundell v Bogasi Pty Ltd as Trustee for the James Ralph Sundell Trust [2025] NSWSC 989

Hearing dates:

8-11,15,18, 22-24, 29, 30 April 2024; 1-2, 6-9, 14 May 2024, 19-20 June 2024; final written submissions 6 November 2024

Decision date:

29 August 2025

Jurisdiction:

Equity

Before:

Kunc J

Decision:

See paragraph [26]

Catchwords:

EQUITY — Trusts and trustees — Express trusts — Declaration of trust

ESTOPPEL — Various types — No issue of principle

LAND LAW — Torrens title — Exceptions to indefeasibility

SUCCESSION — Construction — Gifts

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Conveyancing Act 1919 (NSW)

Evidence Act 1995 (NSW)

Family Court Act 1975 (Cth)

Family Law Act 1975 (Cth)

Law Property Act 1936 (SA)

Limitation Act 1969 (NSW)

Probate and Administration Act 1898 (NSW)

Real Property Act 1900 (NSW)

Succession Act 2006 (NSW)

Supreme Court Act 1970 (NSW)

Cases Cited:

Aerotropolis Pty Ltd v Secretary, Department of Planning and Environment [2023] NSWCCA 195

Akjay v Hickey & Co Pty Ltd [2011] NSWSC 822

Amalgamated Investment & Property Co Ltd (in liq) v Texas Commerce International Bank Ltd [1982] QB 84; [1981] 1 All ER 923; [1981] 2 WLR 554

Arambasic v Veza (No 4) [2014] NSWSC 1109

Ashton v Pratt (No 2) [2012] NSWSC 3

Blair v Curran (1939) 62 CLR 464; [1939] HCA 23

Bluemine Pty Ltd (in liq) v AKA (Civil) Pty Ltd [2022] NSWCA 160

BMI Ltd v Federated Clerks Union of Australia (1983) 51 ALR 401

Bokhari v Bokhari [2014] NSWSC 1474

Break Fast Investments Pty Ltd v Gravity Ventures Pty Ltd (No 1) [2015] VSC 497

Brown v New South Wales Trustee and Guardian [2012] NSWCA 431

Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26

Carter v Federal Commissioner of Taxation (2020) 279 FCR 83; [2020] FCAFC 150

Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502; [1988] HCA 21

Cherry v Boultbee (1839) 4 My & Cr 442; 41 ER 171

Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295

Claremont Petroleum NL v Cummings (1992) 110 ALR 239

Coles v Wood [1981] 1 NSWLR 723

Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389

Commissioner of Stamp Duties (NSW) v Bone (1976) 135 CLR 223

Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226

Crawley v Short [2009] NSWCA 410

Dedakis v Deligiannis; The estate of Rebecca Deligiannis (also known as Rebeka Deligiannis) [2024] NSWSC 1018

Dixon v Blindley Heath Investments Ltd [2015] EWCA Civ 1023; [2017] Ch 389

DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431; [1982] HCA 14

Ekes v Commonwealth Bank of Australia [2014] NSWCA 336

Elmzamtar v Bangladesh Islamic Centre of NSW Inc [2020] NSWSC 1161

Estate of the late James Sundell [2019] NSWSC 1108

Falkner v Bourke (1990) 19 NSWLR 574

Federal Commissioner of Taxation v Ramsden [2005] FCAFC 39; (2005) 58 ATR 485

Fell v Fell (1922) 31 CLR 268; [1922] HCA 55

Fielden v Christie-Miller [2015] EWHC 87 (Ch)

Gilbert v Fitzpatrick (1927) 39 CLR 151; [1927] HCA 2

GLJ v Trustees of the Roman Catholic Church for the Diocese of Lismore [2023] HCA 32; (2023) 97 ALJR 857

Global Risk Alliance Group Services Pty Ltd v Harmer (No 2) [2024] NSWSC 234

Greater Lithgow City Council v Wolfenden [2007] NSWCA 180

Haiye Developments Pty Ltd v Commercial Business Centre Pty Ltd [2022] NSWSC 937

Hawes v Dean [2014] NSWCA 380

Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64

Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46

In re Leach; Chatterton v Leach [1948] 1 Ch 232

In re Wedmore; Wedmore v Wedmore [1907] 2 Ch 277

Irwin v Pamplin (No 4) [2024] NSWSC 73

James v Douglas [2016] NSWCA 178

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

Kalls Enterprises Pty Ltd (in liq) v Baloglow (No 3) [2007] NSWCA 298

Kanjian Holdings No 1 Pty Ltd v Kanjian [2021] NSWSC 839

Kinch v Walcott [1929] AC 482

Krajovska v Krajovska [2011] NSWSC 1026

Kuligowski v Metrobus (2004) 220 CLR 363; [2004] HCA 34

Lehrman v Network Ten Pty Ltd [2024] FCA 369

Li v Tao [2023] NSWCA 310

Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221

Lord v Trippe (1977) 51 ALJR 574

Maddison v Alderson (1883) 8 App Cas 467

Mao v Bao [2021] NSWSC 1096

Mao v Bao (2023) 113 NSWLR 26; [2023] NSWCA 278

McBride v Hudson (1962) 107 CLR 604; [1962] HCA 5

McLean v Commonwealth of Australia (Unreported, Supreme Court of New South Wales, 22 August 1996)

Minero Pty Ltd v Redero Pty Ltd (Unreported, Supreme Court of New South Wales, 29 July 1998)

Moratic Pty Ltd v Gordon [2007] NSWSC 5

Murphy v Zamonex Pty Ltd (1993) 31 NSWLR 439

New South Wales v Radford (2010) 79 NSWLR 327; [2010] NSWCA 276

Nguyen v Taylor (1992) 27 NSWLR 48

Otis Elevator Co Pty Ltd v Guide Rails Pty Ltd (in liq) [2004] NSWSC 383; (2004) 49 ACSR 531

Pipikos v Trayans (2018) 265 CLR 522; [2018] HCA 39

Plunkett v Bull (1915) 19 CLR 544; [1915] HCA 14

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45

Powercell Pty Ltd v Cuzeno Pty Ltd [2004] NSWCA 51

Re Blackbird Pies (Management) Pty Ltd [1969] Qd R 387

Re Gulbenkian’s Settlement [1970] AC 508

Re Leech; Milne v Daubeny [1923] 1 Ch 161

Re Paradise Motor Co Ltd [1968] 2 All ER 625

Republic of India v India Steamship Co Ltd (No 2) [1998] AC 878

Revenue and Customs Commissioners v Benchdollar Ltd [2009] EWHC 1310 (Ch); [2010] 1 All ER 174

Rinehart v Rinehart [2020] NSWSC 68

Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65

Saravinovska v Saravinovski (No 6) [2016] NSWSC 964

Scott (Trustee), Re (Bankrupt) v Stolyar (No 8) [2025] FCA 20

Screenco Pty Ltd v RL Dew Pty Ltd (2003) 58 NSWLR 720; [2003] NSWCA 319

Short v Crawley (No 30) [2007] NSWSC 1322

Sidle v Queensland Trustees Ltd (1915) 20 CLR 557; [1915] HCA 48

Smith v Coastivity Pty Ltd [2008] NSWSC 313

Street v Luna Park Sydney Pty Ltd [2007] NSWSC 689

Tatham v Huxtable (1950) 81 CLR 639; [1950] HCA 56

Teterin v Linrod Pty Ltd [2024] NSWSC 1635

Theodore v Mistford Pty Ltd (2005) 221 CLR 612; [2005] HCA 45

Thompson v Palmer (1933) 49 CLR 507; [1933] HCA 61

Trawl Industries of Australia Pty Ltd (in liq) v Effem Foods Pty Ltd (1992) 36 FCR 406

Wade v Trnka [2006] NSWSC 1097

Waterman v Gerling Australia Insurance Co Pty Ltd (2005) 65 NSWLR 300; [2005] NSWSC 1066

Watson v Foxman (1995) 49 NSWLR 315

Watson v Ralph (1982) 148 CLR 646; [1982] HCA 35

Webster v Strang [2018] NSWSC 495

Wright v Lemon (as executor of the estate of Wright) (No 2) [2021] WASC 159

Yates Property Corporation Pty Ltd v Boland (2000) 179 ALR 664

Ying v Song [2009] NSWSC 1344

Young v Queensland Trustees Ltd (1956) 99 CLR 560; [1956] HCA 51

Texts Cited:

M Barnes, The Law of Estoppel (2020, Bloomsbury)

C Ford, Theobold On Wills (19th ed, 2021, Sweet & Maxwell)

P Herzfeld and T Prince, Interpretation (3rd ed, 2024, Thomson Reuters)

D Heydon, On Contract (2019, Lawbook Co)

L Ho, “The Importance of Being Earnest: The doctrines of Laches and Acquiescence” in P Davies, S Douglas and J Goudkamp, Defences in Equity (2018, Hart)

P Keane, Estoppel by Conduct and Election (2023, Thomson Reuters)

D Heydon, M Leeming and PG Turner, Meagher, Gummow and Lehane’s Equity: Doctrine & Remedies (5th ed, 2014, Lexis Nexis Butterworths)

Macquarie Dictionary, 4th ed (2006)

G Thomas, Thomas on Powers (2nd ed, 2012, Oxford University Press)

White J “The Nature of a Beneficiary’s Equitable Interest in a Trust” Supreme Court of NSW Annual Conference 2007

P Young, C Croft and M Smith, On Equity (2009, Thomson Reuters)

Category:

Principal judgment

Parties:

Proceedings 2019/390407
Anne-Katrine Goulston (Plaintiff)
Bogasi Pty Ltd (Third Defendant)
Elmach Pty Ltd (Eighth Defendant)
Tamara Jayne Goodwin as Administrator of the Estate of the Late James Sundell (Ninth Defendant)
Proceedings 2019/390407 First Cross-Claim
Elmach Pty Ltd (Cross-Claimant)
Anne-Katrine Goulston (Cross-Defendant)
Proceedings 2019/390407 Second Cross-Claim
Kim Sundell (Cross-Claimant)
Anne-Katrine Goulston (First Cross-Defendant)
Tamara Jayne Goodwin as Administrator of the Estate of the Late James Sundell (Second Cross-Defendant)
Elmach Pty Ltd (Third Cross-Defendant)
Bogasi Pty Ltd (Fourth Cross-Defendant)
Three Crowns Investments Pty Ltd (Fifth Cross-Defendant)

Proceedings 2019/390407 Third Cross-Claim
Bogasi Pty Ltd (Cross-Claimant)
Kim Sundell (First Cross-Defendant)
Elmach Pty Ltd (Second-Cross Defendant)
Tamara Jayne Goodwin as Administrator of the Estate of the Late James Sundell (Third Cross-Defendant)
Three Crown Investments Pty Ltd (Fourth Cross-Defendant)

Proceedings 2022/96516
Bogasi Pty Ltd (Plaintiff)
Kim Sundell (Defendant)
Proceedings 2023/157660
Tamara Jayne Goodwin as Administrator of the Estate of the Late James Sundell (Plaintiff)
Bogasi Pty Ltd as Trustee for the James Ralph Sundell Trust (Defendant)
Proceedings 2023/157660 First Cross-Claim
Bogasi Pty Ltd (First Cross-Claimant)
Tamara Jayne Goodwin as Administrator of the Estate of the Late James Sundell (First Cross- Defendant)
Kim Sundell (Second Cross-Defendant)
Brett Sundell (Respondent to construction motions)

Representation:

Counsel:
A Byrne (Anne-Katrine Goulston)
J Needham SC /S Chapple SC (Kim Sundell)
M Condon SC/M Cleary (Bogasi Pty Ltd/Bogasi Pty Ltd as Trustee for the James Ralph Sundell Trust)
P Jammy (Elmach Pty Ltd)
A Cheshire SC/T Catanzariti (Tamara Jayne Goodwin as Administrator of the Estate of the Late James Sundell)
CP Birtles (Brett Sundell)

Solicitors:
MJM Lawyers (Anne-Katrine Goulston)
Brown Wright Stein (Kim Sundell)
Piper Alderman (Bogasi Pty Ltd/Bogasi Pty Ltd as Trustee for the James Ralph Sundell Trust)
Clayton Utz (Elmach Pty Ltd)
Ronayne Lawyers (Three Crown Investments Pty Ltd)
Bridges Lawyers (Brett Sundell)
Glass Goodwin (Tamara Jayne Goodwin as Administrator of the Estate of the Late James Sundell)

File Number(s):

2019/390407; 2022/96516; 2023/157660

Publication restriction:

No

JUDGMENT

A. Overview

1. These proceedings concern the Sundell family. Without disrespect, I shall refer to family members by their given names.

2. I begin these reasons with a general overview of what follows in much greater detail. In this section, I avoid formality and technicality.

3. The origins of the Sundell family are in Sweden. The family’s wealth in this country came from the business of the sale of cars, car leasing, finance and construction. Readers of a certain age will recall the Sundell Motors group as a well-known retailer of Holden cars. Today the business is one of diversified investments.

4. For the purposes of these proceedings, the story begins with two brothers: Jim and Gunnar. They took over a successful family business from their father.

5. Jim and his wife Janette had three surviving children: Joakim (known as Kim), Anne-Katrine and Brett. Jim died in May 2017. Issues concerning Jim’s estate arise for determination in these proceedings.

6. Gunnar and his wife Merle had two children: Annmarie and Rickard. Gunnar predeceased Jim, dying in December 2006.

7. Jim and Gunnar trusted each other implicitly. This meant that not everything between them was formally documented. They established family trusts and a number of companies as the means for generating, holding and distributing the family’s wealth and shared the benefits generally equally between their respective halves of the family. The legal effect (if any) of that practice is another important issue in the proceedings, referred to as the Common Assumption. The Court has concluded that the admitted general practice of such sharing is not clear to the point of creating legally enforceable consequences.

8. After working overseas, Kim began to work in the family business from about 1996.

9. In late 1998 and early 1999, Kim negotiated two substantial transactions whereby the family business acquired large property holdings from the Elders Group and the ground leases of a shopping centre in South Australia. This was done using two trusts known as CPT1 and CPT2 (“CPT” standing for “commercial property trust”). The trustee of the trusts was a special purpose company called Elmach Pty Ltd. Of the 100 units in each trust, Jim and Gunnar agreed that Kim (through his private company Josunda Pty Ltd) would have 10 units in each trust in recognition of his central role in the transactions.

10. Kim is also the registered unitholder of the other 90 units in each trust. This is because, at the time of the transactions, no decision had been made as to how those units would be held. Kim agreed with Jim and Gunnar to “warehouse” those units (which are referred to in these reasons as the Elmach units). Because of what was said to be the absolute trust between Jim, Gunnar and Kim, the issues of for whom the Elmach units were being held, and on what terms, were left imprecise. The only point of clarity was that Kim was not intended to be the beneficial owner of the Elmach units. In the years that followed, it became clear that any inter vivos transfer of the Elmach units from Kim to any other person or company associated with the family business would incur significant stamp duty and capital gains tax (CGT).

11. Three companies in the family business relevant to these proceedings are Sundell Holdings Pty Ltd (in broad terms, as the name suggests, the holding company), Bogasi Pty Ltd (at the relevant times the trustee of both Jim and Gunnar’s family trusts and the ultimate residuary beneficiary of Jim’s will) and Three Crown Investments Pty Ltd (TCI) (in effect the “bank” of the family business).

12. Two non-family members are significant figures in these reasons. The first is Mr David Wooldridge. He is a trusted employee, having commenced as Chief Financial Officer of the family business in 1987. The other is Mr Wooldridge’s colleague, Ms Kellie-Anne Francis, who has been Group Accountant since 1999.

13. In early 2011, Kim commenced Family Court proceedings to divorce his wife Shara. As part of their dispute over what constituted their matrimonial assets, Shara claimed that Kim was entitled to the Elmach units. Jim, Sundell Holdings, Josunda, Bogasi and TCI all became parties to the Family Court proceedings and, with Kim, presented a great deal of evidence in support of the proposition that Kim did not have a beneficial interest in the Elmach units.

14. The Family Court proceedings were settled during the course of their hearing by Consent Orders made on 26 November 2012. Critically for the case at bar, those orders included Declarations that the Elmach units “are held by [Kim] on trust for [Jim] and/or his nominee”.

15. Another significant issue in this case arises from Kim’s claim that in or about April 2013 Jim verbally nominated Kim as the beneficial owner of the Elmach units pursuant to the Declarations (the Nomination). The Court has concluded that while, as a matter of fact, the Nomination did occur, on the proper construction of the Declarations Kim was not within the class of persons or companies who could be Jim’s nominee. The consequences of this conclusion will be a matter for further argument.

16. The Court has also been required to resolve a dispute between Anne-Katrine and Elmach over the ownership of Anne-Katrine’s home (the Beecroft property). This was purchased in late 2011 and is held as tenants in common between Anne-Katrine (as to 80%) and Elmach (as to 20%).

17. Anne-Katrine’s fundamental contention (although given different legal characterisations) is that Jim wanted each of his children to own their own home unencumbered by any debt. In accordance with that intention, Jim caused the Beecroft property to be purchased for her and, insofar as Elmach was put on the title, her case is that she is entitled to Elmach’s 20% interest without any actual cash payment by her.

18. The Court accepts, as a matter of generality, that Jim wanted to purchase the Beecroft property for Anne-Katrine. However, the Court has also found that due to a cashflow crisis in the family business at the time of the purchase, Elmach provided funds for the purchase, which resulted in it obtaining its share in the Beecroft property absolutely. On any sale of the Beecroft property, Elmach is entitled to a 20% share of the nett proceeds.

19. The Court has also considered various questions of construction posed about the will made on 9 November 2010. The will has already been the subject of probate proceedings determined by Justice Sackar: Re Estate of the late James Sundell [2019] NSWSC 1108. A present complication is that it is not clear whether the estate is solvent or insolvent (that to some extent being dependent on the outcome of these proceedings, among other things). The solvency of the estate is central to the order of its administration. The construction issue which may have the most significant consequence for the administration of the estate is the Court’s conclusion that after paying Jim’s debts (as strictly understood), the Administrator of the estate is directed to pay out of the estate analogously to Jim’s debts (and before anything else) amounts to Bogasi and other third party creditors of named family members in discharge of their debts to those creditors.

20. Among the many other issues presented by the parties, the Court has had to engage with two protean expressions: “the Sundell Group” and the Common Assumption.

21. As to “the Sundell Group”, much attention was devoted to whether or not Elmach was part of “the Sundell Group”. The answer to what was within “the Sundell Group” is “it depends”. If the expression refers to entities that could be called in aid of family members, then Elmach’s involvement in the purchase of the Beecroft property suggests it is. So does its inclusion in Group management reporting (see for example, the “Group Business Review” at [83] below). However, for formal legal and accounting purposes, the Court accepts the evidence of Mr Wooldridge and Ms Francis that the Sundell Group (or the Group) was at all material times relevantly the entities identified by Ms Francis in the chart which is Annexure A Annexure A - The Sundell Group at 18 November 2021 (92.1 KB, pdf) Annexure A - Corporate Structure of Sundell Group - text version (14.6 KB, docx) to these reasons and did not include Elmach.

22. As for the Common Assumption, there was no dispute that expressed at a high level of generality the Group was run by Jim and Gunnar for the broadly equal benefit of their respective sides of the Sundell family. However, as pleaded by Bogasi, the Common Assumption was alleged to be (omitting the particulars):

“21.   Up until Gunnar's death in December 2006, Jim and Gunnar:

21.1   jointly controlled the companies comprising the Sundell Group;

21.2   jointly controlled the said companies in order to benefit, equally, their respective families; and

21.3   acted in a manner pleaded in sub-paragraphs (a) and (b) on the basis that each trusted the other.

22.   Jim and Gunnar conducted the business activities of the Sundell Group as pleaded in paragraph 21 in order to:

22.1   have a common pool of assets which could be moved between entities within the Sundell Group, so as to provide funds at the lowest possible cost to such entities as needed liquid funds from time to time; and

22.2   share the Sundell Group's wealth equally between their two families

(the Common Assumption).”

23. The Court is not satisfied that the Common Assumption, as a phenomenon with legal significance, has been established on the evidence to have existed.

24. Before summarising the Court’s findings, it is necessary to say something about how the Court has approached the numerous disputes between the parties. The proceedings occupied 20 hearing days, generated a 26 volume court book of approximately 11,600 pages and approximately 600 pages of closing written submissions. Each party had the full benefit of the skill and ingenuity of experienced solicitors and counsel. It is only to observe, and not criticise, to say that no properly identifiable forensic stone was left unturned and no arguable submission was omitted, left unanswered or not then the subject of detailed reply.

23. I have endeavoured to set out in what follows the full extent of the arguments presented by the parties. However, it is neither necessary nor practicable to determine every point raised by them. Accordingly, while the Court has carefully considered all of the arguments raised, this judgment records the determination of those matters which in my respectful opinion were dispositive of the issues presented.

24. With the benefit of this general overview, the Court's conclusions (other than as to the will construction issues) may be summarised as:

1. Kim is not a reliable witness. His evidence is only accepted if it is inherently probable, against his interest or corroborated by contemporaneous records or other reliable testimony;

2. The Court accepts Anne-Katrine, Mr Wooldridge, Mr Walker and Ms Francis as reliable witnesses;

3. While Brett was a credible witness, his evidence was too vague to be of any assistance to the Court;

4. No Jones v Dunkel inference is drawn arising from Bogasi's failure to call Mr Stell;

5. The Sundell Group comprises the companies in the table which is Annexure A to these reasons. It does not include Elmach;

6. On their proper construction, the Declarations do not permit Kim to be the "nominee". That could only be Gunnar or a company in the Sundell Group;

7. In or about April 2013, Jim purported to nominate Kim as the beneficial owner of the Elmach units, contrary to the terms of the Declarations on their proper construction;

8. A nomination pursuant to the Declarations did not have to be in writing to be effective;

9. Given that the Nomination was invalid, the issue of breach of trust as pleaded does not arise. In any event, Jim and Kim did not breach any trust by agreeing to the Consent Orders. It is Kim, however, who committed a breach of trust. He breached the term of the trust as declared in the Consent Orders by failing to act in accordance with its terms. The breach was to treat the Nomination as effective to make him the beneficial owner of the Elmach units;

10. Kim's defences against Bogasi of conventional estoppel, laches and res judicata, Anshun estoppel and issue estoppel fail;

11. Bogasi has not established the Common Assumption with the legal consequences for which Bogasi contended;

12. If it were necessary to decide, Kim is not estopped by convention from denying that he owns the Elmach units to give effect to the Common Assumption;

13. The issue of fraud on the power does not arise, given the Court's construction of the Declarations. In any event, Jim's entitlement to nominate was not a power that attracts the principles sought to be relied upon by Bogasi;

14. The question of whether Elmach should be removed as trustee of CPT1 and CPT2 is to be reserved for further submission after the parties have had an opportunity to consider these reasons;

15. While Jim had the aspiration for Anne-Katrine to own her home completely and free of debt, Anne-Katrine has failed to establish any legal or equitable basis to give effect to that aspiration. Nor is she assisted by cl 4 of the will;

16. The Beecroft property was paid for as Elmach contends. There was no "instruction" from Jim as to how the Beecroft property purchase was to be effected and, even if there was, Anne-Katrine has not established any legal or equitable entitlement to have any alleged departure from that "instruction" "corrected";

17. Elmach paid $411,704.07 in return for its 20% share of the Beecroft property and it holds that share absolutely. It does not hold that share on trust for Anne-Katrine. Anne-Katrine does not owe that amount to Elmach. There is no debt or mortgage which would engage cl 4 of the will or be the subject of an equitable mortgage created by deposit of the certificate of title;

18. Anne-Katrine has not made out any basis on which the Administrator could be compelled to ensure Anne-Katrine has full beneficial ownership of the whole Beecroft property. If Anne-Katrine and Elmach are unable to agree otherwise, the Court will appoint trustees for sale of the Beecroft property and Elmach will be entitled to 20% of the net proceeds of sale;

19. Bogasi is entitled to pre-judgment interest on Kim's admitted debt to it calculated from the date of commencement of the 2022 proceedings;

20. By reason of cl 4 of the will, Kim is entitled to the benefit of a set-off (or a process analogous to a set-off) against Bogasi. That set-off or process is that Bogasi must set off against whatever Kim owes Bogasi that amount which the estate pays to Bogasi in satisfaction of Kim's debt to Bogasi from the funds which Bogasi pays to the estate to satisfy Bogasi's debt to the estate;

21. Jim did not procure or induce a breach of trust by encouraging Kim to agree to the Consent Orders and subsequently purporting to nominate Kim pursuant to the Declarations;

22. Jim did not breach any fiduciary duty by purporting to nominate Kim pursuant to the Declarations because no such duty was owed to anyone;

23. The question of whether Bogasi's 2023 Cross-Claim is time barred does not arise; and

24. The Court's conclusions on the will construction issues are to be found at [1100] to [1102], [1129] and [1142].

27. Mr A Byrne of Counsel appeared for Anne-Katrine. Ms J Needham of Senior Counsel (as her Honour then was) and Mr S Chapple of Senior Counsel appeared for Kim. Mr M Condon of Senior Counsel and Mr M Cleary of Counsel (as his Honour then was) appeared for Bogasi. Mr P Jammy of Counsel appeared for Elmach. Mr A Cheshire of Senior Counsel and Ms T Catanzariti of Counsel appeared for the Administrator. Mr A Ronayne, Solicitor, appeared for TCI. Mr CP Birtles appeared for Brett on the will construction motions.

B. The three proceedings

28. The starting point of the litigation is proceedings 2019/390407 (2019 proceedings) which is Anne-Katrine’s claim about the Beecroft property. This claim produced three cross-claims.

29. Anne-Katrine’s Further Amended Statement of Claim seeks various declarations and orders directed to ensuring that she obtains the complete unencumbered legal and beneficial ownership of the Beecroft property. Anne-Katrine claims that the Beecroft property was purchased for her by Jim as a gift with the intention that she own it outright.

30. The relief sought by Anne-Katrine is opposed by the Eighth Defendant, Elmach because it asserts that it has a 20% beneficial interest in the Beecroft property on the basis that it provided funding for the purchase.

31. Pursuant to the First Cross-Claim in the 2019 proceedings (2019 First Cross-Claim) Elmach seeks an order that trustees for sale be appointed to the Beecroft property pursuant to s 66G(1) of the Conveyancing Act 1919 (NSW) (CA) with consequential orders to facilitate its sale. It is accepted this relief is contingent on Anne-Katrine failing to establish that she is entitled to the unencumbered legal and beneficial ownership of the entire Beecroft property.

32. The second cross-claim in the 2019 proceedings (2019 Second Cross-Claim) and the third cross-claim in the 2019 proceedings (2019 Third Cross-Claim) concern the dispute between Bogasi and Kim as to who is the legal and beneficial owner of the Elmach units in the unit trusts known as CPT1 and CPT2. Elmach is the trustee of CPT1 and CPT2.

33. Kim is the cross-claimant in the 2019 Second Cross-Claim. Kim claims that in April 2013, pursuant to a power of nomination recorded in the Consent Orders Jim made the Nomination. The 2019 Second Cross-Claim seeks declarations that Kim has been since April 2013 the legal and beneficial owner of the Elmach units. If the nomination was not effective at law, Kim seeks a declaration that Bogasi is estopped from denying that Kim is the legal and beneficial owner of the Elmach units.

34. Bogasi denies that Jim made the Nomination and contends that the objective evidence does not support the existence of that Nomination. Bogasi also asserts that no estoppel should be recognised for four reasons. First, a proper construction of the Consent Orders does not permit Jim to nominate Kim to be the full legal and beneficial owner of the Elmach units. Second, there is no nomination in writing, as would be required by s 23C of the CA. Third, any disclaimer of the interest by Jim was not effective because it was made before Jim accepted his interest in CPT1 and CPT2. Fourth, any such nomination would constitute a breach of fiduciary duty on the part of Jim with such duty being a duty owed to the members of the Sundell family for whose benefit the Elmach units were being held on trust or, alternatively, any such nomination was a fraud on the power.

35. The cross-defendants to the 2019 Second Cross-Claim are Anne-Katrine (First Cross-Defendant), Ms Tamara Jayne Goodwin in her capacity as Administrator of the estate (Second Cross-Defendant), Elmach (Third Cross-Defendant), Bogasi in its capacity as trustee of the JRS Family Trust (Fourth Cross-Defendant) and TCI (Fifth Cross-Defendant).

36. In parallel with its defence to the 2019 Second Cross-Claim, Bogasi is the cross-claimant in the 2019 Third Cross-Claim which seeks relief including:

1. A declaration that the Elmach units were held on trust for Bogasi or Jim and the legal representative of Jim’s brother, Gunnar or TCI before the making of the Consent Orders;

2. A declaration that Jim did not make any nomination pursuant to the Consent Orders;

3. A declaration that any nomination was ineffective;

4. A declaration that upon Jim’s death any rights of nomination under the Consent Orders lapsed;

5. A declaration that the nominee pursuant to the Consent Orders could only be an entity within the Sundell Group or someone else who would hold the benefit of the Elmach units on trust for an entity in the Sundell Group and/or members of Jim’s and Gunnar’s families;

6. Declarations in relation to the interpretation of the Consent Orders;

7. Declarations that if Jim did exercise the power of nomination in favour of Kim he acted in breach of fiduciary duty and any such nomination would constitute a fraud on the power;

8. An order that Kim restore the assets of CPT1 and CPT2 together with all profits made to Elmach as trustee;

9. An order that Kim provide an account for any profits he has earned as the purported owner of the Elmach units;

10. A declaration that Kim is estopped from denying the Common Assumption; and

11. An order that Kim be removed as trustee of the Elmach units and that Elmach be removed as trustee of CPT1 and CPT2.

37. Kim adopts a consistent position across the 2019 Second and Third Cross-Claims. That position can be summarised as:

1. There is objective evidence Jim nominated Kim to receive the benefit of the Elmach units and that from 2013 they both (and Bogasi) conducted their affairs on that basis;

2. The Consent Orders are clear on their face and place no fetters on the ability of Jim to nominate a beneficiary of the Elmach units;

3. Neither Bogasi nor TCI sought, in the Family Court proceedings, to achieve the result which is now being sought in these proceedings and they in fact consented to the Consent Orders;

4. Jim had no overriding fiduciary obligations deriving from any asserted ‘common assumption’;

5. There is no need for a nomination or an assignment to be in writing by reason of s 23C of the CA because the nomination (or disclaimer) was not an assignment of an equitable interest within the meaning of that section;

6. After April 2013, Kim, Jim and Bogasi conducted their affairs on the basis that Kim was the legal and beneficial owner of the Elmach units such that Bogasi is now estopped from denying that state of affairs; and

7. In any event, Bogasi is guilty of laches in bringing a claim to recover the beneficial interest in the Elmach units in circumstances where it acquiesced in distributions being paid to Kim during Jim’s lifetime. It was only after the death of Jim (prejudicing Kim in his ability to call Jim as a witness) that Bogasi advanced a claim to the Elmach units.

38. The Cross-Defendants to the 2019 Third Cross-Claim are Kim (First Cross-Defendant), Elmach (Second Cross-Defendant), the Administrator (Third Cross-Defendant) and TCI (Fourth Cross-Defendant).

39. The 2022/96516 proceedings (2022 proceedings) are a dispute between Bogasi as trustee for both the James Ralph Sundell Family Trust (the Old Jim Trust) and the JRS Family Trust (the New Jim Trust), and Kim. Pursuant to an Amended Statement of Claim Bogasi seeks judgment against Kim for $13,964, 189.36 plus interest in the amount of $12,746,436.32 pursuant to s 100 of the Civil Procedure Act 2005 (NSW) (CPA). The money sought to be recovered is said to be money advanced to Kim by Bogasi as trustee for the two trusts.

40. By the time of closing submissions, there was no dispute that Bogasi was owed the principal amount of $13,946,189.36. The only outstanding issues related to whether Bogasi’s claim for interest was contrary to written agreements between Kim and Bogasi, whether Kim has a right to a set off having regard to cl 4 of the will.

41. The 2023/157660 (2023 proceedings) are a dispute between the Administrator and Bogasi in its capacity as trustee of the Old Jim Trust. The Administrator’s Amended Statement of Claim seeks orders for payment and declarations in relation to amounts said to be owing to the estate from distributions from both the Old Jim Trust and the New Jim Trust.

42. Bogasi, in its capacity as trustee of the Old Jim Trust, has also filed an Amended Cross-Claim in the 2023 Proceedings (2023 Cross-Claim), which traverses many of the issues addressed in the 2019 Second and Third Cross-Claims. Specifically, it seeks declarations that the Elmach units were held on trust for Bogasi or Jim and the legal representative of Gunnar or TCI before the making of the Consent Orders. It also seeks declarations that if Jim did exercise a right of nomination in favour of Kim in accordance with the Declarations, then Jim procured breaches of trust by Kim and/or that nomination constituted a breach of fiduciary duty. If those claims were made out, Bogasi sought an order that the Administrator restore the Elmach units to the current trustee of CPT 1 and CPT 2, Elmach, in accordance with the terms of a Master Trust Deed dated 21 December 1998.

43. On 12 February 2024, I made orders that only the prayers for relief in the 2023 Cross-Claim concerning whether Jim was liable for a breach of trust and whether the Administrator should restore the units to Elmach (if I accepted the Nomination had taken place) should be heard in these proceedings. The Administrator’s Amended Statement of Claim and all issues of quantum in Bogasi’s claim against the Administrator are to be determined after the hearing which is the subject of these reasons.

44. On 19 March 2024, I granted leave to Bogasi to amend the 2023 Cross-Claim by adding a claim, if the Nomination had occurred, alleging fraud on the power by Jim. I also heard this claim. However, the date from which that amendment took effect was left open for argument.

45. After the conclusion of the hearing of the three proceedings, the parties also requested the Court to resolve several issues relating to the construction of the will. A regime was put in place for any party who wanted a construction issue to be resolved by the Court to file and serve a notice of motion and for parties to file submissions in relation to the issues raised to the extent they wished to do so. Brett is not a party to any of the three proceedings but is a beneficiary of the estate. As such it became necessary to join Brett as a respondent to any motion concerning the construction of the will.

46. The first construction motion was filed by Kim on 1 July 2024 and sought a determination as to whether the effect of sub-cl 4(a) of the will is that any debts owed by any beneficiaries of the will to Bogasi as trustee of the family trusts are debts which Jim intended would be paid by his estate or are debts which need to be paid back by the beneficiary debtor.

47. The second construction motion was filed on 17 October 2024 by the Administrator. That motion raised three issues: first, whether sub‑cl 4(b)(ii) of the will required the Administrator to pay out the mortgage of Brett‘s principal place of residence; second, a determination concerning if the Administrator was required to pay a legacy pursuant to sub‑cl 4(a) or 4(b)(ii), how those legacies were to be paid; finally, the Administrator also sought advice on the question of if the estate became insolvent as a result of paying a debt pursuant to sub-cl 4(a) or 4(b)(ii) of the will, whether the Administrator would be justified in applying all assets of the estate, including Jim’s interest in a farm at Booral (Brett’s principal residence) towards payment of the estate’s liabilities, including any debts payable pursuant to sub-clauses 4(a) and 4(b)(ii) and whether any debts payable pursuant to sub-clause 4(a) or 4(b)(ii) are to be paid rateably according to value.

48. The third construction motion was filed by Bogasi on 22 October 2024. That motion asked the Court to determine whether on its proper construction cl 6 of the will required Jim’s interest in the “Booral Farm” devised to Brett to be limited only to Jim’s interest as a tenant in common of two of the parcels of land that formed part of the Booral Farm.

C. Dramatis personae

49. The following table summarises the main natural persons, and corporate protagonists involved in the three proceedings before the Court. References to the Sundell Group do not include Elmach and Finclear Pty Ltd but include the trusts and companies in the diagram which is Annexure A to these reasons.

NAME: 

ROLE:

PERSONS:

Edward De La Sala

• Current director of Bogasi

Kellie-Anne Francis 

• Direct report of David Wooldridge and accountant for the Sundell Group

Tamara Goodwin 

• Solicitor

• Administrator of the Estate of the Late James Sundell

Anne-Katrine Goulston (neeSundell) 

• Daughter of Jim Sundell

• Sister of Kim and Brett Sundell

• Alternate Director of Elmach for Jim Sundell– 2013-2017

• Current director of Bogasi

Peter Muldoon 

• Sundell Group employee

Dean Stell 

• Sundell family solicitor – Willis & Bowring solicitors

Brett Sundell 

• Son of Jim Sundell

• Brother of Anne-Katrine and Kim Sundell.

Daisy Khoury-Sundell

• Kim’s second wife

• Elmach Director – since June 2018

James (Jim) Sundell 

• Brother of Gunner - died 22 May 2017

• Father of Anne-Katrine, Brett and Kim

• Director of Elmach – 1998-2017

Janette Sundell

• Mother of Anne-Katrine, Brett and Kim

• Wife of Jim Sundell

Joakim (Kim) Sundell 

• Son of Jim Sundell

• Brother of Anne-Katrine and Brett Sundell

• Director of Elmach since 1998

• Ex-husband of Shara Sundell

Merle Sundell 

• Married to Gunnar Sundell

• Mother of Annmarie and Rickard Sundell

• Bogasi director between 24 January 2007 to 26 July 2017

Shara Sundell 

• Ex-wife of Kim Sundell.

• Respondent in the Family Court proceedings brought by Kim Sundell.

Thor Rickard GunnarSundell 

• Brother of James Sundell

• Married to Merle Sundell

• Father of Annmarie and Rickard Sundell

• Died on 23 December 2006

• Director of Elmach – 1998-2005

ChristopherWalker 

• Director of Bogasi from 2013.

• Friend of Jim Sundell

David Wooldridge: 

• Director of Elmach – 2006-2019

• Current director of Bogasi and longtime Chief Financial Officer

COMPANIES AND TRUSTS

Bogasi Pty Ltd 

• Trustee of Old Jim Trust and New Jim Trust

• Former Trustee of TRGS Family Trust and TRG Sundell Family Trust (until 20 August 2020)

• Owns a 50% interest in Sundell Holdings (as trustee of the Old Jim Trust)

CPT1

• Settled in 1998

• 119 Units on issue; 90 units held by Kim; 10 units by Josunda; 16 units by Crown Financial; and three units by TCI.

CPT2

• Settled in 1998

• 100 units on issue; 90 units held by Kim and 10 units held by Josunda.

Crown Financial Pty Ltd 

• Received 16 units in CPT1 on 29 June 2010 to discharge a loan and satisfy Division 7A income tax obligations.

Elmach Pty Ltd

• Current Trustee of CPT1 and CPT2

• Sole shareholder of Elmach is Kim

• The directors of Elmach were Kim, Gunnar (until his death in 2006), Mr Wooldridge (from 2006-2019) and Jim (until his death in 2017)

FinclearPty Ltd 

• Company incorporated by Kim in 2015 as a corporate vehicle for a venture which provided trading infrastructure, services and technology solutions.

• Not part of Sundell Group

James Ralph Sundell FamilyTrust 

• Old Jim Trust

JRS Family Trust 

• New Jim Trust

Josunda Pty Ltd 

• Company wholly-owned by Kim

SkiidaPty Ltd 

• Trustee since August 2020 of TRGS Family Trust and TRG Sundell Family Trust

Sundell Holdings Pty Ltd 

• Parent company of the Sundell Group

Three Crowns Investments Pty Ltd

• Subsidiary of Sundell Holdings.

• Funded the CPT1 and CPT2 transactions in 1998.

• Received 3 units in CPT 1 on 17 June 2011 to discharge a loan and satisfy Division 7A obligations.

D. The facts

50. The Court finds the facts to be as follows. Questions of credibility are dealt with in [334] to [398] below. Unless otherwise stated in these reasons, the Court generally accepts the evidence of Mr Wooldridge, Ms Francis, Mr Walker and Anne-Katrine but does not accept Kim’s evidence if it is not corroborated. To the extent that what follows sets out conflicting affidavit evidence, those conflicts which are necessary to resolve are dealt with in the course of considering the parties’ submissions.

51. The Sundell Group was created by Jim and Gunnar’s father. The family business originally involved construction and car leasing but eventually diversified into a number of different areas, including property investment, book publishing, advertising and investing in the stock market.

52. Gunnar and Jim took over the direction and control of the Sundell Group from their father. They were very close business partners and made all key business decisions together.

53. In 1962, Jim and Janette were married.

54. In 1973, Bogasi was formed and Jim and Gunnar were appointed directors.

55. On 19 October 1973, the Old Jim Trust and Gunnar’s equivalent TRGS Family Trust were established.

56. The Schedule to the TRGS Family Trust outlined who the beneficiaries were (noting that the first five primary beneficiaries were Gunnar’s family or, in the case of Irma Larssen, the longtime housekeeper and companion, treated like family, and the rest were Jim’s family):

“PRIMARY BENEFICIARIES:

Merle Clarice Sundell

Annemarie Sundell

Richard Sundell

Stella Sundell

Irma Larssen

Jannette Therese Sundell

Kim Sundell

Brett Sundell

Anne-Katrine Sundell

ADDITIONAL MEMBERS OF THE CLASS OF GENERAL BENEFICIARIES:

Thor Rickard Gunnar Sundell

James Ralph Sundell both of 821 Pacific Highway, Chatswood and Azrael Holdings Ltd of Hong Kong and any shareholder from time to time of the said Azrael Holdings Ltd.”

57. The Old Jim Trust was in the same terms but with the order of primary beneficiaries reversed so Jim’s family were listed before Gunnar’s family (and the order of Jim and Gunner also reversed as additional members):

“PRIMARY BENEFICIARIES:

Jannette Therese Sundell

Kim Sundell

Brett Sundell

Anne-Katrine Sundell

Merle Clarice Sundell

Annemarie Sundell

Richard Sundell

Stella Sundell

Irma Larssen

ADDITIONAL MEMBERS OF THE CLASS OF GENERAL BENEFICIARIES:

James Ralph Sundell

Thor Rickard Gunnar Sundell both of 821 Pacific Highway, Chatswood and Azrael Holdings Ltd of Hong Kong and any shareholder from time to time of the said Azrael Holdings Ltd.”

58. Bogasi was appointed as the trustee of both trusts. It was replaced in 2020 by Skiida Pty Ltd as trustee of the TRGS Family Trust. The Sundell Group’s business was operated on the basis that “in principle” (see the Memorandum of Wishes in [64] below) Jim and Gunnar’s families would share equally in the profits of the business through the mechanism of these family trusts. Bogasi was used to distribute the family’s wealth.

59. There was in evidence an unsigned document that from its terms must have been created at the time the family trusts were created. In its general tenor it is not dissimilar to the Memorandum of Wishes of March 1994 set out in [64] below. It is headed “THE G SUNDELL AND J SUNDELL TRUSTS ADVISORY DIRECTIONS TO BOGASI PTY LTD” and included:

“Preliminary:

This memorandum has been compiled by Messrs. G Sundell and J Sundell as a guide to the manner in which they would wish the trusts upon which Bogasi Pty. Ltd holds certain assets settled on   [left blank]            1978 and assets acquired thereafter to be implemented.  The memorandum is primarily designed to be a guide to Bogasi Pty. Ltd after the respective deaths of Messrs. G & J Sundell, but it also outlines certain policies which are to operate during their lifetime.

Note:  This memorandum is intended only as a guide and an indication of the wishes of Messrs. G & J Sundell.  It is not intended to fetter the discretion conferred upon Bogasi Pty. Ltd.

….

General Principles of Operation after Death of Messrs. G & J Sundell:

1.       From part of the profits derived from the group, the beneficiaries shall receive income as specified separately.

2.       The Trust shall at all times endeavour to assist the beneficiaries to develop their talents in whatever field they choose.  Conversely the absolute minimum shall be paid to any beneficiary that does not lead a useful and respectable life, for instance, drug abuse, etc.

3.       In addition to the income indicated in the attached Schedule any beneficiary in case of genuine hardship shall receive appropriate assistance, such assistance in principle in the form of outright grants, and in other cases appropriate repayable loans.  Example of such hardship as sickness, accident, business failure, but in each case Bogasi shall have an absolute discretion.

4        In the case of capital requested for business ventures proposed by the beneficiaries, no loans or advantageous guarantees, etc., shall be given as any such enterprises, if they have sufficient merit, should be undertaken within the Group of Companies controlled by the Trust.  If special circumstances exist however, modest funds could be made available subject to normal business practices and as far as possible, the beneficiary  work within the Group or in conjunction with the Group.  Satisfactory exceptions from the principle could be in the case where, for instance, the beneficiary wishes to open a legal or medical practice or some similar type of activity which could not legally or properly be carried on within the Group.

5.       The members election and constitution of the trust may be changed at any time, based on independent expert advice to accommodate any change in current legislation – this of course, always providing that none of the beneficiaries are put to a disadvantage as against other beneficiaries.” (Emphasis added)

60. On 16 August 1979, Jim made a will.

61. In the late 1970s, Jim met Mr Christopher Walker and the two men became friends.

62. In 1987, Mr Wooldridge joined the Sundell Group as the Group's Chief Financial Officer.

63. In 1991, Kim took up a position with a Swiss bank in London. He later lived in Canada.

64. On 27 March 1994, Jim and Gunnar created what was referred to as the Memorandum of Wishes. This set out their intention for the operation of the family trusts, including in relation to Bogasi. The Memorandum of Wishes was amended on 27 April 1994. It included (as amended):

“FAMILY TRUST MEMORANDUM OF WISHES

A.   STRATEGY

1.   THE STRUCTURE OF OUR GROUP WILL GRADUALLY BE CHANGED TO THAT OF AN INVESTMENT COMPANY. THIS MEANS:

a.   EACH INVESTMENT ACTIVITY MUST MEET NORMAL INVESTMENT TARGETS, AND THIS INCLUDES OUR OWN OPERATING COMPANIES WHICH ARE TO BE TREATED AS SEPARATE ENTITIES.

b.   THE GROUP OR HOLDING COMPANY/TRUST WILL NOT GIVE ANY UNLTD GUARANTEES TO THE OPERATING COMPANIES. THEY MUST STAND ON THEIR OWN LEGS. ANY CAPITAL REQUIREMENTS MUST BE HANDLED AT ARM’S LENGTH AND ANY LOANS FROM TCI SECURED IN LINE WITH NORMAL TRADE-PRACTICE. TAKING UP SHARES IN THE “OPERATING” COMPANY IS SUBJECT TO THE RESTRICTIONS IN THIS MEMO; VENTURE CAPITAL AND MAX LIMIT OF 20%

c.   NO PERSONAL GUARANTIES [SIC] MAY BE MADE IMPLICATING THE TRUSTS OR THE GROUP IN ANY WAY

B.   PROPORTION OF INVESTMENTS

EACH INVESTMENT MUST BE SET UP AS AN INDIVIDUAL ENTITY SO THAT IF IT IS UNSUCCESFUL IT WILL NOT AFFECT THE OTHER UNITS. ANY LOSSES MUST BE CONTAINED TO THE UNIT IN QUESTION.

1.   IN BROAD PRINCIPAL NO SINGLE INVESTMENT SHOULD EXCEED 20% OF TOTAL GROUP ASSETS. THIS INCLUDES ANY LOANS OR LTD GUARANTEES.

2.   A MAX OF 20% OF TOTAL ASSETS MAY BE CLASSIFIED AS RISK OR VENTURE CAPITAL

A.   PURPOSE OF TRUSTS AND ORGANISATION

1.   TO OPERATE AS A SUCCESSFUL ENTERPRISE ON A CONSERVATIVE BASIS USING THE EXPERTISE AVAILABLE TO THE FULLEST EXTENT. EACH FACET OF THE OPERATIONS TO BE UNDER CONSTANT REVIEW AND IF NOT SUCCESSFUL CLOSED OR SOLD.

2.   TO PROVIDE A STEADY INCOME STREAM AND TO ASSIST AND DEVELOP THE ABILITIES OF INDIVIDUAL FAMILY MEMBERS. PARTICULAR EMPHASIS ON EDUCATION AND TRAINING ALSO ASSISTANCE IN “FIRST” HOME AND START UP CAPITAL FOR ANY TALENTED MEMBER WITH A PROVEN TRACK RECORD IN THEIR PARTICULAR CHOSEN FIELD. START UP CAPITAL COMES UNDER THE DEFINITION OF VENTURE CAPITAL UNTIL THE BUSINESS HAS BECOME A PROFITABLE AND STABLE ENTERPRISE AND RE-CLASSIFIED ACCORDINGLY BY THE BOARD OF BOGASI.

B.   DISTRIBUTION OF INCOME

1.   THE INCOME STREAM WILL MAINLY CONSIST OF NORMAL COMMERCIAL DIVIDENDS FLOWING FROM SUNDELL HOLDINGS (OR OTHER ULTIMATE HOLDING COMPANY) TO THE TWO SEPARATE FAMILY TRUSTS.

A MAX OF 75% OF EACH OF THESE SOURCES OF INCOME IS AVAILABLE FOR DISTIRBUTION.

EACH FAMILY WILL SUBMIT TO THE DIRECTORS OF BOGASI A SUGGESTED DISTRIBUTION SCHEDULE BASED ON THE INCOME FROM THEIR FAMILY TRUST.

THE REMAINING MIN 25% IS TO BE RE-INVESTED THROUGH THE RESPECTIVE FAMILY TRUSTS AND TO BE AVAILABLE FOR ANY SPECIAL NEEDS OF ANY FAMILY MEMBER HAVING SEVERE PROBLEMS. SHOULD THIS FUND BECOME TOO LARGE (MORE THAN THE AVERAGE OF FIVE YEARS INCOME) IT MAY BE REDUCED BY DISTRIBUTION OR MADE AVAILABLE FOR GENERAL INVESTMENT.

THE ASSISTANCE TO ANY FAMILY MEMBER IS TO BE DIRECTLY RELATED TO EACH INDIVIDUALS OWN EFFORT IN DEVELOPING HIS/HER ABILITIES AND ALSO THEIR FAMILY SOLIDARITY. ANY MEMBER SHOULD BE ACTIVELY ENCOURAGED TO BE ENGAGED WITHIN THE GROUP.

IT IS TO BE CLEARLY UNDERSTOOD THAT WHILST IN PRINCIPLE THE INCOME SHOULD BE DIVIDED EQUALLY THE THRUST IS TO ENCOURAGE THE TALENTED AND FAMILY SUPPORTIVE MEMBERS TO ACHIEVE RESULTS TO THE BENEFIT OF THE FAMILY TRUST AS WELL AS THEIR PERSONAL BENEFIT.

ANY MEMBER THAT BECOMES INVOLVED WITH DRUGS OR CRIMINAL ACTIVITIES IS NOT TO RECEIVE ANY INCOME.

ANY MEMBER THAT SHOWS NO POSITIVE SIGNS OF IMPROVEMENT TO RECEIVE ONLY NOMINAL SUPPORT.

ANY MEMBER SUFFERING FROM A GENUINE DIS-ABILITY TO RECEIVE APPROPRIATE SUPPORT. (NO BLEEDING HEARTS).

2.   SHOULD THE WIFES OF GUNNAR OR JIM SUNDELL SURVIVE THEM THE FOLLOWING SHALL APPLY.

a.   EACH WIFE SHALL BE ENTITLED TO LIVE FREE OF CHARGE IN THE FAMILY HOME OR SIMILAR PLACE OF HER CHOICE

b.   PROVIDED WITH AN YEARLY INCOME OF $100,000 PAYABLE MONTHLY IN ADVANCE. THIS INCOME TO BE AJDUSTED YEARLY FOR INFLATION AS FROM THIS DATE.

THIS INCOME IS IN ADDITION TO ANY OTHER INCOME THAT MAY BE AVAILABLE E.G. RESULTING FROM THE WILLS OF GUNNAR AND JIM.

THIS INCOME TAKES ABSOLUTE PRECEDENCE OVER ANY OTHER INCOME DISTRIBUTION AND IF NECESSARY ASSETS OF THE TRUST SHOULD BE SOLD TO PROIVDE FUNDS.

3.   BOARD OF BOGASI

a.   …

b.   UNDER THE WILL OF G & J SUNDELL RESPECTIVELY THE SHARE HELD WILL PASS TO THE SURVIVING BROTHER.

c.   UPON THE DEATH OF THE LAST SURVIVING BROTHER AN ADDITIONAL FIVE (5) SHARES SHALL BE ISSUED IN BOGASI BRINGING THE TOTAL SHARES ON ISSUE TO SEVEN (7).

THESE SHARES SHALL BE ALLOCATED AS FOLLOWS:

EACH FAMILY (TRUST) SHALL ELECT TWO (2) DIRECTORS.

THESE FOUR DIRECTORS THEN APPOINT TWO (2) OUTSIDE DIRECTORS OF COMMERCIAL OR PROFESSIONAL STANDING.

FINALLY THESE (6) DIRECTORS APPOINT ONE MORE OUTSIDE DIRECTOR BRINGING THE TOTAL TO SEVEN (7).

EACH DIRECTOR TO BE ALLOCATED ONE (1) SHARE IN BOGASI. WHEN A DIRECTOR LEAVES FOR ANY REASON HIS/HER SHARE TO BE TRANSFERRED TO THE INCOMING DIRECTOR. NECESSARY LEGAL CONTRACT TO BE SET UP TO ACHIEVE THE RESULT.

EACH DIRECTOR TO BE PAID AN APPROPRIATE FEE. NOTE! IT IS ENVISAGED THAT ONE OR TWO BOARD MEETINGS PER YEAR SHOULD BE SUFFICIENT.

SHOULD FOR ANY REASON THE NUMBER OF SHARES ON ISSUE BE VARIED, THE VOTING PROPORTIONS AS SET CANNOT BE VARIED E.G 2-2-3.

4.   CHALLENGE

SHOULD ANY MEMBER/S CHOOSE TO LEGALLY CHALLENGE THESE TERMS THEY ARE TO BE EXCLUDED AS BENEFICIAIRES RECEIVING THEIR BENEFITS.

5.   FINAL

THIS MEMORANDUM OF WISHES IS MADE JOINTLY BY GS & JS AND MAY BE VARIED FROM TIME TO TIME IF MUTUALLY AGREED. AFTER THE DEATH OF ONE OF THE BROTHERS THIS M OF W:S CANNOT BE CHANGED

6.   PREVIOUS M OF W:S

INCORPORATE ITEMS MARKED OK.

7.   EXISTING BENEFITS AND PRIVILEGES

….”

65. On 27 July 1994, Jim revoked his 16 August 1979 will and made a new will.

66. Kim commenced working for the Sundell Group in 1996. According to Kim, he was asked by Jim to return from overseas to work for the family.

67. In June 1998, the Sundell Group completed a real property transaction known as the Elders Deal through T.I.T.E.S Pty Ltd (standing for “This is the Elders Sale”). The transaction involved the purchase from and lease-back to Elders of a number of properties. T.I.T.E.S was wholly owned by TCI. The transaction was a long term, 16 year investment deal with a maturity date in 2013, by which time that the assets would be owned by the Sundell Group unencumbered.

68. After the Elders Deal, another opportunity to acquire real property on a sale and lease-back basis was presented to the Sundell Group. Jim, Gunnar, Kim and Mr Wooldridge discussed the Sundell Group entering into what would become the CPT1 Transaction at the end of 1998. The meeting took place at Jim and Gunnar’s office at the Sundell Motors dealership at Chatswood.

69. At the meeting, it was discussed that the Sundell Group would retain ownership of the investment. Six months after the Elders Deal, Elders had approached the Sundell Group with an invitation to tender for a similar transaction relating to properties in Elders’ Queensland network. For each of the transactions, the representatives of Elders came to Kim in his capacity as Chief Investment Officer of the Sundell Group. Kim deposed in his affidavit in the Family Court proceedings (his evidence on this not being seriously challenged) that he had a discussion with Mr Wooldridge, his uncle Gunnar and Jim and that it was agreed at this meeting that Kim would take a 10% interest in the investment as a reward and that a trust would be established known as CPT1. Kim established Josunda, of which he was sole director and shareholder, to take his 10% share.

70. On 1 October 1998, Elmach was incorporated. Kim, Jim and Gunnar were appointed initial directors. Gunnar and Jim remained directors until each of their respective deaths, on 23 December 2006 and 22 May 2017. Mr Wooldridge was also a director from 23 December 2005 until 2 December 2019. Kim’s second wife, Daisy, was appointed as a director on 18 June 2018. Ms Francis and Mr Hogan were appointed as alternate directors on 27 May 2023. Kim is the sole shareholder of Elmach.

71. On 21 December 1998, the CPT1 Unit Trust (originally known as the Elders Property Trust No 1) came into existence pursuant to a Master Trust Deed, which was made on 21 December 1998 between Elmach (its name from 23 May 2001) as trustee and Josunda as manager. The next day, 90 ordinary units were issued to Kim and 10 to Josunda.

72. On 23 December 1998, the CPT1 Transaction settled. It is convenient to record that Bogasi alleges the CPT 1 Transaction was undertaken to give effect to the Common Assumption. The relevant particulars from the 2019 Third Cross-Claim are:

“a) Kim, Gunnar and Jim agreed that the CPT1 Transaction would be a good investment for the family business and the cornerstone investment for the Sundell Group.

b) Before completion of the CPT1 transaction, Jim and Gunnar repeatedly stated that any investment would be for the benefit of the Sundell Group and the Sundell family, and not for Kim alone.

c) It was the intention of Jim that the assets acquired through the CPT1 Transaction would be held for the benefit of the Sundell family

d) Prior to the completion of the CPT1 Transaction, Kim, Jim and Gunnar provided their consent and financial support to enable the said transaction to proceed and the ownership of the investment, irrespective of what structure was adopted to complete the transaction.

e) Jim and Gunnar expressed their intention on multiple other occasions, to the effect that the 90 units would ultimately be held for the entire Sundell family.

f) It was always intended that Jim and Gunnar would beneficially own or control all assets of both the Sundell Group and of Elmach as trustee for CPT1 and CPT2.”

73. The purchase price for the CPT1 property portfolio was $12,698,104.16 drawn from a $13,000,000 loan from Adelaide Bank Limited (now Bendigo Bank). Other costs incurred to complete the transaction were borrowed by Elmach as trustee of CPT1 from TCI and amounted to $1,951,116.18.

74. At the time of settlement of the CPT1 transaction Kim agreed to warehouse the Elmach units. He said in an affidavit filed in the Family Court proceedings sworn on 15 September 2011:

“[44] For each of these transactions, the representatives of Elders came to me as Chief Investment Officer of the Sundell Group. For the second transaction I had a discussion with David Wooldridge, the CFO of the Sundell Group, my uncle, Thor Rickard Gunnar Sundell, who was alive at the time, and my father, James Ralph Sundell.

[45] It was agreed in this meeting that I would take a 10% interest in the investment as a reward for my work in securing the investment. It was agreed that there would be a trust established, known as Commercial Property Trust No.1 (“CPT1”) for which the entity known as Elmach Pty Ltd is trustee, and that there would be 100 units issued. I was to take a 10% issue of the units, and I advised that I would have an entity solely owned by me to take to those units. Josunda Pty Ltd (“Josunda”) is a shelf company of which I am the sole director and shareholder. That company took 10 units at the establishment of the trust.

[46] It was not decided prior to settlement which entity of the Sundell Group would acquire the other 90 units. It was agreed that some entity or person other than me or my company, would acquire those units.

[47] As the date of settlement of the acquisition drew closer, due to the complexity of the transaction involving approximately 80 separate properties across a number of states (the majority of which being in Queensland), a decision as to who or which entity would take the other 90 units was not made by my father. That was an omission, not a positive decision, due to pressure of the work involved and being ignorant of the consequences of deferring the decision.

[48] On 21 December 1998 Clayton Utz settled the Unit Trust so that CPT1 had 1 unit issued to me. On 22 December 1998 Clayton Utz issued 90 units in the trust to me and 10 units to my company Josunda. When they did this they then cancelled the first unit issued to keep the units issued to only 100 units. I had power of attorney as trustee for Elmach Pty Ltd for the purposes of settlement and was the only officer of the company in attendance as witnessed on the document. My father was not in attendance on the day of settlement with me, although he did execute various documents as a counterpart to effect settlement. Hereunto annexed and marked with the letter “I(2)” a true copy of the offer of facility from Adelaide Bank dated 22 December 1998 addressed to me. This document was forwarded to Clayton Utz by Adelaide Bank on 22 December 1998 by facsimile and was executed by me and returned by Clayton Utz on 23 December 1998. Given that my father had not decided which entity would hold the remaining 90 units, I agreed to ‘warehouse’ the units in my name personally but at all times the agreement between my father and I was that I held them on trust for an entity nominated by my father and my uncle as controllers of the Sundell Group. Clearly I was not going to be the owner of the units as 100% of the moneys borrowed to complete the settlement was arranged by Three Crowns Investments on behalf of the Sundell Group. I was also aware that there would have been a personal income tax liability of approximately $5 million accruing over a period of 15 years, which could not be serviced from the rent derived from assets due to the various bank covenants and the debt repayment schedule requiring in excess of 90% of the rent received to be applied to loan repayments, and which otherwise prevented the purchaser from selling the properties, as well as obligations under the lease agreement to Elders. Erroneously, we thought that the value of the units would be only $90 and that there would be no tax or stamp duty consequences of issuing the units in my name and later transferring them to another person or entity. Had I known of those consequences, I would have ensured that the Sundell Group had made a decision as to the owner of the remaining units prior to settlement. No other officer other than me was able to attend to the matter at the closing stages of the transaction.

…” (Emphasis added)

75. Jim gave a similar version of events in the Family Court proceedings. He deposed in an affidavit sworn on 22 September 2011:

“[28] It was my intention, at the time of the transaction, that the property asset secured in the Elders deal would be held for the benefit of me or Gunnar or both of us. It did not matter whether one or both of us was formally recorded as being the owner of the assets, but that the assets be held for the benefit of the Sundell family. We discussed this at our initial meeting in 1998 to consider Kim’s original proposal anytime subsequent to that. It was on this basis that I allowed other entities within the Sundell Group to advance funds to allow the transaction to complete.” (Emphasis added)

76. In his Family Court Proceedings affidavit sworn 25 September 2011, Mr Wooldridge said:

“[27] The fact that Kim remains in the register of unitholders for CPT1, the holder of 90 units in the trust is not significant as there has always been evidenced to me an unwavering level of trust existent between Kim, Jim and Gunnar and I knew it not to be a true reflection of the intention, expressed to me on numerous occasions in conversations I have had with James and Gunnar over the years, that Kim does not own all of the beneficial interest in CPT1 and CPT2. Furthermore I was fully aware that significant tax consequences would attach to the transfer of any significant interest between members of the Sundell family when there was no compulsion or necessity to do so.

[28] Every 2-3 years I would review the then current legislative provisions impacting upon the restructuring of the CPT1 and CPT2 arrangements. Specifically, during 2006 and 2007, advice was sought from the Sundell Group’s then tax advisors, Pricewaterhouse Coopers (PWC), as well as Allan Blaikie, a partner at Clayton Utz as to whether there was any tax-effective way to transfer ownership of Kim’s units in CPT1 and CPT2 out of his name to James, Gunnar or other beneficiaries within the family. James did not attend any of these meetings but I informed him of the events of each meeting I attended.

[31] In or about May 2007, Kim and I met with Allan Blaikie, a taxation partner at Clayton Utz to obtain his advice in relation to a restructure of CPT1 and CPT2 which we were considering. The effect of that restructure was that a new discretionary trust would be created, the beneficiaries of which would be Sundell family members and a company which would be wholly owned by the trustee of the new trust. In addition, CPT1 and CPT2 would each create a new class of discretionary units and would each issue one unit to the trustee of the new trust. Mr Blaikie’s advice was that:

a) The proposal should not result in a resettlement of the trust and would not attract capital gains tax;

b) On the basis that the restructure did not involve a dominant purpose of obtaining a tax benefit, the tax avoidance provisions in Part IVA of the Income Tax Assessment Act 1936 (Cth) would not apply.

[32] Notwithstanding Mr Blaikie’s advice, I considered that there was still a risk, even if minimal that Part IVA of the Income Tax Assessment Act 1936 (Cth) may apply to the restructure. I said this to Kim, Gunnar and James shortly after our meeting with Mr Blaikie and they indicated to me that they would prefer to avoid the risk of incurring any unnecessary tax liability, particularly in circumstances where everyone – that is Kim, Gunnar, James and I – knew that not all of the assets of CPT1 and CPT2 were his

….

[35] There are two key reasons why Kim’s units in CPT1 and CPT2 have not been transferred:

a) the stamp duty which would attract to such a transfer would be significant;

b) the fact that Kim is recorded as holding 90 units in the trusts is not of great concern to James (nor was it of great concern to Gunnar when he was alive) given that this business is run by a family whose members implicitly trust each other in relation to all matters.

…

[37] It was always intended that Gunnar and Jim would beneficially own or control all assets of not only Elmach as trustee for CPT1 and CPT2 but the entire Sundell Group.” (Emphasis added)

77. Between late December 1998 and January 1999, Kim presented an investment opportunity to Jim and Gunnar for the Sundell Group to purchase leases in a shopping centre in Noarlunga (South Australia). This became the CPT2 Transaction.

78. On 29 January 1999, the CPT2 Unit Trust was settled. 90 ordinary units were issued to Kim and 10 ordinary units were issued to Josunda. The CPT2 Transaction completed on 5 February 1999. The purchase price for the CPT2 Transaction was $4,481,130.70. Of that amount, $3,189,879.69 was borrowed from either Adelaide Bank or Westpac. The balance was funded by TCI.

79. In his Family Court proceedings affidavit sworn on 25 September 2011, Kim deposed that the arrangements for the CPT2 Transaction effectively ‘mirrored’ the CPT1 Transaction:

“[50] A further opportunity arose to purchase two separate ground leases from the one vendor for a shopping centre in Noarlunga in South Australia. This was a much less complex investment and significantly smaller than the Elders acquisition. Again, we had a meeting where I, as the Chief Investment Officer of the Sundell Group, presented the investment opportunity to my father and my uncle. I do not recall whether David Wooldridge was present at that meeting, but I am aware that he received information about the investment from me and also from my father and probably my uncle. From that meeting, we decided that we would establish another trust as we could not use CPT1 due to the covenants placed over the assets in CPT1 by the bank. We decided to set up an entirely separate trust which we described as Commercial Property Trust No.2 (“CPT2”) for which Elmach Pty Ltd would also be the trustee. The precedents for the transactions were effectively mirrored from those precedents used for the purposes of the CPT1 transactions.

[51] In about January 1999, we lodged the tender with the vendor, and were successful in the tender. Again, Three Crowns Investments was to organise the finance for the acquisition. Again, I was to receive a ‘spotter’s fee’ of 10% which was again achieved by my company Josunda taking 10 units of the 100 units issued. The settlement of the transaction was on 5 February 1999. Again, we did not make a decision as to who was to take the remaining units issued. Adelaide bank was the primary mortgage holder and Three Crowns Investments raised the balance of the purchase price internally within the Sundell Group.

[52] Within 6 weeks we had settled two major transactions involving approximately $16,000,000. After completing these transactions, I then had review meetings on about early February 1999 with the Sundell Group’s legal advisors, Clayton Utz. I attended these meetings with David Wooldridge. On my agenda for advice was the decision as to whom the units, which had been issued to me personally on trust for an entity not yet identified were to be issued or otherwise transferred. Annexed hereto and marked “J” is a true copy of notes taken from those review meetings. It was at those meetings that I became aware that any transfer of the 90 units would incur stamp duty and/or capital gains tax liabilities. It was a surprise to me that stamp duty and capital gains tax would be levied on the basis of the value of the underlying assets rather than being levied on the face value of the units which was only $90. This seemed to me to be absurd, as I never owned the units beneficially and the intention was simply to defer the decision as to what entity within the Sundell Group would hold the units. We had already paid the stamp duty on the acquisition. The advice was that if we transferred the units from my name into the name of another entity, we would pay 90% of the stamp duty again within one month. In addition I was intimidated that I could personally be exposed to an assessment of capital gains tax arising from holding these units. At the meeting we discussed the stamp duty implications of transferring the property, the granting of an option (which had little if any effect) and we also discussed whether there were stamp duty implications arising from ‘warehousing’ of the units by me on trust for an entity yet to be agreed upon.” (Emphasis added)

80. There can be no doubt that a motivation for the CPT1 and CPT2 transactions was to benefit the Sundell family.

81. On 24 September 1999, Mr Peter Muldoon, the Human Resources Manager of the Sundell Group, represented to Westpac that Kim’s salary with TCI for the three previous years was packaged at $250,000 annually.

“Dear David,

I refer to our conversation today and confirm that Mr Kim Sundell’s salary for the past three years is as follows:

Base gross salary: $100,000 per annum

Two(2) fully maintained motor vehicles: $30,000

Bonus payments: $120,000

Total Salary: $250,000”

82. In 2001, Kim became a non-executive director of GBST Holdings Ltd. Crown Financial Pty Ltd, acquired a significant interest in GBST and Kim became the Sundell Group’s representative on the board.

83. In December 2002, Mr Wooldridge prepared a document headed “Group Business Review December 2002”. That document included references to Elmach:

“Executive Summary

●   The group including property trusts and Gunns Gully generated a consolidated net loss for the month of $(9)k. Elmach contributed a $31k profit towards this.

●   Cash movement for the month was a net outflow of $142k mainly due to the purchase of shares $194k; personal tax return payments of $735k and Flowcom costs. Elmach cashflow was an outgoing of $350k predominantly due to loan repayments. To date the Bundaberg property has not been refinanced.

●   Projected cashflow over next 6 months now positive for the group although excess funds will be used for the Flowcom deal. The projected cashflow does not include the Flowcom deal or any refinancing of the GBST loan. Elmach is expected to bring in a cash inflow of $152k and this will be used to pay personal tax in relation to the 2002 returns which will be lodged in February 2003.

●   The key issues for the month were:

o   Further purchase of Reckon Shares.

o   FlowCom due diligence finalization.

o   GBST CPS 2 shares first payment of $470k made.

o   Mezzanine loan for $472k settled.”

84. Later in that document Mr Wooldridge recorded that, “TITES, Primac [CPT1] & CPT2 were all profitable.”

85. Kim gave evidence that in or about December 2002 he had this conversation with Gunnar in the presence of Jim (the italicised words were admitted only as evidence of Gunnar’s state of mind):

Gunnar: We have the TITES deal and the other great investments. Jim, it’s [referring to the units held in CPT1 and CPT2] yours. The units aren’t really worth anything anyway. If we can transfer them down the track, we can look at it again.

Kim: You’re right. They’re worth less than the stamp duty we’re considering.

86. Kim also gave evidence under cross-examination in the Family Court proceedings that before entering into the option agreement referred to in the next paragraph, Kim told Gunnar about the proposed agreement, to which Gunnar replied, “Great. He’s [referring to Jim] got financial responsibility for it.” Both this and the conversation referred to in the preceding paragraph are uncorroborated such that, conformably with the view I have taken about Kim’s credit, I do not accept that either conversation took place. The same conclusion applies to Kim’s evidence of later statements by Gunnar to the effect that the transfer of the Elmach units was Jim’s “problem”. Furthermore:

1. Kim has not offered any plausible explanation why Gunnar would give away his family’s access to the benefit of CPT1 and CPT2;

2. It is inconsistent with Gunnar’s later file notes (see [89] and [92] below, and noting that my observations at [547] below are premised on the 2002 conversation having occurred, contrary to my conclusion); and

3. Even in its terms, the first alleged conversation leaves open the prospect of reconsidering the matter if the units could be transferred.

87. On 18 December 2002, an Option Agreement was entered into between Kim (as Grantor), Jim (as Grantee) and Elmach as trustee for CPT1 and CPT2 (referred to in the Option Agreement as “the Company”).

“Initial Option Agreement before rectification

Grant of Option:

In consideration for payment of the Option Price by the Grantee to the Grantor, receipt of which the Grantor acknowledges, and provision of ongoing financial support for both the Company and the Grantor, the Grantor grants the Grantee an exclusive option to acquire all of the shares in the Company and Trust [CPT1 and CPT2 earlier defined as “Trusts”] held by the Grantor on the date of this agreement.

2. Definitions and Terms

Assignment: This Option Agreement shall bind and benefit the parties’ successors and assigns. Neither party may assign rights under this Option Agreement without the prior written consent of the other party.

Entire Agreement: This Option Agreement contains the entire agreement of the parties with respect to the transaction described in this Option Agreement, and no prior or simultaneous oral or other written representations or promises shall be a part of this Agreement or otherwise effective. This Option Agreement may not be amended or released, in whole or in part, except by a document signed by both parties.

Exercise of the Option: The grantee may exercise its option at anytime prior to expiration of the Term by giving written notice signed by the Grantee to the Grantor at Level 2, 53 Walker Street North Sydney 2060.

If the Grantee fails to exercise its option properly before expiration of the Term this Option Agreement shall terminate and the Grantor may retain the Option Price and shall have no further obligation to the Grantee.

Indemnity: The Grantee shall indemnify, hold harmless, and defend Grantor and its trustees, officers, employees and agents against any and all allegations and actions for death, illness, personal injury property damage, and improper business practices arising of the Optioned Rights [undefined].

Interpretation: The headings used in this Option Agreement are provided for convenience of reference only and shall not be used to interpret the provisions of this Option Agreement.

Option Price: Means that amount which the Grantor and the Grantee agree shall be paid for the Optioned Rights within the Term. The Option Price shall be $90 representing 90 of the 100 issued shares in the Company and units of the Trusts.

Term: Means that period of time, which Grantor and Grantee agree shall allow Grantee to exercise these rights. The Term shall be till 23^rd December 2013

The Company will do all things necessary to give effect to this agreement.

…”

88. On 10 July 2004, Shara lodged a loan application with Westpac for the purchase of a property at XX Street, Mosman. Kim was listed as the guarantor of the loan and the loan application represented to Westpac that the units in Elmach had a nett value of $7,350,000 and were an investment of his. Kim also represented to Westpac that his income, which it is assumed was to be expressed per annum, was either $600,000 (or possibly $800,000 – the handwriting is unclear).

89. A file note by Gunnar records a conversation between him and Mr Wooldridge on 15 September 2004. It begins with the words "Long Discussion with DW". Point 4 of that file note records "Kim holds 100 units in "Elder" trust (as trustee) half of value !! Put in 50/50 Jim & G Family Trust."

90. For the financial year ending 30 June 2004, Kim received an annual salary package of $199,075 from GBST. On 22 December 2004, Kim sent an email to Ms Francis requesting his Sundell gross salary be increased to $200,000.

91. On 1 March 2005, the New Jim Trust and a new trust for Gunnar’s family were settled. For both trusts, Mr Wooldridge was the settlor and Bogasi was the trustee. Both trusts were in identical terms, which relevantly included:

“1 Definitions and Interpretation

1.1   Definitions

“Beneficiary” means any of the following:

a) any member of the Primary Individual’s Family

b) any company, partnership or trust (“entity”) in respect of which an interposed entity election, enabling the entity to be treated as a member of the Primary Individual’s family group for the purpose of the Tax Act, is in force;

c) Any other person who is a member of the Primary Individual’s family group for the purposes of the Tax Act.

d)

(i) any company, partnership, or trust (“entity”) where:

A. the Primary Individual;

B. one or more members of the Primary Individual’s Family.

C. the trustee of another family trust in respect of which the Primary Individual is the primary individual for the purposes of the Tax Act; or

D. Any combination of persons referred to in subparagraph A, B and C,

have fixed entitlements directly or indirectly for their own benefit to all of the income and capital of the entity.

(ii) any fund, authority, or institution in Australia which for the purposes of the Tax Act:

A. May receive gifts which are tax deductible; and

B. Is a member of the Primary Individual’s family group pursuant to the Tax Act;

(iii) Any institution, hospital trustee, society, association, club or fund which for the purposes of the Tax Act:

A. is exempt from income tax; and

B. is a member of the primary Individual’s family group pursuant to the Tax Act;

excluding any entity, fund, authority, institution, trustee or other party named in subparagraphs (i)-(iii) that is:

1) A trustee or former trustee of the Trust (other than in the capacity as trustee of another trust); or

2) An entity in the capacity as trustee of any other trust to the extent that a distribution to that trustee would infringe the rule against perpetuities.

e) any other person or class of persons:

(i) appointed during the life of the Primary Individual by notice given by the Primary individual to the Trustee; and thereafter

(ii) appointed by the Trustee by notation

before the Vesting Date but no appointment shall be made of:

(iii) the Settlor;

(iv) the Trustee or any former of the Trust (other than in his or her capacity as trustee of another trust); or

(v) any person in his or her capacity as trustee of any other trust to the extent that a distribution to tat trustee would infringe the rule against perpetuities.

Provided that no person or class of persons will be, become, remain or be appointed as a Beneficiary for the purposes of this deed if and while that person or class of persons is, becomes, or remains and Excluded Person.

“Child”, “Children”, “Grandchildren” and “Great-grandchildren” include stepchildren, illegitimate children and legally adopted children whether adopted before or after the execution of this Deed.

…

“Family” in relation to the Primary Individual means:

a) The Primary Individual and his or her Spouse [which is elsewhere defined to include a de facto partner].

b) The parents, grandparents, children, grandchildren, brothers, sisters, nephews, and nieces of:

(i) the Primary Individual; and

(ii) The Primary Individual’s Spouse; and

c) The Spouses of all persons mentioned in paragraph (b).

…

“Primary Individual” means [Jim, in relation to the New Trust; Gunnar in relation to the TRGS Trust]

…

3 Income of the trust fund

3.1 Distributable Income

Priority to Tax Net Income

a) Subject to paragraph (b) the Distributable Income of the Trust Fund in respect of an Accounting Period for all purposes of this Deed in relation to that Accounting Period is the Tax Net Income for that Accounting period.

b) Notwithstanding the foregoing, the Trustee may, in the absolute discretion of the Trustee, and if necessary, disregarding any legislative provisions on the consideration for an assignment of securities of a body corporate, determine the amount of distributable income of the Trust Fund in respect of an Accounting Period, and in that event the Distributable Income of the Trust Fund in respect of that Accounting Period will be the amount so determined by the Trustee (Whether that amount is greater or less than the Tax Net Income for that Accounting Period). Any determination for this purpose may be made expressly by implication from the actions of the Trustee.”

“I DIRECT my Trustees to pay out of my estate all of my just debts and testamentary expenses including but not limited to:

a.   All amounts which as at the date of my death are due and owing by me and or by my wife JANETTE TERESE SUNDELL and/or any of my children JOAKIM JAMES SUNDELL, BRETT JULIAN SUNDELL and ANNE-KATRINE SUNDELL to any of which BOGASI PTY LTD A.C.N. 001 169 259 is the trustee; and

b.   All amounts secured by mortgage over:

i.   My farming property at Booral, new South Wales;

ii.   The principal residences of my son BRETT JULIAN SUNDELL and of my daughter ANNE-KATRINE SUNDELL respectively.”

1073. It is common ground between the parties that at the time of Jim’s death, each family member was indebted to Bogasi in these amounts (in Kim’s case possibly subject to the 2022 proceedings):

1. Janette: $2,547,982.43;

2. Anne-Katrine: $671,876.71;

3. Kim: $15,377,038.79; and

4. Brett: $1,823,60515.

Kim’s submissions:

1074. Kim accepts that a strict reading of cl 4, which uses the language “all of my just debts and testamentary expenses” (emphasis added), would apply only to debts that were Jim’s personal debts. However, Kim submits that cl 4 must be read as a whole. Adopting such an approach, Kim submits that sub‑cl 4(a) demonstrates that Jim wanted the debts owed to Bogasi by Janette, Kim, Brett and Anne-Katrine to be discharged from his estate. Kim also contends that sub-cl 4(b) intends to discharge “all amounts” secured by mortgages that were granted to third parties in respect of properties which were not Jim’s personal properties.

1075. Kim submits that the inconsistency between the chapeau to cl 4 and the sub‑clauses is resolved by the concluding words “including but not limited to” because that indicates a non-exhaustive intention on behalf of Jim to waive the debts of certain family members. Kim construes the effect of sub-clauses (a) and (b) is to signify that those debts are “Jim’s” debts for the purposes of cl 4.

1076. Kim rejects the submission by Bogasi (see [1080] below) that the words in sub-cl (a) are illustrative and do not qualify the meaning of “my just debts and expenses” (emphasis added) because that interpretation subverts the testator’s clear intention. Kim submits that sub-cl (a) cannot be both ‘merely illustrative’ and have no concurrent operative effect. This construction is contended to render sub-cl 4(a) otiose.

1077. While Kim’s submissions record that there is nothing unorthodox about a testator discharging the debts of third parties, it is accepted that such a discharge cannot have the effect that a third-party debt cannot be treated as a debt of the deceased. This proposition was outlined by the Privy Council in Commissioner of Stamp Duties (NSW) v Bone (1976) 135 CLR 223, 229:

“By “giving” or “forgiving” or “releasing” by will a debt to the debtor a testator, in their Lordships' opinion, is but leaving a legacy of the amount of the debt: for it is clear that by such purported release the testator cannot remove this asset from the claims of creditors of the estate and the requirements of funeral and administration expenses: the testator can give to his benefaction no other status than that of a specific legacy of the value of the debt.”

1078. Therefore, the effect of Kim’s construction of sub-cl 4(a) is that the “discharge” of the debts should be construed as a specific legacy to each of those third parties of the value of their respective debts at the date of Jim’s death. This would require the Administrator to pay a legacy to the trusts on behalf of Janette, Kim, Brett or Anne-Katrine which is equivalent to the debt they owe.

Bogasi’s submissions

1079. Bogasi’s submission is that cl 4 of the will is not capable of converting the debt due to Bogasi from Janet, Kim, Brett and Anne-Katrine into a debt owing by the estate to it and is merely a unilateral statement of a person incapable of binding Bogasi.

1080. Bogasi’s primary interpretation of cl 4 is that the words in sub-cl (a) are merely illustrative and do not otherwise qualify the plain meaning of the expression “my just debts and testamentary expenses.” On this construction, the executors are not required to pay out from the estate debts which are due by any of the family members listed in cl 4.

1081. In the alternative, Bogasi submits that pursuant to cl 4 Jim intended to indicate which debts should be paid in priority to the specific devises found in clauses 5 to 7 and the gift of the residue in cl 8 of the will. Bogasi further submits that by impermissibly aggregating the debts owed by others to Bogasi with his own debts, Jim signalled that those amounts be paid to Bogasi in priority to any other payment.

1082. Bogasi relies on Gilbert v Fitzpatrick (1927) 39 CLR 151 in support of the proposition that cl 4 is merely a direction to the Administrator about how Jim’s debts and testamentary expenses should be paid. In that case, a testator directed that one of the trustees of the will should be paid out of the estate ‘the debt or sum of money owing by [the testator] to him the amount of which [the trustee] will disclose to [the other trustees].” Knox CJ and Rich J (at 155) concluded that the words of the direction were not sufficient to constitute a legacy but was a direction that the creditor trustee be paid that amount which the creditor trustee disclosed to the other trustees. In other words, the disclosure was conclusive of the amount owed.

1083. Bogasi submits that Kim’s reliance on Bone is irrelevant because that case considered whether a debt owing to the estate itself could be extinguished, whereas in this case Jim is purporting to discharge debts of third parties owing to another third party. The debt being owed to the estate was submitted to be a key aspect of Lord Russell of Killowen’s reasoning in Bone at 229 where he held that in substance the debt remained outstanding as an asset of the estate “but… the debtor is in a position to deny an obligation to pay it to the extent that the specific legacy is effective as such.”

1084. In reply, Kim submits that the question is not whether cl 4 of the will converts a debt owed to Bogasi by third parties into a debt owed by the estate to Bogasi but is rather whether that clause discharges the debts owed by third parties to Bogasi. Mr Chapple SC contended on behalf of Kim that Bogasi’s reliance on Gilbert was misconceived in circumstances where that case concerned whether a direction contained in a will that a debt owed by a testator be paid out of the estate does not convert that debt into a legacy but is merely an acknowledgment of indebtedness. Gilbert was said to be inapplicable to this case, which does not concern whether a debt is owed by a testator, but whether the testator (Jim) has released or forgiven a debt of a third party.

Brett’s submissions

1085. Brett concurs with Kim’s position that cl 4 should be construed as a legacy to each beneficiary in the amount equivalent to the amount of their debt at the date of the deceased’s death in accordance with prayer 1(a) of the Notice of Motion. Brett disputes Bogasi’s construction of cl 4 and submits that clause should not be construed as giving those legacies a priority over the specific legacies devised in clauses 5 and 6.

1086. Three reasons were submitted on behalf of Brett for why Kim’s construction of cl 4 should be preferred to Bogasi’s.

1087. First, Bogasi’s construction is contended to be inconsistent with s 46C of the Probate and Administration Act 1898 (NSW) (PAA Act) which addresses how ‘solvent’ and ‘insolvent’ estates should be administered.

S 46C Administration of assets

(1)  Where the estate of a deceased person is insolvent the deceased person’s real and personal estate shall, subject to the provisions of the Bankruptcy Act 1966 of the Parliament of the Commonwealth, be administered in accordance with the rules set out in Part 1 of the Third Schedule.

(2)  Where the estate of a deceased person is solvent the deceased person’s real and personal estate shall, subject to the provisions of any Act as to charges on property of the deceased and to the provisions, if any, contained in the deceased person’s will, be applicable towards the discharge of the funeral, testamentary, and administrative expenses, debts, and liabilities, payable thereout in the order mentioned in Part 2 of the Third Schedule.

(3)  In this section—

deceased person means a person dying after the commencement of the Conveyancing (Amendment) Act 1930.

solvent means sufficient and insolvent means insufficient for the payment in full of the debts and liabilities of the deceased.

1088. Part 1 of the Third Schedule applies to insolvent estates. Funeral, testamentary and administration expenses have priority. Part 2 of the Third Schedule applies to solvent estates and outlines the order in which assets should be applied:

1   Assets undisposed of by will, subject to the retention thereout of a fund sufficient to meet any pecuniary legacies.

2   Assets not specifically disposed of by will but included (either by a specific or general description) in a residuary gift, subject to the retention out of such property of a fund sufficient to meet any pecuniary legacies, so far as not provided for as aforesaid.

3   Assets specifically appropriated or disposed of by will (either by a specific or general description) for the payment of debts.

4   Assets charged with or disposed of by will (either by a specific or general description) subject to a charge for the payment of debts.

5   The fund, if any, retained to meet pecuniary legacies.

6   Assets specifically disposed of by will, rateably according to value.

1089. Contrary to Bogasi’s submission (which prioritises cl 4 over the gifts of real estate in clauses 5 and 6 of the will), Part 2 of the Third Schedule of the PPA Act stipulates that the fund retained to meet specific legacies is applied towards payments of debts before the specific gifts of real estate in clauses 5 and 6 of the will, subject to contrary intention appearing in the will.

1090. Second, the inventory of property annexed to the Grant of Probate of the will is said to confirm that the statutory order of assets should apply. At the date of his death, the deceased had an interest in a farming property at Booral which he intended to give to Brett; had a significant credit to the Old Jim Trust loan account totalling $11,225,423 and had other assets with an estimated value of $110,139.30.

1091. It was submitted on behalf of Brett that clear and conclusive proof is required to establish a priority outside of the statutory order: Re Leech; Milne v Daubney [1923] 1 Ch 161. The words of clauses 4, 5 and 6 are submitted to suggest they are independent gifts and contain no words which indicate that Jim considered there would be a deficiency of assets to meet his debts and other gifts. They also contain no words of priority.

1092. Brett’s position is that the will creates a clear testamentary scheme which requires the debts of the beneficiaries named in cl 4 to any trust of which Bogasi is trustee to be repaid by book entry against his credit loan account to that trust. In reply, Bogasi contends there is nothing in the words of the will that requires Bogasi to take, by way of repayment, a credit of the kind alleged. This construction is said to be unreasonable on the basis that it is a construction which requires Bogasi’s consent to the proposed accounting arrangements which arise from that construction.

1093. Third, if it is the case that the debts owed by the beneficiaries are too large or Jim’s credit loan account is too small then Part 2 of the Third Schedule of PAA Act requires the legacies to abate pro rata before the specific gift of the Booral farm cl 6.

Anne-Katrine’s submissions

1094. Anne-Katrine agrees with the construction of sub-cl 4(a) proffered by Bogasi including its primary position that the words in sub-cl (a) are merely illustrative and do not otherwise qualify the plain meaning of the expression “my just debts and testamentary expenses” and the alternative construction that cl 4 is intended to indicate which debts should be paid in priority to the specific devises found in clauses 5 to 7 and the gift of the residue in cl 8 of the will.

1095. However, there are two qualifications which Anne-Katrine makes to Bogasi’s submissions. The first qualification is that notwithstanding that an entry in the Sundell Group accounts may be ostensibly marked as a credit against Anne-Katrine’s name, whether it is properly treated as an “amount due and owing” by Anne-Katrine or Jim for the purposes of sub-cl 4(a) depends on the proper characterisation of the entry underlying the transaction. This submission makes clear that whilst some debts are marked as being Anne-Katrine’s debts, she submits they should be treated as repayable by Jim.

1096. The second qualification is that Bogasi’s construction should not be taken to assume that an amount that may be characterised for the purposes of sub-cl 4(b) of the will as an “amount secured by mortgage over… the principal residence…of Anne-Katrine” is presumed or deemed to be a debt due and payable by Anne-Katrine and not Jim.

1097. Anne-Katrine disputes Kim’s written submission that “the deceased considered the debts identified in sub-clauses (a) and (b) to be “his” debts in that he assumed liability for their discharge” as it assumes that any “amount secured by mortgage” in respect of the Beecroft property is a debt of Anne‑Katrine. It was again submitted on her behalf that whether a particular amount for the purposes of sub-cl 4(b) of the will is a debt of Jim, Anne-Katrine or another person or entity and is an “amount secured by mortgage” (whether registered, non-registered or equitable) is a matter resolved on the proper characterisation of the amount underlying the security arrangements.

1098. Anne-Katrine further submits that the differences in the language used in sub-clauses (a) and 4(b) provide the Court with a further basis to determine that Jim intended to hold as one of his “just debts” any debts incurred in the finance of the purchase of Anne-Katrine’s home. This is because sub-cl 4(a) is contended explicitly to define debts as being due and owing by Jim and other beneficiaries. However, sub-cl 4(b) merely states “all amounts secured by mortgage over… the principal residences of my son Brett Julian Sundell and of my daughter Anne-Katrine Sundell….”. The use of the phrase “all amounts secured by mortgage” is ambiguous as to who owes the debts associated with the mortgage. This indeterminate language is submitted to support Anne-Katrine’s contention that cl 4 of the will shows Jim intended to assume responsibility for all financial arrangements relating to the Beecroft property, including repayment of any amount the Court may determine remains repayable to Elmach.

1099. In reply, Bogasi submits that the Court should not be invited to determine the characterisation of the accounting entries in Bogasi’s financial records.

Disposition

1100. There can be no real doubt that, as a general proposition, Jim wanted to leave his children debt free in relation to the family trusts and, as to Brett and Anne-Katrine, their principal residences. As will be apparent from the Court’s reasoning on the question of set-off, the Court accepts Kim’s submission that on its proper construction sub-cl 4(a) brings amounts owed by Janette, Kim, Brett and Anne-Katrine to Bogasi as trustee by a process akin to inclusive definition within the class of Jim’s “just debts”. However, for the reasons set out in [1126] below, it is inapt to describe these as legacies: they are payments the Administrator is directed to make out of the estate. However, they are not debts of the estate. This is because Jim cannot unilaterally convert those amounts into debts owed by the estate. Accordingly, the Court will make a declaration in accordance with paragraph 1(a) of Kim’s construction motion, but substitute “that amount” for the words “a legacy”.

1101. Insofar as there is any amount in the accounts of the trusts standing to Jim’s credit, in my view, it is open to the Administrator as creditor to direct Bogasi that those amounts be applied (pro rata if there is insufficient) to meet those specific amounts. However, that conclusion is not a matter of construction (contrary to Brett’s submission), because the will provides no more than the payments are to be made “out of my estate”.

1102. Given the Court’s conclusions in relation to Anne-Katrine’s claim, it is not necessary to resolve her submissions concerning the characterisation of amounts expended in the acquisition of the Beecroft property being debts of Jim rather than of her. Sub-clause 4(b) of the will is not engaged in relation to the Beecroft property because there was no amount secured by mortgage over it as at the date of Jim’s death.

Second Construction Motion

1103. The second construction motion was filed by the Administrator on 17 October 2024. That motion sought for the Court to determine the following issues:

“1.   Determination whether, on a true construction of clause 4(b)(ii) of the will of the late James Ralph Sundell dated 9 November 2010, and to the extent that an amount is or was at the date of death of the deceased secured by mortgage over the principal residence of Brett Julian Sundell:

a.   The administrator is to pay to Brett Julian Sundell which is equivalent to the amount secured by mortgage on the principal place of residence of Brett Julian Sundell

i.   As at the date of death of the deceased or

ii.   As at the date of payment; or

b.   the administrator is to treat the amount secured by mortgage on the principal place of residence of Brett Julian Sundell

i.   As at the date of death of the deceased; or

ii.   From time to time

as a debt of the deceased’s estate

c.   Clause 4(b)(ii) is void for uncertainty.

2.   Determination whether, in the event that the administrator is required to pay a legacy pursuant to clause 4(a) or 4(b)(ii) of the will of the deceased dated 9 November 2010:

a.   Any such legacies are to be paid in priority to all other gifts; or

b.   Any such legacies are specific gifts such that they adeem; or

c.   Any such legacies are general legacies such that they abate rateably.

3.   In the event that the administrator is required to pay a debt pursuant to clause 4(a) or 4(b)(ii) of the will of the deceased dated 9 November 2010, and in the event that the assets of the estate are not sufficient to discharge all estate liabilities and expenses, or in the event that the estate is for any other reason partially insolvent:

a.   Whether the administrator would be justified in applying all assets of the estate, including the deceased’s interest in the property at XXX Road, Booral, towards payment of estate liabilities, including any debts payable pursuant to clauses 4(a) and 4(b)(ii); and

b.   Whether any debts payable pursuant to clauses 4(a) or 4(b)(ii) are to be paid rateably according to value.

4.   Such further or other order as the Court thinks fit.

5.   Costs.”

Brett’s submissions

Submissions re Prayer 1

1104. Prayer 1 of the Administrator’s motion seeks a determination whether sub-cl 4(b)(ii) of Jim’s will requires the Administrator to pay a legacy to Brett which is equivalent to the amount secured by mortgage on his principal place of residence as at the date of death or at the date of payment, as a legacy or a debt or if the gift is void for uncertainty.

1105. Section 30 of the Succession Act 2006 (NSW) provides that subject to the contrary intention appearing in the will “a will takes effect, with respect to the property disposed of by the will, as if it had been executed immediately before the death of the testator.” Section 3 defines “property” as including “any valuable benefit”.

1106. Brett accepts that s 30 of the Succession Act is predominantly used for the purpose of determining whether a specific gift has adeemed, or the quantity of a generic gift, but submits that the definition of “property” in section 3 is broad enough to include a general legacy. Applying s 30 of the Succession Act, sub-cl 4(b)(ii) would require the Administrator to pay to Brett a legacy which is equivalent to the amount secured by mortgage at the date of death of the deceased. There is no evidence of intention in the will to displace the application of s 30.

1104. For the reasons outlined at [1085] to [1093] above, Brett submits that the gift in sub-cl 4(b)(ii) of the Will should be treated as a legacy and there is nothing to indicate an intention to confer a priority on payment of those legacies.

1105. He also contends that the gift cannot be void for uncertainty. There is certainty as to object (Brett) and the subject matter of the legacy (being the amount secured by mortgage over Brett’s principal place of residence as at the date of Jim’s death). The amount owed would be revealed by conducting a real property search to determine the holder of any mortgage security and an enquiry with that entity would reveal the amount owed under the mortgage.

Submissions re Prayer 2

1109. Prayer 2 of the Administrator’s motion seeks a determination as to whether the legacies in sub-cl 4(a) or 4(b)(ii) are to be paid in priority to other gifts or whether they are specific gifts which adeem or general legacies which abate rateably.

1110. Brett’s submissions rely on the judgment of Dixon CJ in McBride v Hudson (1962) 107 CLR 604, 617 as authority for the distinction between general and specific gifts. Dixon CJ (Taylor and Windeyer JJ agreeing) held:

"A general legacy has no reference to the actual state of the testator's property. It is a gift of something which, in the event of the testator leaving sufficient assets, must be raised by his executors out of his general personal estate. . .. Whether or not anything forms part of the testator's personal estate is a pure question of fact, but whether or not it has been separated from the personal estate" (scil. so as to be specific) "depends upon the construction of the will which is a question of mixed law and fact or a pure question of law. Provided it has been separated, anything which was the property of the testator at the time of his death is capable of being specifically bequeathed and thus becoming a specific legacy.": Williams on Wills (1952) vol. 1, p. 148. What marks a bequest as specific is that its subject-matter is designated as something that does at the time of the will, or shall at the time of the death of the testator, form an identifiable part of his property and is, so to speak, distinguished by the intention of the testator as ascertained from his will to separate it in his disposition from the rest of his property for the purpose of bequeathing it as the distinct subject of a testamentary disposition.”

1111. Whether a gift is general or specific determines from which part of the deceased’s estate the gift must be made and how they must be paid. In C Ford, Theobold on Wills (19^th ed 2021 Sweet & Maxwell) at [21-001]-[21-002], the following points are made:

1. A general legacy is to be provided out of the testator’s general estate;

2. A specific legacy is a gift of a distinct part of the testator’s property;

3. A specific legacy does not abate until the general legacies have been exhausted; and

4. For a legacy to be specific there must be shown the testator had an intention to sever the legacy from the rest of the estate.

1112. Brett submits that the legacies in sub-clauses 4(a) and 4(b)(ii) of the will are general legacies which the executors would ordinarily raise out of the testator’s general personal estate. There is nothing to suggest in the will viewed as a whole that the testator intended sub-clauses 4(a) and 4(b)(ii) of the will to separate assets from his personal estate for the purpose of meeting those gifts which would have the effect the gift is a specific legacy.

1113. Should the assets of the estate be insufficient to meet them, it is submitted that the gifts must abate rateably and be applied before the specific gift of Jim’s interest in the farm at Booral in cl 6 of the will.

Submissions re Prayer 3

1114. Prayer 3 of the Administrator’s motion seeks a determination whether the Administrator would be justified in applying all assets of the estate, including Jim’s interest in the Booral property, towards payment of estate liabilities, including any debts payable pursuant to sub-clauses 4(a) and 4(b)(ii); and whether any debts payable pursuant to sub-clauses 4(a) or 4(b)(ii) are to be paid rateably according to value.

1115. Brett submits that the Administrator should apply the assets of Jim’s estate in accordance with the statutory order set out in Part 2 of the Third Schedule in the PAA if the estate is solvent. The general legacies outlined in sub-clauses 4(a) and 4(b)(i) of the will are contended to abate rateably before the specific gift of the Booral property to Brett.

1116. Brett concedes that if Jim’s estate is insolvent he could not submit against orders being made permitting the Administrator to sell Jim’s interest in the Booral property. However, such an order is said to be unnecessary and premature at this stage given the current uncertainty as to the estate’s balance sheet.

Disposition

1117. It is convenient to deal with the overall construction of cl 4 at this point.

1118. There is no dispute about the construction of wills, in particular that the will is to be considered as a whole and words are to be given their natural meaning (unless they have a technical meaning which is not rebutted by context).

1119. The administration of the estate will depend upon whether it is solvent or insolvent. That is not something the Court can yet determine and will depend upon the outcome of these proceedings and any further disputes between the parties.

1120. The structure of the will is clear:

1. There is a specific gift of Jim’s share in Bogasi;

2. Clause 4 deals with Jim’s debts and testamentary expenses including an extension of what falls within that description;

3. There are specific gifts of real property to Ann-Katrine and Brett; and

4. Any residue is to provide income for Janette and on her death to pass to Bogasi.

1121. Clause 4 is in terms a direction to Jim’s trustees to pay out of “my estate” all of “my just debts and testamentary expenses” (emphasis added). Pausing there, there is no particular difficulty or issue about the meaning of this last quoted section, although the “my” is important for what follows. Furthermore, in my respectful opinion, the structure of the will means “estate” refers to all of his assets other than those the subject of the specific legacies.

1122. The “amounts” referred to sub-clauses 4(a) and (b) are to be ascertained as at the date of Jim’s death. In the case of sub-cl 4(a), this is explicitly stated. In the case of sub-cl 4(b), the same conclusion applies either by reason of s 30 of the Succession Act (the will takes effect as if executed immediately before Jim’s death) or (if necessary) as a matter of construction by reference to the express identification of time in sub-cl 4(a).

1123. The references to Jim in sub-cl 4(a) (“owing by me”) and in sub‑cl 4(b) to any amount secured over his Booral property are surplusage, because anything he owed to any trust, or any mortgage he had granted over the Booral property, would be among his just debts. Apart from those two matters, the balance of sub‑clauses 4(a) and (b) concerns the discharge of debts owed by Janette, Brett, Anne-Katrine and Kim to third parties (third party obligations).

1124. Clause 4 is a direction to the Administrator. The language of “including but not limited to” brings those third party obligations as far as the Administrator’s duties are concerned into the category of Jim’s “just debts” but they do not make them in law or equity Jim’s “just debts”. They remain a debt between, for example, Kim and Bogasi. As part of his right to compel due administration, Kim may (assuming the availability of funds) be able to compel the Administrator to pay Bogasi an amount equivalent to his debt to Bogasi (including by the application of any credit to Jim in the books of Bogasi). It is not necessary to decide whether, by analogy with contracts between A and B where A promises B to do something for C, Bogasi might also have a right to compel performance by the Administrator.

1125. None of the foregoing detracts from the conclusion that the relevant debt remains from Kim to Bogasi and is not a debt from Kim to Jim (or his estate). For this reason, the principle affirmed by the advice of the Privy Council in Bone (that releases of a debt owed to the estate equate to a specific legacy in the amount of the debt to the debtor beneficiary) is of limited assistance because the debtor in that case was the beneficiary and not a third party.

1126. Nothing in the language of sub-clauses 4(a) and (b) speaks of a legacy to Kim or the others named. Because it is a direction about how to pay estate assets, the language of “legacy” is in my view inapt. In the only similar case to which the Court was directed (In re Leach; Chatterton v Leach [1948] 1 Ch 232), in which the testator directed the executors to pay her sons debts to third parties out of residue, Vaisey J had no difficulty in characterising the relevant clause as a direction. In the case at bar, what is directed is payment out of the estate of all “amounts … due and owing…to any trust of which Bogasi” is the trustee or, implicitly, amounts owed to the relevant mortgagee. There is no suggestion that those amounts are to be paid to, for example, Kim in relation to debts owed by him. In the absence of express provision otherwise, the direction to “pay” must mean to pay the relevant creditor. In other words, the Administrator will fulfill the direction in cl 4 by paying the relevant amount to, for example, Bogasi on behalf of the relevant debtor of Bogasi such as Kim.

1127. In reaching this conclusion, I have considered two alternative constructions. The first is that cl 4 is a series of specific legacies to the named persons in that amount to discharge their relevant debts. That would be the effect if the debts were owed to Jim (see Bone and In re Wedmore; Wedmore v Wedmore [1907] 2 Ch 277). However, as I have already noted, that is not this case. The second is that cl 4 is a legacy to the relevant creditors. However, that is not what cl 4 says and it would have been a simple matter for a clause expressly to that effect to have been used. Clause 4 begins “I direct” and it is nothing more or less than a direction to the Administrator.

1128. The Court’s preferred construction also requires an important and practical distinction to be observed between “my [Jim’s] just debts” and the obligation to pay out the third party obligations. In my respectful opinion, and contrary to the position advanced by Bogasi, the direction (and the general law) requires the Administrator to pay Jim’s debts (strictly understood as such – and which would include any debt of Jim to Bogasi and to the mortgagee of the Booral property) from available assets (other than those the subject of specific legacies) and then, to the extent assets remain, to satisfy the third party obligations (rateably if there are insufficient assets to meet those obligations completely because the obligation on the Administrator is at least analogous to the payment of a general legacy). It also follows from this construction that the amounts to be paid in respect of the third party obligations are not debts of the estate – they are no more or less than a direction to the Administrator as to how to apply estate funds if there are funds available to do so after paying Jim’s debts and testamentary expenses.

1129. It follows from the foregoing that the second construction motion is to be answered to this effect:

First prayer

1. The amount to be paid in relation to the amount secured by mortgage over Brett’s principal place of residence is the amount of the mortgage debt as at the date of Jim’s death;

2. It is to be paid to the mortgagee on behalf of Brett and not to Brett personally;

3. The amount is not a debt of the estate

Second prayer

1. The Administrator would be justified in paying any of the amounts referred to only after paying Jim’s debts and testamentary expenses, and on the basis that such amounts should be treated by analogy as general legacies that abate rateably.

   1130. As to the third prayer, subject to any further submission any party may wish to make, my present view is that as a matter of the Court’s discretion this prayer should not be answered until the solvency of the estate or otherwise is known.

Third Construction Motion

1131. The third construction motion was filed on 22 October 2024 by Bogasi. That motion sought clarification on the following:

“1   Whether, on the true construction of clause 6 of the will of the late James Ralph Sundell dated 9 November 2010, the interest of the deceased in the “Booral Farm” devised to Brett Sundell is limited only to the deceased’s interest as tenant in common of the following land located in New South Wales:

Lot 750 in Deposited Plan XXXXX X; and

Lot 73 in Deposited Plan XXXXX X.”

1132. Clause 6 of the will provides:

“6. PROVIDED that he survives me by thirty (30) days I GIVE to my son BRETT JULIAN SUNDELL my farming property at Booral, in the State of New South Wales.”

1133. Critical to the present issue, is the evidence adduced during the trial that the ‘Booral Farm’ comprises four parcels of land:

1. Lot 1 in DP XXXXX X (Property 1)

2. Lot 40 in DP XXXXX X (Property 2)

3. Lot 750 in DP XXXXX X (Property 3); and

4. Lot 73 in DP XXXXX X (Property 4).

Bogasi’s submissions:

1134. Bogasi submits that based on the legal principles outlined in Watson v Ralph (1982) 148 CLR 646 and principle 5 in Fell v Fell (see [1069] above), the reference to “my farming property at Booral, in the State of New South Wales” should be construed as referring to only the interests in the Booral farm which Jim himself owned.

1135. Bogasi’s submission is that at the time of Jim’s death, Bogasi had owned Property 1 and 2 since 16 July 2008. According to the affidavit of Cheryl Ann Weston sworn on 23 October 2024, Property 3 was owned by Jim and Merle (Gunnar’s widow) as tenants in common in equal shares. Merle received her interest in Property 3 on 19 March 2010, after Gunnar’s death on 26 December 2006. Property 4 was also owned by Jim and Merle as tenants in common in equal shares with Merle again having received her interest in Property 4 on 19 March 2010.

1136. Merle died in early 2024. Her interest in Properties 3 and 4 forms part of her estate. After his death, Jim’s interests in Property 3 and 4 were transmitted to the Administrator.

1137. From these factual conclusions, Bogasi submits that Jim must have known that Merle owned an interest in Property 3 and Property 4 and that he had no right to devise or otherwise deal with those interests in the property. Therefore, the reference to “my” farming property in cl 6 could only be a reference to the parts of the property that he owned.

1138. Clause 4 of the will directing Jim’s trustees to pay out of his estate ‘all of my just debts and testamentary expenses including but not limited to…. All amounts secured by mortgage over my farming property at Booral’ is submitted to support the proposition that cl 6 can only be construed as devising Properties 3 and 4 to Brett. At the time the will was made, only Property 3 was encumbered with a mortgage and Bogasi has never charged Properties 1 and 2. Bogasi argues this context suggests that Jim never considered Properties 1 and 2 to form part of his “farming property in Booral” and to be devisable to Brett in accordance with cl 6.

1139. Additionally, Bogasi submits that this is not a case where a court will construe a gift as empowering the Administrator to get in what is otherwise Bogasi’s property. Bogasi’s position as a trustee for a discretionary trust was contended to signify that Jim had no power to arm his executors with the power to ensure Properties 1 and 2 formed part of his estate when they were impressed with a trust, and Bogasi was subject to obligations in relation to those properties as a trustee.

1140. The following terms of the New Jim Trust Deed were submitted to demonstrate the broad scope of the powers vested in Bogasi as trustee. These were submitted to preclude Jim from being capable of fettering any power pursuant to any clause in his will:

1. Clause 2.2 stipulates that Bogasi holds the Trust Fund on trust for the Beneficiaries;

2. Clause 3.2 and 4.1 confers on Bogasi a discretion as to the distribution of respectively, income and capital; and

3. Clause 10.4 provides that all powers vested in Bogasi are absolute and uncontrolled.

1141. As a result, Jim was not capable of devising Property 1 and Property 2 to Brett pursuant to cl 6 of the will. Clause 6 only devised Jim’s interest in Property 3 and Property 4, which are the two properties that Jim had an interest in as tenant in common.

Disposition

1142. No other party filed submissions in relation to this motion. The Court accepts Bogasi’s submissions. As a matter of construction, the reference to “my farming property” can only be reference to so much of that property as Jim had an interest in, being his interest as tenant in common in Property 3 and Property 4. The plain words of cl 6 of the will do not sustain a construction that would require the Administrator to seek to get Property 1 and Property 2 into the estate. The issue posed in the third construction motion will be answered “Yes”.

Z. Next steps

1143. The parties will be given time to consider these reasons and determine what, if any, issues are outstanding between them as to the orders required to give effect to these reasons. Because of the complexity of the issues argued and the possibility that a party may wish to contend that some further issues arise (not least in relation to the construction motions that were determined on the papers), the Court will reserve further consideration of the proceedings generally.

1144. Finally, on any view, the delivery of these reasons is not the end of the dispute. Issues will undoubtedly arise in giving effect to these reasons. There are also the matters which have been separated out for later determination. Finally, it would be unrealistic not to take account of the likelihood of appeals. The Court therefore also commends to the parties’ consideration whether the present moment is opportune for a further mediation to occur before the next substantial tranche of legal costs is incurred.

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Amendments

29 August 2025 - Representation updated

Decision last updated: 29 August 2025