Green v Wilden Pty Ltd
[2005] WASC 83 (S)
•9 AUGUST 2005
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA IN CIVIL |
| CITATION | : | GREEN & ORS -v- WILDEN PTY LTD & ORS [2005] WASC 83 (S) |
| CORAM | : HASLUCK J | ||
| HEARD |
| ||
| DELIVERED | : 10 MAY 2005 | ||
| SUPPLEMENTARY | |||
| DECISION | : 9 AUGUST 2005 | ||
FILE NO/S |
| ||
| BETWEEN | : GRAEME WILLIAM GREEN |
First Plaintiff
W J GREEN & CO (1984) PTY LTD
(ACN 008 851 867)Second Plaintiff
SHARYN LEE GREEN
GRAEME WILLIAM GREEN
JULIE ANNE GREEN
WILLIAM JOSEPH GREEN
NORMA GLENYCE GREENThird Plaintiffs
AND
[2005] WASC 83 (S)
WILDEN PTY LTD (ACN 009 143 033)
First Defendant
MAGENTA NOMINEES PTY LTD
(ACN 009 340 158)Second Defendant
TACE PTY LTD (ACN 009 204 915)
Third Defendant
SYDNEY JAMES CHESSON
Fourth Defendant
BERT LEONARD DENBOER
Fifth Defendant
CALLAO PTY LTD (ACN 008 867 552)
Sixth Defendant
BENRONE PTY LTD (ACN 008 931 084)
Seventh Defendant
DELTABROOK PTY LTD (ACN 009 462 695)
Eighth Defendant
JOHN MARTIN KELLY
Ninth Defendant
(BY ORIGINAL ACTION)
WILDEN PTY LTD (ACN 009 143 033)
First Plaintiff by Counterclaim
MAGENTA NOMINEES PTY LTD
(ACN 009 340 158)Second Plaintiff by Counterclaim
AND
[2005] WASC 83 (S)
GRAEME WILLIAM GREEN
First Defendant by Counterclaim
W J GREEN & CO (1984) PTY LTD
(ACN 008 851 867)Second Defendant by Counterclaim
SHARYN LEE GREEN
GRAEME WILLIAM GREEN
JULIE ANNE GREEN
WILLIAM JOSEPH GREEN
NORMA GLENYCE GREENThird Defendants by Counterclaim
(BY COUNTERCLAIM)
Catchwords:
Practice and procedure - Supplementary judgment - Orders and directions providing for various forms of equitable relief - Orders as to costs
Legislation:
Nil
Result:
Plaintiffs' claim allowed in part
Defendants' counterclaim allowed in part
Final orders made
[2005] WASC 83 (S)
Category: B
Representation:
Original Action
Counsel:
| First Plaintiff Second Plaintiff Third Plaintiffs First Defendant | : | Mr D Grace QC & Mr M L Bennett |
| : | Mr D Grace QC & Mr M L Bennett | |
| : | Mr D Grace QC & Mr M L Bennett | |
| : | Mr M J McCusker QC & | |
| Mr R H B Pringle QC | ||
| Second Defendant | : | Mr M J McCusker QC & |
| Mr R H B Pringle QC | ||
| Third Defendant | : | Mr M J McCusker QC & |
| Mr R H B Pringle QC | ||
| Fourth Defendant | : | Mr M J McCusker QC & |
| Mr R H B Pringle QC | ||
| Fifth Defendant | : | Mr M J McCusker QC & |
| Mr R H B Pringle QC | ||
| Sixth Defendant | : | Mr M J McCusker QC & |
| Mr R H B Pringle QC | ||
| Seventh Defendant | : | Mr M J McCusker QC & |
| Mr R H B Pringle QC | ||
| Eighth Defendant | : | Mr M J McCusker QC & |
| Mr R H B Pringle QC | ||
| Ninth Defendant | : | Mr M J McCusker QC & |
| Mr R H B Pringle QC |
[2005] WASC 83 (S)
Solicitors:
| First Plaintiff Second Plaintiff Third Plaintiffs First Defendant Second Defendant Third Defendant Fourth Defendant Fifth Defendant Sixth Defendant Seventh Defendant Eighth Defendant Ninth Defendant | : | Bennett & Co |
| : | Bennett & Co | |
| : | Bennett & Co | |
| : | Galic & Co | |
| : | Galic & Co | |
| : | Galic & Co | |
| : | Galic & Co | |
| : | Galic & Co | |
| : | Galic & Co | |
| : | Galic & Co | |
| : | Galic & Co | |
| : | Galic & Co |
Counterclaim
Counsel:
| First Plaintiff by Counterclaim | : | Mr M J McCusker QC & |
| Mr R H B Pringle QC | ||
| Second Plaintiff by Counterclaim | : | Mr M J McCusker QC & |
| Mr R H B Pringle QC | ||
| First Defendant by Counterclaim | : | Mr D Grace QC & Mr M L Bennett |
| Second Defendant by Counterclaim : | Mr D Grace QC & Mr M L Bennett | |
| Third Defendants by Counterclaim : | Mr D Grace QC & Mr M L Bennett |
Solicitors:
| First Plaintiff by Counterclaim | : | Galic & Co |
| Second Plaintiff by Counterclaim | : | Galic & Co |
| First Defendant by Counterclaim | : | Bennett & Co |
| Second Defendant by Counterclaim : | Bennett & Co | |
| Third Defendants by Counterclaim : | Bennett & Co |
[2005] WASC 83 (S)
Case(s) referred to in judgment(s):
Autodesk Inc v Dyason (1992) 176 CLR 300
Cretazzo v Lombardi (1975) 13 SASR 4
Deputy Commissioner of Taxation for the Commonwealth of Australia v
Robinswood Pty Ltd [2005] WASC 67(S)
Flotilla Nominees Pty Ltd v Western Australian Land Authority (2003) 28 WAR
95
Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (1994) 13
WAR 242
Giumelli v Giumelli (1999) 196 CLR 101
Hungerfords v Walker (1989) 171 CLR 125
IPT Systems Ltd v Quadrant Management Pty Ltd (CIV 1159 of 2002)
Jingellic Minerals v Beach Petroleum (1991) 55 SASR 424
McCarthy v McIntyre [2000] FCA 1250
McLauchlan v Prince [2001] WASC 43
Metwally (No 2) v University of Wollongong (1985) 59 ALJR 481
Orr v Holmes (1948) 76 CLR 632
Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569
President of India v La Pintada Compania Navigacion SA [1985] AC 104
Quancorp Pty Ltd v Macdonald [1999] WASCA 101
Re Nilant (2004) 28 WAR 81
Schmidt v Gilmour [1988] WAR 219
SDS Corporation Ltd v Pasdonnay Pty Ltd & Anor [2004] WASC 26(S2)
Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256
Todd & Anor v Swan Television & Radio Broadcasters Pty Ltd [2001] WASC
334
Treloar v Ivory (1991) 4 WAR 318
Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190
Westgold Resources NL v St George Bank Ltd & Ors, unreported; SCt of WA;
Library No 980717; 30 November 1998
Case(s) also cited:
Nil
[2005] WASC 83 (S)
HASLUCK J
HASLUCK J:
Introduction
1 On 10 May 2005 a lengthy judgment was delivered in this matter
dealing with the matters in dispute between the parties. I indicated that I would hear from the parties as to the exact form of the orders and directions which would be required in order to carry the various rulings into effect. To that end, further hearings took place on 19 May 2005 and 14 June 2005. In addition, various materials in writing were presented to me including written submissions and, importantly, a form of judgment in draft dated 3 June 2005 reflecting the orders proposed by the plaintiffs as the party with the carriage of the action and as a party who had succeeded in part.
2 In the course of the further hearings, arrangements were made for the
draft judgment to be annotated so as to reflect the respective position of the parties in regard to each paragraph of the draft judgment. For ease of reference, I will call this latter document "the plaintiffs' 3 June minute of proposed orders".
3 In addition to the materials I have just mentioned certain affidavits
were submitted to me which were said to have a bearing upon the orders to be made. These affidavits gave rise to a number of subsidiary issues which I will deal with in due course. For ease of reference, I will refer to these affidavits as "the post-judgment affidavits".
4 In this further or supplementary judgment I will endeavour to resolve
the various issues thrown up by the plaintiffs' 3 June minute of proposed orders. In doing so, I will draw upon the evidence given at trial and the reasoning and rulings set out in my primary judgment of 10 May 2005. I will also take account of the submissions made by the parties at the post-judgment hearings and of the written materials just mentioned, subject to the further rulings that are to be made in the course of this supplementary judgment.
5 My primary judgment should be read in conjunction with this
supplementary judgment. However, I am conscious that circumstances may arise in which it becomes necessary as a matter of convenience or otherwise for this supplementary judgment to be read alone. Accordingly, I will begin by providing an overview of the findings made in the primary judgment and of the matters to be resolved as many of my rulings on the issues reflected in the plaintiffs' 3 June minute are affected by my reasoning in the primary judgment. For the most part, I will draw upon
[2005] WASC 83 (S)
HASLUCK J
the overview at pars 3 to 11 of the primary judgment and upon the
summary of various findings at pars 1295 to 1355 of that judgment.
Overview of the primary judgment
6 Mr Green was the principal in a firm of electrical contractors. His
son, Graeme Green, worked in the family business and had an interest in the Green Family Trust. In early 1985, as a result of being introduced to Mr Chesson, the Green parties acquired units in the Fieldgate Square (1985) Unit Trust of which Zilna Pty Ltd was the trustee.
7 In due course the Green parties invested in three additional projects
initiated by Mr Chesson involving the acquisition of suburban shopping centres and the derivation of rental income from the same. The Green parties and other investors, including companies associated with Mr Chesson (Callao Pty Ltd) and his business associate Mr Denboer (Benrone Pty Ltd), acquired units in the various projects pursuant to standard form trust deeds. These events led to various controversies concerning the management of the Balga/Wilden Trust, the Summerfield/Tace Trust and the Kelmscott/Magenta Trust.
8 The first three defendants (Wilden, Tace and Magenta) are the
relevant trustee companies. Mr Chesson was a director of and played an active role in the management of each of the Trusts. Mr Denboer was Chairman of the Balga/Wilden Trust. Mr Chesson's brother-in-law, Mr Kelly, was eventually caught up in the controversy between the parties, due in part to his association with the defendant company, Deltabrook Pty Ltd, and a family investment company, Milone Pty Ltd. For ease of reference, where the context permits, those associated with Mr Chesson are called "the Chesson group" in contra distinction to the Green parties.
9 In mid-1990 Balga/Wilden was facing various financial problems.
This led to steps being taken to inject funds into that Trust. This was done, first, by calling upon the existing investors to reduce loans that were said to have been made to the investors at the time they acquired their Trust units and, second, by creating and allotting additional units in the Balga/Wilden Trust. These events led to a state of acrimony developing between the Green parties and the Chesson group, especially in regard to Balga/Wilden, and to disputation about the two matters just mentioned (described in the primary judgment as the Balga/Wilden Investment Agreement issue and the Balga/Wilden additional units and options issue). There are also various so-called "subsidiary issues" mentioned in the
[2005] WASC 83 (S)
HASLUCK J
primary judgment being the arson incident, the Gillette Award issue and
the Balga/Chesson remuneration issue.10 Each of the Trust Deeds allowed for repurchase of units by the
trustee. The relevant provisions required that consideration be given to the net asset backing of the Trust unit and allowed for a determination of the current repurchase value by an independent valuer. According to the Green parties, they eventually lodged repurchase requests with a view to being paid out and withdrawing from the Trust entities; that is, a repurchase request lodged with Summerfield/Tace on or about 7 November 1990, a request lodged with Balga/Wilden on or about 7 January 1991 and a request lodged with Kelmscott/Magenta on or about 24 May 1991.
11 It seems that after a period of delay brought about by negotiations
between the parties Mr Chesson took steps to have valuers appointed to assess the value of the units the subject of the relevant repurchase requests. The defendants contended that the correct procedure was followed but this was disputed. The Green parties commenced proceedings with a view to compelling performance of the subject repurchase requests. In addition, they sought relief in equity, including a claim for an account and/or equitable damages. They also applied for removal of Wilden and Tace as trustees in respect of various alleged failures by the trustees to perform their obligations.
12 I concluded that the alleged Balga/Wilden Investment Agreement did
not contain terms of the kind contended for in par 13 and par 14 of the statement of claim. It followed that Wilden was entitled to call upon unit holders with outstanding loans (such as the Green parties) to repay or reduce outstanding loans prior to the subject shopping centre being sold or repurchase requests being discharged. It followed that the defendants were not in breach of the alleged Balga/Wilden Investment Agreement (or any similar agreement concerning the other Trusts) in seeking repayment of the relevant loans by letters dated 19 October 1990. The defendants could not be said to have failed to act honestly and impartially in calling for such repayments. Further, the trustee companies were at liberty to assert that outstanding loans represented assets of the Trusts that could be set-off against any amount determined to be due to the Green parties as a price payable by the trustee in respect of the repurchase requests.
13 I found against the Green parties in relation to the so-called
subsidiary issues with the result that Wilden could not be said to be in
[2005] WASC 83 (S)
HASLUCK J
breach of trust in respect of those matters and its directors, Mr Chesson
and Mr Denboer, could not be said to have acted improperly.14 The Balga/Wilden additional units and options issue concerned
events whereby the Summerfield/Tace project was refinanced so that funds became available to repurchase the Chesson/Callao and Denboer/Benrone units in that Trust. This meant in turn that Callao and Benrone were able to acquire additional units and options in Balga/Wilden at a discounted price.
15 In regard to this latter issue, I was not persuaded that the Chesson
group embarked upon a concerted plan to exclude the Green parties from the Balga/Wilden Trust by exaggerating the extent of Balga/Wilden's financial difficulties in mid-1990 and by improperly calling up outstanding loans. I was not persuaded that Tace or members of the Chesson group acted improperly in regard to the management of that Trust or the so-called purported repurchase issue with the result that no order should be made for the removal of Tace as a trustee.
16 However, as to the Balga/Wilden additional units and options issue I
found that Mr Chesson and Mr Denboer began to act in an adversarial manner with the result that both they and the trustee company (Wilden) did not fulfil their obligations to act impartially, to disclose and to account. I held that their actions amounted to fraud and equity with the result that, prima facie, the plaintiffs were entitled to equitable relief including declarations that the subject resolutions concerning the additional units and options in Balga/Wilden were of no force and effect.
17 I found also that the procedures prescribed by cl 4.8 of the standard
form Trust Deed were not complied with and the defaulting parties could not be excused by the "protective provisions" of cl 13.4 of the Trust Deed, s 75 of the Trustees Act 1962 (WA) and s 1318(1) of the Corporations Law.
18 As to the Balga/Wilden repurchase request issues I concluded that, in
the absence of any duty to activate the valuation procedure being expressly imposed upon the trustee by cl 7.4, it was open to either party, if a value could not be agreed, to call upon the President of the Institute of Valuers to nominate an independent qualified valuer to carry out a valuation of the units.
19 However, I went on to hold that, in circumstances where the trustee
exercised its power to activate the valuation procedure, as in the present
[2005] WASC 83 (S)
HASLUCK J
case, the trustee was duty bound to ensure that the procedure was
completed in accordance with the provisions of the Trust Deed.20 I concluded, in regard to the so-called manner of appointment issue,
that the appointment of the valuer in each case was valid and effective. However, as to each Trust I found that the plaintiffs had made out their case that the valuer accepted figures provided by an auditor uncritically with the result that the subject valuation should be regarded as being of no force and effect. I held further that Wilden was in breach of duty as a trustee in failing to ensure that the procedure had been complied with and was not excused by the protective provisions.
21 I was therefore of the view that the plaintiffs, prima facie, were entitled to specific performance as alleged in terms of the plaintiffs' minute dated 14 November 2003 which (described in general terms) sought to compel the trustee to commence and complete the valuation procedure afresh. The price payable in respect of the various repurchase requests could not be taken to be the current repurchase values purportedly determined by the valuers in question, namely, Mr Sanderson per his report dated 21 October 1992 (Balga/Wilden Trust), Mr Richmond per his report dated 1 October 1992 (Summerfield/Tace Trust) and Mr Hunt per his report dated 19 November 1992 (Kelmscott/Magenta Trust).
22 I noted in the primary judgment that questions were bound to arise in
the aftermath of the proceedings as to the appropriate form of relief, especially equitable relief, having regard to the passage of time since the dispute arose, and it was for this reason that I made provision for further hearings to determine the exact form of the orders required to carry the various rulings into effect.
23 I noted that, having regard to a concession made by the defendants at
the commencement of the trial that the Green parties were still unit holders in the subject Trusts, a question would arise as to what extent, if any, they could set-off against amounts found to be due by them in respect of outstanding loans and interest, amounts due to them upon the taking of an account or due to them by way of accrued interest upon any amounts they ought to have received as a price payable in respect of their repurchase requests if the requests had been dealt with properly.
24 I indicated that, prima facie, the defendants were entitled to declaratory and related relief of the kind sought in the defendants'
[2005] WASC 83 (S)
HASLUCK J
counterclaim as to amounts due by the Green parties to the trustee
companies in respect of outstanding loans and accrued interest.25 It appeared to follow from the various findings that orders had to be
made for the removal of Wilden as trustee and for the restraining of the trustee and the directors in their conduct of the affairs of the Balga/Wilden Trust.
26 It emerges from this overview that the plaintiffs failed in respect of
various issues. Rulings were made against them in respect of the so-called subsidiary issues and as to certain aspects of the repurchase procedure compliance issues. I found that the plaintiffs were not entitled to relief in respect of the purported repurchase issue concerning the repurchase of the Callao/Chesson and Benrone/Denboer units in Summerfield/Tace in September/October 1990. I was not persuaded that the trustee in Summerfield/Tace should be removed. There was no basis for removal of the trustee company in Kelmscott/Magenta. The defendants succeeded with respect to the Balga/Wilden Investment Agreement issue, and thus on their counterclaim concerning outstanding loans (and arguably interest) due by the Green parties to the trust entities.
27 The plaintiffs' 3 June minute of proposed orders, generally described,
is divided into five sections being orders relating to the Balga/Wilden Trust, orders relating to the Summerfield/Tace Trust, orders relating to the Kelmscott/Magenta Trust, other orders, and costs of the trial.
28 It is against this background that I now turn to the respective
positions of the parties concerning the contentious post-judgment
affidavits.
The post-judgment affidavits
29 It will be apparent from the primary judgment that it was necessary
to hear from the parties as to the exact form of orders to be made in order to carry the various rulings into effect. I left open the possibility that it might be necessary to receive some further evidence bearing upon such matters. I was conscious that in regard to the grant of equitable relief, especially specific performance, it is sometimes necessary to consider the utility of the relief and the intervention of third party rights: Giumelli v Giumelli (1999) 196 CLR 101.
30 In addition, of course, as to the question of legal costs, it is often
necessary for a party seeking special orders to support the plea in that regard by evidence on affidavit in regard to the removal of limits in the
[2005] WASC 83 (S)
HASLUCK J
scale or as to indemnity costs. This is often so although, as Wheeler J observed in Deputy Commissioner of Taxation for the Commonwealth of Australia v Robinswood Pty Ltd [2005] WASC 67(S) at par 10, it is usually not necessary to prepare affidavits explaining what the trial Judge already knows as a result of having been present for the trial.
31 However, save for matters of the kind I have just mentioned, I must
generally proceed from the premise that the parties were afforded an opportunity to present their respective cases at the trial of the action, which extended over many months, and the final order should be made having regard to the evidence presented at trial.
32 At the conclusion of the further hearings, I indicated that I would
rule upon the admissibility and use (if any) to be made of the post-judgment affidavits. In particular, the plaintiffs opposed the admission of the defendants' affidavits on the grounds that any reliance upon them amounted to an attempt to re-open the defendants' case.
The plaintiffs' affidavits
33 In the course of the two post-judgment hearings and related events
the plaintiffs presented to the Court certain affidavits which are said to fall within the criteria I have just described relating to the presentation of submissions bearing upon the form of final orders to be made.
34 The plaintiffs' first affidavit is that of Giovanni Maurizio Carrello
sworn 18 May 2005. This affidavit is said to bear upon my finding that Wilden should be removed as trustee of the Balga/Wilden Trust. Such a finding brings into play the principle that a trust will not be allowed to fail for want of a trustee.
35 In summary, Mr Carrello affirms that he has sworn the affidavit at
the request of the plaintiffs. He is an official Court appointed liquidator and will consent to being appointed a trustee of the Balga/Wilden Trust. He considers that he does not have any conflict of interest which would disqualify him from acting as a trustee and would charge his normal insolvency practice rates. He has been provided with the plaintiffs' 3 June minute of proposed orders and considers that those orders bearing upon the discharge of his duties should be made in order to facilitate the performance of the duties in question. He provides details concerning his qualifications.
36 The plaintiffs' second affidavit is that of Annabelle Helen Hughes
sworn 18 May 2005, in support of the plaintiffs' motion for a special costs
[2005] WASC 83 (S)
HASLUCK J
order. I will return to this in due course. However, in essence, the deponent refers to various matters bearing upon the complexity of the proceedings in support of the plaintiffs' application for certain special costs orders. I note in passing that the plaintiffs have also delivered to me a schedule of reserved costs orders made in the course of interlocutory proceedings.
37 The plaintiffs' third affidavit is that of Annabelle Helen Hughes
sworn 18 May 2005 to which is exhibited various company documents and searches including notification of an application to wind up Wilden dated 4 February 2005. The applicant for winding up is described as Greenco Pty Ltd. Exhibited to the affidavit also is a letter dated 16 May 2005 in which the solicitors for the plaintiffs seek information from the solicitors for the defendants about the external administration of Summerfield/Tace and Kelmscott/Magenta which is said to have ceased on 17 March 2005.
38 For ease of reference I will refer to the plaintiffs' second affidavit as
"the Hughes special costs affidavit" and to the plaintiffs' third affidavit as
"the Hughes company details affidavit".39 The plaintiffs' fourth affidavit is that of Annabelle Helen Hughes
sworn 19 May 2005 which refers to facts and matters bearing upon the financial standing of Balga/Wilden having regard to the company accounts in recent years, which were produced during the course of the trial, and to other facts and matters referred to in the affidavit. This is said, inter alia¸ to be relevant to any application for a stay of judgment. Exhibited to the affidavit is a letter dated 18 May 2005 in which the plaintiffs' solicitors call upon the defendants to explain the whereabouts of non-current assets being investments in sub-trusts allegedly amounting to $3 million, being a matter mentioned in the company accounts for the year ended 30 June 2003. For ease of reference I will call this "the Hughes 19 May affidavit".
40 In the course of the post-judgment hearings and related events the
defendants have delivered to the Court two affidavits which are said to fall within the criteria mentioned earlier. Again, no ruling has yet been made by me as to whether these affidavits, or any part of them, should be received in evidence or utilised for the purpose of finalising the final orders to be made.
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The defendants' affidavits
41 The defendants' first affidavit is that of Sydney James Chesson
sworn 13 June 2005 which addresses the proposed removal of Wilden as trustee. Exhibited to the affidavit are the financial accounts of Wilden and the Balga Bazaar (1985) Unit Trust as at 30 April 2005.
42 It is said that Wilden has entered into certain arrangements in good
faith as trustee including arrangements for an advance of funds to Wilden by Callao and Mr Kelly's company Milone to provide ongoing financial support to Wilden on the basis that Wilden has at all times been entitled to be indemnified out of the Balga Bazaar (1985) Unit Trust. It is said that the only asset that Wilden holds as trustee for the Balga Trust is the principal debt and interest thereon owed to it by the plaintiffs. It is said that if a new/replacement trustee is appointed Wilden will enforce its right to be indemnified (even if that means taking action against any new trustee) and Callao and Milone will also be entitled to recover advances made to Wilden and the Balga Trust.
43 Mr Chesson also deposes to serious concerns as to Mr Carrello's
independence to act as trustee. He believes Mr Carrello to be a business friend and/or associate of the plaintiffs' counsel, Mr Bennett. The affidavit goes on to refer to a number of matters that were "not the subject of the trial" that would be effected by cancellation of the units issued to Callao and Benrone. Reference is made also to problems concerning the retrospective treatment of the moneys paid to Wilden by Callao and Benrone if the units issued to Callao and Benrone are cancelled. It is said also that further new units in the Balga Trust were issued by Wilden in or about August 2001 being 275 new units issued to Milone at a price of $818.18 per unit and 275 new units issued to Callao by Wilden at a price of $818.18 per unit.
44 Mr Chesson's affidavit, in par 9, goes on to refer to various facts and
matters bearing upon the state of acute personal acrimony between the Green parties on the one hand and the Chesson group. These facts and matters are said to explain why the plaintiffs did not at any time in the period from 1993 to 2003 attend meetings in person or by an agent. I will call this "Mr Chesson's affidavit".
45 The defendants' second affidavit is that of Mr Chesson's son, Simon
James Chesson also sworn 13 June 2005. This is very lengthy and is directed principally to the financial position of Wilden.
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46 Simon Chesson has accountancy and business qualifications and is
described as the company secretary of Wilden since 1995. I will call this
the "Simon Chesson affidavit".47 Reference is made in the Simon Chesson affidavit to outstanding
loans due to Wilden from the Green parties having regard to the findings in the primary judgment concerning the Balga/Wilden Investment Agreement issue and the calculation of interest upon such loans. Simon Chesson says that the types of borrowing that Wilden has used are various and interest rates charged by ANZ Bank varied from month to month. He says at par 16 that by using the rate of interest pleaded by the plaintiffs themselves in their statement of claim he (Chesson) used the rate of 14.75 per cent per annum to calculate the interest payable to Wilden by the first plaintiff and second plaintiff from when the demands for repayment of the loans were made.
48 It is said that the principal loan amount and the interest thereon
payable by the first plaintiff, Graeme Green, to Wilden as at 30 April 2005 is $716,050.77. It is said in par 18 that the sum total of the principal loan amount and the interest thereon payable by the second plaintiff, W J Green & Co Pty Ltd, to Wilden as at 30 April 2005 is $1,963,616.11.
49 It is said in par 22 that as at 30 April 2005 Wilden's total assets were
$2,679,766 consisting essentially of the loan receivable from Graeme Green and the loan receivable from W J Green & Co Pty Ltd. Wilden's total liabilities were $4,287,309 consisting of amounts due to creditors and loans payable including a loan payable to Callao as trustee for the S J Chesson Family Trust in the amount of $1,629,675.85 and a loan payable to Milone Pty Ltd as trustee for the J M Kelly Family Trust in the amount of $1,629,675.85. It is noted that the J M Kelly Family Trust financed the repurchase of Benrone (Denboer) units by Wilden in August 2001. It is said that in the event that the Trust is wound up and vested, the units held by the first plaintiff and second plaintiff would be worthless.
50 Simon Chesson refers at par 33 and par 34 to additional matters
bearing upon the proposed appointment of Mr Carrello as trustee. It is said that Mr Carrello was proposed by related company of the plaintiffs, Greenco Pty Ltd, to act as liquidator of Wilden. It is said that it is not in the interests of the creditors of Wilden nor the Trust, nor any of its other unit holders, that Mr Carrello be appointed as trustee in circumstances where he is being nominated by the first plaintiff and the second plaintiff and it will be his primary duty to act in the best interests of the Trust as a
[2005] WASC 83 (S)
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whole which includes taking action against the first and second plaintiffs
to recover the loans owed to the Trust by them.
General observations on the affidavits
51 At the further hearings on 19 May and 14 June 2005 counsel for both
parties seemed to accept that there was a basis for receiving further evidence bearing directly upon the precise form of the orders to be made in order to carry into effect the rulings reflected in the primary judgment. There was a place also for affidavit evidence concerning the application made by the plaintiffs for special orders as to costs. I indicated (without ruling) that, having regard to my observations in par 1196 and par 1345 of the judgment (in which I foreshadowed that I would hear from the parties as to whether there were any matters which should be considered bearing upon the appropriate form of equitable relief) I would have difficulty in characterising affidavit evidence directed to the form of the orders to be made as a re-opening of the case by one party or the other.
52 I pause here to say that, in my view, the presentation of evidence on
both sides as to the designation (to use a neutral term) of a new trustee for Balga/Wilden was a matter that clearly required the presentation of some evidence concerning that matter.
53 In essence, the plaintiffs' position was that as the primary judgment
allowed for the removal of Wilden as trustee it was necessary that evidence be brought before the Court concerning the credentials of the proposed replacement and other details including an indication of a willingness to accept the appointment. The defendants' position was that an appointment should be effected by a resolution of the unit holders. I will resolve that issue shortly.
54 I consider that evidence on affidavit from both sides should be
received concerning this issue and I will therefore take account of those parts of the post-judgment affidavits on both sides directed to this matter. If an appointment of a new trustee is to be made then the Court must be informed about the suitability of the proposed replacement and his willingness to act.
55 When I turn to other contentious issues, such as the scope of any
equitable relief to be provided to the plaintiffs in respect of issues on which they have succeeded, and the calculation of moneys said to be due by certain of the Green parties to the trustee companies pursuant to loan arrangements of the kind reflected in the so-called Balga/Wilden Investment Agreement, I am conscious that there is more room for
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argument as to whether the proposed affidavit evidence on each side is limited appropriately to the form of the orders to be made or as to whether it amounts to a re-opening of the case.
56 The plaintiffs contended that if any use were to be made of
Mr Chesson's affidavit or the Simon Chesson affidavit then this would amount to an impermissible re-opening of the defendants' case in respect of matters which should have been dealt with at trial. The plaintiffs' position is reflected in their written submissions opposing defendants' application to re-open dated 14 June 2005. It is said that the nature of the additional evidence sought to be adduced by the defendants concerns the financial arrangements Wilden has supposedly entered into, the current asset position in the Balga/Wilden Trust, the position of lenders to Wilden, commercial transactions said to have occurred on 17 January 2001 and the issue of new units in 2001. It is said that the affidavit of Simon Chesson purports to give evidence of financial dealings in the Trust.
57 In the course of argument both parties referred to various decisions
bearing upon the power to re-open. In Jingellic Minerals v Beach Petroleum (1991) 55 SASR 424 Zelling AJ held that a judge has power to re-open a case in which he has given judgment and before orders have been sealed if the interests of justice requires such a course. Such applications are to be kept within strict bounds.
58 In Metwally (No 2) v University of Wollongong (1985) 59 ALJR 481 at 483 the High Court said that except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.
59 In Autodesk Inc v Dyason (1992) 176 CLR 300 an unsuccessful respondent's application to vacate the judgment on the ground that, without thought on their part, they had no opportunity to be heard on three issues was dismissed on the grounds that the interests of justice did not require that the judgment be vacated because it was not fairly arguable that the judgment involved a misunderstanding of the facts or misapplication of the law in relation to one or more of the issues on which the respondents wish to put further argument.
60 Brennan and Dawson JJ were of the view that a court has jurisdiction
to recall a judgment, at least before the formal entry of judgment, if it has
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been pronounced against a person who, without his or her fault, has not had an opportunity to be heard as to why that judgment should not be pronounced.
61 In McCarthy v McIntyre [2000] FCA 1250 the Full Court observed at pars 27 to 30 that in the case before them it was unrealistic to characterise the proposed re-opening as anything other than re-agitation of substantial parts of previous issues. There was no error by the trial Judge in concluding that re-opening would involve re-agitating substantial parts of the case that had already been determined.
62 The Full Court went on to say that where an application is made to
re-open on the basis that new or additional evidence is available, it would be relevant to enquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that would tell decisively against the application. Even if that hurdle is passed, different considerations will apply depending upon whether the case is simply one in which the hearing is complete or one in which reasons for judgment have been delivered. In the former situation, the primary consideration should be that of embarrassment or prejudice to the other side. However, in the latter situation, the appeal rules relating to fresh evidence provide a useful guide as to the manner in which the discretion to re-open should be exercised: Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256 at 266.
63 The Full Court said further at par 32 that there is an incalculable
prejudice to any party in having a question re-opened after all evidence has been heard and a determination made. It is not for a respondent to an application to re-open to demonstrate prejudice in such circumstances. It is for the party making such an application to demonstrate a case for the exercise of discretion in its favour.
64 When one turns to the precepts applied by appeal courts in regard to
applications for a new trial due to the discovery of fresh evidence: Orr v Holmes (1948) 76 CLR 632 continues to be a useful point of reference. Latham CJ observed at 635 that a new trial should not be granted on such a ground if by the exercise of reasonable diligence the fresh evidence could have been discovered in time to be used at the original trial. Further, before a new trial is granted on the ground of discovery of fresh evidence it must be shown at least that the evidence to be admitted is of such importance as very probably to influence the decision.
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65 Dixon J undertook a review of the relevant authorities and observed
that the evident purpose of the rules bearing upon such a matter was to ensure that new trials would not be granted because of fresh evidence unless it placed such a different complexion upon the case that a reversal of the former result ought certainly to ensue. The evidence must be so persuasive that a finding to the contrary would, upon the materials before the Court, appear to have been improbable if not unreasonable.
66 The plaintiffs submitted that pursuant to these principles the putative
application to re-open by the defendants should be rejected. It was said further that Mr Chesson's affidavit raised issues that had not been the subject of discovery. As to the affidavit of Simon Chesson, the plaintiff said that no attempt was made in the supposed calculation of interest payable by the Green parties for any credit to them for either interest on the value of their unit repurchase request (which would date from 1991) or alternatively their proper share of income received by the unit trusts since 1991 bearing in mind that they continued as members of each Trust owing to a failure by the trustee company to complete the repurchase procedure in the manner provided for by the standard form Trust Deed. It was said that the introduction of the amounts just mentioned would significantly reduce the principal and thereby the accumulated interest the subject of the purported calculation in the Simon Chesson affidavit. In addition, the plaintiffs raised various specific objections to the admissibility of certain paragraphs of Mr Chesson's affidavit.
67 I reserved my decision as to the admissibility of the defendants'
affidavits. The matter was adjourned upon the basis that counsel for both parties had made all submissions they wished to make as to the final form of the orders, with the result that the only contentious issue remaining in that regard was the question of whether the further affidavits should be admitted.
68 Counsel on both sides accepted that if the affidavits were excluded in
their entirety then I should simply proceed to make rulings on the various contentious issues concerning the exact form of the final orders and proceed to hand down the orders.
69 However, both counsel were of the view that if the further affidavits
were received in evidence then it would be necessary for me to hear from the parties again before proceeding to make the final orders. A ruling of that kind might give rise to an application by the plaintiffs to file answering affidavits.
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70 Further, counsel for the plaintiffs foreshadowed that if the
contentious affidavits were received in evidence then the plaintiffs would seek discovery of the documents referred to in the affidavits, and an opportunity to cross-examine the deponents and an adjournment at the defendants' cost. I note in passing that as to the matter of discovery, counsel for the defendants indicated that they were willing to provide discovery of the underlying documents referred to in the affidavits within seven days if the need to do so arose as a consequence of any ruling made by the Court.
Further observations as to the post-judgment affidavits
71 It will be apparent from the foregoing discussion that courts must be
careful to ensure that the finality of the trial process is not eroded. In addition, as indicated by the reasoning of Latham CJ and Dixon J in Orr v Holmes (supra), it appears that a court must give careful consideration to the nature and importance of the further evidence sought to be adduced having regard to various factors such as the length and complexity of the trial and the matters in issue.
72 In a case such as Smith v New South Wales Bar Association (supra) where a professional person's livelihood may depend upon an assessment of his truthfulness then the justification for a re-opening in a matter of that kind can be readily appreciated, especially if the re-opening bears upon a narrow issue or matters of credibility. However, different considerations are likely to apply where the trial has extended over many months and the nature of the relief to be provided may require that further accounts or enquiries be undertaken in any event concerning the subject of the further evidence sought to be admitted.
73 In addition, I consider that in the circumstances of the present case it
is necessary to keep in mind the role and responsibility of a trustee in circumstances where a dispute has arisen. The observations I am about to make in that regard bear partly upon the affidavit issue and partly upon some of the disputed issues as to costs that I will have to determine in due course. However, it will be useful to refer to such matters at this stage.
74 Counsel for the defendants (as reflected in the letter from his
instructing solicitors dated 30 May 2005) placed some emphasis upon the fact that as to each of the three Trusts orders and directions were made at an interlocutory stage of the proceedings (prior to the various proceedings being consolidated) bearing upon the role and responsibilities of the trustee company in each case in regard to the litigation.
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75 As to Tace/Summerfield and Kelmscott/Magenta directions were
given on 2 November 1994 that this was a proper case for the trustee company to continue defending the claims against it. The question whether the trustee company should be indemnified for costs out of the Trust fund, irrespective of the outcome, was to be reserved for the trial Judge. The costs of the application were to be in the cause. I was not provided with a copy of the extracted order in respect of Balga/Wilden but I am prepared to accept that directions were given in the same terms in respect of Balga/Wilden.
76 It is immediately apparent from the making of orders of this kind that
the trustee companies were seen to be in a contentious situation and that it was open to beneficiaries or other interested parties to advance claims against a trustee company concerning the proper interpretation of the subject Trust Deed and as to the manner in which the relevant entity was being managed. This is consistent with provisions of the Trustees Act 1962 concerning the courses open to a trustee when matters of contention arise.
77 Section 92 of the Trustees Act provides that any trustee may apply to the Court for directions concerning any property subject to a trust, or respecting the management or administration of that property, or respecting the exercise of any power or discretion vested in the trustee.
78 It might be said in the present case that when the trustee company in
each case was confronted with an assertion by the Green parties that the trustee had interpreted the provisions of the Trust Deed incorrectly or was proceeding improperly that the trustee companies should have utilized the facility in s 92 of the Trustees Act and sought directions from the Court as to how they should proceed.
79 Such a view must be approached with caution. It is apparent from
Dal Pont and Chalmers: "Equity and Trusts in Australia and New Zealand" (2nd ed) at 668 that the procedure in question should not be used to determine substantive issues, such as issues of interpretation of the trust document which involves the question of breach of trust by any of the trustees; for the purpose of securing additional powers for the trustees; and for resolving a contest between the trustees or other parties to a trust. Nor should it be used to determine respective rights of beneficiaries. These are matters in respect of which beneficiaries are entitled to initiate proceedings.
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80 The provision in question came under notice by Barker J in Re Nilant (2004) 28 WAR 81. In the course of reviewing the operation of the section, Barker J referred to various decisions by the Supreme Court in this State indicating that it was not open to the Court under s 92(1) to make "directions" concerning the amount of remuneration to which the trustees were properly entitled for their administration of a trust. This did not fall within the concept of obtaining directions respecting the management or administration of the trust property. In a case of that kind, the relief sought would not be by way of "directions" but would constitute a decision and consequential order by way of resolution of a dispute as to the quantum of the trustees' remuneration.
81 It was against this background that Barker J in Re Nilant (supra) held that s 92(1) of the Trustees Act did not permit the Court to make a direction authorising the payment of the funds the plaintiffs held on trust for Smart America to the Smart World Creditors Trust. This would not be a direction respecting the management or administration of the property the subject of the trust, nor would it be a direction respecting the exercise of any power or discretion vested in the trust. Further, it was doubtful that the direction would constitute a "direction" within the meaning of s 92(1) as that provision contemplated the continuation of the trust following the making of the direction, rather than the termination of the trust to the permanent detriment of the beneficiary.
82 The reasoning in these authorities is important for present purposes
in several respects. First, it bears upon the role and responsibilities of the trustee companies. There will undoubtedly be cases in which a trustee is a party to litigation but of a comparatively neutral kind. In such a case it will often be appropriate for the trustee to take steps to place further information before the Court and to be indemnified out of the Trust fund for its legal costs. However, to my mind, this is not such a case. The authorities I have just referred to establish that beneficiaries are entitled to initiate proceedings about contentious matters including the actions of the trustee and it will then be for the Court to determine where the fault (if any) lies. Orders concerning further evidence or the future administration of the subject trust or concerning costs will depend on the application of legal and equitable rules to the contentious situation.
83 Second, the reasoning in the authorities makes it difficult for the
Green parties to assert in the circumstances of the present case that the defendants and the trustee companies acted improperly in failing to seek or obtain directions for the Court as to some of the matters in dispute including questions of remuneration, and in continuing to contend for an
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interpretation of the Trust Deed that was opposed by the Green parties. This may have a bearing on the plaintiffs' application for indemnity costs, being a matter I will return to in more detail later.
84 For the time being I simply note what was said by Pullin J in Flotilla Nominees Pty Ltd v Western Australian Land Authority (2003) 28 WAR 95. His Honour held that an indemnity cost order will not be made if the costs sought would be covered by an order for party and party costs or by a special costs order. If a properly formulated special costs order is made, there should be little need for an indemnity costs order to try and recover costs incurred above the scale. Indemnity costs should not be sought merely to secure the recovery of costs which could be achieved by a properly formulated special costs order, unless the unsuccessful party's conduct is genuinely to be impugned by the successful party.
85 His Honour held further that the place for indemnity costs orders is
where there has been improper or unreasonable conduct on the part of a party or his legal advisers. An order for an indemnity costs order is a mark of disapproval on the part of the Court about the improper or unreasonable conduct of the litigation, even though there should not be much difference in the costs recovered under such an order compared with recovery under a properly formulated special costs order.
86 His Honour went on to note that a special costs order may be sought
in relation to three aspects of the scale. First, the items describing the work performed might not cover an area of work in conducting the litigation and which has resulted in the incurring of costs. In such a case, the special order sought would be to describe the area of work and to state the hourly rates which should be applied to that area of work. Second, a special costs order might be made in relation to the hourly rates provided for an item in the scale. Third, the successful party might contend that the time allowed for performance of the work is inadequate.
The rulings to be made
87 It will be apparent from discussion to this point that I am persuaded
that I should draw upon the post-judgment affidavits put up on both sides concerning the removal of Wilden as trustee and the appointment of a new trustee. I am of the view also that a ruling upon this and certain related issues reflected in pars 1, 2 and 3 of the plaintiffs' 3 June minute of proposed orders, may have a bearing upon the use (if any) that is to be made of the post-judgment affidavits. I say this because the decided cases suggest that the decision to admit further evidence after the trial has been concluded may be influenced by an assessment of the degree to which the
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additional evidence is likely to affect the outcome of the case or the
resolution of particular issues.88 Accordingly, I will deal with the Balga/Wilden removal/new trustee
issue, having regard to the affidavit evidence adduced on each side concerning that matter, and return to the remaining issues of admissibility in due course.
89 Exhibited to this supplementary judgment is an appendix containing
the orders I have finally resolved to make presented in the form of a draft
judgment. For ease of reference, I will call this document "Appendix A".90 In an endeavour to avoid confusion, I have constructed Appendix A
so that the numbered paragraphs in that document generally coincide with the numbering reflected in the plaintiffs' 3 June minute. In due course I will be dealing with the plaintiffs' 3 June minute paragraph by paragraph. In the course of that discussion it will become apparent whether a particular order contended for by the plaintiffs in the plaintiffs' 3 June minute corresponds to the order made in Appendix A about the issue in question or has been varied or has not been accepted. Appendix A will contain a clean copy of the orders made by me.
91 I note in passing that in construing the final orders encapsulated in
Appendix A any reference to "this judgment" or to "these orders" is to be regarded as a reference to the orders set out in Appendix A which are intended to carry into effect the reasoning and rulings reflected in the primary judgment and this supplementary judgment. Put shortly, the orders in Appendix A represent the formal expression of what has been decided and are therefore described as "this judgment".
92 With these thoughts in mind, I must now turn to the removal/new
trustee issue being pars 1, 2 and 3 of the plaintiffs' 3 June minute of
proposed orders.
Removal/new trustee issue – Paragraphs 1, 2 and 3
93 It is a principle of equity that a trust will not be allowed to fail for
want of a trustee. New trustees may be appointed in accordance with the provisions made in the Trust instrument or statutory enactment conferring a power to appoint. In most States the Trust instrument is of primary importance, with statutory powers relevant only if the instrument is silent or if the provisions of the Trust instrument do not apply. The statute then designates persons who shall have the power to appoint new trustees: Jacobs' Law of Trusts (6th ed) pars 1502 to 1504.
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94 I observed in the primary judgment that a trustee may be removed
from office by the Court where the Court considers that the continuance of the trustee would prevent the proper execution of the Trust. The removal of a trustee brings with it a need for the appointment of a new trustee to ensure the continuance of the Trust. Section 77 of the Trustees Act provides that the Court may make an order for the appointment of a new trustee in substitution for an existing trustee.
95 As a consequence of my findings in the primary judgment both
parties accept that an order must be made in terms of par 1 of Appendix A; that is, "the first defendant, Wilden Pty Ltd, be and is hereby removed as trustee of the Balga Bazaar (1985) Unit Trust". However, there is a further controversy between the parties as to the nature of the new appointment to be made.
96 The defendants submitted that weight must be given to Pt 14 of the
Balga/Wilden Trust Deed concerning resignation and appointment of trustees. I note that by cl 14.3 the unit holders shall be entitled unanimously in writing or in general meeting by unanimous resolution to remove the trustee or to appoint an additional trustee and by special resolution to appoint a trustee in place of any trustee who retires or is disqualified or removed from office. It was said that there is no reason to believe that the unit holders in the present case could not agree on a suitable replacement, nor is there any reason why an expert insolvency practitioner should be appointed as trustee, with the cost which that would entail. Alternatively, the new trustee should be some person other than Mr Carrello, to whom the defendants object. The Court could make a selection from the Court's list of Court appointed liquidators.
97 The plaintiffs submitted that having regard to the lengthy history of
disputation between the parties it was unrealistic to suggest that the unit holders would be able to agree upon a suitable replacement. It was said that the objections to Mr Carrello were not persuasive and his supposed previous and very limited contact with the plaintiffs and their legal advisers was not sufficient to remove him from consideration.
98 The plaintiffs submitted also that a new trustee should be appointed
before any orders for specific performance were made. They submitted that Mr Carrello is an independent professional and an officer of the Court in so far as he is an official liquidator. It was said that par 2 of the plaintiffs' 3 June minute providing for Mr Carrello's appointment and the vesting in him of the Balga/Wilden property with allowance being made pursuant to cl 14.6 of the Trust Deed for him to charge his usual
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remuneration as an insolvency practitioner was necessary. The plaintiffs submitted further at par 3 of the plaintiffs' 3 June minute providing for all current records and accounts to be delivered to Mr Carrello promptly was necessary. I pause here to say that in my view the proposed time limit of 3 days within which to deliver documentation should be extended to 7 days.
99 I am of the view that orders of the kind sought by the plaintiffs
should be made. I am not persuaded that Mr Carrello is disqualified by reason of any previous association with the plaintiffs or their legal advisers. As a trustee, he will be subject to various fiduciary duties which will impose their own constraints and discipline. I consider that the proposed orders are necessary to ensure that he takes control of the subject property and is in a position to determine the financial standing of Balga/Wilden and attend to its administration.
100 It follows that I am persuaded to make orders in terms of pars 1, 2
and 3 of Appendix A which are generally consistent with the plaintiffs'
3 June minute.
The reception of the post-judgment affidavits
101 It follows from the ruling I have made concerning the appointment of
Mr Carrello that an independent party (the new trustee) is now obliged to enquire into and establish the financial circumstances of Balga/Wilden at various stages of the dispute between the parties and to take account of the various orders and directions contained in Appendix A which are designed to carry into effect the rulings reflected in the primary judgment. To my mind, this has a bearing upon the admissibility and use to be made of the post-judgment affidavits save for those passages bearing upon the removal/new trustee issue.
102 As to the plaintiffs' affidavits, I am persuaded that I should receive in
evidence the Hughes company details affidavit as it bears upon the status of Balga/Wilden and can be characterised as evidence limited to the orders to be made. I am persuaded that I should receive the Hughes special costs affidavit as an affidavit of that kind is generally admissible to explain and substantiate the orders sought. I am not persuaded that I should receive the Hughes 19 May affidavit as that goes to certain details which will have to be enquired into by the new trustee.
103 As to the defendants' affidavits, counsel for the defendants said that
they should be characterised simply as evidence bearing upon the orders
to be made.
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104 I pause here to note that counsel did not attempt to persuade me that
they should be admitted as evidence relevant to a re-opening of the defendants' case or the resurrection of issues dealt with at trial. I have to say that, in my view, having regard to the decided cases mentioned earlier, I do not consider that they were admissible upon that basis. In general terms, the defendants' affidavits did not bear upon any narrow issue or issue of credibility which might be likely to disturb or change any rulings previously made in the primary judgment. They were concerned with various commercial facts and matters bearing upon matters of account or the longstanding and acrimonious relationship between the parties to the proceedings. All of these matters were under notice at the trial and it was not suggested that the affidavits exposed some fundamental misunderstanding of fact reflected in the primary judgment.
105 It follows from this that the essential question is whether the
evidence in these affidavits should be characterised as evidence limited to the orders to be made. Having given the matter careful consideration, I am not persuaded that I should receive these affidavits in evidence. To my mind, in various respects they seek to introduce new issues and many of the matters deposed to are matters that will have to be addressed by the new trustee as he seeks to understand the financial position of Balga/Wilden.
106 As to those passages in the affidavit of Simon Chesson concerning
the calculation of moneys said to be due by the Green parties in respect of the outstanding loans and interest thereon, I am conscious that these calculations cannot be regarded as decisive in the absence of rulings as to the appropriate rate of interest and the bringing to account of distributions referable to units held by the Green parties. Further, and in any event, it will emerge from the orders to be made that I will come to shortly that the question of calculating amounts due is to be dealt with in another manner.
For all these reasons, I rule against the reception in evidence of Mr Chesson's affidavit and the affidavit of Simon Chesson.
There are two further observations I feel obliged to make at this point which bear upon the orders I am about to make in a fundamental way.
109 First, the complexity and multiplicity of the issues, plus the diversity
of the rulings made in the primary judgment makes it virtually impossible to make a precise appraisal of the outcome in financial terms until revaluations have been completed, accounts taken and costs calculated. Accordingly, in formulating orders I will, unless otherwise indicated,
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proceed from the premise that final payments are not to be made on either side until there has been a balancing or adjustment of liabilities in respect of all matters in issue including costs (such adjustment allowing for set-offs of one amount against another where applicable). This concept will be reflected in various orders by use of the term "adjustment of liabilities". To my mind, given the lengthy and acrimonious history of disputation between the parties in which respect the possibility remains of any loose end being magnified into a further area of controversy with consequential hearings and so forth, such a step is necessary in order to achieve finality.
110 Second, the orders I am about to make will be handed down upon the
basis that they are final orders, although I am conscious that much will have to be done by way of carrying the orders into effect and proceeding to an adjustment of liabilities. If any refinement of the orders is required that can be attended to pursuant to the general liberty to apply. Again, my overriding concern is the need for finality.
I must now proceed to the Balga/Wilden additional units and options issue – pars 4 to 7 of the plaintiffs' 3 June minute of proposed orders.
Balga/Wilden additional units and options issue – Paragraphs 4 to 7
112 The orders proposed at pars 4 to 7 of the plaintiffs' 3 June minute
concern the Balga/Wilden additional units and options issue. The proposed orders pick up the matters dealt with at pars 867 and 1310 of the primary judgment. Par 4 of the proposed orders envisages that declarations will be made that the issue of 200 units to each of Callao and Benrone in October 1990 and the issue of 200 units to each of those companies in or about 1992 was void and of no effect at law or in equity as from the date of the purposed issue. Paragraph 5 envisages that Mr Carrello, as trustee of Balga/Wilden, will ascertain the funds received by the trustee company Wilden for the purported issue of the subject units and ascertain the moneys paid or credited as having been paid to the purported holders of the units by way of capital and income. He will thereafter set-off against the amount paid for the units any amounts received in respect of the same.
113 By par 6 it is proposed that if the consequence of the set-off is a sum
payable by Balga/Wilden to either or both of Callao or Benrone then the payment should be stayed pending ascertainment of legal costs but if a sum is due from either or both of Callao and Benrone the amount should be paid forthwith and bear interest. By par 7 provision is made for liberty to apply.
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114 The defendants oppose these orders. They recognised that the
making of the orders sought would have a bearing upon the current repurchase value to be attributed to the units in Balga/Wilden the subject of the repurchase requests lodged by the Green parties in January 1991 in that the entirety of units in Balga/Wilden at the relevant valuation date would be diminished by 400 if the orders sought were made. However, they submitted that this point of controversy could be overcome (if orders for specific performance of the kind proposed were made) by directions to the valuer to proceed on the hypothesis that 400 units were not issued and the price paid was a liability of the Trust (that is, a debt owed to Callao and Benrone) carrying interest from the date of payment. Directions of a similar kind could be made in the event of an account between the parties being taken.
115 The defendants submitted also that the units issued to Benrone are no
longer held by it. They were purchased by the eighth defendant, Deltabrook, and Callao for $500 each. It was said that there was no adverse finding as against Deltabrook or John Kelly in relation to the issue of these units by Wilden. To declare the issue of the units to Benrone void ab initio would adversely affect the interests of an innocent third party, and bona fide purchaser for value.
116 As to this aspect of the proposed orders I am not persuaded that the
matters raised by the defendants should stand in the way of making the orders sought by the plaintiffs. It was open to the defendants to raise matters of the kind just mentioned at the trial of the action in the course of addressing the Balga/Wilden additional units and options issue but they failed to do so. Further, and in any event, I am not persuaded that Deltabrook and Kelly can be characterised as bone fide purchasers for value without notice, having regard to the involvement of those parties in the events giving rise to the creation of the disputed units. The evidence in that regard is dealt with at some length in the primary judgment and I will not go over it again. Put shortly, this is not the case of an innocent third party acquiring units without being aware that the status of the units in question was subject to disputation. Deltabrook and Kelly are parties to the legal proceedings. It is apparent from the pleadings that the validity of the units was in dispute.
117 Accordingly, I consider that for the reasons given in the primary
judgment declarations of the kind contended for by the plaintiffs in par 4 should be made. This brings with it a necessity to make the enquiries and take the steps envisaged by pars 5 and 6 of the proposed orders. It will be apparent from my reasoning in earlier discussion that I am generally of
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the view that, wherever possible, orders should be formulated with a view to allowing for an adjustment of liabilities between the parties and a stay of payments until the adjustment is made.
118 This brings me to the question of interest. This is a matter which
arises in various ways in this supplementary judgment and it will therefore be useful at this point to make some general observations about that matter.
119 The common law does not generally allow the recovery of interest
for the breach of a contractual provision to pay money. The most important exception is where the parties expressly agree to the payment of interest, as is so often done in commercial contracts. In those cases, an award of damages in respect of a breach may include an allowance for interest. By statutory provisions, such as s 32 of the Supreme Court Act 1935 (WA) in this State, the courts are given a discretion to add a sum by way of interest to money judgments in order to compensate plaintiffs for being kept out of their money.
120 Section 32 of the Supreme Court Act provides that in any proceedings for the recovery of any money (including any debt or damages or the value of any goods), the Court may order that there shall be included, in the sum for which judgment is given, interest at such a rate as it thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date when the judgment takes effect.
121 By s 32(2) the provision does not authorise the giving of interest
upon interest or apply in relation to any debt upon which interest is
payable as a right whether by virtue of any agreement or otherwise.122 I note in passing that prior to the coming into force of the Civil Judgments Enforcement Act 2004 on 1 May 2005 s 142 of the Supreme Court Act allowed for gazetted rates of interest in respect of judgment debts. This could be regarded as a guide to the exercise of the Court's discretion as to a suitable rate of interest in an applicable case. I note in passing also that the gazetted rates of interest in the period 14 April 1989 to 12 September 1997 ranged from 14 per cent to 8 per cent with 8 per cent being the operative rate in respect of the period 31 July 1992 to 12 September 1997.
| 123 | Various members of the High Court looked closely at the common law position concerning interest in Hungerfords v Walker (1989) 171 CLR 125 and were of the view that in certain circumstances, it was |
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appropriate for interest to be awarded. The amount recovered by way of interest could be characterised as a foreseeable loss, necessarily within the contemplation of the parties, which is directly related to the defendant's breach of contract or tort.
124 Mason CJ and Wilson J noted at 148 in the same case that equity has
adopted a broad approach to the award of interest. It has long been accepted that the equitable right to interest exists independently of statute. Equity courts have regularly awarded interest when justice so demanded, for example, where money was obtained and retained by fraud or when money was withheld or misapplied by a trustee or fiduciary: President of India v La Pintada Compania Navigacion SA [1985] AC 104.
125 In Treloar v Ivory (1991) 4 WAR 318 Ipp J appeared to approve the equitable approach whereby interest can be recovered if a party has been kept out of moneys which ought to have been paid. He noted that s 32(1) of the Supreme Court Act empowers the Court to order interest to be paid on a fund held by a trustee which fund the Court, by its judgment, requires the trustee to pay to a beneficiary.
126 In McLauchlan v Prince [2001] WASC 43 Master Sanderson recognised that, unlike the common law courts, the Chancery Courts are accustomed to award interest as ancillary relief in respect of equitable remedies such as specific performance, rescission and the taking of an account. This was never done on the basis of imposing a penalty on the defaulting party or as compensation for the party suffering loss. Rather, interest was used as a way of assessing the benefit passing to the trustee by the use of the misappropriated trust funds. This line of reasoning suggests that the trustee must be found to have acted improperly in the handling of the funds under his control with the result that it would not be equitable for any benefit to be retained.
127 In the present case the orders proposed by the plaintiffs give rise to
questions as to whether in the adjustment of amounts due the defendants, Callao and Benrone, should be entitled to obtain interest on moneys paid to the trustee company in respect of the units which are to be treated as invalidly issued. There are questions also as to whether interest should be payable in respect of amounts (if any) due from Callao and Benrone. For the purpose of considering and construing any orders to be made in this supplementary judgment pursuant to s 32 of the Supreme Court Act I will, in adopting the language of the plaintiffs' 3 June minute, treat the rate prescribed in s 32 of the Supreme Court Act as the gazetted rate mentioned earlier from which it follows that certain calculations will have
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to be made in respect of differing periods in order to arrive at any final
figure in respect of interest.128 The plaintiffs submitted that care must be exercised in allowing
interest to parties, especially fiduciaries, who have acted improperly. However, in the circumstances of the present case I consider that orders should be made pursuant to s 32 for an allowance of interest in respect of both matters upon the basis that it be simple interest only. For the reasons I have given previously, I consider that a stay should be ordered pending the ascertainment of the costs of the proceedings and an adjustment of liabilities.
129 Accordingly, the orders I make are as follows (with annotations to
indicate the manner in which the orders made differ from the plaintiffs'
3 June minute):"4. It is hereby declared that the issue of:
4.1 200 units in the Balga Bazaar (1985) Unit Trust to the Sixth Defendant, Callao Pty Ltd, in or about October 1990; 4.2 200 units in the Balga Bazaar (1985) Unit Trust to the Seventh , Defendant, Benrone Pty Ltd, in or about October 1990; 4.3 200 units in the Balga Bazaar (1985) Unit Trust to the Sixth Defendant, Callao Pty Ltd, in or about 1992; and 4.4 200 units in the Balga Bazaar (1985) Unit Trust to the Seventh Defendant, Benrone Pty Ltd, in or about 1992, was and is void and of no effect at law or in equity and such units are and have been void as and from the date of purported issue.
5. Mr Carrello, as trustee of the Balga Bazaar (1985) Unit Trust:
5.1
do ascertain the funds received by Wilden Pty Ltd as trustee of the Balga Bazaar (1985) Unit Trust for the purported issue of the units referred to in paragraph 4 of this judgment;
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5.2 ascertain the moneys paid or credited as having been paid by way of capital distribution or income distribution to the purported holders of the units referred to in paragraph 4 of this judgment from the date such units were purportedly issued until the date of this judgment; and 5.3 thereafter set off against the sum found on the inquiry referred to in paragraph 5.1 hereof, the sum found on the inquiry referred to in paragraph 5.2 hereof. 6. In the event that the sum found on the set-off referred to in paragraph 5.3 of this judgment:
6.1
is a sum payable by the Balga Bazaar (1985) Unit Trust to either or both of the Sixth Defendant, Callao Pty Ltd, or the Seventh Defendant, Benrone Pty Ltd, the payment by Mr Carrello be stayed pending ascertainment of the costs of the within proceedings and any claim by the Balga Bazaar (1985) Unit Trust in relation thereto and the adjustment of liabilities between the parties pursuant to these orders or further orders but otherwise accrue interest at the rate prescribed in section 32 of the Supreme Court Act from time to time;
6.2
is a sum payable by either or both of Callao Pty Ltd, the Sixth Defendant, and the Seventh Defendant, Benrone Pty Ltd, to the Balga Bazaar (1985) Unit Trust such payment be stayed pending ascertainment of the costs of the within proceedings and any claim by these defendants in relation thereto and the adjustment of liabilities between the parties pursuant to these orders or further orders but otherwise accrue interest at the rate prescribed in s 32 of the Supreme Court Act from time to time. made by the party or parties identified as being liable within 7 days and such sum bear interest at the rate of 10 per centum per annum compounded on the basis of daily rests as and from the date ascertained by the inquiry
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referred to in paragraph 5.3 hereof as being the date upon which the sum referred to in paragraph 5.2 hereof first exceeded the sum referred to in paragraph 5.1 hereof.
7. In the event of any dispute between Mr Carrello and either or both of the Sixth and Seventh Defendants as to the inquiries referred to in paragraph 5 hereof such parties have liberty:
7.1 to apply generally, such application to be made in
Chambers; and7.2
to apply to have the inquiries determined by a Registrar of this Honourable Court pursuant to order 45 of the Rules of this Honourable Court."
Balga/Wilden specific performance – pars 8 to 10
130 The plaintiffs' 3 June minute of proposed orders sets out orders
aimed at carrying into effect my ruling that, prima facie, the plaintiffs were entitled to specific performance of the repurchase procedure activated by lodgement of repurchase requests in that the valuer, Mr Sanderson, had not proceeded in the prescribed manner. The plaintiffs submitted that the proposed orders reflected the plaintiffs' minute dated 14 November 2003 which was before the Court at trial and the reasoning reflected at par 1336 of the primary judgment. It was said that the plaintiffs were entitled to have the valuation process carried out properly.
131 The defendants submitted that it would be more practical and much
less costly to provide for an independent auditor to determine the values of the non-realty assets and liabilities of the Trust as at the date on which the subject repurchase requests were lodged, bearing in mind that there had not been any significant controversy about the value attributed to the subject reality by Mr Sanderson.
132 I am of the view that the fundamental right of the plaintiffs, as
vindicated by the primary judgment, was to have their units repurchased strictly in accordance with the procedure prescribed by the Trust Deed. Further, I am conscious that by the proposed order 10 the valuer undertaking the proposed revaluation will be entitled to have regard to the valuation of Mr Sanderson of the real property assets of the Balga Bazaar (1985) Unit Trust as at the relevant date for valuation.
Paragraph 42
224 The plaintiffs' stance was that there was one broad contest between
the parties which was essentially resolved in favour of the plaintiffs. However, the realities of the situation were that in order to resolve that contest, and in order to understand the acrimonious relationship between the parties, the affairs of Balga/Wilden had to be subjected to a particularly close analysis. This will be apparent from the structure of the primary judgment. It was in regard to the affairs of Balga/Wilden that the principal allegations of misconduct and fraud in equity were made, and it was in regard to that Trust that the relief sought by the plaintiffs led to the removal of Wilden as trustee.
225 It was against this background that the plaintiffs submitted that the
issues concerning Balga/Wilden gave rise to a justifiable claim for indemnity costs. However, for the reasons I have given in ruling upon the
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main areas of contention, I am not persuaded that an order for indemnity costs of the kind proposed should be made. Accordingly, I propose to delete the passage concerning indemnity costs from the proposed order 42 set out in the plaintiffs' 3 June minute. For the sake of consistency, a further small amendment is necessary to make clear that the costs being spoken of in order 42 are the plaintiffs' costs as that term is defined in the preceding order. I consider also that there needs to be a further proportionate adjustment in order to take account of the position of the sixth and seventh defendants.
The order I make is as follows:
"42. In respect of the proportion of cost the plaintiffs' costs attributable to issues relating to the Balga Bazaar (1985) Unit Trust such costs be taxed on an indemnity basis and be paid:
42.1
as to 80% of such costs by the First Defendant, the Fourth Defendant and the Fifth Defendant jointly and severally; and
42.2
as to 20% of the costs by the First, Fourth, Fifth, Sixth and Seventh Defendants jointly and severally."
Paragraphs 43 and 44
227 It follows from my earlier observations that, in my view, orders
should be made in the form proposed by the plaintiffs subject only to comparatively minor adjustments to give effect to the definition of the term "plaintiffs' costs" in order 41.
228 I pause here to observe that the effect of the various orders made to
this point concerning costs is to impose a liability for costs upon the trustee companies. I noted in earlier discussion that, having regard to the pretrial orders which allowed for the trustee companies to defend the proceedings, a question arose as to whether the trustee companies should be entitled to obtain an indemnity from the Trust fund. A plea to this effect forms part of the defendants' submissions concerning costs.
229 However, for the reasons I gave previously, I am of the view that in
circumstances where the trustee companies had adopted an adversarial stance it would not be appropriate to allow for the trustee companies to be indemnified from Trust funds because this would detract from the relief
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afforded to the plaintiffs. It is apparent from the primary judgment that the plaintiffs remained unit holders in each Trust throughout and as such continue to have an interest in the assets of each Trust entity.
The orders I make are as follows:
"43.
In respect of the proportion of the plaintiffs' costs to be paid in relation to issues in respect of the Summerfield (1986) Unit Trust such costs be paid by the Third Defendant.
44.
In respect of the proportion of the plaintiffs' costs to be paid in relation to issues relating to the Kelmscott (1988) Unit Trust such costs to be paid by the Second Defendant;"
Paragraph 45
231 The plaintiffs sought various special orders including the allowance
to them of reserved costs in the proceedings and that the plaintiffs' costs be taxed without regard to any limits by any applicable scale at any relevant time.
232 It emerges from my rulings upon the main areas of contention that, in
my view, provision should be made for the costs to be taxed without regard to any limits imposed by any applicable scale having regard to the complexity of the proceedings. I will not repeat what I said in previous discussion about that aspect of the subject order.
233 As to par 45.1 and the application for all reserved costs in the
proceedings, I have looked closely at the schedule provided to me. I am of the view that the matters in question are fully integrated and referable to what I have called the one contest between the parties. It has not been demonstrated to my satisfaction that any portion of the reserved costs should be dealt with in isolation owing to some particular default or untoward conduct on one side or the other, and I am therefore of the view that these costs should be dealt with broadly within the framework of the action as a whole and the considerations I have addressed previously. Accordingly, I am persuaded that the plaintiff should be allowed all reserved costs subject to the limitations mentioned earlier which are now reflected in the definition of the term "plaintiffs' costs".
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234 I consider that the plaintiffs should be entitled to certificates for two
counsel, transcript, the expert witness costs of Mr Trevor Gorey and two
solicitors attending trial.235 I pause here to say that it will be a matter for the Taxing Officer to
determine what amounts in particular should be allowed having regard to the nature of the attendances and the time involved both as to counsel, solicitors and the expert witness. I am satisfied that an allowance should be made for Mr Gorey because there was a late delivery of various accounts.
236 As to par 45.3, I consider that the complexities of the trial, as I
described them in earlier discussion, justify an order of the kind proposed. Mr Bennett is a senior practitioner admitted to practice in 1978. The complexity of the case and corresponding experience and expertise of Mr Bennett is sufficient to allow a cost allowance for the appearance of Mr Bennett as counsel to be assessed at the rate applicable to Senior Counsel. I take account of the fact that the defendants were represented by two extremely senior and experienced Queens Counsel. I am conscious that Mr Bennett's costs have been allowed to be taxed at the rate of Senior Counsel in previous litigation: Todd & Anor v Swan Television & Radio Broadcasters Pty Ltd [2001] WASC 334; IPT Systems Ltd v Quadrant Management Pty Ltd (CIV 1159 of 2002).
237 As to 45.4 and the application for the reasonable costs of preparing
the plaintiffs' written closing submissions and two refreshers, I consider that orders should be made in these terms. The lengthy written submissions were necessary having regard to the complexity of the matter. To my mind, it is not material that certain of the submissions were directed to issues in respect of which the plaintiffs failed. The presence of essentially one contest between the parties required that submissions be directed to all matters bearing in mind considerations of the kind I mentioned earlier. I am of the view that the refreshers are justified by reason of the lengthy break from November 2003 to April 2004 and the break in preparation of written submissions and closing submissions between July 2004 and November 2004.
I will make an order in these terms:
"45. In respect of the Plaintiffs' costs there be the following
special orders:
45.1 the Plaintiffs' costs include all reserved costs in
the proceedings;
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45.2 the Plaintiffs be entitled to certificates for 2 counsel, transcript, the expert witness costs of Mr Trevor Gorey and 2 solicitors attending trial; 45.3 the Plaintiffs be entitled to tax the costs as if Mr
M L Bennett was Senior Counsel;45.4 the Plaintiffs be entitled to such sum as determined by the Taxing Officer as to be reasonable for the costs of the Plaintiffs' written closing submissions and for 2 refreshers;
45.5 the Plaintiffs be entitled to have their costs of:
45.5.1 the statement of claim and
reply;45.5.2 giving discovery; 45.5.3 inspecting documents; 45.5.4 getting up case for trial,
taxed without regard to any limits by any
applicable scale at any relevant time."
Paragraphs 46 and 47
239 The plaintiffs accepted that the first and second defendants are
entitled to their costs of the counterclaim. It is said that the matters in issue were prosecuted as a consolidated claim and should be taxed as a single bill. I am of the view that in an endeavour to avoid ongoing controversy it is appropriate that the taxation should proceed at the same time as the taxation of the plaintiffs' bill of costs so that the appropriate set-offs and adjustments can be made.
240 As to par 47, the plaintiffs accept that the eighth and ninth
defendants are entitled to their costs of the claim to the extent that such costs are separate from the costs of the other defendants. However, it is said that they were represented by the same counsel at all times and their costs should be taxed as a single bill at the same time as taxation of the plaintiffs' costs. The Taxing Officer will thereby be able to ascertain the nature of how such costs might be contended to be separate from the costs of the other defendants.
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241 This is opposed by the defendants. However, it follows from my
earlier reasoning that I am of the view that all issues had to be raised as part of issues affecting all defendants so as to resolve all matters in controversy. Accordingly, I consider that orders should be made as contended for by the plaintiffs.
The orders I make are as follows:
| ||||
| Summary |
243 This supplementary judgment is to be read in conjunction with the
primary judgment. The supplementary judgment is directed to carrying into effect the various rulings reflected in the primary judgment and to resolving all matters in issue raised by the parties after the handing down of the primary judgment and at the further hearings on 19 May 2005 and 14 June 2005. The plaintiffs' 3 June minute of proposed orders has been used as a basis for discussion. The orders and directions made by the Court are set out in Appendix A to this supplementary judgment. The orders and directions represent the formal expression of what has been decided and thus, for ease of reference, are described as "this judgment" in Appendix A.
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APPENDIX A
This action having come on for hearing on 4 – 21 November 2003, 15 – 28 April 2004, 5, 11, 12, 21, 26, 27 and 31 May 2004, 1 – 4, 8 – 14, 21 – 30 June 2004, 1 and 2 July 2004, 29 and 30 November 2004, 10 and 19 May 2005 and 14 June 2005 in the presence of Mr D Grace one of Her Majesty's Counsel and Mr M L Bennett of Counsel for the Plaintiffs and First, Second and Third Defendants by counterclaim and Mr M J McCusker one of Her Majesty's Counsel and Mr R H B Pringle one of Her Majesty's Counsel and Mr T Galic for the First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth and Ninth Defendants and for the First and Second Plaintiffs by counterclaim and the Judge having ordered that judgment as hereinafter provided be entered for the Plaintiffs IT IS ADJUDGED that:
In relation to the Balga Bazaar (1985) Unit Trust
1. The First Defendant, Wilden Pty Ltd, be and is hereby removed as trustee of the Balga Bazaar (1985) Unit Trust.
2. Giovanni Maurizio Carrello, of Messrs Dickson Carrello Insolvency Practitioners, be and is hereby appointed Trustee of the Balga Bazaar (1985) Unit Trust and further:
2.1 the property of the Balga Bazaar (1985) Unit Trust vest pursuant to section 78 of the Trustees Act in Giovanni Maurizio Carrello upon the terms of the Balga Bazaar Unit Trust Deed; 2.2 Mr Carrello be entitled to charge pursuant to clause 14.6 of the Balga Bazaar Unit Trust Deed his usual remuneration as an insolvency practitioner; 2.3 Mr Carrello shall not be personally liable to any unit
holder upon redemption of any units; and2.4 Mr Carrello have liberty to apply generally. 3. The First Defendant:
3.1
within 7 business days of this judgment deliver to Mr Carrello all current records and accounts for the Balga Bazaar (1985) Unit Trust held by it together with a full Statement of Assets and Liabilities of the Balga Bazaar (1985) Unit Trust as at the date of this judgment and disclose in writing all sources of income of the Balga Bazaar (1985) Unit Trust verified by affidavit sworn by the directors of the First Defendant;
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3.2
within 15 business days of this judgment deliver to Mr Carrello all other records and accounts and documents of or relating to the Balga Bazaar (1985) Unit Trust held by it; and
3.3 co-operate with Mr Carrello and do all things necessary:
3.3.1 to vest in Mr Carrello the trust property; and 3.3.2 to assist Mr Carrello in performing his duties and functions
as Trustee.4. It is hereby declared that the issue of:
4.1
200 units in the Balga Bazaar (1985) Unit Trust to the Sixth Defendant, Callao Pty Ltd, in or about October 1990;
4.2
200 units in the Balga Bazaar (1985) Unit Trust to the Seventh Defendant, Benrone Pty Ltd, in or about October 1990;
4.3 200 units in the Balga Bazaar (1985) Unit Trust to the
Sixth Defendant, Callao Pty Ltd, in or about 1992; and4.4 200 units in the Balga Bazaar (1985) Unit Trust to the
Seventh Defendant, Benrone Pty Ltd, in or about 1992,was and is void and of no effect at law or in equity and such units
are and have been void as and from the date of purported issue.5. Mr Carrello, as trustee of the Balga Bazaar (1985) Unit Trust:
5.1
do ascertain the funds received by Wilden Pty Ltd as trustee of the Balga Bazaar (1985) Unit Trust for the purported issue of the units referred to in paragraph 4 of this judgment;
5.2
ascertain the moneys paid or credited as having been paid by way of capital distribution or income distribution to the purported holders of the units referred to in paragraph 4 of this judgment from the date such units were purportedly issued until the date of this judgment; and
5.3
thereafter set off against the sum found on the inquiry referred to in paragraph 5.1 hereof, the sum found on the inquiry referred to in paragraph 5.2 hereof.
6.
In the event that the sum found on the set-off referred to in paragraph 5.3 of this judgment:
6.1
is a sum payable by the Balga Bazaar (1985) Unit Trust to either or both of the Sixth Defendant, Callao Pty Ltd, or the Seventh Defendant, Benrone Pty Ltd, the payment by
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Mr Carrello be stayed pending ascertainment of the costs of the within proceedings and any claim by the Balga Bazaar (1985) Unit Trust in relation thereto and the adjustment of liabilities between the parties pursuant to these orders or further orders but otherwise accrue interest at the rate prescribed in section 32 of the Supreme Court Act from time to time;
6.2 is a sum payable by either or both of Callao Pty Ltd the Sixth Defendant, and the Seventh Defendant, Benrone Pty Ltd, to the Balga Bazaar (1985) Unit Trust such payment be stayed pending ascertainment of the costs of the within proceedings and any claim by these defendants in relation thereto and the adjustment of liabilities between the parties pursuant to these orders or further orders but otherwise accrue interest at the rate prescribed in s 32 of the Supreme Court Act from time to time. 7. In the event of any dispute between Mr Carrello and either or both of the Sixth and Seventh Defendants as to the inquiries referred to in paragraph 5 hereof such parties have liberty:
7.1 to apply generally, such application to be made in
Chambers; and7.2 to apply to have the inquiries determined by a Registrar of this Honourable Court pursuant to order 45 of the Rules of this Honourable Court. 8. It is declared that the purported determination of the current repurchase value of the Plaintiffs' units in the Balga Bazaar (1985) Unit Trust made by Mr Ian Sanderson contained in a letter dated 1 October 1992 is not a determination of current repurchase values pursuant to the Balga Bazaar (1985) Unit Trust Deed and is of no force and effect and is not binding on the parties hereto.
9. Mr Carrello, as Trustee of the Balga Bazaar (1985) Unit Trust,
shall:
9.1
forthwith request the President of the Institute of Valuers to nominate a valuer to value the units held by the First and Second Plaintiffs in the Balga Bazaar (1985) Unit Trust as at the Relevant Date for the purpose of ascertaining their Current Repurchase Value in accordance with the terms of the Trust Deed;
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9.2 thereafter promptly make available to such valuer as is appointed by the President the accounts, books and records of the Trust and full details of all assets and liabilities of the Trust as at the Relevant Date; 9.3 at the same time in accordance with the Trust Deed make such estimations as may be required and provide them in writing to the said valuer to enable him to determine the disposal costs as at the Relevant Date; 9.4 upon determination by the said valuer of the unit value of
the First and Second Plaintiffs' units:
9.4.1 forthwith provide the First and Second Plaintiffs with a true copy of all the said valuer's determinations; 9.4.2 forthwith provide the First and Second Plaintiffs
with a statement showing:9.4.2.1 the value of the Plaintiffs' units determined by the valuer as the Current Repurchase Value; and
9.4.2.2 the amount (if any) owing by each unit holder to the Trustee as at the relevant date;
9.5
in the event that the account referred to in paragraph 16 hereof shows a net balance payable to either or both of the First and Second Plaintiffs:
9.5.1 the Trustee shall appoint an independent valuer (who may be the same valuer) to fix the value of all or any part of the assets of the Trust to be sold to provide funds to meet the costs of the Current Repurchase Value;
9.5.2
upon receipt of such valuation forthwith offer for sale the whole or part of the trust funds so valued at a price not less than the values so determined; and
9.5.3
upon receipt of an offer to purchase the whole or part of the trust funds so offered for sale provided such offer is not less than the value so determined accept such offer and promptly complete the sale of the trust fund or part thereof.
9.5.4
if the trust funds are sufficient to cover an amount payable to the plaintiffs the trustee shall pay the
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amount from such funds and 9.5.1 to 9.5.3 above
shall not apply.10. It is declared that in the performance of the valuation referred to in paragraph 9 of this judgment the valuer shall be entitled to have regard to the valuation of Mr Sanderson of the real property assets of the Balga Bazaar (1985) Unit Trust as at the relevant date for valuation.
11. There be an account to be taken before a Registrar of this Honourable Court between the First and Second Plaintiffs and Mr Carrello as to the income and capital distributions to which the First and Second Plaintiffs as unit holders in the Balga Bazaar (1985) Unit Trust would have been entitled had the units referred to in paragraph 4 of this judgment not been issued and capital and income distributions made to the First and Second Plaintiffs pari passu with other unit holders.
12. The First and Second Plaintiffs be awarded equitable damages in the amount found on the taking of the account referred to in paragraph 11 of this judgment being the greater of:
12.1 the value of the First and Second Plaintiffs' units determined pursuant to paragraph 9 of this judgment plus the sums determined by the amount referred to in paragraph 11 of this judgment.
or
12.2 the value of the First and Second Plaintiffs' unitsdetermined pursuant to paragraph 9 of this judgment plus interest thereon calculated at the rates referred to in paragraph 15 of this judgment.
13. It is declared that:
13.1
the First Plaintiff is indebted to the Balga Bazaar (1985) Unit Trust as and from 25 October 1990 in the sum of $85,365.86; and
13.2
the Second Plaintiff is indebted to the Ba1ga Bazaar (1985) Unit Trust as and from 25 October 1990 in the sum of $234,097.56.
13.3
The said debts are repayable on demand subject to the adjustment of liabilities between the parties provided for by these orders.
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14. There be an account to be taken before a Registrar of this Honourable Court between the First and Second Plaintiffs and Mr Carrello as to the cost to the Balga Bazaar (1985) Unit Trust from time to time as and from 1 December 1990 of its borrowing of a bill line facility with the ANZ Bank Limited together with recurring charges.
15. The sums declared to be owing to the Balga Bazaar (1985) Unit Trust referred to in paragraph 14 hereof:
15.1 bear interest at the rate and for the periods found on the account referred to in paragraph 14 hereof to be the cost to the Balga Bazaar (1985) Unit Trust; and 15.2 for the period during which the Ba1ga Bazaar (1985) Unit Trust did not incur costs on any bill line facility with the ANZ Bank Limited at the rate prescribed from time to time pursuant to section 32 of the Supreme Court Act. 16. Upon completion of the accounts referred to in paragraphs 11 and 14 hereof, Mr Carrello prepare a statement to be provided to each of the First and Second Plaintiffs showing:
16.1 the value of the units as ascertained pursuant to paragraph 9 of this judgment;
16.2 the amount of equitable damages as determined by the
account taken pursuant to paragraph 11 hereof;16.3 the amount of the loan the subject of the declaration
referred to in paragraph 13 hereof; and16.4 the amount of interest determined by the account referred
to in paragraph 15 hereof.17. If the account statement prepared by Mr Carrello referred to in paragraph 16 hereof:
17.1
shows a net balance payable to either or both of the First and Second Plaintiffs, such payment be stayed pending determination of the costs of the within proceedings which may be brought to account by way of set off (if a set off is applicable); and
17.2
shows a net balance payable to the Balga Bazaar (1985) Unit Trust by either or both of the First and Second Plaintiffs such payment be stayed pending determination of the Plaintiffs' costs of the within proceedings which the
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First and Second Plaintiffs shall be entitled to set-off against such sums.
18. The Sixth Defendant be restrained and an injunction is hereby granted restraining the Sixth Defendant from:
18.1 seeking repurchase of all or any units held by it in the
Balga Bazaar Unit Trust;18.2 transferring all or any units held by it in the Balga Bazaar
Unit Trust;18.3 calling any meeting of unit holders of the Balga Bazaar
Unit Trust or voting at any such meeting; and18.4 seeking the removal of Mr Carrello as Trustee, unless and until the repurchase of the First and Second Plaintiffs' units in the Balga Bazaar Unit Trust pursuant to this judgment has been completed.
Orders in respect of Tace Pty Ltd as Trustee of the Summerfield (1986)
Unit Trust
19. It is declared that the purported determination of the unit value of the First and Second Plaintiffs' units in the Summerfield (1986) Unit Trust contained in a letter by Robert Richmond dated 1 October 1992 is not a determination of unit values pursuant to the Summerfield Unit Trust Deed and is of no force and effect and not binding upon the parties hereto.
20. Tace Pty Ltd as trustee of the Summerfield (1986) Unit Trust:
20.1
shall forthwith request the President of the Institute of Valuers to nominate a valuer to value the units as at the Relevant Date for the purpose of ascertaining their Current Repurchase Value in accordance with the terms of the Trust Deed;
20.2
thereafter promptly make available to such valuer as is appointed by the President the accounts, books and records of the Trust and full details of all assets and liabilities of the Trust as at the Relevant Date;
20.3
at the same time in accordance with the Trust Deed make such estimations as may be required and provide them in writing to the said valuer to enable him to determine the disposal costs as at the Relevant Date;
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20.4 upon determination by the said valuer of the unit value of
the First and Second Plaintiffs' units:20.4.1 forthwith provide the First and Second Plaintiffs with a true copy of all the said valuer's determinations; 20.4.2 forthwith provide the First and Second Plaintiffs with a statement showing: 20.4.2.1 the value of the First and Second Plaintiffs' units determined by the valuer as the Current Repurchase Value; and
20.4.2.2 the amount (if any) owing by each unit
holder to the Trustee as at the Relevant Date;
20.4.3 the Trustee shall appoint an independent valuer (who may be the said valuer) to fix the value of all or part of the assets of the Trust and to be sold to provide funds to meet the costs of the Current Repurchase Value;
20.4.4 upon receipt of such valuation forthwith offer for sale the whole or part of the Trust funds so valued at a price not less than the value so determined;
20.4.5 upon receipt of an offer to purchase the whole or part of the Trust funds so offered for sale provided such offer is not less than the value so determined accept such offer and promptly to complete the sale of the Trust fund or part thereof; and
20.4.6 within 7 days of receipt by the Trustee of the proceeds of sale pay to the First and Second Plaintiffs the Current Repurchase Value without deduction.
20.4.7 if the trust funds are sufficient to cover any amount payable to the plaintiff the trustee shall pay the amount from such funds and 20.4.3 to 20.4.6 shall not apply.
21. It is declared that in the performance of the valuation referred to in paragraph 20 hereof the valuer shall be entitled to have regard to the valuation of Mr Richmond of the real property assets of the Summerfield (1986) Unit Trust as at the Relevant Date for valuation.
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22. There be an account taken before a Registrar of this Honourable Court between the First and Second Plaintiffs and Tace Pty Ltd as to the income and capital distributions to which the First and Second Plaintiffs as unit holders in the Summerfield (1986) Unit Trust were entitled pari passu with other unit holders until the date of completion of the repurchase pursuant to paragraph 20 of this judgment.
23. The First and Second Plaintiffs be awarded equitable damages in the amount found on the taking of the account referred to in paragraph 22 of this judgment being the greater of:
23.1 the value of the First and Second Plaintiffs' units determined pursuant to paragraph 20 of this judgment plus the sums determined by the amount referred to in paragraph 22 of the judgment; or
23.2 the value of the First and Second Plaintiffs' units determined pursuant to paragraph 20 of this judgment plus interest thereon calculated at the rate prescribed in s 32 of the Supreme Court Act from time to time.
24. The First and Second Plaintiffs and Tace Pty Ltd have liberty to apply in Chambers for further directions in relation to the taking of the accounts referred to in paragraph 22 of this judgment.
25. Until completion of the repurchase of the Plaintiffs' units the Third Defendant be required and an injunction is hereby granted requiring the Third Defendant to:
25.1
provide to the Plaintiffs all accounts, reports, information and documents given to unit holders between 30 June 2003 and the date of this judgment;
25.2
provide to the Plaintiffs at the same time as given to other unit holders all accounts, reports, information and documents as and from the date of this judgment; and
25.3 allow and permit the Plaintiffs to attend and participate in
all meetings of unit holders.
In relation to Magenta Pty Ltd
26. It is declared that the purported determination of the unit value of the Third Plaintiffs' units in the Kelmscott (1988) Unit Trust contained in the letter from Mr Hunt dated 19 November 1992 is not a determination of unit values pursuant to the Kelmscott Unit
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Trust Deed and is of no force and effect and is not binding upon the parties hereto.
27. Magenta Pty Ltd as Trustee:
27.1 shall forthwith request the President of the Institute of Valuers to nominate a valuer to value the units as at the Relevant Date for the purpose of ascertaining their Current Repurchase Value in accordance with the terms of the Trust Deed; 27.2 thereafter promptly make available to such valuer as appointed by the President the accounts, books and records of the Trust and full details of all assets and liabilities of the Trust as at the Relevant Date; 27.3 at the same time in accordance with the Trust Deed make such estimations as may be required and provide them in writing to the said valuer to enable him to determine the disposal costs as at the Relevant Date; 27.4 upon determination by the said valuer of the unit value of
the Third Plaintiffs' units:27.4.1 forthwith provide the Third Plaintiffs with a true copy of all the said valuer's determinations; and
27.4.2 forthwith provide the Third Plaintiffs with a
statement showing:
27.4.2.1 the value of the Third Plaintiffs' units determined by the valuer as the Current Repurchase Value; and
27.4.2.2 the amount (if any) owing by each unit
holders to the Trustee as at the Relevant Date.
28. It is declared that in the performance of the valuation referred to in paragraph 25 hereof the valuer shall be entitled to have regard to the valuation of Mr Hunt of the real property assets of the Kelmscott (1988) Unit Trust as at the Relevant Date for valuation.
29. There be an account taken before a Registrar of this Honourable Court between the Third Plaintiffs and Magenta Pty Ltd as to the income and capital distributions to which the Third Plaintiffs as unit holders in the Kelmscott (1988) Unit Trust would have been entitled to receive pari passu with other unit holders.
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30. The Third Plaintiffs be awarded equitable damages on the amount found on the taking of the account referred to in paragraph 28 of this judgment being the greater of:
30.1 the value of the Third Plaintiffs' units determined pursuant to paragraph 26 of this judgment plus the sums determined by the amount referred to in paragraph 28 of this judgment; or
30.2 the value of the Third Plaintiffs' units determined pursuant to this judgment plus interest thereon calculated at the rates referred to in paragraph 33 of this judgment. 31. It is declared that:
31.1. the Third Plaintiff, Sharyn Lee Green, is indebted to the Kelmscott (1988) Unit Trust in the principal sum of $30,000; 31.2 the Third Plaintiffs, Graham William Green and Julie Anne Green, are indebted to the Kelmscott (1988) Unit Trust in the principal sum of $30,000; and 31.3 the Third Plaintiffs, William Joseph Green and Norma Glenys Green, are indebted to the Kelmscott (1988) Unit Trust in the principal sum of $500,000. 31.4 The said debts are repayable on demand subject to the adjustment of liabilities between the parties provided for by these orders. 32. There be an account to be taken before a Registrar of this Honourable Court between the Third Plaintiffs and Magenta Pty Ltd as to the cost to the Kelmscott (1988) Unit Trust from time to time as and from 6 December 1988 of its borrowings of a bill line facility with the ANZ Bank Limited together with recurring charges.
33. The sums referred to in paragraph 30:
33.1 bear interest at the rate and for the periods found on
account referred to in paragraph 32 hereof; and33.2
for the period during which the Kelmscott (1988) Unit Trust did not incur costs on any bill line facility with the ANZ Bank Limited at the rate prescribed from time to time pursuant to section 32 of the Supreme Court Act.
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34. On completion of the accounts referred to in paragraphs 29 and 32 Magenta Pty Ltd forthwith prepare a statement for each of the Third Plaintiffs showing:
34.1 the value of their units as ascertained pursuant to paragraph 27 of this judgment;
34.2 the amount of equitable damages as determined by the
account taken pursuant to paragraph 30 hereof;34.3 the amount of interest payable to the Third Plaintiffs
pursuant to paragraph 30 of this judgment;34.4 the amount of the loan the subject of the declarations
referred to in paragraph 31 hereof; and34.5 the amount of interest determined by the account referred
to in paragraph 32 hereof.35. If the statement prepared by Magenta Pty Ltd referred to in paragraph 34 of this judgment:
35.1 shows that a net balance is payable to all or any of the Third Plaintiffs such payment be stayed pending determination of any costs payable by the third plaintiffs which costs may be brought to account by way of set off (if a set off is applicable); and 35.2 shows a net balance payable to the Kelmscott (1988) Unit Trust by any of the Third Plaintiffs such payment be stayed pending determination of the Plaintiffs' costs of the within proceedings which the Third Plaintiffs shall be entitled to set off against any such sum owing. 36. The Third Plaintiffs and Magenta Pty Ltd have liberty to apply in Chambers for further directions in respect of the taking of such accounts.
37. Until completion of the repurchase of the Plaintiffs' units the Second Defendant be required and an injunction is hereby granted requiring the Second Defendant to:
37.1
provide to the Plaintiffs all accounts, reports, information and documents given to unit holders between 30 June 2003 and the date of this judgment;
37.2
provide to the Plaintiffs at the same time as given to other unit holders all accounts, reports, information and documents as and from the date of this judgment; and
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37.3 allow and permit the Plaintiffs to attend and participate in
all meetings of unit holders.
Other Orders
38. The Plaintiffs' claims against the Eighth and Ninth Defendants be dismissed.
39. The Plaintiffs' claims otherwise be dismissed.
40. The First and Second Defendants' have judgment on their counterclaims as provided in pars 13 to 15 and 31 to 33 but the counterclaims otherwise be dismissed.
Costs of the trial and proceedings
41. The Defendants (other than the Eighth and Ninth Defendants) shall pay to the Plaintiffs four-fifths of the costs of the within proceedings incurred by the plaintiffs to be taxed as a single bill. The proportion of costs allowed to the plaintiffs by way of costs as aforesaid (that is, four-fifths of the costs incurred by the plaintiffs) shall for the purpose of all following orders and directions be called 'the plaintiffs' costs'. The plaintiffs costs shall be paid in the following proportions:
41.1 the Plaintiffs' costs be apportioned as between the three
Trusts as follows:41.1.1 issues concerning the Balga Bazaar (1985) Unit Trust - 50% of the costs;
41.1.2 issues concerning the Summerfield (1986) Unit Trust - 25% of the costs; and
41.1.3 issues concerning the Kelmscott (1988) Unit Trust
- 25% of the costs.
42. In respect of the proportion of the plaintiffs' costs attributable to issues relating to the Balga Bazaar (1985) Unit Trust such costs be taxed and be paid:
42.1
as to 80% of such costs by the First Defendant, the Fourth Defendant and the Fifth Defendant jointly and severally; and
42.2 as to 20% of the costs by the First, Fourth, Fifth, Sixth and
Seventh Defendants jointly and severally.
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43. In respect of the proportion of the plaintiffs' costs to be paid in relation to issues in respect of the Summerfield (1986) Unit Trust such costs be paid by the Third Defendant.
44. In respect of the proportion of the plaintiffs' costs to be paid in relation to issues relating to the Kelmscott (1988) Unit Trust such costs to be paid by the Second Defendant;
45. In respect of the Plaintiffs' costs there be the following special
orders:
45.1 the Plaintiffs' costs include all reserved costs in the
proceedings;45.2
the Plaintiffs be entitled to certificates for 2 counsel, transcript, the expert witness costs of Mr Trevor Gorey and 2 solicitors attending trial;
45.3 the Plaintiffs be entitled to tax the costs as if Mr M L
Bennett was Senior Counsel;45.4
the Plaintiffs be entitled to such sum as determined by the Taxing Officer as to be reasonable for the costs of the Plaintiffs' written closing submissions and for 2 refreshers;
45.5 the Plaintiffs be entitled to have their costs of: 45.5.1 the statement of claim and reply;
45.5.2 giving discovery;
45.5.3 inspecting documents;
45.5.4 getting up case for trial,
taxed without regard to any limits by any applicable scale at any
relevant time.
46. The First and Second Defendants be entitled to the costs of the counterclaim to be taxed as a single bill at the same time as the taxation of the Plaintiffs' costs.
47. The Eighth and Ninth Defendants be entitled to their costs of the claim against them (to the extent that such costs are separate from the costs of the other Defendants) to be taxed as a single bill at the same time as the taxation of the Plaintiffs' costs.
48. There will be general liberty to apply.
0
25
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