JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: GREEN & ORS -v- WILDEN PTY LTD & ORS [2005] WASC 83
CORAM: HASLUCK J
HEARD: 4-21 NOVEMBER 2003, 15-28 APRIL 2004, 5, 11, 12, 21, 26, 27, 31 MAY 2004, 1-4, 8-14, 21-30 JUNE 2004, 1 & 2 JULY 2004, 29 & 30 NOVEMBER 2004
DELIVERED : 10 MAY 2005
FILE NO/S: CIV 3049 of 1991
CIV 3050 of 1991
CIV 2965 of 1990
CIV 2966 of 1990
Consolidated by order dated 5 August 1998
BETWEEN: GRAEME WILLIAM GREEN
First Plaintiff
W J GREEN & CO (1984) PTY LTD (ACN 008 851 867)
Second PlaintiffSHARYN LEE GREEN
GRAEME WILLIAM GREEN
JULIE ANNE GREEN
WILLIAM JOSEPH GREEN
NORMA GLENYCE GREEN
Third PlaintiffsAND
WILDEN PTY LTD (ACN 009 143 033)
First DefendantMAGENTA NOMINEES PTY LTD (ACN 009 340 158)
Second DefendantTACE PTY LTD (ACN 009 204 915)
Third DefendantSYDNEY JAMES CHESSON
Fourth DefendantBERT LEONARD DENBOER
Fifth DefendantCALLAO PTY LTD (ACN 008 867 552)
Sixth DefendantBENRONE PTY LTD (ACN 008 931 084)
Seventh DefendantDELTABROOK PTY LTD (ACN 009 462 695)
Eighth DefendantJOHN MARTIN KELLY
Ninth Defendant(BY ORIGINAL ACTION)
WILDEN PTY LTD (ACN 009 143 033)
First Plaintiff by CounterclaimMAGENTA NOMINEES PTY LTD (ACN 009 340 158)
Second Plaintiff by CounterclaimAND
GRAEME WILLIAM GREEN
First Defendant by CounterclaimW J GREEN & CO (1984) PTY LTD (ACN 008 851 867)
Second Defendant by CounterclaimSHARYN LEE GREEN
GRAEME WILLIAM GREEN
JULIE ANNE GREEN
WILLIAM JOSEPH GREEN
NORMA GLENYCE GREEN
Third Defendants by Counterclaim(BY COUNTERCLAIM)
Catchwords:
Trusts - Administration of three Trusts by trustee companies - Interpretation of subject Trust Deeds in standard form - Provisions concerning trustees' powers and duties - Provisions concerning repurchase procedure as to units in each Trust - Provisions excluding trustees' liability save for fraud - Resolution of various issues concerning compliance with repurchase procedure - Valuations relied on by trustee companies found to be ineffective - Resolution of various related issues concerning breach of fiduciary duties by the subject trustee companies and their directors - Finding of fraud in equity in respect of units and options allotted to certain directors - Protective provisions of subject Trust Deed held not to exclude liability - Plaintiffs entitled to equitable relief in respect of certain claims subject to intervening circumstances and other relevant matters - Exact form of equitable relief to be determined
Legislation:
Companies (Western Australia) Code, s 229(2)
Companies Act 1961 (WA), s 124(1)
Corporations Act 1989 (Cth) (Corporations Law), s 232, s 1318(1)
Corporations Act 2001 (Cth), s 181, s 182
Trade Practices Act 1974 (Cth), s 52, s 75B
Trustees Act 1962 (WA), s 75
Result:
Plaintiffs' claim allowed in part
Defendants' counterclaim allowed in part
Final orders to be determined
Category: B
Representation:
Original Action
Counsel:
First Plaintiff : Mr D Grace QC & Mr M L Bennett
Second Plaintiff : Mr D Grace QC & Mr M L Bennett
Third Plaintiffs : Mr D Grace QC & Mr M L Bennett
First Defendant : 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
Solicitors:
First Plaintiff : Bennett & Co
Second Plaintiff : Bennett & Co
Third Plaintiffs : Bennett & Co
First Defendant : Galic & Co
Second Defendant : Galic & Co
Third Defendant : Galic & Co
Fourth Defendant : Galic & Co
Fifth Defendant : Galic & Co
Sixth Defendant : Galic & Co
Seventh Defendant : Galic & Co
Eighth Defendant : Galic & Co
Ninth Defendant : 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
Case(s) referred to in judgment(s):
Anderson v Wallace (1835) 6 ER 1347
Armitage v Nurse (1998) Ch 241
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Australian Securities Commission v AS Nominees Ltd & Ample Funds Ltd (1995) 62 FCR 504; (1995) 18 ACSR 459
Banque Commerciale SA en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279
Barnes v Addy (1874) LR 9 Ch App 244
Biala Pty Ltd & Ors v Mallina Holdings Ltd (No 4) (1994) 13 WAR 11
Blakeley v Cook & Ors [2001] WASCA 208
Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600
Brown v Heffer (1967) 116 CLR 344
Brunninghausen v Glavanics (1999) 46 NSWLR 538
Caledonian Rail Co v Lockhart [1843‑60] All ER Rep 900
Chan v Zacharia (1984) 154 CLR 178
Coleman v Myers [1977] 2 NZLR 225
Collector of Customs v Agfa‑Gevaert Ltd (1995) 186 CLR 389
Cotton v Dempster (1918) 20 WALR 14
Craven‑Sands v Koch (2000) 34 ACSR 341
Dalrymple v Melville (1932) 32 SR (NSW) 596
Darbyshire v Leigh (1896) 1 QB 554
Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500
Dempster & Biala Ltd v Mallina Holdings Ltd (Biala case) (1994) 13 WAR 124
Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 4 FCR 450; 57 ALR 167
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 79 ALJR 206
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95
Fouche v Superannuation Fund Board (1952) 88 CLR 609
Giumelli v Giumelli (1999) 196 CLR 101
Godecke v Kirwan (1973) 129 CLR 629
Goldsmith v Sandilands (2002) 190 ALR 370
Green & Ors v Wilden Pty Ltd & Ors [2003] WASC 239
Green & Ors v Wilden Pty Ltd & Ors [2004] WASC 105
Green v Magenta Nominees Pty Ltd, unreported; FCt SCt of WA; Library No 950311; 15 June 1995
Hamilton v Whitehead (1988) 166 CLR 121
Harrison v Randall (1851) 68 ER 562
Horwitz Grahame Books Pty Ltd v Mid‑City Centre Pty Ltd (1990) NSW ConvR 55‑514
Hospital Products Ltd v United States Surgical Corporation (Hospital Products/Surgical Staples case) (1984) 156 CLR 41
Hunter v Hunter [1938] NZLR 520
Kemp v Burn (1863) 6 ER 740
Legal and General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314
Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60
Logue v Shoalhaven Shire Council (1979) 1 NSWLR 537
Marsden v Regan [1954] 1 All ER 475
Metcalf & Kerr v Permanent Building Society (In liq) (1993) 10 WAR 145
Mills v Mills (1938) 60 CLR 150
Molyneux v Fletcher & Clark [1898] 1 QB 648
Monty Financial Services Ltd v Delmo [1996] 1 VR 65
National Trustees Executors & Agency Co of Australiasia Ltd v Federal Commissioner for Taxation (Cain's case) (1954) 91 CLR 540
Nocton v Lord Ashburton (1914) AC 932
Partridge v Equity Trustees Executors & Agency Co Ltd (1947) 75 CLR 149
Percival v Wright [1902] 2 Ch 421
Permanent Building Society (In liq) v Wheeler (1994) 11 WAR 187
Porteous v Rinehart (1998) 19 WAR 495
Re City Equitable Fire Insurance Co Ltd [1925] Ch 407
Re Morish (1939) SASR 305
Re Whitehouse [1982] QdR 196
Ricciardello v Caltex Oil [1991] ANZ Conv R 445
Speight v Gaunt (1883) 9 App Cas 1
Stuart v Kingston (1924) 34 CLR 394
Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444
Summers v Commonwealth (1918) 25 CLR 144
Taylor v Johnson (1983) 151 CLR 422
Tesco Supermarkets Ltd v Nattrass (1972) AC 153
Vrisakis v Australian Securities Commission (1993) 9 WAR 395
Warman International Ltd v Dwyer (1995) 182 CLR 544
Wickstead v Browne (1992) 30 NSWLR 1
Wilkins v Hogg (1861) 31 LJ Ch 41
Case(s) also cited:
Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (The Associated Alloys Case) (2000) 202 CLR 586
Attorney-General (NT) v Maurice (1986) 161 CLR 475
BHP Steel (RP) Pty Ltd t/as BHP Reinforcing Products v ABB Engineering Construction Pty Ltd [2001] WASCA 294
Butterworth v Purnell [1919] VLR 375
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Compaq Computer Australia Pty Ltd v Merry & Ors (1998) 157 ALR 1
Cooper v Morgan [1909] 1 Ch 261
Dixon Stores Group Ltd v Timms Television (1993) 1 All ER 349
Farrow Finance Company (in liq) v Farrow Properties Pty Ltd (in liq) [1999] 1 VR 584
Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) (2001) 188 ALR 566
Green & Ors v Wilden Pty Ltd & Ors [2001] WASC 145
Green v Wilden [2002] WASC 234
Hannes v MJH Pty Ltd (1992) 7 ACSR 8
Harrington v Lowe (1996) 190 CLR 311
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (New York Deli Case) (1988) 39 FCR 546
Humphries v The Queen (1987) 75 ALR 31
In re Skinner; Cooper v Skinner [1904] 1 Ch 289
In re Vickery v Stephens [1931] 1 Ch 572
J C Williamson v Lukey (1931) 45 CLR 282
Jalmoon Pty Ltd (in liq) v Bow [1997] 2 Qd R 62
L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235
Letterstedt v Broers (1884) 9 App Cas 371
Magenta Nominees Pty Ltd v Webb [2000] WASCA 40
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Mouat v Clark Boyce [1992] 2 NZLR 559
Ngurli v McCann (1953) 90 CLR 425
Nicholls v Louisville Investments Pty Ltd (1991) 10 ASCR 723
Officer v Haynes (1877) 3 VLR (E) 115
Ogilvie v Adams [1981] VR 1041
Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444
Potts v Miller (1940) 64 CLR 282
Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370
Prenn v Simmonds [1971] 3 All ER 237
Prentice v Cummins (No 4) [2002] FCA 1215
R v Edwards [1991] 2 All ER 266
Tanti v Carlson [1948] VLR 401
Walker v Stones [2001] QB 902
West Country Cleaners (Falmouth) Ltd v Saly [1966] 3 All ER 210
Willison v Van Ryswyk [1961] WAR 87
Table of Contents
Introduction
Overview
Principal Issues
Procedural issues
Submissions of no case to answer
Further details concerning the no case submissions
The initial application to dismiss
The foreshadowed application to dismiss
Ruling on the foreshadowed application
Amendments concerning the plaintiffs' claim for an account
Amendments concerning the plaintiffs' claim for specific performance
Narrative
The Fieldgate/Zilna Trust
The Balga/Wilden Trust
Subsequent events
The administration of Balga/Wilden
Events at the Balga/Wilden Trust
The Balga/Wilden 1989 events
The Balga/Wilden 1990 events
The mid‑1990 Wilden meetings
The June to October 1990 period
Post October 1990 events
Observations in passing as to Balga/Wilden
The Wilden repurchase request
Acceptance of the Green repurchase request
Tace and Magenta
Tace Pty Ltd
Magenta Nominees Pty Ltd
The Kelmscott/Magenta repurchase requests
The mid‑1992 events
General observations on repurchase requests
Pleadings
Preliminary observations on the pleadings
Statement of claim
The Balga/Wilden prayer for relief
The Tace/Magenta claims
The Summerfield/Tace claims
The Kelmscott/Magenta claims
Modus operandi
Balga/Wilden statements of defence
Tace and Magenta defences
Defendants' counterclaims
The plaintiffs' reply
The issues
The principal issues
Legal principles re breach of trust and equitable fraud issues
Legal principles re administration of trusts
Additional observations re fiduciary duties
Observations re fraud in equity
The legal principles – The cl 13.4 protective provision
Section 75 of the Trustees Act
Legal principles re directors' duties and liabilities
Various subsidiary issues
The arson incident
Findings as to the arson incident
The Gillette Award issue
Findings as to the Gillette Award Issue
The Balga/Chesson remuneration issue
Findings as to the Balga/Chesson remuneration issue
The Balga/Wilden investment agreement issue
Legal principles re investment agreement issue
The circumstances of the present case
Evidence concerning calls for repayment
Some additional matters
Findings as to Balga/Wilden investment agreement issue
The Balga/Wilden additional units and options issue
The defendants' case
The plaintiffs' case
General observations re the Balga/Wilden additional units and options issue
Further observations
Findings as to the Balga/Wilden additional units and options issue
Effect of the protective provisions
Matters of relief
The Trust Deed provisions
The repurchase provisions
The repurchase issues
The plaintiffs' submissions
The defendants' submissions
The par 21.2 statement of claim issue
Legal principles – Clause 7.4 Trustee's duties issue
Legal principles – The Balga/Wilden cl 7.4 repurchase request issue
Resolution of the Balga/Wilden clause 7.4 repurchase request issue
Further observations re the cl 7.4 repurchase request issue
The manner of appointment of the Balga/Wilden valuer
Further evidence/cross‑examination of Mr Sanderson
Findings re the manner of appointment issue
Observations as to the Sanderson independent discretionary judgment issue
The evidence of Robin Tunnicliffe
Legal principles – Repurchase procedure/compliance issue
Findings as to the Balga/Wilden repurchase procedure/compliance issue
General observations as to the Balga/Wilden repurchase procedure/compliance issue
Findings as to the Sanderson report
Balga/Wilden breach of trust issues
Recapitulation
Outstanding issues
Resolution of outstanding issues
Balga/Wilden forms of relief issue
Resolution of the Summerfield/Tace Issues
Summerfield/Tace issues
The pleadings
Repurchase request procedure/compliance issues
The Richmond report
Findings as to repurchase procedure/compliance issue
The purported repurchase issue
The Trade Practices Claim
Resolution of the Kelmscott/Magenta Issues
Kelmscott/Magenta issues
The pleadings
Resolution of certain issues
The Hunt valuation
Summary of various findings
Balga/Wilden issues
Summerfield/Tace issues
Kelmscott/Magenta issues
Counterclaim
HASLUCK J:
Introduction
The first three defendants, Wilden Pty Ltd, Tace Pty Ltd and Magenta Nominees Pty Ltd are the trustees of unit trusts known respectively as the Balga Trust, the Summerfield Trust and the Kelmscott Trust. Each trust deed is in the same form. The other defendants are said to be directors of or otherwise linked to the trustee companies. The plaintiffs seek relief in respect of an allegedly improper administration of these trusts.
The litigation has been on foot for over 14 years. The book of pleadings contains 338 pages. The pleadings raise many issues and it will therefore be useful to begin by providing an overview of the dispute between the parties.
Overview
Many years ago William Joseph Green established a firm of electrical contractors known as W J Green & Co in partnership with his wife. At a later stage he set up a company, W J Green & Co (1984) Pty Ltd, which became the trustee for the Green Family Trust. Mr Green's son, Graeme Green, worked in the family business and had an interest in the Green Family Trust.
In early 1985, as a result of conferring with his accountant, Mr Green contacted the fourth defendant, Sydney James Chesson, who was a well‑known estate agent, with a view to investing in real estate. This led initially to Mr Green by his family company acquiring 400 units in the Fieldgate Square (1985) Unit Trust (of which Zilna Pty Ltd was the trustee). In due course, the relationship with Mr Chesson led to the Green company and members of the Green family becoming unit holders in the three unit trust entities mentioned earlier. The principal trust asset in each case was a suburban shopping centre.
The Fieldgate/Zilna Trust is not a party to the present proceedings. The Balga/Wilden, the Summerfield/Tace and the Kelmscott/Magenta trustee companies have been joined as defendants. Mr Chesson played an active role in the management of all these trust entities. For ease of reference, where the context permits, I will refer to the Green company and individual family members as the Green parties.
Each of the Trust Deeds regulating the affairs of the various trust entities made provision for repurchase of units by the trustee. In essence, any unit holder could request the trustee to repurchase all or any of the relevant units at a price calculated in accordance with a prescribed formula. This required that consideration be given to the net asset backing of the trust unit.
The plaintiffs' case is that they became dissatisfied with the way in which the trust entities were being managed. They were not kept fully informed. Calls for payment pursuant to the loan arrangements underlying the purchase of certain units in the trusts took them by surprise. The Balga/Wilden shopping centre was beset with cash flow problems, and at various meetings in mid‑1990 certain steps were taken by the trustees which allegedly worked to the disadvantage of the Green parties.
The plaintiffs say that they eventually lodged repurchase requests with a view to being paid out and withdrawing from the trust entities. The plaintiffs refer to 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.
The defendants say that valuers were appointed to assess the value of the units the subject of the relevant repurchase requests. They say that the correct procedure was followed but this is disputed by the plaintiffs. On the plaintiffs' case, they have not received any payment in response to the repurchase requests. Further, since 1992 or thereabouts, they have not been provided with information about the affairs of the trust entities or been treated as continuing unit holders of the trusts.
In these proceedings, the plaintiffs seek orders for specific performance with a view to compelling performance of the repurchase requests. They also seek relief in equity, including a claim for an account, and removal of the trustees, in respect of various alleged failures by the trustees to perform their obligations under the trusts.
I note in passing that the claim for an account was brought forward by way of an amendment to the statement of claim at the trial of the action as a consequence of the late discovery of financial statements bearing upon the affairs of each trust entity with respect to the years after 1992. I will turn to these statements in more detail later. However, for the time being, it is sufficient to note that, broadly described, the statements showed that each trust entity held assets and continued to trade from 1992 to the present day.
Principal Issues
A central issue concerns the validity of the steps taken in response to the repurchase requests. In essence, the plaintiffs seek rulings that the defendant trustee companies failed to observe the correct valuation procedure. They say further that the trustee companies misconducted themselves in the handling of these requests. They complain of an alleged failure to provide information and to account to the plaintiffs as unit holders. It is said that the plaintiffs are entitled to specific performance of the repurchase procedure and to payment of the amount due to them once the relevant amount is determined.
In addition, the plaintiffs say that they must be compensated for being denied access to the funds they would otherwise have received if the proper procedure had been followed. This brings with it a claim for interest on any amount found to be due. Further, and in any event, the plaintiffs say that they have never ceased to be unit holders and are entitled to an account.
On the other side, the defendants contend that they acted in accordance with the provisions of the relevant trust deeds throughout. They say that, upon its proper construction, where a price is not agreed, the standard deed did not oblige a trustee company in receipt of a repurchase request to arrange for an independent valuer to determine the current repurchase value of the units. This means that the defendants cannot be held responsible for an alleged failure by the trustees to complete the repurchase procedure. The defendants say further, and in any event, that the steps taken in response to the various repurchase requests represented sufficient compliance with the repurchase procedure. They say that at all material times the trustee companies have been ready, willing and able to pay the amount due in respect of the units in question.
The defendants say that the plaintiffs by their own actions are responsible for the fact that no payment has been received by the plaintiffs as a consequence of submitting repurchase requests to the defendants. They say that the amount due to the plaintiffs is limited to the value of the units as at the date of the repurchase requests. They say that loans made to the plaintiffs must be brought to account in determining what amount, if any, is due in respect of the plaintiffs' repurchase requests.
For many years, the defendants contended that the Green parties did not have any continuing beneficial interest in the trusts as a withdrawal or severance was effected as a consequence of the various events that occurred prior to 1992. The defendants modified their position in that regard at trial.
The defendants have also advanced a counterclaim in respect of various amounts which are said to be due by the plaintiffs in respect of the loan accounts in question. These accounts were created as part of the arrangement whereby members of the Green family acquired units in the trusts.
Procedural issues
It will be useful at this stage to say a few words about certain procedural issues. These observations will assist an understanding of the principal issues.
I begin by noting that various legal proceedings were commenced by the parties on each side of the dispute. The Green parties initiated a claim in the District Court for moneys said to be due to Mr Green's business for electrical services provided to Wilden. Writs of summons were issued by Wilden on 21 December 1990 against the Green company and Graeme Green to recover debts allegedly outstanding pursuant to the Balga/Wilden loan arrangements. The writs issued by the plaintiffs concerning the present dispute were issued on 23 December 1991. Various proceedings were eventually consolidated. There were many amendments to the pleadings on both side, and these adjustments to the pleaded cases became the subject of cross‑examination.
The plaintiffs entered the matter for trial on 28 August 2002 pursuant to a certificate of readiness which suggested that the matter could be listed for trial. The defendants did not apply to countermand the entry and it can therefore be said that thereafter both parties were of the view that the matter was ready to proceed to trial.
As it happened, in following months, there were further amendments to the pleadings. On 3 October 2002 Master Sanderson made a ruling as to certain issues concerning discovery. In due course, pursuant to the usual case management process, orders were made by Steytler J for the exchange of witness statements. It was against that background that at a call over on 29 May 2003 the matter was listed for trial on 4 November 2003, although it appears to have been recognised that witness statements had not yet been exchanged and discovery issues remained outstanding.
It seems that the procedural state of affairs I have described remained in that form until early October 2003. Witness statements had still not been exchanged in compliance with the directions previously made. By letter dated 2 October 2003, that is to say, about one month prior to the listed trial date, the solicitors for the defendants pressed the plaintiffs to provide particulars concerning certain aspects of the loss allegedly suffered by the plaintiffs. This led to an application to strike out certain passages in the statement of claim that was dealt with shortly before the trial commenced.
My ruling in regard to the application to strike out is the subject of discrete reasons for judgment: See Green & Ors v Wilden Pty Ltd & Ors [2003] WASC 239. Broadly described, the defendants' application to strike out succeeded on the grounds that in the absence of particulars the passages complained of were too general and therefore embarrassing.
As I have indicated, it became apparent at the commencement of the trial on 4 November 2003 that witness statements had been delivered by the plaintiffs to the defendants a few days before the trial commenced. There had also been exchanges between the parties concerning the bundles of documents put together by the parties.
In the event, both parties handed up to the Court various lever arch files which were said to contain copy documents agreed as to their authenticity and upon the basis that there would be no objection to the admissibility of many of them. However, the stance of counsel for the defendants (as reflected in a letter written by their instructing solicitors) was that as to the plaintiffs' documents the defendants would only consent to the documents being received in evidence subject to the relevance of the document being made known at trial. This led to objections being taken by defence counsel from time to time to the relevance of various documents which were tendered by counsel for the plaintiffs. My rulings in that regard are reflected in the transcript.
I note in passing that the plaintiffs' lever arch files grouped the documents by reference to the affairs of each trust and prefaced the page numbers with the initial "P" (to establish that the document is to be found in the plaintiffs' files) and the initial of the relevant trust. The defendants' files were arranged in the same way. Thus, for example, the Balga/Wilden trust deed which was tendered by the plaintiffs as Exhibit 78, can be described as 78 @ PW3.
I will follow this pattern throughout my reasons for decision save that if the exhibit had been tendered as part of the defendants' case (in the example I have just given) it would be identified as D78 @ PW3. A document which is not to be found in the lever arch files, being an exhibit handed up at the hearing, will be identified simply as Exhibit 78.
Submissions of no case to answer
At the conclusion of counsel for the plaintiffs' opening at the trial, counsel for the defendants submitted that the claim should be struck out as failing to disclose a reasonable cause of action or, alternatively, on the ground that there was no case to answer. These submissions were based upon an analysis of the pleadings and the provisions of the relevant trust deeds.
I heard the application and ruled eventually that there was a case to answer. Before ruling upon the no case submission, I did not require the defendants to make an election not to call evidence, notwithstanding that such an election is usually required in civil cases. I was of the view that because the application raised a succinct point of law and allegations akin to fraud were reflected on the pleadings the case fell within an exception to the general practice.
The trial continued over many days and the plaintiffs' witnesses were exposed to lengthy cross‑examination.
When the plaintiffs closed their case, counsel for the defendants foreshadowed a further application for an order that the case be dismissed upon the basis that the defendants had no case to answer. On this occasion, as on the previous occasion, counsel for the plaintiffs contended that the no case submission should not be dealt with until the defendants, as the moving parties, had made an election not to call evidence.
Counsel for the defendants did not fully develop his line of argument in support of the foreshadowed submission of no case to answer. However, in the course of discussion about the procedure to be followed, the nature of his proposed plea became apparent. The line of argument was different to the no case submission made at the commencement of the trial, and I was therefore persuaded that, subject to resolution of the threshold issue concerning the obligation to elect, the defendants were not estopped from making a further application.
After hearing from counsel for the respective parties at some length, I ruled in regard to the threshold issue that on this occasion the general practice should be applied with the result that I declined to entertain or rule upon the foreshadowed no case submission until an election was made. Counsel for the defendants intimated that his clients were not willing to elect, and therefore, having regard to the ruling against them on the threshold issue, he said that the defendants would not pursue the foreshadowed no case submission.
It followed from this that the defendants did not put their foreshadowed no case submission to the Court and they were therefore not required to elect. The foreshadowed no case submission did not become the subject of any ruling. The trial continued, and the defendants proceeded to call the first of their witnesses.
Further details concerning the no case submissions
In order to understand these events fully, and the nature of the threshold issue, it will now be useful to look more closely at some of the matters in issue between the parties.
The standard trust deed permits unit holders to require the trustee to repurchase units. Clause 7.4 provides that the price payable on the repurchase of a unit (which is called the "current repurchase value") when there is no agreed value is to be determined by an independent qualified valuer nominated by the President of the Australian Institute of Valuers (Inc) (WA Division).
The "current repurchase value" is defined in the deed by reference to a formula. It can best be described as the net asset backing of a unit. In each case the principal asset of the trust was a suburban shopping centre.
By cl 7.5 the trustee has the option to arrange for some person to effect a purchase of the subject units or to effect the repurchase by borrowing or releasing sufficient trust funds to provide the price. By cl 7.6, if the trustee has not effected a purchase or repurchase of the units within 90 days after receipt of the repurchase request, the trustee shall offer for sale such part of the trust fund as shall be necessary to provide the price payable on repurchase of the units. The price for the units shall be paid within 7 days after receipt of the proceeds of any such sale. The trustee shall offer the trust assets for sale at a price to be determined by an independent qualified valuer nominated as aforesaid.
As I have indicated, the plaintiffs allege that in the early 1990s they lodged repurchase requests with the trustees and that a price was not agreed. The defendants say that valuers were appointed to assess the value in the prescribed manner but this is disputed by the plaintiffs. There is a dispute as to whether the trustees complied with the prescribed repurchase procedure and as to whether the valuers brought an independent discretion to bear on the materials before them, or whether they simply adopted figures in certain audited accounts.
The plaintiffs contend that the trustees have failed to complete the repurchase of the plaintiffs' units in terms of the relevant repurchase procedure or at all. They allege also breaches of trust in that the defendants have allegedly failed to make adequate disclosure to the plaintiffs of their conduct of the affairs of the trusts. There are various other matters in issue including also claims of misleading conduct under the Trade Practices Act 1974 (Cth). However, it could be said that the repurchase procedure/compliance issue lies at the heart of the controversy between the parties.
The initial application to dismiss
The initial application to dismiss the plaintiffs' claim was based upon an interpretation of the relevant trust deeds. The plaintiffs allege in their statement of claim that they submitted repurchase requests to the various trustee companies. The plaintiffs' primary contention on the pleadings is that cl 7.6 of the relevant trust deeds creates an obligation upon the trustee to implement the cl 7.4 and related procedures within 90 days after receipt of a repurchase request. If the units have not been acquired within that period the trustee is obliged to offer trust assets for sale so that a repurchase of units by the trust can be effected.
The defendants' case in regard to this issue is that where the price is not agreed cl 7.4 does not expressly oblige the trustee to arrange for an independent valuer to determine the current repurchase value of the units. Clause 7.4 allows for the appointment of an independent qualified valuer if a price for the units cannot be agreed, but it is silent as to whether the appointment should be initiated by the unit holder requesting repurchase or by the trustee in receipt of the request. This means that, on the plaintiffs' pleaded case, it could not be said that the trustee was in breach of any duty in that regard. Moreover, cl 13.4 of the trust deed provides that the trustee shall not be responsible for any breach of duty whatsoever, unless it shall be proved to have been "committed, made or omitted in personal conscious fraudulent bad faith" by the trustee.
The defendants argued in their initial application to dismiss the claim that the question of whether the trustees could be held responsible for breaches of duties of the kind contended for by the plaintiffs in regard to the repurchase procedure/compliance issue was essentially a question of construction. This was a matter of law which could be dealt with upon the hearing of a no case submission, without requiring an election by the defendants to call no evidence.
As I indicated in earlier discussion, I decided to rule upon the initial no case submission but without requiring the defendants to elect. In the end, I was persuaded that there was a case to answer in that the plaintiffs had an arguable case in regard to the principal issue. I was of the view that under cl 7.4 of the trust deed, in circumstances where a price had not been agreed, the trustee was arguably under a duty to initiate the appointment of an independent qualified valuer. It was therefore open to the plaintiffs to go further and contend also that the trustee had failed to comply with other facets of the repurchase procedure.
For present purposes, for ease of reference, I will continue to characterise the allegations made by the plaintiffs concerning a supposed lack of compliance with the steps allowed for by cl 7 of the trust deed as the repurchase procedure/compliance issue. However, I recognise that in due course it will be necessary to define the matters in issue with greater precision.
The foreshadowed application to dismiss
The foreshadowed application to dismiss was made many days later in somewhat different circumstances. It was made against the background of the plaintiffs having presented all the evidence they intended to call, including evidence establishing that repurchase requests were made and that certain valuations were brought into existence which purported to value trust assets and the units the subject of the repurchase requests.
It became apparent that if the defendants were permitted to develop their argument in support of the foreshadowed no case submission, they would contend that the steps taken by the trustees in response to the repurchase requests and the resulting valuations represented, quite clearly, having regard to the evidence presented to the Court, a proper compliance with the trustees' obligations. In other words, if the duties contended for by the plaintiffs did exist, they had been performed. The defendants would be seeking to persuade the Court that in regard to the repurchase procedure/compliance issue the plaintiffs could not succeed. There was no case to answer.
Counsel for the plaintiffs made it clear that if the no case submission was pursued, this line of argument would be opposed. However, as I have indicated in earlier discussion, counsel for the plaintiffs insisted that there was a threshold issue to be resolved first as to whether the defendants should be required to make an election before being permitted to advance the foreshadowed no case submission.
Ruling on the foreshadowed application
The general rule of practice is that a decision will not be given on a submission of no case to answer unless the moving party elects to call no evidence. However, the trial Judge has a discretion to depart from the general rule where particular circumstances require it. It seems that the primary reason for this practice is to avoid a new trial if an appeal against a decision of no case to answer is successful.
On this occasion, the defendants were not able to satisfy me that circumstances existed which justified a departure from the general practice. I was of the view that, in the absence of an election not to call evidence, the foreshadowed submission did not have the potential to produce a decisive result or to avoid a new trial if an appeal against a ruling of no case to answer was successful. The nature of the issue to be argued, and the fact that a large body of evidence bearing upon the issue had been received after many days of trial, served to distinguish the ruling made on this occasion from the ruling made in response to the initial application. Thus, I held that the no case submission should not be entertained unless the defendants elected before making it not to call any evidence, either generally or on the issue on which the ruling was sought.
My decision in regard to the threshold issue led to a decision by the defendants not to pursue the foreshadowed no case submission. In a separate judgment, I have provided my reasons for my ruling upon the threshold issue: See Green & Ors v Wilden Pty Ltd & Ors [2004] WASC 105.
Let me now turn to some further procedural issues that arose early on concerning various amendments to the pleadings.
Amendments concerning the plaintiffs' claim for an account
I was informed that there had been various exchanges between the parties concerning the ongoing obligation of each party to provide continuing discovery. It seems that shortly before the trial commenced this had led to a decision by the defendants to provide further and better discovery concerning the financial situation of the various trust entities and the shopping centres being administered by them. Discovery as to this aspect of the matter was provided in due course and this gave rise on the plaintiffs' side to an application to amend the statement of claim in various respects.
In the meantime, on the defendants' side, it emerged that, as counsel for the defendants was now instructed for all of the defendants (notwithstanding that the defendant Sydney Chesson had previously been representing himself), amendments were required to the statement of defence of Chesson so as to bring it into conformity with the defence case generally.
It was against this background, on Tuesday, 11 November 2003, that is to say, on the fifth day of the trial, that I was obliged to deal with an application to amend the statement of claim. In particular, the plaintiffs sought to expand their prayer for relief in respect of each trust to include a claim for an account.
It might strike an informed observer, having regard to the pleaded issues reflected in the claim and counterclaim, that some form of financial reckoning between the parties would eventually be necessary in order to resolve all aspects of the dispute. However, the fact is that the plaintiffs' claim for relief did not include a claim for an account against the trustee companies of what was said to be due to the plaintiffs in respect of their units, either as an adjunct to their claims concerning the repurchase requests or as a plea in the alternative should it be held that they were not entitled to relief in respect of the principal issue.
I pause here to say that the position was complicated to some extent by the fact that the defendant, Mr Chesson, had filed a separate statement of defence that reflected the position he had generally adopted in correspondence, namely, that as a consequence of their attempt to withdraw by way of the repurchase requests the plaintiffs were no longer members of the various trusts. In addition, the plaintiffs appear to have been somewhat ambivalent about whether they continued as members of the trusts after the repurchase requests were made, and thus ambivalent in pressing for an account. However, to my mind, their ambivalence was partly explained by the procedural complexities and by the fact that Graeme Green had been prosecuted for an offence concerning Mr Chesson, which added to the impasse between the parties.
In the end, I took account of the fact that, at a formal level, the statement of claim commenced with an assertion in each case that the relevant plaintiff is and was at all material times a member of each trust. The dispute may have been centred upon the repurchase issue, but, as I noted in earlier discussion, an informed observer must surely have concluded that the presence of subsidiary issues would inevitably give rise to a need for an account, and in various passages this was asserted in the claim.
Accordingly, after hearing extensive argument, I allowed the plaintiffs' application to amend the statement of claim so as to introduce a claim for an account.
Amendments concerning the plaintiffs' claim for specific performance
I should mention also that it was at this stage, in the course of discussion about the claim for an account and other procedural issues, that counsel for the plaintiffs concluded that it would be desirable to formulate with greater particularity the nature of the specific performance orders being sought. He therefore submitted to the Court a minute of proposed specific performance orders dated 14 November 2003 to the effect that the current repurchase value of the subject units be determined in accordance with cl 7 of the trust deed and a portion of the trust fund be offered for sale in order to complete the repurchase. The full details of the minute are set out below in the Balga/Wilden prayer for relief section of this judgment.
I pause to observe that a question arose in the course of counsel for the plaintiffs' opening address in regard to the prayer for relief as to what should be treated as the "relevant date" for the purpose of a minute of this kind. Initially, plaintiffs' counsel sought to assert that as there had been late discovery of the accounts portraying the position of the three trusts in recent years, the plaintiffs wished to leave open this issue. Thus, if their review of the accounts suggested that the current value of units in the trusts exceeded the value before the dates of the three repurchase requests prior to 1992 it would be open to them to withdraw the previous requests and, having obtained rulings by way of declaratory relief as to the manner in which cl 7 worked, they would then either obtain orders for specific performance of new repurchase requests or, alternatively, choose between obtaining payments of what was due pursuant to orders for specific performance of the original request or obtaining amounts due to them pursuant to an account taken after trial on present day values.
Counsel for the defendants objected strongly to this line of argument on the basis that for more than 10 years the principal issue the subject of the litigation was the question of whether the steps taken by the trustees in response to the original requests were valid and whether the plaintiffs were entitled to the value of the units as at the relevant dates at that time. It had been open to the plaintiffs to press for more detailed discovery but they had failed to do so. Against this background, it would be inequitable (and a basis for denying relief by way of specific performance) if the plaintiffs now sought to obtain relief in respect of events other than those occurring prior to the commencement of legal proceedings.
The outcome of this fiercely contested debate prior to the completion of the plaintiffs' opening was an acceptance by counsel for the plaintiffs that the term "relevant date" in the minute dated 14 November 2003 was a reference to the date of the original repurchase request in each case, that is to say, 6 November 1990 (Summerfield/Tace), 7 January 1991 (Balga/Wilden) and 24 May 1991 (Kelmscott/Magenta). Thereafter, to my mind, the trial was fought on that basis and the issues on the pleadings must be viewed accordingly.
However, this view of the matter does not necessarily dispose of various incidental issues to be considered if the plaintiffs succeed on the principal issue such as what form of relief (if any) should be allowed to them for being kept out of funds which might otherwise have been paid pursuant to the original repurchase requests and whether they are entitled to an account for breaches of trust as alleged in the statement of claim.
In describing the procedural history of the matter, before and at trial, there is a further matter which I must also mention for the sake of completeness.
Mr Chesson said in evidence on various occasions, especially in re‑examination, that the stance adopted by the trustees as a result of legal advice was as follows. The plaintiffs had commenced legal proceedings with a view to obtaining specific performance of obligations upon the trustees allegedly arising after lodgement of the repurchase requests. If enforced, the obligations would lead to the Green parties withdrawing from the various trusts at a price determined pursuant to the valuation procedure.
Thus, in effect, the plaintiffs' stance was that they (the plaintiffs) had withdrawn from the Trust. The trustee companies were therefore no longer obliged to treat the Green parties as continuing unit holders. They were included in various accounting records simply because there was a faint prospect that they might withdraw the repurchase requests they were seeking to enforce. Nonetheless, the trustees could not be criticised for failing to give them notices of meetings and so forth, or for failing to make distributions of income to the Green parties, for the Green parties were seeking to persuade the Court that they were entitled to enforce the contractual obligations which would effect their withdrawal.
The defendants' stance is reflected succinctly in the minutes of the AGM of Kelmscott/Magenta of 15 December 1992 (503 @ DM47). The minutes in question record that "Mr Chesson stated that the trustee considered that it had repurchased all the Green parties' units and that a debt was outstanding to the Trust by the Greens". The debt in question related to outstanding loans. The AGM was then postponed "until the Green parties can determine whether or not they are unit holders".
Counsel on both sides at the opening of the trial seemed to accept, notwithstanding the pleadings and the history I have just described, that on any view of the matter the Green parties were still members of the various trusts. If, on the plaintiffs' case, the trustees wrongfully failed to complete the repurchase then title to the units remained vested in the Green parties. If, on the defendants' case, the trustees complied with the repurchase procedure, for one reason or another, title to the units does not appear to have been vested in the trustees, with the result that, in strict legal analysis, the Green parties continued as members of the Trusts.
Certain exchanges between counsel about this matter occurred on the second day of the trial and are as follows (transcript 549):
"GRACE, MR: Yes, just a matter of clarification. I understood what Mr McCusker said to your Honour was that not only are those formal amendments to be made but also that there is no issue as to the question as to whether the Green parties, if I could use that in a global sense, remain as unit holders of the various trusts.
HASLUCK J: Yes.
McCUSKER, MR: That's so, your Honour, and I think that's consistent with the defence of the other defendants - that is, there is no contention by them that the Green parties are no longer unit holders and certainly that is the defendants' position; that's all the defendants' position that the Green parties remain unit holders.
HASLUCK J: Yes, all right. Thank you, Mr McCusker. Doubtless this will be addressed later in the opening but just in the overall scheme of the case doubtless, Mr Grace, you will be making it clear to me what the implications of that are in terms of the prayer for relief.
GRACE, MR: Yes. I have already touched upon that issue yesterday when I was raising the question of the charging of interest on the unit holders' loans, which various documentation evidences, without the corresponding accounting for income in respect of the units held by the unit holders.
McCUSKER, MR: Could I mention there, your Honour, that the defendants' position is that clearly the unit holders, that's the Green parties who remain unit holders, are entitled to a credit for their share of distributions to be offset against the interest on the loans and the loans themselves."
It will be necessary to explore the implications of these exchanges at a later stage in this judgment. I will say no more about this issue for the time being.
Narrative
Mr Green said in evidence that he and his wife, Norma Green, have three children being Graeme Green (the first plaintiff and second named third plaintiff), Michael Green and Sharyn Green (the first named third plaintiff). The third named third plaintiff, Julie Green, is married to Graeme Green.
Mr Green said that until about 1980 most of the family income was invested in his electrical contracting business. In 1984 he established the company W J Green & Co (1984) Pty Ltd (the second plaintiff) to act as trustee for the Green Family Trust. At about that time he started to look at investment properties to provide for the future and as a consequence of some investments in real estate as at 1985 he was in a position to invest between $100,000 to $150,000 via the Green Family Trust.
At the suggestion of his accountant, Grant Page, Mr Green contacted Mr Chesson by telephone in early 1985. This led to a meeting at the Green family home in Bateman and visits to various commercial properties. Mr Green said in evidence that at that stage he did not have much knowledge of business structures or any knowledge of how a property unit trust worked.
Mr Green decided eventually to apply for trust units in the Fieldgate Square (1985) Unit Trust which was being managed by a trustee company known as Zilna Pty Ltd. Mr Green said that he was given a copy of the relevant Trust Deed and was taken by Mr Chesson to see a lawyer, Mr Laurie Shervington. As a consequence, of these exchanges Mr Green understood that the Trust Deed was in a standard form and that the syndicate of investors was set up as a trust because that was a convenient way of keeping track of the money invested. Mr Green understood that Zilna Pty Ltd owned the Fieldgate Shopping Centre in Balga and other investors in the Trust included Mr Chesson, Mr Bert Denboer, Mr John Bonini, Mr John Kelly, who was Mr Chesson's brother‑in‑law, and two members of the Jurecivich family. Mr Green said that the fact that Mr Chesson was investing his own money in the syndicate gave him significant comfort.
The Fieldgate/Zilna Trust
Mr Chesson wrote a letter dated 25 June 1985 to Mr Green concerning the process for applying for units in the Fieldgate Square Trust (1 @ PW1). According to the letter, Mr Chesson was instructed at a meeting held on 24 June 1985 of the directors of Zilna Pty Ltd to advise that once a number of units is allocated to an applicant, the trustee has no further power to call funds from any unit holder. The directors of the trustee would not be accepting any applications for units unless the Trust was fully subscribed and obtained sufficient funds to purchase the Fieldgate Square Shopping Centre at $1.9 million. The manager of the Fieldgate Square Shopping Centre was to be Chesson & Co Real Estate Agency.
Mr Green said in evidence that he recalled asking Mr Chesson what would happen if the shopping centre lost some of its tenants. Mr Chesson said that if this occurred, the property would be sold. Mr Green was unable to specify the exact date of this conversation or the precise words used. In any event, he caused the Green Family Trust to invest $150,000 in the venture in paid up units. In addition, the family trust acquired $250,000 worth of loan units in Zilna Pty Ltd.
I digress briefly to mention that the standard form Trust Deed did not contain any specific reference to the making of loans by the Trust in order to assist a prospective investor to acquire units. However, it was common ground at the trial of the action that in each case this occurred. The effect of the arrangement was that the amount in question was debited to the investor in the books of the relevant Trust upon the basis that income from the Trust that might otherwise be payable to the investor could be set off against accrued interest in respect of the relevant loan account.
It was a matter of acute controversy between the parties at trial as to whether an investor such as Mr Green could be called upon for further payments or to discharge the loan while the Trust remained in existence. The evidence of Mr Green was to the effect that as a consequence of representations of the kind reflected in the Zilna letter dated 25 June 1985 he understood that the trustee company had no further power to call up funds from any unit holder in respect of units that had been paid for or for "loan units".
After this investment Mr Green received cheques on a monthly basis from Mr Chesson, the latter being the manager of the Fieldgate Square Trust. In August or September 1985, Mr Chesson spoke to Mr Green about the purchase of another shopping centre and asked Mr Green whether he wanted to be involved. According to Mr Green, Mr Chesson said that the investment would be on the same basis as the Fieldgate/Zilna Trust.
I pause here to say that on the defendants' case at trial, Mr Chesson, as a director of Zilna, obtained legal advice as to the structure of the loan arrangements which was subsequently reflected in a document headed "General Terms for the Issue of Loans to Unitholders" (455 @ DW851). Loan provisions corresponding to the Loan Terms document are said to have been approved in due course by the directors of each of the trust companies, and to be binding upon all those unit holders who utilised the loan mechanism to purchase certain of their units. The loan provisions allow for a loan to be 66.67 per cent of the value of the units and provide for the payment of interest, which is to be met from the income of the Trust. Importantly, by cl 9, the loan is said to be repayable on demand.
Mr Chesson said in evidence that both he and the solicitor, Mr Shervington, went through the loan provisions with Mr Green. On the plaintiffs' case at trial this did not occur; hence, it was not known to the Green parties that pursuant to the loan provisions unit holders could be required to make repayments prior to the Trust being wound up.
The Balga/Wilden Trust
On the defendants' case, at a meeting held on 11 September 1985, the directors of Wilden - Mr Denboer (Chairman) and Mr Chesson - resolved that a trust be formed by initial subscriptions of one unit each of $1000 each made by Callao Pty Ltd as trustee for the S J Chesson Family Trust and Benrone Pty Ltd for the Denboer Family Trust. Mr Chesson was authorised to negotiate for the purchase of the Balga Bazaar Shopping Centre.
Mr Green said in evidence that at about this time he met Mr Chesson at the Balga Bazaar Shopping Centre at 18 Princess Road, Balga and was given an undated document headed "Wilden Pty Ltd Balga Bazaar Shopping Centre". Two documents fitting this description were received as exhibits at the trial, and there was therefore a degree of controversy as to which document, if any, Mr Green received. I will return to this issue later.
For the time being, it will be sufficient to say that one of the two undated documents was a report or memorandum signed by the vendor's agent, Graeme Herps (5 @ PW1036). The Herps report described the premises as a well located retail facility with above average income return and good capital growth comprising 17 retail shops divided into 14 tenancies. The vendors were said to be looking for an asking price of $1 million which would show a return on current income of 13 per cent. The bulk of the tenants were said to have been operating from the centre profitably for some years.
It is apparent from other documentary evidence that by an offer and acceptance dated 11 September 1985 executed by Mr Chesson on behalf of Wilden the trustee company contracted to purchase the Balga Bazaar Shopping Centre for $1 million subject to obtaining finance of $600,000 (3 @ PW59). Wilden was acting as a trustee on behalf of the Balga Bazaar (1985) Unit Trust pursuant to a deed of trust executed at about this time, albeit stamped 6 February 1986 (18 @ PW03).
It was common ground at the trial that because the relevant contract was dated 11 September 1985 the property could be regarded as a property acquired prior to the introduction of capital gains tax. In this respect, the Balga/Wilden shopping centre differed from the shopping centres which were acquired later by the Summerfield/Tace and Kelmscott/Magenta trusts.
By an application form dated 18 September 1985 Mr Green applied for 400 units in The Balga Trust (4 @ PW63). The arrangements were that this would be funded by a cash investment of $120,000 and a trustee loan of $280,000. This meant that the nominal value of each unit was $1000. Mr Green understood that of the 400 units applied for 300 were to be taken by the Green Family Trust and 100 by his son Graeme Green. However, in fact, the relevant form purports to allot 400 units to the Green Family Trust.
The exhibits at trial included the minutes of directors meeting of Wilden held 2 February 1986 at which Mr Denboer and Mr Chesson noted that arrangements were almost complete for settlement of the Balga purchase on the basis that the vendor of the property would provide a vendor's loan of $660,000 to Wilden (D3 @ DW1620). At that meeting, the two directors purported to resolve that loans be advanced to unit holders in accordance with the loan provisions. Further, it was resolved that units be issued to various parties.
I note in passing that although the prospective unit holders, including the Green parties, were required to pay $1000 per unit, either by cash or by loan, 150 units were to be issued to Callao/Chesson for $125,000 (cash $25,000; loan from trust $100,000). It is not clear from the minutes as to why it was decided that Callao/Chesson should acquire the units in question at a reduced price.
Events relevant to the purchase of the Balga Bazaar Shopping Centre and the creation of the Balga Unit Trust are reflected in an undated document which appears to be a report on the situation by Wilden. This seems to have been prepared later in 1986 because it speaks in the past tense of the purchase of the shopping centre having been completed on 6 February 1986 (12 @ PW105). However, the plaintiffs' case was opened on the basis that this was the document given to Mr Green when he first met Mr Chesson at the Balga Bazaar Shopping Centre in September 1985. I will call this the "initial Wilden report".
According to the initial Wilden report, the purchase of the shopping centre was completed on 6 February 1986 with vendor finance of $660,000 for two years. The unit holders at that time are described as G&A Bonini as to 300 units (paid up 150 trust loan 150), the S J Chesson Family Trust as to 150 units (paid up 38 trust loan 112), the B L & J Denboer Family Trust as to 150 units (paid up 50 trust loan 100), the W J Green Family Trust as to 300 units (paid up 100 trust loan 200), Graeme Green as to 100 units (paid up 20 trust loan 80) and A W & R C Jones as to 25 units (paid up 25). It is therefore apparent from the initial Wilden report that there were in all 1025 units (paid up 383 trust loan 642).
The initial Wilden report is consistent with evidence given at the trial by Mr Green that on 3 February 1986 Mr Chesson came to his home to collect two cheques made payable to Wilden. One cheque was for $12,000 for the stamp duty on the purchase and the other cheque was for $100,000 for the purchase of 300 units in the unit trust on the basis that 100 units would be paid up. He received two receipts from Wilden for these amounts (6 and 8 @ PW69/70). He received two unit trust certificates dated 6 February showing The Green Family Trust was entitled to 300 units in all (8 @ PW71 and 11 @ PW78).
At about the same time Mr Green's son, Graeme Green, received two certificates from Wilden for 20 units and 80 units respectively (9 and 10 @ PW73/74). In other words, in all, the Green parties had acquired 400 units; that is, Green Family Trust 300, Graeme Green 100.
Thereafter, Mr Green and his son received various accounts from Wilden reflecting the arrangements that had been made. For example, the statement of unit income for February 1986 directed to Graeme Green shows the February rentals in respect of 100 units as amounting to $880 from which is set off interest in respect of the 80 trust loan units of $772.80 as a reconciliation with the attached cheque of $107.20. Monthly distributions of this kind received by the Green parties were adduced in evidence within the bundle of documents marked as Exhibit P17.
Subsequent events
Mr Green said in evidence that in or about June or July 1987, as a director of Wilden, he signed a guarantee as a director of Wilden to the ANZ Bank. This was done in the awareness that funds were required from the ANZ Bank in order to refinance the Balga Shopping Centre. The guarantors are Bert Denboer, William Green, Giancarlo Bonini and Sydney Chesson who are described as company directors. The guarantee document was up‑stamped to secure $1.16 million on 2 July 1987 (150 @ PW150).
It appears from a Wilden directors' meeting minute dated 16 June 1987 that the borrowed funds were to be used to discharge the vendor's loan of $660,000 with the balance of the funds being used principally to make further loans to the unit holders "on the same terms and conditions as the loans to unit holders made on 2 February 1986". The minutes indicate that Mr Green was one of the four directors present who approved the resolution.
According to Mr Chesson, these steps were taken so that the investors, including the Green parties, would have funds in hand to invest in the Summerfield/Tace Trust that Mr Chesson had now established. Certainly, $400,000 of the funds received from the ANZ Bank was transferred to the Summerfield/Tace bank account to be held pending settlement of the purchase of the Summerfield Shopping Centre which occurred on or about 20 July 1987.
It seems that during the course of 1987 Mr Chesson had indicated that the Balga Shopping Centre could be revalued and that there was an opportunity for each of the unit holders to withdraw the funds they had placed with Wilden and to invest in another shopping centre. Mr and Mrs Green and all of the other unit holders of The Wilden/Balga Trust, apart from Mrs Jones, decided to take advantage of the opportunity. This led to the formation of The Summerfield Unit Trust in accordance with the standard Trust Deed to be administered by a trustee company known as Tace Pty Ltd. The relevant deed of trust is dated 9 July 1987 (19 @ PT42).
I will turn to the affairs of Summerfield/Tace and of Kelmscott/Magenta, which was set up in 1988, in due course. However, for the sake of an orderly narrative, I will continue to focus upon the affairs of the Wilden/Balga Trust for the time being. Nonetheless, it is important to understand that by 1989 and 1990 various events concerning the affairs of the three trusts were occurring in close proximity to each other.
The administration of Balga/Wilden
It was common ground at the trial that by mid‑1987 Mr Green had become a director of Wilden. Mr Green said in evidence that his understanding was that if Wilden was unable to make the required repayments to the ANZ Bank he and the other directors would be liable as guarantors for the debt to the bank. However, he thought that he was only liable for his portion of the debt.
Mr Denboer continued as Chairman of Wilden. However, it is apparent from the minutes, and it was common ground at the trial, that the day to day affairs of the Balga/Wilden Trust were controlled by Mr Chesson who acted, in effect, as Managing Director.
Mr Green said in evidence that meetings of the investors took place approximately every three to six months. These meetings included the annual general meetings of the Trust. The meetings were extremely informal and were generally held either at Mr Chesson's office or at his home. Mr Green said that there were no formal directors meetings of Wilden and general reports were provided to the gathering by Mr Chesson. Each of the investors attended the meetings whether or not they were also a director of the company.
Mr Green said in his signed witness statement that in addition to the monthly statements, after the end of the 1986/87 and 1987/88 financial years he received a statement from Wilden setting out the distributions that had been made that year (Ex 349 @ PW132 and Ex 350 @ PW181). These statements reflected the interest due under the loan arrangements which was to be set off against the income due to the investor.
Mr Green said that it was not the practice at directors' meetings to approve formal minutes recording the proceedings at an earlier meeting. The practice was for Mrs Chesson to take notes. At a later stage, as matters became contentious, Graeme Green served as minute‑taker for a period, and Mrs Green made her own notes of what took place at meetings. It was a matter in issue between the parties at the trial as to the extent to which minutes purporting to be approved and signed as a true record of what had taken place could be relied upon, and as to whether some meetings mentioned in minutes had taken place at all.
I will return to these issues in due course. For ease of reference, where the context permits, I will refer to minutes signed by Mr Denboer (as Chairman) or which were contended for as an accurate record by Mr Denboer or Mr Chesson, as the "Denboer/Chesson minutes". I will refer to notes or minutes prepared by or contended for by the Green parties as the "Green minutes or notes".
I note in passing at this stage that the Denboer/Chesson directors' minutes for 2 February 1986 at which the loan provisions were approved by Mr Denboer and Mr Chesson (D3 @ DW1620) do not appear to have been verified as a true record in the minutes of the next directors' meeting on 3 September 1986. It appears from the Denboer/Chesson minutes of the latter meeting, which were signed by Mr Denboer as Chairman, that Mr Green attended the September meeting as a newly appointed director. It follows from this that the 1986 minutes, of themselves, do not establish that Mr Green was or must have been familiar with the loan provisions. However, the defendants' case at trial was that Mr Chesson had run through the loan provisions with him early on in their relationship and, in any event, the uniform loan provisions were reflected in the minutes of each of the trusts.
Events at the Balga/Wilden Trust
In June 1988 the Balga supermarket was about to become vacant. On or about 9 June 1988 the directors of Wilden met at the Mediterranean Restaurant in Subiaco to discuss this matter. It was proposed that Wilden try to remove the current supermarket operators, Osborne Co‑Op, and run the supermarket until a buyer could be found for the property.
Mr Green said in his witness statement that Mr Chesson suggested that he manage the supermarket on the basis that he receive 50 per cent of the profits from any sale of the supermarket with the balance being divided between the other unit holders of the Trust. Mr Chesson was to receive $1000 a week for management of the supermarket only if the supermarket made an operating profit of more than $1000 a week. Mr Green recalled that after discussing the matter those present agreed to adopt Mr Chesson's suggestion.
Mr Bonini, who was called as a witness by the plaintiffs, and was generally supportive of the plaintiffs' case, gave evidence to much the same effect save that on his account the meeting was held on 13 June 1988. He claims to have made a contemporaneous note of that date immediately after the meeting to the effect that Mr Chesson was to receive 50 per cent of the profits made from any sale of the business with the "remainder 50% to be split amongst other unit holders". I will call this the "June 1988 Bonini note".
The Denboer/Chesson minutes of this meeting (494 @ DW1625) purport to have been signed by Mr Denboer a month later on 4 July 1988. These minutes record that the Osborne Co‑op was to be issued with a Notice to Quit. Chesson & Co were to manage the supermarket until a suitable operator could be found. It was resolved also that:
"That Chesson & Co receive reimbursement for all out‑of‑pocket expenses and professional fees in operating the supermarket plus 50% of the Capital Profits on resale and the remaining 50% of profits be equally divided between the unitholders."
There is another set of minutes which records the resolution in almost exactly the same terms. It was a matter of controversy at the trial as to whether the version I have quoted correctly reflected the will of the meeting. This resolution is said to differ from Mr Green's account of what was decided in that it opened the way to a claim for professional fees by Mr Chesson that was not limited to $1000 per week in the event of a profit being made. Further, it would allow Mr Chesson to claim more than 50 per cent of the capital profits on resale in that he would be entitled to 50 per cent pursuant to the special allowance and Callao/Chesson would then share in the remaining 50 per cent on a proportionate basis in his capacity as a unit holder. On the other hand, according to the June 1988 Bonini note, the remaining 50 per cent was to be split between the unit holders other than Callao/Chesson. For ease of reference, I will call this the "Balga/Chesson remuneration issue".
Mr Green said in evidence that the first time he saw minutes concerning this matter was when the issue concerning payment of fees to Mr Chesson arose over twelve months later. He recalled that those present at the relevant directors meeting acknowledged that there were no minutes of the meeting in June 1988. This is reflected in a document "Discussion of directors" 12 September 1988 (351 @ PW197).
I pause here to note that due to a typographical error or otherwise these notes appear to be incorrectly dated and should read 12 September 1989. They refer to events in 1989. This appears to be borne out by the relevant Denboer/Chesson minutes dated 12 September 1989 which purport to have been signed by Mr Denboer on 26 September 1989 (495 @ DW1632).
Mr Green recalled that there was discussion about finding a purchaser for the supermarket. Mr Green said that the notes of discussion (Ex 351) generally accorded with his recollection of the discussions that took place at the meeting in question (whenever it was) save that he did not agree there was a resolution to the effect that Chesson & Co obtain all out of pocket expenses or that the balance of the profit was to be 50 per cent to Chesson & Co and 50 per cent to be split amongst "all unit holders including S J Chesson Family Trust in proportion to their units".
On the plaintiffs' case, it was not long after the appointment of Mr Chesson to manage the supermarket in mid‑1988 that the income from the Balga/Wilden Trust stopped suddenly.
The Balga/Wilden 1989 events
According to the plaintiffs, on 2 May 1989 Mr Green met Mr Bonini and Mr Chesson for lunch at the Willagee Hotel. During the course of this encounter Mr Green said that he wanted to receive more regular information and sought an explanation as to why the investors were not receiving any money from the Balga/Wilden Trust and had not done so for several months. According to Mr Green, Mr Chesson said words to the effect that it was because of the costs of redevelopment of the shopping centre. He said there was nothing to worry about.
On 16 May 1989 Mr Green wrote to Mr Chesson confirming his request for information (91 @ PW222). However, Mr Green did not receive any further information until the next directors meeting which was held 25 July 1989.
It appears from the minutes of a directors' meeting dated 8 August 1989 (185 @ PW226) that Mr Chesson was to arrange through the ANZ Bank a basic overdraft limit of $300,000 and a supermarket operating limit of $150,000 in addition to the $1 million Bill Line.
The annual general meeting of Wilden was held on the evening of 31 October 1989 at Mr Chesson's house. Mr Green attended the meeting with his wife. He recalled that Mr Chesson gave a report to the meeting which was relatively positive and that he handed out a document to all unit holders at the meeting described as a report to unit holders AGM held 31 October 1989 (285 to 259 @ PW249).
The report refers to a finding in favour of Wilden by the Supreme Court in respect of litigation with Osborne Park Co‑Op and an award of damages. The short term strategy was said to be for Wilden to operate the supermarket as a holding pattern. The company expected to sell the supermarket at a considerable profit upon completion of redevelopment. This would bring the property value to approximately $2.2 million. The report included an income and expense report for the period 1 July 1988 to 30 June 1989 (PW253) which disclosed a net profit of $14,487. The Balga Trust balance sheet as at 30 June 1989 indicated that there was a surplus of assets of $1,046,491.88 (PW255).
Mr Green said in evidence that the minutes of the AGM of Wilden held 31 October 1989 (Ex 284 @ PW247) accord with his recollection of the discussions that took place at the meeting. He recalled that at about this time he signed loan contracts for the finance of equipment for the supermarket and a fixed and floating charge.
The Balga/Wilden 1990 events
The next directors meeting of Wilden was held on 10 February 1990. Mr Chesson said words to the effect that in the first three months of trading there had been a net operating loss of $5574 but it should not be regarded as a bad result.
The plaintiffs adduced in evidence an exchange of correspondence between Chesson & Co and the ANZ Bank at Fremantle in regard to an application by Wilden for increased lending. Mr Green said in evidence that he was not aware that an application for increased lending had been made and he did not believe that Mr Chesson raised this with him as a director of Wilden.
The correspondence suggested that various problems were beginning to emerge. This is reflected in the ANZ letter dated 3 April 1990 (193 @ PW287). The Retail Banking Manager notes that the chemist and bottle shop had not been able to pay rent for nine months. The ANZ Bank administration believed the proposed sale price for the supermarket of $800,000 (plus stock) was excessive. The Banking Manager said further that the directors' valuation of $3 million on the complex appeared to be excessive considering the present business environment and the fact that certain tenants were not meeting rentals due.
The next directors meeting of Wilden was held on 9 June 1990. Mr Green said in evidence that shortly prior to the meeting, Mr Chesson rang and said words to the effect that the supermarket had suffered a huge operating loss. At the meeting on 9 June 1990 Mr Chesson gave those present a number of documents and informed the meeting that the supermarket and shopping centre had an operating loss of $365,574. There was discussion about how to fix the problem.
The mid‑1990 Wilden meetings
A meeting was held at Mr Chesson's office on the evening of 20 June 1990. There are various records of what supposedly took place being the Denboer/Chesson minutes (508 @ DW1638), the Green minutes of the meeting (207 @ PW253) and Green discussion notes (361 @ PW354). Mr Green said in evidence that the notes of discussion were reasonably accurate.
It appears to be common ground that there was discussion at this meeting of obtaining finance from "external sources" bearing in mind that the ANZ Bank was owed $2.2 million (which included Esanda) and creditors amounted to approximately $300,000. Mr Chesson said that approximately $150,000 was needed to keep the supermarket (known at that time as Farmer Jacks) afloat. It is apparent from all versions of the meeting that the required sum of $150,000 was to be financed by the existing unit holders.
The Denboer/Chesson minutes for 25 June 1990 record that "the monies received at this meeting were for a reduction of loans to unit holders". The Chairman obtained the following cheques: Bonini $21,951.22, Greenco $29,268.29, Denboer $10,900, Chesson $10,975.
Mr Green recalled giving to Mr Chesson a Green Co cheque for $29,268.29 (363A @ PW364) which was the subject of a receipt dated 26 June 1990 (363B @ PW378). The receipt speaks of the Green cheque being for "repayment of part of Farmer Jacks Supermarket loan".
It seems that by this time the Green parties harboured grave reservations about the management of Balga/Wilden. It was running at a loss and, on their case, there had been a failure to provide information. They had been called upon to make further cash contributions, although (on the plaintiffs' case at trial) the initial investment agreement arising out of the 1985 Zilna letter and related events prohibited further contributions.
On the other hand, under cross‑examination, Mr Denboer characterised Mr Green's attitude in a different way. He said that Mr Green was simply "rattled" by the fact that Balga/Wilden was running at a loss and that personal guarantees might be called up.
Either way, it is clear that a mood of anxiety and recrimination began to affect the directors' meetings.
The next directors meeting of Wilden took place on 12 July 1990. According to Mr Green (par 166) it was at this meeting that discussion turned to something he had said about burning down the shopping centre to make an insurance claim. It was a matter of controversy between the parties at a later stage as to whether the words were spoken in a joking manner. I will take a closer look at this incident later. However, the fact is that the insurer took an interest in the matter and the incident became the source of much debate and further friction between the parties.
Mr Chesson acknowledged in his witness statement (at par 54) that by the end of June 1990 the losses and the cash flow position was becoming critical. He said (par 65) that, in all, three calls were made upon unit holders for repayment (or reduction) of loan amounts owing. The Green company paid two amounts of $21,951.22 on 25 June 1990 and 12 July 1990 respectively and a third payment of $22,000 on 25 July 1990. Graeme Green paid two amounts of $7317.07 on 26 June 1990 and 12 July 1990 respectively.
Trading was very difficult. Mr Chesson was instructed to find offers to purchase the supermarket at any price he could get for it. It was at about this time, at a meeting on 12 July 1990, that Graeme Green is said by the Green parties to have been appointed minute secretary (211 @ PW398).
It seems that a Mr Liggens expressed an interest in acquiring the supermarket. Further, at a meeting on 25 July 1990 Mr Chesson reported that an offer had been received from Mr J W Peterson and Mr K E Geggie to acquire the supermarket (511 @ DW1641 and 215 @ PW417).
As to the Peterson/Geggie offer, it emerged that the offerors could only afford to lease the Farmer Jacks Supermarket at Balga if they could dispose of certain office premises at Irwin Chambers in the central business district of Perth. There was talk of Balga/Wilden acquiring the Irwin Chambers property so that Petersen/Geggie could take over Farmer Jacks. This complication delayed the negotiations as it meant that Balga/Wilden had to make further approaches to the ANZ Bank. Eventually, as appears from a minute dated 25 October 1990 the directors of Wilden resolved that Chesson & Co be authorised to prepare all necessary documents to fulfil the purchase of the Irwin Chambers property and the sale of the Farmer Jacks Supermarket.
13.2the Second Plaintiff is indebted to the Ba1ga Bazaar (1985) Unit Trust as and from 25 October 1990 in the sum of $234,097.56.
13.3The said debts are repayable on demand subject to the adjustment of liabilities between the parties provided for by these orders.
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:
15.1bear 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
15.2for 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:
16.1the value of the units as ascertained pursuant to paragraph 9 of this judgment;
16.2the amount of equitable damages as determined by the account taken pursuant to paragraph 11 hereof;
16.3the amount of the loan the subject of the declaration referred to in paragraph 13 hereof; and
16.4the 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:
17.1shows 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
17.2shows 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 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:
18.1seeking repurchase of all or any units held by it in the Balga Bazaar Unit Trust;
18.2transferring all or any units held by it in the Balga Bazaar Unit Trust;
18.3calling any meeting of unit holders of the Balga Bazaar Unit Trust or voting at any such meeting; and
18.4seeking 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:
20.1shall 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;
20.2thereafter 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;
20.3at 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;
20.4upon determination by the said valuer of the unit value of the First and Second Plaintiffs' units:
20.4.1forthwith provide the First and Second Plaintiffs with a true copy of all the said valuer's determinations;
20.4.2forthwith provide the First and Second Plaintiffs with a statement showing:
20.4.2.1the value of the First and Second Plaintiffs' units determined by the valuer as the Current Repurchase Value; and
20.4.2.2the amount (if any) owing by each unit holder to the Trustee as at the Relevant Date;
20.4.3the 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;
20.4.4upon 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;
20.4.5upon 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
20.4.6within 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.
20.4.7if 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.
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:
23.1the 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
23.2the 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:
25.1provide to the Plaintiffs all accounts, reports, information and documents given to unit holders between 30 June 2003 and the date of this judgment;
25.2provide 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
25.3allow 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 Trust Deed and is of no force and effect and is not binding upon the parties hereto.
27.Magenta Pty Ltd as Trustee:
27.1shall 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;
27.2thereafter 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;
27.3at 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;
27.4upon determination by the said valuer of the unit value of the Third Plaintiffs' units:
27.4.1forthwith provide the Third Plaintiffs with a true copy of all the said valuer's determinations; and
27.4.2forthwith provide the Third Plaintiffs with a statement showing:
27.4.2.1the value of the Third Plaintiffs' units determined by the valuer as the Current Repurchase Value; and
27.4.2.2the 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.
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:
30.1the 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
30.2the 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;
31.2the 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
31.3the Third Plaintiffs, William Joseph Green and Norma Glenys Green, are indebted to the Kelmscott (1988) Unit Trust in the principal sum of $500,000.
31.4The 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:
33.1bear interest at the rate and for the periods found on account referred to in paragraph 32 hereof; and
33.2for 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.
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:
34.1the value of their units as ascertained pursuant to paragraph 27 of this judgment;
34.2the amount of equitable damages as determined by the account taken pursuant to paragraph 30 hereof;
34.3the amount of interest payable to the Third Plaintiffs pursuant to paragraph 30 of this judgment;
34.4the amount of the loan the subject of the declarations referred to in paragraph 31 hereof; and
34.5the 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:
35.1shows 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
35.2shows 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:
37.1provide to the Plaintiffs all accounts, reports, information and documents given to unit holders between 30 June 2003 and the date of this judgment;
37.2provide 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
37.3allow 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:
41.1the Plaintiffs' costs be apportioned as between the three Trusts as follows:
41.1.1issues concerning the Balga Bazaar (1985) Unit Trust - 50% of the costs;
41.1.2issues concerning the Summerfield (1986) Unit Trust - 25% of the costs; and
41.1.3issues 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:
42.1as to 80% of such costs by the First Defendant, the Fourth Defendant and the Fifth Defendant jointly and severally; and
42.2as to 20% of the costs by the First, Fourth, Fifth, Sixth and Seventh Defendants jointly and severally.
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:
45.1the Plaintiffs' costs include all reserved costs in the proceedings;
45.2the Plaintiffs be entitled to certificates for 2 counsel, transcript, the expert witness costs of Mr Trevor Gorey and 2 solicitors attending trial;
45.3the Plaintiffs be entitled to tax the costs as if Mr M L Bennett was Senior Counsel;
45.4the 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;
45.5the Plaintiffs be entitled to have their costs of:
45.5.1the statement of claim and reply;
45.5.2giving discovery;
45.5.3inspecting documents;
45.5.4getting 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.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: GREEN & ORS -v- WILDEN PTY LTD & ORS [2005] WASC 83 (S2)
CORAM: HASLUCK J
HEARD: 4-21 NOVEMBER 2003, 15-28 APRIL 2004, 5, 11, 12, 21, 26, 27, 31 MAY 2004, 1-4, 8-14, 21-30 JUNE 2004, 1 & 2 JULY 2004, 29 & 30 NOVEMBER 2004, 19 MAY 2005 & 14 JUNE 2005, 9 & 25 AUGUST 2005
DELIVERED : 10 MAY 2005
SUPPLEMENTARY
DECISION :25 AUGUST 2005
FILE NO/S: CIV 3049 of 1991
CIV 3050 of 1991
CIV 2965 of 1990
CIV 2966 of 1990
Consolidated by order dated 5 August 1998
BETWEEN: GRAEME WILLIAM GREEN
First Plaintiff
W J GREEN & CO (1984) PTY LTD (ACN 008 851 867)
Second PlaintiffSHARYN LEE GREEN
GRAEME WILLIAM GREEN
JULIE ANNE GREEN
WILLIAM JOSEPH GREEN
NORMA GLENYCE GREEN
Third PlaintiffsAND
WILDEN PTY LTD (ACN 009 143 033)
First DefendantMAGENTA NOMINEES PTY LTD (ACN 009 340 158)
Second DefendantTACE PTY LTD (ACN 009 204 915)
Third DefendantSYDNEY JAMES CHESSON
Fourth DefendantBERT LEONARD DENBOER
Fifth DefendantCALLAO PTY LTD (ACN 008 867 552)
Sixth DefendantBENRONE PTY LTD (ACN 008 931 084)
Seventh DefendantDELTABROOK PTY LTD (ACN 009 462 695)
Eighth DefendantJOHN MARTIN KELLY
Ninth Defendant(BY ORIGINAL ACTION)
WILDEN PTY LTD (ACN 009 143 033)
First Plaintiff by CounterclaimMAGENTA NOMINEES PTY LTD (ACN 009 340 158)
Second Plaintiff by CounterclaimAND
GRAEME WILLIAM GREEN
First Defendant by CounterclaimW J GREEN & CO (1984) PTY LTD (ACN 008 851 867)
Second Defendant by CounterclaimSHARYN LEE GREEN
GRAEME WILLIAM GREEN
JULIE ANNE GREEN
WILLIAM JOSEPH GREEN
NORMA GLENYCE GREEN
Third Defendants by Counterclaim(BY COUNTERCLAIM)
Catchwords:
Practice and procedure - Application for suspension order (or stay of execution) pending appeal - Special circumstances found to exist - No new principles
Legislation:
Civil Judgments Enforcement Act 2004 (WA), s 15(3)
Result:
Application allowed
Category: B
Representation:
Original Action
Counsel:
First Plaintiff : Mr D Grace QC & Mr M L Bennett
Second Plaintiff : Mr D Grace QC & Mr M L Bennett
Third Plaintiffs : Mr D Grace QC & Mr M L Bennett
First Defendant : 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
Solicitors:
First Plaintiff : Bennett & Co
Second Plaintiff : Bennett & Co
Third Plaintiffs : Bennett & Co
First Defendant : Galic & Co
Second Defendant : Galic & Co
Third Defendant : Galic & Co
Fourth Defendant : Galic & Co
Fifth Defendant : Galic & Co
Sixth Defendant : Galic & Co
Seventh Defendant : Galic & Co
Eighth Defendant : Galic & Co
Ninth Defendant : 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
Case(s) referred to in judgment(s):
Eastland Technology Australia Pty Ltd & Ors v Whisson & Ors [2003] WASCA 307
Federal Commissioner of Taxation v Myer Emporium Ltd (No 1) (1986) 160 CLR 220
Hamersley Iron Pty Ltd v Lovell (No 2) (1998) 20 WAR 79
Case(s) also cited:
Nil
HASLUCK J: The defendants, save for the eighth and ninth defendants, have applied for a suspension order in respect of the judgment and orders made by me on 9 August 2005, pending the outcome of an appeal against the said orders in CACV 101 of 2005. The application is supported by the affidavit of Tihomir Galic sworn 24 August 2005. Such an application was formerly known as an application for a stay of execution and, for ease of reference I will use that term, being the term used in the decided cases to be mentioned later.
It is not necessary for me to set out at length the facts and matters giving rise to the present application. In my supplementary judgment handed down on 9 August 2005 I provided an overview in which I summarised the nature of the matters in issue between the parties and the findings made in the primary judgment. I will not repeat what was said on that occasion and will proceed as if the summary is set out in full in this second supplementary judgment.
For present purposes it will be sufficient to say briefly that the plaintiffs advanced claims against three trustee companies and certain individuals, including Mr Chesson and Mr Denboer, who were allegedly associated with the matters complained of. Broadly described, the plaintiffs succeeded as to certain aspects of the matter and obtained an order for the removal of Wilden Pty Ltd as trustee for the Balga/Wilden Trust. However, certain of their claims failed and judgment was entered against certain of the Green parties in respect of a counterclaim advanced by certain of the defendants.
Put shortly, the litigation required that many finely balanced legal issues be resolved and in the end, neither party can be said to have succeeded entirely. It was a mixed result. Moreover, it will be apparent from the lengthy and detailed orders made on 9 August 2005 that, in order to carry the various findings into effect, further inquiries have yet to be undertaken bearing upon matters of account and valuation.
Section 15 of the Civil Judgments Enforcement Act 2004 (WA) provides:
"A person against whom a judgment is given may apply for an order suspending the enforcement of all or part of the judgment to the Court that gave the judgment or a Court that is dealing with an appeal against the judgment."
By s 15(3):
"On such an application the Court may only make such an order if there are special circumstances that justify it doing so."
I am of the view that this provision empowers me to deal with the present application. I note in passing that by O 47 r 13 of the Rules of the Supreme Court, the Court, if satisfied by a person liable to execution under a judgment or order that by reason of special circumstances it is inexpedient to enforce the judgment or order, may stay the execution for such period and on such terms as the Court thinks fit.
I will turn to the decided cases bearing upon an application for a stay of execution and the meaning of the concept "special circumstances" referred to in s 15(3) of the Civil Judgments and Enforcement Act in a moment.
It emerges from the affidavit of Mr Galic at par 12 that in the present case an application was made for an interim stay of execution before the Appeal Court on the basis of the deponent's understanding that the trial Judge, that is, Hasluck J, was away on circuit and would not be available to hear the application.
The matter came before a single Judge of Appeal, Pullin JA, on Monday, 22 August 2005 and was adjourned. Pullin JA did not grant an interim stay. After some discussion Mr Galic informed his Honour that an application would be made to the trial Judge to stay the execution of the orders. It seems that Pullin JA was of the view that the matter should proceed by way of an application to the trial Judge. It is against this background that the matter comes before me.
Mr Galic says in his affidavit that there is some urgency in obtaining a stay of the orders comprising the judgment. This is due to the peremptory nature of the orders made by the trial Judge in removing Wilden Pty Ltd as trustee and requiring the other trustee companies to forthwith request the president of the Institute of Valuers to nominate a valuer to value certain units. Unless a stay is granted, the defendants will be in contempt of Court for failing to comply with the orders even though they have now instituted an appeal against the primary Court's decision.
In a letter dated 11 August 2005 delivered to the solicitors for the plaintiff seeking their consent to the application for a stay, it is said by Mr Galic on behalf of his clients that it would be clearly inexpedient to enforce the orders being appealed against in the circumstances of the present case. Those circumstances are said to be that the taking of the accounts and inquiries contemplated by the orders and the new trustee's costs are likely to quickly "run through the roof" and cannot realistically be compensated for if the judgment is ultimately overturned on appeal.
Further, a finding on appeal that the valuers' determinations of the repurchase price were valid would unravel most of the orders made. As to the accounts to be taken, it is said that the Green parties elected during the course of the trial to sue for specific performance of their repurchase contract and damages in the form of interest on the repurchase value. The Green parties cannot as a matter of reason, logic or law have both interest on the repurchase value and an account taken of profits and distributions made by the trust after the repurchase request as that would amount to double recovery.
It is said further in Mr Galic's affidavit that in the event of findings on appeal that there were no breaches of fiduciary duty, or that the breaches found were not fraudulent, such findings would nullify any awards of compensation in equity. It was said also that all the matters referred to earlier constitute special circumstances sufficient to justify a stay of the orders previously made.
I pause to note that the plaintiffs were not prepared to consent to the application and are opposed to the making of any order for a stay of execution. They have filed written submissions dated 25 August 2005.
It is well established by authority that the discretion which by statutory provisions or Rules of Court are customarily conferred in regard to the ordering of a stay is only to be exercised where special circumstances exist. Such circumstances must be sufficient to justify a departure from the ordinary rule that a successful litigant is entitled to the fruits of his litigation, pending the determination of any appeal.
It was said in Federal Commissioner of Taxation v Myer Emporium Ltd (No 1) (1986) 160 CLR 220 at 222 by Dawson J:
"Special circumstances justifying a stay will exist where it is necessary to prevent the appeal, if successful, from being nugatory. Generally that will occur when, because of the respondent's financial state there is no reasonable prospect of recovering moneys paid pursuant to the judgment at first instance. However, special circumstances are not limited to that situation and will I think exist where, for whatever reason, there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if judgment against him is executed."
In Hamersley Iron Pty Ltd v Lovell (No 2) (1998) 20 WAR 79 the Full Court held:
"Generally a stay will only be granted where it is necessary to preserve the subject matter of the litigation or where refusal would create practical difficulties in the relief available to the High Court or where there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position."
Anderson J said at 89:
"Unless a stay is necessary to preserve the subject matter or integrity of the litigation the circumstances will not be regarded as sufficiently exceptional to enliven the discretionary jurisdiction to provide a stay. Only if the applicant can show that a stay is necessary to that end will the High Court go on to consider matters such as whether the application for special leave has a prospect of success, whether a stay will occasion hardship to the respondent, where the balance of convenience lies and so on."
His Honour thought that such matters are always treated as secondary to the question of whether a stay is necessary to preserve the subject matter or integrity of the litigation. They come into play only if it appears that the refusal of a stay will substantially deprive the applicant of the benefit to be derived from the appeal. Thus an applicant may fail to obtain a stay even if the applicant can show that unless there is a stay the appeal will be futile.
These principles are echoed in the more recently decided decision of the Full Court in Eastland Technology Australia Pty Ltd & Ors v Whisson & Ors [2003] WASCA 307. In that case the judgment of the Court at par 9 reflected the Court's endeavour to distil what were thought to be the generally applicable relevant principles and that distillation was in the form of this summary:
"•The successful litigant at first instance will ordinarily be entitled to enforce the judgment pending the determination of any appeal.
•It is for the applicant for a stay to move the court to a favourable exercise of its discretion.
•It will not do so unless special circumstances are shown justifying the departure from the ordinary rule.
•The central issue will be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of the litigation, or where refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal. It is often put shortly that it will first and foremost be necessary to establish that without the grant of a stay, the right of appeal, whether upon the grant of leave or special leave or not, will be rendered nugatory.
•If that can be demonstrated, the stay will generally still be refused unless it can be established that the appeal process, whether upon the grant of leave or special leave or not, has ultimately reasonable prospects of success so as to result in the grant of relief to the appellant.
•If that hurdle can be overcome, the stay may still be refused where it appears that the balance of convenience does not lie in favour of the applicant; where, for example, the grant of a stay will occasion hardship to the respondent which may not be alleviated by the terms upon which the stay may be granted."
Against this background let me return to the circumstances of the present case. I am of the view that a stay of execution or a suspension order (to put it another way) should be allowed in the circumstances of the present case pursuant to s 15(3) of the Civil Judgments Enforcements Act. I consider that there are special circumstances justifying the making of such an order.
It will be apparent from matters referred to in an earlier discussion that the dispute between the parties has given rise to matters of legal complexity and that the final judgment of the Court has produced a mixed result. The plaintiffs cannot be easily characterised as a successful party that might be deprived of the fruits of their judgment if a stay is granted.
The nature of the orders made, including provision for the removal of a trustee and the undertaking of further valuations and accounts means that the subject matter of the litigation is likely to be significantly altered if various orders are carried into effect prior to the hearing of the appeal that has now been instituted. Substantial costs will be incurred and possibly the activities associated with those costs will prove to be of no avail if the appeal succeeds.
I consider that in these circumstances a stay of execution is necessary in order to preserve the integrity of the litigation and to ensure that proper effect can be given to orders made by the Court of Appeal if the appeal succeeds. The point of the appeal is likely to be frustrated if the appellant succeeds and the orders previously made have already been carried into effect.
In addition, it will be apparent from both the primary judgment and the supplementary judgment in this matter that many of the matters in issue between the parties are finely balanced and it must therefore be conceded that the appellant has prospects of success on appeal.
To my mind this consideration reinforces the view I have expressed that a stay of execution should be granted. The balance of convenience favours a stay. There is a real risk that the appellants, if successful on appeal, cannot be substantially restored to that former position if the orders comprising the judgment are carried into effect forthwith.
I am not persuaded that the plaintiffs will be subjected to hardship in circumstances where the litigation has been on foot for many years and, in the final analysis, they have had only a partial success.
Accordingly I will make orders in the terms proposed by the defendants with respect to the application for a suspension order. I consider also that there should be general liberty to apply.
- AGLC
- Green v Wilden Pty Ltd [2005] WASC 83
- Case
- [2005] WASC 83
- Decision Date
CaseChat Overview and Summary
The court was required to determine whether the trustee companies had properly complied with the repurchase procedure outlined in the trust deeds. Additionally, the court needed to assess whether the valuations relied upon by the trustee companies were effective and whether the protective provisions in the trust deeds excluded the trustee companies' liability for their actions. The court also had to consider whether the trustee companies had breached their fiduciary duties by allotting units and options to certain directors, and if there was any fraud in equity concerning these allotments.
The court found that the valuations relied upon by the trustee companies were ineffective, and that the trustee companies had breached their fiduciary duties by allotting units and options to certain directors. The court held that the protective provisions in the trust deeds did not exclude the trustee companies' liability for their actions. The court found that there was fraud in equity in respect of the units and options allotted to certain directors. The plaintiffs were entitled to equitable relief in respect of certain claims, subject to intervening circumstances and other relevant matters. The exact form of the equitable relief would be determined at a later stage.
The court ordered that the trustee companies and their directors were liable for the breach of fiduciary duties and fraud in equity. The court further ordered that the plaintiffs were entitled to equitable relief in respect of certain claims, subject to the aforementioned intervening circumstances and other relevant matters. The court directed that the form of equitable relief would be determined at a later stage.
Orders
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Background
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Evidence
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Decision
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