H.E.S.T Australia Ltd v Attorney-General (Qld) & Anor; Mercy Super Pty Ltd v Attorney-General (Qld) & Anor (No 2)

[2022] QSC 244

SUPREME COURT OF QUEENSLAND

CITATION:

H.E.S.T Australia Ltd v Attorney-General (Qld) & Anor; Mercy Super Pty Ltd v Attorney-General (Qld) & Anor (No 2) [2022] QSC 244

PARTIES:

In proceeding No BS 10464 of 2022:
H.E.S.T AUSTRALIA LTD (ABN 66 006 818 695) in its capacity as trustee for the HESTA SUPERANNUATION FUND (ABN 64 971 749 321)

(applicant)

v
ATTORNEY-GENERAL FOR THE STATE OF QUEENSLAND

(first respondent)

AND

ATTORNEY-GENERAL FOR THE STATE OF VICTORIA

(second respondent)

In proceeding No BS 10501 of 2022:
MERCY SUPER PTY LTD (ABN 98 056 047 324) in its capacity as trustee for MERCY SUPER (ABN 11 789 425 178)
v

ATTORNEY-GENERAL FOR THE STATE OF QUEENSLAND

(first respondent)

AND

ATTORNEY-GENERAL FOR THE STATE OF VICTORIA

(second respondent)

FILE NO/S:

BS 10464 of 2022
BS 10501 of 2022

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

11 November 2022

DELIVERED AT:

Brisbane

HEARING DATE:

Written submissions from the first respondent filed 21 October 2022
Written submissions from the second respondent filed 21 October 2022
Written submissions for the applicant in BS 10464/2022 filed 28 October 2022
Written submissions for the applicant in BS 10501/22 filed 28 October 2022

JUDGE:

Kelly J

ORDER:

1.   In proceeding number 10464/22, the first and second respondents’ costs of the application be paid or reimbursed out of the assets of the HESTA Fund on the indemnity basis.

2.    In proceeding number 10501/22, the first and second respondents’ costs of the application be paid or reimbursed out of the assets of the Mercy Super Fund on the indemnity basis.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – COSTS OUT OF FUND OR PROPERTY – CLAIMS FOR BENEFIT OF FUND OR PROPERTY – where the applicants are trustees of two superannuation funds – where the applicants obtained declarations that the successor fund transfer they proposed to complete did not constitute a substituted appointment for the purposes of s. 442F of the Criminal Code (Qld) and s. 180 of the Crimes Act 1958 (Vic) – where the applicants also obtained the Court’s assent to completing the successor fund transfer – where the Attorneys-General for Queensland and Victoria were joined to the proceeding on the basis that they were proper and necessary parties – where the Attorneys-General submitted that their costs should be paid on the indemnity basis out of the assets of the applicants’ funds – whether the costs of the Attorneys-General should be paid on the indemnity basis out of the assets of the applicants’ funds

Uniform Civil Procedure Rules 1999 (Qld), r. 69

Alsop Wilkinson (a firm) v Neary [1996] 1 WLR 1220, considered
Re Buckton; Buckton v Buckton [1907] 2 Ch 406, considered

COUNSEL:

AC Stumer for the applicant in BS 10464/22
D Hogan-Doran SC with T Glover for the applicant in BS 10501/22
EL Hoiberg for the first respondent in both proceedings

O Bigos KC with E Smith for the second respondent in both proceedings

SOLICITORS:

Allens for the applicant in BS 10464/22
Ashurst for the applicant in BS 10501/22
Crown Law for the first respondent in both proceedings
Victorian Government Solicitor’s Office for the second respondent in both proceedings

1. In these proceedings, for the Reasons in H.E.S.T Australia Ltd v Attorney-General (Qld) & Anor [2022] QSC 221, I made declarations and directions.

2. These Reasons are concerned with outstanding costs issues. I have adopted defined terms from my earlier reasons.

3. The declaration I made in each proceeding was in these terms:

   “It is declared that a successor fund transfer of the members of the … Mercy Super Fund … and their assets to the … HESTA Fund …  within the meaning and operation of regulation 6.29 of the Superannuation Industry (Supervision) Regulations 1994 (Cth) is not a substituted appointment for the purposes of:

   (a)Criminal Code Act 1899 (Qld), Sch 1, s. 442F;

   (b)Crimes Act 1958 (Vic), s. 180”

4. The directions I made in proceeding 10464/22 were:

   “Pursuant to Rule 54.02 of the Supreme Court (General Procedure) Rules 2015 (Vic) (together with section 4 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) and section 9 of the Jurisdiction of Courts (Cross- Vesting) Act 1987 (Qld)), it is directed that … the HESTA Trustee … would be justified in, or alternatively, pursuant to the Offence Provisions (together with section 4 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) and section 9 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Qld)), that the Court assents to the HESTA Trustee:

   (a)offering to … the Mercy Super Trustee … and Mater Misericordiae Ltd (Mater) the [P]romises (or any of them) set out in the Transaction Documents;

   (b)giving to the Mercy Super Trustee and Mater the [P]romises (or any of them) set out in the Transaction Documents.”

5. The directions I made in proceeding 10501/22 were:

   “Pursuant to section 96(1) of the Trusts Act 1973 (Qld), it is directed that … the Mercy Super Trustee … would be justified in, or alternatively pursuant to the Offence Provisions (together with section 4 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) and section 9 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Qld)), the Court assents to the Mercy Super Trustee:

   (a)receiving for itself and its related parties from … the HESTA Trustee … (as trustee or in its personal capacity) the [P]romises (or any of them) set out in the Transaction Documents;

   (b)soliciting for itself and its related parties from the HESTA Trustee (as trustee or in its personal capacity) the [P]romises (or any of them) set out in the Transaction Documents;

   (c)receiving and enforcing for itself and its related parties the [P]romises (or any of them) from the HESTA Trustee (as trustee or in its personal capacity) set out in the Transaction Documents.”

6. In proceeding 10464/22, I ordered that the HESTA Trustee’s costs of the application be paid or reimbursed out of the assets of the HESTA Fund on the indemnity basis.

7. In proceeding 10501/22, I ordered that the Mercy Super Trustee’s costs of the application be paid or reimbursed out of the assets of the Mercy Super Fund on the indemnity basis.

8. In each proceeding, I made an order that I would hear the parties otherwise as to costs. 

9. The SFT involved the Proposed Transfer which was to be made in accordance with the Transaction Documents.  Included within the Transaction Documents were the Promises.  The Promises were relevantly given by the HESTA Trustee to the Mercy Super Trustee.  The declaration concerned whether the SFT was a substituted appointment for the purposes of the Offence Provisions.  That was not an academic or hypothetical question. Rather, the question arose in a factual context where the Mercy Super Trustee had proposed the SFT and the Mercy Super Trustee and HESTA Trustee intended to execute the SFT and the Proposed Transfer by reference to, and in accordance with, the Transaction Documents including the Promises. 

10. The first and second respondents were joined to the proceeding under r. 69 UCPR on the basis that they each were proper and necessary parties having regard to the claim for declaratory relief.[1] It is uncontroversial that the first and second respondents were proper contradictors.[2]

    [1]T 1-9 ll 20-25 (6.09.22).

    [2]Applicant’s costs submissions in proceeding 10464/22 [14(a)]; Applicant’s costs submissions in proceeding 10501/22 [17(b)].

11. Where costs should fall in litigation is a matter of discretion. In the context of the court’s costs discretion where a trustee is a party to litigation, in Re Buckton; Buckton v Buckton,[3] Kekewich J provided the following observation by way of guidance:

    “In a large proportion of the summonses adjourned into Court for argument the applicants are trustees of a will or settlement who ask the Court to construe the instrument of trust for their guidance, and in order to ascertain the interests of the beneficiaries, or else ask to have some question determined which has arisen in the administration of the trusts.  In cases of this character, I regard the costs of all parties as necessarily incurred for the benefit of the estate and direct them to be taxed as between solicitor and client and paid out of the estate.”

    [3][1907] 2 Ch 406, 414.

12. In Alsop Wilkinson (a firm) v Neary,[4] Lightman J relevantly said:

    “Trustees may be involved in three kinds of dispute.  (1) The first (which I shall call ‘a trust dispute’) is a dispute as to the trusts on which they hold the subject matter of the settlement.  This may be ‘friendly’ litigation involving e.g. the true construction of the trust instrument or some other question arising in the course of the administration of the trust; or ‘hostile’ litigation e.g. a challenge in whole or in part to the validity of the settlement by the settlor on grounds of undue influence or by a trustee in bankruptcy or a defrauded creditor of the settlor, in which case the claim is that the trustees hold the trust funds as trustees for the settlor, the trustee in bankruptcy or creditor in place of or in addition to the beneficiaries specified in the settlement.  The line between friendly and hostile litigation, which is relevant as to the incidence of costs, is not always easy to draw: see Inre Buckton; Buckton v Buckton [1907] 2 Ch 406.  (2) The second (which I shall call ‘a beneficiaries dispute’) is a dispute with one or more of the beneficiaries as to the propriety of any action which the trustees have taken or omitted to take or may or may not take in the future.  This may take the form of proceedings by a beneficiary alleging breach of trust by the trustees and seeking removal of the trustees and/or damages for breach of trust.  (3) The third (which I shall call ‘a third party dispute’) is a dispute with persons, otherwise than in the capacity of beneficiaries, in respect of rights and liabilities e.g. in contract or tort assumed by the trustees as such in the course of administration of the trust.”

    [4][1996] 1 WLR 1220, 1223-4.

13. Neither Kekewich J nor Lightman J were attempting to codify the types of litigation in which trustees may become involved.  Nor were their Honours purporting to circumscribe the Court’s discretion as to costs. 

14. I make the following findings and provide the following reasons in relation to the exercise of my discretion in relation to costs:

    (a)The question at the heart of these proceedings involved the proper construction of the Offence Provisions but in the specific context of the SFT and the Proposed Transfer. To answer the question, the Court was required to consider the Transaction Documents.  The proceedings did not involve an open-ended or abstract inquiry into “the operation of the criminal law”.[5]  Nor did the proceedings merely involve “an issue about the meaning, applicability and operation of … the Offence Provisions”.[6] Fundamentally, the Court was asked whether proposed conduct (evidenced by the Transaction Documents) to be engaged in by the Mercy Super Trustee and the HESTA Trustee in the management and administration of Mercy Super and HESTA would contravene the Offence Provisions.  Relevantly, I found that the applicants and their respective members had “a real interest in knowing whether the Proposed Transfer and/or the Promises fall within the terms of the Offence Provisions.”[7] I reject the applicants’ submissions to the effect that the proceedings did not concern a question which had arisen in the administration of Mercy Super and HESTA. I find that the proceedings were substantively concerned with a question which arose in the management and administration of Mercy Super and HESTA.

    (b)Although, in a technical sense, the proceedings might be described as adversarial,[8] as a matter of substance, the proceedings were “friendly” rather than “hostile” (to adopt the dichotomy used by Lightman J in Alsop). 

    (c)Whilst the declarations served a public interest by providing clarification about whether SFTs are likely to contravene the Offence Provisions, that outcome was ancillary to the primary purpose of the declarations which was directed to quelling the identified concerns of the Mercy Super Trustee and the HESTA Trustee in respect of the SFT, the Proposed Transfer and the application of the Offence Provisions.

    (d)The respondents’ respective submissions clarified and reduced the real issues in dispute.[9] Their respective written submissions were provided expeditiously and under significant time constraints which were the product of the applicants’ urgent need for the remedies and relief the subject of the applications. Further, it should be observed that, absent the involvement of the respondents as proper contradictors, the declaratory relief ultimately obtained may well not have been available to the applicants.[10]

    [5]Applicant’s costs submissions in proceeding 10464/22 [3], [7(a)].

    [6]Applicant’s costs submissions in proceeding 10501/22 [10].

    [7]H.E.S.T Australia Ltd v Attorney-General (Qld) & Anor; Mercy Super Pty Ltd v Attorney-General (Qld) & Anor [2022] QSC 221 [44].

    [8]Applicant’s costs submissions in proceeding 10501/22 [17].

    [9]By way of example see T 1-14 l 45 – T 1-15 l 25 (13.09.22).

    [10]A point that seems to be implicitly acknowledged by the Applicant’s costs submissions in proceeding 10501/22 [17(b)].

15. In all the circumstances, I am persuaded that the respondents’ costs should properly be regarded as necessarily incurred for the benefit of the Mercy Super Trustee, Mercy Super, the HESTA Trustee and HESTA.  I make the following orders:

    1.In proceeding number 10464/22, the first and second respondents’ costs of the application be paid or reimbursed out of the assets of the HESTA Fund on the indemnity basis.

    2.In proceeding number 10501/22, the first and second respondents’ costs of the application be paid or reimbursed out of the assets of the Mercy Super Fund on the indemnity basis.