Hamilton v JJR Investment Holdings Pty Ltd; Hamilton v JJR Investment Holdings Pty Ltd; Roche v JJR Investment Holdings Pty Ltd

Supreme Court of South Australia
(Civil: Application)
HAMILTON v JJR INVESTMENT HOLDINGS PTY LTD & ORS; HAMILTON v JJR INVESTMENT HOLDINGS PTY LTD & ORS; ROCHE v JJR INVESTMENT HOLDINGS PTY LTD & ORS
[2023] SASC 40
Judgment of the Honourable Justice Stein
APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT - COSTS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL RULE: COSTS FOLLOW EVENT - WHERE ACTION SETTLED OR OTHERWISE DETERMINED WITHOUT HEARING
In early 2021, the applicants in a first set of proceedings sought orders for the removal of the corporate trustees and the appointment of new trustees of two trusts. In June 2021, the mother of the applicants in the first proceedings and a director of the corporate trustees commenced a second set of proceedings which also sought orders for the removal of the trustees and appointment of new trustees of the trusts. In 2022, the second director of the corporate trustees commenced a third set of proceedings in which orders were sought concerning the alleged conduct of the applicants’ mother, the other director. The three sets of proceedings were listed for trial together.
Shortly before the trials were to commence, correspondence was exchanged, following which orders were made by consent for the removal of the corporate trustees and the appointment of an independent trustee as trustee of both trusts. The correspondence addressed substantive relief sought in the trustee removal proceedings but was silent as to costs. Thereafter orders were made dismissing the third set of proceedings.
The applicants in the first two sets of proceedings brought applications for their costs in all proceedings, where relevant, on various bases. The respondents and interested parties and the applicant in the third set of proceedings opposed the applications and contended the Court ought to make no orders as to costs in any of the proceedings.
The applicants in the first two sets of proceedings submitted they had achieved substantial success and the respondents and interested parties in those proceedings and the applicant in the third set of proceedings had effectively capitulated such that the applicants should receive a costs award in their favour and the correspondence did not preclude that outcome.
The respondents and interested parties submitted there was a legally binding contract of settlement that resolved the first two sets of proceedings on the basis each party was to bear its own costs. They submitted that, in any event, the usual principle should apply in all proceedings that, absent a trial on the merits, there should be no order as to costs. The respondents and interested parties in the first two sets of proceedings and the applicant in the third set of proceedings denied they surrendered or capitulated or acted unreasonably and contended the Court could not be certain the applicants would almost certainly have succeeded at trial.
Held:
1.The correspondence resulted in a binding settlement between the parties in relation to the first set of trustee removal proceedings.
2.The settlement terms precluded applications for costs by the applicants in the first set of trustee removal proceedings.
3.In any event, in respect of both sets of trustee removal proceedings, there was a resolution without a trial on the merits in circumstances in which, absent such trial, it was not possible to determine whether the applicants would almost certainly have succeeded or to address the respective reasonableness of the parties. The respondents and interested parties did not relevantly capitulate or surrender. The ordinary position follows that there should be no order as to costs.
4.In relation to the third set of proceedings, it was also not possible in the absence of a trial on the merits to determine whether the respondents would almost certainly have succeeded and the circumstances in which orders were made did not give rise to a conclusion the applicant relevantly capitulated or surrendered. The ordinary position follows that there should be no order as to costs.
5.Reserved costs on an interlocutory application addressed.

Corporations Act 2001 (Cth); Supreme Court Act 1935 (SA) s 40; Trustee Act 1936 (SA) s 36(1); Uniform Civil Rules 2020 (SA); Uniform Civil Procedure Rules 2005 (NSW), referred to.
Australian Securities Commissions v Aust-Home Investments Ltd (1993) 44 FCR 194; Calderbank v Calderbank [1975] 3 All ER 333; Diamond Ace Super Fund Pty Ltd v Rodapa Developments Pty Ltd [2020] FCA 1582; Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302; Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; Firkin v Pease [2020] VSC 539; Fitch v S & A Gallo Pty Ltd [2013] SASC 144; Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284; Hamilton v JJR Investment Holdings Pty Ltd (No 2) [2021] SASC 136; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151; Murray v Lesicar [2014] SASC 43; Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; ONE.TEL Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548; Pacific Indemnity Underwriting Agency Pty Ltd v Maclaw No 651 Pty Ltd (2005) 13 VR 483; Pentroth Pty Ltd v Kirschild Pty Ltd (2006) 96 SASR 129; Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; Re Rush; Holt v Rush [2020] VSC 412; Shellharbour City Council v Minister for Local Government [2017] NSWCA 256; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311; Zhao v Suzhou Haishun Investment Management Co Ltd [2020] VSCA 34, considered.

HAMILTON v JJR INVESTMENT HOLDINGS PTY LTD & ORS; HAMILTON v JJR INVESTMENT HOLDINGS PTY LTD & ORS; ROCHE v JJR INVESTMENT HOLDINGS PTY LTD & ORS
[2023] SASC 40
Civil: Application for costs
STEIN J.
Overview

In early 2021, Airlie and Alexandra Roche Hamilton commenced proceedings against the corporate trustees of two trusts seeking orders for their removal and replacement. In June 2021, Deborah Hamilton issued separate proceedings seeking the removal and replacement of those trustees. A number of respondents and interested parties were joined to both sets of proceedings. In 2022, proceedings were commenced by Fiona Roche, a director of the two corporate trustees, against Deborah Hamilton, the other director of those trustees. The proceedings sought relief under the Corporations Act 2001 (Cth) (“Corporations Act”) in relation to alleged conduct of Deborah Hamilton in her capacity as a director and/or member of the trustee companies. The three sets of proceedings were listed for trial together. The day before the trials were due to commence, the Court was informed that the proceedings brought by Airlie and Alexandra Roche Hamilton and Deborah Hamilton had resolved on terms proposed by Airlie and Alexandra Roche Hamilton and adopted by the solicitors for Deborah Hamilton for the appointment of an independent trustee as trustee of each trust. Formal orders were made by the Court to give effect to the appointment of the independent trustee. At the time the orders were made, various applications for costs were foreshadowed and thereafter made by Airlie and Alexandra Roche Hamilton and Deborah Hamilton. The applications were opposed by the respondents and interested parties and alternative orders were sought in the event costs orders were to be made in favour of Airlie and Alexandra Roche Hamilton and/or Deborah Hamilton. The proceedings brought by Fiona Roche also resolved. Deborah Hamilton’s application for her costs of those proceedings was opposed.
For ease of convenience and without intending to convey any disrespect, I refer to the members of the Roche family by their given names.
The main issues which arise for consideration in determining the applications for costs are as follows:
1.Did the correspondence between the parties which resulted in orders for the replacement of the trustees constitute a binding settlement?
2.If so, was the settlement inclusive of costs so as to preclude applications for costs?
3.Assuming applications for costs were not precluded, should costs orders be made in the particular circumstances of these matters in the absence of a trial on the merits?
In order to understand the various costs applications and the submissions made by the parties, it is necessary to set out more of the factual background to the disputes and the various proceedings.
Background
Deborah Hamilton, Fiona Roche and Shauna Roche are the daughters of the late John Justin Roche. Airlie and Alexandra Roche Hamilton are his grandchildren. Deborah is the mother of Airlie and Alexandra.
John died in 2010. During his lifetime, John was integrally involved in the conduct of the extensive Roche family business interests. Those interests, including property development and farming, have been conducted for many years through a complex structure including numerous companies and trusts. I will refer to the group of companies and trusts generically as the Justin-EDC/ADC Group.
On 16 February 2006, John established the JJR Investment Trust (“JJRIT”). JJR Investment Holdings Pty Ltd (“JJR Investment Holdings”) was appointed as the trustee of the JJRIT.
On 16 February 2006, John made a new will. Among other things, it provided for the establishment of the Westfield Station Testamentary Trust (“WSTT”). Westfield Station Nominees Pty Ltd (“Westfield Station Nominees”) was later incorporated and became the trustee of the WSTT.
Deborah and Fiona were the directors of JJR Investment Holdings and Westfield Station Nominees. Fiona and Deborah were for relevant purposes 50 percent shareholders in each of JJR Investment Holdings and Westfield Station Nominees. I will refer to JJR Investment Holdings and Westfield Station Nominees generally as the trustee companies.
In January 2021, each of Fiona, Deborah and Shauna effectively held a one third interest in the Justin-EDC/ADC Group with exceptions involving companies owned and controlled by each of Fiona, Deborah and Shauna for their own families.
Airlie and Alexandra Trustee Removal Proceedings
Airlie and Alexandra commenced action CIV-21-000520 (“Airlie and Alexandra Trustee Removal Proceedings”) on 21 January 2021 by application seeking orders pursuant to s 36(1) of the Trustee Act 1936 (SA). Airlie and Alexandra sought the following orders:
1.An order that the first respondent and the second respondent [that is, the trustee companies] be removed as the trustees of JJRIT and WSTT.
2.An order that, upon such terms and conditions as this Honourable Court shall deem fit, separate companies incorporated by Airlie and Alexandra, of which they are shareholders and directors, be appointed as the trustees of each trust.
3.In the alternative, professional trustees be appointed to each trust.
4.Further, alternatively, that orders be made regulating the future conduct of each trust.
5.An order that the costs of Airlie and Alexandra be paid on the basis of an indemnity out of the trust funds.
6.Such further or other order as this Honourable Court deems fit.
The application was supported by a lengthy affidavit sworn by Airlie on 21 January 2021. That affidavit asserted that Airlie and Alexandra brought the application in their capacity as beneficiaries of each trust. Airlie’s affidavit set out the grounds for removal of the trustees under the following headings:
·Beneficiaries’ interests have been prejudiced.
·Need for replacement trustees to represent trust interests and get trust funds in.
·Fiona’s antipathy towards specified beneficiaries.
·Roche family business owners have received substantial personal benefit from breach of the trustee role.
Airlie deposed to her view that the interests of the beneficiaries of the trusts had been materially prejudiced by mismanagement of the trusts and breach of duty by the trustee companies. She deposed to a belief that the Roche family business would indefinitely continue to use the money and assets of the JJRIT and WSTT while Fiona remained one of only two directors of each trustee company. Airlie asserted the trustee companies were conflicted as both the directors had used the funds of the trusts and Fiona was the senior manager of the Roche family business. Airlie considered there was an urgent need for new trustees to be appointed to represent the interests of the beneficiaries of the trusts. Airlie also referred to Fiona having demonstrated a deep-seated antipathy towards her and her sister, manifesting itself in the way she treated Airlie and Alexandra as beneficiaries of the two trusts. Airlie asserted the owners of the Roche family business entities had received substantial financial benefit from breaches of duty by the trustees.
I do not intend exhaustively to refer to the complaints made and the transactions referred to in Airlie’s affidavit. However, to appreciate the nature of the complaints made by Airlie and Alexandra, I describe one of those transactions by way of example. Prior to John’s death, a number of transactions were entered into including the incorporation of an entity, Echor DFS Holdings Pty Ltd (“Echor”), and the sale by John of his shares in one of the family companies, Justin Pty Ltd, to Echor for approximately $31 million by way of interest free vendor finance. John then gifted the loan owed by Echor to JJRIT in April 2006. Airlie thought that, as at 30 June 2019, Echor owed approximately $10 million to JJRIT. Airlie asserted that a considerable proportion of the capital of JJRIT had been loaned to Echor for over 14 years on an interest free, unsecured basis; the amount owing on that loan was the biggest single asset of the JJRIT; Echor and its ultimate owners had received a substantial benefit over that period from the loan at the expense of the discretionary trust and its beneficiaries and the value of the loan had decreased substantially in real terms. Airlie stated that she and Alexandra, as the surviving specified beneficiaries of JJRIT, wished the outstanding amount owed by Echor to be identified and repaid so the amount payable could be securely invested for the trust and its beneficiaries. Other transactions over a lengthy period of years, involving both trusts, were criticised and assertions were made of misconduct and breaches of trust. These included complaints about the use of WSTT’s interest in certain land being used as security for various facilities from the Australia and New Zealand Banking Group (“ANZ”), complaints about other loans and assertions that shares were sold at an undervalue.
Airlie deposed to Deborah and Fiona being deadlocked and having an insoluble conflict of interest.
Airlie’s affidavit criticised the way meetings of directors of the Roche family companies were conducted. The complaints included assertions that decisions were made globally and that the Roche family businesses and entities were managed as an aggregation, intermingling management, financial affairs, monies and directorships of the JJRIT and WSTT with a large number of unrelated entities.
Airlie complained that Fiona is one of the two directors of the trustee companies, asserted Fiona refuses to act cooperatively with Deborah and that Deborah and Fiona are not on ordinary speaking terms. Airlie’s affidavit made various allegations about Fiona’s alleged conduct vis a vis her and her sister, Deborah and the management of the trusts.
Airlie deposed to her view that the interests of the beneficiaries of the trusts have been materially prejudiced, the trust assets will be further endangered if the trustee arrangements are not changed and the Roche family business will continue to use the money and assets of the trusts while Fiona remains a director.
Airlie stated that if she and Alexandra were appointed as trustees, they would wish to properly secure the trust funds and preserve and properly invest them for the benefit of the present and future beneficiaries of the trusts. Airlie stated that she and Alexandra considered it consistent with John’s wishes and the objects of the trusts that they be appointed as trustees, as opposed to professional trustees, which was one of the alternative forms of relief sought. Airlie’s affidavit set out why Airlie and Alexandra considered they were suitable for the roles as trustees. Airlie said the discretionary trusts were not entirely suitable for professional trustees including because of their diverse group of assets and assets of a personal nature. She also stated there would be potential advantages for family members who own the Roche family business, rather than professional trustees, to represent the trusts. Alternatively, Airlie and Alexandra sought the appointment of suitably qualified professional trustees for a specified period or until further order to enable them to apply to discharge the order or replace the trustee, such as when Airlie and Alexandra were in a position to exercise powers of appointment under the trust deeds. Airlie stated that the interests of the trusts were numerous and complex and any professional trustee would need to spend substantial professional time in not just investigating and understanding interests and required management tasks but also in carrying out the management tasks thereafter. Airlie and Alexandra did not wish the trusts to incur what would be substantial initial and ongoing costs of that approach. Airlie referred to the higher level of cost to appoint professional trustees and stated she and her sister did not consider it would be fair to incur the additional costs of professional trustees given the need to change the trustee arrangements had arisen as a consequence of mismanagement and misconduct of the existing trustees and would represent a significant penalty for the beneficiaries.
Airlie’s affidavit set out a proposal for the management of the trusts and what Airlie and Alexandra’s initial objectives would be if appointed trustees. These included, among other things, Airlie and Alexandra intending to seek arrangements for repayment of loans owed to the trust by Echor and any other Roche family business company or trust. Airlie and Alexandra proposed to engage independent solicitors and counsel and take appropriate legal action as advised in relation to the sale of trust shares in specified companies. Other intended actions included seeking a timetable for the release of certain land from use as third party security for loans from ANZ.
Airlie deposed to believing John would wish her and her sister to be the trustees.
Procedural history
I do not comprehensively summarise the procedural history of these complex and interrelated proceedings. However, some understanding of the procedural history is necessary to appreciate the position which existed in relation to the various disputes immediately prior to the date the trial was to commence.
The Airlie and Alexandra Trustee Removal Proceedings were initiated against only JJR Investment Holdings and Westfield Station Nominees. Airlie and Alexandra’s application was supported by Deborah. On 27 January 2021, Deborah swore a lengthy affidavit of 241 pages and about 3130 pages of exhibits in support of the application. Deborah’s affidavit complained of transactions in addition to those in Airlie’s affidavit. Deborah subsequently applied to be joined to the Airlie and Alexandra Trustee Removal Proceedings and was joined as an interested party.

Fiona applied to be joined as a respondent and was joined by orders made on 26 February 2021. A number of companies in the Justin-EDC/ADC Group were joined to the proceedings as interested parties by reason of their capacity as general beneficiaries of the JJRIT and WSTT. Additional group companies then sought orders for their joinder as interested parties. The application was opposed by Airlie and Alexandra and they sought the disjoinder of the group companies. Orders were made for joinder of the additional group companies and the application for disjoinder was refused, essentially on the basis that the group companies were entities likely to be affected by the relief sought and the group companies would present a different position to the Court.[1] I will refer generally to the company interested parties as the Group Companies.
[1] Hamilton v JJR Investment Holdings Pty Ltd (No 2) [2021] SASC 136.
Shauna also applied to be joined, and was joined, as an interested party.
The affidavits of both Airlie and Deborah exhibited a very large number of documents. In mid-May 2021, Fiona and the Group Companies applied for the uplift and removal of Airlie’s and Deborah’s January affidavits. In general terms, the basis for the uplift application was that documents exhibited to the affidavits were alleged to comprise confidential and/or privileged group company records. Allegations were also made that Deborah had provided documents to Airlie and Alexandra contrary to express warnings given to her not to share group company material with non-directors.
In addition to filing the uplift applications, the Group Companies commenced separate proceedings in action CIV-21-004640 (“Jerome proceedings”) against Deborah, Mark Hamilton (the father of Airlie and Alexandra and husband of Deborah) and Airlie based on asserted breaches of confidentiality and breaches of the Corporations Act.
At a directions hearing in the Airlie and Alexandra Trustee Removal Proceedings, the Group Companies applied orally for the matter to proceed on pleadings. That application was refused and orders were made for responsive affidavits to be filed. Thereafter, various affidavits were filed by Fiona in her personal capacity and on behalf of the Group Companies.
On 11 June 2021, Deborah issued fresh proceedings in CIV‑21‑006244 (“Deborah Trustee Removal Proceedings”) in which Deborah sought the same relief as Airlie and Alexandra in the Airlie and Alexandra Trustee Removal Proceedings. Deborah relied on her affidavit sworn on 27 January 2021 in the Airlie and Alexandra Trustee Removal Proceedings.
Deborah swore further affidavits on 14 and 15 December 2021. Those affidavits were said to raise additional issues and complaints not previously raised. Among other things, in those affidavits Deborah asserted that Airlie and Alexandra were the specified beneficiaries of the JJRIT and WSTT and, by reason of John’s statements of his testamentary intentions, Shauna was not entitled to anything from the trusts unless she was destitute.
On 2 February 2022, by consent, orders were made for filing points of claim, points of defence and points of reply which where thereafter filed in April and June 2022. I summarise below the gist of the points of claim and defence.
The Airlie and Alexandra Trustee Removal Proceedings and the Deborah Trustee Removal Proceedings were listed for a three week trial commencing on 12 September 2022.
On 14 April 2022, Fiona commenced Supreme Court action CIV‑22‑004128 (“Oppression Proceedings”) against Deborah and JJR Investment Holdings and Westfield Station Nominees alleging that Deborah engaged in oppressive and unfair discriminatory conduct. Fiona sought relief pursuant to the provisions of the Corporations Act for the reconstitution of the boards by the appointment of three new directors to the trustee companies with modifications to be made to the constitutions of the trustee companies. Fiona’s claim alleged, among other things, that there was a deliberate strategy by Deborah, Mark and Airlie and Alexandra to confect deadlock between the directors of the trustee companies in order to create grounds for the relief sought in both sets of Trustee Removal Proceedings. Fiona sought orders that the Oppression Proceedings be listed for trial and be heard together with the two sets of Trustee Removal Proceedings.
On 8 June 2022, I made orders listing the Oppression Proceedings for trial together with the two Trustee Removal Proceedings given there was a significant overlap in the factual issues, there was potential for the relief sought by Fiona to be rendered nugatory in the event I were to make orders in the Trustee Removal Proceedings removing the trustee companies and there was a potential for inconsistent findings and waste of court resources if the actions proceeded separately.
On 29 June 2022, I made orders timetabling various steps for the actions to be ready for trial including a timetable for filing further affidavit material, notification of objections, for counsel to confer in relation to objections, preparation of a tender book, objections to the tender bundle and so on.
On 27 June 2022, Shauna sought to be disjoined as an interested party in the Trustee Removal Proceedings and joined as a respondent. By order dated 15 July 2022, Shauna was disjoined as an interested party and joined as a respondent to each of the two Trustee Removal Proceedings and costs were reserved.
In the lead up to trial, there was significant activity. There were some failures to comply with the pre-trial timetable. Some matters were addressed late and some were not addressed. A voluminous case book was filed. Various notices to produce, subpoenas and submissions were filed. Detailed schedules of objections to evidence were filed. A number of applications were made. A further eight affidavits were filed, six by or on behalf of Deborah, including affidavits which cross referenced materials in the Jerome Proceedings. Deborah’s affidavits alone reached in excess of five thousand pages including annexures. All parties filed at least several affidavits. Written openings were filed.
Points of claim in Airlie and Alexandra Trustee Removal Proceedings
Airlie and Alexandra’s points of claim filed in April 2022 summarised the basis for their application on the following grounds:
1.The existing trustees are deadlocked and dysfunctional, such that they have not been able to and cannot into the future properly carry out their functions as trustees. The relationship between Fiona and Deborah has irretrievably broken down and the deadlock cannot be broken.
2.There has been a continuing failure by the existing trustees to carry out and have due regard to the wishes and intentions of John in establishing the two trusts which expressly were for the benefit of only Airlie and Alexandra and not for the benefit of Fiona, Deborah, Shauna or the companies owned by them.
3.The trustees of the two trusts have over the course of 16 years, under Fiona’s effective control, preferred the interests of the aggregation of companies to the interests of the trusts and in the course of so doing sacrificed the interests of the trusts.
4.By so doing, the JJRIT has made little or no income over 16 years and the capital of the JJRIT has decreased in absolute and real terms. Airlie and Alexandra seek the replacement of the trustees to better understand why that has occurred and to give consideration to the bringing of proceedings in respect of the possible waste of trust assets.
5.There has been an inappropriate intermingling and conflation of the aggregation and trust affairs with the composite board of the aggregation acting in the interests of the aggregation and controlling the affairs of the trusts.
6.Fiona is in a position of active conflict between her roles and interests in the aggregation and her directorship of the trustees of the trusts. She has preferred and is continuing to prefer and promote her own interests and the interests of the aggregation to that of the trusts and has shown personal antipathy towards Airlie and Alexandra for whose benefits the trusts were established such that it is inappropriate for Fiona to have any continuing involvement in the affairs of the trusts.
7.There is a need for historical transactions of the trusts to be investigated because the aggregation’s interests were preferred and the trusts’ interests were sacrificed, and if thought fit, thereafter to be the subject of compensation claims. It is inappropriate for the existing trustees who caused the trusts to enter into the impugned transactions to remain as trustees.
8.Airlie and Alexandra are best placed to be trustees of both trusts having attained 30 years of age and for further reasons set out in the points of claim.
The points of claim allege deadlock and dysfunction between Fiona and Deborah. They assert that since about September 2019, Fiona and Deborah have been unable to agree on nearly all material matters concerning the affairs of JJRIT and WSTT with the result the business and affairs of each trust have not properly been conducted.
Another section of the points of claim is entitled “failure to following [sic] John’s intentions and wishes as effective settlor and trustee”. The points of claim assert that each of JJRIT and WSTT were established for the purposes of providing for Airlie and Alexandra and for future generations and not Fiona, Deborah, Shauna or any other members of the aggregation. The points of claim rely on, among other things, a letter dated 1 February 2006 said to record John’s wishes and intentions in relation to the then proposed JJRIT and a letter addressed “to my trustees” dated 28 March 2006 said to state John’s testamentary intentions. The points of claim also refer to meetings between John and his solicitors as relevant to his testamentary intentions.
Under a section addressing the asserted preferment of the aggregation’s interests to the interests of the trust, the points of claim refer to the Echor loan and other loans and transactions not referred to in the affidavit filed by Airlie on 21 January 2021.
A section entitled “The need to critically investigate historical transactions” refers to the need to investigate and give consideration to making claims in respect of waste of the assets of JJRIT and WSTT by reason of a number of matters including the failure to call in the Echor loan and other loans owing to JJRIT and the failure to invest those funds, the use of the equity of Westfield Station and the sale of shares at an asserted undervalue.
Another section of the points of claim states that Airlie and Alexandra intend to secure the trust assets and properly invest them. The points of claim refer to Airlie and Alexandra’s qualifications and experience to be appointed trustees and the reasons for their suitability for appointment including thereby avoiding the need for the trust to pay for professional trustees. The points of claim state Airlie and Alexandra’s appointment is preferable as the trust assets include things of a personal nature.
The points of claim refer to what Airlie and Alexandra would propose doing. Those actions include seeking arrangements for repayment of various loans and investigating previous transactions of the trust, seeking a timetable for release of the Westfield Station land from use as third party security and so on.
Points of defence
Fiona’s points of defence deny any deadlock or dysfunction between Fiona and Deborah prior to June 2020. The points of defence assert that since about June 2020, Deborah has engaged in a course of conduct that confected deadlock and dysfunction for the improper purpose of creating grounds for the relief in a manner which is oppressive and in respect of which Fiona sought relief in the Oppression Proceedings.
The points of defence deny the failure by the existing trustees to have due regard to the wishes and intentions of John. Fiona denies that the discretionary trusts JJRIT and WSTT are solely for Airlie and Alexandra’s benefit and states the trustees have exercised their discretions and powers in accordance with the terms of the respective trust instruments and the decisions have been unanimously ratified every year until 30 June 2020.
Fiona denies exercising powers to prefer the interests of the aggregation and asserts that the assets of the JJRIT have increased in value notwithstanding distributions of the corpus of the trust. Fiona’s points of defence assert the composite board does not, and has not, controlled the affairs of the trustee companies. The points of defence assert the affairs of the trusts have been inextricably bound up with those of the Justin-EDC/ADC Group of companies and trusts since their inception by reason of the gifting of assets by John and as each of Fiona, Deborah and Shauna are beneficiaries of the trusts.
Fiona denies all of the allegations made by Airlie and Alexandra and asserts she has at all times discharged her duties as a director of the trustee companies in the best interests of the trusts and their beneficiaries.
Fiona denies any need for transactions to be investigated, denies that Airlie and Alexandra are best placed to be trustees and asserts that Airlie and Alexandra have disclosed that they would exercise their discretions and powers in their and the Hamilton family’s own interests, contrary to the obligations of a trustee.
Fiona’s points of defence state that all transactions were in the power and discretion of the trustee companies, were entered into in accordance with the terms of the relevant trust deeds, in most instances, preceded the appointment of the current trustee companies and arose primarily as a consequence of steps undertaken by John prior to the establishment of the trusts. The points of defence assert that those transactions took place with fully informed agreement and consent of Deborah and, properly considered, were for the benefit of the beneficiaries of the trusts including Airlie and Alexandra and their family.
I will not summarise the points of defence and reply of the Group Companies, Shauna and Deborah. Suffice it to say that Deborah’s position primarily supports that of Airlie and Alexandra. The positions of the Group Companies and Shauna are substantially aligned to Fiona’s position.
Resolution of proceedings
The day before the trial was due to commence, Senior Counsel for Fiona sent an email to the Court which stated it was sent with the consent of counsel for the applicants, Shauna and the Group Companies. The email informed the Court that the Airlie and Alexandra Trustee Removal Proceedings and the Deborah Trustee Removal Proceedings had settled on the terms proposed by Airlie and Alexandra (adopted by the solicitors for Deborah) by letter dated 1 September 2021 for the appointment of Australian Executor Trustees Limited (“AET”) as trustee. That email attached proposed draft minutes of order and correspondence dated 11 September 2021 from each of the solicitors for Fiona, Shauna and the Group Companies. The email stated it was agreed counsel would appear and seek that the trial be stood down to 14 September to enable time for discussion in relation to certain outstanding matters, including the Oppression Proceedings which were not settled.
On 12 September 2022, the matter was called on for trial. During that hearing, counsel for Airlie and Alexandra indicated that a proposal for the removal of the trustee companies and the appointment of AET had been accepted, that there would no longer be trial but there were still some matters to be sorted out by the parties. Counsel for Airlie and Alexandra referred to the fact that costs were not referred to in the proposal and there would need to be a discussion about that and some other consequential matters. Consequently, the Court was asked not to make any formal orders that day but to stand the matter over to 14 September 2022. During the hearing, counsel for Fiona stated that the proposal made no mention of costs and it was against that background that the offer was accepted. Counsel for Fiona referred to a view that the parties would not have been able to complete the trial in three weeks.
At the hearing on 14 September 2022, counsel for each of Fiona, Shauna and the Group Companies stated their position that the settlement proposal had been accepted on the basis it contained no reference to costs and consequently there could be no costs orders. On 14 September, noting there was a dispute in relation to costs, I made orders for the removal of JJR Investment Holdings and Westfield Station Nominees as trustees and the appointment of AET as trustee of the JJRIT and WSTT. Orders were made suspending the powers of appointment of the trust deeds for 5 years from the date of the order. Timetabling orders were made in relation to any application which may be made concerning costs.
Thereafter, as a result of assertions made to the effect that Airlie and Alexandra ought not receive any costs referable to work performed by Mr Hamilton or Grope Hamilton, Mr Hamilton and Grope Hamilton applied to be joined as interested parties to the proceedings and for the question of the recoverability of costs of work undertaken by Mr Hamilton or Grope Hamilton to be referred to a taxing master or determined separately. Given there was a possibility that the issue of costs referable to work performed by Mr Hamilton and Grope Hamilton would not be required to be addressed depending on my conclusions concerning Airlie and Alexandra’s application for costs, I determined to address the primary arguments first and thereafter to consider the question of recoverability of costs referable to work performed by Mr Hamilton and/or Grope Hamilton.
Applications for costs
Airlie and Alexandra sought their costs of the Airlie and Alexandra Trustee Removal Proceedings on two alternative bases. The first basis was that Airlie and Alexandra be reimbursed from the trusts for their costs and their liability for costs orders made against them in the proceedings on an indemnity basis with each of Fiona, Shauna and the Group Companies to reimburse the trusts for one third of the costs incurred by Airlie and Alexandra.
The alternative basis was for each of Fiona, Shauna and the Group Companies to pay one third of Airlie and Alexandra’s costs on a party/party basis and for Airlie and Alexandra to be reimbursed from the trusts for the difference between the amount recovered from Fiona, Shauna and the Group Companies and their costs on an indemnity basis together with their liability for costs orders made against them. Airlie and Alexandra sought orders that Fiona, Shauna and the Group Companies bear their own costs.
Deborah sought in both the Airlie and Alexandra Trustee Removal Proceedings and the Deborah Trustee Removal Proceedings orders for costs equivalent to those sought by Airlie and Alexandra. Deborah sought in the Oppression Proceedings orders that Fiona pay her costs on a party/party basis.
Each of Fiona, Shauna and the Group Companies opposed the applications and contended there should be no order as to costs in both sets of Trustee Removal Proceedings. They submitted that if Airlie and Alexandra were to be awarded any costs from the trust funds then like orders should be made in respect of the other parties participating in the proceedings and the Court should reduce any costs on account of what were described as blatantly inadmissible, lengthy and discursive affidavits filed by Deborah. Fiona asserted Deborah should not receive any costs orders in her favour. The Group Companies sought the exclusion of costs referable to work performed by Grope Hamilton and/or Mark Hamilton.[2]
[2] In the absence of filed offers, the provisions of r 132 of the Uniform Civil Rules 2020 (SA) were not relevant. No party contended any correspondence fell within the principles enunciated in Calderbank v Calderbank [1975] 3 All ER 333.

Fiona opposed any costs orders being made in the Oppression Proceedings and sought no order in relation to the costs of the Oppression Proceedings.
The parties tendered various affidavits[3] and documents[4] in support of their positions which I received.[5]
[3]    Affidavits relied on for the costs application: affidavits of Mr Simon Crawford sworn 1 September, 21 September and 27 September 2022 (FDN 132, 164 and 170); affidavit of Ms Nadia Shivarev dated 23 September 2022 (FDN 165) (absent paragraph [5]); affidavit of Mr Matthew Harders sworn 26 September 2022 (FDN 166); affidavit of Ms Debrah Maria Mercurio sworn 26 September 2022 (FDN 167); affidavit of Mr Jean-Pierre du Plessis sworn 27 September 2022 (FDN 168); affidavit of Mr Samuel Dundas sworn 27 September 2022 (FDN 169); affidavit of Ms Alisha Testa sworn 23 September 2022 in CIV-22-004128 (FDN 44); affidavit of Mr Samuel Dundas sworn 27 September 2022 in CIV-22-004128 (FDN 45).
[4]    Email from Ms Angela Liaskos dated 9 September 2022; email from Mr Matheo Vinciullo dated 11 September 2022 attaching letter dated 11 September 2022 from King & Wood Mallesons; email from Mr David Gaszner dated 11 September 2022 attaching letter dated 11 September 2022 from Thomson Geer; email from Ms Debrah Mercurio dated 11 September 2022 attaching letter dated 11 September 2022 from Dentons; email dated 10 September from Mr Mark Hoffmann KC to Chambers of Justice Stein and parties.
[5]   Subject to the receipt of certain paragraphs on a limited basis including on the basis of submissions not as facts.
Correspondence relevant to proposal and acceptance of proposal
The first ground upon which Fiona, Shauna and the Group Companies opposed the application for costs was that the Trustee Removal Proceedings were settled on 11 September 2022 by acceptance of an open offer that did not include any term for the payment of costs and did not reserve costs.
I set out below a summary of the key correspondence which resulted in resolution of the Trustee Removal Proceedings and the orders made in those proceedings.
On 25 July 2022, the solicitors for the Group Companies wrote to the solicitors for Airlie and Alexandra requesting information about the alternative relief sought by them in the originating application (that is, the appointment of independent trustees). The letter asked for information including the name of any professional trustee intended to be put forward, details about that trustee’s experience and suitability, details of the proposed fee structure and so on.
On 19 August 2022, the solicitors for Airlie and Alexandra wrote to AET indicating they acted for Airlie and Alexandra. The letter sought AET’s proposal to act as trustee of the trusts and asked for a proposal, including fees.
On 23 August 2022, the solicitors for Fiona sent to the other parties a letter on a without prejudice save as to costs basis setting out two alternative offers to resolve the proceedings. The purpose of the letter was said to be a resolution of the proceedings in light of the imminent trial, the substantial costs which would be incurred and the strong prospects the trial would not be completed within the allocated three weeks. The offers made in the letter were open for acceptance until 26 August 2022. The first option involved a change in the directors of the trustee companies. The second option involved a commercial resolution whereby the control and beneficial entitlement of JJRIT and WSTT would essentially be divided between Airlie, Alexandra, Deborah, Fiona and Shauna. In the case of both options, the letter referred to the parties agreeing to sign minutes of consent orders discontinuing the Trustee Removal Proceedings and the Oppression Proceedings with no orders as to costs. The letter set out reasons why Fiona maintained the offers made in the letter were reasonable. Among other things, the letter stated that Airlie had clearly proved she would be unable to discharge her duties as trustee in an unbiased way and that Airlie and Alexandra had chosen not to make allegations against Deborah in respect of her position as a director of the trustee companies. The letter noted that Airlie, Alexandra and Deborah had not identified a replacement professional trustee nor the terms upon which any such replacement trustee may be appointed. The letter noted that the circumstances giving rise to the deadlock and dysfunction were the subject of the Oppression Proceedings in which relief was sought to regularise the affairs of the trustee companies.
On 26 August 2022, the solicitors for Airlie and Alexandra responded and requested an extension of time to respond. On 26 August, Fiona’s solicitors agreed to extend the deadline for acceptance to 31 August 2022.
On 1 September 2022, the solicitors for Airlie and Alexandra sent a without prejudice save as to costs letter addressed to Fiona’s solicitors. The letter referred to Fiona’s letter dated 23 August 2022 and rejected each of the proposed settlement options, including on the basis it was not appropriate to have Fiona or Deborah remain on the board of the trustee companies, a five person board would be unwieldy and expensive and the division of assets was wholly inappropriate and an example of inappropriate self-dealing. The letter stated that the solicitors would be sending an open letter setting out their client’s attitude with respect to new trustees.
On 1 September 2022, the solicitors for Airlie and Alexandra sent to the solicitors for all other parties an open letter (“1 September open letter”). Given the importance the 1 September open letter assumed in argument, I set it out in full.
1.In a letter from Thomson Geer dated 25 July 2022 we were asked about the alternative relief which we seek in the Originating Application (OA) dated 21 January 2021.
2.Paragraph 3 of the OA provides, as alternative relief, that a professional trustee be appointed to each of the two trusts.
3.In that regard we have obtained a proposal from the Australian Executor Trustees (‘AET’). They have consented to act and sent to us the attached proposal, which includes their proposed fee structure. We also attach our letter dated 19 August 2022, to which they refer in their proposal. We will submit to the Court that AET is an appropriate and suitable professional trustee.
4.We further give notice that, in respect of Paragraph 2 of the OA, the Applicants will approach these proceedings on the basis that they do not seek to have sole control in respect of the new trustee company.
5.By way of example, the Applicants are content for there to be two directors of the trustee companies with one director being Airlie or Alexandra Hamilton (with the non-director sister, being appointed as an alternate director) and the other director being an independent director and Chair, not otherwise known to the parties, and who has, as Chair, a presiding vote.
6.Further, and as part of an open proposal, the Applicants give notice that if, prior to the commencement of the trial, the Respondents concede the relief claimed in paragraph 1 of the OA then the Applicants are content for:
6.1.   the new trustee of both trusts to be AET or, alternatively,
6.2.   that there be two natural persons as trustees of both trusts selected as follows:
6.2.1.the first trustee shall be an Australian based accountant or a former accountant who has at least 20 years professional experience who shall be selected by the President of the Chartered Accountants (Australia & New Zealand); and
6.2.2.the second trustee shall be an Australian based lawyer or a former lawyer (including a retired solicitor, barrister or judge) who has at least 20 years professional experience who shall be selected by the President of the Law Council of Australia.
7.The open proposal is on the basis that the Court impose, as a condition of its appointments, in:
7.1.   paragraphs 6.1 and 6.2 herein, that the appointment powers in the trust deeds be suspended for a period of 5 years and that thereafter they be reinstated; and
7.2.   paragraph 6.2, that neither selected trustee shall have any former or existing personal or professional connection to any of the parties in this proceeding.
8.It will be appreciated that the purpose of the open proposal is to put forward a model in which the replacement trustee or trustees is or are independent from the parties to the proceedings. The Applicants are receptive to considering any alternate model, not suggested in this letter, which respects that principle.
The letter attached a proposal from AET to provide professional trustee services including information about AET and its estimated fees and costs.
On 1 September 2022, the solicitors for Deborah wrote to the other parties referring to the 1 September open letter, confirming that Deborah would submit to the Court that AET is an appropriate and suitable professional trustee and that Deborah would approach the proceedings on the basis that she does not seek Airlie and Alexandra have sole control of the new trustee companies and she was content with the arrangement set out in paragraph 5 and the proposal in paragraphs 6 and 7 of the 1 September open letter.
On 2 September 2022, the solicitors for Fiona sent an open letter referring to the 1 September open letter. The stated purpose was to put an open offer to resolve the proceedings and to set out the bases on which Airlie and Alexandra’s proposal was wholly inappropriate and not in the interests of the general beneficiaries of the trusts. Fiona made an offer which involved making changes to the boards of the trustee companies. The letter stated if the offer was accepted, “the parties agree to sign minutes of consent order discontinuing each of the Proceedings … with no order as to costs”. The offer was open for acceptance until 6 September 2022. The letter set out reasons why Fiona considered it would be unreasonable for Airlie, Alexandra and Deborah not to accept the offer and why the proposal for the appointment of AET was inappropriate. The assertion in the 1 September open letter that Airlie and Alexandra would not seek to have sole control of the trustees was said to be a material departure from Airlie and Alexandra’s case thus far prosecuted and involved the engagement of AET at extraordinary cost directly contrary to the sworn evidence of Airlie. The letter rejected Airlie and Alexandra’s proposal as inappropriate and inconsistent with the best interests of the beneficiaries of the trusts for reasons including the potential significant quantum of fees.
On 5 September 2022, the solicitors for the Group Companies wrote to the solicitors for Airlie and Alexandra saying they did not presently consider the appointment of AET to be in the interests of the beneficiaries of the trusts. The stated reasons included the significant and disproportionate financial costs to the trusts and the fact that as Airlie and Alexandra had clearly stated the trusts were created for their exclusive benefit, there was a significant risk the professional trustees would be occupied with beneficiary disputes. The Group Companies asserted, among other things, that the appointment of a new trustee with no corporate knowledge was undesirable. The letter stated that the AET proposal appeared to be an afterthought and stated that, as at 12 August 2022, no documents were returned to the Court in answer to a subpoena requiring the production of all records of communications with potential candidates for appointment as trustees. The proposal involving a company of which only one of Airlie or Alexandra was a director was rejected as not workable for reasons including it would be inappropriate to appoint as trustee an entity controlled by beneficiaries who had declared their adversity to other beneficiaries and had asserted that the discretionary trusts were to be administered for their exclusive benefit. The Group Companies supported Fiona’s proposal.
On 6 September 2022, the solicitors for Shauna indicated Shauna was open to the proposal put by Fiona. Shauna did not support the proposal put by Airlie and Alexandra for reasons including the likely exorbitant costs of AET acting as trustee and its lack of corporate knowledge.
On 7 September 2022, Fiona’s solicitors wrote to the other parties’ solicitors referring to their letter dated 2 September and stating that they were instructed to “restate [Fiona’s] open offer to settle the Proceedings, as outlined at paragraphs 5 to 7” of the letter dated 2 September.
On 9 September 2022, by letter from their solicitors (“restatement letter”) Airlie and Alexandra rejected Fiona’s open offer dated 2 September 2022 and restated on 7 September 2022. The restatement letter asserted that in the event of final determination by the Court, the trustee companies would be replaced and Fiona would not be selected as a replacement trustee or a director of a replacement corporate trustee. The letter continued:
…
4.Our open offer made on 1 September 2022 is restated.
5.It will be recalled that our clients’ proposal suggests that an independent trustee or trustees be appointed.
6.In the letter of 1 September 2022, we suggested two scenarios for appointment. First, the Australia Executor Trustees (AET), which is a well-respected and established professional trustee company.
7.Second, we suggested that there be two natural persons as joint trustees with the selection of those persons to be made by the Presidents of the Law Council of Australia and of the Chartered Accountants.
8.Our clients indicated that they were not wedded to either proposal and invited any suggestion from Fiona Roche which respected the principle of independence. Instead of doing so, Ms Roche sent the open offer of 2 September 2022.
9.Since our proposal, David McEvoy has filed an affidavit in the Oppression Proceedings attaching a consent to be a director of the trustee companies of JJRIT and WSTT. He is eminently qualified.
10.As a further instance of a scenario which our clients would accept, and as a third alternative to our open offer, our clients propose that David McEvoy be approached to be appointed as the trustee of each of the JJRIT and WSTT. Our clients would be content for him to perform that role either by himself or with a person appointed by the President of the Law Council.
…
11. In our letter of 1 September 2022, we did not state that our clients “no longer sought relief in terms of paragraph 2 of [the] Originating Application”. Rather we said that the Applicants will approach these proceedings on the basis that they do not seek to have sole control in respect of the new trustee company.
12.Our letter then gave by way of example, that our clients would be content to have a replacement trustees a company which had an independent Chair in addition to another director being Airlie or Alexandra Hamilton. We will submit to the Court that an appropriate person be David McEvoy, or some other independent person appointed by the Court.
The restatement letter continued to address a number of matters relating to the conduct of the trial.
On 11 September 2022, the day before the trial was due to commence, Fiona’s solicitors wrote to Airlie and Alexandra’s solicitors in the following terms:
1.We refer to your letter of 1 September 2022 (your letter) and to your clients’ settlement proposal as set out therein, and as restated in your further letter of 9 September 2022.
2.We are instructed that our client:
2.1.   consents to an order in terms of paragraph 1 of the Originating Application dated 21 January 2021, as offered in the chapeau to paragraph 6 of your letter;
2.2.   accepts your offer that Australian Executor Trustees Limited (AET) be appointed as replacement trustee of the JJR Investment Trust and the Westfield Station Testamentary Trust, as offered by paragraph 6.1 of your letter; and
2.3.   accepts the condition of AET’s appointment stated in paragraph 7.1 of your letter.
3.The acceptance of your clients’ offer is in no sense to be taken as an acceptance of the veracity of your clients’ allegations and/or claims as to the conduct of the Trustees or that they properly found a basis for them to be removed. It is for solely pragmatic reasons not least to avoid the costs of a Trial that will not require much longer than the 3 weeks presently set aside for the hearing.
4.We will forward draft minutes of order shortly effecting the final disposition of the proceedings.
On 11 September 2022, the solicitors for Shauna wrote to Airlie and Alexandra’s solicitors and copied in the other parties’ solicitors. Shauna’s solicitors referred to the 1 September open letter containing the settlement proposal as restated by the letter dated 9 September 2022 and said that Shauna consented to an order in terms of paragraph one of Airlie and Alexandra’s originating application dated 21 January 2021, accepted the offer that AET be appointed as replacement trustees and accepted the conditions of AET’s appointment. The letter stated that the acceptance of the offer should not be taken as an acceptance of the veracity of the allegations and it was for solely pragmatic reasons, not the least to avoid the costs of a trial likely to require much longer than the three weeks set aside for the trial.
On 11 September 2022, the solicitors for the Group Companies sent a letter in essentially the same terms accepting the proposal.
Summary of submissions in relation to the resolution correspondence
Counsel for Fiona submitted that the proceedings were settled by the acceptance of an open offer which did not include terms as to the payment of costs. Counsel contended Airlie and Alexandra and Deborah did not reserve a right to seek costs nor did they indicate an intention to bring an application for costs. Counsel submitted that no costs were ever claimed against Fiona until after the proceedings had resolved and Airlie and Alexandra should be bound by the manner in which they pleaded and conducted their case in accordance with the rules of procedural fairness.
Counsel for Shauna submitted the offer of 1 September 2022 amounted to an offer of settlement. Counsel contended that the decision to omit costs from the offer must have been deliberately and advisedly taken. Counsel submitted that the acceptance of the offer was for solely pragmatic reasons and was not to be taken as acceptance of Airlie and Alexandra’s allegations as to the conduct of the trustees and the Court should not discourage such a pragmatic approach. Further, Shauna submitted that had there been an offer incorporating costs, there was no basis to infer she would have accepted such an offer.
Shauna submitted that Deborah’s consent to the appointment of AET as trustee, despite the fact she was entitled to prosecute the Deborah Trustee Removal Proceedings, constituted acknowledgement of the settlement offer. Counsel submitted that Deborah’s contention the offer was uncertain or incapable of acceptance lacked merit.
Counsel for the Group Companies submitted that the terms upon which Airlie and Alexandra were prepared to resolve the proceedings can properly be characterised as a settlement offer, capable of acceptance, the offer was certain, made no mention of costs and did not reserve any question of costs. At the time the offer was made, there had been no application for costs against any respondent or interested party. In the circumstances, counsel for the Group Companies contended the parties must be taken to have agreed by their correspondence that the proceedings were to be disposed of, with each party bearing their own costs. Counsel also contended it would be procedurally unfair for the Court to entertain an application for costs in circumstances where there was no relief sought in the proceedings as to costs between the parties and there had been no application or threat of an application for costs against the parties such that they were reasonably entitled to proceed on the basis that they would not be exposed to a costs order.

Counsel for Airlie and Alexandra disputed there was a legally binding contract and submitted in any event there was no term as to costs and consequently the issue of costs had not been settled between the parties. Counsel submitted that there was no meeting of the minds if there was no concession and that there was no intention to enter into a contract. It was contended that by the “open proposal”, Airlie and Alexandra were only advising they would be prepared to submit as a consent position that AET should be appointed if the other parties conceded the trustee companies should be removed. The only obligation of Airlie and Alexandra could be that they were “content” in relation to the identity of a replacement trustee and that could not comprise a contractual performance obligation. Counsel for Airlie and Alexandra submitted the 1 September open letter and the restatement letter did not constitute an offer made in full and final settlement of the proceedings. If the 1 September open letter could be said to amount to an offer capable of forming a contract upon acceptance, counsel contended it lapsed when it was rejected by the counterproposal sent by Fiona on 2 September and the restatement letter that was only sent to Fiona and Deborah did not accept Fiona’s restated offer.
Counsel cited Whitney v Dream Developments Pty Ltd[6] (“Whitney”) in support of the proposition that where a monetary offer is made which is silent as to costs, it is by its language made exclusive of costs. Counsel submitted there was nothing which would lead to a conclusion that Airlie and Alexandra were precluded from seeking their costs as there was no express term precluding Airlie and Alexandra from doing so and no such term could be implied. Further, there was no reason to think Airlie and Alexandra were agreeing not to seek costs from the trusts on an indemnity basis as an order to that effect was sought in the originating application.
[6] (2013) 84 NSWLR 311.
Counsel for Deborah submitted there was no agreement as to costs, contending that the letter from Deborah’s solicitors on 1 September did not amount to an offer to settle the proceedings let alone all aspects including costs. He submitted an indication Deborah was “content” cannot rise high enough to amount to a clear statement of terms on which she was prepared to be bound and the matters rose no higher than an invitation to treat. Further, nothing was said to indicate costs were being addressed. Counsel said no other letter was sent on behalf of Deborah.
Relevant principles
Whether the parties intended to create contractual relations is objectively assessed, taking into consideration what would objectively be conveyed by what was said or done and having regard to the circumstances in which the statements were made or the action occurred.[7]
[7] Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at [24]-[25] per Gaudron, McHugh, Hayne and Callinan JJ.
The ordinary principles of construction apply to determining the common intention of the parties to an agreement. The rights and liabilities of the parties to a contract are determined objectively by reference to what each party, by words and conduct, would have led a reasonable person in the position of the other to believe.[8] The Court will consider the language used by the parties, the surrounding circumstances and the purpose and objects of the transaction.[9]
[8] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ.
[9] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151 at [8] per Gleeson CJ.
Analysis of correspondence
The first reference to a proposal for the appointment of AET as replacement trustee(s) was contained in the 1 September open letter. That letter was a response to the Group Companies’ solicitors’ enquiry about the details of the alternative relief sought in Airlie and Alexandra’s originating application. Airlie and Alexandra’s solicitor’s separate without prejudice letter dated 1 September described the 1 September open letter as an open letter setting out Airlie and Alexandra’s attitude with respect to new trustees. The fact the 1 September open letter was a response to correspondence unrelated to settlement and the manner of cross reference may tend to suggest the 1 September open letter was not intended as a letter of offer. While the 1 September open letter referred to Airlie and Alexandra being “content” for the trustees to be AET (or some other alternatives), that was stated “as part of an open proposal” and the “open proposal is on the basis” that the Court impose specified conditions on the making of the appointments. The language of “proposal” is consistent with language conveying the making of an offer for consideration and possible acceptance. The reference to “part” of a proposal is ambiguous. However, the only requirements expressed in the 1 September open letter related to the Court making certain orders as conditions of the appointment of the new trustees. The 1 September open letter was addressed to the solicitors for all parties.
Relative to the originating application, the proposal in effect addressed the relief sought by way of removal of the trustees (order 1), the relief sought by way of appointment of replacement trustees (orders 2 and 3) and would have rendered unnecessary orders for regulating the future conduct of the trust (order 4). Consequently, the only order in the originating application not expressly addressed in the proposal was the order seeking costs from the trusts (order 5).
The 1 September “proposal” was also made by Deborah by her solicitor’s letter of 1 September addressed to the solicitors for all parties.
The 2 September letter from Fiona’s solicitors was addressed to the solicitors for all parties. It referred to the 1 September open letter but not expressly to the 1 September letter from Deborah’s solicitors. The letter referred in the heading only to the Airlie and Alexandra Trustee Removal Proceedings. By the 2 September letter Fiona made a new offer which constituted a rejection of the proposal in the 1 September open letter.
The letter from the Group Companies’ solicitors sent on 5 September was addressed to Airlie and Alexandra’s solicitors, contained a reference in the heading only to the Airlie and Alexandra Trustee Removal Proceedings and referred to the 1 September open letter and Fiona’s 2 September response. It was copied to Deborah’s solicitors. There was no express reference to Deborah’s solicitor’s letter.
The letter from Shauna’s solicitors dated 6 September was addressed to the solicitors for all parties. It referred to not supporting the proposal in the 1 September open letter and also contained a reference in the heading to the Airlie and Alexandra Trustee Removal Proceedings. There was no express reference to Deborah’s solicitor’s letter.
The letter from Fiona’s solicitors dated 7 September restating Fiona’s offer in the 2 September letter was addressed to all other parties.
Airlie and Alexandra’s solicitors’ restatement letter was addressed to Fiona’s solicitors. The letter responded to Fiona’s solicitor’s letters dated 2 and 7 September. It stated that “we are providing a copy of this letter to all parties to the proceeding”. After rejecting Fiona’s offer, Airlie and Alexandra’s “open offer” (emphasised in underline and bold) in the 1 September open letter was restated. The letter reiterated aspects of the 1 September open letter and added a further scenario as an alternative for the appointment of trustees. The language used in the restatement letter was expressly one of offer. The restatement letter made afresh the offer contained in the 1 September open letter, thus rendering irrelevant the previous rejection. While the restatement letter was not formally addressed to the solicitors for all parties, it was sent to all parties’ solicitors. The fact the letter was formally addressed to Fiona’s solicitors may be because it was a response to two letters from them. The terms of the restatement letter do not suggest they were intended only for Fiona and such limitation would have reduced the practical efficacy of the proposal.
Deborah’s solicitors did not send correspondence in terms similar to or adopting the restatement letter.
The letters from the solicitors for each of Fiona, Shauna and the Group Companies dated 11 September were formally addressed to Airlie and Alexandra’s solicitors. The letters referred to the 1 September open letter and the restatement letter, consented to the removal of JJR Investment Holdings and Westfield Station Nominees and accepted the offer for the appointment of AET on the terms specified in the 1 September open letter. Each letter denied the acceptance of the veracity of any allegations made.
It appears there was no separate correspondence to Deborah’s solicitors.
Addressing first the correspondence concerning Airlie and Alexandra’s proposal, the 1 September open letter uses the word “proposal” and the restatement letter uses the word “offer”. Both words are consistent with the concept of an offer. The proposal amounted to an offer by Airlie and Alexandra to accept the appointment of AET, on stated conditions, if the parties agreed to the removal of the trustees. The language used objectively conveys an intention to make an offer, the acceptance of which would result in binding agreement for the making of orders for the removal of the trustees and the appointment of AET as replacement trustee and thereby the resolution of the proceedings. In my view, the parties to the Airlie and Alexandra Trustee Removal Proceedings entered into a binding settlement agreement upon the written acceptance by the 11 September correspondence of the restated offer in the restatement letter.
Paragraph 6 of the 1 September open letter referred as part of the open proposal to Airlie and Alexandra being “content” to agree to the appointment of AET if Fiona, Shauna and the Group Companies “concede the relief” sought in paragraph 1 of the originating application, that is, the removal of JJR Investment Holdings and Westfield Station Nominees. Counsel for Airlie and Alexandra contended that by their acceptance of the removal of JJR Investment Holdings and Westfield Station Nominees, Fiona, Shauna and the Group Companies had conceded or abandoned their defences to the removal of those trustee companies. The correspondence from each of the solicitors representing Fiona, Shauna and the Group Companies expressly disavowed any acceptance of the merits of Airlie and Alexandra’s claims. Objectively construed, I consider the concession referred to in the 1 September open letter was limited to the concept of agreement to the removal of the trustees. I do not consider acceptance of the offer in the context of the use of the word “concede” in the 1 September open letter represented any concession by Fiona, Shauna and the Group Companies in relation to the veracity or merits of the underlying claims. The letters on behalf of each of Fiona, Shauna and the Group Companies expressly rejected any such suggestion. Further, after the receipt of the correspondence accepting the offer, orders were made by the Court at the request of all parties.
I turn to consider whether the settlement agreement contained in the correspondence, objectively construed, included or excluded costs.
As set out above, counsel for Airlie and Alexandra referred to Whitney. In Whitney, a party made offers of compromise which provided for the payment of a monetary sum and for payment of costs “as agreed or assessed”. The primary judge held the offers were made exclusive of costs. The appeal concerned the interpretation and application of the Uniform Civil Procedure Rules 2005 (NSW) relating to the making of offers. The relevant Rule expressly provided that an offer must be exclusive of costs. While Bathurst CJ stated that, as a matter of language, an offer which is silent as to costs is exclusive of costs,[10] this must be read in the context of the judgment as a whole and the question addressed by the Court. Chief Justice Bathurst noted that in using the phrase “exclusive of costs”, the relevant Uniform Civil Procedure Rule suggested that to be a compliant offer, the offer should not deal with costs at all. This was because the relevant Rules dealt with the cost consequences of offers.[11] Chief Justice Bathurst concluded that the trial judge erred and the relevant offer was not a compliant offer.
[10] Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311 at [31].
[11] Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311 at [24]-[25] per Bathurst CJ and [55], [60] per Barrett JA (with whom McColl JA and Beazley P agreed).
In discussing the questions raised on the appeal, Justice Emmett noted that if an offer were inclusive of costs, the plaintiff would not be entitled to any additional amount for costs. Justice Emmett continued to note that one possibility is an offer may be completely silent as to costs in which case, unless the relevant rule applied, such an offer would have the same effect as if inclusive of costs. That is, the defendant would pay the amount specified and would not pay a separate amount towards costs.[12]Whitney consequently does not assist Airlie and Alexandra in the particular circumstances of these applications for costs.
[12] Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311 at [73] per Emmett JA.
Counsel for Fiona referred to Pacific Indemnity Underwriting Agency Pty Ltd v Maclaw No 651 Pty Ltd (“Pacific Indemnity”).[13]In Pacific Indemnity, the parties compromised proceedings on terms which required payment of a sum in full and final settlement of claims and additionally the payment of reasonable legal costs and expenses. The question was whether the compromise gave rise to an entitlement to full indemnity costs. The Court of Appeal considered the question of interpretation of the words used in the contracts of compromise. Counsel for Fiona relied on statements in the judgment of Ormiston JA that:[14]
It was not, in my opinion, intended that the issue of costs was to be reserved to another day, or decided in a different way: the object of agreed terms of settlement or of an accepted offer of settlement is to reach final conclusion… Very exceptionally, of course, parties can agree to put over some matter to another day but that is the exception rather than the rule and offers of settlement and compromises should be read upon the assumption that the parties intend to deal with all the issues and the whole of the dispute between them.
[13] (2005) 13 VR 483.
[14] (2005) 13 VR 483 at [32].
The compromises addressed by the Court of Appeal in Pacific Indemnity expressly addressed costs and as such the decision is not directly on point. However, the statement by Ormiston JA that settlement offers should be read upon the assumption that the parties intend to deal with the whole of the dispute and all of the issues between them is apposite.
In this case, the 1 September open letter and the restatement letter did not contain any reference to costs. There could only be one of two alternatives in relation to costs, that is, the offer addressed everything and was inclusive of costs, or was exclusive of costs so as to enable costs to be addressed separately thereafter. The correspondence did not use the phrase “in full and final settlement” or use alternative, similar language to clearly indicate costs were encompassed in the proposal. The correspondence also did not reserve costs expressly or include any language which made it clear that the offer was exclusive of costs. The correspondence did not refer to any potential claim for costs as against the respondents and interested parties in a context in which the originating application only sought orders for costs from the trusts. Counsel for Airlie and Alexandra explained that the originating application only sought costs from the trusts because at the time of institution, Fiona, Shauna and the Group Companies had not been joined as parties. Counsel for Airlie and Alexandra also pointed to paragraph 6.7 of Airlie and Alexandra’s points of reply which referred to Fiona’s opposition being unreasonable and to that being a matter which would be relied on by Airlie and Alexandra in seeking special costs orders.
Given the way the proceedings progressed with the respondents and interested parties being joined after commencement and considering the breadth of the cost provisions of the Uniform Civil Rules 2020 (SA) (“UCR”), the absence of an express claim for costs against the respondents and interested parties in the originating application would not of itself have precluded such an application being made. However, it remains relevant context in which the 1 September open letter and the restatement letter were sent.
Although counsel for Airlie and Alexandra submitted there was no express term which precluded a costs application, there was conversely no term that preserved such an application. I do not consider the Court would have to imply a term into the correspondence to preclude any application for costs. On an objective construction of the correspondence that outcome could result from the absence of any express reservation of costs. The correspondence constituted offer and acceptance and resulted in a binding settlement which did not refer to costs. There was no articulation of any intention that costs would be sought against any of the respondents or interested parties. The correspondence did not reserve the question of costs for determination by the Court or separate settlement discussions. The silence in relation to costs occurred in the context of correspondence that effectively addressed the substantive relief sought in the originating application and specified the conditions upon which the Court would appoint the replacement trustees. As stated in Pacific Indemnity, generally speaking, compromises should be read on the basis the parties intended to deal with the whole of the dispute between them in the absence of an express reservation or words to indicate a contrary position. Objectively construed, I do not consider the correspondence would have led a reasonable person to believe the offer left open the prospect for Airlie and Alexandra to seek costs against them after acceptance.
Accordingly, I conclude that the terms of the correspondence between the parties settled all issues including costs and precluded further applications for costs by Airlie and Alexandra.
The position in relation to Deborah is different. The letter from Deborah’s solicitors on 1 September referred to Deborah being “content” with the open proposal put in the 1 September open letter. It was not a separate offer, but rather an expression of agreement and willingness to approach the Airlie and Alexandra Trustee Removal Proceedings on the same basis as put in the 1 September open letter. While it appears that none of Fiona, Shauna and the Group Companies expressly responded to Deborah’s solicitor’s 1 September letter, the counter proposal put by Fiona and consequent rejection of Airlie and Alexandra’s 1 September proposal implicitly rejected Deborah’s agreement to the proposal. Deborah’s solicitors did not send further correspondence. There is no evidence that the re-enlivened offer in the restatement letter was adopted by Deborah. I do not consider the subsequent entry of orders in the Deborah Trustee Removal Proceedings of itself constituted such adoption. Consequently, Fiona, Shauna and the Group Companies’ acceptance of Airlie and Alexandra’s restated offer did not constitute acceptance of a restated position put by Deborah. It follows that the settlement correspondence did not result in a binding agreement with Deborah.

It is apparent that McMillan J had sufficient undisputed evidence upon which to reach conclusions about the reasonableness or otherwise of the conduct of the parties. The relief sought was ultimately granted. For the reasons I set out below, I consider the facts of the present case to be sufficiently different to justify a different outcome.
Without expressly traversing each of the other authorities relied on, I am satisfied they are distinguishable on their particular facts.
Analysis
Submissions made by counsel for Airlie and Alexandra sought to make good the propositions that Airlie and Alexandra were the substantial winners in the litigation by reference, among other matters, to the fact Airlie and Alexandra obtained the relief sought in the Airlie and Alexandra Trustee Removal Proceedings and that Fiona, Shauna and the Group Companies capitulated. Airlie and Alexandra did not resile from the fact that the primary relief sought was effectively the appointment of Airlie and Alexandra as trustees. Counsel contended nevertheless the relief obtained was that sought, being the alternative relief in the originating application. On a comparison of the relief sought and obtained, counsel submitted Airlie and Alexandra were clear winners. Airlie and Alexandra maintained it was inevitable that the trustees would be replaced in view of the deadlock and dysfunction and that that inevitability could be determined by a desktop analysis or review of the filed materials without a need to delve into the merits.
Counsel for Airlie and Alexandra did not expressly address whether capitulation is a separate consideration in itself or rather a factor relevant to why Airlie and Alexandra were the winners. I agree with counsel for Shauna’s submissions that the analysis in Firkin and the reasoning in Nichols is consistent with surrender and capitulation not being a separate, standalone basis for an order for costs in New South Wales. However, it is not necessary for me to further analyse or attempt to reconcile any differences between the New South Wales and Victorian authorities. For the reasons I articulate below, Fiona, Shauna and the Group Companies did not relevantly capitulate or surrender irrespective of whether capitulation and surrender is a separate basis for a costs award or only relevant to whether a party would almost certainly have succeeded.
While a comparison between the relief sought and obtained may provide relevant information from which to assess whether a party was almost certain to have succeeded, in the present case a comparison of that nature would fail to give sufficient consideration to the complex nature of the underlying allegations supporting the relief sought and the manner in which the Trustee Removal Proceedings were prosecuted and defended. The assertions by Airlie and Alexandra of the inevitability of their success depended on what would have been the evidence in the trial in relation to which no findings have been made.
If not already apparent by reason of the matters referred to above, the Trustee Removal Proceedings traverse a history of transactions involving the interrelated trusts and Roche family companies from approximately 2006 in an extremely complex factual context. The appropriateness or otherwise of those transactions was vigorously contested, as were the assertions that Airlie and Alexandra were the “true” beneficiaries of the JJRIT and the WSTT. Determination of disputes would have required, among other things, construction of various relevant documents, including the trust deed of the JJRIT, the memorandum to record the terms of the WSTT and the documents said to evidence John’s testamentary intentions. It is apparent from the affidavit material filed in support of the Trustee Removal Proceedings, the points of claim, defence and reply, the pleadings in the Oppression Proceedings and the written openings, that determination of the issues in contention in the proceedings would, among other things, have necessitated significant factual findings and findings of credit.
Fiona, Shauna and the Group Companies vigorously opposed the removal of JJR Investment Holdings and Westfield Station Nominees. While it appears that Fiona and the Group Companies accept that the trustee companies were deadlocked and unable to make decisions, Fiona, Shauna and the Group Companies blamed Deborah for that state of affairs and asserted there was a deliberate strategy to confect dysfunction to support the removal of the trustees. Deborah and Airlie and Alexandra denied any such strategy and blamed Fiona’s conduct. Given the nature of the defence in the Trustee Removal Proceedings and the allegations made in the Oppression Proceedings, it was not necessarily inevitable that the consequence of a finding of deadlock and/or dysfunction was the removal of JJR Holdings and Westfield Station Trust and the appointment of Airlie and Alexandra. It would have been necessary to determine whether the removal of the trustees was the appropriate remedy or whether the Court could, and if so should, make the orders sought by Fiona for the reconstitution of the boards of JJR Holdings and Westfield Station Trust through the appointment of additional directors. Determination of the appropriate remedy would have depended on legal issues, factual findings and likely findings of credit, including about the asserted dysfunction strategy. Those issues cannot be determined or predicted without descending into a trial of the merits of the resolved proceedings.
Fiona, Shauna and the Group Companies hotly contested the allegations of misconduct and breaches of trust by the trustees. They disputed factual assertions concerning past transactions and the characterisation of past transactions. They pointed to the involvement of John in some of the transactions, the nature of those transactions and the involvement of Deborah in making decisions relating to the trusts. Fiona, Shauna and the Group Companies referred to what was asserted to be considerable breadth in the powers and discretions reposed in the trustees by the constituent documents of the trusts. So, for example, in responding to the criticisms of the failure of the trustees to repay the Echor loan, among other things, they pointed to the factual context in which funds were advanced on an interest free basis and loans gifted to the trust on an interest free basis in a context of the broad powers and discretions reposed in the trustees to make interest free loans. They referred to provisions of the trust deeds which included the power to lend sums to any general beneficiary with or without security, upon such terms and conditions as to repayment and with or without interest as the trustees shall in their absolute discretion think fit, the power in the absolute discretion of the trust to enter into transactions involving personal interest and express provisions authorising self-dealing. Determination of the allegations of misconduct would have required, among other matters, construction and application of the terms of the relevant documents in the particular history of the individual transactions. Conclusions about potential misconduct and/or breaches of trust would have impacted on Airlie and Alexandra’s potential success, including in relation to potential remedies. Those conclusions would have depended on factual findings and likely findings of credit which cannot be determined or predicted without descending into a trial of the merits of the resolved proceedings.
Fiona, Shauna and the Group Companies vigorously opposed the appointment of trustees to be controlled by Airlie and Alexandra. They did so for reasons including that they did not accept Airlie and Alexandra as appropriate trustees. Fiona, Shauna and the Group Companies vigorously opposed Airlie and Alexandra’s position in relation to John’s testamentary intentions and the relevance of those intentions. It is apparent from the written openings that the parties contended for different interpretations of John’s letters. Airlie and Alexandra relied upon them as supporting their contention that they in effect were the true, sole beneficiaries of the trusts. The Group Companies, Fiona and Shauna asserted a different interpretation of the letters in the context of the asserted importance of the ongoing functioning of the Roche family group of companies. Fiona, Shauna and the Group Companies asserted that Airlie and Alexandra were not appropriate trustees because, among other things, they had demonstrated a pre-determined intention to exercise powers and discretions only for their and their parent’s benefit and not for the other general beneficiaries. Issues concerning the potential admissibility of evidence about John’s testamentary intentions and the reliance by Airlie, Alexandra and Deborah on documents filed in prior proceedings relating to John’s testamentary capacity were to be the subject of significant objection and contention at trial. Assuming the orders sought for the removal of the trustees were made, whether Airlie and Alexandra would have succeeded in obtaining their primary relief of appointment of entities controlled by them as trustees of the JJRIT and WSTT depended on multiple issues including findings of fact and credit and the interpretation of relevant documents. Again, those are not issues which could be determined without descending into the merits of the resolved proceedings. The potential for appointment of Airlie and Alexandra as trustees and the basis upon which they sought their appointment remains relevant because while the orders ultimately accepted by Fiona, Shauna and the Group Companies related to the alternative relief sought in the originating application, the Trustee Removal Proceedings were prosecuted until 1 September 2022 on the basis of the primary relief sought. Airlie’s first affidavit set out the reasons why the primary relief was sought and the reasons why the alternative relief was undesirable for Airlie and Alexandra. Airlie and Alexandra’s points of claim were aimed at achieving their primary relief and the proceedings were conducted accordingly until 1 September.
Counsel for Airlie and Alexandra submitted that Fiona, Shauna and the Group Companies could simply have agreed with the alternative relief sought, which would have entirely changed the way the proceedings were run. However, the manner in which the claims in the Trustee Removal Proceedings were expressed, the relief supported and the proceedings prosecuted necessarily impacted upon the way the proceedings evolved. While counsel for Airlie and Alexandra contended that in the circumstances of deadlock, Airlie and Alexandra had to step in to protect the trusts, the initiated proceedings were not based only on a need to resolve an existing deadlock. They were complex proceedings alleging not just deadlock but alleging significant misconduct and breaches of trust by the trustees and claiming entitlements as beneficiaries of the trusts. Airlie and Alexandra’s allegations were to the effect that, based on John’s testamentary intentions, they were the “true” beneficiaries, the other beneficiaries did not have entitlements, there was past misconduct and breaches of trust and outcomes of past transactions should be investigated and potentially steps taken to alter the current position. Those allegations gave rise to the potential for significant and adverse consequences for the general beneficiaries, Fiona, Shauna and the Group Companies. The nature of the primary relief sought and allegations made to support the claim for relief were very relevant to the manner in which the proceedings unfolded including the extent of opposition by Fiona, Shauna and the Group Companies.
Fiona, Shauna and the Group Companies on 2 September rejected the suggestion of appointment of AET on the basis of cost and lack of corporate knowledge before accepting the offer on 11 September. No submissions were put about costs referable only to this period, presumably because Airlie and Alexandra sought a favourable costs order for the entirety of the proceedings. While submissions could potentially have been made concerning reasonableness from that date, in circumstances in which the matter resolved within 10 days in the context of a 20 month long dispute, I would likely not have been inclined to address the costs referable to that period differently. Further, submissions were made concerning particularly Deborah’s conduct in the week preceding trial including in relation to the additional affidavit material filed in that week and the reasonableness of the associated costs which I would have had to consider if the costs in that period were to be separately considered.
Counsel for Airlie and Alexandra referred to the failure of Fiona, Shauna and the Group Companies to file a response in accordance with the UCR. Taking into account the manner in which the proceedings were managed and orders made, including for responsive affidavits, I do not place weight on any such failure.
Counsel for Airlie and Alexandra contended that the so-called Hamilton dysfunction strategy was spurious and was abandoned by the acceptance by Fiona, Shauna and the Group Companies of the removal of the trustees. Whether there was such a strategy was to be a significant issue in trial and one in relation to which factual findings and credit findings would have been made. I do not consider that issue is capable of resolution in the absence of the evidence which would have been called at trial. As set out above, I do not consider that the resolution of the trial on the basis of the orders which were made constituted the abandonment by Fiona, Shauna and the Group Companies of their assertions in relation to the dysfunction strategy or the abandonment of defences. The acceptance letters on 11 September made clear the positions of Fiona, Shauna and the Group Companies that the veracity of allegations were not accepted and the basis for resolution was a commercial one. Agreement to compromise does not necessarily translate to acceptance of the other party’s underlying position or abandonment of one’s own position.
For these reasons, I do not consider the present case factually analogous to ONE.TEL, Re Rush, Zhao or Diamond Ace. This is not a case in which I can conclude without the benefit of evidence on the merits that Airlie and Alexandra would almost certainly have succeeded. Given the matters to which I have referred, it is not a case which can properly be characterised as one of Fiona, Shauna and the Group Companies capitulating or surrendering. While the orders made by resolution achieved the removal of JJR Holdings and Westfield Station Trust, the appointment of AET as an independent trustee was a significantly different outcome to that for which Airlie and Alexandra vigorously contended until 1 September. The making of the orders did not result in the determination of many of the issues which were to be agitated by Airlie and Alexandra and Deborah at trial, including questions of misconduct or asserted breaches of trust relating to past transactions or Airlie and Alexandra’s asserted status as the true beneficiaries of the trusts. This case did not involve Fiona, Shauna and the Group Companies conceding allegations or defences or accepting the likely inevitability of orders in favour of Airlie and Alexandra in a manner akin to that of ONE.TEL. While much might have been said about the reasonableness or otherwise of the conduct of the various parties, in the particular circumstances of this matter, the question of reasonableness of conduct in the litigation cannot be divorced from the merits and determined in the absence of the evidence to be called at trial. Assessment of reasonableness could only be made by reviewing the considerable evidence and making findings and thus conducting a shadow trial.
I therefore conclude there should be no orders as to costs.
As a consequence of my conclusion, it is not necessary to consider the reasonableness of costs associated with particular work or events, or the issues raised by Fiona, Shauna and the Group Companies in relation to the costs referable to the work of Mr Hamilton or Grope Hamilton. It is not necessary to consider the application for joinder by Mr Hamilton and Grope Hamilton as parties to address issues associated with the work performed by them. It is also not necessary to address the specific authorities and submissions made in relation to the payment of costs from a trust estate. Airlie and Alexandra’s submissions to support the payment of costs from the trust estates were based significantly on the contention that the Trustee Removal Proceedings were brought for the benefit and protection of the trust estates including in circumstances in which the trusts were deadlocked. For the same reasons I have set out above, such a conclusion would have depended on factual findings and likely findings of credit which cannot be determined or predicted without descending into a trial of the merits of the resolved proceedings.
While the analysis above relates to Airlie and Alexandra’s costs in the Trustee Removal Proceedings, the same position follows in relation to Deborah, both concerning the costs incurred by her as interested party in the Airlie and Alexandra Trustee Removal Proceedings and her costs as applicant in the Deborah Trustee Removal Proceedings. Deborah’s entitlement to costs as an interested party, rather than respondent, in the Airlie and Alexandra Trustee Removal Proceedings would require consideration of issues such as whether the intervention was necessary to address an interest not otherwise addressed by the parties. Given my conclusions above apply with equal force to Deborah, it is not necessary specifically to address Deborah’s cost entitlement in the context of her status as an interested party in the Airlie and Alexandra Trustee Removal Proceedings. I do not consider it necessary to address submissions concerning the manner in which Deborah conducted herself in the proceedings, including filing and conducting the separate Deborah Trustee Removal Proceedings and/or the extent of and nature of materials filed including in the lead up to trial. If I had concluded there was a basis for an award of costs in favour of Deborah, those issues would have required determination.
I regard this as a case in which there has been a resolution without a trial on the merits in circumstances in which, absent such trial, it is not possible to determine whether Airlie and Alexandra and Deborah would have almost certainly succeeded, nor to address the respective reasonableness of the conduct of the parties. For the same reasons I have expressed above, there was no capitulation or surrender within the meaning of the authorities. The ordinary position follows that there should be no order as to costs for any of the parties subject to one outstanding matter.
Reserved costs on interlocutory application
Shauna applied to be disjoined as an interested party and joined as a respondent to the Trustee Removal Proceedings. I allowed the joinder application, which was opposed, made those orders and costs were reserved.
Airlie, Alexandra and Deborah submitted Shauna’s joinder application was late and taking into account the finely balanced issue as to whether Shauna should be a respondent or interested party, there should be no order as to costs on the joinder application.
Just as the 1 September open letter and the restatement letter did not contain any reference to costs, neither did the acceptance letter from Shauna’s solicitors on 11 September 2022. There was no express reservation or reference to any entitlement to seek Shauna’s costs of the joinder application. For the same reasons I have addressed above, I consider the correspondence objectively construed included costs and consequently did not leave open an application by Shauna in relation to the reserved costs on the joinder application. Accordingly, I make no order for costs in relation to the joinder application in the Airlie and Alexandra Trustee Removal Proceedings.

As I have concluded the settlement correspondence did not resolve the Deborah Trustee Removal Proceedings, there remains the question of costs of the joinder application in those proceedings. The UCR do not limit the general discretion conferred by s 40 of the Supreme Court Act 1935 (SA).[50] While the usual outcome is that costs follow the event, in the particular circumstances of this matter I consider it in the interests of justice that there be no order as to costs of the joinder application in the Deborah Trustee Removal Proceedings. I have reached that conclusion taking into account a number of considerations. As the joinder application related to both sets of Trustee Removal Proceedings, only 50 percent of the costs incurred could be said to be referable to the Deborah Trustee Removal Proceedings. When those costs are likely to constitute but a small fraction of the total costs incurred in respect of which no costs orders will be made, yet a costs order would result in further incurring of time, costs and resources, proportionality favours no cost order. Further, the joinder application was not filed until late June 2022 in a context in which, on 2 February 2022, the proceedings were listed for trial commencing September 2022, and there were reasonable arguments both for and against the application. Accordingly, I have determined to exercise my discretion to make no order for costs in relation to the joinder application in the Deborah Trustee Removal Proceedings.
[50] Gwinnet v Day (No 2) [2012] SASC 61 at [13]-[14] per Stanley J; Rasch Nominees Pty Ltd v Bartholomaeus [2013] SASCFC 105 at [57]-[60] per Stanley J (with whom Gray and Sulan JJ agreed).
Oppression Proceedings
The Oppression Proceedings were dismissed by consent after orders were made in the Trustee Removal Proceedings. The Oppression Proceedings were integrally related to the Trustee Removal Proceedings and consequently orders were made listing the trial of the Oppression Proceedings with the Trustee Removal Proceedings.[51] In the Oppression Proceedings, Fiona pleaded the previous conduct of the affairs of the trustee companies, alleged conduct of Deborah in relation to the affairs of the trustee companies including in relation to director and shareholder meetings, asserted Deborah had contributed to and deliberately caused dysfunction and caused the inability of the trustee companies to properly function. Fiona sought relief by way of reconstitution of the boards of the trustee companies.
[51] Ruling delivered on 8 June 2022 in CIV-22-004128 (FDN 16). Order dated 9 June 2022 (FDN 15).
The Oppression Proceedings were not resolved by the resolution correspondence. Fiona contended that the resolution of the Trustee Removal Proceedings removed the subject matter of the Oppression Proceeding, a contention Deborah refuted. The resolution of the Trustee Removal Proceedings resulted in the Oppression Proceedings becoming futile given their relationship with the Trustee Removal Proceedings. In the trial of the Oppression Proceedings, it would have been necessary to make factual findings and likely credit findings not only in relation to the asserted Hamilton dysfunction strategy, but also in relation to the conduct of both Deborah and Fiona concerning relevant board meetings and the conduct and administration of the affairs of the trustee companies. For the reasons I have expressed above, it is not possible in the absence of a hearing on the merits to determine whether Fiona or Deborah would have been almost likely to succeed. I do not consider the circumstances in which orders were made in the Oppression Proceedings, given their inextricable linking with the Trustee Removal Proceedings, gives rise to a conclusion that Fiona relevantly capitulated or surrendered. For these reasons, I consider there should be no order as to costs in relation to the Oppression Proceedings.
Orders
I will make the following orders.
CIV-21-000520 – the Airlie and Alexandra Trustee Removal Proceedings
1.There be no order as to costs in relation to any of the parties.
CIV-21-006244 – the Deborah Trustee Removal Proceedings
1.There be no order as to costs in relation to any of the parties.
CIV-22-004128 – the Oppression Proceedings
1.There be no order as to costs in relation to any of the parties.

[2023] SASC 40

23 March 2023