Hoffman v Boscacci
[2006] VSC 271
•28 July 2006
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 8438 of 2002
| TREVOR HOFFMAN | Plaintiff |
| v | |
| KEVIN TREVOR BOSCACCI | Defendant |
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JUDGE: | HARPER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 3, 4, 7-10, 14-18 NOVEMBER 2005 | |
DATE OF JUDGMENT: | 28 JULY 2006 | |
CASE MAY BE CITED AS: | HOFFMAN v BOSCACCI | |
MEDIUM NEUTRAL CITATION: | [2006] VSC 271 | 1st Revision 18/8/2006 |
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TRUSTS – Operation of a business – Whether a trust or a partnership – Whether premises acquired by the defendant held on trust – Property sold to satisfy defendant’s indebtedness in Family Court proceedings – Whether defendant breached duty to plaintiff as beneficiary under a trust.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr G. Hardy | The Law Offices of Barry Fried |
| For the Defendant | Mr R. Squirrell | Lewenberg & Lewenberg |
HIS HONOUR:
The plaintiff (Trevor Hoffman) and the defendant (Kevin Boscacci) were business associates. In 1988 they, together with the defendant’s father (Murray Boscacci) and one of the defendant’s brothers (Perry Boscacci), acquired both a brothel and the land at 182 Rose Street, Fitzroy from which it operated. A company (Chezavion Pty Ltd) controlled by Perry Boscacci was, on 2 December 1988, registered as the proprietor of that land. Each of the four men contributed $50,000 to the purchase price. The balance was borrowed.
The common purpose was to operate the brothel as a profitable enterprise. All the indicia of a partnership were present in the arrangement. Yet the plaintiff by his statement of claim asserts that, by an agreement made between the four associates “early in 1988”, the relationship between them was to be that of beneficiaries of a trust, Chezavion Pty Ltd being the trustee. The statement of claim does not say whether the agreement was oral or in writing and, of the terms by which the business would be conducted, says no more than that “the land would be held and the business operations would be conducted upon trust for the parties equally”.[1] It suggests, rather than directly states, that the device of a trust was used “so that the identity of the parties was not disclosed to the public”.[2]
[1] Statement of claim, paragraph 2
[2] Ibid.
It is at this early point in the narrative that some discordance is apparent between the pleadings, the evidence, and reality. Complete harmony is never thereafter restored. One of the constant difficulties, during the course of the trial and beyond, has been to discern through the fog of unstructured and undocumented dealings what in fact happened and in what legal framework. This was a business association to which transparency and its associated notions of accountability and straightforward dealing were foreign. Each party seems to have operated on the premise that whatever step was of greatest immediate advantage should be taken, without regard to the longer term, or to the dictates of good faith. Records were not kept. Bookkeeping seems to have been almost non-existent. Yet, at the time, this was of no concern to the four colleagues; certainly, according to the plaintiff’s evidence, it was of no concern to him. And the attempt to discern the truth from within the resultant morass of fact and fiction has occupied 11 days of hearing, produced 1,130 pages of transcript, and inspired the collation of 971 pages of Court Book; all of which places the Court in a very difficult position. It is asked to unscramble, years after the relevant events, that which the parties themselves were not concerned to keep distinct in the first place.
The task is made no easier by the fact that the plaintiff does not, in his witness statement, support many of the assertions made in his statement of claim. In his witness statement he says that, in early 1988, Perry Boscacci told him that he, Perry, was “thinking about purchasing a brothel”, and wondered whether the plaintiff was interested in “lending” money to Perry for that purpose.[3]
[3] Plaintiff’s witness statement, paragraph 4.
There is no suggestion at this point in the evidence that anyone had a trust in mind. The plaintiff in his witness statement goes on to say that he subsequently had discussions with the defendant and with Murray Boscacci. Assuming that the witness statement was as carefully prepared as it should have been, it must be taken that Perry was not a participant in these subsequent talks: the witness statement describes them as having taken place between “Murray and the defendant and I” (that is, the plaintiff).[4] Each of the three agreed to contribute $50,000 towards the purchase price of the business and the freehold. They also agreed that Perry would act as manager of the business. The notion of a loan was apparently put aside, although what Perry thought of this remains unknown. It was “subsequently”[5] agreed, this time as between all four men, “that a company would be formed to own the freehold and run the brothel on behalf of the four of us equally … and for that purpose ... Chezavion Pty Ltd was formed or acquired.”[6] Each of the four “partners”[7] thereafter contributed $50,000 as agreed and “each of the ... partners”[8] instructed a solicitor (Phillip Linacre) to act on behalf of them all.
[4] Ibid.
[5] Ibid, paragraph 6.
[6] Ibid, paragraphs 5 and 6.
[7] Ibid, paragraph 7.
[8] Ibid, paragraph 8.
To this point in the plaintiff’s narrative, the word “partner” has appeared on multiple occasions, but the word “trust” has been entirely absent. And if a trust was to be contemplated, then the evidence is silent about the instructions given to Mr Linacre in relation to its establishment. This is a serious omission, especially given that, according to the statement of claim, a principal asset of the trust was to be a fully functional business. How and to what extent the solicitor acted on such instructions as he received is likewise undisclosed. Yet it is fundamental to the creation of a trust that it either be expressed in clear words or be capable of being implied by law so that, at the least, there be no doubt about the powers, duties and responsibilities of the trustee. After all, it is the trustee who must act with absolute fidelity; but this is impossible if it cannot be known to what he, she or it must be faithful.
The potential difficulties became real in this litigation. The plaintiff is at pains in his evidence to stress that each of the four associates was to be treated equally. But, according to the pleaded version of the plaintiff’s case, they were beneficiaries of a trust. Their position as such was necessarily different to that of the trustee, upon which person or entity would be conferred the powers, discretions and duties required if, as was allegedly planned, the trustee would manage the business. The plaintiff by his statement of claim asserts that Chezavion Pty Ltd was chosen as the trustee. But that company was controlled by Perry. He therefore had powers and duties and discretions not granted to those of his colleagues who were mere beneficiaries; and so the maintenance of equality had its associated difficulties and tensions. There is nothing in either the statement of claim, or the evidence, to indicate how these issues were resolved. If Mr Linacre was concerned to tackle the problem, the court was not favoured with the results.
Counsel for the plaintiff prepared a document, some 33 pages in length, headed “submission notes” to supplement his final (oral) address. It was, according to this document, “undisputed that the plaintiff, the defendant, Perry and Murray were participants in the trust which was carried on under the name Chezavion Pty Ltd”.[9]
[9] Submission notes, paragraph 3
This proposition is unsupportable. It was in hot dispute throughout the litigation, as the case put on behalf of the defendant discloses. Certainly, Chezavion Pty Ltd held the land on trust for those who contributed to the purchase price, and they were beneficiaries to that extent. It is also true that the relationship between the four was one in which each had fiduciary obligations to each of the others. But the evidence put forward on behalf of the plaintiff goes nowhere near establishing that the company was charged as trustee with the conduct of the business of the brothel on behalf of four individual beneficiaries. Rather, the evidence establishes a partnership operating from land owned by a company which held that land on trust for the partners.
The point may be illustrated by reference to evidence produced by the plaintiff himself. After Perry had “managed” the business for some time, it was discovered that he was a drug addict. It was therefore decided that he should be removed as manager. And he was – or so the plaintiff would have it. And if the plaintiff’s witness statement accurately records the facts, Perry ceased at some time in 1991 to exercise his former managerial responsibilities (according to the records of the Australian Securities Commission, he remained in office as a director of Chezavion Pty Ltd until 24 June 1993). But if he acted as manager in the exercise of his powers as a director and the controlling shareholder of the trustee, Chezavion Pty Ltd, what right any beneficiary had to remove him from office is a matter of pure speculation, since none of the remaining “beneficiaries” were themselves in a position to dictate what Chezavion Pty Ltd should do. Whatever the position in law or in equity, it seems that the plaintiff, Perry and the defendant simply met in a coffee shop and “agreed that Perry should retire as manager and that the defendant would take over as manager”.[10] There is not a word in the plaintiff’s evidence to suggest that there was then any agreement about the status of Chezavion Pty Ltd as trustee, or that the other director and shareholder of that company, a man named Ian Young, was in any way consulted about these changes. (Nor, it seems, was Murray Boscacci, although by then he may have ceased to be a beneficiary - there is much imprecision in the evidence about dates.)
[10] Plaintiff’s witness statement, paragraph 11.
On the other hand, were the brothel operated as a partnership, with Chezavion Pty Ltd being a mere landlord, what was done was simply the replacement of one partner by another as managing partner. Save for some obscurity in the part, if any, played by Murray Boscacci in the exercise, the change was effected in accordance with the principles of partnership law.
Although there is no evidence that Perry’s addiction rendered him unable to manage his own affairs, the statement of claim alleges that “the parties agreed … that [his] share or interest … in the … trust should be held by his mother Josephine Boscacci for on behalf of and in trust for [him].” Perhaps this step was taken in order to preserve the licence for the brothel. Nevertheless, in trust terms it was irregular. On analysis, the plaintiff’s version of what happened, as expressed in the statement of claim, is that Perry – who was already a beneficiary of the trust of which Chezavion Pty Ltd was the trustee – was made a beneficiary of his own beneficial interest, albeit that that beneficial interest was by this time held by his mother as his trustee. In other words, she became a beneficiary of the trust of which Chezavion was the trustee, but she held her beneficial interest as trustee for Perry, whose beneficial interest it ultimately was. This smacks more of smoke and mirrors than of a proper dealing with trust assets.
It may be that the four associates took no advice before introducing Josephine Boscacci into the equation, although even if they did not, the plaintiff’s legal skills (he holds the degree of Master of Laws) might have been called in aid. Be that as it may, advice was sought towards the end of 1991. Not, however, from Mr Linacre, or any other lawyer. On this occasion, resort was had to an accountant, John Delmo, with whom a consultation was arranged. Shortly before it took place, the defendant had, on 4 November 1991, entered into a contract for the purchase of the property at 180 Rose Street Fitzroy, which adjoined the land at 182 Rose Street from which the brothel was conducted. In his witness statement, the plaintiff is silent about the source of the purchase price. The defendant has sworn, and I accept, that he was entirely responsible for it; in part, the money came directly from him, while in part it was borrowed by him from a bank.
It is on this basis that the defendant claims that he held, at all material times, both the legal and the equitable interest in the newly-acquired real estate. The plaintiff, by contrast, asserts that 180 Rose Street was as much part of the trust assets as was the brothel next door. The “parties”, he alleges, agreed that this would be so.[11] Indeed, the plaintiff - by reasoning that I cannot understand - alleges that when, on 18 August 1992, the defendant became registered as the proprietor of 180 Rose Street, he thereafter held both that property and its adjoining neighbour and the business of the brothel “for and on behalf of the parties in equal shares”.[12] If that were so, then logic would indicate that 180 Rose Street should have joined its neighbour and be registered in the name of Chezavion Pty Ltd
[11] Statement of claim, paragraph 5.
[12] Ibid, paragraph 9.
According to the statement of claim, a conference between Mr Delmo, the plaintiff and the defendant took place in December 1991.[13] This is supported by the defendant in his evidence.[14] Despite his own pleading, however, the plaintiff in his witness statement says that Perry Boscacci and his father were also present.[15] At all events, Mr Delmo advised that a trust should be “set up … to run the business”.[16] How this sits with the plaintiff’s claim that the defendant already held both the properties, as well as the business of the brothel, “for and on behalf of the parties in equal shares” is not explained. Be that as it may, the plaintiff was agreeable to Mr Delmo’s proposal and, because he trusted the defendant, was also agreeable to the latter being made the trustee. Indeed, he told Mr Delmo “that it was immaterial to [him] what form the documentation took.”[17]
[13] Ibid, paragraph 12.
[14] Defendant’s witness statement, paragraph 21.
[15] Plaintiff’s witness statement, paragraph 12.
[16] Defendant’s witness statement, paragraph 21.
[17] Plaintiff’s witness statement, paragraph 14.
The result of the consultation with Mr Delmo was a deed of trust dated 24 December 1991. It was drawn by a firm of solicitors called “Murphy’s”. It is, given the object of the exercise, a singular document. The defendant is designated in the deed as both the trustee and the appointor – with power as such to remove any trustee or appoint any additional or substitute trustee.[18] Mr Delmo is designated as “the settlor”. The recitals recount that the latter is desirous of making provision for Kevin Boscacci, and for Mr Boscacci’s children and parents, as “primary beneficiaries”; and he is likewise desirous of making provision for the “general beneficiaries”, that is, those described in clause 1(ii) of the deed, together with any school, college or university that the primary beneficiaries may attend, and “John Mann” (which name is, as all agree, an alias for the plaintiff). In order to give effect to his desire to make the provision to which the deed refers, the settlor “has settled or is about to settle on the trustee the sum set forth in the … schedule”; namely, $10.00. There is, however, no attempt to establish by means of the deed the structure upon which a business might operate. Still less does the deed evidence an intention to facilitate the operation of a quasi-partnership on behalf of the beneficiaries. It is also noteworthy that it contains no reference to No 180 Rose Street; a strange omission if it was to be an asset of the trust.
[18] Deed of trust dated 14 December 1991, clause 19.
Apart from the inclusion of the plaintiff as a beneficiary, the 24 December deed bears all the hallmarks of a family trust established by a parent for the particular benefit of his or her children. It is true that the class of beneficiaries covers all the principals of the business of the Rose Street brothel. But, save for the plaintiff, all those principals automatically qualify as beneficiaries because they also happen to be the immediate relatives of the defendant; and the beneficiaries also include, pursuant to clause 1(ii), not only members of the defendant’s extended family but also “[a]ny person appointed with the consent of the appointor by the trustee by deed to be a beneficiary”. Given that he is both appointor and trustee, this gives the defendant very wide powers to increase the number of beneficiaries even further beyond those to whom the plaintiff from time to time in his pleadings and his evidence refers as the “partners” in, or the “parties” to, the brothel venture. As trustee, the defendant has, in addition, a very wide discretion in distributing both income and capital. By clause 3(i), the trustee may set aside such part of the income as he in his absolute discretion thinks fit for such one or more of the beneficiaries as he likewise thinks fit; and, by clause 5, the trustee may in his absolute discretion raise any sum out of the trust capital and then in his like discretion pay that sum to any one or more of the beneficiaries. With some presently irrelevant exceptions, the deed thus empowers the trustee to disperse the assets of the trust to many persons other than the plaintiff, the defendant, Murray Boscacci and Perry Boscacci. Yet, according to the case of both the plaintiff and the defendant, only those latter are (or, depending on the relevant date, would then have been) beneficially entitled to those assets as the “partners” in, or “parties” to, the Rose Street enterprise.
The plaintiff does not in his statement of claim allege that the deed reflects an agreement reached between the four principals. He does not even plead the making of such an agreement, let alone specify in the statement of claim or elsewhere what the agreed terms were. Yet what was contemplated was the restructure of business arrangements to which each of the four was a party. It is plain that such a restructure could not be effected without the consent of each of them. It is also plain that the plaintiff’s case is founded on the restructure having taken place. The fact that the statement of claim contains no reference to the relevant terms is therefore of concern. Equally serious is the omission of the plaintiff to deal with the matter either in his witness statement or in his oral evidence. I turn first to the statement of claim.
By his pleading, the plaintiff alleges that the advice given by Mr Delmo at the meeting with him included a recommendation that a company should be “formed to hold all the assets” then held in trust for the “parties” by Chezavion Pty Ltd, and that another company should be “formed to conduct the business”. No reason is given for the removal of Chezavion from the scene. The second company, as the “trading trustee”, “should trade in a manner in which the profits made by [it] would be held beneficially for the parties in equal shares”. Pending the taking of these steps, “the defendant would hold the office of trustee of the … trust.”[19]
[19] Statement of claim, paragraph 13.
The statement of claim then proceeds to allege that, as a result of this advice, the plaintiff believed that “a trust deed confirming the beneficial entitlement of the parties in the first trust” would be prepared and that “a trust deed or similar agreement would record that the parties were entitled to the profits earned by the trading trust using the land at No. 180-182, the business and the assets and operating from 180-182 as aforesaid, leased by it from the first trust.”[20]
[20] Ibid, paragraph 14.
Although the statement of claim does not say so explicitly, the necessary implication is that the “first” trust was (or would have been, had Mr Delmo’s advice been followed) the original trust, shorn of its trading responsibilities and now reduced to making its assets available to the “trading trust”. At all events, the statement of claim is explicit in presaging two trust deeds, while implying that the second of them, the deed by which the trading trust was established, would recognise the existence of the other trust – the “first” trust – and, after identifying the “trading trustee” (being the corporation “formed to conduct the business”), would specify its relationship with the trustee of the “first” trust and set out the terms by which the trading trust would be bound.
Having formed the belief described above, the plaintiff was subsequently told by the defendant that “a trust deed [singular – my emphasis] had been executed to record that the assets represented by the land and other assets of the first trust were owned by the parties; [that] the trust was called the Kevin Boscacci Trust; [and that] the corporate trustee was being formed to become trustee of the trading trust”. Pending the taking of these steps, “the defendant would continue [to] act as trustee as aforesaid.”[21] Having been given this information, the plaintiff accepted it as true, made no further enquiries, “and in particular did not call for a copy of the trust deed [singular – again, my emphasis] referred to.”[22]
[21] Ibid, paragraph 15.
[22] Ibid, paragraph 16.
The mere belief held by a beneficiary or putative beneficiary about the creation of a trust (as opposed to evidence of the matters inducing the belief) is seldom if ever evidence of that creation, still less a material fact in determining whether or not a trust actually came into existence. In this case, the pleading states no more than that advice was sought by, and given to, some - but not all - of those whose agreement would be necessary if the trust in contemplation were to be set up; and that thereafter one of those persons (the plaintiff) believed (a belief strengthened by what he was told by another – the defendant) that the advice had been put into effect. On that basis, the plaintiff refrained from seeking more concrete confirmation.
These allegations appear to be a prelude to claims that the advice was wrong, that the person to whom it was given was deceived, and that a cause of action against the deceiver - based upon deceit or misrepresentation - thereby arose. But, rather than being the introduction to a cause of action, the allegations are left to hang in the air. It is true that, by paragraph 28 of the statement of claim, the plaintiff alleges that the defendant failed to disclose that the trust deed did not confirm the beneficial entitlement of the plaintiff to his share in the trust assets. It is also there alleged that the defendant likewise failed to disclose that the trust deed conferred certain important powers upon him as trustee and appointor. But the statement of claim takes these allegations no further. Their point or purpose is therefore unclear. The pleading simply proceeds on the unarticulated basis that a trust or trusts was or were established; that the brothel in Rose Street Fitzroy was (or at least should have been) conducted in accordance with its or their terms; and that those terms were not reflected in the trust deed. What the “agreed” or (so far at least as the plaintiff was concerned) anticipated terms actually were, is not the subject of any relevant allegation; the statement of claim does not go beyond a vague and incomplete reference to the plaintiff’s belief about them.
Nor are these terms to be found elsewhere in the plaintiff’s case. In his witness statement, the plaintiff says that he went to the conference with Mr Delmo in the company of “Perry, Murray and Kevin”.[23] Then, without any other reference to what was discussed, let alone any reference to the continuation, revision or creation of any trust or trusts, the plaintiff says that he “told Delmo [that] I wanted to keep my name out of the business and wanted nothing to do with the ‘hands on’ management or having my name on permits and things like that.” Having referred on a number of occasions to the “partners”, and never once having employed the word “trust”, the witness statement continues (the emphasis being mine):
“He asked me if I wanted the trust to be set up as unit trust or a discretionary trust. I told him that Perry had been handling the business up until then on behalf of all of us and it had been quite satisfactory. I told him that I had trusted Perry to handle it in the way which he had and I was prepared to trust the defendant to handle it in the same way. I told Delmo that it was immaterial to me what form the documentation took. Delmo told me that he would arrange for a document to be created in the form of a trust.
A week or so later the defendant told me that Delmo had set up the trust as we had discussed. I was happy for the defendant and Delmo to bring into existence any documents which were necessary for taxation or like purposes, and for Delmo to act as accountant for the business and in the interest of the partners. I did not ask to see the trust deed and was not shown it. I assumed that everything that was done between the defendant and Delmo would reflect my interest as a partner. In our discussions with Delmo, we were all agreed as to our respective interests in the trust assets being one-quarter each and discussed that the defendant would operate the business at No 182 and the assets thereof having regard to the interests of Perry, Murray and myself as partners.
Some months later, the defendant gave me a copy of a trust deed called ‘The Kevin Boscacci Trust’. I now know that the trust deed provides that the defendant is one of the discretionary beneficiaries and that I am one of the discretionary beneficiaries in my assumed name as John Mann. I note that the document does not refer to Perry. I do not know why that is so.[24]
[23] Plaintiff’s witness statement, paragraph 12.
[24] Ibid, paragraphs 14-17
Nobody, certainly nobody with any legal training, could glance at the trust deed of 24 December 1991 without appreciating (a) that the Kevin Boscacci Trust had no necessary concern with any trade or business, let alone a brothel at Rose Street Fitzroy; (b) that, on the contrary, the deed was consistent with it being the written repository of the terms of a trust for the Kevin Boscacci family (albeit with the plaintiff, who is not a relative, as a “general” beneficiary); (c) that the trust deed made no reference to “a trust deed confirming the beneficial entitlement of the parties in the first trust”[25], or to any assets of the trust, save the initial settled sum of $10.00; and (d) that it gave the trustee very wide discretions, including the power to distribute both capital and income to persons other than those who in 1988 joined in the purchase of 182 Rose Street. In short, nobody could even glance at the 24 December trust deed without realising that it did not come close to conforming to the plaintiff’s alleged beliefs.
[25] See paragraph 21, above.
The plaintiff admits that he received the document “some months” after the Delmo meeting, and “queried the defendant as to why [it] was named [the Kevin Boscacci Trust]”. In these circumstances, and having regard to all the relevant evidence, I find that the plaintiff - a lawyer and an intelligent man - was acquainted with the terms of the deed of 24 December; that he understood what those terms were, and their effect; and that he acquiesced in them. In particular, he acquiesced in the defendant having a wide discretion in dealing with the trust assets. Moreover, there can be no substance in any complaint that the defendant failed to tell the plaintiff what it was that the deed contained.
The plaintiff’s acquiescence is nevertheless, on one level, difficult to explain. The terms of the deed did not fit any reasonable model for the conduct of the business carried on by the four associates in Rose Street Fitzroy. One theoretical possibility is that there was more than one “Kevin Boscacci Trust” – the one, of 24 December 1991, being that which it appeared to be, namely the defendant’s family trust; with the other established to conduct the brothel. Yet there is no support from either side, or in the evidence, for that hypothesis: the plaintiff’s case is that there was one trust, but its terms were not embodied in either the 24 December deed or any other instrument. And there is no doubt that the (one and only) “Kevin Boscacci Trust” did become involved with the Rose Street enterprise. How this could be so, given what is known or alleged about its terms, is something for which there is no adequate – certainly no logical - explanation. Why the original “partners”, or Mr Delmo, would think such involvement appropriate - given that the business was supposed to operate not as if one of them had wide discretions not open to the others, but as if those interested in it were equals and as if, at least in important respects, it would be conducted as, or as if it were, a partnership - is equally inexplicable, although the plaintiff’s evidence is that he was prepared to accept the defendant when the latter assured him “that he was holding the assets and administering the trust on behalf of the partners equally”. But so much of what was done in the name of “The Rose” defies rational legal analysis. This, it seems to me, is simply an illustration of that proposition.
Apart from the plaintiff’s evidence that three members of the Boscacci family (Murray, Kevin and Perry) were present at the meeting with Mr Delmo, which at this point contradicts the allegation in his statement of claim that Kevin was the only family member present, there is no evidence, save that extracted at paragraph 25 above, about the involvement of either Murray or Perry in the re-arrangement of the governance of the brothel. Nor does the statement of claim touch further on the matter. There is, however, the defendant’s version of events. In his witness statement, he states that the meeting with Mr Delmo “was attended by Delmo, Hoffman and me.”[26] There is no mention of either Murray or Perry. He goes on to say that the proposal to “set up the Rose business as a trust to run the business” was supported by the plaintiff “who was also providing advice to Delmo and me about the documents needed and setting up the brothel as a trust, and I accepted this advice.”[27] Indeed, the defendant’s recollection is that “Hoffman and Delmo organised setting up the trust known as the Kevin Boscacci Trust”.[28]
[26] Defendant’s witness statement, paragraph 21.
[27] Ibid.
[28] Ibid.
It is, on both the pleadings and the evidence, impossible for me to find that either Murray Boscacci or his son Perry were informed and consenting parties to agreed terms by which their interests in the Rose Street enterprise were to be held on trust for them. Indeed, the same is true of the plaintiff and the defendant. For the time being all four retained their interests, of course, and were entitled to have those interests respected; but they were not beneficiaries of a trading trust the settled terms of which had been agreed by them, let alone reduced to writing in the form of the trust deed of 24 December 1991.
Although, according to the plaintiff, Mr Delmo proposed that a corporate entity other than Chezavion Pty Ltd assume proprietorship of the premises at 182 Rose Street, that company on 10 April 1992 executed a contract of sale of that property not to an incorporated body but to the defendant. The plaintiff alleges that the latter thereafter commenced to hold the land as trustee for the four “partners”. The transaction, however, was never consummated by the defendant’s registration as proprietor of 182 Rose Street, and Chezavion Pty Ltd remained for the time being as such. It was not until 16 November 1993 that a company called Violet Dell Pty Ltd succeeded Chezavion as registered proprietor. In the meantime, according to the plaintiff’s evidence, yet another company - Chiltern Valley Pty Ltd, which had been incorporated in 1989 - “commenced to run the [brothel] business with the defendant and myself as directors.”[29] Or, in the words of the defendant:
“Following the setting up of the Kevin Boscacci Trust, the trust owned the land and Chiltern Valley Pty Ltd operated the business of ‘The Rose’. I continued to own 180 Rose [Street], and I was paying for the mortgage over that property.”[30]
[29] Plaintiff’s witness statement, paragraph 20.
[30] Defendant’s witness statement, paragraph 27.
The plaintiff, of course, maintains that, while the defendant was the person identified on the relevant contract of sale as the purchaser of 180 Rose Street, and while the relevant certificate of title shows that, on 18 August 1992, he was registered as the proprietor of that land, he never enjoyed more than a legal interest in it. The beneficial ownership was at all material times held on trust by him for the “partners” in the brothel. But, if this is correct, it is hard to explain why, in striking contrast to the dealings in 182 Rose Street, he continued throughout to remain on title as the registered proprietor of the adjoining property.
The records maintained by the Australian Securities Commission show that both the plaintiff and the defendant were, on 29 January 1992, appointed as directors of Chiltern Valley Pty Ltd. The defendant ceased to hold that office on 22 March the following year; the plaintiff, however, remained. From 29 January 1992 he was, by virtue of his directorships and shareholdings, in a position of influence over the business of the brothel, which continued to be conducted by Chiltern Valley Pty Ltd from 182 Rose Street – of which property Chezavion Pty Ltd remained, until 16 November 1993, as the registered proprietor. What Perry Boscacci or his father thought about the involvement of Chiltern Valley is not known. Certainly, the deed of 24 December makes no provision for it.
When, on the latter date, Violet Dell Pty Ltd succeeded to the registered proprietorship of 182 Rose Street, the plaintiff’s capacity to influence the affairs of the brothel further increased. For, from 1 April 1993, he was one of two directors and shareholders of that company, the other being a friend of the defendant’s and a worker at “The Rose”, Sharon Cullinane. She had by then replaced Murray Boscacci as a “partner” in the brothel. Thus, as at 16 November 1993 at the latest, the plaintiff was a director of and shareholder in the both the company that operated the business (Chiltern Valley Pty Ltd), and the company (Violet Dell Pty Ltd) that owned the premises from which the business was carried on. Next door, at 180 Rose Street, were facilities, such as staff amenities, that were an important adjunct to the brothel itself. But the defendant was the owner of those adjoining premises, not (as I find) as trustee, but in his own right. The fact remains that the plaintiff cannot validly assert that he was unable to prevent another or others managing the business to his detriment, or that he had no power to find out what was happening. Nor can he validly assert that while he was not a trustee of anything, the defendant - who had no greater connection with the company that operated “The Rose” than did the plaintiff - was somehow in a trustee relationship with the business. The plaintiff seems to concede this by his assertion in his statement of claim:
“In running the business … Chiltern Valley ran the business … as trustee as aforesaid for the benefit of the plaintiff, the defendant and Cullinane and held all profit therefrom for them … equally …”.[31] (My emphasis).
[31] Statement of claim, paragraph 22.
It is true that the plaintiff was only one of the two directors of Chiltern Valley Pty Ltd. The other was the defendant. The statement of claim alleges that it was the defendant who “managed” the brothel.[32] So he might have done, in the sense that the plaintiff perhaps allowed his fellow director to be more “hands on” than was the plaintiff himself. The defendant in his witness statement supports this conclusion. He there states:
“My function at that time was to manage ‘The Rose’. Hoffman was attending to organising renovations to both ‘The Rose’ and 180 Rose. From time to time I also assisted with the renovations and Hoffman assisted with the management of ‘The Rose’.”[33]
[32] Ibid, paragraph 21.
[33] Defendant’s witness statement, paragraph 27.
I accept this evidence. That, however, does not make the defendant, any more than the plaintiff, a trustee with power to operate the brothel on behalf of a class of beneficiaries. In my opinion, there is no adequate basis for the conclusion that the defendant was such. He was certainly the trustee of the Kevin Boscacci Trust. The question is whether the Rose Street properties, or one or other of them, and the business conducted there together with its assets, were assets of that or any other trust. They could only be so if all the “partners” agreed in that result. Of course a person may appoint himself or herself trustee of his or her own assets. But, apart from 180 Rose Street, all the relevant assets were owned by the “partners”; and the only relevant means by which the defendant could become a trustee of them, and as trustee use them in the business (the plaintiff alleges that the defendant became a trustee de son tort, but in my opinion that allegation has no substance) is with their approbation. Yet evidence of such approbation or agreement is lacking – indeed, direct evidence is entirely absent – and the terms of the deed by which the Kevin Boscacci Trust was established do not fit the purpose.
These conclusions are supported by the evidence of the circumstances in which Murray Boscacci and Perry Boscacci ceased to be associated with the business. The process resembled not so much the transfer to a beneficiary of his beneficial interest, as the purchase - by the continuing partners, a continuing partner, or a new partner - of the interest of an outgoing partner.
Sharon Cullinane succeeded Murray Boscacci as a principal of “The Rose”. In his witness statement, the plaintiff describes her introduction as follows:
“The business was … in need of monies to finance the building of four new rooms. Sharon Cullinane, who worked at the brothel, agreed with the partners that she would purchase [for $100,000.00] the one-fourth share in the partnership previously owned by Murray ... However, she said that she wanted to see the transaction properly formalised by proper documentation, to reflect her interest as one of the four partners.
At the time I had a conversation with Kevin Boscacci as to Sharon Cullinane’s introduction as one of the partners. He told me that [the solicitor, Mr Phillip] Linacre was preparing documents which he had instructed Linacre to do in order to reflect Cullinane’s one-quarter interest as a partner.”[34]
[34] Plaintiff’s witness statement, paragraphs 32 and 33.
The defendant’s version is a little different. He says, in his witness statement, that:
“I met Cullinane when she was working at ‘The Rose’. After I had agreed to buy out Murray’s share I asked Cullinane if she would like to invest in ‘The Rose’ as a partner. After some discussion she said she would pay $100,000.00 for a quarter share in the business. She paid $10,000.00 cash and she agreed to pay the balance from her income. The $10,000.00 was used to pay for renovations.
Hoffman prepared some documents to be signed to record the investment by Cullinane. He arranged for Cullinane and me to attend at the offices of Phillip Linacre, who is a solicitor. Hoffman had introduced me to Linacre earlier on as a friend of Hoffman’s. … I cannot recall what conversation occurred when the documents were presented to be signed. I believe that I would have read or at least looked at the documents at the time. I was not really concerned with the documents as they were prepared to satisfy Cullinane’s insistence that her contribution be recorded in writing.”
The resultant documents are in evidence. Each is dated 16 September 1992. The first is headed “Supplemental Deed - The Kevin Boscacci Trust”. It is “signed sealed and delivered” by the defendant. Its recitals refer to the defendant as “the trustee for the time being of the Kevin Boscacci Trust established by a deed dated 24 December 1991”. By clause 1, “[t]he trust deed shall be and is hereby revoked (my emphasis) by the deletion of the fourth part of the schedule thereto namely the list of primary beneficiaries.” Clause 2 provides that (in happy disregard of the earlier “revocation”) “[t]he trust deed be and is hereby varied by the addition of a new fourth part of the schedule thereto, which reads …”. And the clause continues by naming the plaintiff, the defendant, Josephine Boscacci and Sharon Cullinane as the primary beneficiaries “all as tenants in common in equal shares.” It then preserves the very wide powers and discretions conferred by the original deed on the defendant: clause 3 of the supplemental deed confirms the original deed “[i]n all other respects”. It thus confirms a document that, as a base for the management of a business, was then inappropriate, had always been inappropriate, and remained so after its confirmation on 16 September 1992.
I note in passing that the supplemental deed purports, at a stroke, to extinguish the entitlements of the defendant’s children as primary beneficiaries. The matter was not an issue at the trial, and therefore not the subject of argument; but, as I read the trust deed, the power of amendment is limited to amendments which “shall … be for the benefit of all or any one or more of the general beneficiaries.”[35] The defendant’s children were, by virtue of their status as primary beneficiaries, general beneficiaries as well – and it seems that the supplemental deed conferred no benefits on them. This, however, is not a matter for me to decide.
[35] Trust deed dated 24 December 1991, clause 21(ii).
The supplemental deed bears the hallmarks of a document that has not been drawn with the care it deserved. The same is true of a declaration made by the defendant on the same day – 16 September 1992. He there declares that he is trustee of the Kevin Boscacci Trust, and that as such he “is possessed of or … [is] entitled in equity to be possessed of … freehold land known as 182 Rose Street Fitzroy; freehold land known as 180 Rose Street Fitzroy; [and] the business conducted upon the abovementioned land and called ‘The Rose’.”
The plaintiff relies upon this document. It would be surprising were it otherwise. The barriers to it being accepted at its face value are nevertheless formidable. For the reasons to which I have already referred, there is no proper basis for the conclusion that the defendant – as opposed to the company that was the registered proprietor - ever held 182 Rose Street on trust for the principals of the Rose Street enterprise. It is true that at one point a contract was made for the sale of No 182 from Chezavion to the defendant as trustee of the Kevin Boscacci Trust. But that contract was never followed by the registration of the defendant as proprietor.
Likewise, the evidence is that 180 Rose Street was purchased in the name, and at the cost, of the defendant, and that he never – save for the declaration in question – agreed to hold it on trust for anyone, or that it had ever become an asset of a partnership. Consistently with this, that property remained registered in his name, whereas the relevant certificate of title shows 182 Rose Street as being held by, first, Chezavion Pty Ltd and, secondly, by Violet Dell Pty Ltd. Then there is the allegation that the business was conducted by a trustee on behalf of beneficiaries/”partners” pursuant to what is pleaded by the plaintiff to be the “trading trust”. I have already adverted to the inadequacy of the original trust deed for this purpose, and to the evidence pointing to the falsity of that conclusion.
In my opinion, the declaration was drawn by Mr Linacre on the instructions of both the plaintiff and the defendant in an attempt to convince Ms Cullinane to invest in the business. This purpose was given much greater weight than any desire for legal or other accuracy.
The statement of claim itself does not plead a coherent basis for the conclusion that the defendant was a trustee of either 180 Rose Street or what it refers to as the “trading trust”. It alleges that the “parties” agreed in about mid 1991 to purchase the property adjoining No 182 “using the assets of the first trust and money borrowed from the Commonwealth Savings Bank of Australia.”[36] It next alleges that on 18 August 1992 the defendant became registered as proprietor. There is no allegation that the purchase price was in fact raised using the assets of any trust, still less one in which the plaintiff was a beneficiary; and, as I have already observed, the only evidence is that the defendant was solely responsible for raising the purchase price in its entirety.
[36] Statement of claim, paragraph 7.
The defendant’s status as trustee of the “trading trust” is, on the pleadings, even more tenuous. It is pleaded in paragraph 20 of the statement of claim that the plaintiff and the defendant, together with Josephine Boscacci – apparently but inexplicably as “trustee” for Perry Boscacci - agreed that Chiltern Valley Pty Ltd would “operate as trustee of the trading trust … and Chiltern Valley went into possession of the trading trust including No 180 to No 182 and, through the defendant, commenced to run and thereafter continued to run the business and generally performed the functions of the trading trust as the corporate trustee under the management of the defendant.” It is then alleged, as noted in paragraph 35 above, that the company “ran the business … as trustee as aforesaid”.[37] From there, the statement of claim alleges an agreement made on or about 1 April 1993 between the plaintiff, the defendant and Cullinane that Violet Dell Pty Ltd, the shareholders and directors of which were to be the plaintiff and Cullinane, “would be the corporate trustee” and, as such, “would deal with No 180, No 182, the business and the income and assets thereof and accruing therefrom as if Violet Dell had been validly appointed as trustee of the first trust and the assets thereof represented by No 180, No 182, the business and the income accruing therefrom each leased to and used by Chiltern Valley”.[38]
[37] Statement of claim, paragraph 22.
[38] Ibid, paragraph 24.
These allegations appear to be a comprehensive rebuttal of the proposition that the defendant was a trustee of the business of “The Rose”. In addition, there seems to be some confusion at this point about which of Chiltern Valley Pty Ltd or Violet Dell Pty Ltd, or both, is or are trustee or trustees of the business, or some undefined part of it. Be that as it may, the very next allegation in the statement of claim is that “[f]rom the time referred to in the last paragraph [i.e. 1 April 1993] the defendant dealt with and managed the assets and income of the first trust and/or the trading trust to the extent that they were not held in the name of Violet Dell, as bare trustee for and liable to account to the beneficiaries”.[39]
[39] Statement of claim, paragraph 25.
The assets and income held in the name of Violet Dell are not described or defined. Worse, there is no attempt to explain how the defendant could be the trustee of a trust or trusts said by the very pleading by which the allegation is made to have either Chiltern Valley Pty Ltd or Violet Dell Pty Ltd as its or their trustee. The two sets of allegations are simply contradictory. And the difficulty of sustaining the proposition that the defendant was the trustee of the business is increased when one has resort to the evidence given by the plaintiff in his witness statement. He there states:
“On 1 April 1993 ... I was appointed a director and Sharon Cullinane was also appointed a director of Violet Dell. The acquisition of Violet Dell and the appointment of the directors as aforesaid came about in the following circumstances.
By this time Chiltern Valley was running the business of ‘The Rose’, the defendant ceased to be manager of ‘The Rose’, [and] Cullinane through Chiltern Valley was managing ‘The Rose’ … . Violet Dell took a transfer of No. 182 from Chezavion to hold the property on behalf of the partners [and] the defendant confirmed to me that Delmo had done everything necessary to remove the defendant completely as a partner.”[40]
[40] Plaintiff’s witness statement, paragraphs 44 and 45.
This evidence, if believed, would lead to the conclusion that the defendant had nothing to do with the management of the business or its assets, whether as trustee or otherwise, after 1 April 1993. In my opinion, however, the defendant was never a trustee of the business of “The Rose”. It follows that all the relief sought by the plaintiff on the basis that the defendant was such a trustee must be refused.
There remains the question of the land known as 182 Rose Street Fitzroy. In his statutory declaration of 16 September 1992, the defendant asserts that he is the trustee of the Kevin Boscacci Trust pursuant to the deed dated 24 December 1991, and as such is “possessed of or … entitled in equity to be possessed of” that property, as well as 180 Rose Street and the brothel business. I accept the evidence of the defendant that the plaintiff was a party to the drawing of this document. I find that both men intended to impress Ms Cullinane, and were content to put accuracy in second place. In particular, the plaintiff knew that the trust deed of 24 December did not reflect the terms under which the defendant held a legal interest in the land, even if a legal interest could be said to reside elsewhere than with the registered proprietor, Chezavion Pty Ltd. Thus, in his final submissions, counsel for the plaintiff urged me to hold that the terms of the trusts he propounded were never those of the trust deed that established the Kevin Boscacci Trust.
Ms Cullinane accepted the offer of a position as a principal participant in the business of “The Rose”. As between her and the defendant, and indeed as between her and the plaintiff, the documents of 16 September possibly had a particular significance. But Ms Cullinane is not a party to these proceedings.
The plaintiff alleges that the defendant had an obligation to the plaintiff to produce these documents in quite different proceedings. He further alleges that, had they been produced, they would have been received into evidence; and that, once so received, they would have resulted in a different outcome of the relevant litigation. More specifically, they would have prevented the loss of 182 Rose Street as an asset over which the plaintiff had a claim as a beneficiary – a claim stemming from his position as a principal in the enterprise that was the brothel known as “The Rose”.
The proceedings in question were instituted in 1994 in the Family Court. The parties were the defendant and his then wife, Kathleen Delanty. Judgment was given on 4 November 1994. The Court ordered by way of property settlement that on or before 30 January 1995 the defendant pay or cause to be paid the sum of $109,939.00 to Ms Delanty. In the course of its judgment, the Court also accepted – as, with respect, do I - that, by clause 18 of the deed of 24 December 1991, the defendant had as appointor the power to remove any trustee and appoint any substitute or additional trustee. The Court further accepted – whereas I do not - that 182 Rose Street was an asset of the Kevin Boscacci Trust, with Violet Dell Pty Ltd as the trustee. In order better to ensure that Ms Delanty actually received the amount ordered to be paid to her, the Court required the defendant to exercise his powers as appointor under the December deed by replacing Violet Dell Pty Ltd as trustee, and appointing his wife in the company’s stead. This having been done, Ms Delanty was in a position to sell both 182 Rose Street and the business of “The Rose”, and retain so much of the purchase price as was necessary to meet the judgment debt. In the events that happened, this is what she did; [41] and the plaintiff complains that he has been left with nothing, while the defendant has obtained the benefit that flows from his court-assisted (or, more accurately, compelled) use of a trust asset, 182 Rose Street, as a means of satisfying a judgment against him.
[41] There is a suggestion in the evidence that she retained enough to satisfy the judgment, and some more besides. I am not in a position to make any finding on the point.
The plaintiff alleges, in effect, that in breach of his obligations as trustee, the defendant failed to produce to the Family Court not only the documents of 16 September 1992, but also two statutory declarations each dated 9 March 1993 and made, respectively, by the defendant and Perry Boscacci. The plaintiff further alleges that, had those documents been produced, the Court would not have found, as it did, that the defendant was the sole beneficial owner of 182 Rose Street Fitzroy.
I assume for present purposes that the documents were not produced, and that this failure was a breach of a fiduciary obligation owed by the defendant to the plaintiff. But I must also assume that the deed of 24 December 1991 was in evidence; and that that document, which reveals that the plaintiff (albeit under an assumed name) was - with the defendant - one of many beneficiaries of the Kevin Boscacci Trust, nevertheless did not prevent the Court coming to the conclusion it did about the defendant’s interest. And if the trust deed could not prevent the Court reaching that conclusion, there can be no confidence that the documents of 16 September and 9 March would have made the difference. This is especially so since the defendant called the plaintiff as a witness in the Family Court trial. He did so, according to the plaintiff, to refute the claim by Ms Delanty that the defendant “owned all the trust property”.[42] According to the plaintiff:
“I attended as requested and gave evidence but was surprised when the defendant who was representing himself never put any other questions of substance to me.
During the course of the hearing the judge stood the matter down for about 20 minutes to enable me to write out a statement.” (My emphasis).
[42] Plaintiff’s witness statement, paragraph 50.
One must assume from this evidence that questions of substance about who “owned all the trust property” were put to the witness. The plaintiff therefore had his opportunity to put to the Family Court what he claims was the true position. If, after receiving this evidence, the Court held that the defendant was the beneficial owner of No 182, it cannot be concluded by me that, on the balance of probabilities, the production of either the 16 September documents or the 9 March documents, or all of them, would have made any difference.
I would in any event be reluctant to conclude that the Family Court ought to have supported a conclusion, to which it was not otherwise inclined to come, on a supplemental trust deed that purports, probably without justification, to remove a large number of primary beneficiaries from their status and entitlements as such, and names Josephine Boscacci as a new primary beneficiary when in truth it was her son Perry who was intended to benefit. Likewise, putting the status of 180 Rose Street aside for the moment, the 16 September statutory declaration was false in asserting that the defendant was the trustee of the adjoining property at 182 Rose Street (Violet Dell Pty Ltd held that office) while also being the trustee of the business of “The Rose” (there was never any trust which included as an asset the business of “The Rose”). Both September 1992 documents are and were open to attack, and it would therefore be wrong of me to conclude that the Family Court, had they been produced to it, would have a accepted them to the point of changing its mind.
The documents dated 9 March 1993 are in my opinion equally unhelpful to the plaintiff. The first, a statutory declaration by the defendant, opens by reciting that, in his capacity as trustee of the Kevin Boscacci Trust, he has agreed with his brother Perry to purchase Perry’s interest “in the land, business and chattels at 182 Rose Street Fitzroy” for the Trust (my emphasis). There is no reference to the adjoining property at No. 180 Rose Street. This, it seems to me, is a very significant omission, and strengthens the conclusion that the latter property was not a trust asset.
But the statutory declaration has a further significance. If, as the plaintiff and the statutory declaration maintain, the defendant is the trustee and Perry is a beneficiary, there would be no question of the trust “purchasing” his interest. The trustee is already the legal owner of that interest and, because it is held on trust for Perry, the trustee is bound to hand it over to him whenever by the terms of the trust the legal interest must be so transferred.
The balance of the defendant’s declaration of 9 March simply describes the terms of the “purchase”; and Perry’s declaration of the same date corroborates those terms while also including a quite inappropriate and inaccurate reference to a “sale” by Perry to the trust of his interest as a beneficiary. It too omits any reference to 180 Rose Street.
It is only with a great deal of hesitation, if at all, that a court would accept these documents as in themselves proving that Perry was no longer a beneficiary, if he ever was, of a trust - the Kevin Boscacci Trust - one of the assets of which was 182 Rose Street Fitzroy (or, for that matter, 180 Rose Street). I cannot be satisfied that, furnished with this evidence, and with that provided by the 16 September deed and declaration, the Family Court would on the balance of probabilities have come to the conclusion that the plaintiff contends would have been inevitable.
The plaintiff does not in his statement of claim allege that the defendant’s former wife has paid to the defendant any of the proceeds of sale of 182 Rose Street. As a matter of law, the vendor was not the defendant anyway; that position was occupied by the then registered proprietor, Violet Dell Pty Ltd, of which company the plaintiff was both a (minority) shareholder, and a director. But even if the defendant could be said, in relation to the plaintiff, to be unjustly enriched by that transaction, and thereby liable to the plaintiff in restitution, that cause of action is not part of these proceedings; perhaps because there might be a defence to it under the Limitations of Actions Act.
Rather, the plaintiff relies on the allegation that, by his failure to tender the “relevant” documents during the trial in the Family Court, and by reason of the orders which followed, “the defendant upon the sale by the wife of the business assets and the application of the proceeds as aforesaid assumed once again and continues to hold the office of trustee of the first trust [and] holds and has possession of the assets of the trusts.”[43] The statement of claim adds, for good measure, that “[t]he defendant holds possession of the assets of the first trust and the trading trust and has intermeddled with them and thereby as trustee of his own wrong in respect of the remaining assets.”[44] I have been quite unable, however, to identify which of the defendant’s acts are said to constitute the “intermeddling”. There is a suggestion that it was his deceit in telling the plaintiff that the September 1992 and March 1993 documents were in evidence; if this is the basis for the allegation, then it does not support the conclusion; which in any event I reject.
[43] Statement of claim, paragraph 45.
[44] Ibid, paragraph 46.
I am prepared to assume that the sale of “The Rose”, and of the property at 182 Rose Street on which it was conducted, realized more than the amount ordered to be paid by the defendant to Ms Delanty – who, because on 27 September 1996 (sic) she was registered as the proprietor, seems to have been the purchaser. I cannot assume more than that. The statement of claim does not directly allege that the difference between property settlement and sale price was transmitted to the defendant. On the contrary, it alleges that Ms Cullinane “made a claim to the proceeds of sale”, a claim which was made against Ms Delanty and was settled out of court.[45] Whatever the amount involved, I must proceed on the basis that the settlement moneys received by Ms Cullinane did not go to Kevin Boscacci. Otherwise, the statement of claim restricts itself to the allegation noted at paragraph [64] above; namely, that “by reason of the [Family Court] orders the defendant, upon the sale … of the assets … assumed once again … the office of trustee.”
[45] Statement of claim, paragraphs 42 and 43.
If the defendant did receive any monetary amount from his former wife, he ought to have accounted to Violet Dell Pty Ltd for so much of the receipts as represented the return following the sale of 182 Rose Street. For the rest, that is, so much of the price obtained on the sale as represents the amount attributable to the business, he ought to have accounted to the plaintiff.
It follows that, subject to any relevant limitation period, the plaintiff would have a claim against Violet Dell Pty Ltd; but its creditors (if any) would have a superior claim. In any event, the company is not a party to these proceedings. And any claim that the plaintiff might have against the defendant for the proceeds of sale of the business would not be against the latter as trustee, for he was never a trustee of the enterprise carried on under the name of “The Rose”.
If I am wrong in concluding that the defendant cannot be sued as a trustee, then any claim would have to take account of the present pleading. The statement of claim alleges that the defendant ought to have produced to the Family Court the defendant’s statutory declaration made on 16 September 1992. That document, as has been seen, refers to the defendant as the trustee of the Kevin Boscacci Trust, and to that trust as having been established by deed dated 24 December 1991. By his attendance when this document was executed,[46] by his knowledge that its purpose was to induce Sharon Cullinane to put money into “The Rose”, and by his subsequent association with Ms Cullinane, the plaintiff is - as between himself and her - bound by its terms. He is accordingly bound to accept her as a beneficiary of the Kevin Boscacci Trust, with all the rights that the trust deed gives to its primary beneficiaries. Among those rights is a right to the assets and income of the trust, distributed at the discretion of the trustee.
[46] Plaintiff’s witness statement, paragraph 36.
It may be that, as between Ms Cullinane and Ms Delanty, a settlement has been reached. It by no means follows that Ms Cullinane’s rights as a beneficiary of the Kevin Boscacci Trust have necessarily been exhausted. I reject the plaintiff’s attempt, made by paragraphs 42-44 of his statement of claim, to plead to the contrary. The plaintiff is not entitled to a distribution of any trust assets without regard to those rights. Yet, as I have observed before, Ms Cullinane is not a party to these proceedings.
For all the above reasons, the plaintiff’s claim must be dismissed, with costs.
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