Lin v Lin (No. 4)
[2024] VSC 759
•10 December 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S CI 2018 02053
| TSAI MEI CHUAN LIN and Others (according to the schedule) | Plaintiffs |
| v | |
| SHIH-HSIEN LIN and Others (according to the attached schedule) | Defendants |
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JUDGE: | Moore J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 5 December 2024 |
DATE OF JUDGMENT: | 10 December 2024 |
CASE MAY BE CITED AS: | Lin v Lin (No. 4) |
MEDIUM NEUTRAL CITATION: | [2024] VSC 759 |
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PROCEDURE – Courts and judges generally – Jurisdiction to discharge party from undertaking not to exercise power to appoint or remove trustee – Where proceeding dismissed – Where undertakings given on final basis – Application by appointor to be discharged from undertaking – Grant of liberty to apply – Where independent trustee not party to proceeding – Where independent trustee seeks to stay or strike out application as abuse of process – Court retains jurisdiction – Application to stay or strike out application dismissed - Russell v Russell [1956] P 283 - Bailey v Marinoff (1971) 125 CLR 529 - Kensington Housing Trust v Oliver (1998) 30 HLR 608 - Birch v Birch [2017] 1 WLR 2959 - Commonwealth Bank v The Law Debenture Trust Corporation PLC [No 4] [2018] WASC 165 - Application of Rinehart 2020/142504 (No 2) [2021] NSWSC 364 - Lin & Ors v Lin & Ors (No 2) [2022] VSC 542 - Lin v Lin (No 3) [2024] VSC 17.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N Kaskani | Hunt & Hunt |
| For the First Defendant | Mr D Farrands KC with Ms Z Anderson | AUM Lawyers |
| For the Independent Trustee | Mr P Pascoe | Hicks Oakley Chessell Williams Lawyers |
HIS HONOUR:
The central issue raised for determination by this application is whether, in a proceeding which has been dismissed, the Court has jurisdiction to discharge a party from an undertaking given to the Court as part of the final relief granted in the proceeding. For the reasons which follow, the Court retains jurisdiction in the circumstances described.
Background
This proceeding, which was commenced on 1 June 2018, concerns a dispute over the control and administration of two family trusts, the Lin Family Trust and the Lin Family Trust No 2 (collectively, the Trusts), and the beneficial ownership of certain real properties. One matter in dispute concerned the validity of the first defendant’s appointment as appointor of the Trusts; in Lin & Ors v Lin & Ors (No 2),[1] McMillan J upheld the validity of that appointment.
[1][2022] VSC 542 (‘Lin v Lin (No 2)’).
In Lin v Lin (No 3),[2] I summarised the relevant procedural history of the matter as follows:[3]
… the matter proceeded to trial over four days commencing on 17 February 2022. Judgment in respect of three of nine issues for determination was delivered on 16 September 2022.[4] The remaining six issues for determination were the subject of a further trial before McMillan J which commenced in January 2023. However, on the eighth day of the trial on 2 February 2023, the proceeding settled with the first defendant giving certain undertakings to the Court and the Court making various orders by consent, including an order that the proceeding be dismissed.
[2][2024] VSC 17 (‘Lin v Lin (No 3)’).
[3]Ibid [3].
[4]Lin v Lin (No 2) (n 1).
The orders made by the Court on 2 February 2023 (the 2 February orders), which were made with the consent of the parties, required the parties to agree on an independent person to be the trustee of the Trusts or, in the absence of agreement, for the President of the Law Institute of Victoria to nominate a suitably qualified and experienced solicitor to be trustee. The orders were as follows:
1.The First and Second Plaintiffs and the First and Sixth Defendants shall by agreement choose an independent person to be the sole trustee of the Lin Family Trust and the Lin Family Trust No 2 (‘the Independent Trustee’).
2.Failing agreement under paragraph 1 of these orders within 21 days of the date of these orders, the First and Second Plaintiffs and the First and Sixth Defendants shall request the President of the Law Institute of Victoria to nominate a suitably qualified and experienced solicitor to be the Independent Trustee.
3.With effect upon the appointment of the Independent Trustee, pursuant to s 51(1) of the Trustee Act 1958 (Vic):
(a)the property of the Lin Family Trust shall vest in the Independent Trustee; and
(b)the property of the Lin Family Trust No 2 shall vest in the Independent Trustee.
4.Upon the appointment of the Independent Trustee, the First Defendant shall:
(a)cause the Third Defendant to remove the caveat lodged by it on or about 13 May 2019 over the title of the land described in certificate of title volume 8263 folio 465;
(b)do all such things and deliver all such records and things and execute all such documents as are reasonably necessary to give effect to paragraph 3 of these orders; and
(c)cause the Second and Third Defendants to do all such things and deliver all such records and things and execute all such documents as are reasonably necessary to give effect to paragraph 3 of these orders.
5.Upon the appointment of the Independent Trustee, the Second Plaintiff shall:
(a)do all such things and deliver all such records and things and execute all such documents as are reasonably necessary to give effect to paragraph 3 of these orders; and
(b)cause the Third and Fourth Plaintiffs to do all such things and deliver all such records and things and execute all such documents as are reasonably necessary to give effect to paragraph 3 of these orders.
6. There is liberty to apply in respect of these orders.
7. The proceeding is otherwise dismissed.
8. There is no order as to costs.
Other matters to the 2 February orders, as authenticated, record that the first defendant gave the Court the following undertakings on 2 February 2023 (the Undertakings):
(i)Within seven days of the identification of the Independent Trustee pursuant to para 1 or 2 of these orders, he shall exercise his power under cl 17 of the trust deed of the Lin Family Trust to remove the second defendant as trustee of the Lin Family Trust and appoint the Independent Trustee as the trustee of the Lin Family Trust.
(ii)Within seven days of the identification of the Independent Trustee pursuant to para 1 or 2 of these orders, he shall exercise his power under cl 17 of the trust deed of the Lin Family Trust No 2 to remove the third defendant as trustee of the Lin Family Trust No 2 and appoint the Independent Trustee as the trustee of the Lin Family Trust No 2.
(iii)He shall not exercise his power under cl 17 of the trust deed of the Lin Family Trust to remove the Independent Trustee as trustee of the Lin Family Trust or to appoint any additional trustee or trustees of the Lin Family Trust in addition to the Independent Trustee without leave of the Court.
(iv)He shall not exercise his power under cl 17 of the trust deed of the Lin Family Trust No 2 to remove the Independent Trustee as trustee of the Lin Family Trust No 2 or to appoint any additional trustee or trustees of the Lin Family Trust No 2 in addition to the Independent Trustee without leave of the Court.
(v)Until the Independent Trustee is appointed, he shall not without the written consent of the plaintiffs or leave of the Court cause or permit, or cause the Second or Third Defendants to cause or permit, the payment, distribution or disbursement of any funds of the Lin Family Trust or the Lin Family Trust No 2 other than by continuing to pay or discharge proper trust expenses where any such expense is less than $3,000 in amount.
Clause 17 of the trust deeds of the Trusts referred to in the Undertakings provides that the appointor, and on his or her death, such other person or persons as have been appointed to act as appointor (or his or her legal personal representative in default of any such appointment), is entitled at any time by instrument in writing to: (a) remove any trustee; (b) appoint any additional trustee or trustees; and (c) appoint a new trustee in place of any resigning trustee or trustee that ceases to be a trustee by operation of law.[5]
[5]As described by McMillan J in Lin v Lin (No 2) (n 1), [23(g)].
In the weeks after the 2 February orders were made and the Undertakings given, the parties were unable to reach agreement about the identity of an independent trustee for the Trusts and in due course, on 10 March 2023, following events which it is unnecessary to recount, the plaintiffs filed a summons seeking various heads of relief.
When that summons came before the Court on 14 March 2023, orders were made by consent that a solicitor, Lachlan James Vallance, be appointed trustee of each of the Trusts. Procedural orders for the determination of the remaining relief sought in the summons were also made. The remaining relief sought in the summons filed was ultimately not pressed, save for the question of costs, which is the subject matter of the judgment in Lin v Lin (No 3).
Recent developments
On 6 August 2024, the first defendant[6] filed a summons (the August summons) seeking orders that he be given leave to exercise his powers of appointment to remove Mr Vallance as trustee of the Trusts and to appoint in his place a suitably qualified and experienced solicitor to be nominated by the President of the Law Institute of Victoria. This relief was sought in circumstances where, by paragraphs (iii) and (iv) of the Undertakings set out above, the first defendant had undertaken to the Court not to exercise his power of appointment to remove Mr Vallance as the independent trustee of the Trusts, or to appoint any additional trustee of the trusts, without leave of the Court.
[6]Although the summons is marked as having been filed on behalf of the first and seventh defendants, at the hearing on 5 December 2024, counsel for the first defendant confirmed that this was in error; it is the summons of the first defendant only.
The first defendant sought the following orders in the August summons:
1.Having regard to order 6 of the Orders of the Honourable Justice McMillan made on 2 February 2023 in proceeding number S CI 2018 02053 (Order), leave is given to the First Defendant to exercise his power of appointment under clause 17(1) of the Lin Family Trust Settlement Deed dated 17 August 1989 for the removal of the current trustee of the Lin Family Trust, Lachlan James Vallance, and the appointment of a suitably qualified and experienced solicitor to be nominated by the President of the Law Institute of Victoria in his stead (Independent Trustee).
2.Having regard order 6 of the Orders, leave is given to the First Defendant to exercise his power of appointment under clause 17(1) of the Lin Family Trust No 2 Settlement Deed dated 11 September 1990 for the removal of the current trustee of the Lin Family Trust No 2, Lachlan James Vallance, and the appointment of the Independent Trustee.
3. With effect upon the appointment of the Independent Trustee, pursuant to s 51(1) of the Trustee Act 1958 (Vic):
(a) the property of the Lin Family Trust shall vest in the Independent Trustee; and
(b) the Property of the Lin Family Trust No 2 shall vest in the Independent Trustee.
4. Upon the appointment of the Independent Trustee, Lachlan James Vallance shall do all such things and deliver all such records and things and execute all such documents as are reasonably necessary to give effect to paragraph 2 of these orders.
5. The costs of and incidental to this proceeding be paid by Lachlan James Vallance in his personal capacity.
6. The parties have liberty to apply.
The first defendant sought this relief because of various concerns he hold about Mr Vallance’s alleged conduct in relation to the management of the Trusts as trustee, as detailed in the affidavits filed in support of the summons. It is presently unnecessary to detail these concerns.
On 8 October 2024, the first defendant filed a further summons seeking orders that Mr Vallance be joined as a party to the proceeding (the joinder summons).
Mr Vallance subsequently approached the Court for leave to file an application to stay or to strike out the August summons.
On 14 November 2024, the Court as presently constituted determined that, in the interests of justice and the efficient case management of the proceeding, Mr Vallance’s foreshadowed application to stay or to strike out the August summons should be heard and determined before the other applications, including the August summons. Leave was given to Mr Vallance to file and serve an application to the effect he had proposed.
On 22 November 2024, Mr Vallance, in his capacity as independent trustee of the Trusts, filed a summons seeking the following orders:
1. The Summons of the first defendant, alternatively, the first and seventh defendants, filed 6 August 2024 (the August Summons) be stayed generally on the grounds that it constitutes an abuse of process and/or lacks a proper basis in law pursuant to r 23.01(1) (c) of the Supreme Court (General Civil Procedure) Rules 2015 (Rules) and s 18 of the Civil Procedure Act 2010 (CPA).
2.Further or alternatively, the August Summons be struck out in its entirety - without leave to re-issue against the Independent Trustee - on the grounds that it constitutes an abuse of process and/or lacks a proper basis in law pursuant to r 23.02 & 1.15 of the Rules and s 18 CPA.
3.Further or alternatively, the August Summons be struck out in its entirety - without leave to reissue against the Independent Trustee and the plaintiffs - on the grounds that it constitutes an abuse of process and/or lacks a proper basis in law pursuant to r 23.02 & 1.15 of the Rules and s 18 CPA.
4.The costs of the Independent Trustee of and incidental to this application be paid by the first defendant, alternatively the first and seventh defendants, on an indemnity basis.
5. Such further or other orders as the Court may see fit to make.[7]
[7]Emphasis in the original.
The plaintiffs adopted a neutral position in respect of the summons filed by Mr Vallance; they neither opposed nor supported the relief sought.
Consistent with the order of the Court made on 14 November 2024, these reasons for judgment concern Mr Vallance’s summons filed on 22 November 2024.
Mr Vallance’s submissions
Mr Vallance’s case was that the August summons was unjustifiably oppressive and an abuse of the Court’s processes because it sought relief beyond what the law permitted and therefore had no proper basis in law. He sought that the summons be stayed generally on the grounds that it constituted an abuse of process and/or lacked a proper basis in law and relied on r 23.01(1)(b) of the Supreme Court (General Civil Procedure) Rules 2015 (the Rules) and s 18(b) and (c) of the Civil Procedure Act 2010.
Counsel for Mr Vallance submitted that, as he was a non-party and a stranger to the proceeding, there was no proper basis for the August summons to be issued and served on him. None of the exceptions to this principle contained in the Rules applied in the circumstances of the case.
Counsel for Mr Vallance also relied upon an exchange between McMillan J and senior counsel for the first defendant on 2 February 2023, soon after the Court was informed that a settlement of the proceeding had been reached. The proceeding was then adjourned to allow minutes of proposed orders to be prepared and put before the Court. When submitted, the minutes included the Undertakings as ultimately made to the Court and orders later reflected in the 2 February orders, including the grant of liberty to apply. When senior counsel for the first defendant addressed McMillan J in relation to the minute, he adverted to the possibility of the grant of liberty being utilized in the event that his client was dissatisfied with the independent trustee’s conduct and sought the leave of the Court to be released from his undertaking not to exercise his power of appointment to remove the independent trustee. In reply:
(a) McMillan J stated:[8]
[8]Transcript of proceedings, Lin v Lin (No 2) (n 1) (2 February 2023) 669.4 – 669.5 (McMillan J).
Yes. That would be a separate proceeding. By its very nature.
(b) After senior counsel for the first defendant then responded, her Honour stated:[9]
[9]Ibid 669.13 – 669.17 (McMillan J).
But that doesn’t mean that it comes within this proceeding. You’ve made orders and if these orders are made then—because the parties would be different parties. But otherwise it’s academic in one sense at the moment.
(c) After a further reply by senior counsel for the first defendant, her Honour stated:[10]
[10]Ibid 669.21 – 669.24 (McMillan J).
The plaintiff would be a different person and so would the defendant. And you’d be relying on – whatever, but there’s a lot of material in this proceeding that wouldn’t be relevant.
(d) After further exchanges between counsel and the Court, her Honour appeared to conclude her consideration of the matter and stated:[11]
If there’s a problem with the undertakings down the track, that’s a separate matter I would have thought and it would enable another judge to hear it.
[11]Ibid 670.5 – 670.7 (McMillan J).
Counsel for Mr Vallance next submitted that the proceeding was no longer extant because it was concluded by paragraph 7 of the 2 February orders that ‘[t]he proceeding is otherwise dismissed’. No application had been made to correct any aspect of the 2 February orders under the slip rule.
Mr Vallance relied on my statement in Lin v Lin (No 3) that:[12]
Upon authentication of the Court’s orders made on 2 February 2023, the Court therefore became functus officio and those orders could not be altered or modified, save under the grant of liberty to apply, the slip rule or by reason of a specific statutory provision.[13]
It was submitted that this statement gave rise to an issue estoppel as between the parties and their privies, and the contrary could likewise not be asserted against a non-party to whom leave has been granted to issue a summons that the August summons be stayed or struck out.
[12]Lin v Lin (No 3) (n 2), [30].
[13]Carroll v Price [1960] VR 651, 657-8; CMG v R [2013] VSCA 243, [126].
It was submitted on behalf of Mr Vallance that the grant of liberty to apply in the 2 February orders was not a valid basis to seek orders for the first defendant’s release from the Undertakings. In support of this submission, Mr Vallance referred to my summary of the authorities on liberty to apply in Lin v Lin (No 3):[14]
[14]Lin v Lin (No 3) (n 2), [32]-[34].
As explained by Campbell JA in Australian Hardboards Ltd v Hudson Investment Group Ltd,[15] the grant of liberty to apply ’enables further orders to be made which are necessary for the purpose of implementing and giving effect to the principal relief already pronounced or, as it is sometimes called, “working out the order”’.[16]“[W]hat can be done under a reservation of liberty to apply depends on what needs to be done, in the particular case, to work out the particular orders that have been made”,[17] although liberty to apply cannot be used to obtain an order outside the scope of those sought in the initiating process.[18]
[15](2007) 70 NSWLR 201.
[16]Ibid [50].
[17]Ibid [56].
[18]Ibid [74].
In Abigroup Ltd v Abignano, the Full Court of the Federal Court of Australia described the purpose of liberty to apply as being:[19]
… directed essentially to questions of machinery which may arise from the implementation of a court’s orders. They include cases where a court may need to supervise the enforcement of orders after they have been made.
More recently in Eckert v Roberts, Bleby JA (with whom Kelly P and Doyle JA agreed) stated that:[20]
… liberty to apply cannot be deployed to obtain an order that alters the substance of a final order. Even more starkly, it cannot be used to devise what is properly characterised as a separate claim from that which engaged the jurisdiction of the court.
… the essence of the power … is to make any orders necessary to address any issues arising on account of the final orders determining the claim and which therefore remain within the court’s jurisdiction so engaged.
[19](1992) 39 FCR 74, 88.
[20](2021) 405 ALR 515, 530-1 [49]-[50] (citations omitted).
Counsel for Mr Vallance also relied upon Haviland v McLeary[21] and the observations by Owen CJ that liberty to apply ‘only covers matters which are within the scope of the suit as originally framed’.[22]
[21](1894) 15 LR (NSW) Eq 22.
[22]Ibid 23.
It was submitted that the 2 February orders were made in the context of controversy about the rightful trustee of the Trusts.[23] The principal effect of the orders was to establish a process for the appointment of an independent trustee by agreement or otherwise by a process of nomination. The scope of the powers retained by the Court after the 2 February orders were made was therefore the working-out of those matters. This occurred with the making of the consent orders on 14 March 2023 appointing Mr Vallance as the independent trustee as trustee of the Trusts. The scope of the powers retained by the Court did not touch upon or concern the Undertakings given by the first defendant in relation to the removal of the independent trustee. It was also submitted that the Undertakings were not orders made by the Court and the grant of liberty was confined to orders. Liberty to apply was therefore not a ‘means by which to draw into the fold of an aged and concluded proceeding a new claim arising in respect of the Undertaking(s)’.
[23]Relying on Lin v Lin (No 2) (n 1), [5].
Consideration
In substance, by the August Summons the first defendant seeks to be discharged from paragraphs (iii) and (iv) of the Undertakings he gave to the Court on 2 February 2023.
The submissions on behalf of Mr Vallance did not properly engage with the nature of the relief sought in the August summons as concerning the discharge of an undertaking given by a litigant to a court, as distinct from an application to vary or vacate an order. The authorities considered below establish that, although an undertaking and an order are relevantly the same for the purposes of enforcement, the essential character of an undertaking differs in that it requires and assumes, as an incident of a court’s supervision of its own processes and procedures, the retention by the court of jurisdiction to discharge a party from binding promises made to the court, including after a proceeding has been dismissed and where the undertaking has been given on a final as distinct from interlocutory basis.
Although an undertaking to the court is volunteered by a litigant, it is ‘as solemn, binding and effective as an order of the court in the like terms’.[24] If broken, an undertaking is therefore ‘treated as the equivalent of an order for the purpose of enforcement; it may therefore be enforced in the same manner as an injunction’.[25]
[24]Hussain v Hussain [1986] Fam. 134, 139H (Sir John Donaldson MR).
[25]Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150, 164.
A court has power to release a party from an undertaking without the consent of the other party.[26] In Re Jordan,[27] Hallen J recently referred to a court’s power to release a person from an undertaking ‘as part of its jurisdiction to control its own orders’.[28] He cited the following statements by Jenkins LJ in Russell v Russell:[29]
Any undertaking given to the court is capable of being discharged by the court whenever it appears to the court that circumstances have arisen which make that course a proper one in the interests of justice.
…
It is always competent to the court to discharge an undertaking given to it, if in its discretion the court comes to the conclusion that that is the proper course in the interests of justice.
[26]Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, 177-178 (‘Adam P Brown’).
[27][2023] NSWSC 221.
[28]Ibid [34].
[29]Ibid [35]-[36], citing [1956] P 283, 294 and 297 (‘Russell v Russell’).
In Kensington Housing Trust v Oliver,[30] the Court of Appeal confirmed the applicability of the principles stated by Jenkins LJ to all civil proceedings.[31] In the lead judgment, Butler-Sloss LJ articulated the rationale for this approach in terms which are particularly apposite to the present application:[32]
… It is not necessary to include in the order “until further order” or “liberty to apply” in order for the giver of the undertaking to make an application to the court in respect of it. There is always liberty to apply in respect of an undertaking although there may not be in respect of the parts of the final order which are orders and not undertakings. One of the main reasons why the court has to retain control over undertakings given to it is the significance of the undertaking. It is a solemn promise made to the court and not to the other party to the proceedings. A breach of that promise is a matter which affects the court itself and may be enforced through committal proceedings for contempt of court. The issue is between the court and the contemnor. … Once proved it is a matter for the court whether to impose a penalty which includes the power to send to prison. The court must therefore have in the proper case the power to release the giver from the promise made to the court, where for instance, through no fault of the giver the undertaking cannot subsequently be complied with. The court ought not to allow the giver to remain in contempt in such circumstances even if the other party does not seek enforcement of the undertaking. It is not only a matter for the other party. It remains a matter for the court.
I am in no doubt, therefore, that an undertaking wherever recorded which is accepted by the court can be discharged by the court at any stage if it is just to do so. The fact that it is recorded in a consent order does not, in my judgment, change its nature from promise to order. …
[30](1998) 30 H.L.R. 608 (‘Kensington Housing’).
[31]Ibid 612.
[32]Ibid 613 (emphasis added).
The jurisdiction to discharge a litigant from an undertaking to which the Court of Appeal referred in Russell vRussell and Kensington House was affirmed by the Supreme Court of the United Kingdom in Birch v Birch.[33] The following general statements of principle by Lord Wilson JSC may also be noted:[34]
…An undertaking is a solemn promise which a litigant volunteers to the court. A court has no power to impose any variation of the terms of a voluntary promise. A litigant who wishes to cease to be bound by her (or his) undertaking should apply for “release” from it (or “discharge” of it); and often she will accompany her application for release with an offer of a further undertaking in different terms. The court may decide to accept the further undertaking and, in the light of it, to grant the application for release. Equally the court may indicate that it will grant the application for release only on condition that she is willing to give a further undertaking or one in terms different from those of a further undertaking currently on offer. In either event the court’s power is only to grant or refuse the application for release; and, although exercise of its power may result in something which looks like a variation of an undertaking, it is the product of a different process of reasoning. In Cutler v Wandsworth Stadium Ltd [1945] 1 All ER 103, 105D—E Morton LJ said:
the court does not vary an undertaking given by a litigant. If the litigant has given an undertaking and desires to be released from that undertaking, the application should be an application for release … Litigants are not ordered to give these undertakings; they choose to give them, and an application to have an undertaking already given varied is wholly wrong in form.
[33][2017] 1 WLR 2959, 2963-4 [7]-[8], [12], 2970 [29].
[34]Ibid 2963 [5].
The above authorities were considered by Pritchard J in Commonwealth Bank v The Law Debenture Trust Corporation PLC [No 4][35] in the context of an application by parties to a proceeding to be released from undertakings given some 14 years previously. Importantly, her Honour considered that there:[36]
… is no doubt that this Court has the power, as part of its jurisdiction to control its own orders, to release a person from an undertaking.[37] That power exists both in respect of undertakings given and received in lieu of the grant of interlocutory relief, and in respect of undertakings given and received in lieu of the grant of final relief.[38]
[35][2018] WASC 165 (‘Debenture Trust).
[36]Ibid [85] (emphasis added).
[37]Adam P Brown (n 26), 178 (Gibbs CJ, Aickin, Wilson & Brennan JJ).
[38]Woods v Sheriff of Queensland (1895) QLJ 163, 165 (Griffith CJ).
Pritchard J concluded that the same approach applied when considering applications for the discharge of both a ‘final’ undertaking (given in lieu of final relief) and an ‘interlocutory’ undertaking (given in lieu of interlocutory relief).[39] After referring to the factors which typically would be relevant in respect of both types of undertakings,[40] her Honour determined that the undertakings should be set aside because their maintenance in all of the circumstances would be unjust.[41]
[39]Debenture Trust (n 35), [114]-[115].
[40]Ibid [125].
[41]Ibid [136].
This approach was followed by Parker J in Application of Rinehart 2020/142504 (No 2)[42] in proceedings involving the administration of a trust. Relevantly, a challenge was brought to the validity of an order which was expressed to vary undertakings given by a litigant recorded in an order made five years earlier which appointed that person as trustee of a trust in place of another. It was submitted that the undertakings were equivalent to final orders and therefore could not be varied by the Court. Reliance was placed on the ‘functus officio rule’ stated by Barwick CJ in Bailey v Marinoff[43] as follows:
Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance … beyond recall by that court.
It was submitted that this principle applied to the undertaking in question because the undertaking was final rather than interlocutory (it not being expressed to operate until further order).
[42][2021] NSWSC 364 (‘Rinehart’).
[43](1971) 125 CLR 529, 530, in terms approved in DJL v Central Authority (2000) 201 CLR 226, 245 [38].
Justice Parker rejected this submission, principally on the basis that he considered Pritchard J’s analysis in Debenture Trust to be persuasive, it being supported by Australian authority and ‘clear and long-standing statements of principle in England, which have been approved by the United Kingdom Supreme Court’.[44] However, he also observed that, because the proceeding concerned the exercise of the Court’s jurisdiction over the administration of a trust, the functus officio rule could not have prevented the Court from modifying the undertakings[45] given the ‘cardinal principle that the court must always exercise its administrative jurisdiction so that the interests of the trust, as they appear at the time the jurisdiction is exercised, are paramount’.[46]
[44]Rinehart (n 42) [110].
[45]Ibid [111].
[46]Ibid [115].
I respectfully agree with the analyses and conclusions reached by Pritchard J in Debenture Trust and Parker J in Rinehart concerning the jurisdiction of a court to discharge, or release, a party from an undertaking. The preceding discussion demonstrates that their conclusions are, with respect, consistent with established authority. The observations of Butler-Sloss LJ in Kensington Housing referred to in [30] speak to the principal reasoned bases upon which the Court continues to retain jurisdiction to consider applications for discharge from undertakings made in the context of the grant of final relief, including after a proceeding is dismissed. Mr Vallance’s complaint that the relief sought in the August summons is beyond what the law permits, or otherwise lacks a proper basis in law, must accordingly be rejected.
Mr Vallance’s reliance upon my statement in Lin v Lin (No 3) referred to in [22] above is of no assistance because the August summons does not seek to vary orders previously made by the Court, but is instead an application for the first defendant to be released or discharged from paragraphs (iii) and (iv) of the Undertakings. The difference in character between an order and an undertaking means that the issue estoppel in relation to the 2 February orders after the Court become functus officio does not preclude the first defendant from seeking to be released from the Undertakings, and in turn for the Court to determine that matter. Consistent with the reasons of Pritchard J in Debenture Trust and Parker J in Rinehart, the functus officio rule does not prevent the Court from discharging a party from an undertaking.
The fact that the relief sought in the August summons is expressed ‘[h]aving regard to order 6’ (the grant of liberty to apply) of the 2 February orders does not obscure the substantive nature of the relief sought by the first defendant. Mr Vallance’s submissions about the principles relating to the exercise of the grant of liberty to apply are not on point given the particular nature of the first defendant’s application to be released from the Undertakings. The limitations associated with the ‘working out’ of the Court’s orders conveyed by the grant of liberty to apply cannot delimit the Court’s jurisdiction to discharge a party from an undertaking which they have volunteered to the Court. As Butler-Sloss LJ explained in Kensington Housing, this is a matter which ‘affects the court itself and may be enforced through committal proceedings for contempt of court’.[47]
[47]Kensington Housing (n 30), 613.
Having reviewed the entirety of the relevant part of the transcript of the hearing before McMillan J on 2 February 2023, it is tolerably clear that her Honour was of the view that, in the event that the first defendant later became dissatisfied with the independent trustee’s conduct, the appropriate course would be for him to commence a separate proceeding rather than to make application under liberty to apply. Clearly the issuance of a separate proceeding in that scenario is one course which it would be open for the first defendant to pursue.
However, in her exchange with counsel, McMillan J also expressed the view that any future application by the first defendant to be partially released from his undertaking would not ‘come[s] within this proceeding’.[48] On its face, that statement is, with respect, inconsistent with the principles and authorities to which I have referred. It would be wrong, however, to treat this statement by her Honour as reflecting a definitive or considered view. Her Honour referred to the issue as ‘academic’, concerning as it did a hypothetical scenario raised after she was told the proceeding had settled on the eighth day of the trial and very shortly before her retirement from the Court. Neither did she have the benefit of any submissions on the point which, it would appear, has not been the subject of any decision of this Court. In the end, McMillan J’s observations relied upon by counsel for Mr Vallance do not assist in determining the issue raised by the summons.
[48]In her statements referred to in [20(b)], her Honour is responding to counsel’s reference to an application by the first defendant to be partially released from his undertaking.
My analysis and conclusion is unaffected by the fact that Mr Vallance is not presently a party to the proceeding. The attempt by his counsel to make something of this does not sit comfortably with the fact that it is Mr Vallance who sought leave from the Court to file an application to stay or to strike out the August summons. Whether Mr Vallance should be joined as party to the proceeding is the subject of the joinder summons, the consideration of which has been deferred pending counsel’s consideration of these reasons and an application for judicial advice which has been foreshadowed by Mr Vallance.
It is for the above reasons that, on 5 December 2024, the Court dismissed the summons dated 22 November 2024 filed by Mr Vallance in his capacity as independent trustee of the Trusts.
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