Perpetual Trustees (WA) Ltd v Equuscorp Pty Ltd

[2000] NSWSC 1120

CITATION:	Perpetual Trustees (WA) Ltd v Equuscorp Pty Ltd & ors [2000] NSWSC 1120
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 4424 of 1999
HEARING DATE(S):	31 October 2000
JUDGMENT DATE:	5 December 2000
PARTIES :	Perpetual Trustees (WA) Ltd (Plaintiff) Equuscorp Pty Ltd & Ors (Defendants)
JUDGMENT OF:	Bergin J

COUNSEL :	J Simpkins SC/D Morgan (Plaintiff) CR Newlinds (35, 59, 61, 62, 96 and 148 Defendants)
SOLICITORS:	Henry Davis York (Plaintiff) Michell Sillar (Defendants)
CATCHWORDS:	[EQUITY] - Whether the Cherry v Boultbee equity applies to the assignee of the first defendant. [DEEDS] - Construction of Deed of Settlement - Whether it is to be construed as a release or a covenant not to sue - Whether trustee plaintiff is required to retire as trustee prior to approval of new trustee by ASIC. [CORPORATIONS LAW] - Nature of ASIC's powers under s 1067 are broad and to be exercised to enable efficient and effective transfer from retiring trustee to new trustee.
LEGISLATION CITED:	Corporations Law ss. 1069, 1454, 1067
CASES CITED:	Cherry v Boultbee [1839] 4 My. & Cr. 442 Commercial Bank of Tasmania v Jones & Anor [1893] AC 313 Dorgal Holdings Pty Ltd v Buckley & Ors (1996) 22 ACSR 164 Duck v Mayeu [1892] 2 QB 511 Head v Gould [1898] 2 Ch 250 In Re Hurburgh; National Executors and Trustees Co of Tasmania v Hurburgh [1959] Tas. S.R. 25 Kenworthy v Avoth Holdings Pty Ltd., Cannon & Bishop (1974) WAR 135 Moorooka Shopping Town (Nominees) Pty Ltd v Mulherin (de Jersey CJ, SCQ, 20 August 1999, unreported) Murray-Oates v Jjadd Pty Ltd (1999) 76 SASR 38 In Re Peruvian Railway Construction Company Ltd [1915] 2 Ch 144 Perpetual Trustees (WA) Ltd v Equuscorp Pty Ltd (Young J, NSWSC 5 March 1998, unreported) S.R. Derham, Set-Off, 2nd Ed., Oxford University Press, 1996
DECISION:	Deed construed as covenant not to sue. Cherry v Boultbee equity applicable. Trustee to retire when new trustee approved.

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BERGIN J

DATE 5 DECEMBER 2000

4424/99 - PERPETUAL TRUSTEES (WA) LTD v EQUUSCORP PTY LTD & ORS

JUDGMENT

1    The disputes between the parties to this litigation have had a lengthy and peripatetic history. There are only two issues for determination by me. They are firstly, whether the Deed of Settlement (the Deed) entered into between the plaintiff and the first defendant on 21 September 1999 is to be construed so that the rule in Cherry v Boultbee [1839] 4 My. & Cr. 442 applies to the assignee of the first defendant, HK Capital Ltd (HK) and secondly, whether the plaintiff should retire as trustee.

2    The plaintiff is the trustee of various assets relating to a film originally to be released as “Night of the Leopard” but ultimately released under the title “Double Impact” (the film). The trust is in writing and is contained in a Deed made 9 May 1988.

3    The investors in the film fell into two classes. The first class consisted of those investors who borrowed money from the first defendant, Equuscorp Pty Ltd, and the second class consisted of those who were self funded or obtained finance from sources other than the first defendant. The investment was by way of units in the trust.

4    In 1996 the plaintiff issued a Statutory Demand for just over $5 million against the first defendant, a debt alleged to be owing pursuant to a Letter of Credit dated 28 June 1990 (the Letter of Credit). A challenge was made to the Statutory Demand and that figure was reduced to $943,765 and paid by the first defendant to the plaintiff. An injunction was granted in the Federal Court restraining the plaintiff from distributing that amount (the distribution injunction).

5    The plaintiff asserted there was still a large amount of money payable to it by the first defendant pursuant to the Letter of Credit. The first defendant asserted that pursuant to its rights as assignee of those investors who had borrowed from it, it was entitled to receive distributions from the Trust Fund due to those investors.

History prior to the Deed

6    The first defendant had commenced proceedings in the Federal Court against the plaintiff in which it made claims including allegations of breach of trust, breach of fiduciary duty and misleading or deceptive conduct (the 1996 Proceedings).

7    The plaintiff had cross claimed against the first defendant in the 1996 Proceedings claiming the amount ($4,064,995) it claimed to be owing to it pursuant to the Letter of Credit (the Cross Claim).

8    The plaintiff had commenced proceedings in the Supreme Court (2827/1996 and 2591/1997) which were subsequently cross vested to the Federal Court (the 1998 Proceedings). The 1998 Proceedings involved over one hundred parties. Those parties included the first defendant, HK, Nick Russo, Katie Russo and Targridge. Prior to the cross vesting Windeyer J had determined that the Fund was constituted by certain payments.

9    In the 1998 Proceedings the plaintiff sought and received judicial advice, the effect of which was that the distributions it had made in prior years was on a wrong footing as the distribution to the unitholders had not been equal.

10    The 1998 Proceedings sought orders that would recognise that the amounts distributable by the plaintiff to the unitholders consisted of the amounts that the investors had to repay to the plaintiff so that the amounts distributed in the previous years would be equal. It also sought orders to reflect its claim that the Fund consisted of the amount of $5,008,760 which the first defendant had failed to pay under the Letter of Credit plus interest. The question of whether the Cherry v Boultbee equity applied to the defendants was an issue in those proceedings.

11    In the 1998 Proceedings the plaintiff asserted that any right claimed by the first defendant to receive distributions was subject to the equity in Cherry v Boultbee that “where a person entitled to participate in a fund is also bound to make a contribution in aid of that fund, he cannot be allowed so to participate unless and until he has fulfilled his duty to participate”: In Re Peruvian Railway Construction Company, Ltd [1915] 2 Ch 144 at 150 (the Cherry v Boultbee equity).

12    The question of whether such equity applied to the first defendant was dealt with in the 1998 Proceedings (2591/1997) prior to the cross vesting to the Federal Court. Young J identified the rationale of the equity as being if a person has to contribute to a fund he or she should not be able to have the fund dissipated by collecting from it before her or she has made contributions. On the assumed facts before him, Young J held that the equity did apply to the first defendant: Perpetual Trustees (WA) Ltd v Equuscorp Pty Ltd (Young J, NSWSC, 5 March 1998, unreported at p. 7).

13    Some of the claims made in the 1996 Proceedings had been set down for trial in the Federal Court in Melbourne commencing 13 September 1999 (the Trial). On 10 September 1999 the plaintiff, the first defendant, Nick Russo and Katie Russo, who were directors of the first defendant and Targridge Pty Ltd (Targridge) and Targridge entered into an Agreement (the September Agreement).

14    In the September Agreement the first defendant proposed to the plaintiff that “the disputes between the parties including the 1996 proceedings be settled by the payment to the plaintiff of the sum $500,000” and otherwise on the terms contained in the Deed, on the basis that the payment was greater than that which would be available to the plaintiff if it attempted to enforce any judgment which it might obtain on the Cross Claim.

15    Pursuant to the September Agreement the plaintiff agreed to consent to the adjournment of the Trial to enable the first defendant to obtain an independent chartered accountant’s report to attempt to satisfy the plaintiff that the proposed settlement was the “best reasonably available” to the plaintiff. The plaintiff was provided with the chartered accountant’s report and was satisfied that the payment of $500,000 on the terms and conditions contained in the Deed “was an appropriate settlement of the 1996 Proceedings”.

16    The plaintiff and the first defendant agreed to settle the 1996 Proceedings on the terms and conditions contained in the Deed. The 1998 Proceedings remain on foot and the first defendant’s involvement in them are subject to the terms of the Deed.

17    Since Young J’s judgment the first defendant has transferred its units in the trust to HK. HK concedes that it took the first defendant’s rights as assignee “subject to the equities” and that if there had been no change in circumstances, the equity would apply to it. However on 21 September 1999 the first defendant and the plaintiff entered into the Deed.

18    HK contends that the Deed released the first defendant from the obligation to pay the debt and in those circumstances the Cherry v Boultbee equity is not applicable to HK. The plaintiff contends that, properly construed, the Deed constitutes a covenant not to sue for the debt and not a release and that HK, as the first defendant’s assignee, is subject to the Cherry v Boultbee equity.

Deed of Settlement

19    The relevant provisions of the Deed are contained in the Schedule to this judgment.

20    The first defendant authorised a payment of $500,000 to the plaintiff in consideration of the plaintiff “foregoing its right to sue and receive the sum of $4,064,994”, the amount claimed in the Cross Claim (cl.1). Subject to the provisions of the Deed, the parties agreed to discontinue their respective claims in the 1996 Proceedings and pay their own costs (cl.2).

21    Subject to the provisions of the Deed, the first defendant agreed to pay the plaintiff $52,693.56 to satisfy costs orders in the 1998 Proceedings when they were still before the Supreme Court (cl.3(a)).

22    It was agreed that the first defendant and Targridge would remain as parties in the 1998 Proceedings and that they would each pay their own costs incurred in the proceedings up to the date of the Deed (cl.3(b)). The first defendant and Targridge covenanted to take no further active part in the proceedings other than to submit to a formal order of the Court (cl. 3(c)). The plaintiff agreed that so long as the first defendant and Targridge observed that covenant it would make no further claim for any costs of those proceedings against them (cl.3(d)).

23    Although clause 4 of the Deed appears under the heading dealing with the Settlement of the 1998 Proceedings it refers to the payment of $500,000 referred to in the portion of the Deed dealing with the settlement of the 1996 Proceedings in which it is agreed that the payment was in consideration of the plaintiff forgoing its right to sue and receive the amount in the Cross Claim. Clause 4 provides:

4. In consideration of the Trustee agreeing to accept the Payment as full and final settlement of all the Trustee’s claims against Equus, Equus makes the following admissions:
(a) the security provided by Equus Financial Services Pty Limited (now Equuscorp Pty Ltd) being a document entitled “Equus Financial Services Limited Irrevocable Standby Letter of Credit dated 29 June 1990”, and provided in relation to investment in the Prospectus for the film “Night of the Leopard”, is an irrevocable Letter of Credit;
(b) but for the terms of this Deed of Settlement and the payment of $500,000 to the Trustee,
(i) Equus would have been indebted to the
Trust for the sum of $4,064,995.00; and
(ii) the Trustee is entitled to recover the sum of $4,064,995.00 from Equus for the benefit of the fund and on behalf of unitholders.

24    The Deed deals with the distribution of the Fund and in particular clause 5 provides:

5 Equus acknowledges and agrees that the Trustee is able to deal with the payment of $500,000 as it thinks fit and acknowledges that it is the Trustee’s intention, upon payment of the $500,000.00, to distribute the Fund in accordance with the orders of Young J in the 1998 Proceedings made on 5 March 1998 and in accordance with such further orders as may be made in the 1998 Proceedings.

25    The first defendant agreed to the dissolution of the distribution injunction and agreed that it did not have any objection to the distribution of the entire fund (cl.6(a)&(c)). The first defendant also agreed to provide to the plaintiff a letter to be tendered to the Court (clause 6(d)). The relevant parts of that letter stated:

Equuscorp acknowledges that it is Trustee’s intention to distribute the Fund in accordance with the orders of Young J of the Supreme Court of New South Wales in proceedings 2591 of 1997 made on 5 March 1998 and in accordance with any further orders for any court.
Equuscorp has no objection to the Trustee proceeding to distribute the entire Fund in accordance with its intention.

26    The parties also agreed that if a liquidator, administrator or trustee recovered part or all of the $500,000 payment made by the first defendant pursuant to clause 1 of the Deed, the plaintiff would be entitled to prove the whole amount in the Cross Claim, $4,064,995, in any winding up, Deed of Company Arrangement, or other administration, composition or arrangement (cl.10).

27    The parties respective releases are contained in clauses 12 and 13 of the Deed as follows:

12. Each of Equus, Nick Russo, Katie Russo and Targridge (except where Targridge owes a lawful duty as bare Trustee of 60 units held for and on behalf of HK Capital Limited) releases the Trustee (both in its capacity as Trustee and in its personal capacity) from all actions, claims, demands and liabilities arising out of the matters that are the subject of the 1996 Proceedings or the 1998 Proceedings or arising otherwise out of the Trustee’s conduct with respect to the administration of the Trust Fund.
13. Except as otherwise provided in clause 10 the Trustee releases Equus from any further obligations or claims with respect to the Equus Letter of Credit.

28    An acknowledgment by the plaintiff is contained in clause 14 of the Deed as follows:

14. Subject to the provisions of Clause 5, the Trustee acknowledges that it will distribute such of the Trust Fund (if any) to Equus as the holder of 5 units in the Trust and to Targridge as holder of 60 units as bare trustee for HK Capital as the Trustee may be required to at law and nothing in this Deed shall be construed as a waiver by Equus or Targridge to their entitlement to funds from the Trust Fund.

29    The parties agreed that the Deed “binds and benefits the parties and their respective successors and permitted assigns” (cl.23).

30    In support of the plaintiff’s submission that the Deed constitutes a covenant not to sue, reliance was placed upon a number of authorities which deal with joint or joint and several debtors: Duck v Mayeu [1892] 2 QB 511 at 514; Kenworthy v Avoth Holdings Pty Ltd., Cannon & Bishop (1974) WAR 135 at 138-139 and 141-142; and Dorgal Holdings Pty Ltd v Buckley & Ors (1996) 22 ACSR 164. The plaintiff submitted that such cases are analogous to the present circumstances of the first defendant’s relationship with HK. HK submitted that such were not analogous.

31    In Duck v Mayeu the plaintiff was seeking from the defendant a proportion of a licence fee for a play “Our Boys”, that had been produced and performed at the Wandsworth Town Hall In January 1891. The defendant had arranged the licence fee with the plaintiff at the behest of a clergyman, Wills, who had paid half of the licence fee to the plaintiff when the plaintiff’s solicitors had requested the whole fee.

32    When the plaintiff sued the defendant for the balance of the fee the defendant claimed that the plaintiff had released her from liability by reason of the release of her joint debtor, Wills. The document which the defendant claimed was a release acknowledged receipt of the payment and stated that it was “in full discharge of your personal liability in connection with Miss Mayeu’s performance of above at Wandsworth Town Hall on 23rd January, 1891. This is, of course, without prejudice to my client’s claim against Miss M. Mayeu”. The Court said at 514:

A rule of construction for such a document was laid down by the Court of Queen’s Bench in Price v Barker 4 El. & BC. 760, where it was held that, in determining whether the document be a release or a covenant not to sue, the intention of the parties was to be carried out, and if it were clear that the right against a joint debtor was intended to be preserved, inasmuch as such right would not be preserved if the document were held to be a release, the proper construction, where this was sought to be done, was that it was a covenant not to sue, and not a release.

33    In Dorgal Holdings Pty Ltd v Buckley & Ors (1996) 22 ACSR 164 McLelland CJ in Eq. was dealing with a situation in which one of three directors of a company in liquidation had settled proceedings in which he had been sued pursuant to s 592 of the Corporations Law for the company’s debt to the plaintiff.

34    The other two directors relied upon the common law rule that the plaintiff’s release of the co-director with whom they were jointly and severally liable for the debt was a release of their liability.

35    McLelland, CJ in Eq., accepted that although the common law rule was seemingly impossible to justify (a view apparently held by Burt J in Kenworthy v Avoth Holdings at 140.9), it was binding but subject to qualification. The qualification was that if the true construction of the Deed demonstrated an intention that the other directors were to remain liable then it would not be treated as a release in the strict sense but as a covenant not to sue the director purportedly released. The same qualification is applicable to a guaranteed debt so far as the liability of a surety is concerned: Commercial Bank of Tasmania v Jones & Anor [1893] AC 313.

36    Kenworthy v Avoth Holdings Pty Ltd is another case involving at least joint or joint and several liability. That case involved three contracts for the purchase of shares. One of the purchasers reached an accord with the vendors and the other two purchasers claimed that such accord had released them from liability.

37    Virtue S.P.J at 138 referred to the following passage from Glanville Williams on Joint Obligations:

Clearly, accord and satisfaction with one will discharge the others, provided that the satisfaction is intended to be a complete substitution for the performance originally promised.

38    In the document under scrutiny the vendor had stated that in accordance with the Agreements between the relevant parties whereby certain moneys had to be paid “I hereby accept the sum of $6,203.66 in full payment of any and all money outstanding” by the relevant purchaser. Burt J, as dissentient, said of this document at 141-142:

But if the terms of the agreement are terms of discharge, as in my opinion the words of this agreement - “accept….in full payment” - are, and if no more has been agreed, as on the facts was the case here, then in my opinion the agreement must be construed and left to operate in its terms as ordinarily understood. If it is permissible to look to surrounding circumstances to displace this conclusion, they must, I think be such as to enable it to be held that the agreement made contained an implied term to the effect that the rights against the other joint debtors were reserved because it is only when the reservation appears in the agreement expressly or by implication that the basis is laid for reading the words of discharge as a covenant not to sue.

39    Wickham J drew the distinction between the right of a creditor to the debt or promise and the remedy which is the right to recover the debt or enforce the promise. His Honour said at p 142:

In the same way an agreement between a creditor and a debtor may be for the substituted performance of the obligation and then and thereby the satisfaction of it, or it may be for consideration coming from the debtor an agreement on the part of the creditor not to sue. In a unitary relationship the distinction does not matter but in the case of one of several joint debtors the result on the liability of the others is critical.

40    An example of an agreement reserving the creditor’s right against joint debtors or sureties is found in Moorooka Shopping Town (Nominees) Pty Ltd v Mulherin (de Jersey CJ, SCQ, 20 August 1999, unreported). In that case the creditor had expressly deferred any release until proceedings against the co-surety were concluded. The question of whether the document is a release or covenant not to sue is approached as being one of construction having regard to the words used: Murray-Oates v Jjadd Pty Ltd (1999) 76 SASR 38 at par. 88.

41    The only basis upon which the plaintiff can require the first defendant’s assignee, HK, to contribute to the fund prior to distribution in accordance with the Cherry v Boultbee equity is if the first defendant’s debt has not been extinguished, in other words, if the Deed is construed as a covenant not to sue for the debt. Even if it is so construed the defendant submits that the equity should not apply in the circumstances.

42    The plaintiff submitted that there are many indications in the Deed that the plaintiff wished to reserve its right to agitate the Cherry v Boultbee equity point against HK. It submitted that clause 1, does not, in express terms, release or extinguish the first defendant’s debt in that the plaintiff only agreed to forego its “right to sue and receive” the first defendant’s debt.

43    The plaintiff submitted that if the first defendant’s debt had been released by the Deed, there would have been no reason for continuing the 1998 Proceedings as contemplated in clauses 3 (c) and (d), similarly the admissions in clause 4 would serve no purpose.

44    The opening words of clause 4 that in consideration of the plaintiff “agreeing to accept the payment as full and final settlement” of all the plaintiff’s claims against the first defendant, and the “admissions” in clause 4(b), may present as an impediment to the construction of the Deed for which the plaintiff contends. They are relied upon by the defendant in its submission that the Deed is a release.

45    The admissions recorded in clause 4(b) were that but for the terms of the Deed and the payment of $500,000, the first defendant “would have been indebted to the Trust for the sum of $4,064,995 and that the plaintiff “is entitled to recover the sum of $4,064,995” from the first defendant for the benefit of the fund on behalf of the unitholders.

46    The plaintiff submitted that the word “settlement” in the opening words of clause 4 is meant in the sense of disposing of the dispute between the parties by means of a covenant not to sue for the first defendant’s debt in the 1996 Proceedings. He submitted that the terms of the admission in clause 4(b) are not to be construed as an extinguishment of the debt but as an admission for the purpose of the 1998 Proceedings that, because of the Deed, the plaintiff is not entitled to recover the debt by the commencement of proceedings against the first defendant.

47    The plaintiff also highlighted the conjunctive between clause 4(b)(i) and (ii) and submitted that a proper construction of the clause is that, but for the Deed, the plaintiff would be entitled to sue to recover the amount of money the first defendant agreed it otherwise owed it.

48    It was also submitted that if the payment of $500,000, coupled with other provisions of the Deed, extinguished the first defendant’s debt there would be no scope for a distribution of the Fund upon the basis of the order made by Young J on 5 March 1998 as referred to in clause 5 of the Deed.

49    The first defendant agreed not to oppose the plaintiff’s intended distribution of the Fund and not to assist any other person, including HK, to oppose the distribution (cl. 7(a) & (b)). The first defendant also agreed to do whatever is necessary to assist the plaintiff in the proposed distribution (cl. 7(c)). The “intended” distribution is that referred to in clause 5 which is in accordance with Young J’s Orders of 5 March 1998.

50    Clause 10 acknowledges the plaintiff’s entitlement to prove the debt in relation to the Letter of Credit in the circumstances mentioned in that clause. I accept the plaintiff’s submission that it is inconceivable that the plaintiff could have this entitlement if the debt had in fact been extinguished. I am also satisfied that the existence of this entitlement in clause 10 is consistent with an intention that the debt would not be extinguished. The parties intended that the plaintiff would not enforce or sue for the debt but would be entitled to “sue” consistently with the terms of clause 10.

51    I am satisfied that the Deed should be construed as an agreement between the parties to settle the 1996 Proceedings on the basis that the first defendant was to pay $500,000 to the plaintiff in consideration of the plaintiff’s covenant not to sue and recover the Cross Claim debt from the first defendant.

52    There is reference in Recital F to the proposal by the first defendant to the plaintiff that the “disputes” between the parties “including the 1996 Proceedings” be settled. There is no doubt that the 1996 Proceedings were settled. The heading to clause 3 also refers to the “settlement of the 1998 Proceedings”. Clause 18 of the Deed also refers to the settlement of the 1998 Proceedings. Notwithstanding those references it is obvious that the 1998 Proceedings were to continue but that the disputes between the parties to the Deed were “settled” in that they would take no further active part in the proceedings, other than submitting to an order of the Court.

53    Comparison between the Releases in clause 12 and clause 13 highlights the qualified nature of clause 13 which refers back to clause 10. I am satisfied that such a qualification recognises that, notwithstanding the language of the clause in the use of the word “releases”, the debt continues to remain as a non-recoverable rather than an extinguished debt.

54    Clause 14 is also subject to the provisions of clause 5. This is yet a further recognition that the distribution, if any, to the first defendant will be made subject to Young J’s ruling on 5 March 1998, that is subject to the application of the Cherry v Boultbee equity.
55    It was submitted that if there is ambiguity in the Deed the correspondence (Ex. A) could be reviewed to settle such ambiguity. Young J also dealt with the question of whether interest applied to the money in the Fund. On one view, clause 5 could still have operation if the debt is extinguished and if one were to read the clause as meaning that the plaintiff would distribute the Fund with the application of interest in accordance with Young J’s findings. I am of the view that such a meaning is improbable, however I intend to review the correspondence in the light of the competing submissions as to the characterisation of the Deed.

56    The parties commenced their negotiations in late May 1999. There were some offers and counter offers which were evidenced in writing. By letter of 17 June 1999 from the plaintiff to the first defendant the plaintiff, in referring to the proposed settlement of the 1996 Proceedings, proposed that:

Equus will, for the purposes of the settlement of these proceedings, acknowledge the security document in dispute is in fact the Letter of Credit (dated 29 June 1990) as asserted by the trustee and that the amount of $4,064,995 is outstanding.
The trustee agrees not to enter judgment or to make any claim, demand, suit or similar judgment against Equus with respect to the amount outstanding under the Letter of Credit.

57    Part of the proposal was that the first defendant was to consent to the dissolution of the distribution injunction in order to enable the plaintiff to distribute the money in the Trust Fund. In respect of this matter the plaintiff noted that such begged the question as to how the plaintiff was to distribute the Fund and stated:

This is the issue at the heart of proceedings V140 of 1998 and accordingly settlement of proceedings V610 of 1996 must be conditional upon and interdependent with a satisfactory resolution and settlement of proceedings V140 of 1998.

58    Having referred to the plaintiff’s intention as to distribution of the Fund, with reference to Cherry v Boultbee, the plaintiff proposed that certain of the investors receive the full entitlement to the return of their investment in the Trust Fund and stated:

Such full amount can only be achieved either through Equus actually contributing the sum of $4,064,995 due under the Letter of Credit or allowing the trustee to distribute the Fund on the basis of a notional payment by Equus of that amount in accordance with the equity illustrated in Cherry v Boultbee.

59    On 16 August 1999 the first defendant responded to the plaintiff’s counter offer and proposals, debating the differing views about whether the equity in Cherry v Boultbee would apply. The first defendant’s letter stated:

A settlement with us would still leave the ‘Cash and Equus Paid Out Production Contractors’ to litigate with the clients represented by Wilmoth Field and Warne on the question of the proper distribution of the funds in accordance with the alleged equity expressed in Cherry v Boultbee. If the Court eventually determines that the equity in Cherry v Boultbee is not available to the ‘Cash and Equus Paid Out Production Contractors’ in priority to the Wilmoth Field and Warne clients, then the proposed settlement with Equuscorp can only increase the amount of any distribution that would be otherwise available to them and the other production contractors from the fund.

60    After further negotiation, some of which is contained in the correspondence in Exhibit A, the plaintiff wrote a further letter to the first defendant on 25 August 1999. In that letter the plaintiff proposed that the first defendant admit that upon the payment of $500,000 it owed $3,564,995 to the Trust with a further reference to the Cherry v Boultbee equity.

61    Although there is reference in the correspondence to the application of the Cherry v Boultbee equity, such reference is not in the Deed. The defendant submitted that if such application was intended, it would have been quite easy to include those words in the Deed. By use of the general reference to Young J’s Orders in clause 5 the parties, in my view, agreed that the whole of the Orders made by Young J, that is the application of the Cherry v Boultbee equity and interest, would be the basis upon which the plaintiff intended to distribute the Fund.

62    Although I am not satisfied there is an ambiguity which justifies resort to the correspondence, such review would support a finding that the parties intended that clause 5 was a reference to the first defendant’s acknowledgment and agreement that the plaintiff intended to distribute the Fund in accordance with the findings made by Young J in respect of the application of the Cherry v Boultbee equity.

63    The defendant submitted that the cases relied upon by the plaintiff involved a special rule of construction in relation to releases or covenants not to sue in circumstances of a joint obligation. It is submitted that the terms of the Deed are plain and from the Deed itself, from what is known about the commercial setting or matrix of facts in which the Deed was executed, the parties intended the release in paragraph 13 to relate to the obligations arising out of the Letter of Credit.

64    It is true that the cases upon which the plaintiff relied deal with joint obligations. However the observations made in those cases in relation to the construction of documents purporting to be releases can be used in aid of the construction of this Deed and the consequences where an assignee accepts the Deed is binding upon it. That is so particularly in the light of the defendant’s concession that it took the assignment subject to the equities.

65    I am satisfied that the terms of clause 4 do not amount to an extinguishment of the debt under the Letter of Credit. I am satisfied that it was intended that the admissions in clause 4 were for use in the 1998 Proceedings in conjunction with the first defendant’s agreement to cease any active involvement in that case, although remaining a party, and agreeing not to oppose the intended distribution of the Fund.

66    I am satisfied that the Deed should be construed as a covenant not to sue.

67    The next question is whether a covenant not to sue precludes the application of the Cherry v Boultbee equity. Reference has been made to Mr R. Derham’s learned text on Set-Off in which he devotes a chapter to the rule in Cherry v Boultbee (Ch. 10 at p 432). At p 439 Mr Derham states:

The distinction between a right of set-off and a right under Cherry v Boultbee may be illustrated by the different treatment accorded by each to the usual form of statute of limitation, which takes away the creditor’s right to enforce the debt owing to him but leaves the debt itself untouched. It is prerequisite to a set-off under the Statutes of Set-off that both demands be enforceable by action, though the fact that the liability to contribute is time-barred, and consequently unenforceable, does not affect the right to invoke Cherry v Boultbee . The administrator of the fund does not set up that liability as a form of cross-action. Rather he says that, although the claim is unenforceable, it is still a subsisting asset of the estate. Since the person claiming a share of the fund still holds an asset constituting a part of the fund, he should pay himself pro tanto out of that asset.

The fact that the time-bar meant recovery of the debt was not possible, the imposition of the equity was not precluded.

68    The defendant submitted that if the Court finds, as I have, that the Deed is to be construed as a covenant not to sue, the Cherry v Boultbee equity should not apply. It was submitted there is nothing unconscionable in the first defendant insisting on payment to it by the plaintiff in circumstances where the plaintiff contractually and for valuable consideration, has agreed not to pursue the first defendant for any moneys that it may have owed to the plaintiff. In this regard it was submitted that equity would look at substance rather than form and that in substance the Agreement simply does not trigger the equity.

69    I disagree. The plaintiff agreed not to sue and recover the debt in consideration of the payment of $500,000. That does not mean that it agreed that it would only take that amount into account on the distribution. If that were so there would be no sense and no necessity to agree that the Fund was to be distributed pursuant to the application of the Cherry v Boultbee equity because such application would be irrelevant if that had been the agreement.

70    For the parties to have agreed that the Fund would be distributed pursuant to the orders made by Young J is in my view very much a matter of substance to which equity will have regard. In this agreement the first defendant effectively acknowledged that it already had an asset of the Fund, the balance of the debt, in its hands and that the plaintiff would distribute the Fund on that basis.

71    The assignee, HK, cannot be in a better position than the first defendant from which it takes the assignment. The mere entry into the covenant not to sue in my view does not extinguish the equity: Re Hurburgh; National Executors and Trustees Co of Tasmania Ltd v Hurburgh [1959] Tas.S.R. 25 per Crawford J with whom Green J concurred at 40-42.

72    I am satisfied that the covenant not to sue does not prevent the application of the Cherry v Boultbee equity and that the plaintiff is entitled to distribute the Fund in accordance with the application of that equity.

Should the Plaintiff retire as Trustee?

73    Clause 21.02 of the Trust Deed provides relevantly that:

21.02 The trustee…further covenants that it will retire as trustee in relation to any particular Prospectus:
(h) if, at a duly convened Meeting of the relevant Production Contractors in relation to the Prospectus the Production Contractors by special resolution require the trustee to retire.

74    It is common ground that on 2 August 1999 a resolution was passed at a meeting which falls within the terms of clause 21.02(h).

75 The plaintiff claims that notwithstanding such resolution, clause 21.02(h) was not operative on the date on which the resolution was passed because its provisions conflicted with a covenant incorporated into the Trust Deed by s 1454 of the Corporations Law.

76 Section 1454 of the Corporations Law continues the applicability of the Corporations Law as it stood prior to 1 July 1998 to schemes, enterprises, contracts or arrangements for a period of a further two years unless the relevant undertaking becomes a registered scheme. It is common ground that there is no relevant, registered scheme.

77 Section 1069(5) of the Corporations Law provided that, where at the commencement of Part 7.12 of the Corporations Law, a Deed had been approved under a corresponding previous law, the Deed should, if it did not contain the covenants concerned, be deemed to contain covenants to the effect of the covenants required to be contained in the Deed under s. 1069(1), subject to certain exceptions which are not presently relevant. Section 1069(9) provided that:

If a regulation is made prescribing a covenant for the purposes of paragraph (1)(n) that a covenant shall except insofar as the regulations provide otherwise:
(a) be deemed to be contained in every approved deed that is in force when the regulation comes into force

78 There is no issue between the parties that the Trust Deed was approved under a corresponding previous law. Accordingly for the period that Part 7.12 was in force, and a further two years, the Trust Deed included covenants prescribed in the Regulations for the purposes of paragraph 1069(1)(n).

79    Clause 7.12.15(2) provided relevantly that:

For the purposes of paragraph 1069(1)(n) of the Corporations Law, each of the following covenants is prescribed to bind the trustee in relation to a scheme or the representative of the holders of prescribed interests:
(e) a covenant that the trustee or representative will retire from office at the request of the management company in any circumstance specified in sub-regulation (8).

80    Sub-regulation (8) provided:

For the purposes of paragraph (2)(e), each of the following circumstances is specified:
(d) if the holders of the value of 50% or more of prescribed interests resolve at a meeting that the trustee of those interests should be removed.

81    In order for the deemed covenant to apply 50% or more of prescribed interests were required to resolve that the Trustee should be removed. Although it is not conceded that this occurred, if it did, the obligation imposed on the Trustee was to retire “at the request of the management company”. No such request has to date been made by the management company.

82    I am not satisfied that the deemed covenant is inconsistent with the terms of the Deed. There is no inconsistency between a retirement at the request of a management company and the removal in the range of options provided in clause 21.02 of the Deed including pursuant to the circumstances outlined in cl. 21.02(h).

83    The plaintiff submitted that in any event, even if the deemed covenant does not apply, the Trustee is not in default of any obligation to retire pursuant to clause 21.02(h). It is submitted that the clause does not state when, after the passing of the resolution, the Trustee is to retire. In those circumstances in the absence of a time stipulation it is submitted that the Trustee’s obligations to retire could only be an obligation to retire within a reasonable time.

84    In assessing what is reasonable, reference has been made to clause 21.04 of the Deed which imposes an obligation on the plaintiff to vest the Trust’s assets in the new Trustee “on retirement” and to deliver to the new Trustee all books, documents, records and other property, the plaintiff is only absolved and released from all “further duties and obligations” in relation to the Trust upon the execution by the new Trustee of a Deed undertaking all of the obligations of the retiring Trustee (clause 21.05).

85    The plaintiff submitted that the clear intent of these clauses is that the Trustee shall, notwithstanding the passing of the resolution that it retire, retain possession of all the assets and continue to be under an obligation to perform all previous duties and obligations until such time as the new Trustee is appointed and executes the required Deed. Reliance in this regard was placed upon Head v Gould [1898] 2 Ch 250, in which Kekewich J said at p 268:

On retiring from the trust and passing on the trust estate to their successors - and this is whether they appoint those successors or merely assign the property to the nominees of those who have the power of appointment - they are acting as trustees and it is equally incumbent on them in this ultimate act of office to fulfil the duty imposed upon them as at any other time.

86    The defendant submitted that the Trust Deed contemplated and acknowledged the possibility of an hiatus between the retirement of the plaintiff and the appointment of a new Trustee. Clause 21.03 provides:

On the retirement of the Trustee under any of the foregoing provisions of this clause the manager shall within NINETY (90) days from the date of such retirement appoint in writing some other company approved by the Commission to be Trustee in relation to this Deed or in relation to the relevant Prospectus (whichever is applicable).

87    Clause 21.04 provides:

The Trustee shall on retirement vest or cause to be vested in the new Trustee all assets held by it as Trustee hereof in relation to this Deed or in relation to the relevant Prospectus (whichever is applicable) and shall deliver to the new Trustee all books, documents, records and other property whatsoever relating to the relevant Units, interests or other interests.

88    The Trust Deed on the one hand anticipates a contemporaneous occurrence of retirement and a new appointment (cl. 21.04 and cl. 21.05) and on the other a possible hiatus between retirement and appointment of a new trustee(cl.21.03).

89 On 4 November 1999 the Australian Rural Group (ARG) consented to being appointed as replacement trustee subject to the approval of ASIC and receipt of satisfactory indemnities and legal clearances. On 9 October 1999 ASIC advised that it “considered that it is not appropriate to grant a conditional approval to a proposed trustee”. It also advised that application pursuant to s.1067(3) of the Corporations Law should be lodged once the existing trustee “has been removed”.

90    ASIC’s approach has created difficulties because the plaintiff has refused to “retire” when the new trustee is not ready to have the trust vested in it. It claims that to retire in such circumstances would leave the Trust unadministered.

91 Section 1067 contemplates approval of the Deed and the trustee for the purpose of the Deed (s.1067(2)&(4)). ASIC has power to subject the approval to appropriate terms and conditions (s.1067(4)) and to revoke the approval for non-compliance with the terms or conditions (s.1067(5)).

92    It seems to me to be in the interests of all parties that the deadlock needs to be resolved in a manner that protects the interests of all parties. The Trustee must retire within a reasonable time. The reasonableness of the time has been lengthened because of the problem created by the refusal of ASIC to approve the new trustee until the Plaintiff retires.

93    It is understandable that a new trustee may be less willing to agree to appointment if the trust has been left unadministered for a period, even for a short period. It is also important that the unitholders are protected from exposure to legal liability if there is an hiatus. A new trustee is also entitled to appropriate indemnities that may not be able to be offered for the period of hiatus.

94    Clause 21.03 is a clause which focuses upon the Manager’s obligations as opposed to the plaintiff’s obligations. The plaintiff remains obliged to be true to its duties as trustee until it hands the trust over to the new trustee. The terms of clause 21.03 do not in my view relieve it from that obligation.

95 For ASIC to require the application for approval of the new trustee to be lodged after the trustee is removed is effectively requiring the trustee to abandon its obligations to the trust, under an approved Deed. This could not be intended. The broad powers given to ASIC pursuant to s.1067(5) can cure this deadlock. A condition for approval could be the appointment of the new trustee on the retirement of the trustee on a particular date, in the future, at which time the approved trustee can take over the reins.

96    It seems to me that ASIC has a responsibility to ensure that it does not stand in the way of trustees adhering to their obligations under approved deeds. Indeed the breadth of its powers reflect the recognition of such an approach. By appropriate and flexible use of those powers it can encourage adherence to obligations and make the transition from a retiring trustee to a new trustee effective, sensible and efficient.

97    In all the circumstances on a construction of the Trust Deed, the Trustee should retire when it is in a position to comply with its obligations pursuant to clauses 21.04 & 21.05 of the Trust Deed.

98    Counsel are to bring in Short Minutes of Order reflecting these findings including an agreed costs order. If the parties are unable to agree to a costs order I will hear argument when the Short Minutes are brought in.

*****************************

SCHEDULE

BACKGROUND
A. Equus has commenced proceedings No.VG610 of 1996 in the Federal Court of Australia against the Trustee (among others) (“the 1996 Proceedings”).
B. The Trustee has filed a Cross Claim against Equus in the 1996 Proceedings in which it claims against Equus the sum of $4,064,995.00 (“the Cross Claim”).
C. The Trustee commenced proceedings 2591 of 1997 in the NSW Supreme Court against Equus, which proceedings were cross vested to the Federal Court and given proceedings No. VG140 of 1998 (the NSW Supreme Court proceedings and the Federal Court proceedings being hereinafter referred to as “the 1998 Proceedings”).
D. Certain claims made in the 1996 Proceedings have been set down for trial in Melbourne commencing 13 September 1999 (“the Trial”).
E. Equus has expressed its intention to withdraw or discontinue the claims made against the Trustee in the Further Amended Statement of Claim in the 1996 Proceedings.
F. On 10 September 1999 the Trustee, Equus, Nick Russo, Katie Russo and Targridge (the “Parties”) entered into an Agreement (“the Agreement”) whereby:
1. Equus proposed to the Trustee that the disputes between the parties including the 1996 Proceedings be settled by the payment to the Trustee of the sum of $500,000.00 (“the Payment”), and otherwise on the terms contained in this Deed (being in identical terms to annexure “A” to the Agreement) on the basis that the Payment is greater than that which would be available to the Trustee if it attempted to enforce any judgment which it might obtain on its Cross Claim in proceedings VG610 of 1996; and
2. the Trustee agreed to consent to an adjournment of the Trial on the terms contained in the Agreement in order to give Equus an opportunity to obtain an independent chartered accountant’s report to attempt to satisfy the Trustee that the proposed settlement is the best reasonably available to the Trustee.
G. The Trustee has been provided with the independent chartered accountant’s report and is satisfied that the Payment on the terms and conditions contained in this Deed is an appropriate settlement of the 1996 Proceedings having regard to its duties as Trustee of the Trust Fund associated with investment in the production of the film “Night of the Leopard” (“the Trust Fund”).
H. Equus and the Trustee have agreed to settle the 1996 Proceedings on the terms and conditions contained in this Deed.
I. Nick Russo is a Director of Equus and Targridge.
J. Katie Russo is a Director of Equus and Targridge.
OPERATIVE PROVISIONS
THIS DEED witnesses that:
Settlement of the 1996 Proceedings
1. In consideration of the Trustee foregoing its right to sue and receive the sum of $4,064,995.00 from Equus, Equus authorises Middletons Moore & Bevins (“Middleton”) to release to the Trustee the sum of $500,000.00 currently held in the Middletons trust account (“the Payment”).
2. Subject to the provisions of this Deed:
(a) Equus agrees to discontinue the 1996 Proceedings against the Trustee as pleaded in the Further Amended Statement of Claim and the Trustee consents to the discontinuance of the proceedings.
(b) The Trustee agrees to discontinue the 1996 Proceedings as pleaded in the Cross Claim and Equus consents to the discontinuance on (sic) the proceedings.
(c) Each party is to bear its own costs with respect to the 1996 Proceedings.
Settlement of the 1998 Proceedings
3. With respect to the 1998 Proceedings and subject to the provisions of this Deed the parties agree that:
a) Equus will, upon execution of this Deed, pay to the Trustee $52,693.56 being the sum assessed by Mr Ian Dwyer, Cost Assessor of Laurence & Laurence, Solicitors, in full and final satisfaction of costs orders of the Supreme Court of NSW by Windeyer J on 13 November 1997 and Young J on 5 March 1998 in the 1998 Proceedings; and in all other respects the Trustee, Equus and Targridge agree that, as at the date of this Deed, costs incurred by the Trustee, Equus and Targridge lie where they fall;
(b) Each party to the 1998 Proceedings will otherwise pay its own costs of those proceedings incurred up to and including the date of this Deed;
(c) Equus and Targridge will remain as parties to the 1998 Proceedings but will take no further active part therein other than to submit formally to such order the Court sees fit to make; and
(d) Provided that Equus and Targridge observe the covenants on their part contained in sub-paragraph 3(c) the Trustee will make no claim against Equus or Targridge for any further costs in the 1998 Proceedings.
4. In consideration of the Trustee agreeing to accept the Payment as full and final settlement of all the Trustee’s claims against Equus, Equus makes the following admissions:
(a) the security provided by Equus Financial Services Pty Limited (now Equuscorp Pty Ltd) being a document entitled “Equus Financial Services Limited Irrevocable Standby Letter of Credit dated 29 June 1990”, and provided in relation to investment in the Prospectus for the film “Night of the Leopard”, is an irrevocable Letter of Credit;
(b) but for the terms of this Deed of Settlement and the payment of $500,000 to the Trustee,
(i) Equus would have been indebted to the Trust for the sum of $4,064,995.00; and
(ii) the Trustee is entitled to recover the sum of $4,064,995.00 from Equus for the benefit of the fund and on behalf of unitholders.
Distribution of the Fund
5. Equus acknowledges and agrees that the Trustee is able to deal with the payment of $500,000.00 as it thinks fit and acknowledges that it is the Trustee’s intention, upon payment of the $500,000.00, to distribute the Fund in accordance with the orders of Young J in the 1998 Proceedings made on 5 March 1998 and in accordance with such further orders as may be made in the 1998 Proceedings.
6. Equus agrees and consents without any order as to damages or costs:
(a) to the extinguishment of the injunction granted by
the Federal Court on 19 December 1997 preventing a distribution of the sum of $943,765.00 paid into the Fund by Equus;
(b) in so far as it might be required, and for the sake of certainty, to any necessary order of any Court to allow the distribution of the balance of the fund by the Trustee and if necessary Equus will give its consent to such an order;
(c) that it has no objection to the Trustee proceeding to distribute the entire Fund; and
(d) Equus agrees to provide to the Trustee a letter in the form of Annexure B to this Deed which is to be tendered for the purposes of satisfying a Court as to the matters contained in this clause.
7. Equus, Nick Russo and Katie Russo agree, with respect to the Trustee’s proposed distribution of the fund as referred to in clause 5:
(a) that they and each of them undertake and warrant that none of them, nor any other corporation that is a related entity to Equus or of which Nick Russo or Katie Russo (together or either of them individually) is or are directors, will oppose in any manner whatsoever the said proposed distribution by the Trustee of the Fund:
(b) that they and each of them undertake and warrant that none of them will assist:
(i) H K Capital;
(ii) Roydon Luff;
(iii) Rosemary Luff;
(iv) Alan Herskope;
(v) Tom Linardos;
(vi) Wilmoth Field & Warne,
or any other person or corporation that takes a position that is in opposition to the Trustee’s said proposed distribution of the Fund;
(c) that they and each of them undertake and warrant that each and all of them will do whatever is reasonably necessary to assist the Trustee in its said proposed distribution of the fund including the signing of any documents; and
(d) that they and each of them and any other corporation that is a related entity to Equus or of which Nick Russo or Katie Russo (together or either of them individually) is or are directors, will not take any objection to the Trustee’s standing to bring any legal proceedings on behalf of unitholders in connection with the fund.
8. Nick Russo acknowledges that he has warranted on his own behalf and on behalf of Equus and Targridge to the Trustee that Targridge is a bare trustee on behalf of HK Capital of 60 units in the Fund.
9. Targridge agrees that insofar as Targridge’s obligations do not conflict with its position as trustee, Targridge agrees to the undertakings set out in this Deed at paragraph 7 as though those undertakings and warranties also applied to it.
Default Provisions
10. If:
(a) a liquidator or other administrator in insolvency is
appointed to Equus, or a trustee in bankruptcy is appointed to the estate of Carol Russo; and
(b) such liquidator or administrator in insolvency or trustee in bankruptcy is entitled to recover part or all of the Payment from the Trustee, whether pursuant to the provisions of Part 5.7B of the Corporations Law, or Part VI Division 3 of the Bankruptcy Act 1966, or on any other basis
then the following provisions shall apply:
(i) the Trustee will be entitled to prove in any
winding up, Deed of Company Arrangement, or other administration, composition or arrangement of Equus, for the whole of the amount of the Letter of Credit, being the sum of $4,064,995.00;
(ii) in addition to the right of the Trustee reserved in
(i), Nick Russo and Katie Russo shall jointly and severally indemnify the Trustee in respect of the amount of the Payment which the Trustee is liable to repay as referred to in (b) and shall pay such amount to the Trustee or at its direction forthwith on request.
Warranties
11. Equus, Nick Russo and Katie Russo jointly and severally warrant that Equus:
(a) is not subject to current winding up proceedings:

(b) can pay its debts as and when they fall due; and

(c) has not been served, and thereafter failed to comply, with a Creditor’s Statutory Demand for Payment under section 459E of the Corporations Law.
Releases
12. Each of Equus, Nick Russo, Katie Russo and Targridge (except where Targridge owes a lawful duty as bare Trustee of 60 units held for and on behalf of HK Capital Limited) releases the Trustee (both in its capacity as Trustee and in its personal capacity) from all actions, claims, demands and liabilities arising out of the matters that are the subject of the 1996 Proceedings or the 1998 Proceedings or arising otherwise out of the Trustee’s conduct with respect to the administration of the Trust Fund.
13. Except as otherwise provided in clause 10 the Trustee releases Equus from any further obligations or claims with respect to the Equus Letter of Credit.
Acknowledgment
14. Subject to the provisions of Clause 5, the Trustee acknowledges that it will distribute such of the Trust Fund (if any) to Equus as the holder of 5 units in the Trust and to Targridge as holder of 60 units as bare trustee for HK Capital as the Trustee may be required to at law and nothing in this Deed shall be construed as a waiver by Equus or Targridge to their entitlement to funds from the Trust Fund.

Confidentiality
15. Except as otherwise provided by this clause and any other clause of this Deed, the terms of the Deed are to remain private and confidential between the parties and their officers, employees and advisors subject to:
(a) the fiduciary and legal duties of the Trustee including the need as and when the Trustee seems fit to communicate with Kamisha and any reporting requirements that flow therefrom; and
(b) the Trustee’s obligation to disclose to its insurers.
16. The terms of settlement contained in clauses 2, 3, 4, 5 6 19, and 20 are not confidential. The terms may be disclosed by the Trustee if necessary for any reason whatsoever in the discharge by the Trustee of its fiduciary and legal duties.
17. In the event of:
(a) the appointment of a liquidator or administrator to Equus; or
(b) the bankruptcy of Carol Russo,
and the Trustee needs to rely upon the terms of this Agreement for the any purpose associated with paragraphs (a) and (b) above, the parties agree that the Trustee will be entitled to disclose as much of this Agreement as is necessary for those purposes.
Trustee’s Right to Costs
18. Nothing in this Deed, or the settlement of the 1996 Proceedings or the settlement of the 1998 Proceedings, derogates in any way from the Trustee’s right to indemnify itself and otherwise rely upon the trust deed, associated with the Trust Fund, with respect to its costs.
General Provisions
19. Interpretation
In this Deed unless the context requires otherwise;

(a) the singular includes the plural and vice versa;
(b) headings are used for convenience only and do not affect the interpretation of this Deed;
(c) the word “person” includes” a natural person and any body or entity whether incorporated or not.
20. Nature of Obligations
Any provision in this Deed which binds more than one person binds all of those persons jointly and each of them individually.
Each obligation imposed on a party by this Deed in favour of another is a separate obligation.
21. Entire Deed
This Deed contains the entire understanding between the parties concerning the subject of the Deed and supersedes all prior communications between the parties.
Each party acknowledges that, except as expressly stated in this Deed, that party has not relied on any representation, warranty or undertaking of any kind made by or on behalf of the other party in relation to the subject matter of this Deed.
22. Severability
If any provision of this Deed is or becomes wholly or partly invalid or unenforceable then, from the date of the invalidity or unenforceability:
(b) if the offending provision can be read down to make it valid and enforceable without materially changing its effect, it must be read down to the extent necessary to achieve that result; and
(b) otherwise; the offending provision must be severed from this Deed and the remaining provisions will operate as if the severed provision had not been included.
23. Successors and Assigns
This Deed binds and benefits the parties and their respective successors and permitted assigns.
24. Costs
Each party will bear its own costs of and incidental to this Deed. Nothing in this clause shall effect any rights created by clauses 2, 3, 6 and 19.
25. Counterparts
If this Deed consists of a number of counterparts, each is an original and all of the counterparts together constitute the same document.
…..
28. Governing Law and Jurisdiction
This Deed is governed by and must be construed in accordance with the laws of the State of New South Wales. The parties submit to the non-exclusive jurisdiction of the Courts of that State and the Commonwealth of Australia in respect of all matters or things arising out of this Deed.

*****************************

Last Modified: 12/07/2000