Plan B Trustees Ltd v Parker [No 2]
[2013] WASC 216
•30 MAY 2013
PLAN B TRUSTEES LIMITED -v- PARKER [No 2] [2013] WASC 216
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2013] WASC 216 | |
| Case No: | CIV:1494/2012 | 28, 29 NOVEMBER 2012 & 8 MAY 2013 | |
| Coram: | EDELMAN J | 30/05/13 | |
| 66 | Judgment Part: | 1 of 1 | |
| Result: | Directions given | ||
| B | |||
| PDF Version |
| Parties: | PLAN B TRUSTEES LIMITED as trustee for MARTU IDJA BANYJIMA CHARITABLE TRUST MAITLAND PARKER as personal representative of the beneficiaries of MARTU IDJA BANYJIMA CHARITABLE TRUST ATTORNEY GENERAL FOR WESTERN AUSTRALIA BHP BILLITON IRON ORE PTY LTD |
Catchwords: | Trusts and trustees Directions under s 92 of Trustees Act 1962 (WA) Directions sought that trustee is justified in not commencing various legal proceedings Factors relevant to whether the directions should be given Circumstances when a trustee seeking directions should provide a legal opinion from counsel Directions given |
Legislation: | Magistrates Court (Civil Proceedings) Act 2004 (WA) Trustees Act 1962 (WA) |
Case References: | Andrews v M'Guffog (1886) 11 App Cas 313 Application of Gnitekram Marketing Pty Limited [2010] NSWSC 1328 Application of Macedonian Orthodox Community Church St Petka Inc (No 3) [2006] NSWSC 1247 Application of Perpetual Trustee Company Ltd [2003] NSWSC 1185 Armitage v Nurse [1998] Ch 245 Attorney General v Corporation of Exeter (1826) 2 Russ 45 Attorney General v The Governors of the Sherborne Grammar School (1854) 18 Beav 256, 280; (1854) 52 ER 101 Barlow Clowes International Ltd (in liq) & Ors v Vaughan [1992] 4 All ER 22 Barnes v Addy (1874) LR 9 Ch App 244 Bartlett v Barclays Trust Co Ltd (No 2) [1980] 1 Ch 539 Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 Citibank NA v QVT Financial LP [2007] EWCA 11 Clephane v Lord Provost of Edinburgh (1869) LR 1 HL Sc 417 Commissioner of Taxation of the Commonwealth of Australia v Word Investments Ltd [2008] HCA 55; (2008) 236 CLR 204 Dingle v Turner [1972] AC 601 Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 286 ALR 12; (2012) 86 ALJR 296 FAI General Insurance v Australian Hospital Care (1999) 153 FLR 448 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 Guinness v Saunders [1990] 2 AC 663 Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2012] WASCA 16 HIH Casualty and General Insurance Australia Ltd v DellaVedova [1999] FCA 456; (1999) 10 ANZ Ins Cas 61-431 In re Freeston's Charity [1978] 1 WLR 120 Landsdale Pty Ltd v Moore [2009] WASCA 176 Langsam v Beachcroft LLP & Ors [2012] EWCA Civ 1230 Langsam v Beachcroft LLP [2011] EWHC 1451 (Ch) Latimer v Commissioner of Inland Revenue [2002] 3 NZLR 195 Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar, the Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand & Anor [2006] NSWCA 160; (2006) 66 NSWLR 112 Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66 Magill v Magill [2006] HCA 51; (2006) 226 CLR 551 Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449 Marley v Mutual Security Merchant Bank [1991] 3 All ER 198 Mayfair Trading Co Pty Ltd v Dreyer [1958] HCA 55; (1958) 101 CLR 428 Miller v Miller [2011] HCA 9; (2011) 242 CLR 446 Mischel v Mischel Holdings Pty Ltd (in liq) (No 2) [2012] VSC 421 Mohamed v Alaga & Co (A firm) [1999] EWCA Civ 3037; [2000] 1 WLR 1815 Nocton v Lord Ashburton [1914] AC 932 Partington v Reynolds (1858) 4 Drew 253 Permanent Trustee Australia Ltd v FAI General Insurance (1998) 153 ALR 529 Plan B Trustees Ltd v Maitland Parker [2012] WASC 392 Radmanovich v Nedeljkovic [2001] NSWSC 492; (2001) 52 NSWLR 641 Re Atkinson [1971] VR 612 Re Beddoe Downes v Cottam [1893] 1 Ch 547 Re Estate of Anastasios Keriacules Challis (Dec) [2010] WASC 333 Re Leek [1969] 1 Ch 563 Re Lemon Tree Passage and Districts RSL and Citizens Club (1987) 11 ACLR 796 Russell-Cooke Trust Company v Prentis [2003] 2 All ER 478 Shire of Derby-West Kimberley v Yungngora Association Inc [2007] WASCA 233 Shire of Derby-West Kimberley v Yungngora Association Inc [2007] WASCA 233; (2007) 157 LGERA 238 Spence v Crawford [1939] 3 All ER 271 State Government Insurance Office (Qld) v Brisbane Stevedoring Pty Ltd [1969] HCA 59; (1969) 123 CLR 228 Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1 Vacuum Oil Co Pty Ltd v Wiltshire [1945] HCA 37; (1945) 72 CLR 319 Welker & Ors v Rinehart (No 2) [2011] NSWSC 1238 Western Australia v Ward [2002] HCA 28; (2002) 213 CLR 1 Wilden v Green [2009] WASCA 38; (2009) 38 WAR 429 Yanner v Eaton [1999] HCA 53; (1999) 201 CLR 351 Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15; (2003) 212 CLR 484 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- as trustee for MARTU IDJA BANYJIMA CHARITABLE TRUST
Plaintiff
AND
MAITLAND PARKER
as personal representative of the beneficiaries of MARTU IDJA BANYJIMA CHARITABLE TRUST
First Defendant
ATTORNEY GENERAL FOR WESTERN AUSTRALIA
Second Defendant
BHP BILLITON IRON ORE PTY LTD
Third Defendant
Catchwords:
Trusts and trustees - Directions under s 92 of Trustees Act 1962 (WA) - Directions sought that trustee is justified in not commencing various legal proceedings - Factors relevant to whether the directions should be given - Circumstances when a trustee seeking directions should provide a legal opinion from counsel - Directions given
Legislation:
Magistrates Court (Civil Proceedings) Act 2004 (WA)
Trustees Act 1962 (WA)
Result:
Directions given
Category: B
Representation:
Counsel:
Plaintiff : Mr M D Howard SC & Mr A Sharpe (8 May 2013) Mr Salvo (28 & 29 November 2012)
First Defendant : Mr S Glacken SC & Mr G D Cobby (28 & 29 November 2012) & Mr S Glacken SC (8 May 2013)
Second Defendant : Ms M J Elliott (28 & 29 November 2012, 8 May 2013)
Third Defendant : Mr S K Dharmananda SC & Mr S C M Wong (28 & 29 November 2012, 8 May 2013)
Solicitors:
Plaintiff : Allens
First Defendant : Roe Legal Services
Second Defendant : State Solicitor for Western Australia
Third Defendant : Ashurst Australia
Text(s) referred to in judgment(s):
P Birks, 'Restitution Without Counter-Restitution' [1990] LMCLQ 330
P Birks, Unjust Enrichment (2nd ed , 2005)
C Mitchell and S Watterson, Subrogation: Law and Practice (2007)
Case(s) referred to in judgment(s):
Andrews v M'Guffog (1886) 11 App Cas 313
Application of Gnitekram Marketing Pty Limited [2010] NSWSC 1328
Application of Macedonian Orthodox Community Church St Petka Inc (No 3) [2006] NSWSC 1247
Application of Perpetual Trustee Company Ltd [2003] NSWSC 1185
Armitage v Nurse [1998] Ch 245
Attorney General v Corporation of Exeter (1826) 2 Russ 45
Attorney General v The Governors of the Sherborne Grammar School (1854) 18 Beav 256, 280; (1854) 52 ER 101
Barlow Clowes International Ltd (in liq) & Ors v Vaughan [1992] 4 All ER 22
Barnes v Addy (1874) LR 9 Ch App 244
Bartlett v Barclays Trust Co Ltd (No 2) [1980] 1 Ch 539
Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253
Citibank NA v QVT Financial LP [2007] EWCA 11
Clephane v Lord Provost of Edinburgh (1869) LR 1 HL Sc 417
Commissioner of Taxation of the Commonwealth of Australia v Word Investments Ltd [2008] HCA 55; (2008) 236 CLR 204
Dingle v Turner [1972] AC 601
Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 286 ALR 12; (2012) 86 ALJR 296
FAI General Insurance v Australian Hospital Care (1999) 153 FLR 448
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89
Guinness v Saunders [1990] 2 AC 663
Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2012] WASCA 16
HIH Casualty and General Insurance Australia Ltd v DellaVedova [1999] FCA 456; (1999) 10 ANZ Ins Cas 61-431
In re Freeston's Charity [1978] 1 WLR 120
Landsdale Pty Ltd v Moore [2009] WASCA 176
Langsam v Beachcroft LLP & Ors [2012] EWCA Civ 1230
Langsam v Beachcroft LLP [2011] EWHC 1451 (Ch)
Latimer v Commissioner of Inland Revenue [2002] 3 NZLR 195
Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar, the Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand & Anor [2006] NSWCA 160; (2006) 66 NSWLR 112
Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66
Magill v Magill [2006] HCA 51; (2006) 226 CLR 551
Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449
Marley v Mutual Security Merchant Bank [1991] 3 All ER 198
Mayfair Trading Co Pty Ltd v Dreyer [1958] HCA 55; (1958) 101 CLR 428
Miller v Miller [2011] HCA 9; (2011) 242 CLR 446
Mischel v Mischel Holdings Pty Ltd (in liq) (No 2) [2012] VSC 421
Mohamed v Alaga & Co (A firm) [1999] EWCA Civ 3037; [2000] 1 WLR 1815
Nocton v Lord Ashburton [1914] AC 932
Partington v Reynolds (1858) 4 Drew 253
Permanent Trustee Australia Ltd v FAI General Insurance (1998) 153 ALR 529
Plan B Trustees Ltd v Maitland Parker [2012] WASC 392
Radmanovich v Nedeljkovic [2001] NSWSC 492; (2001) 52 NSWLR 641
Re Atkinson [1971] VR 612
Re Beddoe Downes v Cottam [1893] 1 Ch 547
Re Estate of Anastasios Keriacules Challis (Dec) [2010] WASC 333
Re Leek [1969] 1 Ch 563
Re Lemon Tree Passage and Districts RSL and Citizens Club (1987) 11 ACLR 796
Russell-Cooke Trust Company v Prentis [2003] 2 All ER 478
Shire of Derby-West Kimberley v Yungngora Association Inc [2007] WASCA 233
Shire of Derby-West Kimberley v Yungngora Association Inc [2007] WASCA 233; (2007) 157 LGERA 238
Spence v Crawford [1939] 3 All ER 271
State Government Insurance Office (Qld) v Brisbane Stevedoring Pty Ltd [1969] HCA 59; (1969) 123 CLR 228
Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1
Vacuum Oil Co Pty Ltd v Wiltshire [1945] HCA 37; (1945) 72 CLR 319
Welker & Ors v Rinehart (No 2) [2011] NSWSC 1238
Western Australia v Ward [2002] HCA 28; (2002) 213 CLR 1
Wilden v Green [2009] WASCA 38; (2009) 38 WAR 429
Yanner v Eaton [1999] HCA 53; (1999) 201 CLR 351
Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15; (2003) 212 CLR 484
Contents
HYPERLINK \l "_Toc357766649" Introduction PAGEREF _Toc357766649 \h 3
HYPERLINK \l "_Toc357766650" The preliminary issue PAGEREF _Toc357766650 \h 3
HYPERLINK \l "_Toc357766651" The three categories of direction sought PAGEREF _Toc357766651 \h 3
- HYPERLINK \l "_Toc357766652" The payments to Christensen Vaughan PAGEREF _Toc357766652 \h 3
HYPERLINK \l "_Toc357766653" The payments to individuals PAGEREF _Toc357766653 \h 3
HYPERLINK \l "_Toc357766654" The payments to Kingsworld PAGEREF _Toc357766654 \h 3
HYPERLINK \l "_Toc357766656" Matters relevant to directions concerning justification of legal action PAGEREF _Toc357766656 \h 3
HYPERLINK \l "_Toc357766657" (1) Directions concerning the payments to Christensen Vaughan PAGEREF _Toc357766657 \h 3
- HYPERLINK \l "_Toc357766658" The issue PAGEREF _Toc357766658 \h 3
HYPERLINK \l "_Toc357766659" The evidence PAGEREF _Toc357766659 \h 3
- HYPERLINK \l "_Toc357766660" (i) File number 20070215 (native title claim) PAGEREF _Toc357766660 \h 3
HYPERLINK \l "_Toc357766661" (ii) File number 20070318 (Warden's Court objections to Hammersley Exploration lease application) PAGEREF _Toc357766661 \h 3
HYPERLINK \l "_Toc357766662" (iii) File number 20050605 (Chichester Regrade) PAGEREF _Toc357766662 \h 3
HYPERLINK \l "_Toc357766663" (iv) File number 20070314 (Marandoo Appeal) PAGEREF _Toc357766663 \h 3
HYPERLINK \l "_Toc357766664" (v) File number 20050487 (Warden's Court objections to BHPBIO lease applications) PAGEREF _Toc357766664 \h 3
HYPERLINK \l "_Toc357766665" (vi) File number 20070028 (Brockman agreements) PAGEREF _Toc357766665 \h 3
HYPERLINK \l "_Toc357766666" (vii) File number 20050509 (Heritage Agreement) PAGEREF _Toc357766666 \h 3
- HYPERLINK \l "_Toc357766668" (i) The potential cost of bringing an action PAGEREF _Toc357766668 \h 3
HYPERLINK \l "_Toc357766669" (ii) Conditions upon recovery or possible set-off or counterclaim PAGEREF _Toc357766669 \h 3
HYPERLINK \l "_Toc357766670" (iii) Obstacles to success of a claim for restoration of all funds paid PAGEREF _Toc357766670 \h 3
HYPERLINK \l "_Toc357766671" (iv) Obstacles to claims for restoration of funds paid in breach of ceiling limits PAGEREF _Toc357766671 \h 3
HYPERLINK \l "_Toc357766672" (iv) Obstacles to a claim for restoration of particular funds PAGEREF _Toc357766672 \h 3
- HYPERLINK \l "_Toc357766675" The reason why abstaining from legal action against individuals is justified PAGEREF _Toc357766675 \h 3
HYPERLINK \l "_Toc357766676" Conclusion in relation to the directions concerning the individuals PAGEREF _Toc357766676 \h 3
- HYPERLINK \l "_Toc357766678" The nature of an action against Kingsworld PAGEREF _Toc357766678 \h 3
HYPERLINK \l "_Toc357766679" The assets of Kingsworld PAGEREF _Toc357766679 \h 3
HYPERLINK \l "_Toc357766680" Obstacles to recovery from Kingsworld's insurance PAGEREF _Toc357766680 \h 3
- HYPERLINK \l "_Toc357766681" (i) The extent to which the relevant policies apply PAGEREF _Toc357766681 \h 3
HYPERLINK \l "_Toc357766682" (ii) Possible obstacles to establishing prima facie liability of Kingsworld PAGEREF _Toc357766682 \h 3
HYPERLINK \l "_Toc357766683" (iii) Exclusion of liability in the MIB Trust Deed PAGEREF _Toc357766683 \h 3
HYPERLINK \l "_Toc357766684" (iv) Indemnification from the MIB Trust Fund PAGEREF _Toc357766684 \h 3
HYPERLINK \l "_Toc357766686" Conclusion in relation to directions concerning Kingsworld PAGEREF _Toc357766686 \h 3
HYPERLINK \l "_Toc357766688" Schedule A: Payments made to Christensen Vaughan Lawyers in respect of legal fees PAGEREF _Toc357766688 \h 3
HYPERLINK \l "_Toc357766689" Schedule B: Trust payments made to individuals PAGEREF _Toc357766689 \h 3
EDELMAN J:
Introduction
1 This application for directions is associated with separate litigation for which a trial is pending. The separate, but related, litigation to this application concerns income which the Martu Idja Banyjima Charitable Trust (the MIB Trust) derives from BHP Billiton Iron Ore Pty Ltd (BHPBIO).
2 BHPBIO entered into an agreement with the Martu Idja Banyjima People (MIB People) under which BHPBIO promised to make compensation payments. But, on 28 April 2009, BHPBIO suspended payments under the agreement. BHPBIO alleges that a 'Suspension Event' occurred under the agreement for reasons including the following: (i) that the trustee of the MIB Trust (since replaced) failed to provide BHPBIO with an audit report which confirmed various matters of compliance by the MIB Trust; (ii) that the audit report did not comply with the MIB Trust Deed; and (iii) that payments of trust funds were made in breach of trust. At 23 March 2012, the total of compensation payments suspended by BHPBIO was around $61 million.1
3 BHPBIO commissioned investigations into the affairs of the MIB Trust by Ernst & Young. The Ernst & Young reports identified issues which indicated that payments made by the former trustee might have been in breach of the terms of the MIB Trust.
4 This application precedes the litigation about the Suspension Event because it concerns directions sought by Plan B Trustees Ltd that it would be justified in not commencing legal proceedings in respect of three categories of payment from the MIB Trust.
5 This application was properly brought. The amount of money involved was substantial. Payments made by the former trustee from the MIB Trust in the relevant period involved almost $14 million. In relation to these issues, however, the financial cost and time spent by Plan B Trustees has also been substantial. The evidence over the two parts of this directions hearing was voluminous. The cost to the MIB Trust of investigation and attempted remediation of possible breaches of trust may run to more than $3 million.2 The evidence from one of the managers of Plan B Trustees was that approximately 90% of Plan B Trustees' time has been spent in relation to matters concerning these directions and the past administration of the MIB Trust.3
6 In each category of payment it is appropriate to make the directions sought. The submissions from all parties, including those relating to disputed matters, were of enormous assistance. A reason which is heavily influential in each category is the potential for any judgment amount to be exceeded by irrecoverable costs of proceedings.
The preliminary issue
7 A preliminary issue was determined prior to this trial.4 I concluded that this Court has jurisdiction to make the directions sought if it is appropriate to do so. Orders concerning whether legal proceedings are, or are not, justified are within the Court's jurisdiction under s 92 of the Trustees Act 1962 (WA). In cases of doubt, 'the proper course for a ... trustee to adopt is to seek the court's decision as to whether or not action should be brought, otherwise the representative or trustee might find itself paying the costs of any proceedings which a court might subsequently say were not "properly incurred"'.5
The three categories of direction sought
8 The directions sought by Plan B Trustees, as amended, relied only upon s 92 of the Trustees Act 1962 (WA). There were three directions sought which are summarised below.
The payments to Christensen Vaughan
9 Plan B Trustees is justified in not taking legal proceedings to recover payments made to Christensen Vaughan Lawyers in respect of legal fees identified in Schedule A to these reasons.
10 Paragraphs [54] to [162] below involve consideration of directions in relation to this issue.
The payments to individuals
11 Plan B Trustees is justified in not taking legal proceedings to recover, and justified in not making any further enquiries concerning, any of the trust payments made as identified in Schedule B to these reasons, as the estimated costs of making further enquiries or taking legal proceedings mean that such enquiries or proceedings would not be in the best interests of the MIB Trust. This is the case whether or not those moneys were properly paid for a 'Charitable Object' within the meaning of the MIB Trust Deed.
12 Paragraphs [163] to [178] below involve consideration of directions in relation to this issue.
The payments to Kingsworld
13 Plan B Trustees is justified in not bringing legal proceedings against Kingsworld Pty Ltd, the former trustee of the MIB Trust, to recover trust property or seek equitable compensation in respect of possible breaches of the Deed and fiduciary obligations while it was a trustee and justified in not making any further enquiries or investigations concerning possible causes of action it might have against Kingsworld.
14 Paragraphs [179] to [242] below involve consideration of directions in relation to this issue.
15 A matter fundamental to the reasons which follow is that there is a 'radical difference' between: (i) deciding 'whether it would be proper for a trustee to [prosecute] proceedings instituted about the trust'; and (ii) 'deciding the issues that are to be agitated in the principal proceeding. The two steps are not to be elided. In particular, the judicial advice proceedings are not to be treated as a trial of the issues that are to be agitated in the principal proceedings'.6
16 The defendants to this summons for directions are (i) Mr Parker as representative of the beneficiaries of the MIB Trust, (ii) the Attorney General for Western Australia, and (iii) BHPBIO, which is a party to the agreement by which trust funds were obtained.
17 The Attorney General and Mr Parker support the orders sought by Plan B Trustees. BHPBIO initially submitted that the Court can make some, but not all, of the orders sought by Plan B Trustees. As the hearing progressed, and as the submissions of the other parties and the formulation of the directions sought became more refined, various matters of opposition raised by BHPBIO became less significant.
Background
18 The first defendant, Mr Parker, is one of the MIB People and a beneficiary under the MIB Trust Deed.7
19 The individual members of the MIB People from time to time are members of the MIB Claim Group which is involved in the bringing of a native title claim under the Native Title Act 1993 (Cth) (the MIB Claim).8 On 3 June 2011, the MIB Claim was consolidated with another claim to form the Banjima Claim.9
20 On 12 December 2000, the third defendant (BHPBIO) entered into a project development agreement (the PDA) with Winston Parker, Wobby Parker and Maitland Parker in their capacities as applicant and registered native title claimant in the MIB Claim. The PDA was varied in December 2001.10
21 On 17 February 2005, the MIB Trust was established by a deed of settlement. The MIB Trust Deed was executed pursuant to the PDA. The trustee under the deed of settlement was Kingsworld Pty Ltd.11
22 On 28 April 2009, BHPBIO notified the applicant and the MIB Claim Group of the MIB Claim that BHPBIO was suspending payments under cl 7.2 and cl 7.3 of the PDA.12 BHPBIO relied upon the failure by Kingsworld to provide BHPBIO with an independent qualified auditor’s audit report that confirmed various matters of compliance with cl 8.3(c) of the PDA as a 'Suspension Event' under cl 9.1(e)(vi), (ix) and (vii) of the PDA. As at 23 March 2012, the total compensation payments suspended by BHPBIO was around $61 million.13
23 BHPBIO instructed accountants, Ernst & Young, to report on Kingsworld's administration of the MIB Trust during the financial years ending 30 June 2008, 30 June 2009 and 30 June 2010.14
24 On 21 May 2009, Kingsworld's independent auditors provided a report to Kingsworld. The report qualified previous audits.15 The auditors' qualifications and concerns are considered in more detail below.
25 On 3 August 2009, BHPBIO sent a letter to Kingsworld enclosing an 'interim investigation factual findings' report from Ernst & Young.16 The interim report identified six 'key areas of concern'.17 It also expressed concerns about breaches of the MIB Trust Deed threshold limits and indicated general agreement with the qualifications in the 21 May 2009 report from Kingsworld's independent auditors.
26 Kingsworld responded to that preliminary report in February 2010 and June 2010.18
27 Ernst & Young produced final reports on 15 September 2010 and 22 December 2010.19 The final reports were for the financial years ended 30 June 2008 and 30 June 2009. The Ernst & Young reports suggested that breaches of trust may have occurred during the financial years ended June 2008, June 2009 and June 2010.20
28 During the financial years ending 2008 and 2009, Kingsworld made payments to entities from the MIB Trust, which included the following:
(i) Payments to Christensen Vaughan Lawyers in relation to invoices issued by Christensen Vaughan Lawyers for legal fees and disbursements.21 These payments include those set out in Schedule A to these reasons.
(ii) Payments to members of the Claim Group and other individuals, who received payments of up to $20,000 in trust funds.22 These payments are set out in Schedule B to these reasons.
29 On 27 April 2011, Plan B Trustees became the trustee for the MIB Trust.23
30 Since becoming trustee, approximately 90% of Plan B Trustees' time has been spent in relation to matters concerning these directions and the past administration of the MIB Trust.24 Plan B Trustees has conducted substantial preliminary investigations into each of the payment types (i) and (ii) above, as well as the financial position of Kingsworld, and prospects of recovery from it.
31 In two affidavits sworn on behalf of Plan B Trustees, Mr Satie describes preliminary investigations that Plan B Trustees has undertaken in relation to these payments.25 Those affidavits describe the following steps taken.
32 Plan B Trustees analysed the conclusions in the 2008 and 2009 Ernst & Young reports.
33 Plan B Trustees conducted a cost/benefit analysis of: (i) the cost to the MIB Trust of bringing legal action; (ii) the amount of money arguably disbursed in breach of trust; and (iii) the likely prospects of success for Plan B in bringing the action.
34 Plan B Trustees instructed McGrathNicol to conduct a forensic investigation. The 15 March 2012 preliminary analysis of the 2008, 2009, and 2010 payments by McGrathNicol was exhibited to Mr Satie's affidavit.26 A final report from McGrathNicol was provided on 7 June 2012.27
35 The investigations by Plan B revealed that a range of payments was madefrom the MIB Trust by Kingsworld for fees and costs associated with the assertion or defence of the land rights of the MIB People. The total trust funds paid for the purpose of the pursuit or protection of native title rights was approximately $1,591,380. Of that sum, legal fees associated with the assertion or defence of the land rights of the MIB People comprised approximately $550,039.40. Those fees were largely paid to Christensen Vaughan Lawyers, Gadens Lawyers and senior counsel.
36 The payments made from the MIB Trust during the financial years ended 2008, 2009 and 2010 totalled $15,030,348. In addition, during the financial years ended 2008, 2009 and 2010 the total payments made from the MIB Trust of amounts of $20,000 and more was $13,411,240.28
Matters relevant to directions concerning justification of legal action
37 There are numerous considerations relevant to the giving of directions that concern whether litigation is, or is not, justified.29 The overlapping considerations include the following:
(i) the prospects of success;
(ii) the known means of the other party to satisfy any judgment;
(iii) the potential for the litigation to deplete the trust estate;
(iv) the costs should the application be unsuccessful, and whether those costs are proportionate to the issues and to the significance of the case;
(v) the irrecoverable costs even if the application is successful;
(vi) the nature of the case and issues raised and what will be gained if the action is to succeed; and
(vii) any public interest factors in the case of a charitable trust.
39 When directions are sought concerning the justification for legal action the Court will usually have before it a legal opinion on the prospects of success. In this case, no legal opinion was provided in relation to the payments to individuals and payments to Christensen Vaughan. Submissions were made concerning the absence of this opinion. Prior to the second part of the hearing concerning the directions in relation to Kingsworld, a legal opinion was provided to the Court concerning an action against Kingsworld. Parts of that legal opinion were redacted and were not provided to the other parties.
40 It is necessary to explain the relevance of legal opinions, or the absence of them, in relation to the payments to individuals and to Christensen Vaughan, and the role of the legal opinion which was provided.
41 In Re Lemon Tree Passage and Districts RSL and Citizens Club,31 Young J considered an application by a liquidator for directions concerning whether proceedings should be commenced. His Honour considered that cases involving directions to trustees were analogous to directions sought by a liquidator. Despite a 'metre high pile of material' there was not sufficient information before the Court to allow it to answer the relevant questions. In a passage subsequently quoted with approval,32 his Honour said:33
What is required is that the court have material to enable it to assess: (1) the reasonable chances of the liquidator succeeding; (2) the estimated cost of the litigation; and (3) how the litigation is to be funded in the first instance. The first requirement will usually be satisfied by the court being given an opinion from senior counsel, or at least very experienced counsel who has reviewed the evidentiary material and who has researched the legal points involved, and who can give some indication as to the prospects of success.
42 The historical roots and the common practice of providing a legal opinion are reflected in this passage.34 But the better view today may be that it should not be the practice of courts to assess the prospects of success of an action by reference to an 'expert opinion' from senior counsel. There are various reasons for this.
43 First, it is no longer common for applications for directions to be made ex parte (by one side). The provision of a confidential, usually privileged, advice to the Court in proceedings inter partes (between the parties)in order to prove a required element for directions raises real questions of procedural fairness. Legal submissions can be made by counsel. Almost any matter which could be contained in an expert opinion could also be made in submissions.
44 Secondly, although there are constitutional and procedural anomalies in Australia arising from the historic practice of judges giving directions to a trustee, an 'expert opinion' from senior or experienced counsel on a matter of local law would not generally be admissible evidence for its content.
45 Thirdly, the provision of a legal opinion to the Court which is relied upon for its substantive content may raise difficult issues and real concern about waiver of legal professional privilege. The answers to those issues may be affected by the particular procedure and legislation in different States concerning trustee directions.35
46 On the other hand, there is another purpose underlying the historical practice of providing a court with an opinion from senior counsel about the law in the case. This other purpose is generally independent of the content of the opinion from senior counsel, and is concerned with showing merely that advice has been obtained.
47 The starting point for the other purpose for a legal opinion is that a direction that the trustee 'should', 'must' or 'ought to' take legal action is fraught with difficulty.36 The appropriate form of direction sought will usually be that the trustee is justified in taking or abstaining from legal action. It is that question which is the concern of a legal opinion provided in an application for directions.
48 A court will usually be reluctant to exercise discretion in favour of sanctioning, as justified, a course of action by a trustee unless the trustee has taken reasonable steps necessary to form its own opinion on the subject. Where the direction sought is that legal action is justified then it will generally be necessary for the trustee to obtain a legal opinion before approaching the Court. This is because the trustee should have taken reasonable steps to form its own opinion on the subject about directions which are sought before approaching the Court for directions. Legal action should never be commenced unless the trustee is satisfied that it is properly arguable.37
49 Where, as in this case, the direction sought by the trustee is that the trustee would be justified in not commencing legal action, it is less essential for the trustee to form an opinion about whether the cause of action is properly arguable. This is because there are other reasons for not commencing legal action independent of the strength of the claim. In such a case, whether the trustee has obtained a legal opinion is one matter the Court will consider in assessing whether the trustee has taken appropriate preliminary steps prior to approaching the Court.
50 Six years after his Honour's decision in Re Lemon Tree Passage, Young CJ in Equity said in Re Permanent Trustee Australia Ltd:38
[I]n the basic application under this section the court expected that if there was a question of law involved, the Trustee would take proper advice. The court expected that if there was some commercial decision to be made, the Trustee would take proper advice. Then the Trustee would consider matters of law, fact and expert opinion and reach a reasoned decision. The court would then give protection. It was usually not enough merely for the court to be told that the Trustee had determined, in the light of counsel's opinion and in the events which have happened, that its decision was X.
51 In this case, there is very limited evidence relating to any legal advice received and relied upon by Plan B Trustees concerning the directions sought in relation to Christensen Vaughan and the various individuals. The limited evidence included evidence from Mr Satie, a manager of Plan B Trustees, that on the basis of legal advice which he sought and received, and from his personal analysis of the MIB Trust Deed, the payments may have been made pursuant to the charitable objects of the Deed. Mr Satie then set out the facts and legal reasoning which lead him to this conclusion.39
52 The absence of provision to the Court of any further substantial legal advice is not fatal to the application in relation to the directions concerning Christensen Vaughan and the various individuals. The application seeks directions that the trustee is justified in not taking legal proceedings. Further, the trustee took considerable steps and incurred significant expense, compared with the potential amount of any recovery, prior to seeking these directions. Those steps included the following:
(i) investigations into the trustee's accounts, archive boxes containing financial and trust records, and minutes of meetings of the board of the trustee;
(ii) a preliminary analysis;
(iii) a cost-benefit analysis; and
(iv) commissioning and considering the McGrathNicol preliminary report.
53 The preparation and forensic investigations by Plan B in relation to these directions were also substantial. This is not a case where a trustee is asking the Court to give directions 'without the information which the trustee himself either has or ought to have to enable him to [form an opinion on the subject and] carry out his duties personally'.40
(1) Directions concerning the payments to Christensen Vaughan
The issue
54 The evidence of Mr Satie, based upon his review of the McGrathNicol analysis, is that Christensen Vaughan was paid $132,003 in legal fees associated with the assertion or defence of the land rights of the MIB.41 At one point, it seemed that Mr Satie was suggesting that the directions might be confined to the payment of that amount.42 But that amount is not the relevant quantum.
55 Mr Satie explains that the categories of work done in relation to the defence of land rights of the MIB identified by Kingsworld, and queried by Ernst & Young, were:
(i) heritage land surveys;
(ii) negotiating land access rights with mining companies including Future Act agreements;
(iii) funding legal costs for the MIB claim;
(iv) opposing mining lease applications before the warden; and appealing an environmental assessment report concerning the impact of an RTIO mine expansion proposal.
56 The payments made to Christensen Vaughan from the MIB Trust, about which directions are sought, amount to $220,983. The evidence concerning the payments to Christensen Vaughan relates to the invoices rendered by Christensen Vaughan43 which are summarised in Schedule A to these reasons.44
The evidence
57 The invoices about which directions are sought fall within seven broad categories, identified by reference to a Christensen Vaughan file number. With the exception of category (ii), explained below, the files described below are all in the possession of the solicitors for the first defendant.45
(i) File number 20070215 (native title claim)
58 The Christensen Vaughan files with this number concern the native title claim which was then WAD6278 of 1998 (the MIB Claim).46 Christensen Vaughan were the solicitors on record for this matter from March 2007 until May 2009.47 They provided legal assistance to the MIB people in pursuing the MIB claim.48 This included work in relation to preservation evidence49 and preparation of a witness statement.50 The following invoices relate to this file (with amounts ex GST):51 6007; 5810; 6405; 6506; 6615; 7098; 7193; 7270; 7323; 7520; 7640; 7793; 7963; 8095; 8406; 8653; 8800; 8897; 9143; 6827 (in part).
59 The total of these paid invoices is $110,671.
60 Narrations in a number of these invoices52 reflect work done by Christensen Vaughan in assisting with heritage land surveys and in supporting anthropological studies.53 Many of these invoices also reflect work done in assisting the MIB to pursue the MIB Claim.
(ii) File number 20070318 (Warden's Court objections to Hammersley Exploration lease application)
61 This file is the subject of invoices 7187 and 6501.
62 The amount of money charged (ex GST) is $1,891.
63 The file concerns Warden's Court objections lodged on behalf of the Youngaleena Banjima Aboriginal Community to a mining lease application by Hamersley Exploration Pty Ltd.54 Documents relating to this file number are not in the possession of the solicitors for the first defendant. However, the narrations on the invoices indicate assistance was provided by Christensen Vaughan, which is an agreed fact,55 with objections by the MIB to mining tenement applications.
(iii) File number 20050605 (Chichester Regrade)
64 This file is the subject of invoice 7198.
65 The amount of money charged (ex GST) is $23,059 less $2,727 credit.
66 The file concerns a Warden's Court objection to the grant of miscellaneous licence L45/147.56 The licence was for a section of railway which was described by BHPBIO as the 'Chichester Regrade'.57 One document located in this group58 is a minute of amended grounds of objection by the MIB native title applicants dated 3 July 2007.59 Work done in relation to this invoice also included assistance with negotiations for land access rights and objections by the MIB to mining tenement applications.60
(iv) File number 20070314 (Marandoo Appeal)
67 This file is the subject of invoice 6406.
68 The amount of money charged (ex GST) is $1,099.
69 The file concerns compliance issues associated with Rio Tinto's mining activities in the MIB claim area. It also involves an appeal from a decision of the Environmental Protection Authority on the basis that a higher level of environmental assessment was required to assess the impact of dewatering on sites of significance to the MIB Claim Group.61 The appeal was lodged on instructions from Mr Slim Parker and Mr Maitland Parker.
70 It is an agreed fact that the narration in invoice 6406 reflects the assistance given by Christensen Vaughan in appealing a decision of the Environmental Protection Authority concerning the level of assessment required for the proposed Marandoo Mine Phase 2 Project.62
(v) File number 20050487 (Warden's Court objections to BHPBIO lease applications)
71 This file is the subject of invoice 9107.
72 The amount of money charged (ex GST) is $9,077.
73 This file relates to Warden's Court objections to four mining leases.63 The work included assisting with the preparation of an expert report64 and a report of anthropological comments65 as well as preparation of particulars of evidence of witnesses for the objectors.66
(vi) File number 20070028 (Brockman agreements)
74 This file is the subject of invoice 8174.
75 The amount involved, as described in Schedule A to these reasons, is $51,460.
76 The work on this file by Christensen Vaughan concerned a native title related agreement between Brockman Iron Pty Ltd, Brockman Resources Ltd, Maitland Parker as applicant for the MIB people and Karijini Development Pty Ltd dated October 2008.67 The agreement is described as relating to the Marillana Project. There is an overlap between the Marillana Project and the MIB Claim Area.68 Work done in relation to this invoice also included assistance with negotiations for land access rights.69
(vii) File number 20050509 (Heritage Agreement)
77 This file is the subject of invoice 8935.
78 The amount of money charged (ex GST) is $26,452.
79 This invoice relates to work done by Christensen Vaughan in respect of negotiations between the MIB and BHPBIO for a heritage agreement.70 A draft heritage agreement was prepared but no heritage agreement was ever reached.71 Work done in relation to this invoice also included assistance with negotiations for land access rights.72
80 The draft Heritage Agreement, as proposed, was between three parties: (i) BHPBIO; (ii) the registered native title claimants of the native title claim for and on behalf of the MIB People; and (iii) Karijini Development Pty Ltd (a subsidiary of Kingsworld,73 but not bound by the MIB Trust Deed).
81 The draft Heritage Agreement recited matters including the concern of the MIB People to 'ensure that the Aboriginal Sites are protected according to their cultural traditions' and the concern of the processes in the Deed to 'allow the MIB People to maintain its cultural obligations over country in accordance with traditional law and custom'.74 The draft Heritage Agreement included provision for payment to Karijini Development for heritage survey services (cl 4). The negotiations also concerned a proposed immediate, advance payment of $3.5 million to the MIB People for the purchase of the Auski roadhouse or 'otherwise achieve economic development'.75
Reasons justifying abstaining from legal action against Christensen Vaughan
(i) The potential cost of bringing an action
82 A significant factor in assessing whether Plan B Trustees is justified in abstaining from bringing an action against Christensen Vaughan is the potential cost of any action, particularly considered in light of any potential recovery.
83 An affidavit of Mr McKenna discusses this issue.76 Mr McKenna is a legal practitioner with considerable experience in litigation, including in providing costs estimates. On the basis of a two to three-day trial, Mr McKenna estimates the cost of proceedings as exceeding $200,000. He estimates that approximately $70,000 of those costs would be irrecoverable. Those irrecoverable costs must be weighed against the potential benefit of litigation. Even complete success in the action would lead only to restoration of $220,983 plus interest to the trust.
84 The potential for a very significant part of any ultimate recovery being consumed by irrecoverable costs may, by itself, be sufficient justification for Plan B Trustees to abstain from bringing any action.
85 I have considered the possibility that the matter could settle on terms favourable to Plan B Trustees, thus reducing irrecoverable costs. But there is also a real possibility that a trial might extend for considerably longer than two to three days. Irrecoverable costs could become far greater than $70,000.
86 In oral submissions, senior counsel for BHPBIO submitted, with some force, that the legal questions to be tried would require consideration of the underlying work behind each of the invoices issued by Christensen Vaughan. He accepted that this could potentially explode the two to three day estimate for the proceedings.77 Even in these directions proceedings there was a lack of agreement between the parties concerning the extent of the underlying work done in relation to numerous invoices.78 There is a real possibility of zymotic growth of irrecoverable costs of any action by Plan B Trustees against Christensen Vaughan.
(ii) Conditions upon recovery or possible set-off or counterclaim
87 A further reason militating in favour of a direction that Plan B Trustees is justified in abstaining from bringing an action against Christensen Vaughan is the existence of possible conditions upon recovery or a possible counterclaim by Christensen Vaughan.
88 If the payments to Christensen Vaughan were made in breach of trust, and if defences such as bona fide purchase for value did not succeed, it may still be that any order for restitution of the payments would nevertheless be conditional upon payment to Christensen Vaughan of the fair value of the work performed.
89 Rescission of a transaction will generally be conditional upon restitution of the value of a benefit obtained.79 The restoration of trust funds paid to Christensen Vaughan would mean Plan B Trustees effectively received the benefit of those legal services without cost. Arguably, equity would impose a condition on that recovery. As Lord Wright explained in Spence v Crawford:80
Though the defendant has been fraudulent he must not be robbed, nor must the plaintiff be unjustly enriched, as he would be if he both got back what he had parted with and kept what he had received in return.
90 When common law procedure was dominated by forms of action, the common law might have recognised a separate claim by Christensen Vaughan if Plan B Trustees succeeded in recovery of the value of legal fees. That potential action would have been characterised as one for quantum meruit (as much as the service is worth) which later became a species of indebitatus assumpsit. The cause of action is commonly recognised today as one for restitution based upon unjust enrichment. Unjust enrichment is a possible, arguable, counterclaim in any proceedings against Christensen Vaughan.
91 Whether characterised as an equitable condition upon recovery or a common law action for unjust enrichment, the quantum of recovery by Plan B Trustees would be limited if Plan B Trustees' entitlement to restoration of trust funds paid as legal fees to Christensen Vaughan were reduced by an award of restitution of the fair value of the legal work performed by Christensen Vaughan.
92 One possible argument against such a claim for the fair value of legal work performed might be that coherence in the law would be undermined if Christensen Vaughan (i) were required to restore funds received in breach of trust as payment for legal services, but (ii) if they were able to set off such payment against the fair value of the legal services provided. Senior counsel for BHPBIO adverted to this possibility of a 'coherence' issue in oral submissions.81
93 In Equuscorp Pty Ltd v Haxton,82 this coherence principle was expressed as being concerned with avoiding a situation in which the law stultifies itself. The precise scope of the principle is unclear, as is the extent to which it is controlled by the language of the statute. In Equuscorp, Heydon J dissented from the application of such a principle, saying that the policy of the statute must be based in 'the primacy of legislative language ... It is the legislative language which reveals the policy of the statute, its purpose, its guidance, its intention'.83 The new editors of Goff and Jones suggest that such a principle should only be applied to deprive a person of rights to restitution 'where the particular manifestation of policy is quite clear'.84
94 Two English cases illustrate different results reached in different contexts. The first is Mohamed v Alaga & Co (A firm).85 In that case, the plaintiff introduced asylum seekers to the defendant law firm. The plaintiff performed translation services. The law firm promised the plaintiff that it would share legal aid fees received in relation to the clients seeking asylum. The agreement between the plaintiff and the law firm was illegal and unenforceable. The question was whether the plaintiff could recover the fair value of the services he provided. The English Court of Appeal unanimously held that he could.
95 In contrast, in Langsam v Beachcroft LLP,86 Roth J, in an issue not considered on appeal,87 rejected a claim for the fair value of legal services performed under an unenforceable conditional fee agreement. His Lordship said:88
the unenforceability of the [conditional fee agreement] arises under a statute intended ... to protect the public (as clients engaging solicitors to provide legal services) at the potential expense of solicitors. In my judgment, it would significantly undermine the operation of [the relevant provision] of the Act if a solicitor who is unable to claim his fees for the legal services provided because of material non-compliance with the statutory requirements could nonetheless recover payment for those services from the client on the basis of a quantum meruit claim.
96 Each of Haxton, Mohamed, and Langsam involved questions of whether a restitutionary recovery would stultify the policy of a statute. The question involved in a claim against Christensen Vaughan would be different. The question would be whether the common law would stultify either the claim for knowing receipt or the claim for restoration of trust assets by allowing Christensen Vaughan restitution of the fair value of legal services performed.89
97 It is enough to say that even if Christensen Vaughan were required to restore the trust funds it is arguable that Christensen Vaughan would be entitled to fair value of the legal services performed.
(iii) Obstacles to success of a claim for restoration of all funds paid
98 Although there is little evidence of legal advice obtained by Plan B Trustees, this is not fatal to the present application for the reasons I have explained. To reiterate, this application was for directions that the trustee is justified in not taking legal action. In addition, there is evidence that demonstrates considerable preliminary work and expense was incurred by Plan B Trustees to reach conclusions about the appropriate course of action prior to seeking the directions from this Court.
99 There were also submissions made concerning the obstacles to a claim which might be brought by Plan B Trustees for recovery of the trust funds which were paid without authority to Christensen Vaughan. All the parties assumed that the action would be one based upon knowing receipt of trust property.90 However, depending upon the facts, other potential claims might be available if the funds were paid without authority, including:
(i) A claim for restoration of the trust funds on the basis that any proceeds of the payments held by Christensen Vaughan, or their traceable substitute, remain subject to the trust.
(ii) A claim for knowing assistance in a dishonest or fraudulent breach of trust.
100 Even if Plan B Trustees could prove that the funds were paid without authority to Christensen Vaughan, both of these claims face significant obstacles.
101 A claim based on tracing would require Plan B Trustees to prove that Christensen Vaughan traceably retained trust funds. The rules concerning tracing, particularly into a mixed account, can produce horrendously expensive factual enquiries. Even in cases involving sums of up to ₤115 million, judges have felt compelled to displace principle in favour of a pragmatic search for a cheaper alternative because 'the costs involved would be out of all proportion even to the sizeable sums which are here involved'.91
102 A claim based upon tracing would also be defeated if Christensen Vaughan proved that it was a bona fide purchaser for value without notice.
103 A claim for knowing assistance would also require evidence which could support a finding of the required degree of knowledge and a dishonest and fraudulent breach of trust.92
104 There were no submissions made concerning the likelihood of any knowledge or notice by Christensen Vaughan. It may be that no sufficient foundation could exist for any claim based upon knowledge. Instead, submissions focussed upon the prospects of Plan B Trustees proving that payments had been made in breach of trust. Each of the claims, to succeed, would require proof that the payments had been made without authority, and if the claim is based upon tracing, it would be subject to the obstacles discussed above.
105 The MIB Trust Deed provides that the trustee of the MIB Trust holds the trust fund on the trusts contained in the MIB Trust Deed and in accordance with the terms and conditions set out in the MIB Trust Deed (cl 3).
106 The MIB Trust Deed is an instrument to be construed, like a contract, according to the objective meaning manifested by its words in their context.93
107 The purpose of the MIB Trust is set out in the Recitals, which include that 'the members of the Aboriginal Community are subject to considerable poverty, misfortune, destitution, disadvantage, dispossession, lack of education, ill-health and suffering' and that the settlor wishes to create the MIB Trust for the promotion of the Charitable Objects.
108 One of the trustee’s responsibilities is to apply the trust fund and its income to the promotion of the Charitable Objects (cl 3.3). Clause 5.1 provides that subject to the terms of the MIB Trust Deed, the trust fund shall be applied exclusively for the promotion of the Charitable Objects in accordance with the terms of the Deed.
109 Plan B Trustees, as well as Mr Parker and the Attorney-General, submitted that the legal work done by Christensen Vaughan promoted the Charitable Objects. Clause 1.1 defines the Charitable Objects as follows:
“Charitable Objects” means
(a) the relief of poverty, sickness, distress, misfortune or destitution;
(b) the advancement of education;
(c) the promotion of health including the provision of health care services and facilities;
(d) the provision of transport and communication services; and
(e) the promotion and protection of Aboriginal culture,
for Community Benefit that satisfy the requirements for endorsement of the Trust under Subdivision 50-B of the Income Tax Assessment Act 1997;
110 Community Benefit is defined as:
the benefit, welfare or assistance of the Aboriginal Community or any section of the Aboriginal Community comprising one or more of its members including but not limited to:-
(i) Community Development [which is later defined as developing projects and industries which will achieve economic self-support for the MIB People including by the acquisition or establishment of economic enterprises or interests in those enterprises];
(ii) managing the affairs of the MIB People taking into account the maintenance of their traditional culture;
(iii) improving the social and health circumstances of the MIB People;
(iv) developing and acquiring communities and community facilities within the Lands;
(v) advancing the education and training of the MIB People;
(vi) providing employment opportunities to the MIB People;
(vii) developing community projects;
(viii) assisting the MIB People in asserting and maintaining their traditional rights and interests to land including the protection of culturally significant areas.
(i) were within definition (e) of Charitable Objects for work which was for 'the promotion and protection of Aboriginal culture';
(ii) were for Community Benefit because the work was either (a) managing the affairs of the MIB People taking into account the maintenance of their traditional culture, or (b) developing community projects; and
(iii) satisfied the requirements for endorsement of the MIB Trust under Subdivision 50-B of the Income Tax Assessment Act 1997 (Cth).
112 As to (i) and (ii), the promotion and protection of Aboriginal culture and Community Benefit, it is well known that, as recognised in the preamble to the Native Title Act 1993 (Cth), 'Aboriginal peoples and Torres Strait Islanders have become, as a group, the most disadvantaged in Australian society'. It is also well recognised that 'the connection which Aboriginal peoples have with "country" is essentially spiritual'.94 An important aspect of the 'socially constituted fact of native title rights and interests that is recognised by the common law is the spiritual, cultural and social connection with the land'.95
113 It is likely that in any claim against Christensen Vaughan it would be argued in defence that work done in furtherance of native title interests was work for 'the promotion and protection of Aboriginal culture'. It is also likely that it would be argued that much of the work constituted management of the affairs of the MIB People taking into account the maintenance of their traditional culture.
114 The work of Christensen Vaughan might also arguably be seen as falling within the Charitable Objects in the sense that, as Mr Parker submitted, those objects read as a whole express an overriding concern for relief of a disadvantaged section of the community (see also the particular definition (a)).96
115 As to (iii), all the parties submitted that the requirement was that the object was one which, properly understood, satisfied the requirements for endorsement of the MIB Trust under Subdivision 50-B of the Income Tax Assessment Act 1997 (Cth). I accept that it is likely that the definition of Charitable Objects in the MIB Trust Deed would be construed in this way.
116 The importance of the implication of the words in italics ('properly understood') arises because the MIB Trust has not been endorsed.97 The Australian Taxation Office refused an application for endorsement of the MIB Trust as a Deductible Gift Recipient and as a Tax Concession Charity.98 The application was brought on the asserted basis that the MIB Trust is generally a public benevolent institution. The Australian Taxation Office ruled, in part, that:
[a]s those to benefit from the MIB Trust are the 'MIB People' defined as persons who are entitled by Aboriginal Tradition to use or occupy an area of land covered by the Native Title claim, it is considered that benefits are not provided to a section of the public in the required sense. An individual's capacity to benefit is not based upon their need but rather on whether they satisfy the requirement of being entitled by Aboriginal Tradition to occupy a certain area of land.
117 Whether or not this reasoning of the Australian Taxation Office is correct, and whether or not the MIB Trust should properly have been endorsed, it is arguable that the promotion and protection of Aboriginal culture (by protection of the native title rights of the MIB people) for Community Benefit (ie managing the affairs of the MIB People taking into account the maintenance of their traditional culture) comprises an object that satisfies the requirements for endorsement of the Trust under Subdivision 50-B of the Income Tax Assessment Act1997 (Cth).
118 In Latimer v Commissioner of Inland Revenue,99 it was held by the New Zealand Court of Appeal, and not challenged in the Privy Council,100 that assisting Maori claimants to pursue claims before the Waitangi Tribunal was a charitable purpose. In the course of delivering the judgment of the New Zealand Court of Appeal, Blanchard J said that it is 'impossible not to regard the Maori beneficiaries of this trust, both together and in their separate iwi or hapu groupings, as a section of the public'. His Honour quoted with approval from the leading speech of Lord Cross of Chelsea in Dingle v Turner:101
In truth the question whether or not the potential beneficiaries of a trust can fairly be said to constitute a section of the public is a question of degree and cannot be by itself decisive of the question whether the trust is a charity. Much must depend on the purpose of the trust. It may well be that, on the one hand, a trust to promote some purpose, prima facie charitable, will constitute a charity even though the class of potential beneficiaries might fairly be called a private class and that, on the other hand, a trust to promote another purpose, also prima facie charitable, will not constitute a charity even though the class of potential beneficiaries might seem to some people fairly describable as a section of the public.
119 As Newnes JA has explained, 'if land is used for the purpose of improving the economic position, social condition and traditional ties of an Aboriginal community, that will generally be a charitable use of the land... There is a significant body of authority which supports that view'.102
(iv) Obstacles to claims for restoration of funds paid in breach of ceiling limits
120 One submission by BHPBIO was that even if payments by the trustee to Christensen Vaughan were within the objects of the trust, some payments exceeded the limit imposed by the MIB Trust Deed.
121 Clause 5C is entitled 'utilisation of income'. It comprises 12 sub-clauses (5C.1 through to 5C.12).
122 Sub-clauses 5C.1, 5C.3, 5C.5 and 5C.7 each provide that 'not less than' a certain percentage of the Available Income received by the Trustee in each Accounting Period will be applied in a particular way. In summary, the application described is, respectively:
(i) 33% (and preferably up to 50%) for medium to long term prudent investments (5C.1);
(ii) 10% in funding programmes for the education and training of MIB People (5C.3);
(iii) 20% in assisting Eligible Entities or the MIB People or Beneficiaries in acquiring, commencing, expanding, approving, upgrading or restructuring economic enterprises or interests in economic interests with a view to assisting MIB People in becoming economically independent (5C.5); and
(iv) 20% in connection with Community Development programmes (5C.7).
123 Sub-clauses 5C.9 to 5C.12 then provide as follows:
Cultural Purposes
5C.9 Up to 5% of the Available Income received by the Trustee in any Accounting Period will be utilised for maintaining, protecting and enhancing the cultural life of the MIB People.
Beneficiary Benefits
5C.10 Up to 15% of the Available Income received by the Trustee in any Accounting Period will be utilised for the direct benefit of the Beneficiaries, with a preference being given to benefiting the elder members of the MIB People.
Other Income
5C.11 The balance of the Available Income received by the Trustee in each Accounting Period will be applied by the Trustee in furtherance of any activities within the Objects of the Trust.
Proviso
5C.12 If in any Accounting Period the Trustee determines that it would not be in the best interests of the Trust to apply any of the minimum levels of Available Income referred to above to any of the purposes referred to above then the Trustee may by instrument in writing setting out the reasons therefore determine that in that Accounting Period any of the above minimums will not apply.
124 Senior counsel for BHPBIO submitted that if the payments to Christensen Vaughan were within the objects of the MIB Trust Deed then those payments exceeded the 5% threshold for utilisation of Available Income under cl 5C.9 of the MIB Trust Deed. It is arguable that a 5% maximum threshold is the proper construction of that clause, and other sub-clauses in cl 5C.
125 There are, however, a number of possible arguments against such a construction.
126 First, each of cl 5C.1, cl 5C.3, cl 5C.5 and cl 5C.7 refers to application of 'not less than' a percentage amount of income. But each of cl 5C.9, cl 5C.10 and cl 5C.11 provides that 'up to 5%', and 'up to 15%' and 'the balance of the available' income will be utilised in the manner provided. Those provisions referring to 'up to' might arguably be construed as neither prescriptive nor proscriptive. They do not say that 'not more than' 5% or 15% of income will be utilised in the relevant manner.
127 The sub-clauses are also followed by the proviso in cl 5C.12 which says that 'if in any Accounting Period the Trustee determines that it would not be in the best interests of the Trust to apply any of the minimum levels of Available Income referred to above to any of the purposes referred to above'. But there is also no suggestion in cl 5C.12 that the provisions above include some maximum levels.
128 Secondly, cl 6.1 provides that 'the Trustee may at any time and from time to time pay or apply the whole or any part of the income of the Trust Fund towards the promotion of any one or more of the Charitable Objects'. Although this clause is expressed to be 'subject to' some clauses including cl 5C, it might arguably be consistent with a construction of cl 5C as being concerned with minimum payments, and not maximum payments.
129 Thirdly, as counsel for Mr Parker argued, it may be that other clauses in the MIB Trust Deed, and the nature of the trust as a charitable trust, strengthen the argument that the provisions in cl 5C.9, cl 5C.10 and cl 5C.11 are merely evaluative rather than prescriptive. These matters include submissions that these clauses involve means to effectuate charitable objects rather than ends in themselves; the inability for all the cl 5C and cl 5D percentages to be met at the same time; the conferral of power to make further distributions (cl 5C.11; cl 5D.3); and the only qualification upon trustee independence provided in cl 5F being the provisions in cl 5C.1 and cl 5C.2. Clause 5C.1, and possible breaches of it, is considered separately below in relation to the directions sought about Kingsworld.
130 It may also be relevant that a distinction should be drawn between 'ends, means and consequences. The ends must be exclusively charitable. But if the non-charitable benefits are merely the means or the incidental consequences of carrying out the charitable purposes and are not ends in themselves, charitable status is not lost'.103
131 For the three reasons above, it is arguable that although cl 5C could be construed to mean that each percentage referred to describes a minimum provision of income, cl 5C.9, cl 5C.10 and cl 5C.11 might provide merely an aspirational minimum 'range'.
132 Fourthly, it is arguable that cl 5C.9 refers to matters that could fall within the objects of the MIB Trust and potentially also within cl 5C.11. The reference in cl 5C.9 to 'maintaining, protecting and enhancing the cultural life of the MIB People' overlaps with the purpose of 'the promotion and protection of Aboriginal culture for Community Benefit'. Sub-clause 5C.11 provides for the application of income in furtherance of any activities within the objects of the MIB Trust. It arguably does not restrict that application to objects of the MIB Trust other than 'the promotion and protection of Aboriginal culture for Community Benefit' in the event that application under cl 5C.9 has reached a 5% limit.
133 Fifthly, there may be difficulties proving that the threshold set in cl 5C.9 had been exceeded by the payments to Christensen Vaughan. On the most conservative estimates, the income of the MIB Trust for 2008 and 2009 was $7,684,370 and $5,750,187 respectively.104 On what might be an expansive interpretation105 of matters falling within cl 5C.9, the previous trustee treated expenses for cultural purposes in these periods as $757,701.62 and $1,031,994. These amounts are, respectively, 9.9% and 17.9%. The total of the payments to Christensen Vaughan in each period was $109,587.96 (2008) and $111,395.40 (2009).106 These amounts are, respectively, 1.4% and 1.9%.
134 Difficult questions might arise. How should those amounts be apportioned between the payments to Christensen Vaughan and other cultural purposes payments? Should the parties be put to what could well be the extraordinary expense of ascertaining, and tracing, each payment and its timing from the trust account? Or should the Court adopt a pari passu approach, apparently discarding principle at the altar of pragmatism?107 Would Plan B Trustees need to perform the tracing exercise in anticipation of the possibility that the Court would adopt the former approach?
135 Sixthly, some of the payments to Christensen Vaughan might be characterised as relating to matters other than cl 5C.9. For example, file 20050509 and invoice 8935 ($26,452) concern work done by Christensen Vaughan in respect of negotiations between the MIB and BHPBIO for a heritage agreement. Those payments might arguably be characterised as falling within cl 5C.5 or cl 5C.7.
136 Seventhly, any claim that payments of trust funds were received in breach of trust because the payment exceeded a limit in cl 5C.9 may face a difficulty of needing to establish that all payments to Christensen Vaughan constituted payments of income and not of capital. This raises the question of whether payments made from the capital of the MIB Trust should also be required to comply with any threshold limits in cl 5C.
137 BHPBIO submits that questions may arise concerning 'why, in good sense, and relevantly, for the purpose of the [MIB Trust] any payment out of the capital should be free of the limitation in cl 5C.9'.108 These questions might not be clear cut.
138 Clause 6.3 and cl 8(a) provide that the trustee has a power to pay or apply the whole or any part or parts of the capital of the Trust Fund towards the promotion of one or more of the Charitable Objects. Clause 6.3 and cl 8(a) are expressed to be subject to certain clauses which include cl 5C. But cl 5C contains no express restriction on expenditure of capital.
139 The expression 'subject to' also might not say anything about whether any conflict exists between the provisions.109 Any limitation imposed on capital distribution would need to be implied into cl 5C, perhaps supported by cl 5E(6) and cl 5E(7), which provide 'guiding principles' for maintaining the trust fund.
140 On the other hand, although not applicable to the distributions to a non-beneficiary such as Christensen Vaughan, there is a separate restriction on the distribution of 'any cash' to beneficiaries, which includes capital, in cl 5D. Arguably, that restriction might support a construction of cl 5C in which it is confined to applications of income, not of capital.
141 This seventh point, involving the argument that distributions to Christensen Vaughan concerned income not capital, might also be affected by the issue of which party bears the onus of establishing a breach of trust (Plan B Trustees in a claim against Christensen Vaughan) or which party bears the onus of establishing a proper distribution (arguably Kingsworld in a claim against it based upon its duty to account).
142 The previous trustee, Kingsworld, did not keep separate accounts for income and capital and did not record whether a payment was from income or capital.110 Plan B submits that in the accounting period for the year ended 30 June 2008, and probably also the year ended 30 June 2009, there was sufficient capital for all those payments characterised as cultural purposes payments to have been made from capital rather than income.111 But this conclusion depends upon a number of assumptions concerning when income becomes an accretion to capital under cl 6.2, cl 7.1(b) and cl 7.7 of the MIB Trust Deed.112 One difficulty with establishing an accretion under cl 6.2 and cl 7.1(b) is that there is no evidence of a determination to accumulate income to be treated as capital.113 The automatic accretion provision of cl 7.7 depends upon an assumption that certain unspent cash was accumulated as capital.114
143 These seven matters, although of differing force, establish that there are obstacles to a claim by Plan B Trustees for restoration of part of the trust funds paid to Christensen Vaughan on the basis that the payments exceeded a 5% income ceiling. Again, it should also be reiterated that no submissions were made concerning whether there was any likelihood of proving that Christensen Vaughan had sufficient knowledge or notice that any payment exceeded a limit imposed by the MIB Trust Deed.
(iv) Obstacles to a claim for restoration of particular funds
144 A full assessment of the likelihood of any recovery against Christensen Vaughan requires consideration of each individual payment. I have explained above that it is arguable that many of the payments to Christensen Vaughan fell within the objects of the MIB Trust. I have also explained above some of the arguments which can be made against the proposition that thresholds were exceeded. But, in either case, a trial of a claim against Christensen Vaughan may need to descend to the detail of each individual payment, particularly where it is disputed whether individual payments are within the objects of the MIB Trust.
145 BHPBIO correctly submitted that there are gaps in the evidence before the Court, which means that an assessment of prospects of success in relation to every individual payment, on this application, would be impossible. There are also some evidentiary aspects of the invoices which could arguably fall outside the permitted payments under the Deed.
146 Senior counsel for Mr Parker submitted that some or all of these matters are de minimus non curat lex (the law does not concern itself with trifles). This point might be arguable, although it may be that the scope of this maxim might today be understood as concerned with protection against abuse of the Court's processes. The equitable maxim might today have limited application as a positive defence to what is asserted to be a minor breach.
147 In any event, the size of any potential recovery based upon a particular invoice being in breach of trust is relevant to the assessment of whether a claim would be justified, in light of potential costs (including irrecoverable costs) and a potential counterclaim or conditions upon recovery discussed above.
148 The groups of invoices for which BHPBIO says there is either inadequate explanation or where BHPBIO says the invoices do not fall within the object of promotion and protection of Aboriginal culture for Community Benefit are as follows:
(i) File number 20070215 (native title claim): $7002.89.
(ii) File number 20070318 (Warden's Court objections to Hammersley Exploration lease application): $342.12.
(iii) File number 20050605 (Chichester Regrade): $6279.22.
(iv) File number 20070314 (Marandoo Appeal): $0.
(v) File number 20050487 (Warden's Court objections to BHPBIO lease applications): $170.83.
(vi) File number 20070028 (Brockman agreements): $36.24.
(vii) File number 20050509 (Heritage Agreement): $9,404.03, although BHPBIO also submitted that the whole of the amount in relation to the Heritage Agreement was outside the MIB Trust objects: $26,452.
150 It suffices to say that even if the whole of this amount were treated as if the evidence established that there were strong prospects of successful recovery, Plan B Trustees would be justified in abstaining from legal action against Christensen Vaughan. This is because this amount must be considered in light of the other factors described above: that is, obstacles in relation to the other aspects of a claim against Christensen Vaughan, potential costs including irrecoverable costs of a claim, and the potential counterclaim or condition on any recovery.
151 There are also reasonable arguments, based on evidence before the Court, that invoices comprised in this total could fall within the objects of the MIB Trust. Two of the most significant files containing invoices that were questioned by BHPBIO are file number 20050605 (Chichester Regrade) and file number 20050509 (Heritage Agreement).
152 In relation to the Chichester Regrade, approximately $20,000 in legal fees was paid for work done in relation to objections by the applications for the MIB Native Title Claim to BHPBIO's Warden's Court application for a miscellaneous licence.
153 On 14 February 2008, Christensen Vaughan wrote to the solicitors for BHPBIO explaining that the objectors did not intend to pursue their native title objections.116
154 BHPBIO submitted that the payment of approximately $5,000 was for subsequent legal work involved in preparation and attendance at the court hearing117 and could not be for the promotion and protection of Aboriginal culture.
155 It is arguable that this subsequent work should not be filleted from any determination concerning whether the work done before 14 February 2008 was within the objects of the MIB Trust. Even if the nature of the objections changed, it is arguable that the end point of the work remained the same. That end point might be said to be a determination by the Warden's Court which affected the native title rights of the objectors. The Warden's decision involved a determination that the grant was conditional upon compliance with the Native Title Act 1993 (Cth).118
156 In relation to the Heritage Agreement, BHPBIO referred to the work negotiating that agreement to provide heritage survey services to BHPBIO for a fee. BHPBIO submitted that the 'whole character and atmosphere'119 of the activity, and the related work done by Christensen Vaughan, was of a commercial character rather than one which advanced a charitable purpose.120
157 Again, there are reasonable arguments to the contrary. The Heritage Agreement was in relation to land which was the subject of the MIB Native Title Claim. It recited the concern of the MIB People to ensure that Aboriginal Sites are protected according to their cultural traditions. It also recited that the processes in the agreement were intended to allow the MIB People to maintain their cultural obligations over country in accordance with traditional law and custom.
158 The goal of making profit is not necessarily antithetical to charitable objects such as those of the MIB Trust. As Gummow, Hayne, Heydon and Crennan JJ said in Commissioner of Taxation of the Commonwealth of Australia v Word Investments Ltd,121 'to point to the goal of profit and isolate it as the relevant purpose is to create a false dichotomy between characterisation of an institution as commercial and characterisation of it as charitable'.
159 BHPBIO also pointed to evidence concerning the failed negotiations for the proposed upfront payment from BHPBIO to allow the MIB People to acquire the Auski Roadhouse.122 BHPBIO submitted that operation of a roadhouse could not exclusively promote the charitable objects as required by cl 5.1 of the MIB Trust Deed.
160 There is evidence that 'the MIB people have a strong connection to the site' of the Auski Roadhouse123 and that buying the roadhouse was 'the dream of [the Claim Group's] grandfathers'.124 It might arguably be a matter of degree whether this part of the negotiations upon which Christensen Vaughan performed work could: (i) be severed from the rest of the negotiations; and (ii) be said involve commercial interests in the Auski roadhouse which have the effect that the payment to Christensen Vaughan was not an application under cl 5.1 'exclusively for the promotion of the Charitable Objects' in accordance with the MIB Deed.
161 All of these matters raise arguable issues in favour of, and against, findings of breach. It is sufficient for these reasons to say that the conclusion is uncertain.
Conclusion in relation to the directions concerning Christensen Vaughan
162 The discussion above illustrates some potential difficulties in any case which might be brought against Christensen Vaughan. Even if a case against Christensen Vaughan were contemplated on a more limited basis, that is seeking recovery of less than the $220,983 which is the subject of these directions, the potential difficulties for that case, coupled with the potential costs of the action and a possible counterclaim or conditions upon any recovery, mean that Plan B Trustees is justified in not taking legal proceedings to recover payments made to Christensen Vaughan in respect of legal fees as described in Schedule A.
(2) Directions concerning the payments to individuals
163 Another category in which Plan B Trustees sought directions was in relation to payments of trust funds by Kingsworld to individuals. Those payments are set out in Schedule B to these reasons. This schedule replicates, in a summary form, the schedule relied upon by Plan B Trustees. It is a list of individuals to whom less than $20,000 in payments have been made from the MIB Trust in the financial years ended 30 June 2008, 30 June 2009 and 30 June 2010.125
210 As I have explained, I proceed on the basis that under the Elders policy Kingsworld was required to notify its insurer of the circumstances that gave rise to a claim once it became aware of such circumstances. It is arguable that the insurer nevertheless could not refuse to pay a claim due to any omission to notify. The reason for this is s 54(1) of the Insurance Contracts Act.
211 Section 54(1) of the Insurance Contracts Act provides as follows:
Insurer may not refuse to pay claims in certain circumstances
(1) Subject to this section, where the effect of a contract of insurance would, but for this section, be that the insurer may refuse to pay a claim, either in whole or in part, by reason of some act of the insured or of some other person, being an act that occurred after the contract was entered into but not being an act in respect of which subsection (2) applies, the insurer may not refuse to pay the claim by reason only of that act but the insurer's liability in respect of the claim is reduced by the amount that fairly represents the extent to which the insurer's interests were prejudiced as a result of that act.
212 Section 54(6) provides that a reference to an act includes a reference to an omission.
213 In FAI Insurance Limited v Australian Hospital Care Pty Ltd,168 the insured made a claim on FAI for indemnity against liability. The insured first became aware of the occurrence which gave rise to the claim during the period of cover. The contract of insurance permitted FAI to refuse to pay the claim because the insured did not give FAI notice of the occurrence. A majority of the High Court held that s 54 required the conclusion that FAI could not refuse to pay the insured's claim because '[t]he effect of the contract of insurance, but for s 54, would be that the insurer may refuse to pay the insured's claim by reason only of the omission of the insured to notify the occurrence which, at the time, was one which might subsequently give rise to a claim by the third party against it'.169
214 The clause in FAI Insurance required the insured to give the insurer immediate notice in writing of any claim made against the insured and also provided as follows:170
If during the subsistence hereof the Insured shall become aware of any occurrence which may subsequently give rise to a claim against him or them for breach of professional duty by reason of any negligence, whether by way of act, error or omission and shall during the subsistence hereof give written notice to the [insurer] of such occurrence, then any claim which may subsequently be made against the Insured arising out of such negligence shall for the purposes of this Policy be deemed to have been made during the subsistence hereof.
215 The clause considered by the High Court of Australia in FAI Insurance is in different terms from the clause in the Elders policy. The difference might, however, not be one of any distinction, since on the proper construction of the Elders policy, the effect of the policy may also be to require written notice of any circumstances of a claim which Kingsworld becomes aware of during the Period of Cover, including circumstances which might give rise subsequently to any Claim.
216 The conclusion to be drawn is that it is arguable that the Elders policy might apply to a claim brought against Kingsworld. However, for three reasons there are potential limitations and hurdles which Plan B Trustees would need to overcome before it could successfully recover from the Elders policy.
217 First, if Plan B Trustees were required to rely upon s 54 of the Insurance Contracts Act, Elders might argue that the absence of notice caused prejudice to its interests. Resolution of this issue may depend upon whether the delay in notifying Elders of circumstances giving rise to a potential claim against Kingsworld could give rise to defences to any claim by Kingsworld against a third party to which Elders would be subrogated.
218 Secondly, although Kingsworld was aware of some circumstances which might give rise to a claim, most notably matters raised in the Ernst & Young interim report, not all of those circumstances amount to relevant knowledge of possible claims of breach of trust which are now agitated as potential claims. The overlapping categories of potential claim based upon a broad interpretation of the 3 August 2009 interim report from Ernst & Young include:171
(i) possible breaches of threshold limits in the MIB Trust Deed;
(ii) payments made where the recipient was in a position of conflict of duty to the MIB Trust and personal interest;
(iii) failures to invest or apply trust funds as required by the MIB Trust Deed; and
(iv) payments which are otherwise contrary to terms of the MIB Trust Deed.
220 Thirdly, there may also be questions of the extent to which particular breaches fall within the terms of the Elders policy. To reiterate, the Elders policy provides for indemnity for claims for 'Breach of Professional Duty'173 which is defined as a 'breach of duty owed by you or your Employees in a professional capacity, arising out of advice, act, error or omission in the conduct of your Business'.174 The definition of Business175 refers to the Schedule where the profession of the insured is described as:176
The provision of: education and training support services; community development support services; economic development consultancy support services; administration of individual beneficiary payments.
221 There is no reference to the administration of a trust. Nor is there reference to acts as a trustee being part of the Business of Kingsworld. Issues may arise as to the extent to which various alleged breaches of trust fall within the Business (as described) of Kingsworld.
(ii) Possible obstacles to establishing prima facie liability of Kingsworld
222 Even if the Elders policy, or even the Chubb policy, were applicable there would be further issues concerning whether various payments had been made in breach of trust. Some of those issues have already been discussed. They include the issue of ascertaining the scope of the charitable objects of the MIB Trust (discussed above at [106]-[119]). They also include difficult questions concerning whether a breach of trust occurred in relation to payments made in excess of limits or thresholds in the MIB Trust (some of which are discussed above at [120]-[143]).
223 Other matters, not discussed above, which admit no immediate answer include questions arising in relation to any alleged breach of cl 5C.1. There is no definition of 'medium to long term prudent investment' as described in that clause. If the clause is intended to have proscriptive effect is the relevant investment to be measured in any accounting period as a net investment (including investment losses realised) or gross investment? And if the provision incorporates discretion for the trustee in determining the character of a medium to long term prudent investment then how much discretion is to be afforded to the trustee?
224 In respect of breaches of the MIB Trust by Kingsworld due to any failure to comply with any mandatory minimum threshold, there may also be questions concerning the manner in which Kingsworld could be held liable for failure to spend trust funds. No loss is incurred by the trust from the failure and it is hard to see how an account, on any basis, would render Kingsworld liable to reconstitute an existing trust fund.
225 In respect of any breaches due to 'possible conflicts of interest' and possible breaches of director's duties referred to in the interim Ernst & Young report, those matters concern breaches of duty of the particular director, not of Kingsworld. Even if vicarious liability for breach of a fiduciary duty could be attributed to Kingsworld, a significant defence would be that the constitution of Kingsworld, cl 69, permits directors to act despite the existence of any conflict of interest.177
(iii) Exclusion of liability in the MIB Trust Deed
226 Clause 18.1 of the MIB Trust Deed provides as follows:178
The Trustee [Kingsworld] shall not be liable for any loss or damage resulting from (i) the exercise by the Trustee of any discretion or power hereby or by law conferred on the Trustee; or (ii) the Trustee'[s] failure to exercise any such discretion or power. The Trustee shall not be liable for any loss or damage arising as a result of concurring or refusing or failing to concur in the exercise of any power or discretion.
227 This clause, on its face, is capable of excluding the liability of Kingsworld, and hence the liability of Elders. But this issue of exclusion is complicated in two respects.
228 First, if Kingsworld is liable after the taking of an account in common form (subject to the comments above concerning the application of such an account) it is arguable that the exclusion of liability for 'loss or damage' might not extend to Kingsworld's liability upon the taking of the account.
229 There are, however, difficulties with reading the exclusion clause in such a restrictive manner. One difficulty is the potential inconsistency between construing the policy broadly to extend to liability arising upon a common accounting but to construe the exclusion narrowly to exclude it. Some older rules of construction of insurance contracts might be thought to permit such an approach. But the policy must be read as a whole.
230 Another difficulty is whether the manifest purpose of the exclusion clause would be defeated by a narrow construction of the language which did not include a key manner in which a trustee might have been made liable historically. The language of account in equity was borrowed from long obsolete formulations of the liability of a receiver at common law. Putting aside situations involving profits made by a defendant, it has been said to be an anachronism to speak today of accounting rather than compensation for loss.179
231 In Bartlett v Barclays Trust Ltd,180 Brightman LJ (as his Lordship had become during the many months of the lengthy litigation) said of the liability to account and to make restitution to the trust fund that it is 'in reality compensation for loss ... not readily distinguishable from damages except with the aid of a powerful legal microscope'. And in Youyang Pty Ltd v Minter Ellison Morris Fletcher,181the High Court of Australia spoke of the 'loss of the trust funds as soon as the trustee wrongly disbursed them'.
232 Secondly, in its plain terms, the exclusion clause in cl 18.1 purports to exclude liability for loss or damage caused by acts of bad faith or dishonesty. It is not possible to exclude liability for actual fraud or dishonesty, which has been described as part of an irreducible core of the trust obligation.182 However, courts have given effect to clauses in trust deeds such as a clause which excludes liability for:183
any breach of duty or trust whatsoever - on the part of the Trustee or its legal or other advisers or generally unless it shall be provided to have been committed made or omitted in personal conscious fraudulent bad faith by the Trustee charged to be so liable.
233 Obligations not to act dishonestly, or in bad faith, are duties of universal obligation existing independently of contract or special obligation.184 Arguably, cl 18.1 might be read in a manner that the exclusion clause did not apply to instances of bad faith.185
(iv) Indemnification from the MIB Trust Fund
234 Clause 19 of the MIB Trust Deed provides as follows:186
The Trustee [Kingsworld] if acting in good faith shall be entitled to be indemnified out of the Trust Fund in respect of all liabilities incurred relating to the execution or purported execution of any powers, duties, authorities or discretions vested under the provisions of this Deed and in respect of all actions, proceedings, costs, claims and demands relating to any matter or thing done or omitted to be done concerning the Trust Fund.
235 In both respects discussed above, the indemnity clause would be more likely to apply to any claim brought against Kingsworld than the exclusion clause. Unlike the exclusion clause, the indemnity clause in cl 19 applies only to acts by Kingsworld in good faith. There could be no argument that the clause is invalid because it purports to exclude dishonest acts. Clause 19 is also not constrained by reference to 'loss or damage'.
236 For this reason, if the indemnity clause applies to the circumstances of any claim against Kingsworld, and if Elders were obliged to meet the claim due to the operation of s 54 of the Insurance Contracts Act, then there is a strong argument that Elders, as the insurer, would be entitled to have recourse to the MIB Trust Fund by subrogation to recoup any payment made for any liability of Kingsworld.187
The costs of proceeding and the size of the claim
237 There are also commercial reasons which militate in favour of Plan B Trustees being justified in not commencing legal proceedings against Kingsworld.
238 In terms of potential recovery, there are all the possible obstacles discussed above. Although other potential breaches may be significant, one of the most significant possible breaches by Kingsworld, as to which an estimate of potential recovery can be put, is any breach concerning compliance with cl 5C.1 of the MIB Trust Deed (investment of Available Income). If all of the potential obstacles above could be overcome then the estimated recovery in relation to that breach, based on the 7 June 2012 McGrathNicol Report, would be between $69,088 and $480,976.188
239 Against this, and against all of these matters considered above, is the cost of proceeding and the perspective in relation to which any potential recovery must be placed. If the Court considered it appropriate for the issue concerning s 54 of the Insurance Contracts Act to be heard as a preliminary issue, Mr McKenna estimates the costs of that hearing alone to be approximately $100,000 to $150,000 and potentially as high as $200,000 to $250,000.189 All of the expressed assumptions of Mr McKenna, set out in his affidavit, appear to be very reasonable.
240 Of course, there is a real prospect that a preliminary hearing might not be ordered.190 Or if it were ordered, and Plan B Trustees were successful, and liability was still contested by the insurer, the substantial action would involve vast time and expense. During the relevant period, Kingsworld made 16,251 payments totalling $13,971,934.73.191 The payments were made to 412 different entities,192 more than half of those payments were for amounts less than $307, and 97% of the payments were for amounts less than $5,000.193 Mr Morgan, a manager at Plan B Trustees, has estimated that the litigation would require a review of approximately 16,000 documents involving 80,000 pages.194
Conclusion in relation to directions concerning Kingsworld
241 To reiterate, it can sometimes involve a highly nuanced assessment to determine whether litigation should be commenced. In the case of a charitable trust the decision is one which must be taken carefully having regard to the best manner in which the charitable purposes of the trust can be furthered. Having regard to all the matters discussed above, including the obstacles to any recovery, and the difficulties and cost of litigation, Plan B Trustees would be justified to conclude that it would not bring legal proceedings against Kingsworld to recover trust property or seek equitable compensation in respect of possible breaches of the Deed and fiduciary obligations while it was a trustee.
242 The same matters, and the extensive work already done by Plan B Trustees would also justify it in concluding that it would not make any further enquiries or investigations concerning possible causes of action it might have against Kingsworld.
Conclusion
243 It is appropriate that each of the directions sought by Plan B Trustees, with slight modifications for expression, be made.
244 In relation to a claim against Christensen Vaughan, there should be a direction that Plan B Trustees is justified in not taking legal proceedings to recover payments made to Christensen Vaughan Lawyers in respect of the legal fees identified in Schedule A of these reasons.
245 The following factors combine to make this direction appropriate:
(i) the cost of bringing such a claim and potentially irrecoverable legal fees compared with the maximum possible recovery;
(ii) the existence of possible conditions on recovery or counterclaims;
(iii) other obstacles to the success of any claim which might be brought against Christensen Vaughan.
246 In relation to a claim against individual recipients of payments it is appropriate to direct that Plan B Trustees is justified in not taking legal proceedings to recover, and justified in not making any further enquiries, concerning any of the trust payments made as identified in Schedule B to these reasons.
247 The primary reason for this direction is the likelihood of irrecoverable costs of making further enquiries or taking legal proceedings.
248 In relation to a claim against Kingsworld a direction should be made that Plan B Trustees is justified in not bringing legal proceedings against Kingsworld Pty Ltd to recover trust property or seek equitable compensation in respect of possible breaches of the Deed and fiduciary obligations while it was a trustee and also justified in not making any further enquiries or investigations concerning possible causes of action it might have against Kingsworld.
249 This direction is appropriate having regard to all the circumstances particularly the obstacles to recovery of any funds from Kingsworld.
250 Two matters should be mentioned in conclusion. The first is that although these directions might be described as partly 'commercial' in nature, this does not deprive this Court of jurisdiction to make the directions sought. Nor is there anything in the terms of s 92 of the Trustees Act 1962 (WA)which suggests that a commercial aspect to matters upon which directions are sought should weigh against the exercise of discretion to make those orders.195
251 Secondly, it has been suggested in submissions that further directions might be sought from the Court in future in relation to whether litigation is, or is not, justified against (i) directors of Kingsworld, (ii) a barrister who received payments from the MIB Trust, and (iii) another law firm. It is undesirable that directions in respect of related issues should be bifurcated by separate hearings, with separate evidence, particularly where the cost to the MIB Trust of investigation and attempted remediation of possible breaches of trust is already estimated to run to more than $3 million.196 In any event, the matters which affect the justification for abstention from litigation that are considered in these reasons may provide some basis for consideration of the appropriate course for Plan B to take in relation to other persons. Of course, different facts and a different strength of case would alter any calculus of decision. It is sufficient to conclude at this stage that I received no substantial submissions on the appropriateness of future further directions, and if such directions are sought these issues might be one factor to be considered in relation to any exercise of discretion to make such further directions.
Schedule A: Payments made to Christensen Vaughan Lawyers in respect of legal fees
File | Invoice | Acc. Name | Src | Date | Memo/Payee | -/+ | Net transaction Excl GST | Job no. | Supplier | Beneficiary |
2007 0215 | 6007 | LE | PJ | 9/07/2007 | Services provided from 1/6/07-29/6/07, Christensen Vaughan | $6693* - | $6693* | CV | U | |
2007 0215 | 5810 | LE | PJ | 24/07/2007 | Purchase: Christensen Vaughan | $10896 - | $10896 | CV | U | |
2007 0314 | 6406 | LE | PJ | 31/08/2007 | Drafting & Attending Apeal Marandoo Assessment: Christensen Vaughan | $1099 - | $1099 | CV | ||
2007 0215 | 6405 | LE | PJ | 31/08/2007 | Services provided from 9/7/07-31/8/07 - Pursuing emails PNTS telephone attendance with ACHM, considering MOU amend, telephone attendance with NNTT, attending meeting NNTT; Christensen Vaughan | $4210 - | $4210 | CV | U | |
2007 0215 | 6506 | LE | PJ | 28/09/2007 | Attending Teleconference; preservation evidence; researching law on expert witnesses & Professional Privilege; Christensen Vaughan | $7830 - | $7830 | CV | U | |
2007 0318 | 6501 | LE | PJ | 28/09/2007 | Drafting statutory declaration - ML: 47/916, letter to BDW & Wardens Court; Christensen Vaughan | $892 - | $892 | CV | ||
2007 0215 | 6615 | LE | PJ | 30/10/2007 | Auski Native Title Trip & Disbursements; Christensen Vaughan | $18353 - | $18353 | CV | U | |
2007 0215 | 6827 | LE | PJ | 30/11/2007 | Purchase; Christensen Vaughan - Inv#6827 | $966 - | $966 | CV | U | |
rvs'd | 6-3050 | LE | PJ | 30/11/2007 | Purchase; Christensen Vaughan | $530 - | $530 | CV | U | |
Rvs'd | 6-3050 | LE | PJ | 30/11/2007 | Reversal; Purchase # 07063273 | $530 + | ($530) | CV | U | |
2007 0215 | 7098 | LE | PJ | 31/01/2008 | Purchase; Christensen Vaughan | $16247 - | $16247 | N | ||
2007 0318 | 7187 | LE | PJ | 29/02/2008 | Purchase; Christensen Vaughan | $999 - | $999 | N | ||
2007 0215 | 7193 | LE | PJ | 29/02/2008 | Purchase; Christensen Vaughan | $1490 - | $1490 | N | ||
2005 0605 | 7198 | LE | PJ | 29/02/2008 | Purchase; Christensen Vaughan | $23059 - | $23059 | N | ||
Credit | 7198 | LE | PJ | 29/02/2008 | Purchase; Christensen Vaughan | $2,727 + | ($2727) | N | ||
2007 0215 | 7270 | LE | PJ | 10/03/2008 | Purchase; Christensen Vaughan | $270 - | $270 | N | ||
2007 0215 | 7323 | LE | PJ | 31/03/2008 | Purchase; Christensen Vaughan | $2873 - | $2873 | N | ||
2007 0215 | 7520 | LE | PJ | 6/05/2008 | Purchase; Christensen Vaughan | $10900 - | $10900 | N | ||
2007 0215 | 7640 | LE | PJ | 31/05/2008 | Purchase; Christensen Vaughan | $5537 - | $5537 | N | ||
2007 0215 | 7793 | LE | PJ | 1/07/2008 | Purchase; Christensen Vaughan: legal fees | $2471 - | $2471 | N | ||
2007 0215 | 7963 | LE | PJ | 5/08/2008 | Purchase; Christensen Vaughan | $3963 - | $3963 | N | ||
2007 0215 | 8095 | LE | PJ | 2/09/2008 | Purchase; Christensen Vaughan: MIB Native Title legal fees | $1346 - | $1346 | N | ||
2007 0028 | 8174 | LE | PJ | 19/09/2008 | Purchase; Christensen Vaughan | $51460 - | $51460 | CV | ||
2007 0215 | 8406 | LE | PJ | 5/11/2008 | Purchase; Christensen Vaughan: Native Title - Kingsley Palmer's field trip | $5,757 | $5757 | N | ||
20070215 | 8653 | LE | PJ | 19/12/2008 | Purchase; Christensen Vaughan: Native Title Expense | $493 - | $493 | N | ||
2007 0215 | 8800 | LE | PJ | 6/02/2009 | Purchase; Christensen Vaughan | $1733 - | $1733 | N | ||
2007 0215 | 8897 | LE | PJ | 5/03/2009 | Purchase; Christensen Vaughan | $1979 - | $1979 | N | ||
2005 0509 | 8935 | LE | PJ | 9/03/2009 | Purchase; Christensen Vaughan | $26452 - | $26452 | CV | ||
2007 0215 | 9143 | LE | PJ | 8/04/2009 | Purchase; Christensen Vaughan | $6664 - | $6664 | N | ||
2005 0487 | 9107 | LE | PJ | 3/04/2009 | Purchase: Gadens Lawyers pre. Trade as Christensen Vaughan - Re BHP - Mining Lease Objections - M47/761-M47/782 | $9077 - | $9077 | |||
Total | $224240 - $3257 + | $220983 |
KEY: Schedule A | |
| Symbol |
|
| LE |
|
| N |
|
| CV |
|
| U |
|
| -/+ |
|
| * |
|
Schedule B: Trust payments made to individuals
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ROFRA RODEN CAING PACHA MADOU WEMER PACAR-M DOSTE GAERI CARLOR SPJAM CHKYL MIRON- AN ASLEA SILIN MIDON PAALI DONAT THROS MISUD RORUE HIDAV WIFEL SIADE CUPHI PAHOR COTRA PAPRE BOLAR MIJOA ROROB WHHAR-SNR GADIL HICALI MIKIA PADW CABRE1 LAEDW WHPET TUBRI HIREV WHGRA WHCHA HUANN WHDAV WHGLE DIALL DHHEN DOJIM PACEC-ILA ROCON HIDON COCYN DOBEN HITRI LOALA DAMAR PALAT HAVAU PAHAI CAKAY WEGER SIKAA WHMEG CUGAR KEERN DOJEN WHSAL CASKAT WHHAR-O1 ROTHO HAKER BOJAD PAROD-ER PAZAN WHMYO PADYL PALEE-J ROTEE COROB WHLUK CASRIC PASHE-RI CHREX HAWAR CHTAH SACLA PAROS PATHE DHBRE KEROD LOKRI PASHE- LI HUSHA MIKRY PAVIC CODWA TULLO PANAT PHLYD PALEE-S PHJUD COUKRI RODAR MIREH WACAR HILIL HUJUS PAWOB BLSCO WHCAR HURAC COLES ASPRI WHKIM JOTER PANIG HASUS HICHRI NON-MEMBER MAPET MOSTU PALAV TUEUS KEDAL COMAR LOPAT RONIK COUVIN WARIC NON-MEMBER RONAR CACOL NON-MEMBER NON-MEMBER LOHEN COHED HIRUE HIJUL NON-MEMBER LARIK NON-MEMBER SACAL NON-MEMBER PALEA NON-MEMBER PAMAR-J DOKIM NON-MEMBER NON-MEMBER NON-MEMBER NON-MEMBER LOLES NON-MEMBER NON-MEMBER | 19,849 19,758 19,579 19,531 19,474 18,971 18,838 18,780 18,630 18,625 18,427 18,347 18,317 18,201 18,169 17,230 17,047 16,895 16,786 16,732 16,696 16,317 16,309 16,102 16,069 16,058 15,938 15,904 15,598 15,505 15,270 15,187 14,591 14,439 14,264 14,220 14,109 14,023 14,013 13,927 13,907 13,653 13,587 13,000 12,990 12,923 12,922 12,893 12,872 12,827 12,659 12,608 12,063 11,869 11,801 11,713 11,413 11,294 11,059 10,879 10,562 10,410 10,376 10,137 10,114 10,056 9,824 9,600 9,567 9,263 8,951 8,944 8,832 8,786 8,715 8,661 8,568 8,500 8,487 8,259 8,176 7,801 7,673 7,660 7,649 7,625 7,499 7,361 7,206 6,724 6,554 6,499 6,420 6,400 6,234 5,973 5,950 5,837 5,805 5,576 5,450 5,400 5,309 5,307 5,173 5,080 4,981 4,845 4,830 4,775 4,669 4,503 4,150 4,024 3,982 3,814 3,771 3,733 3,700 3,650 3,608 3,592 3,550 3,400 2,970 2,720 2,676 2,609 2,546 2,262 2,000 1,850 1,850 1,822 1,800 1,671 1,600 1,331 1,299 1,200 1,200 1,171 1,063 1,039 1,002 1,000 930 800 668 620 600 600 531 500 500 500 498 468 422 416 400 400 400 400 395 350 347 328 310 246 200 200 200 200 200 200 168 65 16 1,401,945 |
1 Exhibit B (affidavit of Mr Satie sworn 23 March 2012) [7].
2 Exhibit L (affidavit of Mr Morgan sworn 22 March 2013) [37].
3 Exhibit L (affidavit of Mr Morgan sworn 22 March 2013) [39].
4Plan B Trustees Ltd v Maitland Parker [2012] WASC 392.
5Re Atkinson [1971] VR 612, 615 - 616 (Gillard J); Re Beddoe Downes v Cottam [1893] 1 Ch 547, 557 (Lindley LJ), 562 (Bowen LJ).
6Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66, 94 [74] (Gummow ACJ, Kirby, Hayne & Heydon JJ).
7 Further conformed statement of agreed facts, 27 November 2012 (Statement of agreed facts) [6].
8 Statement of agreed facts [3]; Exhibit 1.
9 Statement of agreed facts [7].
10 Statement of agreed facts [4]; Exhibit 3.
11 Statement of agreed facts [5]; Exhibit 4.
12 Statement of agreed facts [10]; Exhibit 5.
13 Exhibit B (affidavit of Mr Satie sworn 23 March 2012) [7].
14 Statement of agreed facts [42]; Exhibit 12 (2008 report); Exhibit 13 (report for year ended 30 June 2009).
15 Exhibit K (affidavit of Mr Satie sworn 25 March 2013) Annexure MVS32.
16 Exhibit K (affidavit of Mr Satie sworn 25 March 2013) Annexure MVS34.
17 Exhibit K (affidavit of Mr Satie sworn 25 March 2013) Annexure MVS34, p 12.
18 Exhibit K (affidavit of Mr Satie sworn 25 March 2013) [13] - [14], and Annexure MVS35 and MVS36.
19 Exhibit 12; Exhibit 13.
20 Exhibit A (affidavit of Mr Satie sworn 23 March 2012) [10].
21 Statement of agreed facts [15].
22 Statement of agreed facts [62].
23 Statement of agreed facts [2].
24 Exhibit L (affidavit of Mr Morgan sworn 22 March 2013) [39].
25 Exhibit A (affidavit of Mr Satie sworn 23 March 2012); Exhibit C (affidavit of Mr Satie sworn 3 October 2012).
26 Exhibit A (affidavit of Mr Satie sworn 23 March 2012) MVS6.
27 Exhibit 14.
28 Exhibit A (affidavit of Mr Satie sworn 23 March 2012) [47].
29Re Estate of Anastasios Keriacules Challis (Dec) [2010] WASC 333 [30] (Allanson J).
30Application of Perpetual Trustee Company Ltd [2003] NSWSC 1185 [24] (Young CJ in Eq).
31Re Lemon Tree Passage and Districts RSL and Citizens Club (1987) 11 ACLR 796.
32Mischel v Mischel Holdings Pty Ltd (in liq) (No 2) [2012] VSC 421 [70] (Croft J).
33Re Lemon Tree Passage and Districts RSL and Citizens Club (1987) 11 ACLR 796, 799.
34 See also Application of Gnitekram Marketing Pty Limited [2010] NSWSC 1328 [17(c)] (Hallen AsJ).
35 See, in relation to different statutory provisions, Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar, the Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand & Anor [2006] NSWCA 160; (2006) 66 NSWLR 112. No application for special leave was brought and the plaintiffs failed in a later attempt, in a different stream of litigation, to challenge the decision by notice of contention or cross-appeal: Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66, 121 [169] - [170], 123 - 124 [178] - [184] (Gummow ACJ, Kirby, Hayne & Heydon JJ);
36Plan B Trustees Ltd v Maitland Parker [2012] WASC 392 [6].
37Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66, 119 [162] (Gummow ACJ, Kirby, Hayne & Heydon JJ); Application of Macedonian Orthodox Community Church St Petka Inc (No 3) [2006] NSWSC 1247 [80] (Palmer J).
38Application of Perpetual Trustee Company Ltd [2003] NSWSC 1185 [11].
39 Exhibit A (affidavit of Mr Satie sworn 23 March 2012) [24] - [25].
40Marley v Mutual Security Merchant Bank [1991] 3 All ER 198, 201 (Lord Oliver).
41 Exhibit A (affidavit of Mr Satie sworn 23 March 2012) [21(d)].
42 Exhibit A (affidavit of Mr Satie sworn 23 March 2012) [37].
43 Exhibit 8.
44 Adapted from Schedule A to the Originating Summons.
45 See Exhibit E (affidavit of Mr Gallagher affirmed 3 September 2012) [12].
46 Exhibit F (affidavit of Mr Gallagher affirmed 14 September 2012) [4].
47 Exhibit E (affidavit of Mr Gallagher affirmed 3 September 2012) [14]; Exhibit G (affidavit of Mr Sheiner affirmed 11 October 2012) [7(a)].
48 Statement of agreed facts [23].
49 Exhibit E (affidavit of Mr Gallagher affirmed 3 September 2012) [15], and Annexure RG1.
50 Exhibit F (affidavit of Mr Gallagher affirmed 14 September 2012) [8].
51 Exhibit 8.
52 Exhibit 8 (Invoices 5810, 6506, 7098, 7193, 7520, 7640, 7963, 8406).
53 Statement of agreed facts [19].
54 Exhibit G (affidavit of Mr Sheiner affirmed 11 October 2012) [7(e)].
55 Statement of agreed facts [25].
56 Exhibit F (affidavit of Mr Gallagher affirmed 14 September 2012) [9]
57 Exhibit G (affidavit of Mr Sheiner affirmed 11 October 2012) [7(b)].
58 Exhibit E (affidavit of Mr Gallagher affirmed 3 September 2012) [16]
59 Exhibit 35.
60 Statement of agreed facts [21] - [22], [25] - [26].
61 Exhibit G (affidavit of Mr Sheiner affirmed 11 October 2012) [7(d)], [19].
62 Statement of agreed facts [27] - [28].
63 Exhibit F (affidavit of Mr Gallagher affirmed 14 September 2012) [14]; Exhibit G (affidavit of Mr Sheiner affirmed 11 October 2012) [7(c)].
64 Exhibit F (affidavit of Mr Gallagher affirmed 14 September 2012) [15], and Annexure RG13.
65 Exhibit F (affidavit of Mr Gallagher affirmed 14 September 2012) [16], and Annexure RG14.
66 Exhibit E (affidavit of Mr Gallagher affirmed 3 September 2012) [21], and Annexure RG4.
67 Exhibit E (affidavit of Mr Gallagher affirmed 3 September 2012) [17] - [18], and Annexure RG2; Exhibit G (affidavit of Mr Sheiner affirmed 11 October 2012) [7(f)].
68 Exhibit F (affidavit of Mr Gallagher affirmed 14 September 2012) [13], and Annexure RG12.
69 Statement of agreed facts [21] - [22].
70 Exhibit G (affidavit of Mr Sheiner affirmed 11 October 2012) [7(g)].
71 Statement of agreed facts [17]; Exhibit 9.
72 Statement of agreed facts [21] - [22].
73 Statement of agreed facts [80].
74 Exhibit 9.
75 Exhibit I (affidavit of Ms Bursle sworn 26 September 2012) Annexure JMB4.
76 Exhibit D (affidavit of Mr McKenna sworn 23 November 2012).
77 ts 173 - 174.
78 Further conformed statement of disputed facts, 27 November 2012 [2] - [11].
79Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449, 475 (Brennan CJ, Gaudron, McHugh and Gummow JJ); Mayfair Trading Co Pty Ltd v Dreyer[1958] HCA 55; (1958) 101 CLR 428, 452 (Dixon CJ).
80Spence v Crawford [1939] 3 All ER 271, 288 - 289.
81 ts 189.
82Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 286 ALR 12; (2012) 86 ALJR 296.
83Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 286 ALR 12; (2012) 86 ALJR 296, 326 [122].
84 C Mitchell et al, Goff and Jones The Law of Unjust Enrichment (8th ed, 2011) 31 [2-24].
85Mohamed v Alaga & Co (A firm) [1999] EWCA Civ 3037; [2000] 1 WLR 1815.
86Langsam v Beachcroft LLP [2011] EWHC 1451 (Ch). Compare also Guinness v Saunders [1990] 2 AC 663. Cf P Birks, 'Restitution Without Counter-Restitution' [1990] LMCLQ 330.
87Langsam v Beachcroft LLP & Ors [2012] EWCA Civ 1230.
88Langsam v Beachcroft LLP [2011] EWHC 1451 (Ch) [64]
89Miller v Miller [2011] HCA 9; (2011) 242 CLR 446, 454 [15] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ).
90Barnes v Addy (1874) LR 9 Ch App 244.
91Barlow Clowes International Ltd (in liq) & Ors v Vaughan [1992] 4 All ER 22, 35 (Woolf LJ).
92Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89, 163 - 164 [177] - [179] (the Court).
93Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253, 289 [113] (Heydon and Crennan JJ).
94Western Australia v Ward [2002] HCA 28; (2002) 213 CLR 1, 64 [14] (Gleeson CJ, Gaudron, Gummow and Hayne JJ).
95Yanner v Eaton [1999] HCA 53; (1999) 201 CLR 351, 373 [38] (Gleeson CJ, Gaudron, Kirby and Hayne JJ).
96 See Radmanovich v Nedeljkovic [2001] NSWSC 492; (2001) 52 NSWLR 641, 665 [136] (Young CJ in Eq).
97 Statement of agreed facts [30].
98 Exhibit 10.
99Latimer v Commissioner of Inland Revenue [2002] 3 NZLR 195, 208 [38] (Blanchard J).
100Latimer v Commissioner of Inland Revenue [2004] 3 NZLR 157, 168 [28] and see 171 [42] (Lord Millett).
101Dingle v Turner[1972] AC 601, 624.
102Shire of Derby-West Kimberley v Yungngora Association Inc [2007] WASCA 233; (2007) 157 LGERA 238, 253 [54] (Buss & Miller JJA agreeing).
103Latimer v Commissioner of Inland Revenue [2004] 3 NZLR 157, 170 [36] (Lord Millett).
104 Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [18].
105 See Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [24].
106 Statement of agreed facts [44].
107 In a different context Barlow Clowes International v Vaughan [1992] 4 All ER 22; Russell-Cooke Trust Company v Prentis[2003] 2 All ER 478.
108 Third defendant's submissions, 24 October 2012 [91].
109Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2012] WASCA 16 [119] (McLure P).
110 Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [14].
111 Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [42] - [43].
112 Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [32] - [38].
113 Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [29] - [30].
114 Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [37] - [38].
115 Third defendant's submissions, 24 October 2012 [57].
116 Exhibit H (affidavit of Mr Barry affirmed 24 September 2012) Annexure CDB5.
117 Exhibit 8 (Invoice 7198).
118 Exhibit 32 [104].
119Shire of Derby-West Kimberley v Yungngora Association Inc [2007] WASCA 233 [76] (Newnes JA, Miller and Buss JJA agreeing).
120 Third defendant's submissions, 24 October 2012 [47].
121Commissioner of Taxation of the Commonwealth of Australia v Word Investments Ltd [2008] HCA 55; (2008) 236 CLR 204, 219 [24].
122 Exhibit I (affidavit of Ms Bursle sworn 26 September 2012) Annexures JMB4 - JMB17.
123 Exhibit 11, p 15.
124 Exhibit I (affidavit of Ms Bursle sworn 26 September 2012) Annexure JMB6, p 102.
125 Statement of agreed facts [62].
126 Statement of agreed facts [61].
127 Statement of agreed facts [72].
128 Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [73(a)].
129 Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [73(b)], [74].
130 Statement of agreed facts [69].
131 Exhibit A (affidavit of Mr Satie sworn 23 March 2012) [45]; Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [65], [68], [69].
132 Exhibit A (affidavit of Mr Satie sworn 23 March 2012) Annexure MVS18.
133 Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [67].
134 Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [69].
135 Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [68].
136 Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [68]; Exhibit 28.
137Magistrates Court (Civil Proceedings) Act 2004 (WA)s 30.
138Magistrates Court (Civil Proceedings) Act 2004 (WA)s 31.
139Partington v Reynolds (1858) 4 Drew 253, 255 - 256; 62 ER 98, 98 - 99 (Kindersley VC).
140Clephane v Lord Provost of Edinburgh (1869) LR 1 HL Sc 417, 421 (Lord Westbury). Cf Attorney General v The Governors of the Sherborne Grammar School (1854) 18 Beav 256, 280; (1854) 52 ER 101, 110 - 111 (Romilly MR).
141Clephane v Lord Provost of Edinburgh (1869) LR 1 HL Sc 417, 420 (Lord Westbury).
142Clephane v Lord Provost of Edinburgh (1869) LR 1 HL Sc 417, 421 (Lord Westbury).
143Andrews v M'Guffog (1886) 11 App Cas 313, 316. See also In re Freeston's Charity [1978] 1 WLR 120, 130 (Fox J).
144Attorney General v Corporation of Exeter (1826) 2 Russ 45, 54 (Lord Eldon).
145Attorney General v Corporation of Exeter (1826) 2 Russ 45, 54 (Lord Eldon).
146 Exhibit 26, p 751.
147 Exhibit 26, p 751.
148 Statement of agreed facts [45] - [56]; Exhibit A (affidavit of Mr Satie sworn 23 March 2012); Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [46] - [56].
149 Exhibit 24 (Copy of company extract for Kingsworld).
150 Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [46] - [52]; Statement of agreed facts [54].
151 Exhibit C (affidavit of Mr Satie sworn 3 October 2012) [54] - [55]; Statement of agreed facts [46] - [53].
152 Statement of agreed facts [45].
153 Statement of agreed facts [56].
154 Exhibit 26 pp 695 - 712.
155 Exhibit 26 pp 713 - 729.
156 Exhibit 26 pp 730 - 761; Statement of agreed facts [57].
157 Exhibit 26 p 705 (cl 8).
158 Exhibit 26 p 720.
159 Exhibit 26 pp 720 (cl 1.2), 725 (cl 5.1), 751.
160 Exhibit C (affidavit of Mr Satie sworn 3 October 2012) Annexure MVS29; Statement of agreed facts [60].
161 Exhibit K (affidavit of Mr Satie sworn 25 March 2013) Annexure MVS32.
162 Exhibit K (affidavit of Mr Satie sworn 25 March 2013) Annexure MVS34.
163 Exhibit K (affidavit of Mr Satie sworn 25 March 2013) Annexure MVS34, p 12.
164 Exhibit K (affidavit of Mr Satie sworn 25 March 2013) [13] - [14], and Annexures MVS35 and MVS36.
165HIH Casualty and General Insurance Australia Ltd v DellaVedova [1999] FCA 456; (1999) 10 ANZ Ins Cas 61-431, 74, 870 [38] (the Court)
166Permanent Trustee Australia Ltd v FAI General Insurance (1998) 153 ALR 529, 568 (Hodgson CJ in Eq).
167FAI General Insurance v Australian Hospital Care (1999) 153 FLR 448, 454 [24] (Derrington J, Pincus J agreeing). There was no appeal to the High Court on this point.
168FAI Insurance Limited v Australian Hospital Care Pty Ltd [2001] HCA 38; 204 CLR 641.
169FAI Insurance Limited v Australian Hospital Care Pty Ltd [2001] HCA 38; 204 CLR 641, 660 [46] (McHugh, Gummow and Hayne JJ).
170FAI Insurance Limited v Australian Hospital Care Pty Ltd [2001] HCA 38; 204 CLR 641, 650 [14].
171 Exhibit K (affidavit of Mr Satie sworn 25 March 2013) Annexure MVS34.
172 Exhibit 12; Exhibit 13; Statement of agreed facts [42].
173 Exhibit 26, p 751.
174 Exhibit 26, p 751.
175 Exhibit 26, p 741.
176 Exhibit 26, p 732.
177 Exhibit L (affidavit of Mr Morgan sworn 22 March 2013) Annexure AVM16, p 145. See also Citibank NA v QVT Financial LP [2007] EWCA 11 [82] (Arden LJ).
178 Exhibit 4, p 25.
179 P Birks, Unjust Enrichment (2nd ed, 2005) 295.
180Bartlett v Barclays Trust Co Ltd (No 2) [1980] 1 Ch 539, 545.
181Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15; (2003) 212 CLR 484, 507 [63] (the Court).
182Armitage v Nurse [1998] Ch 245, 253 (Millett LJ, Hutchison and Hurst LJJ agreeing); Welker & Ors v Rinehart (No 2) [2011] NSWSC 1238 [24] (Brereton J).
183Wilden v Green [2009] WASCA 38; (2009) 38 WAR 429, 466 [156] - [167] (McLure P; Newnes AJA agreeing).
184Nocton v Lord Ashburton [1914] AC 932, 954 (Viscount Haldane LC); Magill v Magill [2006] HCA 51; (2006) 226 CLR 551, 561 [17] (Gleeson CJ) 615 - 616 [207] (Heydon J).
185Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253, 286 [102] (Heydon and Bell JJ). Compare Re Leek [1969] 1 Ch 563, 586 (Sachs LJ).
186 Exhibit 4, p 25.
187 C Mitchell and S Watterson, Subrogation: Law and Practice (2007) 433 [12.23]; Vacuum Oil Co Pty Ltd v Wiltshire [1945] HCA 37; (1945) 72 CLR 319, 335 - 336 (Dixon J); State Government Insurance Office (Qld) v Brisbane Stevedoring Pty Ltd [1969] HCA 59;(1969) 123 CLR 228, 240 - 241 (Barwick CJ).
188 Exhibit 14, p 33 [4.7.9].
189 Exhibit J (affidavit of Mr McKenna sworn 18 March 2013) [9].
190Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1, 55 [168] - [170] (Kirby and Callinan JJ), 18 [52] (Gaudron J), 27 [90] (McHugh J); Landsdale Pty Ltd v Moore [2009] WASCA 176 [20] (Newnes JA).
191 Exhibit L (affidavit of Mr Morgan sworn 22 March 2013) Annexure AVM6, p 47.
192 Exhibit A (affidavit of Mr Satie sworn 23 March 2012) Annexure MVS6, Appendix E, pp 175 - 178.
193 Exhibit L (affidavit of Mr Morgan sworn 22 March 2013) [44].
194 Exhibit L (affidavit of Mr Morgan sworn 22 March 2013) [9].
195Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66, 89 [55] (Gummow ACJ, Kirby, Hayne & Heydon JJ).
196 Exhibit L (affidavit of Mr Morgan sworn 22 March 2013) [37].
165
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