Pope v DRP Nominees Pty Ltd No. Scgrg-96-1003 Judgment No. S6994

[1998] SASC 6994

POPE V DRP NOMINEES PTY LTD & ORS

[1998] SASC 6994

Full Court: Prior and Lander JJ

1. PRIOR J.   I too would reject the application.  I am not satisfied that there are special circumstances to warrant departure from the general rule that an appeal does not operate as a stay of execution or of proceedings under the decision of the court.  The application is therefore refused.

2. LANDER J.       This is an application for a stay by the second defendant. The application is supported by the first defendant, and the interveners.  The plaintiff opposes the application and so also does one beneficiary who is a person under a disability. 

3. The second defendant filed a Notice of Appeal on 11 November 1998 against orders made by Olsson J on 5 November 1998. 

4. The action in which the second defendant has appealed was brought by his son who, with his mother and siblings (including the interveners), was a beneficiary of the Pope Family Trust. 

5. The Pope Family Trust is a discretionary trust which was established by Oliver Edgar Pope as settlor.  He is the father of the second defendant and the grandfather of the plaintiff. 

6. The trustee of the trust is the first defendant, DRP Nominees Pty Ltd, and the directors of that company are WB Finnie Pty Ltd, and the second defendant.  The second defendant is a director of WB Finnie Pty Ltd and therefore controls the trustee. 

7. The Deed of Trust provides that the power of appointment of the trustee resides in the settlor and failing him the second defendant.  The settlor died in 1977 so the power resides in the second defendant. 

8. The plaintiff's case is that he has received no allocation from the trust since 1983.  All income and distribution of capital has been to the plaintiff's siblings.  The plaintiff claims that he and his father, the controller of the trustee, and the appellant, are on bad terms. 

9. Initially the plaintiff applied for the appointment of an inspector and after argument a Master of the Court made such an appointment.  The trustee appealed to the Full Court from that decision but the appeal was subsequently abandoned.  

10. The inspector provided an interim report which was highly critical of the trustee.  After receipt of that report the plaintiff then sought further relief including orders to remove the trustee and to appoint independent persons as trustees. 

11. When the matter came before Olsson J the trustee advised the court that it wished to retire.  The second defendant then advised the court that he wished to appoint two new trustees who are persons known to the second defendant. 

12. On 28 July 1998 the second defendant advised the court he would abide by any order of the court.  However, he later appeared by senior counsel and argued that there was no jurisdiction to make any order for the appointment of new trustees. 

13. This Court has been told on this application for a stay that the second defendant only intended to abide by any order of the Court in his capacity as a beneficiary and reserved to himself the right to argue against the making of the orders in his capacity as appointor. 

14. Olsson J determined these matters without going to viva voce evidence.  He said that the matters disclosed matters of disquiet, including a total failure to maintain proper records, and loans raised by the trust being on-lent to the second defendant.  He described the administration of the trust as being about as “inappropriate and unsatisfactory as one can imagine short of actual dishonesty”. 

15. He ordered the removal of the trustee and the appointment as trustees of the two independent persons nominated by the plaintiff.

16. The outgoing trustee has not appealed against that decision, nor have the interveners.  Notwithstanding that they have not appealed against his Honour's orders, they support this application for a stay by the second defendant, whose only interest in the appeal apparently is that of appointor. 

17. Rule 95.16 asserts as a proposition that an appeal does not operate as a stay, but, of course, a stay of the orders appealed against will be granted where the justice of the case requires it; that is, that on balance it would be appropriate to order a stay. 

18. It usually would be a ground for a stay if the subject matter of the appeal would be lost or destroyed if a stay is not ordered.  So also a stay will be ordered if otherwise the appeal would be rendered nugatory; Where an appellant would suffer irremediable harm which would not be obviated by success on appeal a stay would usually be ordered.   The circumstances of the particular case will dictate whether a stay is appropriate. 

19. In this case the applicant, and those supporting the applicant, say that there is a real disadvantage in allowing the order of appointment of the new trustees to stand and not be stayed.  The disadvantage is that those appointed trustees by Olsson J will, according to their obligations pursuant to that appointment, investigate the assets of the trust at a significant cost to the trust, which will be irrecoverable in the event that the appeal is successful.  There is no doubt that if the trustees do take up their position monies will be expended in determining the assets of the trust and, in particular, whether there is a chose in action available to the trust against the former trustee and the second defendant.  If the appeal is successful some of those costs will be lost. 

20. Against that, there are the findings made by the learned Trial Judge of serious irregularities in the conduct of the trust and in the protection of the trust assets.  Those allegations are, as I have said, that the trustee and inferentially the applicant, have acted in regard of the trust in ways just short of actual dishonesty. 

21. In response to those findings the applicant and the trustee have offered to undertake to protect the trust assets in the meantime.  However, that undertaking, as I understood it, would not necessarily include the protection of any chose in action available to the trust against the trustee and the second defendant. 

22. In my opinion, having regard to the findings made by the trial judge, and in particular to his findings in relation to the various breaches of trust, it would be inappropriate to grant a stay notwithstanding that the failure to grant a stay might, if the appeal is successful, mean some loss to the trust.  I would reject the application. 

23. MRS SHAW:     I seek costs against the appointor in relation to this application, in relation to the application before his Honour Olsson J.  The question of costs was reserved or adjourned to see what the outcome of this application was.  I seek an order for costs in relation to the stay application as against the appointor personally. 

24. MR FROST:      I join the application

25. PRIOR J:   The order of the court is that those opposing the stay are to have costs in this application, so too with respect to the application before Olsson J.