Powers v Hayes

[2002] WASC 101

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   POWERS & ANOR -v- HAYES & ORS [2002] WASC 101

CORAM:   WHITE AUJ

HEARD:   23 APRIL 2002

DELIVERED          :   2 MAY 2002

FILE NO/S:   CIV 2251 of 1998

BETWEEN:   ALAN JOHN POWERS

First Plaintiff

SHEILA POWERS
Second Plaintiff

AND

COLIN ROBERT HAYES
First Defendant

DAVID ROBERT PRICE
Second Defendant

IMAGINATION ENTERPRISES PTY LTD
Third Defendant

Catchwords:

Practice and procedure - Application for the appointment of a receiver and manager - Affidavit evidence with no cross-examination of deponents

Turns on own facts

Legislation:

Supreme Court Act, s 25(9)

Result:

Application dismissed

Category:    B

Representation:

Counsel:

First Plaintiff                :     Mr C L Caine

Second Plaintiff            :     Mr C L Caine

First Defendant             :     No appearance

Second Defendant         :     Mr D R Clyne

Third Defendant           :     No appearance

Solicitors:

First Plaintiff                :     Caine & Co

Second Plaintiff            :     Caine & Co

First Defendant             :     No appearance

Second Defendant         :     Tottle Christensen

Third Defendant           :     No appearance

Case(s) referred to in judgment(s):

Nil

Case(s) also cited:

Nil

1. WHITE AUJ:  This is an application by the second defendant, Mr Price, pursuant to a chamber summons filed on 4 April 2002, for the appointment of a receiver and manager to the third defendant.

2. The dispute between Mr and Mrs Powers on the one hand and Mr Price on the other is of long standing and has been debated before me on more than one occasion.  In my written reasons for decision published on 10 October 2001, I summarised the background to this dispute as follows (the reference to "the Company" is a reference to the third defendant):

   "In September 1988, Mr Hayes and Mr Price were the two directors of, and the two shareholders in, the Company that was the corporate trustee of the Denmark Unit Trust ('the Trust').  Each held two of the four issued shares in the Company.  In addition, each of Mr Hayes and Mr Price held 10 units in the Trust.

   In November 1988, the Company purchased 33 hectares of land at a purchase price of $42,500 which amount, together with the stamp duty on transfer and the conveyancing costs in connection with that purchase, was paid by Mr Price.

   In May 1990, there was a meeting attended by Mr Hayes, Mr Price, a Mr Ryan, Mr and Mrs Powers and others at which it was agreed that Mr and Mrs Powers and Mr Ryan would pay the purchase price of a piece of land to be bought by the Company, in consideration of which 10 units would be issued to each of Mr and Mrs Powers (jointly) and Mr Ryan.  It was agreed that each of Mr Hayes and Mr Price would transfer one of their shares in the Company to Mr and Mrs Powers (jointly) and Mr Ryan, respectively.  This agreement was carried into effect and settlement of the land purchased took place on 14 August 1990.

   Thereafter, Mr Price fell into financial difficulties and on 2 July 1991, he became bankrupt.

   By documents which are dated August 1990 (the actual date of execution is disputed, as will appear hereunder), it was agreed that Mr Price would exchange his 10 ordinary units in the Trust for 13,125 special units, in consideration of the promise by Mr and Mrs Powers, Mr Hayes and Mr Ryan that, when Mr Price was cleared of bankruptcy, he would be reinstated as a director of the Company and would have his special units converted back into 10 ordinary units in the Trust.

   This agreement was executed to the extent that the Company issued the special units as agreed and repurchased Mr Price's 10 units accordingly.  The terms of the agreement were, on 16 April 1996, reduced to writing in the form of a Deed of Declaration of Trust of that date (Ex 16) executed by Mr and Mrs Powers and Mr Price, respectively and witnessed by Mr Bazeley, which contained, inter alia, the following provisions (and in which Mr and Mrs Powers are together referred as 'Powers'):

   'Whereas:

   G.On or about 9 August 1990 Price exchanged his 10 ordinary units in the trust for 13,125 special par units in the trust in consideration of a promise by the company, Powers, Hayes and Ryan that the special par units would be converted back to 10 ordinary units if he should personally request them to do so and in consideration of a declaration by Powers, Hayes and Ryan that they each hold the ordinary units in the Trust issued to them for one another and for Price as tenants in common in equal shares.

   …

   NOW THIS DEED WITNESSETH:

   1.…

   2.Powers hereby acknowledge and confirm the promise referred to in recital G above and declare that they hold the 10 ordinary units in the trust issued to them in trust for themselves and for Price and that they will take all steps and do all things necessary to convert the special par units issued to Price to 10 ordinary units in the trust and appoint Price a director of the company as soon as they are able to do so and hereby undertakes not to deal with the units or exercise the powers attached to them without the knowledge and consent of Price.'

   As a consequence of his bankruptcy, all Mr Price's rights and interest in the special units and his shares in the Company vested in his trustee in bankruptcy.

   On 25 April 1992, Mr Ryan died, leaving the residue of his estate to the Trust.

   In proceedings in this Court in CIV 2114 of 1995, Mr and Mrs Powers and the executor of Mr Ryan's estate made certain claims against Mr Hayes and Mr Price, seeking the transfer to them of the shares in the Company as previously agreed.  Mr Price consented to the orders sought, but Mr Hayes defended the claims.

   On 14 February 1997, Mr Price wrote to Mrs Powers a letter (Ex 17) confirming his support for the claims made against Mr Hayes and saying, inter alia:

   'At the end of these actions we will share all costs and legal fees incurred in this pursuit and hopefully move onward into forever and really establish the dream at Denmark that we created at the outset of this project.'

   The undertaking to share the costs was understood by both Mr Price and Mr and Mrs Powers as an agreement that, if and when they had control of the Trust, following a successful claim against Mr Hayes, the costs would be paid from trust funds.  Mrs Powers said this in her evidence and I find that to be so.  Neither Mr and Mrs Powers nor Mr Price had any moneys from which the costs could be paid, other than their loan accounts in the Trust.

   In due course, the claims against Mr Hayes were tried, there was an unsuccessful attempt to resolve the differences by mediation and the matter was dealt with by Templeman J who delivered a written judgment on 13 May 1998 pursuant to which his Honour made declarations that Mr Hayes held one share in the Company in trust for the executor of Mr Ryan's estate and that Mr Price held one share in trust for Mr and Mrs Powers jointly.  There were consequential orders for the transfer of the shares accordingly.  The shares have since been transferred in compliance with his Honour's orders.

   Mr Price has asked Mr and Mrs Powers to implement the agreement exchanging his special units for 10 ordinary units and reinstating him as a director of the Company, but Mr and Mrs Powers have refused to comply."

3. At the conclusion of my reasons, I made a declaration that the Deed of Declaration of Trust is binding on Mr and Mrs Powers and should be performed by them.  At the same time, I granted leave to Mr Price to apply for consequential or facilitative orders to give effect to that declaration.

4. Mr and Mrs Powers, together with Mr Bazeley, who had acquired from Mr Hayes his 10 units in the Trust and one share in the third defendant, held a meeting at which Mr and Mrs Powers voted in  favour of the conversion of Mr Price's special units to 10 units in the Trust, and at which Mr Bazeley voted against the proposal which was thereby rejected.

5. It is, I think, of significance that the deed of declaration of Trust records an agreement by the third defendant, as well as by Mr and Mrs Powers and Messrs Hayes and Ryan, that Mr Price's special units be converted to ordinary units in the Trust and that that Deed was witnessed by Mr Bazeley.

6. It is probable, therefore, that when Mr Bazeley voted against the resolution to convert Mr Price's special units to ordinary units in the Trust, he well knew that the third defendant, as well as all the unit holders and shareholders at the time, had been a party to the agreement to effect such conversion.  Nonetheless, he acted to defeat Mr Price's entitlement under that arrangement.  Of course, Mr Bazeley is not a party to these proceedings, although he is well aware of them, and no orders have been sought against him at  any stage of the proceedings.

7. In the action in this Court, CIV 1124 of 2002, initiated on 31 January 2002, Mr Price has sued Mr and Mrs Powers, Mr Bazeley and the third defendant, claiming the following orders:

   "(a)the entry in the Unit Register of the Denmark Trust of 13,125 special units being held by the plaintiff be cancelled and in consideration the cancellation of those units the plaintiff be shown as the registered holder of 10 ordinary $1.00 units;

   (b)alternatively, a new trustee be appointed to the assets of the Denmark Trust;

   (c)alternatively, a receiver be appointed to the assets of the Denmark Trust;

   (d)the assets of the Denmark Trust be disposed of and in due course the net proceeds of the disposal of the assets of the Denmark Trust be distributed to the Registered Unit Holders;

   (e)a pro rata proportion of profits distributed to ordinary unit holders since 1998 be made to the plaintiff in respect of his holding of 10 ordinary $1 units in the Denmark Trust;

   (f)the ten ordinary $1 units in the Denmark Trust held by Robert Bazeley be cancelled;

   (g)the 1 ordinary $1 share in the capital of Imagination held by Robert Bazeley be cancelled;

   (h)any ordinary $1 shares in the capital of Imagination be cancelled;

   (i)interest be paid by Imagination to the plaintiff at such rates as to the court shall deem fit on monies due but unpaid to the plaintiff pursuant to distributions of profit due to the plaintiff on his ordinary $1 units held in the Denmark Trust as and from 1998;

   (j)Robert Bazeley and Sheila Powers be removed as directors of Imagination;

   (k)damages;

   (l)costs."

8. The application before me is, I understand, made pursuant to the provisions of s 25(9) of the Supreme Court Act, which empowers a Judge of this Court to appoint a receiver in all cases in which it shall appear to the Judge to be just or convenient that such order be made.  Affidavits have been placed before me which manifest factual disputes.  The deponents to those affidavits have not been required to attend for cross‑examination.  Some of the affidavit evidence, perhaps particularly that of Mr Pawlak, clearly requires clarification by cross‑examination.  The state of the evidence before me is not such as to satisfy me that it would be just or convenient to appoint a receiver to the third defendant at this stage.

9. It is apparent that the orders now sought before me duplicate some of the orders sought in CIV 1124 of 2002.  As the rights of Mr Bazeley, whatever these may be, would be affected by the orders sought in the proceedings before me, it is appropriate that he be joined as a party in relation to relief now sought.  Accordingly, it seems to me to be preferable that the issues be dealt with in the action CIV 1124 of 2002 rather than in the present proceedings.  The parties may well consider applying to the Expedited List Judge for the entry of that action to the Expedited List and for appropriate programming directions as this matter has dragged on for a very long time.

10. For the aforegoing reasons, the application for the appointment of a receiver to the third defendant is dismissed.