Premier Land Holdings Pty Ltd v Excellent Development Pty Ltd (No 2)
[2017] NSWSC 1693
•08 December 2017
Supreme Court
New South Wales
Medium Neutral Citation: Premier Land Holdings Pty Ltd v Excellent Development Pty Ltd (No 2) [2017] NSWSC 1693 Hearing dates: 2, 3 November 2017; Submissions 27 November 2017 Decision date: 08 December 2017 Jurisdiction: Equity Before: Emmett AJA Decision: See paragraph [18]
Catchwords: EQUITY – Costs Legislation Cited: Trustee Act 1925 (NSW), s 78 Cases Cited: Premier Land Holdings Pty Ltd v Excellent Development Pty Ltd [2017] NSWSC 1575 Category: Costs Parties: Premier Land Holdings Pty Ltd (Plaintiff and Second Cross Defendant)
Excellent Development Pty Ltd (First Defendant and First Cross Claimant)
Min Liu (Second Defendant)
Yanmei Xu (First Cross Defendant)Representation: Counsel:
Solicitors:
A Greinke (Plaintiff and Second Cross Defendant)
A Joseph (Defendants and Cross Claimants)
Auyeung Hencent & Day Lawyers (Plaintiff and Second Cross Defendant)
Goodwin & Co Lawyers (Defendants and Cross Claimants)
Crown Solicitor’s Office (Submitting Appearance)
File Number(s): 2016/00123081
Judgment
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On 20 November 2017, I published my reasons for concluding that the plaintiff, Premier Land Holdings Pty Ltd, is the trustee of the Excellent Unit Trust[1] . I directed the parties to file any further evidence on which they wished to rely as to the nature of the relief that should be granted in light of the conclusions that I reached. In these reasons, I shall use terms as they were defined in those earlier reasons.
1. See Premier Land Holdings Pty Ltd v Excellent Development Pty Ltd [2017] NSWSC 1575.
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The parties are not entirely agreed on the orders that should be made in light of the conclusions that I reached. It is common ground that there should be a declaration that the plaintiff is the trustee of the Excellent Unit Trust, having been appointed on 14 August 2015. It is also accepted that there should be a vesting order, although there is some disagreement as to its terms.
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Section 78(1) of the Trustee Act 1925 (NSW) relevantly provides that, in the case of a vesting order consequential on the appointment of a new trustee, the vesting order has the same effect as if the persons who were the trustees before the appointment had duly executed all proper conveyances of the property for such estate or interest as the Court directs. A vesting order may be appropriate in a case where the original trustee is unable or unwilling to co-operate to convey the rights of the original trustee to the new trustee. Premier asserts that there will be benefits with such an order in that it will likely entitle Premier to execute a legally effective rescission of the contract between Excellent and High Quality in relation to the Meadowbank Property (the Contract) and otherwise assist Premier in pursuing an application for refund of stamp duty on the Contract following its purported rescission.
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In early March 2016, an application was made on behalf of Excellent to the Office of State Revenue (now known as Revenue NSW) for refund of the stamp duty paid on the Contract. On 8 April 2016, Revenue NSW issued a requisition requiring the provision of the original Rescission Deed showing the signature of High Quality, the provision of a copy of the new contract between Premier and High Quality and the re-writing and re-signature of documents directing payment of any refund. These proceedings were commenced on 21 April 2016 and those requisitions have not been answered. Rather, Premier sought interlocutory relief to restrain any further action by Excellent in relation to the application for refund of stamp duty.
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On 17 May 2016, orders were made by consent that, if the Chief Commissioner of Revenue NSW determined that a refund of stamp duty would be made, the repayment would be made to the trust account of Goodwin & Co, who were acting for Excellent in relation to the application for refund. Excellent was required to give any authority required by the Chief Commissioner for the refund to be paid into the trust account of Goodwin & Co, who were to deposit the refund to an interest bearing controlled money account in the joint names of Excellent and Premier. Goodwin & Co were not to release any part of that fund until further order of the Court. In addition, if the Chief Commissioner determined that he would issue a refund but would not pay it into the trust account of Goodwin & Co, the payment of a refund was to be restrained until the determination of the proceedings.
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Since those orders were made, no action has been taken to obtain a refund of the stamp duty or to obtain the documents held by Revenue NSW. Goodwin & Co understand that Revenue NSW is of the view that the money should be held by them pending the outcome of the proceedings.
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On 9 November 2017, an officer of Revenue NSW, in response to inquiries from Goodwin & Co, indicated the following:
The refund application was dated 8 February 2016 and was received by Revenue NSW on 8 March 2016;
The applicant shown on the application was Excellent;
The original of the stamped Contract and the original stamped, but unsigned, transfer were lodged with the refund application;
Revenue NSW has held those documents continuously since lodgement on 8 February 2016.
Revenue NSW also confirmed that it had received a copy of the orders made on 17 May 2016 and would adhere to the provisions of those orders. Revenue NSW also confirmed that, if the refund was approved by the Chief Commissioner and Revenue NSW had written authority from Excellent, the refund would be paid into the trust account of Goodwin & Co. However, if a refund was approved but there was no written authority, no refund would be made until the finalisation of these proceedings.
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Excellent and Ms Liu are concerned that, if a refund were to be received by Premier, the funds could be diverted to Hong Kong or mainland China, thereby making it difficult for Ms Liu to obtain any share of the monies to which she may be beneficially entitled through her interest in Project 117. They therefore seek an order restraining Premier from dealing with the property of the Trust without first providing 14 days’ notice to the seven investors of such intention, including the details of any proposed dealing.
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In the circumstances, the preferable course is for the solicitors retained by Excellent to prosecute the claim for refund of the stamp duty on the basis that, if and when the refund is made, in the name of Excellent, the funds be paid to Premier forthwith. It is also appropriate for Premier to undertake not to deal with the funds without first giving notice to Ms Liu.
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As I indicated in the earlier reasons, there are two aspects to the cross-claim. The first aspect was the obverse of the relief sought by Premier concerning the effectiveness of the change of trustees. The second aspect concerned alleged misrepresentation by Premier and its inducement of High Quality to breach a contract. Excellent and Ms Liu have asked that they be given leave to discontinue the second aspect of the cross-claim with no penalty as to costs. I do not see any utility in that course. The second aspect was predicated upon an assumption that the removal of Excellent and appointment of Premier was ineffective. I have concluded that the change of trustees was effective. Accordingly, there is no basis for the second aspect. I do not see any reason why the cross-claim should not be dismissed.
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The final matter of contention concerns costs. Premier seeks an order that the costs be paid jointly by Excellent and Ms Liu. Ms Liu contends, however, that she was not a necessary party to the proceedings and acted at all times in her capacity as a director of Excellent.
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Premier seeks a costs order against Ms Liu on the basis that, having been joined as defendant, she actively opposed the relief claimed. When the question of Ms Liu’s joinder was raised on 16 June 2016, Premier’s solicitors responded on 21 June 2016, asserting that Ms Liu had disputed the validity of the change of trustees. The solicitors asserted that it was appropriate that she be joined as a defendant because she possessed documents of the Trust and because it would ensure that she was bound by the declarations as to the validity of the change of trustee. Following receipt of that letter, Ms Liu had the opportunity to file a submitting appearance but, on 24 June 2016, filed a defence disputing the claims made by Premier.
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On 14 September 2016, Ms Liu’s solicitors again complained about her joinder. Premier’s solicitors responded that she had been joined and remained a proper party. Ms Liu could have elected to submit at that stage but did not. As a consequence, she actively opposed the relief sought by Premier, including the declaration as to the effective appointment of Premier as trustee. In addition, Premier points to allegations made in the defence filed on behalf of Excellent and Ms Liu raising questions concerning Project 117. Those allegations may be summarised as follows:
In May 2015 Ms Liu, Ms Xu and five others entered into a joint venture agreement to invest in the proposed development of the Meadowbank Property;
The joint venture agreement provided for the establishment of the Trust in Australia, with Excellent as the trustee and all of the issued units in the Trust being held by Key Luck;
It was a term of the joint venture agreement that the board of Key Luck would comprise three directors being Ms Liu, Ms Xu and Ms Zhang;
On 19 March 2015, Excellent issued 100 units in the Trust to Key Luck in accordance with the joint venture agreement;
On 17 April 2015, Excellent acquired the entire interest in the Contract;
Excellent paid the deposit under the Contract and stamp duty from funds advanced to Excellent;
On 17 August 2015, Ms Xu served on Excellent a document purporting to be minutes of a meeting of the board of Key Luck recording a unanimous resolution removing Excellent as trustee of the Trust and appointing Premier as trustee of the Trust;
On 17 August 2015, Ms Xu served on Excellent a document purporting to give notice to Excellent of its removal from the Trust;
At no time did Ms Liu receive notice of a meeting of the directors of Key Luck to be held on 14 August 2015, nor was she informed that there was a proposed resolution to remove Excellent as trustee of the Trust;
In the circumstances, the purported resolution was invalid and of no effect and the consequent notice was of no effect;
On 2 November 2015, without notice to Excellent, Premier, purporting to be the trustee of the Trust, entered into an agreement with High Quality to rescind the Contract;
On 2 November 2015, without notice to Excellent, Premier, as Purchaser, entered into a contract for the purchase of the Meadowbank Property from High Quality;
High Quality has terminated that contract and forfeited the deposit paid by Excellent.
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The contentions implicit in those allegations were advanced on behalf of both Excellent and Ms Liu. At no time did Ms Liu formally submit to such order as the Court might make, save as to costs. Further, it appears that Ms Liu is the only director and shareholder of Excellent and is effectively the person behind Excellent.
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On the other hand, it is not clear that Ms Liu was a necessary party to the proceedings. Nevertheless, in the circumstances, I consider that it is appropriate that, having resisted all of the orders and caused Excellent to resist the making of the orders, in circumstances where there was very little prospect of success in resisting the primary declaration, it is appropriate that the orders for costs be made against both defendants jointly.
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However, Ms Liu was not a party to the cross-claim. It may well be that she was the directing mind of Excellent in filing the cross-claim. If, as seems likely, Excellent would not be in a position to meet any order for costs, the consequence may be that Ms Liu would have personal responsibility for permitting Excellent to incur liabilities in circumstances where it had no reasonable prospect of meeting them. That, of course, is not an issue before me. In the circumstances, I do not consider that it is appropriate to order Ms Liu to pay the costs of the cross-claim.
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Excellent and Ms Liu also complain about the failure on the part of Premier to make admissions pursuant to a notice to admit facts and the authenticity of documents given on 18 October 2017. Excellent and Ms Liu contend that most of the matters that were not admitted were in fact proved, most of them relating to the provenance of the agreement establishing Project 117. Ultimately, the documents were proved. Some costs would have been incurred unnecessarily. It is appropriate to make some small allowance in that regard. Rather than requiring assessment of those costs separately, the appropriate course would be to discount the order for costs against the defendants.
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In all of the circumstances, I consider the appropriate orders are as follows:
1 Declare that the plaintiff is the trustee of the Excellent Unit Trust, having been duly appointed as trustee on 14 August 2015.
2 Order that all of the property and rights of the Excellent Unit Trust be vested in the plaintiff, including in particular:
(a) any rights as purchaser under the contract of sale dated 17 April 2015 for the sale of the property at 117-119 Bowden Street, Meadowbank, New South Wales (folio identifier 2/574943) between the first defendant and High Quality Building No 3 Pty Ltd (the Contract); and
(b) any rights to a refund of the duty paid in respect of the Contract, including the duty refund application reference 8221377-001.
3 Order that the defendants, no later than 5pm on 11 December 2017, deliver up to the plaintiff, at the offices of Auyeung Hencent & Day, any books or records of the Excellent Unit Trust in their possession, including files collected from Mr William Hu and any original documents relating to the purchase by the first defendant of 117-119 Bowden Street, Meadowbank.
4 Order the first defendant forthwith to take all necessary steps to obtain from Revenue NSW a refund of the stamp duty paid in relation to the Contract (the stamp duty).
5 Order the plaintiff to provide any necessary assistance to the first defendant in order to enable a refund of the stamp duty.
6 Order the plaintiff as trustee to compensate the first defendant in relation to any legal costs arising from the date of these orders that are associated with compliance with order 5.
7 Order that, upon the plaintiff undertaking to the Court that it will not dispose of, transfer or otherwise deal with the property of the Trust without providing 14 days’ notice to the seven named investors listed at page 30 of exhibit 1 in the proceedings of such intention, including the details of any proposed dealing, the first defendant pay the amount of any refund of the stamp duty received by it to the plaintiff or to whomever the plaintiff directs.
8 Reserve liberty to the parties to apply for further or ancillary orders in respect of any matter arising in respect of the refund of the stamp duty.
9 Order the defendants jointly to pay 90% of the plaintiff’s costs in relation to the statement of claim.
10 Order that the cross-claim be dismissed.
11 Order the cross-claimant to pay the costs of the cross-defendants in relation to the cross-claim.
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Endnote
Decision last updated: 08 December 2017
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