Rankine v Rankine

[1995] QCA 556

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 227 of 1995

Brisbane

[R.M. Rankine v. T.G. Rankine & Ors]

BETWEEN:

ROY McNAY RANKINE

(Applicant) Appellant

AND:

TREVOR GEORGE RANKINE KEITH SCOTT RANKINE and

RALPH McAUSLAN RANKINE

(Respondents) Respondents

Macrossan CJ McPherson JA Thomas J

Judgment delivered 12 December 1995
Separate concurring reasons by each member of the Court

APPEAL ALLOWED TO THE EXTENT OF SETTING ASIDE PARAGRAPHS 11, 12 AND 13 OF THE ORDER APPEALED FROM. RESPONDENTS TO PAY ONE HALF OF THE APPELLANT'S COSTS OF THE APPEAL.

CATCHWORDS:	CORPORATIONS LAW - oppression proceeding - purchase of applicant's shares - nature of remedy under s.260(2)(e) - dates and methods of valuation - order for "valuation" before determination of effect of oppression - whether possible before determination of acts of oppression - exercise involves award of compensation for breach of duty - Dalkeith Investments Pty Ltd (1985) 3 A.C.L.C. 74 and Coombs v. Dynasty Pty Ltd (1994) 12 A.C.L.C. 915 explained - appointment of special referee for valuation of shares - whether issues of oppression may be delegated by Trial Judge - references under ss. 11 and 12 of Judicature Act 1876, Corporations Law s.260(2)(e) and (f), R.S.C. O.39.
Counsel:	Mr K.C. Fleming QC with Mr P.P. McQuade for the Appellant Mr A.J.H. Morris QC for the Respondents
Solicitors:	Flower & Hart for the Appellant Gilshenan & Luton for the Respondents
Hearing Date:	17 November 1995
IN THE COURT OF APPEAL	[1995] QCA 556
SUPREME COURT OF QUEENSLAND

Appeal No. 227 of 1995

Brisbane

Before Macrossan CJ

McPherson JA

Thomas J

[Rankine v. Rankine & Ors]

BETWEEN:

ROY McNAY RANKINE

(Applicant)

Appellant

AND:

TREVOR GEORGE RANKINE KEITH SCOTT RANKINE and RALPH McAUSLAN RANKINE

(Respondents)

Respondents

REASONS FOR JUDGMENT - THE CHIEF JUSTICE

Judgment delivered 12/12/1995.

Thomas J, in his reasons, has sufficiently set out the essential matters involved in the appeal. I wish to state my reaction to the matters of complaint that counsel for the appellant appeared to raise in his submissions on the appeal hearing.

Although there seemed to be some disappointment exhibited that the appellant might be deprived of an advantage he hoped for from a full airing of matters complained of as constituting oppression, there was, at the same time, an absence of dissent from certain of the fundamental orders made below. Those orders had emerged from what was essentially a case management exercise conducted by the Judge and they constituted useful steps in the settlement of the matters in dispute. It would be a pity if the benefit of those advantageous orders were now to be lost.

It has to be remembered that we are here concerned with what is predominantly an interlocutory procedural order and this increases the difficulty of raising valid objections to it. Additionally, there is reason for concluding that the objections which are advanced are in some ways premature.

I understood counsel for the appellant to make no objection to the fact that a valuation had been ordered or to the identity of the valuer appointed to undertake the task. He objected to the fact that the date of valuation had not been fixed as he would wish it to be. He referred to the date of his application to the Court (4 March 1993) as one possibility and also to the contentions that the acts of oppression which resulted in the application being brought, commenced at the end of the 1989 year, or the beginning of 1990.

The respondents' counsel expressed a preference for the date to be taken as 1 January 1996 but at the same time seemed less inflexibly committed to it, or at least willing to accept that valuations might be made at more than one date.

The real point, however, is that the order appealed from does not fix the date
or dates, but leaves open the possibility of dates being fixed following the making
of further submissions by the parties to the Judge whose order is under appeal.
This appears particularly from clauses 2,4 and 26 of the order.

The order does not in any way indicate that submissions that the appellant might wish to make on the matter of date would not receive attention: indeed, the possibility is that they may be accepted. For this reason alone the appellant's essential matter of complaint is premature. It would be open to the Judge to make his determination upon the matter of date in a fashion to be subsequently decided and not presently before us for review.

Looking at the narrowness of the complaint now argued and the desirability of avoiding jeopardising useful progress that has been made in the litigation, I think it is important to allow the beneficial aspects of the order to have their effect. I detect no denial of justice to the appellant in this conclusion. Subject to these observations I am in general agreement with what Thomas J has stated in his reasons. For the sake of clarity and to avoid any impression that the appellant's rights are improperly restricted I would agree, as Thomas J has suggested, that clauses 11, 12, and 13 of the order below should be deleted. I also agree with the costs order he suggests.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 227 of 1995

Brisbane

Before Macrossan C.J. McPherson J.A. Thomas J.

[Rankine v. Rankine]

BETWEEN

ROY McKAY RANKINE Appellant

AND

TREVOR GEORGE RANKINE, KEITH SCOTT RANKINE

and RALPH McAUSLAN RANKINE Respondents

REASONS FOR JUDGMENT - McPHERSON J.A.

Judgment delivered the 12th day of December 1995

I have had the advantage of reading the reasons of Thomas J.,and I agree with

them.

On the question of valuing the shares, it is plain that what I said in Re Dalkeith

Investments Pty. Ltd. (1984) 9 A.C.L.R. 247 is, if applied generally, too widely stated.

In saying as I did there that "the proper course in a case such as this is to assess the

value of the petitioner's shares without reference to the matters that give rise to the

oppression", I was primarily concerned to exclude the impression that the value arrived

at for shares ordered to be bought or sold might include some component of a punitive

or exemplary character for the acts of oppression alleged.

It was not intended to mean that, in arriving at the value to be paid for shares in such circumstances, nothing was to be allowed for the value of corporate assets shown to have been misappropriated by the wrongdoers, or for the fact that their depredations

or mismanagement might have reduced the value of those assets, and correspondingly

of the shares themselves. Of that phenomenon, Scottish Co-Operative Wholesale

Society Ltd. v. Meyer [1959] A.C. 327 is an illustration. There the inaction of the

majority shareholder in deliberately starving the company of supplies of essential raw

materials had a debilitating influence on the business of the company, and a

consequently depressing effect on the value of the petitioner's shares. That this was a

factor which properly entered into the valuation, or the price to be paid for the

petitioner's shares, can be seen both from reports of the proceedings in the Court of

Session, and from what was said particularly by Lord Keith in the House of Lords: see

S.C.W.S. v. Meyer [1959] A.C. 327, 364.

In arriving at a "payout" figure for the shares of the complaining shareholder,

factors of the kind mentioned must therefore be accommodated and allowed for.

Otherwise the essentially compensatory nature of the remedy would be defeated, and

the relief granted would fail to rectify the oppression complained of. It is for these

reasons that a proceeding like this investigation of the alleged oppression and its

consequences are often called for. Logically such investigation should take place first.

Subject, however, to providing for those factors to be taken into account, there appears

to be no reason why the process of valuing the shares should not be entered upon

before such questions are finally resolved, so as to arrive at a figure which, apart from

further adjustments or allowance for the factors described, can at least be used as a

starting point for arriving at a final value.

I agree with Thomas J. that, shorn of cll. 11, 12 and 13 of the order which at

present give to it an appearance of finality, the appeal is premature. Apart from those

clauses the order under appeal envisages that essential issues affecting value are to

remain open for resolution by litigation or by some other appropriate method. In those

respects I also agree with what Thomas J. has written, and with the order he proposes.
IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 227 of 1995

Brisbane

Before Macrossan CJ

McPherson JA

Thomas J

[R.M. Rankine v. T.G. Rankine & Ors]

BETWEEN:

ROY McNAY RANKINE

(Applicant) Appellant

AND:

TREVOR GEORGE RANKINE KEITH SCOTT RANKINE and

RALPH McAUSLAN RANKINE

(Respondents) Respondents

REASONS FOR JUDGMENT - THOMAS J

Judgment delivered 12 December 1995

This is an appeal against an interlocutory order appointing a special referee to determine the value of the appellant's shares in Rankine Bros Pty Ltd ("the company"). The order provides for the applicant to be paid in due course the amount so determined.

The initiating proceeding is an application under s.260 of the Corporations Law ("the oppression proceedings") brought by the appellant against his brothers who are the other directors and shareholders in the company. Pleadings have been exchanged and it is common ground that the ultimate relief should be that the respondents or the company should purchase the appellant's shares at a price to be determined. The appellant, who owns one-quarter of the shares in the company, recognises that a valuation must be made, and in the proceedings below agreed that Mr Edmonds should be the valuer. He objects on a number of grounds to the order which has been made, the principal point being that such a reference should not be made at this stage as there are many preliminary issues of fact to be decided before a valuation can be made that will determine the amount that should be ordered to be paid him in exchange for the shares.

The order appealed from forms part of a wider directions order applicable to some fifteen pending actions or proceedings in the Supreme Court involving these parties or their company. At the request of the respondents' solicitors, Moynihan SJA listed pending proceedings including the oppression proceedings so that directions could be given for their further conduct. Quite obviously the finalisation of the oppression proceedings (Company Application 171 of 1993) was seen as capable of unlocking the difficulties confronting the resolution of other substantial matters, including the finalisation of dissolution of the partnership between the appellant and the respondents. The appellant and the respondents are brothers, and in recent years considerable hostility has led to a proliferation of litigation between them and their respective families and companies. The respondents are aged seventy-four, seventy-three and seventy-two and have some health problems. There is reason to think that without some degree of court management of the pending proceedings the parties will continue to proliferate their disputes and get no closer to a solution of them.

Moynihan SJA's order was a preliminary order only, inasmuch as it contemplated the making of further written submissions as to "the date as at which the valuation is to be made", the sequence in which issues should be determined, the procedure by which the referee should conduct the valuation and the giving of further rulings or directions thereon by his Honour. The order specifically contemplated that the learned Judge would make a further determination of the procedure that will be followed, and the date or dates as at which the valuation is to be made.

The order was directed that the valuation be determined on the basis that the shares should have a value equal to one quarter of the value of the company either as a going concern or by reference to its underlying assets, whichever was the greater. Whilst there is no objection to this, the order goes on to order payment to the appellant of the amount of the valuation determined by the referee. Objection is taken to this on the footing that this will terminate the proceedings without any judicial determination of the allegations of oppression or their effect upon the value of the shares having taken place.

It is suggested that the cost of the valuation exercise is likely to be between $400,000 and $500,000.

Although the parties have exchanged pleadings, they are not ready for trial. The appellant submits that the present order will not sufficiently advance the position of the parties in the litigation, and that various determinations of fact are necessary before any valuation should be made.

The main difference between the parties is as to the sequence in which and the person by whom the necessary questions should be answered and issues determined.

The following are the main points as to which the parties suggest different means of determination.

1.          Who is to purchase the shares? The following possibilities remain open:

(i)	purchase of the appellant's shares by the respondents;
(ii)	reduction in capital of the company, with corresponding compensation to the appellant;
(iii)	a combination of the above;
(iv)	some other mechanism.

Both parties agree that they should each be required to state the proposal by which they propose the eventual purchase will be effected, that they should attempt to agree upon it, and that in the event of disagreement they should refine the issues that will need to be determined by Moynihan SJA on this point.

The only point of divergence is that the appellant wants this issue determined before the valuation takes place, whereas the order of Moynihan SJA directs that the procedure for determining this issue will commence thirty days after the appointment of the referee. Either way, the issue will be resolved by the Court if the parties cannot agree.

Having agreed that his shareholding is to be disposed of, the appellant in my view has very little stake in the identity of the purchasers, other than ensuring that his entitlement is actually paid. An issue of this kind is most likely to be resolved by financial considerations, and might be thought to be the type of issue that could more appropriately be decided later rather than earlier in the litigation. The likely quantum of the purchase is a potentially relevant factor in resolving this point.

In my view no error is disclosed in the making of this particular direction.

2.          On what basis is the valuation to be made? The order directs that the valuation be determined on the basis that the

appellant's shares have a value equal to one quarter of the value of the company either as a going concern or by reference to its underlying assets, whichever is the greater. That direction is favourable to the appellant and no complaint is made in this regard. Accordingly this is not a case afflicted by issues such as whether the valuation should be at market price or on a liquidation basis, or by the application of special requirements in the articles (cf. Re Golden Bread Pty Ltd; The Queensland Cooperative Building Assoc v. Hutchison [1977] Qd.R. 44; Sanford v. Sanford Courier Services Pty Ltd (1986) 10 A.C.L.R. 549, 560; 5 A.C.L.C. 394, 404).

This issue must be taken to be already settled.

3.          As at what date are the shares to be valued? As earlier mentioned this question has not yet been determined, and further

submissions are to be received by Moynihan SJA before that matter is decided.

The appellant submits that this question cannot be properly decided unless and until various factual issues are determined, including a determination of the allegations of oppression that have been made, and the effect of any acts so found upon the value of the shares.

The submission on behalf of the respondents is that the referee should be directed to value the shares as at 1 January 1996, that date apparently being suggested as a convenient date that will indicate the current value of the shares. The submission for the appellant is that the shares should be valued as at the date of presentation of the petition (4 March 1993), or alternatively the date when the respondents' acts of oppression commenced, namely at the end of 1989.

To speak of the "date of valuation" of shares in oppression proceedings is apt to confuse unless one clarifies what is meant by "valuation". What needs to be assessed is the value of the shares at a selected date had it not been for the effect of the oppressive conduct (Scottish Cooperative Wholesale Society Ltd v. Meyer [1959] A.C. 324, 364; Re Golden Bread (above) p. 50, 55). The underlined words show that the price is not the amount of a valuation at a particular time, but rather a finding of hypothetical fact. The figures attributable to each will commonly be different. The valuation of the shares at the given date will not necessarily provide the answer that the parties need. It may however take the parties some distance towards the goal if it can be used as a figure from which deductions or to which additions may be made in the light of subsequent findings as to the effects of earlier acts of oppression.

I have no difficulty with the notion of referring issues of valuation to a qualified referee, but have considerable difficulty with the notion of referring the finding of the ultimate hypothetical fact to such a person.

This point deserves emphasis because some confusion seems to have existed in the present case as to what would be involved in making the valuation on a given date. In Re Dalkeith Investments Pty Ltd (1985) 3 A.C.L.C. 74, 81, McPherson J applied the test stated in Re Golden Bread (above) observing that the proper course was "to assess the value of the petitioners' shares without reference to the matters that gave rise to the complaint of oppression". I take this as a paraphrase of the principle stated in Re Golden Bread, as his Honour went on to consider factors which would eliminate the effect of the oppressive conduct and to give effect to what his Honour referred to as balancing factors. Similarly in Sanford v. Sanford Courier Services Pty Ltd (1987) 5 A.C.L.C. 394, Waddell CJ in Eq adopted the approach in Re Golden Bread observing, "What has to be arrived at is a value which is fair in all the circumstances, disregarding the effect of the oppressive conduct which has occurred." It may be noted that his Honour determined that the shares should be valued as at the time the proceedings were commenced, and set out the basis on which it should be made, adding that there should be an increment for the slight possibility that the shares could then have been sold on an asset-backing basis. As the evidence was insufficient to permit such an assessment to be made his Honour adjourned the proceedings to permit the parties to provide further evidence.

Subsequently Dalkeith and Sanford were referred to in Coombs v. Dynasty
Pty Ltd (1994) 12 A.C.L.C. 915 where Von Doussa J observed: "In the valuation
exercise the oppressive conduct and the effects which it may have had on the value
of the shares is to be disregarded," and these words are reflected in the headnote.
The valuation exercise to which his Honour referred is the exercise by the Court in
fixing the price that should be paid. Taken in isolation the quoted statement is apt
to mislead, because the ultimate exercise must focus directly upon the oppressive
conduct and take into account so that its actual effect can be eliminated from the
valuation. There is of course no doubt that Von Doussa J applied the correct

principle as his Honour immediately went on to discuss various ways in which the
effect of the oppressive conduct might be eliminated. His Honour finally concluded
that the applicant's shareholding should be valued immediately before a company
restructure which had been to his disadvantage, and that an interest factor should be
allowed on that amount to arrive at a fair price at which his shares should now be
purchased.

In granting a remedy in favour of an oppressed shareholder under s.260(2)(e) or 260(2)(f) of the Corporations Law by ordering the compulsory purchase of the applicant's shares at a stated price, the Court is in effect awarding compensation for the respondents' breach of duty. The nature of the duty is both subtle and complex, and not capable of exhaustive definition, but the most useful expressions of it are collected in The Law of Company Liquidation (McPherson), 3rd Ed (Donovan), pp. 143-144. One such expression describes it as a duty of probity and fair dealing (Meyer above, 364, per Lord Keith). The compensatory nature of the remedy is recognised by Lord Denning in Meyer at p.369, in re a company No. 002612 of 1984 (1986) 2 B.C.C. 99, 495, and in Coombs v. Dynasty (above, p.918). The ultimate finding of the price that should be paid cannot be made until the nature and effect of the oppression has been identified and its effect quantified or allowed for. By contrast a valuation of shares on the basis of the value of the company as a going concern, or by reference to its underlying assets, as has been directed in this case, is a conventional valuation exercise without adjustments for the oppression factors.

In the present matter paragraphs 25 to 28 of the statement of claim allege numerous acts of oppression, and some of these, if proved, are capable of affecting the value of the assets. Some of the allegations are of managerial matters where there might be room for differences of opinion, and where it may be that even if the respondents are found to have been guilty of oppression, the effect upon the value of the shares has been insignificant or even non-existent. However a wide range of misconduct is alleged, and at some stage of this litigation, failing settlement, a determination will have to be made as to whether the respondents acted in breach of their duties, and whether such acts had any effect upon the value of the company.

One allegation is that the applicant was wrongfully excluded from the management of the company and the question will arise whether this had any, and if so what, effect on the financial well-being of the company. Other issues including allegedly improper outlays and ex gratia payments may not be particularly time-consuming issues and if held to be improper their effect upon the company's accounts may be a relatively easy task to assess. But these are matters that demand at some stage a judicial determination. Their determination cannot be delegated to a referee.

The question which has troubled me is whether the determination of such matters could be effectively postponed until after the making of a valuation of the company's undertaking upon a specified date or dates. It is a cardinal principle of equity that the remedy must be fashioned to fit the nature of the case and the particular facts (Warman International Ltd v. Dwyer (1995) 69 A.L.J.R. 362, 368). The appellant's submission is that the fixing of the date of the valuation exercise cannot be fairly and finally determined unless and until the Court has an appreciation of the nature and extent of the oppression and its likely effect upon the value of the shares. I accept that the fixing of a single date as at which the Court will fix the value of the shares, having eliminated the effects of the oppression, is not generally a function that can be satisfactorily exercised in a preliminary way when the parties contend for different dates. However that is not to say that a determination of a matter such as the present cannot satisfactorily be accelerated by means of obtaining valuations of the actual share value at the material times contended for by the parties (e.g. 1 January 1990, 4 March 1993, 1 January 1996), followed by a hearing which will determine the degree and effect of oppression. At that stage the court could select the date that it finally considered would best do justice to the parties, and make the necessary adjustments to the valuation of that date.

In most cases the order contemplates a valuation at the time of presentation of the petition (re a company (1983) 1 W.L.R. 927; re a company (1986) 2 B.C.C. 99, 453; re a company (1986) 2 B.C.C. 99, 495). But of course other dates are possible (Coombs v. Dynasty above; Dalkeith Investments above; re D.R. Chemicals Ltd (1989) 5 B.C.C. 39). One factor favouring the petition date is that it is the point at which the claimant elects to claim the remedy. Another consideration that can favour an early date is that equity leans against permitting a dilatory claimant to gain benefits in an expanding business. "A man having an adverse claim in equity . . . should show himself in good time willing to participate in possible loss as well as profit, not play a game in which he alone risks nothing" (Clegg v. Edmondson (1857) 8 De. G.M. & G. 787, 814; 44 E.R. 593, 604, per Knight Bruce LJ, approved by the High Court in Warman International v. Dwyer (1995) 69 A.L.J.R. 362, 369). That comment was made in the context of a claim of constructive trust, but may be equally apposite in the context of a claim that a respondent be compelled to acquire the applicant's shares.

I do not wish to be taken to be expressing a view on the date or dates that should be fixed for this valuation. This discussion is directed to the question whether it is possible that a reasonable determination of date or dates for the valuation can be made at this preliminary stage before the oppression allegations are heard. Obviously it would be undesirable for the parties to be put to the considerable expense of obtaining a valuation if it might in the long term prove to be only of marginal relevance. However the fact that it will be open to the learned Judge to obtain valuations at alternative dates plainly strengthens the feasibility of proceeding in this manner. There is no reason to think that this would unduly lengthen the exercise or its cost, but if material suggesting that this would happen were placed before the learned Judge he would no doubt take it into account.

If an unsatisfactory determination is made with respect to the date or dates for the valuation, that would be the time to complain. In other words it seems to me that the appellant's complaint in this respect is premature. On present indications the valuation is in my view likely to produce a sound starting point for the resolution of issues - if not by the parties then by the Court.

5.          Judgment in accordance with the valuation Clause 12 of the order is in effect a judgment that

"Payment out is to be effected to Roy Rankine (the appellant):

(a)        in accordance with the mechanism determined as aforesaid;

(b)        at the valuation determined by the referee; and

(c)         as soon as is practicable after the valuation is finalised."

A mechanism is provided (in cl.11 of the order) that would permit any interested party (including plaintiffs in another action) to apply to restrain payment out being effected to the appellant as aforesaid, but this seems to be a device to secure for the benefit of other parties any entitlements that they may have against him in pending litigation.

In my view clause 12 of the order (and other clauses incidental to it) cannot be sustained. Issues such as the propriety of the company's actions, the commission of breaches of duty by the respondents, and the manner in which the valuation should be varied so as to eliminate the effects of the oppression in the granting of ultimate relief are not matters that an accountant or valuer can be asked to decide. Leaving aside possible reference to arbitration, mediation or case appraisal, issues of this kind should be determined by a Court. It may well be that the course proposed by the learned Judge is the one best designed to induce the parties to settle, as it would provide the necessary information to enable an appropriate offer to be made and accepted. That however cannot support the order unless it is designed to assist the parties towards a judicial determination of their differences. The obtaining of a valuation is a step that can reasonably assist towards eventual judicial resolution of the case, but the order in clause 12 pre-empts ultimate judicial resolution of the issues of oppression and their effect.

In proceedings of this kind references may usefully be made to a special referee under s.11 or s.12 of the Judicature Act of discrete questions or issues, such as valuation upon defined bases, and indeed other issues of a valuing or an accounting nature which may arise in such proceedings. However it is not appropriate that the whole question in an oppression application be delegated to such a person. It is not entirely clear whether it is contemplated that such issues, after being formulated by the parties, would additionally be referred to Mr Edmonds, but for the reasons already given it would be inappropriate to do so. If it is not intended to do so, the present order deprives the appellant of the opportunity of any determination of these questions, as it contemplates that there will be no further trial in a court of the issues raised in the pleadings.

I would therefore allow the appeal to the extent of deleting paragraphs 11, 12

and 13 of the order.

OTHER ISSUES ON APPEAL

A number of arguments were made by counsel for the appellant on the appeal which were not clearly presented to the learned Trial Judge during the proceedings below. However it was made clear that the appellant was not consenting to directions of this kind, and I do not think that the appellant is precluded from challenging the order on the above ground.

It is only necessary to consider briefly other grounds contained in the notice

of appeal.

(a)        "No consent by appellant to reference" Jurisdiction exists to make such an order under s.12 of the Judicature Act 1876.

Consent of the parties is unnecessary in any matter "requiring any prolonged examination of documents or accounts . . . which cannot in the opinion of the Court . . . conveniently be . . . conducted by the Court through its ordinary officers". In my view, on the footing that it is a valuation exercise rather than a determination of the acts of oppression, the present reference satisfies that requirement, and the matter is an appropriate one for the exercise of this power. It is not appropriate however for reference of virtually the whole case.

The power under s.11 of the Judicature Act to refer any question to a special referee for enquiry and report is even wider. Both ss. 11 and 12 of the Judicature Act and the Rules of Court (O.39 rr.7, 44, 46, 47, 48 and 49) enable the Court to obtain the benefit of expert consideration of a particular issue and to control its own proceedings, although the control is substantially greater in a reference under s.11 than under s.12. It may be noted that extensive use of the special referee procedure has been made in New South Wales in recent years. In partly allowing this particular appeal I in no way intend to discourage the use of these procedures. It may be that the approach taken in some trial Judge decisions (Netanya Noosa Pty Ltd v. Evans Harch Constructions Pty Ltd [1995] 1 Qd.R. 650; Everingham v. Clarke (1994) 1 Ad.R. 34) unduly fetters the use that may be made of those provisions, but it is not necessary to consider that question further in the present case.

(b)        "No trial of the matter had been embarked upon" It is not necessary that a matter be set down for trial, or even be fully ready

for trial, before a preliminary question or issue can be sent to a referee under s.11 or
s.12 of the Judicature Act.

(c)         " . . error in making a determination as to the burden of costs of the referee's fees without there being any determination of the matter"

The learned Judge's direction in clause 8 of the order as to the incidence of the costs of the referee fees was within his jurisdiction to make. Indeed it is hard to imagine a matter going forward unless some such provision is ordered. This does not mean that the Judge who finally determines the matter cannot order that the successful party recover his costs in such an exercise from the unsuccessful party, or to make such final order for costs as between the parties as shall be just.

(d)        "The learned Judge . . was wrong in ordering that out of the moneys payable to the applicant, the sum of $450,000 was to be placed in an interest-bearing account to abide the outcome of other proceedings"

The learned Judge's order dealt with many pending actions in this court between the present parties and others. One such action is by the Commonwealth against the present parties for $1.1 million. On 20 July 1995 the respondents wrote to the appellant's solicitors raising this question and suggesting the sum of $450,000 as being a reasonable sum to cover the appellant's potential liability in this claim, when interest and costs were taken into consideration. The figure was not questioned and no counter-proposal made, either in correspondence or in argument before the learned Judge. The complaint on this appeal against the inclusion of such an order is without merit.

The appeal should be allowed to the extent of setting aside paragraphs 11, 12 and 13 of the order appealed from. The appellant was unsuccessful on other major issues raised in the appeal. In the circumstances the respondents should pay one half of the appellant's costs of the appeal.