Re Permanent Nominees (Aust) Ltd

[2000] VSC 2

SUPREME COURT OF VICTORIA
PRACTICE COURT	Do not Send for Reporting
Not Restricted

No. 6788 of 1999

IN THE MATTER OF AN APPLICATION BY PERMANENT NOMINEES (AUST.) LTD. IN ITS CAPACITY AS TRUSTEE PURSUANT TO AN UNSECURED NOTES TRUST DEED AND AN EXCHANGEABLE NOTES TRUST DEED Applicant

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JUDGE:	BEACH, J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	21 JANUARY 2000
DATE OF JUDGMENT:	28 JANUARY 2000
CASE MAY BE CITED AS:	RE PERMANENT NOMINEES (AUST.) LTD.
MEDIA NEUTRAL CITATION:	[2000] VSC 2

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CATCHWORDS:      Costs of Trustee – Total indemnity in respect of all costs incurred by it in respect of proceeding involving the trusts of which it is trustee.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr. N.J. O'Bryan	Freehill Hollingdale & Page
For Hudson Conway Ltd.	Mr. S. Whelan Q.C. with Mr. J. Dodds-Streeton	Blake Dawson Waldron

HIS HONOUR:

1. The only dispute remaining in this proceeding concerns the form of the costs order to be made in favour of Permanent Nominees (Aust.) Limited in proceeding No. 6788 of 1999 and in proceeding Nos. 6484 and 6485 of 1999.

1. For Permanent it is argued that Hudson Conway Limited (H.C.L.) should be required to indemnify it in respect of all costs (including the costs of any valuers, accountants, solicitors or counsel retained by it) which Permanent has incurred in connection with the proceedings in question.

1. It is said that its entitlement to such an indemnity is given to it by clause 19.3 of the Unsecured Notes Trust Deed entered into by it and H.C.L. on 24 October 1996.  That clause reads:

"19.3 Without prejudice to the right of indemnity given by law to trustees the Trustee is entitled to be and is by this deed indemnified by the Company in respect of all liabilities and expenses incurred in the execution or purported execution of the trusts hereof or the exercise or attempted exercise of any of the powers authorities and discretions vested in it under this deed (including any waiver given under clause 19.4 or action or proceeding taken under clause 19.5) and against all actions, proceedings, costs, claims and demands in respect of any matter or thing done or omitted to be done in any way relating to the powers, authorities and discretions vested in it under this deed (including, without limiting the generality of the foregoing, all liabilities and expenses incurred by the Trustee in respect of any attorney, manager or other person duly appointed by the Trustee pursuant to this deed) other than a claim arising out of fraud, wilful neglect, wilful default or wilful breach of trust on the part of the Trustee or any employee, servant or agent of the Trustee and the Trustee may retain and pay out any moneys in its hands arising therefrom (in priority to any claim by any Noteholder) all sums necessary to effectuate and satisfy such indemnity, PROVIDED ALWAYS that the Trustee shall be entitled to be indemnified only to the extent permitted by section 1062 of the Corporations Law."

1. The contrary argument is that although Permanent is entitled to a complete indemnity in respect of all of the costs in question, the appropriate order nevertheless should be that such costs be taxed.

1. What is said in that regard is that the failure to order that Permanent's costs be taxed is tantamount to giving Permanent an open cheque in respect of its costs.

1. As J.H. Phillips, J. (as he then was) pointed out in the National Safety Council of Australia – Victorian Division (In Liquidation) (No. 2) (1992) 1 V.R. 485 at p.503:

"A trustee when conducting litigation in relation to the trust fund, is ordinarily entitled by the nature of his office and his duties to a full indemnity out of the trust assets for all costs, charges and expenses properly incurred in the litigation."

1. That is what clause 19.3 provides and in my opinion Permanent is entitled to such an order.

1. There is no suggestion in the material that Permanent's valuers, accountants, solicitors or counsel will charge other than appropriate fees.  In the unlikely event that any of such persons or firms did not, there would be various avenues open to H.C.L. in the matter including its right to make a complaint to the appropriate professional body of which such person or firm is a member.

1. I order that Hudson Conway Limited indemnify Permanent Nominees (Aust.) Ltd. in respect of all costs (including the costs of any valuers, accountants, solicitors or counsel retained by it) which Permanent Nominees (Aust.) Ltd. has incurred in connection with its application in proceeding No. 6788 of 1999 and in connection with proceedings Nos. 6484 and 6485 of 1999.

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