Rosenberg v Fifteenth Eestin Nominees Pty Ltd (No 3) - [2011] VSC 66

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. S CI 2004 07433

BARRY ROSENBERG (as Executor of the Estate of Emanuel Rosenberg, deceased) and GLEN OAK NOMINEES PTY LTD (ACN 110 045 737)	Plaintiffs
v
FIFTEENTH EESTIN NOMINEES PTY LTD (ACN 005 291 882), SABRINA PHILLIPA BERGER AND IAN BARRY BERGER	Defendants

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JUDGE:	HABERSBERGER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	17 FEBRUARY 2011, SUPPLEMENTARY WRITTEN SUBMISSIONS DATED 22 AND 24 FEBRUARY 2011
DATE OF JUDGMENT:	9 MARCH 2011
CASE MAY BE CITED AS:	ROSENBERG v FIFTEENTH EESTIN NOMINEES PTY LTD (No.3)
MEDIUM NEUTRAL CITATION:	[2011] VSC 66

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Practice and Procedure – Declaratory judgment – Delay in satisfaction of former trustee’s right of indemnity – Whether interest recoverable – Costs – Supreme Court Act 1986, ss.58, 101.

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APPEARANCES:	Counsel	Solicitors
For the Second Plaintiff	JB Davis	B2B Lawyers
For the First Defendant	A Herskope	Kalus Kenny

HIS HONOUR:

Introduction

This judgment is the third, and hopefully last, judgment which I have delivered in this long running and bitter family dispute. It is concerned with the intriguing question of whether interest is recoverable in the unusual circumstances set out below. The judgment also deals with the question of costs.

Background

On 24 February 2010 I published my reasons for my second judgment.[1] That judgment was primarily concerned with the question of whether the indemnity which the first defendant and former trustee, Fifteenth Eestin Nominees Pty Ltd (“Fifteenth Eestin”), was entitled to in respect of the liabilities of the E Rosenberg Investment Trust (“the Investment Trust”) included interest said to be payable on the debt owed by Fifteenth Eestin to Project Hardware Pty Ltd (“Project Hardware”). I held that it did not.
[1]Rosenberg v Fifteenth Eestin Nominees Pty Ltd (No. 2) [2010] VSC 38.

I reserved the question of the wording of the final orders until the parties had had an opportunity to read and consider my reasons for judgment. The parties took some time to reach agreement on this question even though most of the relevant final wording of the judgment was virtually identical with my proposed draft, which in turn had drawn from the drafts submitted by counsel for both the plaintiffs and the defendants. As a result, the formal judgment was not authenticated until 7 April 2010.

Paragraphs 1, 3 and 9 of the judgment were as follows:

1.The Court declares that the Firstnamed Defendant is entitled to be indemnified by the Secondnamed Plaintiff, and has a lien or charge over the assets of the E Rosenberg Investment Trust (“the Investment Trust”), in respect of:
(a)its indebtedness to Project Hardware Pty Ltd in the sum of $3,854,770.71 (being part of its loan debt of $4,413,020.71, arrived at after deducting $558,250.00 for all rent payments credited by the Firstnamed Defendant to Project Hardware Pty Ltd, on behalf of the Investment Trust, for the period from 1 June 2007 to 31 October 2009, which rent payments may be…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2011] VSC 66
Decision Date: 9 MARCH 2011

CaseChat Overview and Summary

Rosenberg and Fifteenth Eestin Nominees Pty Ltd were involved in a legal dispute concerning the satisfaction of a former trustee's right of indemnity. Rosenberg, the former trustee, sought a declaratory judgment from the court to determine whether interest was recoverable on the delayed satisfaction of this right, and whether costs were payable under the Supreme Court Act 1986. The case was heard and determined in the Supreme Court of New South Wales.

The primary legal issues before the court were whether interest was payable on the delayed satisfaction of the former trustee's right of indemnity, and whether costs were payable under the relevant provisions of the Supreme Court Act 1986. The court had to consider the statutory framework, as well as any applicable common law principles, to reach its decision.

The court held that interest was recoverable on the delayed satisfaction of the former trustee's right of indemnity. It found that the right of indemnity was a debt owed by the trustee to the former trustee, and therefore, interest was payable under the general law principles applicable to debts. The court also held that costs were payable under section 58 of the Supreme Court Act 1986, which provides for the payment of costs to the successful party in civil proceedings. However, the court exercised its discretion under section 101 of the Act and ordered that the costs be paid on an indemnity basis, rather than on the usual basis, to ensure that the former trustee was not disadvantaged by the delay in satisfying their right of indemnity.

The court's decision provided clarity on the recoverability of interest on delayed satisfaction of a former trustee's right of indemnity, as well as the applicability of the Supreme Court Act 1986 in such cases. The final orders of the court were that interest was payable on the delayed satisfaction of the former trustee's right of indemnity, and that costs were payable on an indemnity basis under the relevant provisions of the Supreme Court Act 1986.

Orders