Serendipity Investments P/L v Cape, W.T.

[1993] FCA 975

9 7 ~ ~ 9 3

JUDGMENT No. ., ........ ...... -,

IN THE FEDERAL COURT OF AUSTRALIA)

1

AUSTRALIAN CAPITAL TERRITORY	)
1 No. ACT G 60 of 1992
DISTRICT REGISTRY	1
)
GENERAL DIVISION	)

BETWEEN: SERENDIPITY INVESTMENTS

PTY LIMITED

Applicant

AND: WILLIAM TIMOTHY CAPE

First respondent

REDARB PTY LIMITED (Receiver

and Manager Appointed)

Second respondent

MINUTE OF ORDER

JUDGE MAKING ORDER :  Neaves J.

RECEIVED

DATE OF ORDER 23 December 1993 09 J A N 1994

FEDERAL QJURT OF

WHERE MADE Canberra AUSTRALIA PRINCIPAL

THE COURT ORDERS THAT:

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

1.    The application be dismissed.

2.   The applicant pay the respondents' costs of the application.

IN THE FEDERAL COURT OF AUSTRALIA)

)

AUSTRALIAN CAPITAL TERRITORY	1
) No. ;>CT G 60 of 1992
DISTRICT REGISTRY	)
GENERAL DIVISION	1

BETWEEN: SERENDIPITY 1N':ESTMENTS

PTY LIMITED

AND: WILLIAM TIMOTHY CAPE

First respondent

REDARB PTY LIMITED (Receiver

and Manager Appointed)

Second respondent

LRAM: Neaves J.

m: 23 December 1993

REASONS FOR JUDGMENT

Serendipity Investments Pty Limited has applied for leave to appeal from part of a judgment of the Supreme Court of the Australian Capital Territory (Higgins J.) given in a proceeding (No. SC 333 of 1989) brought in that Court by

William Timothy Cape against Robert George Maidment, Redarb	Pty Limited (Receiver and Manager Appointed), Kerry John
Breeze, Lawrence Victor Quigg and Serendipity Pty Limited. By the judgment from which leave to appeal is sought, the Supreme Court ordered, inter alia, that Serendipity Investments Pty Limited and William Timothy Cape each "contribute the sum of $25,000 to the fund for use by the receiver in furtherance of
the litigation".

Leave to appeal 1s requ~red by s . 2 4 ( 1 A ) of the

Federal Court of Austral~a Act 1976 (Cth).

The parties have been engaged in protracted litigation over a number of years. I do not propose to trace the history of that litigation. It had its origin, however, in disputes as to the control of Redarb Pty Limited, the trustee of the Redarb Unit Trust, and as to the ownership of unlts in that trust. The original piece of litigation resulted in a declaration that Serendipity Pty Limited and Mr Cape were the sole, and equal, unlt holders in the trust. Under the relevant trust deed, Serendipity Pty Limlted and Mr Cape were, at the end of each accounting period entitled equally to the income of the trust fund. On 8 August 1989, Robert John Yeomans was appointed by the Supreme Court as receiver and manager of Redarb Pty Llmited and of the Redarb Unit Trust. Since then the long and tortuous process of taklng accounts has proceeded. Other proceedings have concerned the conduct of the receiver and manager in selling

assets of the trust, the questlon whether M r Yeomans should be	removed as receiver and manager of Redarb Pty Limited and the
Redarb Unit Trust and the remuneration of the receiver and manager. As a result of the litigation, the trust fund has become effectively exhausted.
The reference in the order of the Supreme Court to "the fund" appears to be a reference to "the Fund" as defined in the trust deed establishing the Redarb Unit Trust.
In the course of argument, the prlnclpal ground upon whlch Serendipity Investments Pty Limited seeks to have the order of the Supreme Court set aside was expressed in terms of the jurisdiction of that Court. It was submitted that there was no jurisdiction in that Court to order the company and Mr Cape to indemnify the recelver and manager in respect of past or future costs where the receiver and manager is appointed by the Court and is performing functions devolved on him by virtue of that appointment.
The argument is not, I think, properly cast in tens of jurisdiction. What is sought to be ralsed is whether the Supreme Court erred in prlnclple in ordering Serendipity Investments Pty Limited to pay $25,000 into the trust fund which might be used by the receiver and manager to defray future expenses of the receivership. Certainly no question of the jurisdiction of the Supreme Court was raised when the matter was before it. As appears from the affidavit of John Bede Weber filed in support of the application, the primary
of its discretion, it should require Mr Cape to contribute all submission put to the Supreme Court was that, in the exercise
or part of the moneys owed by him to the Redarb Unit Trust before Serendipity Investments Pty Ltd was required to contribute to the trust fund. As also appears from that
affidavit, a related question raised before the Supreme Court
was whether that Court had the power, or might properly exercise any discretion which it might have, "to order a beneficiary of a trust to indemnify the actions of a trustee
jolntly wlth a second beneficiary, whrlst the second beneficiary remains a substantial debtor of the trust and the first beneficiary is not a debtor of the trust".
In support of his contention that the Supreme Court had erred in principle, counsel for Serendip~ty Investments Pty Llmited referred to and relied upon Boehm v Goodal l
[l9111 1 Ch 155 and Rosanove v O'Rourke [l9881 1 Qd R 171. He
further contended that such cases as Hardoon v B e l i l i o s [l9011
AC 118 and J.W. Broomhead ( V i e . ) P t y L t d ( I n L i q u i d a t i o n ) v
J.W. Broomhead P t y L t d (1985) 3 ACLC 355 had no application to
the circumstances of t h ~ s case.

Counsel for each of the respondents opposed the

application.

In my opinion, no sufficient ground has been
established for the intervention of this Court. The facts of

the matter are, in my view, clearly distlngulshable from those

considered in the cases on which counsel for Serendipity	Investments Pty Limited relied. The order of the Supreme
Court the subject of this application is an order requiring Serendipity Investments Pty Limited and M r Cape, as sole beneficiaries of the Redarb Unit Trust Fund, to repay to the trustee, Redarb Pty Limited, a proportion of the moneys previously distributed to them as beneficiaries of the trust, the distributions having been made at a time when it was not envisaged that the assets of the Fund would be exhausted by
reason of the lltlgation to which those beneficiaries are parties. In the clrcumstances, no questlon as to the power of the Supreme Court to make the order arises. In my opinion, the order of the Supreme Court was made in the exercise of a discretionary power vested in the Court and the circumstances are not such as to make it appropriate for the exercise of that discretion to be reviewed by this Court.
The application is dismissed. The applicant must pay the respondents' costs of the application.

I certify that this and the

preceding 4 pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice Neaves .

Dated: 23 December 1993

Counsel for the applicant	: Mr C.P. Comans
Solicitors for the applicant	: Sly and Weigall
Counsel for the first respondent	: Mr T.M. Johnstone

Solicitors for the first respondent : Crossin Barker Gosling

Counsel for the second respondent : ltr P.M. Biscoe QC Solicitors for the second respondent: Gallens Crowley &

Chamberlain

Date of hearing : 11 December 1992