Stilbo Pty Ltd v MCC Pty Ltd (in liq) - [2003] TASSC 6

[2003] TASSC 6

CITATION:Stilbo Pty Ltd & Ors v MCC Pty Ltd (in liquidation [2003] TASSC 6

PARTIES:  STILBO PTY LTD (ACN 009 547 915)
  CAMERON, Margaret Cecilia
  LADON PTY LTD (ACN 009 553 655)

v
MCC PTY LTD (in Liquidation) (ACN 009 519 359)

TITLE OF COURT:  SUPREME COURT OF TASMANIA (FULL COURT)
JURISDICTION:  APPELLATE
FILE NO/S:  FCA 2/2002
DELIVERED ON:  11 March 2003
DELIVERED AT:  Hobart
HEARING DATE:  28, 29 August 2002

JUDGMENT OF: Cox CJ, Underwood J

CATCHWORDS:

Equity - Trusts and trustees - Powers, duties, rights and liabilities of trustees - Indemnity lien and reimbursement - General principles - Trustee entitled to proprietary right against trust property to indemnity.

Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360, followed.
Aust Dig Equity [171]

Limitation of Actions - General - Application of Statutes of Limitation - Other matters - Creditor secured by equitable proprietary interest not barred by barring of personal action in respect of debt.

Australia and New Zealand Banking Group Ltd v Douglas Morris Investments Pty Ltd [1992] 1 Qd R 478, applied.
Aust Dig Limitation of Actions [13]

Limitation of Actions - Trusts and deceased estates - Statutory provisions in Trustee Acts and Trustee Companies' Acts - Constructive trust and trustee de son tort not protected from liability by Limitation Act.

Taylor v Davies [1920] AC 636, distinguished.
Limitation Act1974 (Tas), ss2, 24.
Aust Dig Limitation of Actions [39]

Limitation of Actions - Trusts and deceased estates - Statutory provisions in Trustee Acts and Trustee Companies' Acts - Meaning of trust property - Whether it includes income from trust property.

Re Howlett [1949] Ch 767; In re Landi [1939] 1 Ch 828, followed.
Re Pollock [1964] VR 554, distinguished.
Limitation Act1974 (Tas), s24.
Aust Dig Limitation of Actions [39]

Procedure - Supreme Court procedure - Tasmania - Practice under the Rules of Court - Parties - Addition of parties - When proceedings commence against party joined.

Supreme Court Rules 2000 (Tas), r184.
Aust Dig Procedure [271]

REPRESENTATION:

Counsel:
             Appellants:  S B McElwaine
             Respondent:  A J Abbott
Solicitors:
             Appellants:  S B McElwaine
             Respondent:  Toomey Manning & Co

Judgment Number: [2003] TASSC 6
Number of paragraphs: 120

Serial No 6/2003
File No FCA 2/2002

STILBO PTY LTD, MARGARET CECILIA CAMERON &
LADON PTY LTD v MCC PTY LTD (IN LIQUIDATION)

REASONS FOR JUDGMENT FULL COURT

COX CJ
UNDERWOOD J
11 March 2003

Orders of the Court:

In abeyance pending further argument.

Serial No 6/2003
File No FCA 2/2002

STILBO PTY LTD, MARGARET CECILIA CAMERON &
LADON PTY LTD v MCC PTY LTD (IN LIQUIDATION)

REASONS FOR JUDGMENT FULL COURT

COX CJ
11 March 2003

The appellants challenge a decision of the learned primary judge granting the respondent leave to join the second and third named appellants ("Miss Cameron" and "Ladon" respectively) as defendants to the action brought by the respondent against the first named appellant ("Stilbo") and to amend its statement of claim so as to allege a number of causes of action not previously pleaded in the action.

The history of this litigation is tortuous. In 1888, one Donald Cameron devised a property, "Fordon", to his descendants in tail male. In August 1979, the then tenant in tail executed a Deed of Settlement creating a discretionary trust, the trustee being the respondent, and the principal who had the power to remove the existing trustee and to appoint a new one being his daughter, Miss Cameron. She had been born on 17 February 1925. Shortly before his death in December 1979, the then tenant in tail leased the Fordon homestead to Miss Cameron and the balance of the property to the respondent for 20 years. Both Miss Cameron and the respondent entered into possession under the leases, but as the solicitor who had drawn them failed to register them in the time allowed by the Estates Tail Act 1853, it is common ground that the leases were void thereafter. Upon the lessor's death, the entailed estate passed to Donald Edward Cameron, his grandson, the latter's father having predeceased him. Donald Edward Cameron demanded possession of both properties and commenced actions on 26 November 1981 against Miss Cameron and the respondent to recover possession and mesne profits of each of the two properties. The action against Miss Cameron was resolved by her returning possession of the homestead to Donald Edward Cameron and paying money into Court by way of mesne profits, such money being accepted. On the other hand, however, the action against the respondent for the balance of the property proceeded to trial. In that action, the respondent joined as a third party the firm of solicitors whose partner had failed to register the lease. Three months before the action was tried, Miss Cameron, on 19 September 1984, in exercise of her powers under the 1979 Deed of Settlement removed the respondent as trustee and appointed Stilbo trustee in its stead. The respondent, on the same day, assigned the lease of Fordon (exclusive of the homestead) to the new trustee.

On 16 November 1984, the respondent reached agreement with the third party firm of solicitors to compromise its claim in the third party proceedings. Without admission of liability, the third party agreed to settle the respondent's claim by paying to Stilbo, at the request of the respondent, the sum of $240,000 and certain costs. On 3 December 1984, the action of Donald Edward Cameron against the respondent for possession and mesne profits was heard in the Supreme Court, counsel for the respondent appearing to make certain admissions and then withdrawing. The trial judge gave judgment on 11 December 1984 ordering that the plaintiff in that action recover from the respondent possession of the balance of Fordon, together with mesne profits in the sum of $471,412.76, plus costs. The following day a statutory demand was served on the respondent for payment of the debt and a week later Donald Edward Cameron took possession of Fordon. The demand not being met, Donald Edward Cameron sought the winding up of the respondent by a petition served on the respondent on 24 January 1985. On 18 March 1985 it was ordered that the respondent be wound up and that Rex James Dwyer be appointed liquidator.

On 27 March 1985, the liquidator wrote to Mr Peter Parsons, the former accountant for the respondent and one of its directors, and requested the submission of a report as to the affairs of the company. On the same day he wrote to the directors of the respondent company, who included Miss Cameron, seeking delivery of all documents relating to the company. Mr Parsons provided certain documents in response to the notice and subsequently the minute books, accounts, journals, cash books, statutory files and correspondence files of the respondent were delivered to the liquidator. Among the minutes was one of a meeting on 9 September 1981 at which the late Mr Justice Zeeman, then in practice as a solicitor, advised the respondent (inter alia) that because the lease was not registered it was unenforceable against the new tenant in tail. The then directors had expressed concern that the lessee had been obliged to apply a significant amount of money to make the property more productive and further sums might have been expended in capital and overdue maintenance matters. That threat and the threat of the invalidation of the leases was said to place the respondent and Miss Cameron in a difficult situation as it might not have been possible for either to recoup or secure a return on the funds outlaid. The minutes record that the directors recognised that a general plan needed to be considered to ensure neither lessee was disadvantaged.

On 9 August 1985, Mr Dwyer sent a letter to the former directors of the respondent requesting the completion and return of a questionnaire. In May of that year, the solicitor at the firm of Page Seager having the conduct of Donald Edward Cameron's affairs including, obviously, his interest as the sole creditor of the respondent and who was also acting for the respondent company in liquidation, indicated to the Commissioner for Corporate Affairs a belief that there may have been company fraud in the affairs of the respondent. On 23 August 1985, the Commissioner wrote to Page Seager referring to that discussion and inviting the firm to expand on the reasons for the belief and to provide copies of any documentation which might support it. No response was ever discovered to that letter.

On 28 August 1985, the former directors returned to the liquidator the answers to the questionnaire, each to the best of their knowledge and belief. A month later, the Commissioner for Corporate Affairs wrote to Mr Dwyer referring to his report under the Companies (Tasmania) Code ("the Code"), s376 and asking him to advise whether he believed further enquiry was desirable with respect to the conduct of the business of the company. He was also asked to advise whether he had examined company officers and their advisers pursuant to the Code, s541, and if not, when he intended to do so. On 30 October 1985, Mr Dwyer advised the Commissioner for Corporate Affairs that a report as to whether or not further enquiry about the conduct of the company's business was required would only be available after examination of the company officers.

On 3 October 1985, Zeekap (No 35) Pty Ltd was incorporated. On 31 October 1985, it changed its name to Ladon Pty Ltd, the third named appellant.

On 10 April 1986, an application under the Code, s541 was filed in the Supreme Court by Page Seager on behalf of Mr Dwyer for the examination of Miss Cameron and the other two directors of the respondent, Mr Parsons and Mr Gee. The examination was sought on:

"(a)Matters relating to the administration and affairs of MCC Pty Ltd during the period 15th January 1982 until the 24th December 1984.
(b)Matters concerning the negotiation and execution of a Deed of Release between MCC Pty Ltd and the partners of Archer Hall Waterhouse and Campbell relating to the lease of the Fordon property, and dated the 16th November, 1984, and the settlement of the action between MCC Pty Ltd and the said partners being part of the action in Supreme Court of Tasmania matter number 3507 of 1981, and
(c)Matters concerning the disbursement of and dealings with any and all monies and any other consideration referable to the said deed of release."

A return date of 14 April 1986 was nominated, but the application was not served. On 15 April 1986 Mr Dwyer wrote to Miss Cameron advising of an intention to make such an application and referring to the matters the subject of the proposed examination, as set out above. The letter concluded:
"I will not pursue such application if within 7 days from the date hereof you indicate your willingness to meet with me to openly discuss all such matters and questions arising. Please therefore telephone the writer by 5.00 pm on 23 April next to indicate your co-operation and to make arrangements for a conference convenient to all parties."

It was signed on behalf of Mr Dwyer by Mr Richard Shoobridge, who is the present liquidator, Mr Dwyer having in the meantime retired. Mr Shoobridge has been conversant with the affairs of the respondent and the course of this litigation since the winding up order was made.

On 24 April 1986, Mr Zeeman sent a facsimile to Mr Dwyer advising that Miss Cameron, Mr Gee, Mr Parsons and Major R A C Cameron, to all of whom a similar letter had apparently been sent, were perfectly happy to attend a conference with Mr Dwyer and the suggestion was made that he nominate a proposed time for a meeting in Launceston. He was requested to provide adequate notice of the meeting and also to give an indication as to the particular matters which he wished to question the addressees about so that access to relevant documents could be had.

On 19 May 1986, Ladon purchased two properties, one from W and C Youl for $189,000 and the second from M D'Antoine for $140,000.

On 23 March 1987, Mr Dwyer wrote to the Assistant Commissioner for Corporate Affairs and advised that it was then clear that following a dispute with legal advisers, settlement of $240,000 was not paid to the respondent but went to a replacement trustee, namely Stilbo. Mr Dwyer indicated that a solicitor at Page Seager would meet with Donald Edward Cameron in the near future to discuss action against Stilbo to recover the $240,000 in which the respondent would join. He reported to the Assistant Commissioner that at that stage he was "not aware that any officer of MCC Pty Ltd has been guilty of any offence". He also said that "on legal advice that the need for a s541 examination is not relevant because of responses and documents obtained to date I do not now propose to apply for examination or order under s541 of the Code".

On 18 June 1987, Page Seager asked Mr Zeeman whether he would accept service of a writ by the respondent against Stilbo. On 26 June, Mr Zeeman advised them that he had instructions to accept service on behalf of Stilbo. On 10 March 1989, the Commissioner for Corporate Affairs wrote to Mr Dwyer requesting the outcome of any action to recover the $240,000. Mr Dwyer replied on 4 May 1989 advising that legal action would be initiated against Stilbo to recover that sum. On 16 June 1989, a writ was issued in the name of Rex James Dwyer as plaintiff against Stilbo. It sought payment of $444,124.85 plus statutory interest from 11 December 1984. Three days later it was sent to Mr Zeeman and an appearance was entered on behalf of Stilbo on 27 June 1989. The action was numbered 643/1989.

The statement of claim delivered in this action (Dwyer v Stilbo Pty Ltd) alleged that the plaintiff was appointed as liquidator for the respondent to this appeal and that that company had become trustee of certain settled property by virtue of the 1979 settlement ("the Settlement") made by the late Donald Cameron. It then alleged the fact that the respondent had been ordered to pay the sum of $471,412.76 to Donald Edward Cameron in respect of a liability incurred by it under and by virtue of the Settlement for its occupation of Fordon. The Deed of Appointment of 19 September 1984 whereby Miss Cameron appointed Stilbo trustee of the trusts under the Settlement in place of the respondent was pleaded, as was the allegation that no part of the moneys ordered to be paid had been paid to Donald Edward Cameron. It was then pleaded that Mr Cameron continued to claim that payment, but that the plaintiff Mr Dwyer had no moneys to apply to that claim. An overstatement of the amount of the moneys said to have been ordered to be paid was acknowledged and a calculation for statutory interest on the balance allegedly owing of $444,124.25 from 11 December 1984 to 11 June 1989 was made in the sum of $199,856.18 with a daily rate of $121.68. The statement of claim then continued:

"By reason of the foregoing the Plaintiff seeks:
a)A declaration that the Defendant is bound to indemnify the Plaintiff for $643,981.03, being the liability as at the 11th June, 1989 and increasing by the amount of $121.68 per day thereafter during which such monies are unpaid, out of the assets of the Settlement.
b)Payment of the amount referred to in paragraph a) hereof or alternatively the like sum as damages for breach of indemnity.
c)Such further or other necessary orders for relief as the Court deems appropriate.

d) Costs."

Stilbo delivered a defence on 11 July 1989 in which it was pleaded that the statement of claim disclosed no cause of action. As no facts were pleaded to show the basis upon which the new trustee would have been obliged to indemnify the old one in the amount claimed or in any other amount, it clearly did not disclose a cause of action.

At the same time as the writ in Dwyer v Stilbo Pty Ltd (action No 643/1989) was issued, a second writ was issued by Page Seager on behalf of Donald Edward Cameron against Stilbo and Miss Cameron. It was numbered 642/1989, but the precise nature of that claim is not clear from the appeal books. A number of steps appear to have been taken towards advancing that case in the following two years. During that time Mr Zeeman was appointed a judge of this Court and Mr McElwaine took over the carriage of the matter.

On 26 July 1991, Page Seager appointed 12 August 1991 for the compulsory conference in both matters. It was put off at the request of Mr McElwaine. By November 1991, further particulars were supplied and affidavits of discovery filed by the defendants to action 642/1989 and there was further activity in respect of it during 1992. Whether there was similar activity in respect of action 643/1989 is not clear. The chronology in the appeal book suggests that there was, but the references given relate to the other action. On 10 July 1992, Mr Gee, a former director of the respondent, died. The next matter of moment in action 643/1989 was a letter from Page Seager dated 21 December 1992 in which some basis for that action was articulated. In part the letter said:

"We wish to consider with you some general principles concerning liabilities incurred by trustees in the course of executing their trust and the rights of those to whom such liabilities are incurred. In our view a trustee has the right to resort to and apply trust assets for the discharge of liabilities incurred by him in the authorised conduct of his trust. His liability to third parties is personal but if he acts within his authority the entitlements of the beneficiaries are subject to the trustees right to be indemnified out of the trust assets. He has a lien over the trust assets, income as well as capital, which takes priority over the beneficiaries rights. See Octavo Investments Pty Ltd - v - Knight (1979) 144 CLR 360. The lien is not a possessory lien but and [sic] equitable interest in the assets. It is convenient to refer to it as a right of indemnity both to the trustee's right to be reimbursed from the assets for moneys paid by him and to his right to have a liability discharged directly from them. The latter right is more appropriately called a right of exoneration, the former a right of recoupment. A trustee's right of indemnity is an equitable right which has been recognized or declared by statutes such as Section 27 (2) of the Trustee Act 1998 (Tas). The right of indemnity extends to tortious as well as contractual liabilities: See In re Raybould (1900) 1 Ch 199.
It would be our submission that a successor trustee receives trust property subject to any unsatisfied rights of the previous trustee: In Xebec Pty Ltd - v - Enthe Pty Ltd (1987) 18 ATR 893, it was said that it was 'clear on ordinary principle in equity that equity has not so framed the interest of a trustee in these circumstances as to be circumvented by a mere device of the beneficiaries or the holder of a power of appointment to appoint a new trustee when all the trust property is equitable and not the subject of physical possession which would ensure the trustee's rights by lien'.
It is most arguable that the sum of $240,000.00 and the amount representing Mr Cameron's costs, which amounts were referred to in the above Release between the trustee and its former solicitors, were impressed with an express or implied trust in favour of Mr Cameron by the tripartite instrument. If they were not, M C C Pty Ltd has acquired a trustees lien to enable it to meet its liabilities to Mr Cameron. The deed of settlement does [sic - not] negate the trustees right of exoneration for the liabilities incurred in the administration of the trust. Indeed clause 20 impliedly recognises it. The deed of appointment of Stilbo Pty Ltd as trustee does not purport to negate any right of the former trustee.
We recognise that the action in which Mr Dwyer is the Plaintiff ought to have been brought in the name M C C Pty Ltd, and not in the liquidators own name and we propose to seek an amendment to the title of the action. Indeed we would also propose to amend the proceedings so as to include Mr Cameron as a Plaintiff upon the basis as referred to above."

On 19 May 1993, an application was made by the plaintiff Mr Dwyer in action 643/1989 for orders that the respondent be substituted as plaintiff and that it be at liberty to deliver an amended statement of claim embracing the new name of the plaintiff. The application was prompted by advice from Mr Merralls QC of the Victorian Bar. It would appear from a letter of 30 August 1993 from Page Seager to the liquidator in which Mr Merralls' advice is summarised, that the advice had been given prior to the letter of 21 December 1992 to which I have referred, for in substance the letter of 30 August 1993 replicates the December letter. The matter was brought before me on 20 October 1993 and the application was refused for reasons published on 22 November 1993 (A96/1993). I commented that the statement of claim in the action seemed to me to require substantial amendment if the contentions of counsel for the applicant (Mr Dwyer) as to the nature of the equitable relief sought and the factual basis for it were to be articulated in the pleadings as they should be. Action number 643/1989 was discontinued on 3 October 1994.

On 26 August 1994, the writ in the current action was issued in the name of the respondent and named only Stilbo as defendant. It was served the same day. The statement of claim delivered therewith was to the following effect:

1The plaintiff therein had been placed in liquidation on 18 March 1985 and Mr Dwyer appointed liquidator.

2 The Settlement of 1979 was pleaded.
3The Supreme Court judgment in favour of Donald Edward Cameron against the plaintiff for $471,412.76 for mesne profits in respect of Fordon was pleaded.

4 The plaintiff occupied Fordon as trustee under the Settlement at all material times.
5"By clause 20 of the Settlement it was provided that any trustee purporting to act in the execution of the trust and the powers thereof shall not be liable for loss not attributable to (its servants or agents) dishonesty or to the wilful commission or omission by it (its servants or agents) of any act known to be a breach of trust nor shall the trustee be liable for any loss or damage resulting from the known exercise of any of its powers authorities or discretions thereunder."
6"By clause 21 of the Settlement it was provided that the Principal therein referred may remove from office any trustee for the time being and may by deed appoint a new trustee in its place to be the trustee of the Settlement."
7The September 1984 (incorrectly referred to as 1994) appointment of Stilbo as replacement trustee in place of the plaintiff was pleaded.
8"By clause 3 of the Appointment it was provided that the trustee by its execution hereof accepts the appointment as trustee of the Settlement and will hold all property herebefore held by the former trustee as trustee of the settlement upon the terms and subject to the powers and provisions declared and contained in the Settlement concerning the same or such of the said trusts, powers and provisions as are now subsisting and capable of taking effect."
9The continued claims by Donald Edward Cameron upon the plaintiff as retired trustee were pleaded.
10The fact that neither plaintiff nor defendant had made any payment to Donald Edward Cameron in respect of his entitlement for mesne profits under the judgment was pleaded.

It was then asserted:
"By reason of the foregoing the plaintiff claims:
AA declaration that it has the right to be exonerated for its liability under the Order dated 11th December 1984 from trust assets held by the defendant.
BA declaration that the defendant is bound to indemnity the plaintiff for its liability under the said Order.
CSuch further or other consequential orders so as to effect a payment to Donald Edward Cameron in order to satisfy his claims arising under the Order.
DA declaration that the trust property held by the defendant by reason of the Appointment is subject to the unsatisfied rights of the plaintiff as previous trustee appointed by reason of the Settlement.
ESuch further or other necessary orders for relief as the Court deems appropriate.

F Costs."

The defence delivered on 12 October 1994, admitted par1; did not admit pars2, 4, 5, 6, 8, 9 and 10; admitted the recovery of judgment by Donald Edward Cameron against the plaintiff in the sum of $471,412.76; but otherwise denied par4 and denied par7. By par 11, the defence pleaded that the statement of claim failed to disclose any cause of action against the defendant, by pars 12, 13 and 14 pleas were made that any cause of action was barred by the Limitation Act 1974 ("the Act"); and by pars 15 and 16 reliance was placed on the acquiescence and laches of the plaintiff as barring any entitlement to relief.

Between November 1994 and November 1996 there was some interlocutory activity in the action and a request was made by Page Seager in October 1996 for a compulsory conference. On 14 November 1996, Mr McElwaine responded to that request by advising that he had mislaid the relevant pleadings in the action and he asked Page Seager to supply copies. He also advised that the plaintiff had not yet made discovery and asked that that be done before any compulsory conference. His request for a response to that letter was repeated on 31 January 1997, 29 April 1997 and 30 July 1997, but no further response or activity was generated by Page Seager after that letter of 15 October 1996. On 14 June 2000, the respondent's present solicitors served a notice of change of solicitors and gave notice of intention to proceed with the action. Thereafter the respondent's solicitors have acted with due despatch. On 18 May 2001 they made application for an appointment for the orders the subject of this appeal.

Before leaving this recital of the background to the application in question, I record that Mr Richard Shoobridge, the present liquidator of the respondent, gave evidence before the learned primary judge and in cross-examination agreed that from an early stage in the liquidation he had received advice that there was a right of indemnity in the respondent in the assets of the trust of which it had been trustee and that the liability to Mr Cameron could not be avoided simply by changing trustees from the respondent to Stilbo. He also agreed that the liquidator had advice from Page Seager that sufficient information was on hand to progress the recovery of the $240,000 paid to Stilbo and there was no need therefore for an examination under the Code, s541. He undertook no further factual enquiries to progress the claims against all three appellants until the appointment of new solicitors in June 2000. He agreed that he knew since March 1987 that the money had not gone to the respondent, but had been paid to Stilbo and agreed that any information sought from Miss Cameron and Ladon had been provided by them. He further agreed that it was on Page Seager's advice that the liquidator had not taken up the opportunity to meet with Mr Zeeman and his clients which the latter had offered.

The amendments the respondent sought to make to the statement of claim on the joinder of Miss Cameron and Ladon are voluminous. For the first time there is mention of the third party proceedings which were compromised by Release and by the payment of $240,000 to Stilbo at the direction of the respondent and which sum of money is the asset pursued in the action.

- In par34 it is pleaded that:
"As a result of the matters set out herein, the plaintiff has a right of indemnity out of the assets of the trust created pursuant to the Deed of Settlement, such indemnity being secured by an equitable charge over and an equitable proprietary interest in the assets of the trust".
-In par35 it is pleaded that the respondent as plaintiff is entitled in equity to trace the last mentioned sum (the trust money) paid under the Release into any hands into which it has been paid or property acquired by its application in whole or in part. It is then pleaded that the respondent did not benefit from the Release and that the trust money was either paid to Stilbo or to Miss Cameron or to Ladon, or by one of those appellants to or to the use of the other of the appellants.
-By par44 it is pleaded that on or about 19 May 1986, the trust money was applied to the use of or used by Ladon to fund part of the purchase price of two properties, the first being purchased from W and C Youl for the sum of $189,000 and the second being purchased from M D'Antoine for the sum of $140,000.
-Paragraph 47 introduces a claim that Stilbo took the trust money with actual notice of the facts giving rise to the respondent's equitable proprietary interest therein and as such is liable to account to the respondent for the trust money.
-By par48, a right of indemnity as against Stilbo is claimed by the respondent as former trustee by virtue of its right to be exonerated for its liability under the order from the trust moneys held by Stilbo as replacement trustee.
-By par50, a further account claim is made against Miss Cameron by virtue of her alleged receipt of the trust money or her direction that it be paid.
-Paragraph 51 alleges in the alternative that the respondent has a right of indemnity against Miss Cameron as a replacement trustee or alternatively under par52, to the extent that she directed the payment of the trust money, she is liable to account to the respondent therefor.
-Paragraph 53 alleges that Miss Cameron had actual notice of the facts giving rise to the respondent's equitable proprietary interest in the trust money and received the trust money to defeat that equitable proprietary interest. It is alleged that she is a constructive trustee of the money and is therefore liable to account to the respondent for it.

-          By par58 an allegation is made that Miss Cameron is a trustee de son tort.
-By par62 it is alleged that Miss Cameron is in breach of fiduciary duty to the respondent by permitting the payment of the trust money from the third parties to Stilbo rather than to the respondent.
-Paragraph 76 introduces a claim for an account from Ladon. Similar claims are made against Ladon of a right to indemnity and allegations are made that the real estate was acquired as a constructive trustee for the respondent and was a trustee de son tort of the trust established under the deed of settlement.
The claim for relief is as follows:
"By reason of the foregoing the plaintiff claims:
A        Tracing of the Trust Money.
BAn order that the firstnamed defendant account to the plaintiff for the Trust Money.
CA declaration that it has the right to be exonerated for its liability under the Order dated 11^th' December 1984 from trust assets held by the firstnamed defendant.
DA declaration that the firstnamed defendant is bound to ~~indemnity~~ indemnify the plaintiff for its liability under the said Order.
EA declaration that it has the right to payment or discharge out of the trust estate held by the firstnamed defendant [of] the liability incurred under the Order pursuant to section 27(2) of the Trustee Act 1898.
C F     Such further of or other consequential orders so as to effect a payment to Donald Edward Cameron in order to satisfy his claims arising under the Order.
D G     A declaration that the trust property held by the firstnamed defendant by reason of the Deed of Appointment is subject to the unsatisfied rights of the plaintiff as previous trustee appointed by reason of the Deed of Settlement.
HAn order that the secondnamed defendant account to the plaintiff for the Trust Money.
IA declaration that the plaintiff has a right of indemnity out of the trust assets held by the secondnamed defendant for the p1aintiff's liability arising under the Order.
JA declaration that it has the right to pay or discharge out of the trust estate held by the secondnamed defendant the liability incurred under the Order pursuant to section 27(2) of the Trustee Act 1898.
KA declaration that the Trust Money is held by the secondnamed defendant on trust for the plaintiff.
LAn order that the secondnamed defendant account to the plaintiff as a trustee de son tort for the loss of the Trust Money.
MAn order that the secondnamed defendant pay to the plaintiff the amount found due and owing upon taking the account referred to in paragraph L herein.
NAn account of profits made by the secondnamed defendant from the use of the Trust Money.
OAn order that the secondnamed defendant pay to the plaintiff the amount found due and owing upon taking the account of profits referred to in paragraph N herein.
PAn order that the secondnamed defendant account to the plaintiff for breach of fiduciary duty.
QProfit made by the secondnamed defendant and loss and damage pursuant to section 229(7) of the Companies (Tasmania) Code.
RAn order that the thirdnamed defendant account to the plaintiff for the Trust Money.
SA declaration that it has a right of indemnity out of the trust assets held by the thirdnamed defendant for the plaintiff's liability arising under the Order.
TA declaration that it has the right to pay or discharge out of the trust estate held by the thirdnamed defendant the liability incurred under the Order pursuant to section 27(2) of the Trustee Act 1898.
UA declaration that the Youl Property and D'Antoine Property are held by the thirdnamed defendant upon trust for sale for the plaintiff and the secondnamed defendant in such shares as the Court shall determine.
VAn order that the thirdnamed defendant account to the plaintiff as a trustee de son tort for the loss of the Trust Money.
WAn order that the thirdnamed defendant pay to the plaintiff the amount found due and owing upon taking the account referred to in paragraph V herein.
XAn account of profits made by the thirdnamed defendant from the use of the Trust Money.
YAn order that the thirdnamed defendant pay to the plaintiff the amount found due and owing upon taking the account of profits referred to in paragraph X herein.
ZInterest pursuant to section 165 of the Supreme Court Civil Procedure Act 1932.
EZA    Such further of or other necessary orders for relief as the Court deems appropriate.

F ZB Costs."

The learned primary judge gave the respondent leave to add Miss Cameron and Ladon as defendants to the action and gave leave to amend the statement of claim so as to include the claims I have adverted to. He declined to permit certain amendments which I have not mentioned, but they are not the subject of a cross-appeal. In essence, the grounds of appeal are that the learned primary judge incorrectly classified certain causes of action pleaded as not being subject to the Act by analogy and hence not subject to the rule in Weldon v Neal (1887) 19 QBD 394; that he incorrectly regarded some causes of action as not being causes of action, but only matters of relief; that he failed to correctly apply the provisions of the Act in respect of claims against trustees; and that his discretion both in respect of joinder and in respect of the allowance of the amendments to the statement of claim miscarried, especially having regard to the lengthy delays which have accompanied this litigation.

It is convenient to deal with the discretionary point first. The learned primary judge had two discretions to exercise. The first was to add Miss Cameron and Ladon as defendants to the action under the Supreme Court Rules 2000, r184, and the second to amend the pleadings pursuant to r427 thereof. The mere addition of the parties would not have advanced the matter without pleading the facts upon which the cause or causes of action against them were based, for there was nothing in the existing statement of claim which grounded any such cause. Accordingly, matters relevant to the exercise of the discretion in respect of either application became relevant to the other.

It is undoubtedly the case that there has been inordinate delay in the conduct of these proceedings by the respondent and/or its advisers prior to the present solicitors on the record re-invigorating it. The liquidator was aware in 1986 of the respondent's right to seek an indemnity from the replacement trustee out of the trust property in its hands. Stilbo and Miss Cameron co-operated with the liquidator in responding to his questions and indicated their willingness to meet and supply further information, an invitation which was not accepted. Action was commenced in the wrong name and the statement of claim in the first action failed to disclose a cause of action. Eventually the action was discontinued and a new action started in the right name, but against only one of the present defendants. Arguably until the amendment of the pleading permitted by the learned primary judge's order, the second statement of claim likewise failed to disclose any cause of action. Nearly 7 years passed, the last 3½ without any activity at all from the respondent's then solicitors, before the application was made to get matters in order. In the meantime, a director of Stilbo, Mr Gee, has died and so has the solicitor who advised the three appellants in respect of the activities which it is claimed give rise to the causes of action now pleaded. Miss Cameron is in her 78th year and the other appellants, though incorporated, are not business corporations as alluded to by Lord Griffiths in Ketteman v Hansel Products Ltd [1987] AC 189 where he said of the proposition that costs can remedy the prejudice of fresh issues being raised:

"… justice cannot always be measured in terms of money and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes … ." (at 220)

An application to amend pleadings should be granted if the justice of the case demands it. As Dawson, Gaudron and McHugh JJ said in Queensland v J L Holdings Pty Ltd (1997) 71 ALJR 294 at 297:

"Justice is the paramount consideration in determining an application such as the one in question. Save in so far as costs may be awarded against the party seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making the application."

The precursor to r427 was O31, r1, which provided:

"The Court or a judge may, at any stage of the proceedings, allow any party to alter or amend the endorsement on his writ or his pleadings, in such manner and on such terms as may be just, and all such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy between the parties."

Although the present rule is slightly differently expressed, the principle underpinning it remains the same and was adopted by the High Court in Clough and Rogers v Frog (1974) 48 ALJR 481 at 482, where the court, in a joint judgment, said:
"The principle according to which this power is to be exercised was stated by Bowen LJ in Cropper v Smith (1884), 26 Ch D 700, at pp 710-711: '… the object of courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases … I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the court ought not to correct, if it can be done without injustice to the other party … as soon as it appears that the way in which a party has framed his case will not lead to a decision of the real matter in controversy, it is as much a matter of right on his part to have it corrected, if it can be done without injustice, as anything else in the case is a matter of right.'"

Where the injustice is the defeat of a party's right to rely upon a statute of limitations, the rule in Weldon v Neal (supra) clearly provides that leave to amend a statement of claim setting up a new cause of action will normally be refused (see also Ritchie & Parker Alfred Green & Co v Gornalle [2000] TASSC 8). In respect of an application for joinder of another party as defendant, because "unless otherwise ordered, a proceeding against a party whose name is added as defendant or respondent is taken to have begun on the service of the originating process on that party" (r184(6)), such an amendment would not prejudice any existing rights under a statute of limitations. However, as Dawson J pointed out in Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231 at 236, it follows that "leave to amend to substitute or add a defendant who has a good defence under a period of limitation will generally be refused as serving no useful purpose." The applications to join and to amend were not made during or on the eve of the trial as was the case in Ketteman v Hansel Products Ltd (supra). The considerations of stress upon elderly parties and persons other than business corporations adverted to by Lord Griffiths in that case do not have the same weight in circumstances such as the present. It is not suggested that the death of Mr Gee and Mr Justice Zeeman has prejudiced the appellants in their defence of the action as now framed. In my view, but for the existence of defences under the Act which, if established, would preclude amendment of the statement of claim pursuant to the rule in Weldon v Neal or require the dismissal of a joinder application as serving no useful purpose, the proper exercise of the learned primary judge's discretion did not require him to refuse either application on the ground of delay or otherwise.

When this matter came before the learned primary judge, counsel for Stilbo announced his appearance on behalf also of the potential new defendants. Rule 184(6) provides that unless otherwise ordered, the proceeding against defendants joined by an order thereunder is taken to have begun on service of the originating process on them and subrule (8) requires the amendment and filing of that process and service thereof in the same manner as original process is served. No different order was made and it would seem that the orders effecting amendments to the statement of claim having relevance to them were premature and should only have been made after the proceeding against them had begun. However, this is not the subject of any ground of appeal and no point was made of it on the hearing of the appeal where they were represented by the same counsel as Stilbo. I note that in some jurisdictions where joinder orders and orders amending pleadings which affect new parties have been made at the same time (eg, Liff v Peasley [1980] 1 WLR 781) the relevant joinder rule provided that the proceedings which are amended to add or substitute a defendant are "deemed to have been begun on the date of amendment". Had the learned primary judge ordered the joinder of Miss Cameron and Ladon taken to have begun on the date he made it, subsequent orders amending the statement of claim would have avoided the problem. If there be error in his not having done so, I see no reason why this Court cannot correct it by making such an order. His substantive orders should not be set aside only on that ground.

The principal thrust of the appeal is that the new claims being made by virtue of the amendments are barred under the Act. By s24 it is provided:

"24      (1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action –
(a)     in respect of fraud or fraudulent breach of trust to which the trustee was a party or privy; or
(b)     to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use.
(2) Subject to subsection (1), an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of 6 years from the date on which the right of action accrued."

The Act, s2(1) provides:
"2 (1) In this Act, unless the contrary intention appears –
…
"trust" and "trustee" have the same meanings as they have for the purposes of the Trustee Act 1898."

The last-mentioned Act, s4, provides:
"4 In this Act, unless the contrary intention appears –
"trust" does not include the duties incident to an estate conveyed by way of mortgage, but, with this exception, "trust" includes implied and constructive trusts, and cases where the trustee has a beneficial interest in the trust property and the duties incident to the office of representative of a deceased person;
"trustee" includes –
(a) any person seised or possessed of or entitled to any property subject to any trust as aforesaid;
(b) any person who has also a beneficial interest in the trust property;
(c)
(d) any company, corporation, firm, or association authorized by law to act as trustee, executor, or administrator of the estate of any deceased person;
(e) any representative in any way possessed of or entitled to any property subject to any trust express or implied;
(f) any trustee whose trust arises by construction or implication of law, but does not include a mortgagee; and
(g) joint trustees, executors, or administrators, where more than one person is acting in any of the said capacities;"

The respondent's primary claim against Stilbo is for indemnity out of the assets created by the Deed of Settlement which it is alleged is secured by way of equitable charge over and an equitable proprietary interest in the assets of the trust (par34 of the statement of claim). It is claimed that this entitles the respondent to trace the $240,000 into any hands into which it has come (par35). To the extent that Stilbo parted with the trust money, it is claimed in par49 that Stilbo is liable to account to the respondent. None of these claims justify classification as "an action by a beneficiary under a trust" within the meaning of s24(1) irrespective of whether they otherwise fall within pars(a) or (b) thereof. I shall return to them.

As to Miss Cameron, none of the claims that she received the trust money or part of it or directed the payment of the trust money and is therefore liable to account to the respondent for it (par50), that her receipt of the money binds her to indemnify the respondent (par51) and that her direction of the payment of the money imposes an obligation on her to account for it (par52) likewise fit the classification referred to in s24(1). However, pars53 - 56 plead circumstances leading to the assertion in par57 that Miss Cameron "holds the trust money on constructive trust for the [respondent]" and is liable to account to it therefor. This claim, in my view, is an action by a beneficiary (the respondent) under a trust as defined by the Trustee Act 1898 and it seeks in terms of s24(1)(b) "to recover from the trustee trust property in the possession of the trustee". It is submitted on behalf of the appellants that the pleadings do not assert the necessary facts to bring the case within par(b) and that all which is pleaded is a past reception of or dealing with the property. Whether the facts will ultimately be established is one thing, but we must take the pleadings as they stand and par57 quite clearly pleads that Miss Cameron "holds the trust money on constructive trust" for the respondent and seeks its return. It may be that the draftsman of the statement of claim, fearful that the inference that the trust money did not reach Ladon may prove incorrect and the Court find it remained in Miss Cameron's hands, has included a claim (from an abundance of caution) that she holds the money on trust. Whatever the reason and whatever the ultimate finding, the statement of claim pleads the necessary facts to support the claim against Miss Cameron. It is further submitted by counsel for the appellants that the exceptions within the compass of par(b) of s24(1) comprise only actions to recover capital sums and do not extend to claims for interest thereon which attract the protection of the Act and must be brought within six years (Handbury Modern Equity, 5 ed, 364; Maitland's Equity (1909) at 178). I have had the advantage of reading the reasons for judgment prepared by Underwood J and have reached the conclusion that, notwithstanding the respect due to such learned authors, the better view is that the exceptions do extend to claims for income or profits derived from trust property whenever received. The case of Re Pollock [1964] VR 554 is distinguishable on the basis that it was expressly governed by the equivalent of the Act, s4(5) which deals with interest on legacies and not by the equivalent of s24(1)(b). In addition to the case of Re Howlett [1949] Ch 767 which my brother cites, and which was a successful claim for the recovery of income notionally earned over a period well in excess of six years on trust property wrongfully withheld from the plaintiff, there is the Court of Appeal decision of In re Landi [1939] 1 Ch 828 where income received on property which, from the date of commencement of the English Law of Property Act 1925, was held upon statutory trusts for the benefit of tenants in common was determined to be within the exception of the equivalent of our legislation as trust property. At 840, Sir Wilfred Greene MR said:

"It follows necessarily from the reasoning I have endeavoured to expound, that as from January 1, 1926, Mr Landi received the rents in the character of trustee, that no Statute of Limitations in respect of the rents so received, being trust moneys, could run in his favour, and that therefore the claimant is entitled to receive the rents as far back as that time."

By pars58 - 61, the plea is made that Miss Cameron is a trustee de son tort. Once again, in my view, this is an action by a beneficiary under a trust within the definition of the Trustee Act. Although the plea that Miss Cameron presently "holds the trust money" was made in par57 as part of a contention that she holds it as constructive trustee rather than as a trustee de son tort, the factual assertion that she presently holds it is contained in the pleading and enables the claim against her as a trustee de son tort to be classified as also falling within par(b). The assertion that she holds the property is also repeated in par K of the prayer for relief. Counsel drew attention to such cases as Soar v Ashwell (1893) 2 QB 390 and Taylor v Davies [1920] AC 636, but having regard to the language of s24 and the definitions of "trust" and "trustee", I respectfully adopt the views of the learned editors of Jacobs's Law of Trusts in Australia, 6 ed at par 2227 that:
"The effect of the legislation is to abolish the distinction which formerly existed between express and constructive trusts, and is broadly that a trustee who commits a breach of trust and is sued for the recovery of trust money or trust property is entitled to plead that the loss occurred and that the breach of trust took place (ie, that the beneficiary's right of action accrued) more than six years before the institution of the proceedings, except in the three cases mentioned in the legislation namely:
(a)In cases of fraud or fraudulent breach of trust to which the trustee was party or privy.
(b)Where the claim is for the recovery of trust property or its proceeds still retained by the trustee.
(c)Where a trustee has received trust property and converted it to his own use.
With these exceptions the trustee is as much entitled to the protection of the various Statutes of Limitation as if actions or proceedings for breach of trust were enumerated in each statute."

The pleas of constructive trust and trusteeship de son tort alleged against Ladon in pars78 - 81 and 82 - 86 and par U of the prayer for relief also fall within the classification of s24(1)(b) so that amendments to include them do not prejudice the appellants by depriving them of a limitation defence. The claims made against the appellants in respect of the funds in their hands or converted by them in contravention of their duties as trustees being excepted from the operation of the Act, s24, so, too, the remedies sought of account and tracing are excepted and are not barred by any alleged analogy to common law claims of the same nature.

A claim for breach of fiduciary duty is brought against Miss Cameron in pars62 - 68. By virtue of her directorship of the respondent company, it is alleged that she stood in a fiduciary relationship to that company, owing it a duty to inter alia act in its best interests, but that she breached her duties by causing the trust money to be paid not to it but to Stilbo (or alternatively to herself or to Ladon), thereby gaining a personal advantage. It is claimed that she is liable to account for any benefit obtained by any of the appellants. In my view, such a claim is barred by analogy. In Metropolitan Bank v Heiron (1880) LR 5 Ex D 319, the plaintiff bank sought payment to it from a former director of a bribe received by him for acting in breach of his duty to the company. The fraud had been discovered more than six years before the action was commenced. In the Court of Appeal, James LJ said at 323 - 324:

"The ground of this suit is concealed fraud. If a man receives money by way of a bribe for misconduct against a company or cestui que trust, or any person or body towards whom he stands in a fiduciary position, he is liable to have that money taken from him by his principal or cestui que trust. But it must be borne in mind that that liability is a debt only differing from ordinary debts in the fact that it is merely equitable, and in dealing with equitable debts of such a nature Courts of Equity have always followed by analogy the provisions of the Statute of Limitations, in cases in which there is the same reason for making the length of time a bar as in the case of ordinary legal demands. In the case of a bribe received, or other profit made by a person in a fiduciary position, there is no doubt that the cestui que trust who is wronged is not barred by any length of time, so long as that wrong is concealed from him by the wrongdoer. But when the cestui que trust knows of the fact, or knows that the fact is charged, and investigates the case, it is for him to make up his mind whether he will bring proceedings, just as any other creditor has to make up his mind whether he will issue a writ or not, and if he allows six years to elapse after he has had full information and knowledge of the alleged wrong before he takes steps to enforce the redress for that wrong, then the person against whom be bring such a suit has, according to my view, a clear right to avail himself of the lapse of time against the claim as much as if it had been a mere legal demand. I think, therefore, that the Statute of Limitations in this case began to run from the time at which the company discovered the fact."

In the present case, the respondent had knowledge of the diversion of the trust money from it to Stilbo before the issue of the first writ.

The foundational claim in this action is the respondent's claim for indemnity in respect of its liability to Donald Edward Cameron for mesne profits. Both counsel accept that the relevant principle is stated in Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 by Stephen, Mason, Aickin and Wilson JJ at 367, as follows:

"It is common ground that a trustee who in discharge of this trust enters into business transactions is personally liable for any debts that are incurred in the course of those transactions: Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319 . However, he is entitled to be indemnified against those liabilities from the trust assets held by him and for the purpose of enforcing the indemnity the trustee possesses a charge or right of lien over those assets: Vacuum Oil Co Pty Ltd v Wiltshire. The charge is not capable of differential application to certain only of such assets. It applies to the whole range of trust assets in the trustee's possession except for those assets, if any, which under the terms of the trust deed the trustee is not authorized to use for the purposes of carrying on the business."

At 369 - 370, the same Justices stated:
"If the trustee has incurred liabilities in the performance of the trust then he is entitled to be indemnified against those liabilities out of the trust property and for that purpose he is entitled to retain possession of the property as against the beneficiaries. The trustee's interest in the trust property amounts to a proprietary interest, and is sufficient to render the bald description of the property as 'trust property' inadequate. It is no longer property held solely in the interests of the beneficiaries of the trust and the trustee's interest in that property will pass to the trustee in bankruptcy for the benefit of the creditors of the trust trading operation should the trustee become bankrupt."

In Chief Commissioner of Stamp Duties v Buckle (1998) 72 ALJR 243, the issue was whether or not the beneficiaries' rights in trust property could be regarded for the purposes of s66 of the relevant Stamp Duties legislation as encumbered by the trustee's right of exoneration or reimbursement. The court, citing the last-mentioned passage from Octavo, said:

"The interests of the beneficiaries are not 'encumbered' by the trustee's right of exoneration or reimbursement. Rather, the trustee's right to exoneration or recoupment 'takes priority over the rights in or in reference to the assets of beneficiaries or others who stand in that situation'. Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319 at 335. A court of equity may authorise the sale of assets held by the trustee so as to satisfy the right to reimbursement or exoneration. In that sense, there is an equitable charge over the 'trust assets' which may be enforced in the same way as any other equitable charge. See Hewitt v Court (1983) 149 CLR 639 at 663. However, the enforcement of the charge is an exercise of the prior rights conferred upon the trustee as a necessary incident of the office of trustee. It is not a security interest or right which has been created, whether consensually or by operation of law, over the interests of the beneficiaries so as to encumber them in the sense required by s 66(1) of the Act. In valuing the interests of beneficiaries which are conveyed by an instrument, there is no encumbrance which the Act requires to be disregarded."

In Hewitt v Court cited above, Deane J said at 663:
"An equitable lien is a right against property which arises automatically by implication of equity to secure the discharge of an actual or potential indebtedness (see In re Beirnstein (1925) Ch 12, at pp 17-18 ; In re Bond Worth Ltd (1980) Ch 228, at 251; Snell's Principles of Equity, 28th ed (1982), pp 450-451). Though called a lien, it is, in truth, a form of equitable charge over the subject property (see Landowners West of England and South Wales Land Drainage and Inclosure Co v Ashford (1880) 16 Ch D 411 ) in that it does not depend upon possession and may, in general, be enforced in the same way as any other equitable charge, namely, by sale in pursuance of court order or, where the lien is over a fund, by an order for payment thereout (Bowles v Rogers (1800) 6 Ves 95 n (31 ER 957); In re Stucley (1906) 1 Ch 67, at pp 76-77, 80; Davies v Littlejohn (1923)34 CLR 174, at p 184; Seton's Judgments and Orders, 7th ed (1912), vol 3, pp 2220-2225). Equitable lien differs from traditional mortgage in that it does not transfer any title to the property and therefore cannot be enforced by foreclosure."

Mr McElwaine for the appellants argues that the respondent's claim for recovery of trust moneys by way of indemnity is barred either expressly by the Act, s4(1)(d), which bars actions to recover any sum recoverable by virtue of an enactment (the relevant enactment being the Trustee Act, s27, which gives a right of indemnity to trustees in respect of all expenses incurred in or about the execution of their trusts or powers) or by analogy to common law actions for money had and received. If that be the case, he argues that the trustee's lien exists only to enforce the indemnity and does not exist independently of the right to be indemnified. It is not a security interest or right which has been created, but is merely a right to approach a court of equity for sale of the assets to enforce the charge. If the indemnity claim is lost by virtue of a Statute of Limitations, the lien falls away as well because it has no separate existence.

In Australia and New Zealand Banking Group Ltd v Douglas Morris Investments Pty Ltd [1992] 1 Qd R 478, the Full Court was concerned with a scrip lien in the form of a charge to secure banking accommodation over specific shares, some of which had been exchanged for shares in a company called Pioneer after a compulsory take-over. The bank's action to recover money advanced being outside the limitation period, it did not succeed on that claim, but the trial judge's grant of a declaration that the lien was valid and the bank entitled to possession of the share certificates was upheld. McPherson J, with whose reasons for judgment Connolly and Williams JJ concurred, said at 492 - 493:

"If amounts of principal and interest due to the bank under the scrip lien have become statute barred, the next question is what, if any, effect this has on the bank's charge over or in respect of the Pioneer shares and share certificates subject to the scrip lien. The answer is, I consider, that it has no effect. The charge created by the lien operated to vest in the bank an equitable proprietary interest in those shares. The barring of proceedings to recover the debt which the charge was intended to secure does not touch that interest. Few rules were better settled than that under the original Statute of Limitations, which was the Act of 1623; 21 Jac I, c 16, it was the remedy only that was lost and not the right. In the case of a debt, that meant that an action could not be brought to recover it; but the debt itself was not extinguished."

He cited London and Midland Bank v Mitchell [1899] 2 Ch 161, Stubbs v Slater [1910] 1 Ch 632 and Weld v Petre [1929] 1 Ch 33.

In my view, the effect of any applicable limitation on an action to recover the trust money is merely to bar the remedy and not the right. Buckle's case (supra) distinguishes the trustee's right to indemnity from a security interest which would constitute an encumbrance on the beneficiaries' interests for the purposes of the relevant Stamp Duties legislation, but reasserts its characteristic as an interest in the trust property which amounts to a proprietary interest and one which may be enforced in the same way as any other equitable charge, such as the one created as a specific security in the Queensland case. The lien does not fall away with any action defeated by limitation, but subsists as an added remedy by which the trustee may enforce his right to indemnity. In consequence it is my opinion that no prejudice will be caused to the appellants by the amendment seeking to assert and rely on the respondent's right to indemnity from each of them to that extent[1].
[1] Amended in Court 25 March 2003 on hearing of parties prior to final orders by the addition of "to that extent".

By pars47 - 49 and 50 - 52 of the statement of claim, claims were made against each of Stilbo and Miss Cameron that they had taken the trust money, or dealt with it, with actual notice of the facts giving rise to the respondent's equitable proprietary interests therein and in consequence were each liable to account to the respondent therefor. Alternatively to the extent that each retained the trust money, each was bound as replacement trustee to indemnify the respondent as former trustee for the liability under the Order, and to the extent that they had parted with the money or directed its payment to third parties, each was bound to account therefor. By par76 and 77, similar claims were made that Ladon was bound to account and/or to indemnify the respondent as former trustee. These claims do not justify classification as actions "by a beneficiary under a trust" within the meaning of the Act, s24(1), nor are they actions to enforce the equitable proprietary interest in the trust moneys by virtue of the respondent's right to indemnity pleaded in par34 of the statement of claim and to follow the assets into the hands of whoever now has them. To the extent that any of the appellants now has the trust money, these actions do not seem to me to take the matter any further than the pleadings which assert the respondent's equitable proprietary interest in that money and its right to trace. As such, the pleadings which purport to raise such actions are mere surplusage. However, to the extent that any of the appellants has parted with the money or directed its payment to another person, such pleadings raise in essence separate equitable claims analogous to the common law action for money had and received and hence are barred by analogy (the Act, s9; Knox v Gye (1872) 5 LRHL 656).

For the foregoing reasons, I conclude that the appeal should be allowed in part and that the amendments to the following paragraphs of the statement of claim permitted by the learned primary judge should be disallowed: paragraphs 47, 48, 49, 50, 51, 52, 62, 63, 64, 65, 66, 67, 68, 76 and 77. However, I would dismiss the appeal insofar as it seeks to set aside the other orders complained of in the notice of appeal. Before making such orders, I think we should give the parties the opportunity to address the Court in respect of the date from which the order of joinder should operate.

File No FCA 21/2002

STILBO PTY LTD, MARGARET CECILIA CAMERON &
LADON PTY LTD v MCC PTY LTD (IN LIQUIDATION)

REASONS FOR JUDGMENT FULL COURT

UNDERWOOD J
11 March 2003

The long history of these proceedings

Donald Cameron ("the settlor") died on 31 October 1890. By a devise, the settlor created an estate in fee tail of certain farming properties collectively known as "Fordon". The devise passed the estate to the settlor's son, Cyril, for life and thereafter was limited to Cyril's eldest male linear descendants.

Cyril Cameron died in 1941 and his eldest son took possession of Fordon as tenant in fee tail. He, too, was called Donald Cameron, but to avoid confusion and for reasons that will become apparent, I shall refer to him as "the grandfather" in these reasons for judgment.

The grandfather's eldest son was Donald Alastair Cameron. No doubt, it was expected that upon the grandfather's death, Donald Alastair Cameron would take the Fordon estate in tail. However, this did not occur, because Donald Alastair Cameron died in 1964, predeceasing the grandfather. At the date of his death his eldest son was Donald Edward Cameron ("the grandson").

In the ordinary course of events, the grandson would have taken the estate in fee tail upon the grandfather's death, but the grandfather tried to prevent this. On 11 August 1979, the grandfather entered into a deed of settlement with himself as the settlor and the respondent, MCC Pty Ltd, as trustee. It might be inferred that this company derived its name from one of its directors, Margaret Cecilia Cameron, an aunt of the grandson and the second named appellant. The other directors were Ralph Alverne Cameron and Arthur Stewart Gee. The deed of settlement created a discretionary trust. It also conferred on Margaret Cameron powers to remove MCC Pty Ltd as trustee of the settled property and to appoint a new trustee in its stead.

Having created the discretionary trust, the grandfather executed two leases of the entailed property. By one he leased a small portion of Fordon, known as "Old Fordon", to Margaret Cameron for 20 years at $1 per annum. The balance of Fordon was leased to MCC Pty Ltd, also for 20 years, but at $8,000 per annum. The lessees entered into possession of the properties. The grandfather died on 19 December 1979, just five days after he executed the two leases.

The terms of the leases were such that they fell within the provisions of the Estates Tail Act 1853, s19. In consequence, the leases would become void if they were not registered in the office of the Registrar of Deeds within 12 months of their execution. The leases were not so registered and in December 1980 became void.

On 26 November 1981, the grandson commenced proceedings in this Court for possession of the properties and mesne profits. In the proceedings against MCC Pty Ltd, five solicitors, the then partners of Archer Bushby, were joined as third parties, for it was alleged that the failure to register the leases was due to their neglect.

According to the chronology that formed part of the appeal books, upon being advised that the leases were void, MCC Pty Ltd became concerned that money that it had invested in the properties to make them productive, would not be recouped if possession reverted to the grandson. Acting on legal advice, Zeekap (No 16) Pty Ltd was incorporated on 24 August 1984. Margaret Cameron, and initially, Ralph Chapman, but later Arthur Gee, were directors of this company.

On 19 September 1984, Margaret Cameron exercised the power given to her by the grandfather's deed of settlement and removed MCC Pty Ltd as a trustee of the settled land and in its place appointed Zeekap (No 16) Pty Ltd. At the same time, MCC Pty Ltd purported to assign to Zeekap (No 16) Pty Ltd the lease of Fordon that it had taken from the grandfather. On 1 October 1984, Zeekap (No 16) Pty Ltd changed its name to Stilbo Pty Limited ("Stilbo"), the first appellant in this appeal.

On 16 November 1984, MCC Pty Ltd settled its third party claim against the then partners of Archer Bushby upon the basis that in the event of the grandson succeeding in his claim for mesne profits against MCC Pty Ltd, the solicitors would pay $240,000 and the grandson's legal costs to a maximum of $27,500. (The Court was informed from the bar table, albeit not by way of formal admission, that this sum was the limit of the solicitors' professional indemnity insurance cover.)

On 11 December 1984, judgment was entered for the grandson against MCC Pty Ltd for possession of Fordon and for mesne profits in the sum of $471,412.76 up to 19 December 1984 and thereafter at the daily rate of $328.77, plus costs. The proceedings against Margaret Cameron for possession of Old Fordon and mesne profits came to an end with a judgment for possession and an acceptance of monies paid into Court by Margaret Cameron.

The grandson took possession of Fordon, but was not paid any part of the judgment sum. It was a term of the settlement of the third party proceedings between MCC Pty Ltd and the then partners of Archer Bushby that the sum of $240,000 ("the Fund") would be paid, not to MCC Pty Ltd, but to Stilbo.

A statutory demand for payment of the judgement sum and costs was issued against MCC Pty Ltd. It was not satisfied. A petition was issued and by order of this Court made on 18 March 1985, MCC Pty Ltd was wound up and Mr R J Dwyer was appointed liquidator. The grandson became an unsecured creditor of MCC Pty Ltd.

Mr Dwyer pursued several lines of enquiry and without going into the detail, it appears that those concerned with the incorporation of the predecessor to Stilbo and the terms of the settlement of the third party proceedings against the solicitors made full disclosure of the relevant events.

Mr Dwyer engaged Mr Adams, solicitor of Page Seager, to assist him. Two proceedings were instituted on 16 June 1989, writs numbered 642 and 643 of 1989. The plaintiff in action number 642 of 1989 was the grandson and the defendants were Stilbo and Margaret Cameron. In action number 643 of 1989, the plaintiff was Mr Dwyer and the defendant was Stilbo. Action number 643 of 1989 was plainly misconceived, as Mr Dwyer had no cause of action against Stilbo. The material in the appeal books does not disclose the basis of the proceedings in action number 642 of 1989. The purpose of both proceedings was to obtain the Fund.

The litigation dragged on through various interlocutory processes until 19 May 1993 when an application was made in action number 643 of 1989 to substitute MCC Pty Ltd (in liq) as plaintiff in lieu of Mr Dwyer. This application, heard on 20 October 1993, was dismissed on 22 November 1993 (A96/1993). This action was discontinued on 3 October 1994. The appeal books do not disclose the fate of action number 642 of 1989.

Meanwhile, on 28 August 1994, Page Seager filed another writ in this Court. This time the plaintiff was MCC Pty Ltd (in liq) and the defendant was Stilbo. This appeal arises from an interlocutory order made in these proceedings. The statement of claim dated 26 August 1994 recites:

·    the order of liquidation of Stilbo;
·    the grandfather's deed of settlement;
·    the judgment in favour of the grandson for possession and mesne profits;
·    diverse provisions in the deed of settlement and the replacement of Stilbo for MCC Pty Ltd as trustee of the settled land;
·    that the grandson claims from MCC Pty Ltd the judgment sum and that no payment has been made to him.
and then claims:
·    a declaration that the plaintiff has the right to be exonerated for its liability to pay the judgment sum from trust assets held by Stilbo;
·    a declaration that the defendant is bound to indemnify the plaintiff for its liability to meet the judgment sum;
·    a declaration that the monies paid in settlement of third party proceedings are subject to the unsatisfied rights of MCC Pty Ltd as a previous trustee.

The defence pleads (inter alia) that the statement of claim discloses no cause of action and that any claim cannot now be brought by virtue of the provisions of the Limitation Act 1974. As was the case with the former litigation, there followed considerable interlocutory skirmishing including applications for security for costs.

On 17 June 1996, Mr Adams appointed 3 July 1996 as the date for a compulsory conference in the action. Two days before the date fixed for the compulsory conference, the appellants' present solicitor, Mr McElwaine, took over conduct of the action on behalf of Stilbo. Accordingly, the compulsory conference was postponed. In November 1996, Mr McElwaine wrote to Page Seager seeking certain information with respect to the action. There was no response. Mr McElwaine wrote to Page Seager on three occasions during the following year, 1997, requesting a response, but to no avail. Nothing at all appears to have happened until 14 June 2000, when the respondent's present solicitors were appointed and gave notice of an intention to proceed. During the ensuing 12 months there was considerable correspondence between solicitors. On 18 May 2001, the respondent's solicitors made an application to the Court to amend the statement of claim and to add the second and third appellants as defendants. The orders made on the determination of that application ([2002] TASSC 143) are the subject of this appeal.

Before turning to the application, the orders made on it and the grounds of appeal, it is necessary to say something about the third appellant, Ladon Pty Limited ("Ladon"). According to the proposed amendments to the statement of claim, it is alleged that on 3 October 1985, Zeekap (No 35) Pty Ltd was incorporated and on 31 October 1985, its name was changed to Ladon Pty Limited. According to the proposed statement of claim, at "all material times" Margaret Cameron was a director and the sole shareholder of Ladon. It is asserted that the Fund was used to buy two properties, one known as "the Youl property" and one known as "the D'Antoine property".

The application

By the application that was made on 18 May 2001, the respondent sought the following orders:

"1   Pursuant to Rule 184(1)(b) of the Rules of Court, an order that Margaret Cecilia Cameron, a person who ought to have been joined as a party or whose presence may be necessary for the Court or judge to adjudicate on and settle all the questions involved in the proceeding, be added as the secondnamed defendant in proceeding number 1471 of 1994.
2    Pursuant to Rule 184(1)(b) of the Rules of Court, an order that Ladon Pty Ltd (ACN 009 553 655), a person which ought to have been joined as a party or whose presence may be necessary for the Court or judge to adjudicate on and settle all the questions involved in the proceeding, be added as the thirdnamed defendant in proceeding number 1471 of 1994.
3    Pursuant to Rule 247 of the Rules of Court, an order that the plaintiff have leave to amend the statement of claim in accordance with the statement of claim annexed and marked 'A'."

The order from which the appeal is brought

The order with respect to which this appeal is brought is dated 17 December 2001 and provides:

"1   The statement of claim against the firstnamed defendant Stilbo Pty Ltd be amended in the terms of the draft document filed on 4 October 2001, with the exception of paragraphs 69 - 75.
2    Margaret Cameron be joined as a party to the action.
3    Ladon Pty Ltd be joined as a party to the action.
4    The statement of claim against the second and third defendants be amended in the terms of the draft document filed on 4 October 2001, with the exception of paragraph 69 - 75.
5    The amendments allowed by order 4 are allowed on terms that:
(a)   paragraphs 35, 50, 52 and 76, and remedy A [tracing of the trust money] are deemed to have been made on 26 August 1994;
(b)   paragraphs 51, 53 - 68 and 77 - 86 are deemed to have been made on 18 May 2001.

6    The commencing date in relation to paragraphs 1 - 46 of the draft document filed on 4 October 2001 against the second and third defendants is 26 August 1994.
7    ...
8    ...
9    ...
10   ..."

Annexed to these reasons for judgment is a copy of the statement of claim referred to in the order as "the draft document filed on 4 October 2001". Although it is dated 16 August 2001, counsel are agreed that it is the one that was the subject matter of the application dated 18 May 2001 and the one referred to in the order as the draft document filed on 4 October 2001.

The appeal

The appellants have appealed against all of the orders made by the learned primary judge except:

·    the dismissal of the application for leave to amend by the addition of pars69 - 75 to the statement of claim;
·    the grant of leave to amend pars1 - 33 and 36, 38, 39 and 40 of the statement of claim except insofar as those paragraphs refer to Margaret Cameron and Ladon; and
·    the order for costs.

By virtue of the impugned order, the following equitable remedies are brought:

(a)Against Stilbo:
· exoneration and indemnity from trust assets (pars34 and 48);
· account (par47).

(b)         Against Margaret Cameron:
·    exoneration and indemnity from trust assets (par51);
·    account (pars50 and 52);
·    account as a constructive trustee (pars53 and 57);
·    account and indemnity as a trustee de son tort (pars58 - 61);
·    account as breach of fiduciary duty (pars62 - 68).

(c)         Against Ladon:
·    exoneration and indemnity out of trust assets (par77);
·    account (par76);
·    declaration of trust as a constructive trustee (pars78 - 81);
·    account and indemnity as a trustee de son tort (pars82 - 86).

Paragraph 35 of the amended statement of claim simply claims an entitlement to trace the sum of $240,000 plus costs. A right to trace is also claimed in the general prayer for relief at the end of the statement of claim. It is to be assumed that tracing is claimed against each of the appellants as well as the other remedies I have just set out.

On 15 August 1979, the plaintiff was duly incorporated as a company.
At all material times, the secondnamed defendant was a Director of the plaintiff.
By an indenture for lease ("the Lease") dated 14 December 1979 made between Donald Cameron as lessor and the plaintiff, in its capacity as the Trustee as lessee, the lessor demised Fordon, but excluding the messuage "Old Fordon", to the lessee for a term of twenty years at a yearly rental of $8,000.00.
Donald Cameron died on the 19 December 1979.
At all material times MCC Pty Ltd occupied "~~Fordon~~" Fordon as trustee appointed under the Deed of Settlement.
The occupation of Fordon referred to in paragraph 16 was purportedly by virtue of the Lease.
By clause 1 of the Deed of Settlement, the secondnamed defendant, among others, became a beneficiary under the Deed of Settlement.
By clause 1 of the Deed of Settlement and the schedule annexed thereto, the secondnamed defendant was appointed principal for the purposes of the Deed of Settlement ("the Principal").
By clause 21 of the Deed of Settlement it was provided that the Principal therein referred may remove from office any trustee for the time being and may by deed appoint a new trustee in its place to be the trustee of the Deed of Settlement.
By clause 20 of the Deed of Settlement it was provided that any trustee purporting to act in the execution of the trust and the powers thereof shall not be liable for loss not attributable to (its servants or agents) dishonesty or to the wilful commission or omission by it (its servants or agents) of any act known to be a breach of trust nor shall the trustee be liable for any loss or damage resulting from the known exercise of any of its powers authorities or discretions thereunder.
By a Writ filed in the Supreme Court of Tasmania on 26 November 1981, proceeding number 3507 of 1981, Donald Edward Cameron issued proceedings against the plaintiff for possession of Fordon and mesne profits from 14 December 1979 until possession was given up to Donald Edward Cameron.

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By a notice dated 26 January 1982 ("the Third Party Notice") the plaintiff joined John Hallowes Waterhouse, Donald Nixon Stewart, Geoffrey Robert Stephenson, Michael Rodney Hill and Stephen Peter Estcourt as third parties in proceeding number 3507 of 1981 ("the Third Parties").
On 24 August 1984, Zeekap (No 16) Proprietary Limited (ACN 009 547 915) was duly incorporated as a company.
At all material times, the secondnamed defendant was a director of Zeekap (No 16) Proprietary Limited and Stilbo Ptv Ltd (to which Zeekap (No 16) Proprietary Limited had changed its name).
By a Deed of Appointment made the 19th day of September ~~1994~~ 1984 between Margaret Cecilia Cameron as appointor ("the Appointor") of the one part the firstnamed defendant as the trustee of the second part and MCC Pty Ltd as the former trustee of the third part, the firstnamed defendant was appointed as replacement trustee in place of MCC Pty Ltd as trustee under the Deed of Settlement. The plaintiff will hereinafter refer to such Deed as "the Deed of Appointment".
By clause 3 of the Deed of Appointment it was provided that the trustee by its execution ~~hereof accepts~~ thereof accepted the appointment as trustee of the Deed of Settlement and ~~will~~ would hold all property ~~herebefore~~ therebefore held by the former trustee as trustee of the Deed of Settlement upon the terms and subject to the powers and provisions declared and contained in the ~~settlemen~~t Deed of Settlement concerning the same or such of the said trusts, powers and provisions as ~~are now~~ were then subsisting and capable of taking effect.
By clause 4 of the Deed of Appointment it was provided that the former trustee thereby declared that the property would thenceforth vest in the trustee and the retiring trustee covenanted that it would upon demand do all things and execute all documents as may be reasonably required by the Appointor and/or the trustee to ensure that the property vested in the trustee.
By a deed of assignment dated 19 September 1984 made between the plaintiff as assignor and Zeekap (No 16) Proprietary Limited as assignee, the plaintiff assigned Fordon to Zeekap (No 16) Proprietary Limited as demised to the plaintiff under the Lease.
The plaintiff delivered up possession of Fordon to Zeekap (No 16) Proprietary Limited on 19 September 1984.
On 1 October 1984, Zeekap (No 16) Proprietary Limited changed its name to Stilbo Pty Ltd (ACN 009 547 915).
By an agreement of release executed by the plaintiff on 16 November 1984 made between the plaintiff, Stilbo Pty Ltd and the Third Parties ("the Release"), the plaintiff agreed to settle its claim against the Third Parties by the Third Parties agreeing at the

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request of the plaintiff to pay to Stilbo Pty Ltd the sum of $240,000.00 plus the legal costs and disbursements of the plaintiff and Donald Edward Cameron associated with proceeding number 3507 of 1981 and the Third Party Notice whether already incurred or to be incurred to be taxed in default of agreement ("the Costs").

By an Order of the Supreme Court of Tasmania dated and entered the 11^th day of December ~~1994~~ 1984 in proceeding number 3507 of 1981 MCC Pty Ltd was ordered, inter alia to pay to one Donald Edward Cameron the sum of $471,412.76 for mesne profits arising from its occupation of ~~the property known as "Fordon" at Nile in Tasmania~~ Fordon together with additional mesne profits at the rate of $328.77 for each day the plaintiff remained in possession of Fordon after 11 December 1984 (the plaintiff will hereinafter refer to such order as "the Order").
As a result of the matters set out herein, the plaintiff has a right of indemnity out of the assets of the trust created pursuant to the Deed of Settlement, such indemnity being secured by an equitable charge over and an equitable proprietary interest in the assets of the trust.
In the premises of paragraph 34, the Plaintiff is entitled in equity to trace the sum of $240 000.00 and the Costs ("the Trust Money") paid under the Release into any hands into which it has been paid or property acquired by its application, in whole or in part.
The plaintiff did not benefit from the Release in any manner whatsoever.
The Trust Money was either paid to the firstnamed defendant, or to the secondnamed defendant or to the thirdnamed defendant, or by one of the defendants, to or to the use of the other of the defendants.
By letter dated 12 December 1984 the solicitors for Donald Edward Cameron demanded payment, pursuant to the then Companies (Tasmania) Code, of the sum of $471,412.76.
On or about 19 December 1984 the firstnamed and secondnamed defendants vacated and delivered up possession of Fordon to Donald Edward Cameron.
On the 18^th day of March 1985, upon the petition of Donald Edward Cameron, and by order of the Supreme Court of Tasmania, MCC Pty Ltd was placed in liquidation and Rex James Dwyer was appointed as the liquidator.
On 3 October 1985, Zeekap (No 35) Proprietary Limited (ACN 009 553 655) was duly incorporated as a company.
At all material times, the secondnamed defendant was a director and the only shareholder of Zeekap (No 35) Proprietary Limited and Ladon Pty Ltd (to which Zeekap (No 35) Proprietary Limited had changed its name).
On 31 October 1985, Zeekap (No 35) Proprietary Limited changed its name to Ladon Pty Ltd.

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On or about 19 May 1986, the Trust Money was applied to the use of or used by the thirdnamed defendant to fund part of the purchase price of two properties, the first being purchased from William Frank Lyne Youl and Crosby Lyne Youl for the sum of $189,000.00 ("the Youl Property") and the second being purchased from Marcel Lindsay D'Antoine for the sum of $140,000.00 ("the D'Antoine Property").

PARTICULARS OF THE YOUL PROPERTY

As shown on the plan drawn on an Indenture dated 10 February 1983, Registered Number 16/467 and made between Richard Stanley Preston Beddome of the first part, Harold Irving MacCartney of the second part, Geoffrey Valentine Chapman of the third part, Alfred Fullarton Sharland of the fourth part and the said Geoffrey Valentine Chapman of the fifth part and therein surrounded by red boundary lines saving and excepting ALL THAT strip of land in the said plan coloured blue being the Railway Reservation Main Line Launceston to Hobart, and as more particularly described in the Folio of the Register Volume 103779 Volume 1.
PARTICULARS OF THE D'ANTOINE PROPERTY

As shown by the plan drawn on Indenture of Conveyance Number 19/9772 and there surrounded by red boundary lines save and excepting ALL THAT strip of land shown on the said plan and there coloured blue being the said Main Line Railway Reservation from Launceston to Hobart.

Donald Edward Cameron makes and continues to make claim upon the plaintiff as the retired trustee appointed under the Deed of Settlement for payment of the mesne profits referred to in the ~~order~~ Order together with interest thereon.
Neither the plaintiff nor the ~~defendant has~~ defendants have made any payment to Donald Edward Cameron in settlement or part settlement of his entitlement under the ~~order~~ Order which as at the 26^th August 1994 amounted to $828,390.29.

Liability to account ‑ firstnamed defendant

The firstnamed defendant took the Trust Money, or dealt with it, with actual notice of the facts giving rise to the plaintiff's equitable proprietary interest in the Trust Money referred to in paragraph 34 and as such is liable to account to the plaintiff for the Trust Money.

The right of indemnity ‑ firstnamed defendant

In the alternative, to the extent that the firstnamed defendant retained the Trust Money:
(a)the plaintiff as former trustee has a right to be exonerated for its liability under the Order from the trust assets held by the firstnamed defendant as replacement trustee; and
(b)the firstnamed defendant as replacement trustee is bound to indemnify the plaintiff as former trustee for the liability under the Order.

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PARTICULARS

Particulars will be provided prior to trial.

In the alternative, to the extent the firstnamed defendant parted with the Trust Money, the firstnamed defendant is liable to account to the plaintiff.

Liability to account ‑ secondnamed defendant

In the alternative, the secondnamed defendant:
(a) received the Trust Money, or part of it; or
(b) directed the payment of the Trust Money;
and is liable to account to the plaintiff for the Trust Money.

The right of indemnity ‑ secondnamed defendant

In the alternative, to the extent that the secondnamed defendant received the Trust Money:
(a)the plaintiff as former trustee has a right to be exonerated for its liability under the Order from the trust assets held by the secondnamed defendant as replacement trustee; and
(b)the secondnamed defendant as replacement trustee is bound to indemnify the plaintiff as former trustee for the liability under the Order.

PARTICULARS

Particulars will be provided prior to trial.

In the alternative, to the extent the secondnamed defendant directed the payment of the Trust Money, the secondnamed defendant is liable to account to the plaintiff.

Constructive Trust ‑ secondnamed defendant

The secondnamed defendant had actual notice of the facts giving rise to the plaintiffs equitable proprietary interest in the Trust Money referred to in paragraph 34 and received and otherwise dealt with the Trust Money to defeat that equitable proprietary interest.
In the premises of paragraph 32, the secondnamed defendant as director of both the plaintiff and the firstnamed defendant, caused the plaintiff to enter into the Release whereby the Trust Money was to be paid not to the plaintiff but to the firstnamed defendant.
The secondnamed defendant has denied that the plaintiff is entitled to the Trust Money in order for the plaintiff to satisfy its liability to Donald Edward Cameron.
Such denial in the circumstances is unconscionable.

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In the premises:
(a)the secondnamed defendant holds the Trust Money on constructive trust for the plaintiff; or
(b)the secondnamed defendant is liable to account to the plaintiff for the Trust Money.

Trustee de son tort ‑ secondnamed defendant

In the alternative, upon receiving or otherwise dealing with the Trust Money, the secondnamed defendant exercised control over it.
At all material times the secondnamed defendant knew that the Trust Money formed part of the property of the trust established under the Deed of Settlement and well knew the terms of the trust.
By receiving the Trust Money and exercising control over it, the secondnamed defendant acted as trustee of the trust in place of the firstnamed defendant.
In the premises of paragraphs 58 to 60 herein:
(a)the secondnamed defendant is accountable to the plaintiff as a trustee de son tort of the trust established under the Deed of Settlement;
(b)the plaintiff is entitled to an account of profits made by the secondnamed defendant from the use of the Trust Money; and
(c)the plaintiff has a right of indemnity out of the trust assets held by the secondnamed defendant for the plaintiff's liability arising under the Order.

Breach of fiduciary duty ‑ secondnamed defendant

In the premises of paragraph 13, at all material times the plaintiff and secondnamed defendant stood in a fiduciary relationship ("the Fiduciary Relationship").
By reason of the Fiduciary Relationship, the secondnamed defendant owed the plaintiff the following duties:
(a) to act in the best interests of the plaintiff;
(b) to avoid a conflict of interest; and
(c)to exercise her duties as a director of the plaintiff for the purposes for which they were conferred and not for improper or collateral purposes.
On or about 19 September 1984 and 11 November 1984 the secondnamed defendant:
(a)caused, permitted and/or authorised the Release as director of the plaintiff; and

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(b)caused, permitted and/or authorised the Trust Money to be paid by the Third Parties to the firstnamed defendant, or alternatively to the secondnamed defendant or the thirdnamed defendant, rather than to the plaintiff.

In the premises of paragraph 64, the secondnamed defendant acted:
(a)mala fide and against the interests of the plaintiff;
(b)in breach of her duties as a director of the plaintiff; and
(c)for improper purposes by or in relation to the exercise of her duties as a director of the plaintiff.
By reason of the Fiduciary Relationship, the secondnamed defendant owed the plaintiff a duty not to make personal profit arising from her position as director of the plaintiff.
In breach of the duty referred to in paragraph 66, the plaintiff made a personal profit or obtained a personal benefit or alternatively, obtained a profit or secured a benefit for the firstnamed defendant or thirdnamed defendant by reason and only by reason of the fact she was a director of the plaintiff.

PARTICULARS

The secondnamed defendant obtained or secured the benefit of the Trust Money.

As a result of the breach of the fiduciary duties referred to in paragraphs 65 and 67, the secondnamed defendant is liable to account to the plaintiff for the personal profit or benefit obtained by any of the defendants.

Breach of the Companies (Tasmania) Code ‑ secondnamed defendant

By section 229(1) of the Companies (Tasmania) Code, the secondnamed defendant was required at all times to act honestly in the exercise of her powers and the discharge of the duties of her office as a director of the plaintiff.
In the premises of paragraph 64, the secondnamed defendant failed at all times to act honestly in the exercise of her powers and the discharge of the duties of her office as a director of the plaintiff.
By section 229(3) of the Companies (Tasmania) Code, the secondnamed defendant was prohibited from making improper use of information acquired by virtue of her position as a director of the plaintiff to gain, directly or indirectly, an advantage for herself or for any other person or to cause detriment to the plaintiff.
In breach of the statutory duty referred to in paragraph 71, the secondnamed defendant made improper use of information acquired by virtue of her position as a director of the plaintiff to gain, directly or indirectly, an advantage for herself or for any other person or to cause detriment to the plaintiff.

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PARTICULARS

(a)The secondnamed defendant acquired information in her capacity as a director of the plaintiff relating, to the claim by Donald Edward Cameron against the plaintiff and the Release which she used to gain an advantage for herself and/or the firstnamed defendant and/or the thirdnamed defendant to the detriment of the plaintiff.
(b)Further particulars of the breach of the statutory duty will be provided prior to trial.

By section 229(4) of the Companies (Tasmania) Code, the secondnamed defendant was prohibited from making improper use of her position as a director of the plaintiff to gain, directly or indirectly, an advantage for herself or for any other person or to cause detriment to the plaintiff.
In breach of the statutory duty referred to in paragraph 73, the secondnamed defendant made improper use of her position as a director of the plaintiff to gain, directly or indirectly, an advantage for herself or for any other person or to cause detriment to the plaintiff.

PARTICULARS

(a)The secondnamed defendant obtained or secured the benefit of the Trust Money for herself or alternatively, for the firstnamed defendant or thirdnamed defendant.
(b)The secondnamed defendant caused detriment to the plaintiff by depriving it of the Trust Money.

In the premises of paragraphs 70, 72 and 74, and in reliance upon section 229(7) of the Companies (Tasmania) Code, the plaintiff is entitled to recover from the secondnamed defendant, as a debt due to it:
(a)any profit made by the secondnamed defendant as a result of the contravention or failure to comply with the statutory duties; and
(b)loss and damage suffered by the plaintiff as a result of the contravention or failure to comply with the statutory duties.

PARTICULARS

The plaintiff repeats the particulars subjoined to paragraph 74 herein.

Liability to account ‑ thirdnamed defendant

In the alternative, the thirdnamed defendant received the Trust Money or part of it and is liable to account to the plaintiff for the Trust Money.

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The right of indemnity ‑ thirdnamed defendant

In the alternative, to the extent that the secondnamed defendant received the Trust Money:
(a)the plaintiff as former trustee has a right to be exonerated for its liability under the Order from the trust assets held by the thirdnamed defendant as replacement trustee; and
(b)the thirdnamed defendant as replacement trustee is bound to indemnify the plaintiff as former trustee for the liability under the Order.

PARTICULARS

Particulars will be provided prior to trial.

Constructive Trust ‑ thirdnamed defendant

In the alternative, the Trust Money was received by the thirdnamed defendant from or at the direction of the secondnamed defendant.
The thirdnamed defendant had actual notice of the facts giving rise to the plaintiff's equitable proprietary interest in the Trust Money.
In the circumstances and in the premises of paragraph 44, it is unconscionable for the thirdnamed defendant to retain the benefit of the Trust Money.
In the premises, the thirdnamed defendant holds the Youl Property and the D'Antoine Property on constructive trust for the plaintiff and the thirdnamed defendant in such shares as the Court shall determine.

Trustee de son tort ‑ thirdnamed defendant

In the alternative, upon receiving and dealing with the Trust Money, the thirdnamed defendant exercised control over it.
This control was evidenced by the purchase of the Youl Property and the D'Antoine Property.
At all material times the thirdnamed defendant knew that the Trust Money formed part of the property of the trust established under the Deed of Settlement and well knew of the terms of the trust.

By receiving the Trust Money and exercising control over it, the thirdnamed defendant acted as trustee of the trust in place of the firstnamed defendant.
In the premises of paragraphs 82 to 85 herein:
(a)the thirdnamed defendant is accountable to the plaintiff as a trustee de son tort of the trust established under the Deed of Settlement;

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(b) the plaintiff is entitled to an account of profits made by the thirdnamed defendant from the use of the Trust Money; and
(c)the plaintiff has a right of indemnity out of the trust assets held by the thirdnamed defendant for the plaintiff's liability arising under the Order.

By reason of the foregoing the plaintiff claims:

ATracing of the Trust Money.
BAn order that the firstnamed defendant account to the plaintiff for the Trust Money.
CA declaration that it has the right to be exonerated for its liability under the Order dated 11^th December 1984 from trust assets held by the firstnamed defendant.
DA declaration that the firstnamed defendant is bound to ~~indemnity~~ indemnify the plaintiff for its liability under the said Order.
EA declaration that it has the right to payment or discharge out of the trust estate held by the firstnamed defendant the liability incurred under the Order pursuant to section 27(2) of the Trustee Act 1898.
CF Such further of or other consequential orders so as to effect a payment to Donald Edward Cameron in order to satisfy his claims arising under the Order.
DG A declaration that the trust property held by the firstnamed defendant by reason of the Deed of Appointment is subject to the unsatisfied rights of the plaintiff as previous trustee appointed by reason of the Deed of Settlement.
HAn order that the secondnamed defendant account to the plaintiff for the Trust Money.

A declaration that the plaintiff has a right of indemnity out of the trust assets held by the secondnamed defendant for the plaintiff's liability arising under the Order.

JA declaration that it has the right to pay or discharge out of the trust estate held by the secondnamed defendant the liability incurred under the Order pursuant to section 27(2) of the Trustee Act 1898.
KA declaration that the Trust Money is held by the secondnamed defendant on trust for the plaintiff.
LAn order that the secondnamed defendant account to the plaintiff as a trustee de son tort for the loss of the Trust Money.
MAn order that the secondnamed defendant pay to the plaintiff the amount found due and owing upon taking the account referred to in paragraph L herein.
NAn account of profits made by the secondnamed defendant from the use of the Trust Money.

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OAn order that the secondnamed defendant pay to the plaintiff the amount found due and owing upon taking the account of profits referred to in paragraph N herein.
PAn order that the secondnamed defendant account to the plaintiff for breach of fiduciary duty.
QProfit made by the secondnamed defendant and loss and damage pursuant to section 229(7) of the Companies (Tasmania) Code.
RAn order that the thirdnamed defendant account to the plaintiff for the Trust Money.
SA declaration that it has a right of indemnity out of the trust assets held by the thirdnamed defendant for the plaintiff's liability arising under the Order.
TA declaration that it has the right to pay or discharge out of the trust estate held by the thirdnamed defendant the liability incurred under the Order pursuant to section 27(2) of the Trustee Act 1898.
UA declaration that the Youl Property and D'Antoine Property are held by the thirdnamed defendant upon trust for sale for the plaintiff and the secondnamed defendant in such shares as the Court shall determine.

An order that the thirdnamed defendant account to the plaintiff as a trustee de son tort for the loss of the Trust Money.

WAn order that the thirdnamed defendant pay to the plaintiff the amount found due and owing upon taking the account referred to in paragraph V herein.

An account of profits made by the thirdnamed defendant from the use of the Trust Money.

YAn order that the thirdnamed defendant pay to the plaintiff the amount found due and owing upon taking the account of profits referred to in paragraph X herein.
ZInterest pursuant to section 165 of the Supreme Court Civil Procedure Act 1932.
E ZA Such further of or other necessary orders for relief as the Court deems appropriate.
F ZB Costs.

DATED this 16th day of August 2001.