Yunghanns v Merim Pty Ltd
[2000] VSC 42
•23 February 2000
SUPREME COURT OF VICTORIA
COMMERCIAL & EQUITY DIVISION Not Restricted COMMERCIAL LIST
No. 2053 of 1999
F5035
| DAVID BRIAN YUNGHANNS and SARAH JANE MAHON | Plaintiffs |
| v | |
| MERIM PTY LTD, PETER NICHOLAS YUNGHANNS and M. & M. TAYLOR NOMINEES PTY LTD | Defendants |
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JUDGE: | Warren J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 18 February 2000 | |
DATE OF JUDGMENT: | 23 February 2000 | |
CASE MAY BE CITED AS: | Yunghanns & Anor v Merim Pty Ltd & Ors | |
MEDIA NEUTRAL CITATION: | [2000] VSC 42 | |
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Amendment – Order 36, leave to amend defence and serve a counterclaim – interrogatories, further and better answers
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiffs | Mr D.G. Collins | Jerrard Stuk |
| For the Defendants | Mr A.P. Young | Strongman & Crouch |
| For Margaret Yunghanns, the proposed defendant by counterclaim | Mr R. Moore | Mills Oakley Lawyers |
HER HONOUR:
The proceeding is a matter within the province of the Commercial List. The present applications are twofold. Firstly, an application by the second defendant for leave to further amend his defence and to serve a counterclaim including the joinder of a fresh party as defendant by counterclaim. The application is opposed by the plaintiffs and the party proposed to be joined by counterclaim. Secondly, there is an application by the plaintiffs for further and better answers to interrogatories by the first and second defendants, leave having been granted to serve such interrogatories by Gillard J on 3 December 1999.
Background
Before turning to the discrete applications it is appropriate to set out the nature of the causes of action alleged in the proceeding and general background matters.
The first defendant, Merim Pty Ltd ("Merim") is the trustee of two trusts. The first trust is the David Brian Yunghanns Trust Fund. The second trust is the Sarah Jane Yunghanns Trust Fund. Both trust funds were constituted by separate trust deeds each executed on 30 April 1973. Merim was incorporated on 17 April 1973. The first plaintiff, David Yunghanns, is the sole specified beneficiary of the first trust. The second plaintiff, Sarah Mahon, previously Sarah Jane Yunghanns, is the sole specified beneficiary of the second trust. David Yunghanns and Sarah Mahon are the adult children of the second defendant, Peter Yunghanns. Under both trust deeds Peter Yunghanns has the power and role of appointor whereby it is said by the plaintiffs that he has power to replace a trustee or add a trustee. The second power and role of Peter Yunghanns is that of guardian. He has the same powers and roles with respect to both the David Brian Yunghanns Trust Fund and the Sarah Jane Yunghanns Trust Fund. It is alleged by the plaintiffs that as a consequence of the role of Peter Yunghanns with respect to both trusts his consent is required before certain steps can be taken by the trustee. It is asserted by the plaintiffs that at all relevant times Peter Yunghanns was and is the controlling mind of Merim.
It appears from the pleadings and arising from submissions on a number of occasions before me that there is no dispute between the parties that Merim owns the three issued shares in a company known as Ballan Pastoral Co Pty Ltd and which in turn owns a large rural property south of Ballan in Victoria. Up until recently the primary issue in the proceeding was whether Merim owns the shares in Ballan Pastoral Co Pty Ltd as trustee of the two trusts or in some other capacity.
The proceeding was commenced in June 1999 in the Commercial List. It was fixed for trial to commence on 8 November 1999 but due to difficulties within the List itself and also arising from an extension of the estimates of the length of the trial given by the parties the trial was stood over and re-fixed for 7 February 2000.
Very shortly before the trial date of 7 February 2000 an event of some apparent significance occurred. On 28 January 2000 Merim and Peter Yunghanns executed two deeds. One deed related to the David Brian Yunghanns Trust Fund and the other to the Sarah Jane Yunghanns Trust Fund. The two deeds executed on 28 January 2000 were executed by Merim and Peter Yunghanns purporting to exercise a power of nomination under the two trust fund deeds of 30 April 1973. By virtue of the deeds of nomination executed by Merim and Peter Yunghanns on 28 January 2000, Merim and Peter Yunghanns purported to nominate another entity, M & M Taylor Nominees Pty Ltd as a beneficiary of each of the two trust funds. It appears that M & M Taylor Nominees Pty Ltd is the trustee of another trust fund called the Jessie Yunghanns Trust Fund.
The first of the amending deeds executed on 28 January 2000 purported to nominate M & M Taylor Nominees Pty Ltd as a beneficiary of each of the David Brian Yunghanns Trust Fund and the Sarah Jane Yunghanns Trust Fund. The second amending deed executed on 28 January 2000 purported to appoint M & M Taylor Nominees Pty Ltd as the beneficiary entitled to the relevant trust funds or, in other words, the assets constituting the trust fund upon the vesting of that trust fund. In other words, M & M Taylor Nominees Pty Ltd by virtue of the deeds executed on 28 January 2000 purportedly became the beneficiary under both the David Brian Yunghanns Trust Fund and the Sarah Jane Yunghanns Trust Fund to the exclusion of all others.
Under the second amending deed the defendants, Merim and Peter Yunghanns, purported to vest or appoint a vesting date for each of the David Brian Yunghanns Trust Fund and the Sarah Jane Yunghanns Trust Fund as at 29 January 2000.
Arising from these developments at the end of January 2000 it became necessary for the plaintiffs to seek to have the proceeding adjourned.
On 7 February 2000 the first and second defendants, Merim and Peter Yunghanns sought and were granted leave to file an amended defence pleading the events that had occurred at the end of January 2000 and, in particular, the alleged vesting of each of the David Brian Yunghanns Trust Fund and the Sarah Jane Yunghanns Trust Fund on 29 January 2000. As a consequence, the plaintiffs sought and were granted leave to amend their statement of claim to plead that the events that occurred at the end of January 2000 were invalid and, further, that the plaintiffs were entitled to relief by way of the setting aside of the deed of nomination and deed of appointment as being invalid acts by the trustee Merim. The plaintiffs sought and were granted leave, also, to join M & M Taylor Nominees Pty Ltd as a third defendant. Arising from these matters the trial was adjourned and a stringent timetable imposed upon the parties in order that the matter could return before me on 25 February 2000 for further directions with a view to the re‑fixing of the trial date. It should be stated that on 17 February 2000 Mr A.J. Myers QC who appeared with Mr A. Young for the defendants on that occasion informed the court that the trial estimate had expanded to up to three weeks. The trial date was originally fixed by Gillard J upon an estimate of approximately five days.
A further related set of circumstances that effects the applications before me concerns orders made by Gillard J on 3 December 1999 whereby leave was granted to the plaintiffs to file and serve interrogatories upon the defendants in a stipulated form. The specific order of Gillard J made on 3 December 1999 was that the plaintiffs were granted leave to file and serve interrogatories for the examination of the defendants in the form exhibited to the affidavit of Matthew Dominic Sweeney sworn 30 November 1999 by 6 December 1999. The application for leave to interrogate was opposed by the defendants. An examination of the transcript of 3 December 1999 reveals that the plaintiffs sought leave to interrogate largely with respect to specific documents annexed to the proposed interrogatories on a number of grounds. Firstly, the events surrounding the original trusts occurred long ago. Secondly, the documents about which the plaintiffs sought to interrogate allegedly contained admissions that supported the plaintiffs' case. Thirdly, the anticipated difficulty of the plaintiffs that the second defendant Peter Yunghanns may not give evidence at the trial or may object to the production of the documents in which case the plaintiffs may face difficulties in proving the alleged admissions contained in such documents. It was submitted before Gillard J on 3 December 1999 that the plaintiffs sought to interrogate so as to be able to tender the relevant documents at trial and also to establish the truth of the alleged admissions contained in such documents. It was urged on behalf of the plaintiffs that interrogation was essential to the presentation of the plaintiffs' case at trial. It was also urged that answers to interrogatories may potentially shorten the trial. It appears from the transcript that after hearing argument in opposition on behalf of the defendants Gillard J accepted the submissions on behalf of the plaintiffs and, accordingly, granted leave to interrogate as already stated. The interrogatories were served on the defendant and answers were delivered on 27 January 2000. The plaintiffs were dissatisfied with the answers provided by the defendants and sought further answers. The adequacy of those answers was adjourned before me on directions day in the Commercial List on 18 February 2000.
Against this background I turn to consider the applications presently before me.
The Application of the 2nd defendant to amend and counterclaim
In an affidavit sworn on 15 February 2000 Peter Yunghanns deposed that after taking the advice of senior and junior counsel retained by him in the proceeding he determined that he should institute a counterclaim and sought leave to amend the then defence and, also, leave to file and serve a counterclaim. A form of pleading was exhibited to the affidavit.
In the proposed amended defence the second defendant sought to allege that he was married to Margaret Bruce Yunghanns and which marriage was dissolved on 14 February 1995; that arising from proceedings commenced in the Family Court of Australia, Peter Yunghanns and Margaret Yunghanns reached agreement in about June 1996 as to the terms of division of their matrimonial property and for an amount of maintenance to be paid by Peter Yunghanns to Margaret Yunghanns; that in about June 1996 David Brian Yunghanns and Sarah Jane Mahon assented to the shares in the Ballan Pastoral Co Pty Ltd being treated as assets of Peter Yunghanns and, further, represented that they accepted that the said shares were owned by Peter Yunghanns; that arising from the said representations and in reliance thereon Peter Yunghanns changed his position and acted to his detriment by entering into a settlement in the proceedings in the Family Court. There are other matters alleged in the proposed defence with respect to the Family Court proceedings specifically in relation to David Brian Yunghanns and related companies. Arising from these allegations the second defendant, Peter Yunghanns, seeks to allege in his proposed amended defence that the plaintiffs, David Brian Yunghanns and Sarah Jane Yunghanns are estopped from asserting that Merim holds the Ballan shares as to one equal undivided interest as trustee of the David Brian Yunghanns Trust Fund and as to the other equal undivided interest as the trustee of the Sarah Jane Yunghanns Trust Fund. The second defendant, Peter Yunghanns, seeks leave also, to file and serve a counterclaim. In the proposed counterclaim he repeats the matters alleged in the proposed defence and, further, alleges that his former wife, Margaret Yunghanns participated in representations concerning the Ballan shares and the settlement of the Family Court proceedings and as a consequence he relied upon the said representations and suffered loss and damage. As a consequence Peter Yunghanns seeks to join Margaret Yunghanns as a defendant by counterclaim.
Mr D. Collins who appeared for the plaintiffs opposed the application by the second defendant, Peter Yunghanns to further amend the defence and to file and serve a counterclaim. The opposition was based on the following grounds: firstly, the pleadings sought to introduce a new plea of estoppel which was not consequential to the amendments made to the plaintiffs' statement of claim ordered on 7 February 2000. Secondly, the application for amendment of the new pleading arose very late in the proceeding and without an adequate explanation as to why the amendment was sought at that time. Thirdly, the allegations in the proposed pleading are inconsistent with correspondence that are the subject of interrogation by the plaintiffs of the first and second defendants, in particular, a letter from a firm of accountants, Pitcher Partners to the Australian Taxation office dated 12 November 1997. In this respect it was submitted by Mr Collins that the letter from the accountants contained admissions on behalf of Peter Yunghanns made some 17 months after final orders in the Family Court proceeding and which admissions were made in answers to interrogatories that are not the subject of dispute between the plaintiffs and the defendants. Fourthly, it was alleged that the proposed amendments do not disclose a defence. In this respect it was submitted that the second defendant, Peter Yunghanns seeks to estop the plaintiffs from denying that the Ballan shares are his whilst at the same time neither he nor the first defendant, Merim, allege that the Ballan shares are in fact the shares of Peter Yunghanns. Further complaint is made that the proposed pleading does not allege that Peter Yunghanns will suffer any detriment. Fifthly, the plaintiffs complain that the proposed counterclaim suffers from the same defects as the defence but further complain that the pleading does not allege that the relevant representations were untrue or that they were made negligently or dishonestly. In essence, it is alleged that the proposed counterclaim does not disclose a cause of action.
Mr R. Moore who appeared for the proposed defendant by counterclaim, Margaret Yunghanns, opposed the application for the joinder of his client and adopted the submissions of Mr D. Collins. Strictly speaking Mr Moore did not have an entitlement to be heard. Nevertheless in view of the fact that he adopted the submissions of Mr Collins I heard him on the matter briefly.
In considering an application for leave to amend a pleading the appropriate starting point is Order 36 of Chapter 1 of the Rules. Order 36.01(1) in summary provides that the court may at any stage order that any party has leave to amend any document in the proceeding "for the purpose of determining the real question in controversy between the parties to any proceeding". It is not possible or indeed appropriate for the court at this point to enter into a determination as to the inconsistency or otherwise between proposed pleading amendments by a party, namely, Peter Yunghanns and admissions allegedly contained in documents and answers to interrogatories not yet in evidence. I am satisfied on the basis of the draft pleading before me and notwithstanding the submissions made on behalf of the plaintiffs and the proposed defendant by counterclaim, Margaret Yunghanns, that Peter Yunghanns is entitled to allege the matters he proposes in the amended pleading for the purpose of determining the real question in controversy between the parties to the proceeding. If indeed it transpires that there are inconsistencies between the pleading and assertions or admissions made by Mr Yunghanns or others on his behalf elsewhere then that will be a matter for evidence at the trial and in all likelihood a matter of issue as to the credit of the party asserting the particular facts.
Turning to the complaint of the lateness of the amendments I do not consider that the proposed amendment to the defence and the proposed counterclaim are too late in any event. On the basis of the principles expressed by the High Court in Queensland v J.L. Holdings Pty Ltd (1996) 189 CLR 146 (especially the observations of the majority at 155), I am satisfied that it is in the interests of justice that the second defendant Peter Yunghanns be granted the leave sought. I note particularly that the plaintiffs have not put forward any prejudice arising from the amendments as would affect them save for such prejudice that can be compensated by an appropriate order for costs. Further, in light of the principles expressed by the Court of Appeal in Howarth v Adey (1996) 2 VR 535 I do not consider it can be alleged that the amendments sought by the second defendant in this proceeding are too late.
I make the additional observation that there are aspects of the pleading as proposed on behalf of the second defendant that could be improved. Nevertheless, I am satisfied that the proposed pleadings are in a sufficient form for the plaintiffs to be able to apprehend the case alleged against them. In the event that the plaintiffs require further particulars of any of the allegations that can be the subject of a request in the ordinary course.
It follows that subject to an appropriate order for costs the second defendant, Peter Yunghanns, will be granted leave to amend his defence and leave to file and serve a counterclaim joining Margaret Yunghanns as a defendant by counterclaim.
The application for further and better answers by the defendants to the plaintiffs' interrogatories
The plaintiffs delivered interrogatories addressing six matters:
(1)The engagement of the accountants Pitcher Partners by the defendants and "the Yunghanns Corporate Group". Essentially interrogatory (1) sought to probe the connection between Pitcher Partners, the defendants and the Yunghanns Group and, also, any group of companies associated with or controlled by the second defendant Peter Yunghanns.
The defendants objected to answering this interrogatory on the basis that it did not relate to any questions between them or alternatively required the defendants to express an opinion which they were not qualified to give.
(2)On the basis of three charts annexed to the interrogatories whether the said charts were prepared by Pitcher Partners or some other person and if so on behalf of the Yunghanns Group including Merim and whether the notations on the charts were true or untrue.
The defendants answered that it was their belief that the document was prepared by Pitcher Partners but otherwise objected to answering the interrogatory further on the basis that it did not relate to any question between them and the plaintiffs.
In relation to the interrogatory addressing the basis upon which Merim held the shares, the defendants answered that the one ordinary share of Peter Yunghanns in Merim was not held on behalf of Merim and the two ordinary shares held by Merim were not held as trustee for the David Yunghanns Trust Fund and Sarah Yunghanns Trust Fund.
(3)On the basis of a letter from Peter Yunghanns addressed to the Australian Taxation Office dated 17 September 1996 annexed to the interrogatories whether the letter was signed by Peter Yunghanns, sent to the Australian Taxation Office and if so by whom.
The defendants answered the interrogatory essentially in the affirmative.
(4)On the basis of a letter from Pitcher Partners to the Australian Taxation Office dated 12 November 1997 annexed to the interrogatories whether that document was prepared and signed by Pitcher Partners and, if so, whether the said accountants were authorised by Peter Yunghanns to do so.
The defendants answered the interrogatory in the affirmative but otherwise objected to answering the interrogatory on the basis that it did not relate to any question between them and the plaintiffs or alternatively required them to express an opinion which they were not qualified to give.
(5)On the basis of matters alleged in the defendants' defence whether Merim owned the Ballan shares as trustee for any person and if so for whom.
The defendants took the same objection with respect to relevance and opinion.
(6)A final interrogatory was delivered in relation to the land at Ballan and other related matters. The answers to this interrogatory are not the subject of complaint by the plaintiffs and need not be considered further at this time.
In any event, the defendants took the same objection of relevance and opinion together with the further objection that the interrogatory was too wide or oppressive.
The plaintiffs seek further and better answers to interrogatories (2), (4) and (5).
Having had the opportunity to consider the submissions made on behalf of both the plaintiffs and the defendants and, further, to consider the statement of claim upon which the plaintiffs rely together with the interrogatories and the documents annexed thereto I am satisfied that the interrogatories seek answers to matters that relate to whether Merim Pty Ltd owns the three ordinary shares in Ballan Pastoral Co Pty Ltd in its capacity as trustee of the David Brian Yunghanns Trust Fund and the Sarah Jane Yunghanns Trust Fund or otherwise. An examination of the pleading in my view discloses that the issue is central to the proceeding. The discrete allegations arise from paragraphs 9.1 to 9B of the third statement of claim. I observe that the relevant allegations in that statement of claim are denied by both the first and second defendants. Further, I observe from an examination of the history of the pleadings on the court file that those defendants have failed to allege as to whom they allege is the beneficial owner of the shares in Ballan Pastoral Co Pty Ltd. Interrogatory (2) addresses the role of Pitcher Partners and documents relating to or emanating from them and which are specifically concerned with the basis upon which the shares in Ballan Pastoral Co Pty Ltd were held. I am satisfied that the second interrogatory raises matters that are inherently relevant to the issues between the parties and in particular issues arising from the plaintiffs' third amended statement of claim. Further, it appears that the matters contained in the document that is the subject of interrogatory (2) potentially raises matters that may be the subject of proper cross‑examination of the second defendant Peter Yunghanns.
Interrogatory (4), similar to interrogatory (2), is concerned with documents that in my view are inherently relevant to the fundamental issue of the proceeding, that is, the basis upon which the shares were held by Merim in Ballan Pastoral Co Pty Ltd. For the same reasons expressed in relation to interrogatory (2) I am satisfied that interrogatory (4) raises matters that go not only to the primary issue between the parties but also seem appropriate matters for cross‑examination of the second defendant Peter Yunghanns.
Interrogatory (5) is directly related to the question of whether Merim owns the Ballan shares in its capacity as trustee of the David Brian Yunghanns Trust Fund and the Sarah Jane Yunghanns Trust Fund. It is an issue that is central to the proceeding and in my view highly relevant. The objections made by the defendants to answering or further answering the interrogatory are not made out.
I make the additional observation that insofar as the defendants seek to allege that the answers to interrogatories involve their expressing matters of opinion I do not consider such objection is made out. I am satisfied that each of the interrogatories are directed to questions of fact and on the face of the pleadings such facts ought be within the province of knowledge of one or both of the first and second defendants.
As part of the submissions made by Mr A. Young who appeared for the defendants in opposing the provision of further answers to interrogatories he submitted that the interrogatories created difficulties for the defendants because they made reference to "the Yunghann Group". Mr Young submitted that the Yunghann Group was insufficiently defined. In light of the present proceeding and other Yunghann proceedings in the Commercial List I have some scepticism with respect to such submissions. However, the difficulty insofar as it exists can be overcome by the plaintiffs being granted leave to amend the interrogatories dated December 1999 by way of inserting in the preamble thereof the usual definition provision and thereby define the reference in the interrogatories to "the Yunghanns Group of Companies".
It follows from these reasons that the first and second defendants will be required to provide further and better answers to the plaintiffs' interrogatories.
Other matters
The plaintiffs complained also that the first defendant failed to provide adequate particulars of paragraph 23 of the defence of the first defendant. Having considered the form of the pleading I consider that the appropriate course would be for the plaintiffs to serve any request they desire of further and better particulars upon the first defendant in order to elicit the particulars sought. I consider that such course constitutes the most expeditious way for the concerns of the plaintiffs to be addressed.
In light of my reasons it is appropriate that orders be formulated by the parties making provision for the second defendant to have leave to file and serve a further amended defence and a counterclaim, that the plaintiffs file and serve amended interrogatories in accordance with these reasons and that the first and second defendants provide further and better answers to such interrogatories. As the matter returns before me for further directions on Friday 25 February 2000 I anticipate that the parties will be in a position to formulate appropriate orders by agreement. I will hear the parties as to costs.
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