2. Order that the plaintiffs be advised pursuant to s 63 of the Trustee Act 1925 (NSW) that, in respect of Supreme Court of New South Wales proceeding 2016/257478 (Gilmore Finance Pty Ltd v Aesthete Pty Ltd), the plaintiffs

Background

1. Broadly speaking, by way of background, the Gilmore proceedings, which are listed for hearing to commence next week, were originally commenced in January 2016 in the Supreme Court of Queensland and transferred to this Court by orders made on 4 July 2016 by Jackson J. The plaintiff in those proceedings is an entity named Gilmore Finance Pty Limited (Gilmore Finance). Gilmore Finance owns half of the units in The Real Money Unit Trust (RMUT) of which Aesthete Pty Limited (referred to as A1) is trustee, and one-third of the units in the Hospital Precinct Unit Trust (HPUT) of which Aesthete No. 3 Pty Limited (referred to as A3) is trustee.
2. The sole director of both A1 and A3 is, and at all material times has been, the third defendant in the Gilmore proceedings, Mr Farshad Amirbeaggi, who is a solicitor. The fourth defendant Ms Conway, and the fifth defendant, Mrs Yates are the unit holders of the respective trusts together with Gilmore Finance.
3. The Trusts were initially established in relation to the acquisition of certain parcels of land. In April 2010, A1 acquired certain land at Kingswood and in August 2012, A3 acquired certain land which is referred to as the hospital land. (The hospital land is part of a broader site referred to as the Nepean land in respect of which A3 had acquired options to purchase.) Both properties were acquired by A1 and A3 in their roles as trustees.
4. Both properties have since been sold. The hospital land was sold in January 2018 for $18 million, the Kingswood land was sold in June 2020 for $3.54 million. None of the other options in respect of other plots of land constituting the Nepean land was exercised before the relevant options expired.

Claims in substantive proceedings

1. Gilmore Finance, in its submissions filed on the present application, describes the claims made in the Gilmore proceedings as follows (set out at [3] and [4] of the written submissions), categorising them into five groups. It is alleged that the breaches of trust were all directed by Mr Amirbeaggi.
2. The first category of claim identified is referred to as a misrepresentation claim. In that category, what is asserted by Gilmore Finance is that, from late February 2011, it was induced to invest into the respective trusts (RMUT and HPUT), and was induced to advance further funds to the respective trustees by reason of alleged misleading and deceptive representations concerning the state of the Kingswood and hospital lands and the quality of the investment opportunities presented by investment in the respective trusts (see [24], [25], [27]-[33] and [89]-[99] of the amended commercial list statement filed 11 June 2018).
3. It is alleged that, but for those alleged misleading and deceptive representations, Gilmore Finance would not have invested in the respective unit trusts or advanced any moneys to A1 or A3 (see the amended commercial list statement at [94]-[99]).
4. The second category of claim identified is what is referred to as an under-contribution claim. Gilmore Finance asserts that the fourth and fifth defendants (Ms Vashti Conway and Ms Kate Yates) under-contributed to the respective trusts, thereby causing loss and damage to Gilmore Finance (see [101]-[104] of the amended commercial list statement). There is also a claim against A3 for failing to enforce the subscription agreements between it and the fourth and fifth defendants in the sum of $2.25 million see [133]-[135] of the amended commercial list statement).
5. Third, there is what is referred to as the discount units claim. Gilmore Finance alleges that A3 breached certain duties owed by A3 as trustee by issuing units in the HPUT in August 2012 at a discount to the fourth and fifth defendants as compared to the price paid by Gilmore Finance (see [52]-[56] and [130]-[131] of the amended commercial list statement).
6. Fourth, there is an unauthorised transactions claim. Gilmore Finance asserts that both A1 and A3 breached their duties as trustees by entering into unauthorised transactions; namely, first, in respect of A1, borrowing money from Ares Capital and Westpac against the Kingswood land for the purposes of assisting costs associated with the hospital land without Gilmore Finance's prior consent as said to be required pursuant to a Unit Holders' Agreement (see [107]-[109] of the amended commercial list statement); and second, in respect of A3 borrowing money from Perpetual Trustees without Gilmore Finance's prior consent as allegedly required pursuant to the Unit Holders' Agreement (see [124]-[128] of the amended commercial list statement); and, third, in respect of both A1 and A3, by alleged over-charging of legal fees by Mr Amirbeaggi's law firm, Yates Beaggi Lawyers (see [114]-[115] and [136]-[137] of the amended commercial list statement).
7. Fifth, the proper financial records claim in which Gilmore Finance alleges that A1 failed to keep proper books and records and failed to provide financial accounts when requested (see [112]-[113] of the amended commercial list statement), and the same allegations made in respect of A3 (see [120]-[123] of the amended commercial list statement). Allegations are also made as to the failure to provide financial records when asked (see [111]-[112] and [120]-[121] of the amended commercial list statement), as well as a failure to keep unit holder registers as required (see 113 and 123 of the amended commercial list statement).
8. By way of relief, in relation to the misrepresentation claim, Gilmore Finance seeks damages pursuant to s 236 of Schedule 2 to the Competition and Consumer Act 2010 (Cth) to compensate Gilmore Finance for the difference between the moneys invested in the respective trusts and the moneys it has received back, so as to put it in the position in which it would have been had it not decided to invest or advance any moneys to RMUT and the HPUT (see prayers 1 and 2 of the summons).
9. In relation to the under-contribution claim, Gilmore Finance seeks damages from A3 and the fourth and fifth defendants in the amount of the alleged under-contributions (see prayer 3 of the summons), and in relation to the discount units claim, the unauthorised transactions claim and the proper financial records claim, Gilmore Finance seeks the removal of A1 and A3 as trustee the of the RMUT and HPUT and their replacement by independent trustees (see prayers 4-8 of the summons).
10. In the Gilmore proceedings, there is also a claim made that Mr Amirbeaggi was knowingly involved in the Australian Consumer Law claims, it being alleged: that he made many of the misleading representations during discussions with or in emails sent to the sole director of Gilmore Finance, Mr Lyle Gilmore; that he failed to correct misleading representations made in an email received from Mr Gilmore; and that he was also involved by virtue of his position as sole director and shareholder in and the controlling mind of the trustees.
11. Ms Conway and Ms Yates are defendants also to the Gilmore proceedings, the allegation being that they breached the terms of the Unit Holders' Agreements that give rise to the under-contribution and breach of contract claims.

First application for judicial advice

1. By summons filed on 15 June 2018, the trustees sought advice in relation to those proceedings as outlined by Henry J in the public judgment published on 31 July 2019. In support of the application before her Honour, the trustees relied upon an affidavit affirmed 26 March 2019 by Mr Amirbeaggi, and a voluminous accompanying exhibit as well as a confidential opinion from counsel, that opinion being dated 9 April 2019, as well as a confidential affidavit affirmed 10 April 2019 of the plaintiff's solicitor, Ms Jolin Luu, and an accompanying confidential exhibit.
2. In those proceedings, her Honour (having been satisfied that there was jurisdiction to give judicial advice in relation to the breach of duty and removal claims, and the other issues raised, and having not accepted Gilmore Finance's submissions on this issue (see [34] of the public judgment)), concluded as follows: that A1 and A3 would be justified in defending the claims made against them by Gilmore Finance in the Gilmore proceedings, in accordance with terms of the advice given in the confidential judgment of the Court dated 31 July 2019; that A1 and A3 would be justified in funding their defences to the Gilmore proceedings out of the assets of the RMUT and the HPUT pursuant to cl 15.1 of the RMUT and HPUT deeds, in accordance with the terms of the advice given in the confidential judgment of the Court dated 31 July 2019; and, subject to the matters referred to in the confidential judgment of the Court, that A1 and A3 did not require separate representation to Mr Amirbeaggi, Ms Conway and Mrs Yates in the Gilmore proceedings.
3. Relevantly, however, for the purposes of the present application, her Honour noted in the confidential judgment that her judicial advice was qualified given the earlier stage of the proceedings and the preliminary nature of the confidential opinion. Her Honour concluded that the breach of duty, removal and contract claims raised questions concerning the interpretation of the trust instruments and would determine matters that might guide future trustees in administering the trusts.
4. Her Honour was of the opinion that it was in the interests of the trusts and the unit holders to have those issues resolved, and that it was in the interests of the trusts to defend the contract and Australian Consumer Law (ACL) claims made against them, as it might be expected that not doing so could result in damages claims that if paid out, would result in the diminution of the assets of the trusts (see [4] of the confidential judgment.)
5. I pause here to note that the evidence before me is that the trusts have no assets at present other than amounts that might potentially be recovered in respect of costs orders in the trustees' favour in proceedings, but I have no details of those costs orders.
6. Her Honour concluded that the trustees were the proper contradictors to the claims, noting that it was possible that Ms Conway and Ms Yates might take a different approach from the trustees in defending the contract claims (see [5]).
7. Her Honour also noted (at [6]) that the ACL claims (by which her Honour was referring to the misrepresentation claims), were made both against the trustees and against Mr Amirbeaggi, but was of the view that, as proper contradictors, it was appropriate for the trustees to defend those claims. Her Honour noted that "[a]s the ACL claims are also against Mr Amirbeaggi and his and the trustees' interests are aligned on the defences to those claims, presumably Mr Amirbeaggi will take the lead in defending them."
8. At [7], her Honour noted that the breach of duty and removal claims were pleaded as against the trustees only, and were matters on which the trustees should respond.
9. At [8] and [9], her Honour said the following: 8. The Confidential Opinion is based on the pleadings as they stood at 11 June 2018, the facts deposed to by Mr Amirbeaggi (as set out in his affidavit) and the documents contained in the exhibit to Mr Amirbeaggi's affidavit: at [6]. Counsel have not had the opportunity to consider any evidence from Gilmore Finance in support of its allegations, which is yet to be filed. 9. That the preliminary nature of the Confidential Opinion means the advice I am prepared to give to the trustees is that they are justified in defending the Gilmore proceedings, but only until the evidence is complete and the trial date has been set. I consider that it would be appropriate for the trustees to review their position after the evidence is complete. Doing so will enable an updated advice on prospects to be prepared which takes into account all the evidence, how the case is being advanced (noting that the nature of Gilmore Finance's case may change and develop further as it works through the interlocutory stages), and whether the matters identified in these reasons (see below) impact the assessment on prospects. It will be a decision for the trustees as to whether they seek further judicial advice at that time.
10. At [11] of her Honour's confidential reasons, her Honour said in relation to the ACL claims (where Counsel's conclusions were based in part on Mr Amirbeaggi's denial that he made certain representations), that "the conclusions reached suggest that acceptance of Mr Amirbeaggi's evidence may be critical to the Trustees' prospects of successfully defending the ACL claims"; and that "[i]n those circumstances, Mr Amirbeaggi's evidence may need to be tested with the benefit of Gilmore Finance's evidence".
11. At [16], her Honour also indicated in relation to the breach of duty claims that "[c]ounsel's conclusions on the defences available to the Trustees" relied also, in part, "on the acceptance of Mr Amirbeaggi's evidence" and that that evidence "should be tested with the benefit of Gilmore Finance's evidence".
12. From [17], her Honour addressed question 2 (which was whether the trustees were justified in funding their defences from the assets of the trust), and noted at [18], again as had previously been noted, that the trustees were proper contradictors to all of the claims made against them in the proceedings, and that it was "currently in the interests of the Trusts" that they be defended.
13. Reference was made at [19] to the proposition that recourse to trust assets for the purposes of defending the proceedings would not be futile or fruitless in circumstances where the confidential opinion made clear that the trustees had an arguable case in respect of each of the claims.
14. At [23], her Honour noted that there was no evidence before the Court as to whether or not the trustees were able to fund their defences without recourse to the trusts' assets or whether there existed other entities with the financial capacity to contribute to the trustees' defences.
15. At [25], her Honour accepted a submission that had been made by the trustees that it was in the interests of the trusts to fund the defence of the proceedings, as they were the beneficiaries of valuable costs orders. (As noted, I have no information as to those earlier costs orders.)
16. Her Honour then addressed (at [26]), the estimate for costs, in the course of which her Honour indicated that her advice was limited to the costs to be incurred by the trustees in defending the proceedings up to the completion of evidence and the setting of the trial only. Her Honour noted that the estimate indicated that there was not expected to be any or no significant further work required to prepare the lay evidence for the trustees, and the costs associated with Mr Amirbeaggi's defence to the ACL claims should be excluded from the costs funded from the assets of the trusts at this stage of the proceedings.
17. At [27], her Honour said that, for those reasons, her Honour was satisfied that the trustees were justified in having recourse to the assets of the trusts to fund their defences to the proceedings, but only until the completion of the evidence and the setting down of the proceedings for trial, and on the basis that the trusts' assets were utilised for defence costs on the limited basis referred to in [26] of her Honour's reasons.
18. Her Honour said at [30]: At a later stage in the proceedings, it may be possible for the Court to take into account the value of the relief sought, by way of damages, in the Gilmore proceedings. This is another relevant factor to assess in considering whether there are sufficient prospects of success to justify utilising the Trusts' assets to fund the defences to the proceedings: Macedonian Church at [83]-[84]; Application of Macedonian Orthodox Community Church St Petka Inc (No 3) [2006] NSWSC 1247 at [80].

Subsequent steps in proceedings

1. Since the provision of the judicial advice by her Honour, a number of steps have taken place in relation to the preparation of the matter for hearing. Between December 2019 and October 2020, Gilmore Finance served its lay and expert evidence (the expert evidence being accounting evidence) for the final hearing. That evidence was primarily from Mr Lyle Gilmore and from Mr David Hambleton, the latter giving evidence as an expert accountant.
2. On 21 May 2021, Mr Amirbeaggi served a lengthy affidavit accompanied by an exhibit encompassing some 22 folders, and the first, second and third defendants also served an affidavit of 20 May 2021 of Mr Brenton Yates, who is Ms Yates' husband and was a director and principal of the legal practice Yates Beaggi Lawyers at the time of the events which are the subject of the Gilmore proceedings. (Mr Yates was also the settlor of the RMUT and the HPUT.)
3. On 21 May 2021, Hammerschlag J ordered that: The Court has fixed the matter to commence on 14 March 2022 on an estimate of 7 days. The lead time will allow for the service of any evidence in response to the late-served trustee defendants' evidence on the assumption that leave to rely on it is granted and for the parties to arrange counsel. Any application by the trustee defendants to rely on late-served evidence can be filed in the registry and will be dealt with according to the protocol earlier sent to the parties.
4. In late October 2021, Gilmore Finance served evidence in reply. On 2 February 2022, the first, second and third defendants served an expert report of Mr Clayton Hickey, addressing the matters raised by the expert report prepared by Mr Hambleton and served by Gilmore Finance. Leave to rely upon that expert report was granted on 25 February 2022 by Stevenson J.
5. In Mr Price's 9 March 2022 affidavit (note, not Mr Price's confidential 9 March 2022 affidavit), Mr Price deposes that the allocation of the hearing date at the directions hearing on 21 May 2021 was originally proposed by the plaintiffs and was not opposed by the trustees. Mr Price has deposed that the status of the proceedings as at 21 May 2021 can be summarised as follows: 7.1 The Proceedings had been on foot for over five years, and it was expected that any hearing date was unlikely to be allocated until at least 2022 (by which time the Proceedings would have been on foot for over six years); 7.2 It was the expectation of the Trustees that their evidence would be completed shortly after 21 May 2021. The Trustees served their lay evidence in the Proceedings on 21 May 2021 (comprising an affidavit of Farsha Amirbeaggi affirmed on 21 May 2021 - the body of the affidavit comprises 333 pages and 17 volumes of documents - and an affidavit of Brenton Adrian Yates sworn on 20 May 2021). The Trustees were also substantially advanced in the preparation of their expert evidence and it was anticipated that the Trustees' expert evidence would be completed within a short time period after 21 May 2021; 7.3 The Trustees expected that any reply evidence served by Gilmore Finance would have been served well in advance of (i.e. months prior to) any trial date allocated by the Court, and in any event before the end of 2021 Court term; and 7.4 The Trustees anticipated that discovery would be completed following the completion of evidence and months prior to any trial date allocated by the Court, and in any event before the end of 2021 Court term.
6. Mr Price has also deposed to the reasons for delay in the preparation of the trustees' expert evidence and the completion of discovery in the proceedings: 8.1 The Trustees' expert evidence, being an affidavit of Clayton Gary Hickey affirmed on 2 February 2022, was served on 2 February 2022. Mr Hickey is a chartered accountant and a partner of PKF. On 25 February 2022 his Honour Justice Stevenson granted leave to the Trustees to rely upon Mr Hickey's affidavit at the trial commencing on 14 March 2022 … In summary, the Trustees' expert evidence was delayed due to: (a) difficulties obtaining documents from the Trustees' accountant, Mr Mark Bland of Moser Bland & Co, who was unable to respond promptly to requests for documents largely because of substantial work for other clients which was particularly driven by COVID business assistance scheme related issues; (b) the Greater Sydney lockdown from about 26 June 2021 to 11 October 2021, which made it more difficult for Mr Bland to access his records due to working from home arrangements; (c) Mr Hickey's leave commitments between 22 December 2021 and 24 January 2022; 8.2 Discovery by Gilmore Finance was completed on about 4 March 2022. The delay in completion of discovery can be summarised as follows: (a) The parties conferred in relation to discovery between 15 November 2021 and 16 December 2021 and were unable to agree in relation to production of 2 categories of documents; (b) The Trustees filed an application seeking disclosure on 16 December 2021 (Trustees' Disclosure Application). The Trustees' Disclosure Application was subsequently amended on 2 February 2022 to include an additional four categories of documents following orders made by his Honour Justice Ball on 31 January 2022 that the Trustees were relieved of the Harman undertaking in relation to certain documents relevant to discovery; (c) The Trustees' Disclosure Application was returnable on 4 February 2022, and His Honour Justice Stevenson allocated a timetable for the determination of the Trustees' Disclosure Application including the exchange of submissions by the parties. Gilmore Finance also made an made [SIC] a claim for privilege over 593 documents, which was contested by the Trustees; (d) On 23 February 2022, his Honour Justice Stevenson delivered a ruling in relation to the Trustees' Disclosure Application and refused Gilmore Finance's claim for privilege over 592 documents; (e) On 4 March 2022, Gilmore Finance served on the Trustee 592 documents, as well an addition 164 documents which it agreed to disclose.
7. In February 2022, the first, second and third defendants obtained discovery from Gilmore Finance with issues as to claims for privilege being determined by Stevenson J on 23 February 2022. On 8 March 2022, the first, second and third defendants served a further affidavit of Mr Amirbeaggi said to have arisen out of the discovery provided by Gilmore Finance and dealing with the alleged failure of Ms Conway and Ms Yates to pay the sum of $2.25 million for 17 units in the HPUT.
8. At [9] of Mr Price's non-confidential 9 March 2022 affidavit, he deposes to the reasons for the delay by the trustees in seeking further judicial advice that is now sought: 9.1 The Trustees have been preparing the Proceedings for hearing, which are listed on 14 March 2022. The Proceedings are complex and factually intensive. By way of illustration, the Court Book for the hearing is 18 volumes, seven lay witnesses are scheduled to be called and two expert witnesses are scheduled to be called. Further, the majority of February 2022 was occupied by the Trustees' Disclosure Application which was ultimately determined on 23 February 2022; 9.2 Between 3 February 2022 and 17 February 2022, the Trustees were occupied with the 2022 Proceedings, as explained in paragraphs 18 to 21 of my first affidavit; 9.3 Farshad Amirbeaggi, the sole director of the Trustees, was diagnosed with COVID-19 on 3 February 2022 and was in isolation until 10 February 2022; 9.4 As explained in paragraph 9 of my first affidavit, the Trustees considered it to be the most efficient course from both a time and costs perspective to obtain a confidential opinion from their trial counsel in the Proceedings (David Pritchard SC and Angus Macauley) at the same time that counsel were preparing for the hearing of the Proceedings. Mr Pritchard SC and Mr Macauley were occupied with preparation for the hearing of the Proceedings and the Trustees' Disclosure Application after they returned from leave in late January 2022 and were unable to complete the confidential opinion prior to 8 March 2022; 9.5 Mr Amirbeaggi has also been impacted by the recent floods in Northern NSW and did not have access to phone or internet for a substantial part of the week of 28 February 2022. Mr Amirbeaggi was residing in Northern NSW when the recent floods in Northern NSW occurred, and he was unable to provide instructions in relation to the opinion and other steps necessary to obtaining the judicial advice during the week of 28 February 2022; and 9.6 The Trustees sought advice from counsel as to whether it was necessary for these proceedings to be commenced in circumstances where the funding of the Proceedings is being met by Mr Amirbeaggi personally and not by the assets of the RMUT or the HPUT.
9. The upshot of all of this was that there has now been heard, less than a week before the commencement of the hearing, the application for judicial advice, which application is limited now as to judicial advice to the effect that the plaintiffs are justified in defending the proceedings.

Confidential Counsel's advice

1. As noted, reliance is placed by the plaintiffs on the joint opinion of senior and junior counsel who are briefed to appear at the hearing, and in that opinion, counsel have opined that for the reasons there set out along with the qualifications thereto, counsel are of the opinion that there are "reasonable to good prospects of successfully defending the proceedings".
2. By way of synopsis, counsel are of the following opinions: (a) the Misrepresentation Claim suffers from a number of difficulties from the perspective of Gilmore Finance. Almost all of the complained about oral representations are not corroborated by other witnesses or contemporaneous documents, with Mr Gilmore's evidence on the matters in inadmissible form. Mr Gilmore's evidence further contains no evidence of reliance. This is particularly acute in respect of written representations contained in emails, of which there is no evidence that Mr Gilmore read (and some of the pleaded misrepresentations are contained in emails that were not even sent to Mr Gilmore); (b) the evidence does not reveal that there have been any under-payments by the fourth and fifth defendants in respect of their units in the HPUT, or in respect of the RMUT. There is also a real question as the computation of any loss suffered by Gilmore Finance, which appears to be a claim for the diminution in value of its units, which has not been quantified; (c) we are of the opinion that the claim that units were improperly issued at a discount qua the fourth and fifth defendants as compared to Gilmore Finance is factually misconceived; (d) the Unauthorised Transactions Claim do not appear to be sustained on the evidence. There is evidence of prior notification of intention to borrow monies, which was not opposed at the time. Further, Mr Amirbeaggi, as sole appointed director of A1 and A3 pursuant to the terms of the respective unitholder agreements, was empowered to enter into those disputed loan transactions. In respect of the complaint concerning the charging of fees by Yates Beaggi Lawyers, the contemporaneous emails reveal an agreement for Yates Beaggi Lawyers to charge a "blended" rate of $450/h for both legal and non-legal (e.g. project management) work; and (e) there is a proper basis to defend the Proper Financial Records Claim. Mr Hickey does not agree with the allegations concerning the inadequacy of the financial records produced by A1 and A3 at the time, and he appears to have greater experience than Mr Hambleton on matters of accounting (cf. Mr Hambleton's experience as a liquidator). The other matters raised appear ot be peripheral and not a correct characterisation of what occurred (for instance, the evidence does not sustain the proposition that A1 and A3 repeatedly failed or refused to provide financial material - it did so on numerous occasions, as well as providing open access to the accountant for the respective trusts, Mr Mark Bland).
3. At [18] they state that: 18. For these reasons, we are of the opinion that there are reasonable to good prospects of A1 and A3 (as trustees) successfully defending the Proceedings. Of course, the outcome of the Proceedings will depend, in part, upon the performance of witnesses under cross-examination, and whether evidence set out in affidavits is adhered to or departed from. It will also depend, in part, upon matters of credibility. These matters are unknowable. However, these matters aside, the objective evidence, of which there is a significant volume, supports the opinion as to prospects expressed above.
4. I do not propose to summarise in any detail the reasons set out in the joint opinion or the conclusions reached by counsel. However, it is relevant to note in some detail the conclusions reached in respect of the representation claims, particularly in circumstances where the qualification on the judicial advice given in July 2019 effectively related to whether or not counsel's opinion would be affected by an assessment of the evidence filed by Gilmore Finance on the application, as I have indicated above.
5. Counsel addressed the misrepresentation claim in sections dealing, first, with the first set of misrepresentations, being alleged oral representations during a site visit on 16 February 2011. In relation to the alleged oral representations, they are addressed at [174]-[200] of the joint opinion.
6. Insofar as reference is made in those parts of the opinion to the evidence filed by Gilmore Finance, there is a common refrain that Mr Gilmore's evidence on particular topics is inadmissible in form. By way of example, I was taken to Mr Gilmore's 6 October 2020 affidavit at [40.2]. I would simply interpose to note that the fate of the evidentiary objections in relation to Mr Gilmore's evidence cannot yet be known and, to that extent, insofar as counsel's conclusion is that findings will be made that the alleged representations were not made, this depends in part, on the outcome of those evidentiary objections.
7. Counsel, however, go on to note in various parts of the opinion that certain of Mr Gilmore's assertions or evidence is not corroborated by other witnesses, including in particular Mrs Gilmore and Mr Armstrong. Counsel have also taken into account Mr Amirbeaggi's denial of the making of various representations, (which denial is corroborated by Mr Yates); and the inherent likelihood or probability that representations of the particular kind would have been made in relation to others of the alleged representations (such as, for example, the alleged representation that investment in the Kingswood land was low risk). Counsel have opined that there is an immediately apparent fallacy in this pleading; in particular that the asserted representations that the Kingswood land was low risk and a great investment that would generate a significant return were clearly statements of opinion and that, so long as those opinions were honestly held and on reasonable grounds, no claim for misleading or deceptive conduct could be established (see, for example, at [183]).
8. There is also the opinion expressed in relation to the seventh alleged representation (see at [188]-[190]) that the pleading makes no sense.
9. From [201]-[204] of the joint opinion, counsel refer to the second misrepresentation alleged arising out of a 1 March 2011 email to Mr Gilmore. This is an email that is pleaded to have been issued by Mr Wayman, allegedly on behalf of A1. Apart from the issue of by uncertainty as to what email it is to which reference is made in this part of the pleading, counsel has concluded that the assertion that the email was misleading and deceptive (because the Kingswood land was not unencumbered at the time and was subject to a NAB mortgage until 18 April 2013), suffers from the problem that, as of 1 March 2011, the mortgage secured nothing (since the relevant debt had been repaid in full on 25 February 2011). Accordingly, it is said that the Kingswood land was not encumbered at the time, reference being made to Quint v Robertson (1985) 3 NSWLR 398 at 402 per Young J, as his Honour then was, for the proposition that, where a mortgage debt has been repaid in full, the mortgagor is entitled and has the right to procure the mortgagee to execute and deliver a discharge.
10. From [205]-[216], counsel address the third alleged misrepresentation contained in a 3 March 2011 email to Mr Gilmore and conclude that, in the circumstances there set out, in their opinion A3 is not liable for the content of that email.
11. From [217]-[221], counsel address the fourth alleged misrepresentation, which is comprised in a 1 May 2011 email from Mr Amirbeaggi to Mr Camilleri (the accountant for Gilmore Finance and Mr Gilmore). Counsel conclude at [211] that, whatever representation might have arisen from the pleaded email, any error or misrepresentation had been corrected and clarified by 14 July 2011 before Gilmore Finance paid any further money and before it could be said to have relied upon any representation.
12. From [222]-[225], counsel address the fifth alleged misrepresentation which is premised upon an email sent by Mr Amirbeaggi to Mr Camilleri, copied to Mr Gilmore on 30 May 2011, and conclude that the accusations that have been made have no merit.
13. At [216], counsel conclude that, in addition to there being no actionable misleading and deceptive conduct, Gilmore Finance cannot establish that the loss and damage claimed was because of the conduct of A1 or A3 within the meaning of s 236 of the ACL, for the reasons set out from [227]-[241].
14. Counsel then address questions of contributory negligence at [242]-[243] and the position of concurrent wrongdoers from [244]-[263].
15. From [264]-[269], counsel address the nature of the liabilities sought to be imposed by the misrepresentation claimed. Counsel then go on in the joint opinion to address the under-contribution claim from [270]-[285], which they conclude has no merit; the discount units claims from [286]-[291], which they consider to be "equally meritless"; the unauthorised transactions claims from [292]-[321].
16. As to the first of the unauthorised transactions claims, which relates to the borrowing of money against the Kingswood land, counsel consider there to be two answers in response to the allegation that those borrowings were in breach of cll 13.1(b) and 13.1(j) of the RMUT Unit Holders' Agreement (the allegation being that Gilmore Finance had not consented to the borrowings - see [108] of the amended commercial list statement).
17. Those two answers are, first, that counsel have opined that Gilmore Finance did in fact consent to the borrowing by A1 of $1.725 million, with the loan from Westpac merely refinancing the initial loan at a more competitive rate of interest. Counsel state that this requires some factual explanation. That factual explanation is set out from [298]-[308] and appears to amount to a conclusion that silence amounts to assent.
18. I interpose to note in this context that, in the objector's submissions, emphasis is placed on the provisions of the respective unit holders' agreements, relevantly including the cl 1.1 definition of "director" and schedule 1 item 3, and the clauses relating to, amongst other things, reserved items including the requirement for unanimous unit holder approval. Under both the RMUT Agreement dated April 2011 and the HPUT Agreement dated June 2012, cl 1.1 provides that, inter alia: Director means the director/s of the Trustee whose name/s appears in Schedule 1.
19. Schedule 1 item 3 of the RMUT Agreement and Schedule 1 item 2 of the HPUT Agreement both in turn provide that the Director is Farshad Amirbeaggi. Under the HPUT Agreement only, clause 5.1(c) provides that the "funds required for completion will be paid by the Unitholders in accordance with the percentages of their Unit holding".
20. With respect to book-keeping obligations, cll 10.1-10.2 of the RMUT Agreement provide that: 10.1 Keeping Accounts (a) The Trustee must: i. keep proper books of account at the place of business of the Business or such other place as the Unit holders may determine; ii. ensure that all transactions relating to the Business are entered into the books. (b) A Unitholder may only remove the books of account from the place of business of the Business if that Unit holder first obtains the written consent of the other Unitholders. (c) A Unit holder and the Unit holder's legal representative who must be a person approved is writing by the other Unitholders may: i. inspect the books of account at any time; and ii. may make extracts from them. (d) A Unitholder and the Unitholder's legal representative must treat an extract as confidential to the Unitholders and their respective legal representatives. 10.2 Preparation of Accounts (a) The Trustee must ensure that as soon as practicable after the end of each financial year, the following are prepared: i. the accounts of the Business and the Trust; ii. a profit and loss account of the Business for the relevant period; and iii. a balance sheet of the Business and the Trust for the relevant period. (b) Unless the parties otherwise agree, the accounts must be prepared using Australian accounting standards. (c) The Chairman of the Board of Directors of the Trustee must sign a copy of the profit and loss account and balance sheet. (d) Subject to Clause 10.2(e), and in the absence of manifested error, a Unitholder is bound by the profit and loss account and balance sheet after signing. (e) If the Unitholders agree that there is an error in the profit and loss account or balance sheet, then they must ensure that it is corrected immediately. (f) A Unitholder must sign the corrected profit and loss account or balance sheet. (g) The Unitholders are bound by the corrected profit and loss account or balance sheet after signing.
21. Similarly, cll 8.1-8.2 of the HPUT Agreement provide that: 8.1 Keeping Accounts (a) The Trustee must: i. keep proper books of account at the place of business of the Business or such other place as the Unit holders may determine; ii. ensure that all transactions relating to the Business are entered into the books. (b) A Unitholder may only remove the books of account from the place of business of the Business if that Unit holder first obtains the written consent of the other Unitholders. (c) A Unit holder and the Unit holder's legal representative who must be a person approved is writing by the other Unitholders may inspect the books of account at any time. 8.2 Preparation of Accounts The Trustee must ensure that as soon as practicable after the end of each financial year, the following are prepared: (a) the accounts of the Business and the Trust; (b) a profit and loss account of the Business for the relevant period; and (c) a balance sheet of the Business and the Trust for the relevant period.
22. With respect to "unitholders' restrictions", emphasis is placed in the objector's submissions on cl 13.1 of the RMUT Agreement and cl 11.1 of the HPUT Agreement respectively, both of which provide, under the heading "Reserved Items" that: Any decisions to be made by the Trustee regarding the following items must be unanimously approved by the Unitholders (or the Directors appointed by the Unitholders) before the decision is deemed to be made and the matter is implemented: (a) engagement or employment of any persons for consideration in excess of $50,000 per annum including any statutory superannuation contribution; (b) the making of any loan, borrowing of any money, or provision of any guarantee, except in respect of amounts over $10,000.00; (c) the lease of any asset, compromise of any claim, acquisition of any property, the entering into of any contract or the undertaking of any liability present or contingent for a sum of more than $10,000.00; … (j) raising of financial contribution of any nature or kind except temporary accommodation of less than $10,000.00;
23. Both cl 13.2 of the RMUT Agreement and cl 11.2 of the HPUT Agreement provide that "no individual Director may make a decision in respect of a Reserved Item".
24. Finally, counsel emphasises in objecting submissions cl 16.1 of the RMUT Agreement and cl 13.1 of the HPUT Agreement, both of which provide that, "[s]hould there be any revision of this Agreement which is inconsistent with a provision of the Trust Deed, the provision of this Agreement will prevail to the extent of the inconsistency".
25. The position taken in the joint opinion is that, as Mr Amirbeaggi was the sole named initial director, his appointment being ratified by the unit holders by the execution of the relevant unitholders' agreement, he constituted "the directors appointed by the unit holders" and was entitled to make the decision that he did.
26. The second of the unauthorised transaction claims is dealt with from [310]-[313] of the joint counsel's opinion. Counsel consider that Gilmore Finance's complaint is not a tenable complaint, for the reasons that are there set out but which I will not explore in great detail.
27. Then from [314]-[321], counsel address the unauthorised transactions complaint in relation to the incurrence and payment of legal fees to Yates Beaggi Lawyers.
28. In relation to the proper financial records claim, counsel address this from [322]-[327] of the joint opinion and have concluded that the allegation as to failure to provide financial accounts, notwithstanding numerous requests, has no merit, referring to various emails which make reference to the provision of information.
29. As to the alleged failure to keep proper books and records, it is said that this is a contest between competing experts retained by the parties and counsel have concluded that the evidence of Mr Hickey is likely to be preferred to that of Mr Hambleton, and as to the third point, failure to keep accurate unit registers, it is said simply that this is without merit as unit holder registers exist and have been discovered.
30. From [328]-[357], counsel consider the relief claimed as to the removal of A1 and A3 as trustees and the appointment of new trustees and conclude that, even if some of the matters pleaded in the amended commercial list statement were to be established, this would not justify the exercise of the jurisdiction sought to be invoked by Gilmore Finance for the removal of the trustees (see [349]-[357]).
31. I should add, in relation to the submissions made by the objector that the issue raised in relation to the reserved items which is a clause dealing with unit holders' restrictions (contained in cl 11 of the HPUT unit holders agreement and cl 13 of the RMUT agreement), the trustees say that the subclause providing that, for the avoidance of doubt, no individual director may make a decision in respect of a reserved item, effectively has only meaningful operation in circumstances where there is more than one director.
32. Turning then to the principles in respect of applications for judicial advice, those are well known and set out in, amongst other cases, the Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66 at [74]. The present application and the need at this stage for judicial advice is said by the trustees to arise from the finding by the High Court in that case that: A necessary consequence of the provisions of s 63 of the Act is that a trustee who is sued should take no steps in defence of the suit without first obtaining judicial advice about whether it is proper to defend the proceedings. In deciding that question a judge must determine whether, on the material then available, it would be proper for the trustee to defend the proceedings. But deciding whether it would be proper for a trustee to defend proceedings instituted about the trust is radically different from deciding the issues that are to be agitated in the principal proceeding. The two steps are not to be elided. In particular, the judicial advice proceedings are not to be treated as a trial of the issues that are to be agitated in the principal proceedings.
33. The High Court went on to say (at [79]) that: It is very common in judicial advice applications for the court ot be invited to give advice on the basis of facts, whether proved by affidavit as contemplated by s 63(4) or alleged in a "written statement" or "other material" as contemplated by s 63(3), which are contested and controversial. As Palmer J said, a "judicial advice application … is founded upon facts stated to the Court by the trustee, untested by adversarial procedure, and assumed by the Court to be true" - although "only for the purpose of the application" (89).
34. Reference is further made to the propositions (at [110]): In understanding that passage, it must be remembered that Barrett J had earlier said in his reasons (122) that a trustee could properly seek judicial advice relating to defending legal proceedings "if the legal proceedings are themselves concerned with the management or administration of the trust property or the interpretation of the trust instrument" (as the Main Proceedings are). It is also necessary to remember that Barrett J found support for that last statement in an observation by Palmer J in Judgment No 2 (123), which, in turn, had in part been approved by Beazley and Giles JJA (124).
35. The High Court went on to say (at [125]): His Honour quoted the words of the Privy Council in Marley v Mutual Security Merchant Bank and Trust Co Ltd (135) that, in a judicial advice application, "the court is essentially engaged solely in determining what ought to be done in the best interests of the trust estate and not in determining the rights of adversarial parties" (emphasis added). Palmer J only determined the rights of adversarial parties to the limited extent necessary to ensure the protection of the best interests of the trust estate. Palmer J found that it was in the best interests of the trust on which the Schedule A Property is held, and indeed in the public interest, to secure the "important benefit" of having the precise terms of the trust resolved. Palmer J stressed the fact that the orders he was asked to make related only to that question - not to any of the other issues in the Main Proceedings (136). He said that the value of that important benefit "is not measured only according to who pays the costs of the proceedings and whether the assets of the trust are increased by the proceedings" (137). That was so, in his opinion, because the purpose of the trust was charitable, rather than being "the preservation or accumulation of wealth for the financial advantage of a class of beneficiaries" (138).
36. I further note what was said by the High Court in that case at [70]-[72]: 70. In particular, trustees who are sued, particularly for breach of trust, may sometimes experience uncertainty about whether they will be able to obtain indemnity as to the costs of their defence under s 59(4) in any event. Perhaps they will if their breach is excused under s 85(2); but they cannot be sure, in advance, that the court's discretionary power to excuse the breach will be exercised in their favour, and one of the matters to be excused is their failure to obtain the court's direction under s 63 or otherwise. This points strongly to the conclusion that an application under s 63 by a trustee sued for breach of trust (including a breach of trust alleged to arise in the very defence of the proceedings) is not to be seen as one which should rarely if ever succeed. Instead it should be seen as a standard instance to which s 63 can in appropriate circumstances apply. 71. In short, provision is made for a trustee to obtain judicial advice about the prosecution or defence of litigation in recognition of both the fact that the office of trustee is ordinarily a gratuitous office and the fact that a trustee is entitled to an indemnity for all costs and expenses properly incurred in performance of the trustee's duties. Obtaining judicial advice resolves doubt about whether it is proper for a trustee to incur the costs and expenses of prosecuting or defending litigation. No less importantly, however, resolving those doubts means that the interests of the trust will be protected; the interests of the trust will not be subordinated to the trustee's fear of personal liability for costs. 72. It is, therefore, not right to see a trustee's application for judicial advice about whether to sue or defend proceedings as directed only to the personal protection of the trustee. Proceedings for judicial advice have another and no less important purpose of protecting the interests of the trust.
37. In Frost v Fallon [2011] NSWSC 591, I had cause to consider those principles in an application for judicial advice pursuant to s 63 of the Trustee Act as to whether the trustees would be justified in pursuing an appeal from a decision of a judge in the Federal Court and I noted there (albeit a somewhat different question) there, where the question was whether it was appropriate for the executors to pursue the proposed appeal) that this involved an assessment as to whether there was a reasonable basis or reasonable grounds for the appeal and as to whether they would be acting reasonably in so doing, having regard to their responsibilities as executors (see [69]). Relevantly, I noted (at [70]-[71]) that an indication of the kind of circumstance where an executor or trustee would not be justified in commencing or defending proceedings might be seen from the cases in which indemnity for the cost of those proceedings has been denied. It has been held that trustees who have unnecessarily applied to the court (National Trustees v Barnes), have litigated unreasonably (Dixon v Williams (1875) 13 SCR (NSW) Eq 7), have incurred unnecessary expense in the proceedings before the court (Thomas v Walker (1854) 18 Beav 521; 52 ER 205; Wells v Malbon (1862) 31 Beav 48; 54 ER 1055), have commenced legal proceedings without good grounds (Re O'Donoghue [1998] 1 NZLR 116), or have made an application which holds little or no merit or has little or no chance of success (Re Estate of Roberts (1983) 20 NTR 13 at [19]; 70 FLR 158 at [163] per O'Leary J), will be denied an indemnity for legal costs. In Re O'Donoghue, Hammond J stated at [122] that: The notion that a trustee must act "reasonably'' is necessarily qualified in various ways. First, it has never been thought unreasonable for a trustee to hire a properly qualified person to carry out work which the trustee is not qualified to undertake. Second, the trustee does not have a limitless ability to resort to the law: his function is to assert the interest of the beneficiaries only to a point where there is a judicial ruling on something that is properly required, such as the construction of a fairly debatable point in an instrument, or whether the trustee ought to take a certain course. And, it has been said that a trustee has to have very good grounds before that trustee can justify an appeal, especially if costs were awarded against the estate in the Court below (see for instance Smith v Beal (1894) 25 OR 368). Third, a trustee is not entitled to expenses arising out of his own misconduct. (my emphasis)
38. The trustees submit that, in this case, the conflict between the beneficiaries (as to the discount units and under-contribution claims) is secondary to the misrepresentation claim, the unauthorised transactions and proper financial records claim, the last of which is relied upon to seek the removal of the trustees. It is further said that the primary dispute is against the trustees (A1 and A3), and it is emphasised that there is no allegation that, as trustees, they have profited. In light of these arguments, it is submitted that the reservations expressed in the Macedonian Church v Petar case do not apply to prevent the Court from giving the trustee an opinion, advice or direction. Alternatively, if they do apply, it is submitted that there are more significant issues in the case that entitle the Court to give advice.
39. The trustees conclude that there are "reasonable to good" prospects of successfully defending the Gilmore proceedings, on the basis that: first, the misrepresentation claim suffers from several difficulties; second, the evidence does not reveal any under-payments by the fourth and fifth defendants in respect of their units in the respective unit trusts and there is doubt as to whether any loss has been suffered by Gilmore Finance; third, the claim that the units were improperly issued at a discount to the fourth and fifth defendants is factually misconceived; fourth, the unauthorised transaction claim does not appear to be sustained by the evidence; and, fifth, the expert evidence of Mr Hickey provides a proper basis to defend the proper financial records claim.
40. I should also note that Mr Price in the confidential affidavit has deposed to the trustees' legal costs of the proceedings to date. At [12] of the confidential affidavit Mr Price has deposed that the legal costs invoiced to the trustees and Mr Amirbeaggi in the proceedings totalled $861,665.44 excluding GST, of which the legal costs which had been invoiced to the trustees only in the proceedings totalled $793,271.34 excluding GST.
41. The estimated costs of taking the matter now to a concluded hearing are in the order of $428,700 exclusive of GST (see the letter dated 8 March 2022 from the plaintiff's solicitors to the trustees).
42. Mr Price has deposed to his instructions from Mr Amirbeaggi as to the assets of the respective trusts (see [15] of Mr Price's affidavit). Relevantly, the primary asset of each of the trusts was the parcel of land to which I have referred earlier. Following the sale of the land and payment of accrued mortgage expenses and the like, the funds representing the net proceeds of sale of the properties have been depleted to, as I understand it, nil.
43. Mr Price has deposed in [15.2] of his affidavit that the amount remaining from the proceeds of sale of the Nepean land was depleted on about 10 September 2020 and that since then Mr Amirbeaggi has been funding the proceedings personally and intends to fund the future legal costs of the proceedings personally. In relation to the RMUT trust, Mr Price has deposed at [15.3] that the proceeds of sale were depleted on or about 28 August 2020 and since that date Mr Amirbeaggi has been funding the proceedings personally and intends to fund the future legal costs of the proceedings personally.
44. In the confidential submissions filed on the present application, it is noted that, since September 2020, the funding of the proceedings has been from Mr Amirbeaggi and A3 has incurred a liability to Mr Amirbeaggi in relation to that funding. It is submitted that there are no trust assets in either of the trusts to fund the Gilmore proceedings or to pay Mr Amirbeaggi's liability other than costs orders, or potential costs orders, against Gilmore Finance, arising not only from the Gilmore proceedings but other proceedings between A3 and Gilmore Finance as identified in the affidavit at 15.1.
45. Insofar as the limitation placed by Henry J on the judicial advice given in July 2019 was based on the preliminary nature of the confidential opinion and the early stage of the proceedings (and that insofar as acceptance of Mr Amirbeaggi's evidence might be critical to the trustees' prospects of successfully defending the claims, it might need to be tested with the benefit of Gilmore Finance's evidence), it is clear that her Honour had in contemplation that the matter would be tested at some point earlier than two or three business days before the commencement of the hearing.
46. Had the question been a question as to whether or not the conclusions by her Honour as to the matters set out in her Honour's reasons might (or might not) be affected by the evidence that has now been filed, I would accept that there is evidence in the form of the joint counsel's opinion as to the basis on which legal counsel consider that there are reasonable to good prospects of successfully defending each of the claims, and it might well then be considered that, had that material been before her Honour at the time or had there been an application at an earlier stage than now before her Honour in relation to the limitation on her Honour's judicial advice, then her Honour's concerns as to the preliminary nature of the opinion would have been assuaged and there might not have been a limitation on the judicial advice as to whether the trustees were justified in defending the claims.
47. The issue that has troubled me on the present application is not that there is not an opinion which may or may not prove to be correct as to the prospects of success of the respective claims but, rather, that I am being asked afresh to give judicial advice in relation to whether the trustees are justified in defending the proceedings to a concluded hearing (albeit that the terminology in which the relief has been sought has been amended in order to steer me into a particular direction, one might think).
48. The position seems to be that the trusts have no assets and that what I am being asked to consider is whether it is in the interests of the beneficiaries of the trust, the unit holders, that costs be expended in the defence of the proceedings where there are no trust assets at this stage other than potential or unquantified claims based on past costs orders and the prospect of costs in the future. It is important to remember that the High Court has indicated that one (and no less important) purpose of proceedings for judicial advice is to protect the interests of the trust. In circumstances where Mr Amirbeaggi is equally a contradictor to certain of the claims made against the trustees, either because the allegations are that Mr Amirbeaggi personally made the oral representations alleged to amount to misrepresentations or because he is alleged knowingly to have been involved in the contraventions relating to or comprised by those misrepresentations, it would seem to me that it is relevant to take into account the fact that, if the trustees were not to continue to incur a liability for the funding of the defence of those claims, there is no real concern that the claims would remain undefended.
49. It therefore seems to me to be a difficult question to say that the trustees should incur the expense of defending those claims if there is another party represented by the same lawyers with a personal interest in defending the same claims that is equally capable of doing so and where that party has in fact been funding the proceedings since around September 2020.
50. I accept that there is a different position where the claims are discrete claims for breach of trust or the like and where Mr Amirbeaggi is not necessarily a contradictor to those claims, and that this would include the claims for removal of the trustees, in respect of which the trustees have an interest and which Henry J considered fell within the claims that it would be in the interests of the trusts to be defended.
51. In those circumstances, and notwithstanding the submissions made to the effect that it would be difficult to untangle the costs of the concluded hearing (which I do not accept given that costs assessors are well used to determining as between discrete claims the costs that are incurred in relation thereto), I have concluded that the trustees (on the basis of the joint opinion dated 8 March 2022 of senior and junior counsel briefed in the proceedings) would be justified in defending the proceedings to the conclusion of the trial which is listed between 14 and 22 March 2022 but limited to those discrete claims and issues in the proceedings that relate to the trustees and/or the removal of the trustees (rather than the claims in which the third defendant, Mr Amirbeaggi, also has an interest in defending the claims and is currently intending to continue to do so); and I would add with the proviso that the plaintiffs have in place arrangements for the funding of their defence or continued defence of the proceedings in circumstances where there are no assets presently available to call upon to fund the proceedings.
52. Therefore I will make orders giving judicial advice pursuant to s 63 of the Trustee Act 1925 on those terms.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 June 2022