REASONS FOR JUDGMENT
1 This is an application for an extension of time within which to appeal from orders made by a judge of this Court on 1 June 2010. The application for the extension of time was brought by the respondents to the proceeding (the respondents) on 30 June 2010, some eight days after the time for appeal expired under O 52 r 15(1)(a). The application is opposed. The reasons for judgment which gave rise to the orders of 1 June 2010 were published on 11 May 2010. In those reasons, the primary judge indicated that the applicants to the proceeding (the applicants), who are the respondents to this application, had established their claim and that they should bring in short minutes of order to reflect his Honour's reasons. The applicants complied with that request and the primary judge made the orders from which the respondents wish to appeal. I shall call the parties by their description in the proceedings.
2 Because the orders provided that they not be sealed prior to 9 June 2010, the orders were not served until 10 June 2010. The reason why his Honour made an order for the later sealing of the orders was to allow the applicants to bring in further evidence in relation to one aspect of his Honour's orders.
3 The proceedings were for breach of fiduciary duties owed to the applicants by the two respondents. The facts, shortly stated, were that the first applicant purchased a car park at the instigation of the two respondents. The first applicant became the trustee of the Plaza Hotel Car Park Unit Trust under a deed of trust which was executed shortly before the first applicant purchased the car park. Mr Ma, the first respondent, arranged for a number of persons to invest in the first applicant. In the end, seven persons or their respective entities, who are also the applicants, procured by or through Mr Ma, invested in the first applicant. They were each issued 510,000 units, except one investor who took 1,004,000 units. Mr Ma was also issued 502,000 units. All of the investors were issued with one share in the first respondent, except one investor who was issued two shares.
4 The scheme envisaged that the first applicant would borrow $900,000 for the purpose of paying part of the consideration for the purchase of the car park. Each of the investors was accommodated by that borrowing to the extent of $100,000, except the one investor who was accommodated to the extent of $200,000. Unbeknown to the other investors, Mr Ma caused the first applicant to borrow an additional $700,000. Mr Ma used $350,000 of that $700,000 for the purpose of purchasing the 502,000 units which were allotted to him and to the second respondent, a management company controlled by Mr Ma. He used the further $350,000 for personal circumstances. During the trial Mr Ma and the second respondent admitted that they had breached fiduciary duties which were owed to the applicants, in that they had caused the first applicant to borrow $700,000 which was used by the respondents without the knowledge of the applicants.
5 Between the date of the purchase of the car park on 1 November 1996 and the issue of proceedings, the first applicant paid dividends to each of the other applicants and to the second respondent which reflected the profits of the first applicant during that period. During the same time, the first and second respondents caused to be paid the interest payable on the additional $700,000 which had been borrowed without the knowledge of the applicants. In the end, as a result of the admitted breach of fiduciary duties, his Honour made an order that a constructive trust arose in relation to the share and units in the first applicant in favour of each of the other applicants equally. He allowed the respondents to keep the dividends which had been paid in respect of the asset which formed the subject matter of the constructive trust because the respondents had discharged the interest which was payable on the amount which had been borrowed.
6 He released the respondents from the sum of $350,000 which had been borrowed in relation to the purchase of the 502,000 units in the unit trust. The effect of that order, to impose a constructive trust upon the respondents in relation to the 502,000 units, meant that the applicants benefited by the increase in value of those units between the date of the purchase of the car park and the date of trial. It would seem that the car park had more than doubled in value during that period. As to the other $350,000 which had been used for the personal circumstances of the first respondent, his Honour also released the respondents from their liability to repay that sum to the first applicant, but instead ordered the respondents pay the sum of $350,000 by way of equitable compensation. The effect of that order was to make the respondents repay the applicants for the undisclosed $350,000 borrowings.
7 In addition his Honour ordered the respondents, who had used the first applicant's security to borrow moneys on behalf of the respondents in respect of the sum of $350,000 at a lower interest rate, to pay equitable compensation for the interest saved by the respondents over the whole of the period. His Honour found, effectively, that the respondents had used the first applicant's security to borrow the sum of $350,000, thereby obtaining a sum of $350,000 at a lesser interest rate than otherwise would have been payable if the respondents had been forced to borrow the moneys directly from the lender. His Honour assessed that interest in the sum of $910,778.48 by allowing interest at the sum of 3% on the amount of $350,000 compounding over the whole period.
8 The result of his Honour's orders was that the respondents lost all of the benefit of the investment in the car park and had to pay all of the profit by way of reduced interest that they had made on the moneys borrowed for the personal use of the respondents.
9 The respondents did not file their notice of appeal within time. When this matter first came before me on 13 July I was told by the respondents' counsel that the fault in the failure to lodge the appeal within time was either that of the respondents' solicitor's or counsel. However, in my opinion, the affidavit which was said to support that submission did not do so in clear enough terms.
10 A further affidavit has been filed which discloses relevantly that the respondents were advised of the orders on 1 June 2010 immediately after the orders had been made. The respondents instructed their solicitors and counsel to put a without prejudice offer to the applicants, but at the same time instructed their solicitors that if the matter could not be compromised then to appeal against the judgment. An offer was put on 4 June 2010, but was not accepted within the timeframe comprised in the offer and the offer expired on 8 June 2010.
11 On the next day the respondents' solicitor instructed counsel to prepare an appeal against the judgment. The solicitor reported to the respondents that the offer had not been accepted and that counsel had been instructed to prepare the notice of appeal. A week later, on 16 June 2010, the first respondent enquired as to the progress of the appeal notice but was advised that the notice was with counsel and was being prepared for lodgement. On 22 June 2010 the respondents' solicitors wrote to the applicants' solicitors confirming that the respondents had instructed that an appeal be lodged. On 24 June 2010 the respondents' solicitor communicated with counsel and was advised by counsel that the notice of appeal would be ready by 26 June 2010.
12 On 25 June 2010 the respondents' solicitor wrote to the applicants' solicitors, again confirming that an appeal was to be lodged and requesting a stay of execution of the judgment. The applicants' solicitors responded on 28 June 2010 advising that time for appeal had already expired and, in those circumstances, there was no basis to request a stay. Apparently, the respondents' solicitor and counsel proceeded upon the basis that the time to appeal was 21 days after the settling of the orders. Of course, that is an error. It is clear, beyond doubt, and the applicants did not attempt to argue otherwise, that the failure to lodge the notice of appeal in this case lies at the feet of the respondents' legal advisors.
13 The respondents gave prompt instructions for the appeal to be lodged. The first respondent followed up those instructions on 16 June 2010 and no fault could be attributed to either of the respondents in relation to the failure to lodge a notice of appeal. At the time this application was made, the application was accompanied by a draft notice of appeal. When the matter first came on before me on 13 July, I indicated to counsel for the respondents that the draft notice of appeal did not identify the grounds of appeal which were sought to be agitated, either precisely or with sufficient particularity to enable the Full Court, if an extension were to be granted, to pass an opinion upon those grounds. For that reason and for the reason that the affidavit at that stage relied upon was insufficient, I adjourned the matter until today.
14 When the matter resumed again today, the respondents' counsel sought to propound a second draft of the notice of appeal which, in my opinion, was in no better form than the draft notice of appeal which I considered on 13 June 2010. The grounds were again imprecise; they lacked particularity and did not identify what was complained about. The matter was adjourned to enable counsel to further consider the draft notice of appeal and when the matter resumed in the afternoon a further draft notice of appeal was presented which identified sufficiently the grounds of appeal which were sought to be agitated. First, the respondents complain that the primary judge ought not to have found that a constructive trust existed in relation to the share and units. Secondly, they complain that the trial judge should not have awarded equitable compensation by way of interest in circumstances where the applicants had suffered no loss and any interest was merely profit to the respondents. Thirdly, they complain about the failure by the trial judge to take into account some overpayments of interest said to be made by the respondents. Lastly, they complain that the trial judge, effectively, failed to stand back from the orders which he made and failed to consider whether in all of the circumstances the orders were appropriate.
15 It was contended by the applicants' counsel that the application for an extension of time should be refused because there was no prospect of the grounds of appeal succeeding. She argued that it was open to the trial judge to assess equitable compensation as he had and by reference to the interest rates which he adopted. She also argued that it was open to the trial judge to declare that a constructive trust arose in relation to the share and to the units.
16 On an application such as this it is relevant to have regard to the reasons why the notice of appeal was not lodged in time. It is also relevant to have regard to whether the notice of appeal discloses arguable grounds of appeal.
17 In the circumstance of this case, the failure to lodge the notice of appeal within time is the fault of the parties' legal advisors, including counsel who, I should say, was not counsel who appeared before me on this application.
18 I am not prepared to hold, as has been urged by the applicants, that the grounds of appeal which were sought to be agitated are unarguable. I decline to express any view as to the prospects of success of each of the separate grounds on this application, but I merely say that the grounds, collectively, raise arguable propositions in relation to what were discretionary remedies. For those reasons, I will extend the time within which the applicants have to file a notice of appeal to Thursday, 22 July 2010.
I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.