Choy v St Kilda Baths Pty Ltd [1999] VSCA 212

7. In this appeal I have had the benefit of reading the judgment herein of Batt, J.A. in draft form. I would respectfully agree with his analysis of the facts raised by the parties and in broad terms with his analysis of the questions going to the exercise of the Court's discretion to make interlocutory orders in relation to the fund seemingly in dispute. Further, after much vacillation arising out of my concern as to the nature of the proceedings brought by the appellant, I am prepared to agree in the orders proposed by him, other than the order for costs relating to the hearings before the judge from whom this appeal is brought.

10. My principal concern has been whether it was appropriate, indeed whether it was proper, for the appellant to have brought proceedings by way of originating motion with the apparent intention of seeking only the appointment of receivers, to "endure until further order", for the stated purpose only "of preserving the trust property of the defendant" and without any apparent intention of seeking by that proceeding to resolve the matters dealt with by the judge in the Practice Court on an interlocutory basis, that is, only upon the basis that the matters showed that there was a serious question to be tried. I was at first inclined to the view that no such order should then have been made, nor any order made providing interlocutory relief to the appellant, unless the rights of the parties were to be fully tested on the merits upon a final determination of this very proceeding. I was of the view, and still am, that the originating motion could have been ordered to be continued as if it had been commenced by way of writ, pursuant to r.4.07, with appropriate pleadings and other interlocutory steps ordered, but no such step was ever foreshadowed.

13. I was and still am unhappy that the merits are now seemingly to be resolved by a separate action where it would seem that the scope of that proceeding goes far outside the disputes raised so far in this matter and in which there are already an additional plaintiff and two additional defendants. Nevertheless that proceeding was commenced pursuant to an undertaking to this Court given on 2 October 1998 to do so "to enforce such claims as the appellant contends she has upon the respondent". In consequence I am now inclined to proceed upon the basis that, if the claims relevant to the obtaining of the orders in this proceeding are no longer the subject of the second proceeding, that may well constitute a breach of that undertaking.

16. Secondly, I was concerned that the injunctive and other interlocutory relief was not sought or obtained as part of and in the course of a proceeding in which final relief was ever truly intended to be sought or obtained, contrary to the requirements referred to in Meagher, Gummow & Lehane on Equitable Doctrines and Remedies (3rd ed.) at para.2803 and O'Donovan, Company Receivers and Administrators (2nd ed. Revised) paras.18.160 and 18.290: see also Kerr on Receivers and Administrators (17th ed.) p.5 and Picarda, The Law Relating to Receivers, Managers and Administrators (2nd ed.) p.323, and the authorities therein cited. Nevertheless, although in my opinion that is the appropriate way to proceed where interlocutory relief is sought in aid of the plaintiff's claims in a dispute, I am not prepared to express final views as to the limits upon obtaining relief in one action in support of claims in another action or dispute resolution process, such as arbitration. On reflection, it seems to me that the very basis of the Court's equitable jurisdiction was that wide discretionary power exercised by the Court of Chancery to restrain proceedings and to grant interlocutory and final relief in relation to disputes in the common law and other courts, a matter discussed succinctly by Spry on Equitable Remedies (5th ed.) pp.450-452: see also pp.26-35. Moreover, the precise nature and extent of the equitable powers of courts of superior jurisdiction, especially their powers relating to preservation of property and restraints upon the use of property (formerly known as Mareva injunctions), has been the subject of extended discussion in the House of Lords, in the Privy Council and in the High Court of Australia. Those cases, which might be said to start with Channel Tunnel Group Ltd. v. Balfour Beatty Construction Ltd. [1993] A.C. 334, and extending to Bristol City Council v. Lovell [1998] UKHL 8; [1998] 1 W.L.R. 446 (including the Privy Council decision of Mercedes Benz AG v. Leiduck [1996] A.C. 284), as considered by the High Court in Patrick Stevedores v. Maritime Union of Australia [1998] HCA 30; (1998) 195 C.L.R. 1 and Cardile v. LED Builders Pty. Ltd. [1999] HCA 18; (1999) 73 A.L.J.R. 657, raise issues which in the end I have found unnecessary to resolve, particularly in the light of the fact that no mention of them at all was made in argument.

19. However, I would agree with Batt, J.A. that the appointment of receivers in this case was entirely inappropriate. In my opinion it was particularly inappropriate in this case because there was no protection to the defendant respondent in the terms of the order or in the terms of the originating motion, in which no further interlocutory relief for the purpose of bringing any claim on for trial is sought by the appellant. Where an order of so drastic a kind is obtained ex parte, it behoves the Court to ensure that the application is brought on in an appropriate way as quickly as possible so as to avoid any harsh consequences of which by necessity the Court is then unaware. Not only that but on the interlocutory hearing no relief at all should have been granted except upon the basis that the final merits would be resolved in an appropriate way. Preferably, if the action has been properly constituted, such a resolution of the issues in the action would follow, as the night the day, by the application of the ordinary rules and practices of the Court. Where the proceeding on its face will not lead to that consequence then, as a matter of the consideration of the balance of convenience, no order should ordinarily be made unless the plaintiff puts in train steps which will enable the merits to be resolved and the interlocutory orders to be confirmed, discharged or otherwise varied. In the present case, on the face of the originating motion, some $440,000 of the fund was not in terms the subject of dispute for it was not claimed to be the subject of the alternative injunction. That would have been sufficient in my opinion to deny interlocutory relief at that stage. However, I am now content that the orders proposed will result, or ought to result, in the merits of the appellant's claims being determined. The balance of convenience must in those circumstances and upon the conditions proposed in the judgment of Batt, J.A., be satisfied.

22. It will be seen why in the circumstances I would not order costs of the hearing before the primary judge to be paid by the respondent. The respondent was fully entitled to seek an order discharging the appointment of the receivers. That much is recognised by all members of this Court. The claim for "injunctive" (pace Cardile) relief is determined upon an argument relating to whether there is a serious question to be determined and upon the balance of convenience. Upon the undertakings being given, the balance of convenience is now such as I would make the proposed orders. However, there was no such undertaking before the primary judge and, more importantly, the appellant's contentions have not yet been tested at trial and in those circumstances I believe that one of the conventional orders should be made, that they be costs in the action or that they be reserved, for the merits or otherwise of the appellant's assertions will only be known at that time. They cannot be made costs in the other action and so in my opinion they should be reserved, subject to anything which counsel may advance.

25. Otherwise I agree with the judgment of Batt, J.A.

30. This is an appeal from orders of a judge of the Trial Division made on 23 September 1998, whereby he discharged an order made some two weeks earlier by another judge in the Practice Court on the ex parte application of the appellant plaintiff, Siew Sen Choy, for the appointment of receivers "of the trust property of St. Kilda Baths Pty. Ltd.", the respondent defendant, and also refused the appellant's application for alternative relief by way of injunction restraining the respondent from disposing of certain trust funds.

33. Before I proceed to the facts and merits of the appeal some procedural aspects of the case stand out as requiring comment. First, this is yet another case where, for whatever reason it may be, an appeal from an order which on no view determined the real dispute between the parties has taken far too long - over a year - to come on for hearing. The appellant, having on 2 October 1998 obtained from the Court of Appeal (Winneke, P. and Tadgell, J.A.) a stay of the orders made on 23 September 1998, may well have been content for the order appointing receiver to remain in force by virtue of the stay. (I pass by the fact, as their Honours no doubt did, that it was not until 25 September 1998 that the judge ordered that his order of 23 September should not take effect until 4.30 p.m. on 2 October or further order.) The appellant had given the Court of Appeal an undertaking to prosecute the appeal with due diligence as a term of the grant of the stay. In fact, the respondent by summons filed 28 June 1999 made an application for a speedy hearing, which was ultimately granted on 19 August 1999.

36. Secondly, the proceeding was commenced by an originating motion seeking, in essence, the appointment of receivers with specified powers or an injunction - "interim, interlocutory and final" - as summarised above, and also an "order for an account". When the affidavits filed show that the real dispute is whether trust funds should be consumed in payment of alleged creditors or should, as to part at any rate, be returned to the appellant, it must be said that the relief sought in the originating motion does not proclaim itself as designed to achieve, or give effect to, the resolution of that dispute. Even a "final" injunction, which I take to mean a perpetual injunction, in the terms sought would be merely negative, keeping the funds in question in the hands of the respondent as trustee, and, moreover, relief of that kind is merely alternative to the appointment of receivers. But at least a "final" injunction would be final relief. It is clear from para.2 of the relief claimed that the receivers' appointment was not to be final or an end in itself, but only temporary, for the object of their appointment is there described as being the preserving of the trust property of the respondent. Read benevolently, however, the claim for an order for an account might be said to include impliedly a claim for a consequential order for the payment to the appellant of the amount found due upon the taking of the account. Such an order would resolve, or be made in pursuance of a resolution of, the dispute from the appellant's point of view. It was no doubt because of the uncertainty whether any further relief than the appointment of the receivers was in truth sought in the proceeding that an undertaking "to commence within 14 days proceedings by writ to enforce such claims as the appellant contend[ed] she [had] upon the respondent" was another term of the grant of the stay mentioned above. (In somewhat tardy compliance with that undertaking the appellant on 19 October 1998 commenced another proceeding - No. 7535 of 1998 - against the present respondent in the Trial Division. A second plaintiff and three further defendants have subsequently been added to that proceeding. The pleadings are voluminous, but amongst the numerous heads of relief are declarations consistent with the appellant's contentions in this proceeding.)

39. Thirdly, the order which was tendered to the Practice Court judge for signature was unacceptable in four respects: (1) it contained no undertaking as to damages; (2) it gave the appellant her costs of the application out of the receivership without the respondent's even being heard; (3) the appointment of the receivers was expressed to "endure until further order"; and (4) there was no provision for service on the respondent of a copy of the order and the supporting affidavits. That the order was so defective is little short of amazing, for the relevant requirements should have been well known to the appellant's advisers: National Australia Bank Ltd. v. Bond Brewing Holdings Ltd. [1991] VicRp 31; [1991] 1 V.R. 386, as to (1) at 538, 555, 559 and 560 (and on appeal at [1990] HCA 10; (1990) 169 C.L.R. 271 at 277); as to (2) at 538, 555, 556 and 563-564; as to (3) at 538, 540, 555-556 and 559; and as to (4) at 538. The Practice Court judge cured the first two defects by handwritten alterations to the document. But the others remained.

42. Fourthly, the initial order for the appointment of receivers was obtained ex parte. Although no emergency or like "imperious necessity" was mentioned to us as justifying the making of that order ex parte (Bond Brewing at (V.R.) 539, 540-542 and 559; cf. on appeal at (C.L.R.) 277 and R.39.02(1) of Ch.I of the Rules), the appellant's solicitors did at 2.23 p.m. (and again - although this would seem to be too late to be of practical assistance - at 3.50 p.m.) give by facsimile transmission informal notice of her intention to apply that afternoon to the Practice Court judge, together with drafts of the originating motion and summons, though not of any supporting affidavit, and the application was apparently not heard by the judge until shortly after 4 p.m. The respondent did not seek to rely upon the ex parte nature of that application, or any of the other matters I have mentioned, as a basis for resisting the appeal. The ex parte nature of the application to the Practice Court judge had, however, been relied on by the respondent in support of its summons for the discharge of that judge's order appointing the receivers. But the judge from whose decision the present appeal is brought was not satisfied on the evidence that the appellant had failed to give proper notice to the respondent of her intention to apply for the order or, if that occurred, that it was a deliberate failure, and in his discretion decided to embark upon consideration of the matter, doing so, as I understand it, pursuant to the liberty reserved by the Practice Court judge rather than on the respondent's summons. The respondent had also contended before his Honour that there had been a failure on the part of the appellant to make full disclosure, but his Honour found that the non-disclosure was not intentional and was not of the appellant's own making, and that point was not raised before us.

45. The order appealed from is, in my view, clearly interlocutory, for it does not finally determine the rights of the parties. This is so, I think, even if the view should be taken that there was not a principal cause pending between them until the institution of the other proceeding pursuant to the undertaking given to the Court of Appeal on 2 October 1998. So far as the order refused relief by way of injunction, leave to appeal is not required: Supreme Court Act 1986, s.17A(4)(b)(ii). But a nice question arises whether an order refusing to appoint a receiver, or (which I take to be of the same nature) an order discharging the appointment of a receiver, is within the exception from the necessity of obtaining leave that is conferred by sub-para.(ii). That exception speaks of "cases of granting or refusing an injunction or appointing a receiver". The exception has been expressed in the same words ever since the relevant requirement for leave was introduced by the Supreme Court Act 1900, s.2, following s.1 of the Supreme Court of Judicature (Procedure) Act 1894 (U.K.), whereas for England the wording of the exception was changed by the Supreme Court of Judicature (Consolidation) Act 1925 (U.K.) so as to apply "where an injunction or the appointment of a receiver is granted or refused". An order appointing a receiver operates as an injunction (Bond Brewing at (V.R.) 559) and a reasonable case can be made for treating injunctions and the appointment of receivers in exactly the same way as regards leave to appeal. If the expression "the appointment of" had been used in the Victorian sub-para.(ii) instead of the word "appointing" a presentable argument could be advanced for saying that the expression was the alternative of the words "an injunction" and so was governed by the verbal nouns "granting or refusing" (my emphasis). But when the word used is the verbal noun "appointing" it may be said that it is to the verbal nouns "granting or refusing" that it is alternative. If that be right, as regards receivers, the exception applies only to orders appointing them and not also to orders refusing to appoint them. But it is unnecessary to express a final opinion about the construction of the exception, since, assuming it to be inapplicable, leave to appeal is appropriate, if only because his Honour's order in so far as it relates to relief by way of injunction is before us without leave. When the question arose during the hearing of the appeal Mr. Berkeley for the respondent consented to the grant of leave, and the Court then ordered by consent that leave be granted, if needed.

48. The appellant's claim arose in the following circumstances. Negotiations, which were concluded in October 1997, took place between the sister of the appellant, Jannie Tay ("Tay"), and David John Grose ("Grose") concerning a possible investment by the appellant in a development project in St. Kilda known as the St. Kilda Sea Baths ("the Project"). It was proposed that the baths be acquired, renovated and sold at a profit. The respondent, which was incorporated on 10 October 1997, is the trustee of the St. Kilda Baths Unit Trust ("the Trust") constituted by an undated Deed of Trust made on or about 14 October 1997. Grose is the sole director and secretary of the respondent. The national data base of the Australian Securities and Investment Commission, in reliance on the company's 1997 annual return, shows him also to be its sole shareholder, holding one share beneficially. (The agreed Summary of Facts states that Castlepines Corporation (Australia ) Ltd. is its shareholder.) The Trust was created to acquire the Crown leasehold of the baths site and to implement and manage the development of that site. The parties to the Deed of Trust are the respondent and the "First Unitholders", defined as meaning Castlepines Holdings Pty. Ltd. ("Castlepines") as trustee of the Castlepines Unit Trust and Siew Sen Choy as trustee of the East West Trinity Unit Trust, each being stated to hold 10 units. The appellant was only a nominee for the proposed investors in the East West Trinity Unit Trust, who were or included Tay and one Michael Grace ("Grace"). During October 1997 Tay deposited $700,000 in the trust account of the appellant's then solicitors by way of an intended investment in the then anticipated but still to be formed East West Trinity Trust. That amount was released by the solicitors in two instalments of $200,000 and $500,000 to the respondent for use by it as part of the deposit to be paid under the contract for the acquisition of the site and associated rights mentioned below.

51. The Deed of Trust contains provisions common in such a document. It is desirable to mention some of its provisions. The Trust Fund and its administration are vested in the trustee (cl.4.1) and the trustee holds the Trust Fund on trust for the unitholders in proportion to the units registered in their names (cl.4.2). All units are to be of equal value (cl.4.3) and all unitholders are entitled to the trust fund as a whole, but no unitholder is entitled to any particular asset of the trust fund (cl.4.4). The trustee has an absolute and uncontrolled discretion in the exercise of the authorities and powers vested in it by the deed (cl.4.7.1). It must keep proper books of account and records of the trust fund (cl.4.7.2 and cl.12.1). By cl.4.7.5, except in relation to a breach of trust knowingly or wilfully committed, the trustee is not personally responsible or liable in respect of the execution or purported execution of or failure or neglect to exercise any of its duties, authorities, powers or discretions and it is entitled to be indemnified out of and to the extent of the Trust Fund (but not otherwise) against liabilities incurred. It must keep a register of unitholders (cl.5.1) and issue to each unitholder a certificate for the units held by that unitholder (cl.5.2). It is empowered with the unanimous approval of the unitholders to raise further capital by calls upon the unitholders (cl.6.1.2). Extensive powers are conferred on the trustee, including power to employ professional or other assistance in the discharge of its duties, including assistance from a director of the trustee (cl.15.16), power to determine all questions of doubt arising in the course of management or administration of the Trust Fund (cl.15.19), power to conduct any trade or business (cl.15.25) and power to employ any person in connection with any trade or business carried on by it or with anything required to be done pursuant to the deed, including the receipt and payment of money, and to decide the remuneration to be allowed and paid and the amount of all charges and expenses (cl.15.26). Clause 17 is of some importance. It relates to conflict of interest and provides, so far as relevant, that the trustee may exercise any of its powers notwithstanding that a director of it or any unitholder may be directly or indirectly interested in any transaction and in particular the trustee may enter into any contract with the directors of a trustee or any of them or the unitholders or any of them. In like vein by cl.19.3 any director or officer of a corporate trustee being a solicitor, accountant or other professional person may be employed to transact any business and is entitled to be paid all proper costs, charges and expenses as he would have been if he had not been a director. Clause 18 also is of some importance. It relates to third party dealings and provides, so far as material, that no person dealing with a trustee need inquire as to the adequacy of the powers of the trustee in relation to any dealing or as to the proper exercise by the trustee of any of the powers and that in the absence of fraud on the part of a person dealing with a trustee, so far as the safety and protection of that person is concerned, the dealing is deemed to be within the powers of the trustee and to be valid and effectual.

54. A Unitholders Agreement dated 15 October 1997 was entered into between Castlepines (so described in it) as trustee of the Castlepines Unit Trust, the appellant as trustee of the East West Trinity Unit Trust and the respondent as trustee of the Trust. It recites that the unitholders (being Castlepines and the appellant) hold all of the issued units in the Trust which has been formed to acquire, complete and operate the Project, that they wish in the agreement to set out the terms and conditions on which they will contribute funds to the Trust and participate in ensuring that the Trust is able to achieve their objectives and that the trustee wishes to assist them to do so. The agreement sets out the terms on which the Project was to be managed and paid for and its profits or losses borne. Clause 2 concerns equity contributions. The unitholders acknowledge that it is their intention that equity contributions to the Trust be made as to the first $200,000 by the appellant and as to all subsequent contributions equally, with the appellant's maximum equity contribution being $5m. (cls.2.1 and 2.2). Upon the termination or winding up of the Trust the appellant is to be entitled to receive the first $200,000 of excess by way of return of equity contribution, and the remaining excess, if any, is to be shared equally between unitholders (cl.2.3). All profit and losses derived or incurred by the Trust are to be shared or borne by the unitholders equally (cl.3.1). Clause 3.3 is of particular importance in this case. It provides:-

"Castlepines acknowledges that it shall be solely responsible for all debts and liabilities (including any future account rendered in relation to works in progress) owing or incurred by it in respect of the Project up to 16th October 1997 and Castlepines indemnifies Choy against all ... claims ... which Choy may ... suffer ... by reason of default of Castlepines in failing to discharge any such debt, liability or future account rendered in relation to works in progress".

The "Project" is defined in cl.1.1 as meaning the acquisition of the leasehold of the baths site and all developments thereon by way of an assignment of the lease and purchase of improvements by the current occupier, Zarawaters Pty. Ltd. ("Zarawaters"), the establishment of a redevelopment program and its funding and implementation, the securing of tenants for the redeveloped site, the management of the site and its eventual resale on or about the Termination Date. That date is in turn likewise defined as meaning the third anniversary of the commencement date (namely, 15 October 1997) or such other date as the unitholders may determine. By cl.12.2 either party may terminate the agreement with immediate effect by notice in writing to the other if the other commits a material breach of the agreement. Clause 13 makes provision with respect to defaults by a unitholder. By cl.19.2 the agreement may not be amended, modified or supplemented except by writing executed by or on behalf of each party, and by cl.19.10.1 any waiver of any provision or condition of the agreement must be in writing.

59. There are several provisions in the Unitholders Agreement which were overlooked or not implemented. By cl.5.1 each unitholder was to hold one ordinary $1 share in the trustee and each was to be entitled to appoint two directors of the trustee. (Grose was the only shareholder and director.) By cl.7.1 the unitholders were to establish on the commencement date the Project Control Group to make all decisions relating to the Project and it was to meet from time to time as necessary for the proper administration and conduct of the Project on a weekly basis or at other times required by either unitholder. Detailed provisions followed concerning membership and chairmanship of the group, voting and the like. By cl.7.6 all decisions of the Project Control Group were, unless otherwise agreed between the parties, only to be made by unanimous vote at a duly convened meeting at which all relevant facts were presented. (The Group was not formed.) By cl.8.1 the unitholders were obliged within 30 days of settlement of the purchase contract (scil, that for the acquisition of the interest in the Project) to prepare an agreed Project Timetable, Concept Plan and Project Budget incorporating a program of activities and responsibilities for each of the unitholders and the Consultants. (These items were not prepared. As will appear, the purchase contract was never settled.) Clause 8.2 obliged the unitholders to ensure that the Project Budget was strictly adhered to and continued:

"[n]either Unitholder nor the Trustee may incur any expense, which is intended to be a shared expense, which is not provided for in the Project Budget without the prior written consent of both Unitholders."

Certain of the terms just mentioned are defined, but it is necessary to refer to the definition of "Consultants" only. By cl.1.1:

"'Consultants' means the consultants appointed to the Project from time to time by the Project Control Group or as may be chosen by either of the parties to represent that party in reviewing and verifying any part of a Proposal or any services to be provided to the Project by the other party. The consultants appointed to the Project at the date hereof and approved by the parties are: ... Project Manager Project Planning & Management Pty. Ltd. Quantity Surveyor Rider Hunt Legal KPMG Solicitors ..."

65. The Project Control Group was not set up because, the appellant alleged, Castlepines refused to attend any meeting. As a result of that, notice of breach was given and, as the judge said, it seems to have resulted in an irretrievable, or almost irretrievable, breakdown between the appellant and Castlepines and probably the respondent. The appellant also asserted that the respondent had refused to provide it with relevant information in relation to the contract of purchase mentioned in the next paragraph.

68. By an undated agreement made on or about 14 October 1997 between Zarawaters (which later changed its name to St. Kilda Sea Baths Pty. Ltd.) as vendor and the respondent as purchaser it was agreed that Zarawaters would assign all its right, title and interest in and to, amongst other things, the leasehold of the site and building contracts and other matters defined in that agreement as "the Project" to the respondent for the sum of $12m. The respondent paid a holding deposit of $200,000 on or about 13 October 1997 and a further deposit of $1m. on or about 10 November 1997, but did not complete the agreement. On 16 March 1998 Zarawaters commenced proceedings in the Trial Division against the respondent, Castlepines, Tay and others seeking principally declarations that the agreement had been validly terminated and that the deposit belonged to it, and damages. The respondent counterclaimed against Zarawaters. On 4 September 1998 the Court made final orders by consent of all parties other than Tay to the effect that the claim and counterclaim be dismissed and the deposit of $1,200,000 (then on deposit in a trust account in a bank) be paid out as to $1,140,000 to the solicitors for the respondent, who are its solicitors in this proceeding, and as to $60,000 with accumulated interest to the solicitors for Zarawaters. Zarawaters discontinued as against Tay.

71. It is the above-mentioned sum of $1,140,000 and its produce that is in question in this proceeding. The appellant seeks to protect the $700,000 of which she is trustee that was paid by her former solicitors to the respondent and used by it in part-payment of the deposit under the contract with Zarawaters, by ensuring that no more of the first-mentioned sum is paid away by the respondent than will leave $700,000 in its hands. The sum of $1,140,000 together with certain interest was paid to the receivers and by them deposited in an interest-bearing account with the Commonwealth Bank of Australia. The sum so deposited, together with any interest thereon less various fees and costs, constitutes the whole Trust Fund of the Trust. It is common ground that the respondent does not have any assets in its own right (other, no doubt, than any right of indemnification out of the very assets of the Trust only). The respondent intends, if not prevented by an order of the Court, to use the assets of the Trust in paying, so far as those assets extend, the expenses mentioned below. It is common ground also that the amount of those expenses exceeds the value of the assets of the Trust.

74. The appellant fears that the respondent will pay out the balance of the former deposit moneys in, it alleges, breach of trust, to entities which are not entitled to those moneys and some of which, it alleges, have an association with the respondent and Castlepines or one or other of them. The respondent, on the other hand, says that the payments it intends to make are for payment of expenses incurred by it in relation to the Project, and that it is not only empowered, but under an obligation, to make those payments under the Trust and the Unitholders Agreement. More particularly, as recorded by his Honour the appellant contended before him that the payments would constitute a breach of trust essentially for one or more of the following reasons:

(a) Many or most of the claims for payment, amounting to $662,068.75, were not referable to the Project but were unassociated expenses. The appellant pointed to the fact that many of the claims were not even in terms addressed to the respondent, but addressed to others, who did not have a relevant relationship with the Project. Moreover, claims were made by entities which appeared to have a relationship with the respondent. The respondent contended that, notwithstanding the identity of the addressees of such claims, they did on their face relate to work done on the Project that was the subject of the Unitholders Agreement and the Trust Deed.

(b) All the expenses had been incurred without the prior written consent of both unitholders in accordance with cl.8 of the Unitholders Agreement (or approval in accordance with cl.7). The respondent claimed that the appellant's sister, Tay, knew that these expenses had been or were being incurred and by virtue of that knowledge and an alleged failure by Tay or the appellant to complain about the alleged breaches of the Trust Deed and the Unitholders Agreement there was either an estoppel or a waiver of any such breaches.

(c) Many of the claims, amounting to $606,807, were not payable by the Trust, either because they were payable by Castlepines under cl.3.3 of the Unitholders Agreement, or because the liability was incurred before the Trust was constituted.

There is some overlap between the three contentions. Some alleged liabilities are covered by more than one contention. The appellant addressed substantially the same principal contentions to this Court, with particular emphasis on (b) and (c) above and reliance on alleged maladministration of trust. As Mr. Berkeley observed, so far at least as the Unitholders Agreement is relied on it is breach of contract, rather than breach of trust, that is in question, at least in the first instance.

81. His Honour, with commendable expedition, delivered clear and comprehensive reasons on the very day that argument concluded before him. As to contention (a) he held that the claims were wholly or almost wholly referable to the Project even though some of them were not in terms addressed to the respondent. As to contention (b), he held that the expenses were proper for payment because the appellant, as a unitholder, was aware of them and intended that they be paid and contemplated paying some of them herself. He took into account the fact that she had not given affidavit evidence that the expenses were incurred without her approval. With regard to contention (c) his Honour said in substance that he was unable, in the circumstances of the application, to make any finding on the matter, but expressed the view that, even though there might be an argument available to the appellant on the point, it was not sufficiently strong to warrant the retaining of the receivers or the granting of an injunction to restrain payment. He continued:

"I am not satisfied that the [appellant] has made out a serious case in relation to the first two points. To the extent that [she] has made out the case of a serious issue to be tried in relation to the third point, in my view, the balance of convenience in relation to that and in any event, bearing in mind that third party creditors will be affected, lies in favour of discharging the order of [the Practice Court judge] and in refusing to grant an injunction to restrain the trustee from paying the debts of the Project. Any loss the [appellant] may suffer as a result of negligent acts of Grose can be made the subject of a claim for damages against the [respondent] and Grose."

His Honour had earlier said, towards the end of his consideration of the first ground of complaint, that there was no evidence on which he could properly find that the trustee was seeking to pay accounts improperly, though that was not to say that the trustee might not err in its judgment; but that, if a mistake was made, then it was a question of whether or not that mistake was made negligently. He had concluded his above-mentioned consideration:

"The trustee is on notice and so is Grose, the director of the trustee, as to its obligations. In fact, there is material before the court to the effect that Grose is well aware of his obligations and will be personally at risk if he determines negligently what items are to be paid."

87. Before I can consider the challenges to his Honour's decision it is necessary to set out further facts, relating to Grose, Castlepines and their associates, to certain claims and to the respondent's accounts. Grose was made bankrupt by a sequestration order made on 29 June 1992. He was discharged from bankruptcy on 9 May 1995. He was a director and the secretary of Grose Property Holdings Pty. Ltd. between 21 September 1989 and 30 March 1995, when that company became deregistered after being wound up pursuant to court order made on 5 September 1991. The business name "Grose Property Holdings", under which Grose appears to have carried on business at the material times, is unregistered. At the time of the hearing before his Honour Grose was a director and the secretary of, amongst others, Castlepines (IBM) Pty. Ltd., Starr Investments (Australia) Pty. Ltd. (formerly called Castlepines (Princes Gate) Pty. Ltd.), St. Kilda Baths Pty. Ltd. and Castlepines (Belrose) Pty. Ltd. ("Belrose") Except in the case of Belrose, he was the only director. His appointments in relation to Starr Investments (Australia) Pty. Ltd. ("Starr Investments") were made on 12 February 1997, in relation to Belrose on 22 October 1997 and in relation to Castlepines (IBM) Pty. Ltd. on 18 May 1998.

90. All the issued shares in Starr Investments have at all material times been owned by Castlepines Corporation (Australia) Ltd. All the shares in Castlepines , Starr Investments and Belrose were at all material times owned by Castlepines Corporation (Australia) Ltd. and the sole share issued in Castlepines (IBM) Pty. Ltd. was at all material times from its incorporation on 18 May 1998 held by Castlepines. Thus, leaving aside the respondent, all the companies mentioned in this paragraph were related within the meaning of the Corporations Law and Grose was a director and secretary of three of them. Save that there is no information with regard to Castlepines Corporation (Australia) Ltd., the registered office of each of the companies mentioned in this paragraph and of the respondent has since 31 July 1998 been at Level 5, Shaw House, 49-51 York Street, Sydney.

93. The national data base of the Australian Securities and Investment Commission as at 5 August 1998 records the existence of a petition filed on 17 June 1998 against Starr Investments in the Supreme Court of Queensland. That may not be significant, but it appears from the affidavit of Timothy David Frampton sworn 28 June 1999 (and so not before his Honour and relevant only to any re-exercise by this Court of his Honour's discretion) that as at that date Starr Investments had not paid some $200,000 demanded of it as mortgagor by notice of exercise of power of sale dated 18 December 1998 on behalf of Metier 3 Pty. Ltd., one of the Project Consultants listed in the annexure mentioned below.

96. In October 1997 Tay was given a document headed "Castlepines Corporation (Australia) Ltd." which had been transmitted by facsimile by "Castlepines Corp". It describes itself as "an invitation to participate in subsidiary companies/trusts to acquire individual assets, ultimately perhaps to join the Castlepines Unit Trust". It is in the nature of a prospectus or advertising brochure, and is written in proud and confident, if not extravagant, terms. Amongst other things it says that Castlepines Corporation (Australia) Ltd. was an unlisted public company acquired in 1994 as an investment shell for a syndicate group. The "very purpose of its formation" was

"to permit a group of experienced and wealthy men ... to combine their wealth and experience in one hard-hitting, aggressive acquisition machine, counter-cyclically picking the primest and most profitable assets from depressed and partially restored, yet strong, property markets. A confederation strengthens individual power ..."

"Acquire only where significant profits can be realistically made within 24 months. `Significant' is defined as 50-100% on purchase price plus costs and renovations. This could be considered tough ...; however, it has been achieved many times by the CPA [Chief Property Adviser] and the individual syndicate members".

Under the heading "The Starr Companies" the document states, "The two predominant individuals driving all acquisitions for this group are Wayne Starr and David Grose (refer following section)." There then follow eulogistic statements about the Starr Companies "under the careful eye of Mr. Starr". Next comes a section headed "Chief Property Adviser", who, it says:

"is David Grose, of Grose Property Holdings, whose acquisitions and offices have centred in Sydney, Brisbane, Denver, Auckland and Christchurch. A self-made New Zealander, Mr. Grose acquired his first retail building at the age of 19 and by 32 owned NZ$320 million in assets (with NZ$110 million debt) all in office, retail and industrial buildings. Grose Property Holdings will act initially as adviser only with rights to acquire shares in CC(A)L over time."

Later, amongst the investments "available to Castlepines" St. Kilda Baths is listed. The cost to acquire and complete is given as A$27 million and it is said that resale value would be between $55 and $60 million, with numerous buyers available. This section concludes as follows:

"N.B. - Castlepines is determined to acquire only those assets with above-average yields and profits and not to be seen in the same light as moribund and ineffectual institutional investors and funds management groups."

106. On 30 August 1997 Grose wrote to the manager, Coasts and Major Projects, Natural Resources and Environment, Port Phillip Region, in connection with the St. Kilda Baths Project. He said that he acted for a US-based organisation, Castlepines Corporation, as its Chief Property Adviser in Australia and New Zealand and spoke of negotiations with Tay and the then owner of the leasehold of the baths. He enclosed some information about Grose Property Holdings (Sydney) called a "Company Overview". That is written in the same kind of language as the previous document. It is unnecessary to refer to any of its detail except for the statement that Grose is "Director of St. Kilda Baths Pty. Ltd. which is trustee of St. Kilda Sea Baths Unit Trust which is the purchase vehicle. Within this role he provides property consultancy advice to the developer Castlepines Corporation (Australia) Ltd." (Emphasis added).

109. In his affidavit sworn 21 September 1998 Grose sought to show that the respondent was a subsidiary of a substantial corporation and that the Castlepines Unit Trust was one of substance. He swore that the respondent was a subsidiary of Castlepines Corporation (Australia) Ltd. If the national data base of the Australian Securities and Investments Commission, referred to earlier, is correct, that statement is incorrect. Grose swore that the shareholders of Castlepines Corporation (Australia) Ltd. and the unitholders in the Castlepine Unit Trust were an international investment consortium, whose investments were through the medium of the Castlepines group of companies, "one of which is the [respondent]". On the same hypothesis, the last statement is incorrect. He listed investments made by the consortium in Australia through companies referred to earlier. He then specified the main unitholders in the Castlepines Unit Trust, and gave hearsay evidence of statements by the persons controlling those unitholders as to their personal wealth. His affidavit shows that at least 68 per cent of the units are held by overseas entities.

112. I annex to these reasons a sheet ("the annexure") described by Grose in his affidavit of 14 September 1998 as "a summary of bills totalling $1,495,121.88 for expenses incurred by the Trustee [i.e. the respondent] in performance of its duties and which require payment". As the annexure shows some amounts have been paid, leaving a total of $1,331,401.81. (It may be on one set of figures we were given that another $50,000 (approximately) said to be payable is to be added to the total of the annexure, but it is not necessary to explore that matter.) Grose continued in his affidavit as follows:

"It is necessary to point out items 1-3 are management fees payable to GPH, Grose Property Holdings (Sydney) a business with which I am obviously associated, and to Retail Enterprise Pty. Ltd., a company run by Mr. Frank Quinlan, which I on behalf of the [respondent] retained as project manager."

116. By letter dated 11 October 1997, the day after the respondent's incorporation, on the letterhead of the respondent at Level 5, Shaw House, 49-51 York Street, Sydney and addressed to Mr. Frank Quinlan ("Quinlan"), Grose Property Holdings (Sydney) of the same address, Grose on behalf of the respondent wrote to -

"confirm, as the newly appointed director of St. Kilda Baths Pty. Ltd., that an annual fee of $350,000 is agreed payable to Grose Property Holdings (Sydney) and your own project management group to fully oversee the development team that is required to be set up in Melbourne. A fee of $200,000 is also due to Grose Property Holdings (Sydney) for pre-purchase negotiations and time costs. None of the above is payable until construction commences. At that time the accrued sum due is payable at construction commencement in equal monthly instalments added to the normal monthly payments of $29,167 until the full arrears are paid. If for any reason the development does not proceed our fees will be immediately due." (Emphasis added.)

The expressions I have emphasised are not without significance. By letter dated 12 October 1997 on the same letterhead Grose on behalf of the respondent wrote to Quinlan, Retail Enterprise Pty. Ltd., at a post box in Castle Hill, New South Wales, stating:

"In response to your correspondence dated 16 September 1997, I confirm Retail Enterprise Pty. Limited appointment as Project Manager as set out in your proposal for a fee of $180,000 p.a. including all disbursements. As discussed, at this stage fees are to be invoiced at $15,000 per month (including disbursements), however until Project is underway we shall pay $7,250 per month including disbursements. Once the Project is underway or if our client does not proceed with development then Retail Enterprise Pty. Limited will be paid balance owing in full." (Emphasis added.)

Quinlan's letter of 16 September 1997 is not in evidence.

123. On 9 September 1998 Quinlan on behalf of Grose Property Holdings (Sydney) wrote on its letterhead showing the York Street address to Grose, St. Kilda Baths Pty. Ltd., at the same York Street address a letter submitting invoices for payment. Significantly, the letter bears the word processing reference "grose. 961". It enclosed an invoice for pro rata "Property Advisory Consulting fees" from October 1997 to September 1998 at $29,167 per month for 11 months, making a total of $320,837, the figure appearing as outstanding at item 2 of the annexure. It also enclosed an invoice for professional fees for the negotiation to purchase St. Kilda Baths Project in the sum of $200,000, the figure appearing as outstanding at item 1 of the annexure. Quinlan on behalf of Retail Enterprise Pty. Ltd. by letter dated 7 September 1998 submitted to Grose, St. Kilda Baths Pty. Ltd., an invoice for pro rata "Consulting Fee for Project Management" for St. Kilda Baths for the same 11 months at $7,750 (not $7,250) per month, making a total of $85,250, the figure shown as outstanding at item 3 in the annexure.

126. Amongst the Project Consultants listed in the annexure to whom the respondent desires to pay the respective outstanding amounts there shown are KPMG Legal (a business name used by or in respect of KPMG Solicitors (Vic.) Pty. Ltd.) and O'Donnell Frampton Salzano, both solicitors. In an affidavit sworn 16 September 1998 on behalf of the respondent, Quinlan noted that before payment of the total then claimed by KPMG Legal it would be necessary to clarify how much is properly attributable to the respondent's account and how much, if any, to the account of "Castlepines". However, after deduction of the amount paid, the whole total of the invoices referred to by Quinlan is shown in the annexure as the amount outstanding. The relevant KPMG Legal invoices are addressed to Grose of Castlepines Holdings Pty. Ltd. or Castlepines Corporation (Australia) Ltd. and, more significantly, name the client either as Castlepines Holdings Pty. Ltd. or as Castlepines Corporation (Australia) Ltd. One is entitled, I think, to assume that solicitors of all people know who their client is. In any event, it is clear at least that part of the composite amount of $32,585.40 claimed by invoice No.70205 of 19 May 1998 cannot be payable by the respondent, for the narration is divided into two paragraphs, the second of which relates to "acting on behalf of ... (b) Castlepines Holdings Pty. Ltd., regarding the Unitholders Agreement and the threat by Siew Sen Choy to withdraw from that agreement and institute proceedings against Castlepines". Invoice 70077 of 8 December 1997 for $40,448.33 relates to the period from 3 October to 28 November 1997 and names Castlepines as client. Some of those fees would seem payable by Castlepines pursuant to cl.3.3 of the Unitholders Agreement. Invoice 70240 of 10 June 1998 for $20,670 speaks of acting on behalf of Castlepine[s] Holdings Pty. Ltd. and the respondent in relation to the legal issues and affairs arising out of the St. Kilda Baths Development. Its heading refers to the baths development and "related matters". It seems strange that the whole amount of this late-dated invoice should be sought from one only of the two persons for whom the solicitors say they acted. It follows that there is at the least a serious question as to how much the respondent is liable to pay to KPMG Legal. The invoices of O'Donnell Frampton and Salzano, the respondent's present solicitors, are addressed to Grose at Castlepines Corporation (Aust.) Pty. Ltd. [sic]. They relate to the defence of the proceeding brought by Zarawaters. There were eleven defendants in that proceeding and the solicitors acted for all of them except Tay. Although the main claim was no doubt against the respondent, on the face of it one might query whether all the fees should be paid by it.

129. The respondent produced to the appellant's solicitors various financial records, including monthly balance sheets from October 1997 to August 1998 (inclusive). They are headed with the name of the respondent. They are not balance sheets of the company as such, for the issued capital is not shown. Despite the submission for the respondent to the contrary and despite the absence of reference to the original 20 units, I think that they must be balance sheets of the trust of which the respondent is trustee. Their significance for present purposes is that they treat the contribution by or on behalf of the appellant of $700,000 as a loan, when clause 2 of the Unitholders Agreement clearly contemplated that it should be an equity contribution, that is, a subscription for further units. The same remark may be made about the contribution of $500,000 by the other unitholder, in the balance sheet called "Castlepine Corp". Secondly, both contributions, and in particular that by or on behalf of the appellant, are shown under the heading "Starr Investments" and are treated as a liability to Starr Investments (Australia) Pty. Ltd. It may be correct to describe these balance sheets, produced in response to a notice to produce, as interim records. But there was power to prepare them under cl.12.2 of the Deed of Trust and the entries to which I have drawn attention appear in all of them. They do reveal serious misapprehensions on the part of the respondent trustee.

132. I turn at last to consider the challenges to his Honour's decision. In doing so I bear in mind that the decision was one made in the exercise of a discretion and that there is accordingly a strong presumption in favour of its correctness and it should be affirmed unless this Court is satisfied that it is clearly wrong: Australian Coal and Shale Employees' Federation v. The Commonwealth [1953] HCA 25; (1953) 94 C.L.R. 621 at 627. I bear in mind also that the interlocutory decision discharging the order appointing receivers and refusing an injunction was a decision pertaining to practice and procedure, in reviewing which an appellate court exercises particular caution: Adam P. Brown Male Fashions Pty. Ltd. v. Philip Morris Inc. [1981] HCA 39; (1981) 148 C.L.R. 170 at 176-177.

135. I should say at the outset that, in my opinion, given the end sought by the appellant, the appointment of receivers was inappropriate and unnecessary. The end could have been achieved by a less drastic order, such as some form of injunction: Bond Brewing at (V.R.) 540, 567 and 570.

138. The question, then, is whether his Honour was clearly wrong in refusing an injunction. It is unnecessary to set out or summarise the grounds of appeal: the criticisms discussed below are amply covered by them. One may begin with the fact that Mr. Berkeley, who did not appear below, very properly, in my view, conceded that the sum of $200,000, being the amount shown as outstanding to "GPH (pre-purchase)" in item 1 of the annexure, was not payable out of the Trust Fund, and offered an undertaking on behalf of the respondent that that sum would not be paid. The letter dated 11 October 1997 to Quinlan for Grose Property Holdings (Sydney) in which it is stated that a fee of $200,000 is "due" for pre-purchase negotiations and time costs was from the respondent, but the latter was then only in its second day of existence and it is clear from the above-mentioned letter from Grose Property Holdings (Sydney) to the Natural Resources and Environment manager dated 30 August 1997 that Castlepines Corporation had been negotiating with the owner of the leasehold of the baths. Although in strictness the party to the Unitholders Agreement is a subsidiary of the company said to have been negotiating and not that company itself, there is at the very least a serious question to be tried whether, pursuant to clause 3.3 of the Unitholders Agreement, the amount of $200,000 is payable by Castlepines rather than by the respondent. (I in fact took Mr. Berkeley's concession to go beyond the existence of a serious question and to extend to the complete absence of liability.) There are serious questions whether, quite apart from that clause, the supposititious anterior agreement for the earning and payment of the fee of $200,000 - about which there is no evidence, it being within the respondent's power to have produced the evidence - was purportedly made on behalf of the respondent and, if so, was ratified by it in its capacity as trustee. Accordingly, his Honour was, in my respectful view, in error in not positively concluding under the third contention that there was a serious question to be tried at least with regard to $200,000. That is a not insignificant sum, both in absolute terms and relatively to the total of the amounts in the annexure.

38 In relation principally to the first contention listed by his Honour, for the reasons I have given earlier I am of the opinion that his Honour erred, when considering the claim by KPMG Legal, in not giving effect to his view that some apportionment of the substantial fees was necessary and holding that a serious question to be tried was thereby raised. The inquiry, as I respectfully think, is not simply whether KPMG Legal did work in relation to the Project - and this seems not to have been the case with the entirety of the invoices - but also who its client was. Apportionment of some other fees also is necessary, as, I think, his Honour recognised.

142. I am also of the view, treating the point as arising principally under the first contention, that in the circumstances of this case his Honour should also have held that a serious question existed as to the claims in items 2 and 3 in the annexure. Because the liability of the respondent to pay the several amounts shown in the annexure as outstanding will fall to be argued and decided in the other proceeding which the appellant has instituted, or, perhaps, in this proceeding, it is undesirable at this stage to say more than is really necessary. But statements which I make in these reasons as to serious questions need not inhibit a trial judge: I am not finally determining any question. As to items 2 and 3, I am conscious of the width of the powers and protection given to the respondent as trustee by cls.4.7.5.1, 15.16, 15.26, 17 and 18 of the Deed of Trust, though the agreements said to have been made with Grose Property Holdings (Sydney) and Retail Enterprise Pty. Ltd. were made before the respondent was endued with the character of a trustee. Notwithstanding those clauses, there are aspects of the letters said to constitute or record the fee agreements which give rise to concern. It seems remarkable that the respondent should write on 11 October 1997 to Quinlan for Grose Property Holdings (Sydney) and that Quinlan should on 9 September 1998 render that entity's account to the respondent. The second paragraph of the letter of 11 October 1997, by its words "payable to Grose Property Holdings (Sydney) and your own project management group" raises the question whether the annual fee of $350,000 includes the fee of $180,000 per annum referred to in the letter of 12 October 1997 from the respondent to Retail Enterprise Pty. Ltd. The words "our fees" (emphasis added) in the last line of the letter of 11 October 1997 are curious. With regard to Grose's statement as to retaining Retail Enterprise Pty. Ltd., made in his affidavit of 14 September 1998, it is to be observed that the Project Manager which the definition of "Consultants" in the Unitholders Agreement records as having been appointed at 15 October 1997 and approved by the parties is, not Retail Enterprise Pty. Ltd., but Project Planning & Management Pty. Ltd., apparently a well-known and entirely independent organisation. There is in the annexure a claim by that company for $88,215 as Project Manager. It is true that there is by implication in the definition a power reserved to "either party" to the agreement to choose a consultant, relevantly, to represent it in reviewing and verifying any part of a "Proposal". But Grose's above-mentioned statement scarcely suggests that he had invoked that implied power. Moreover, "either party" may mean either unitholder, rather than any party. There is, then, to my mind, a serious question whether the retainer was valid. Quinlan did of course do work on the Project, but the question is for whom.

145. Although his Honour was of the view that the argument available to the appellant in relation to the third contention was not sufficiently strong to warrant the grant of an injunction, he did proceed to consider the balance of convenience in relation to that contention to the extent that the appellant had made out a case of a serious issue to be tried on it. In concluding that the balance of convenience lay in favour of discharging the order of the Practice Court judge, it is clear, in my opinion, that, besides bearing in mind the existence of third party creditors, his Honour relied upon the fact (as he saw it) that any loss that the appellant might suffer as a result of negligent acts of Grose could be made the subject of a claim for damages against the respondent and Grose. That seems clearly to be, or include, a reference to his Honour's earlier statement commencing "The trustee is on notice ...", set out above, which was made in the context of negligence. That damages are an adequate remedy is a classical ground for refusing an interlocutory injunction, but, in my opinion, his Honour's discretion as to the balance of convenience miscarried in that he failed to give weight to relevant considerations which I shall mention. In what follows I treat damages as including any money sums recoverable by judgment or order. If the payments were allowed to be made, the Trust Fund would be entirely consumed and an action against the respondent, whether in its personal capacity or in its capacity as trustee, would be fruitless. On the assumption that there would be a cause of action against Grose, the material before his Honour gave cause to doubt its likely fruitfulness. Grose has been, though he is not, a bankrupt. He carries on business under an unregistered business name, similar to that of the deregistered company Grose Property Holdings Pty. Ltd., of which he was a director. That company was wound up by order of the court. A court order for the winding up of a company is highly likely to be on the ground of insolvency. In so far as his Honour relied upon the facts that the respondent and Grose are on notice, that Grose is well aware of his obligations and that he would be personally at risk, those facts are, to my mind, irrelevant as grounds inclining the balance of convenience against the grant of an injunction, assuming that a serious question has been made out that a threatened payment would be in breach of contract or trust. They would apply to many defendants against whom quia timet injunctions have been granted. In short, ability to sue does not necessarily entail recovery in the sense of receipt, and here the doubt about recovery from Grose means that damages cannot be said to be an adequate remedy.

148. If it be said that his Honour's remarks about the balance of convenience were obiter because he did not find that there was a serious question to be argued as to the third contention, the answer, as it seems to me, is that, as I have already said, his Honour erred in not being satisfied at least as to the sum of $200,000. It might then, however, be said that the third contention does not cover all the amounts which the respondent proposes to pay (though it does cover almost one-half of the total). I doubt whether that is a good rejoinder because the injunction sought in the alternative in the originating motion, whilst not total, was not directed at payment of categories of claimed debts, but at payment of any of the debts over a certain sum, a matter to which I shall return in another context. In any case, when the amounts requiring apportionment are added to the first three claims in the annexure, the aggregate is such that if they were all paid to the respective claimants there would, judging by the information in the affidavit of Simon Alexander Wallace-Smith sworn 18 September 1998 and making allowance for interest and fees since then, be less than $700,000 left in the Trust Fund. The same conclusion follows from the letter dated 1 October 1999 from the receivers' solicitors to the plaintiff's solicitors.

151. The matters as to which I have held a serious question should have been held to exist or the discretion miscarried mean, I consider, that the discretion falls to be re-exercised in its entirety by this Court.

154. Although the serious questions I consider to exist do not extend to all the threatened payments, taking of necessity a somewhat broad approach I am of opinion that the balance of convenience favours the grant of an injunction or similar relief to protect the whole Trust Fund remaining until the question of the respondent's liability to pay each of the amounts shown in the annexure as outstanding can be determined, provided that both proceedings are now brought to trial very expeditiously. It is true that there are in several cases third party creditors unconnected with the parties to this proceeding or their associates; but, with two exceptions, they seem to have been prepared to await the outcome of this appeal and we do not have up-to-date information about the two exceptions. (Of course the first three claims in the annexure are not by third parties and they are substantial claims.) On the other hand, if the Trust Fund remaining is now allowed to be paid away, and that is later after full analysis held to have been wholly or partly wrong, there is a real risk, for reasons already given, that the appellant will not recover any of her equity contribution to the Trust. The erroneous treatment of that equity contribution in the interim balance sheets produced by the respondent causes disquiet and so tends to make the grant of relief desirable. (I do not, however, rely upon any maladministration of the Trust as alleged by the appellant.) In short, I am of the view that it is desirable to leave the question of the liability of the respondent as trustee to pay each of the amounts shown in the annexure as outstanding to be determined at the trial of one or both of the proceedings, in which presumably the appellant will deny, and the respondent will assert, liability on the part of the latter as trustee.

157. The parties agreed during the hearing of the appeal that, in the event that the Court upheld the appeal, the appropriate relief to grant was an order that the money presently held by the receivers, together with all interest accrued thereon, be paid into an interest-bearing bank account in the name of the solicitors for both parties to the appeal to be held by them until the hearing and determination of the other proceeding or further order of a judge of the Trial Division and (subject to any such order) to be dealt with by them as directed by the judge who tries the other proceeding. (The parties may not have expressly agreed to the last provision, but it was necessarily implicit, and I would, on reflection, include references to this proceeding as well.) That order should only be made upon the appellant by her counsel giving the usual undertaking as to damages and also undertaking to bring this proceeding and the other proceeding to trial with all possible expedition and, unless a Judge otherwise orders, together. It is true that the order for payment into a bank account, which is an alternative to a negative injunction, relates to all moneys held by the receivers, whereas the injunction sought in the originating motion is limited to $440,000 and it may be that the injunction sought from, but refused by, the primary judge on 23 September 1998 was of that kind. Nevertheless the argument before us proceeded, without objection, on the footing that any injunction would relate to the whole Trust Fund and, later, that, if payment into a bank account were ordered, it would relate to the whole Trust Fund.

160. Subject to any submissions counsel may make, I would therefore propose that, upon those undertakings being given, the appeal be allowed with costs, paras. 2 and 4 of the order appealed from be set aside and in lieu thereof an order be made for payment by the receivers into an interest-bearing bank account substantially as set out in the preceding paragraph of these reasons together with an order that the defendant pay the plaintiff's costs of and incidental to the application to the primary judge. I would substitute that order for costs, rather than the more usual order reserving them, in all the circumstances of this case, including the fact that, as is now accepted, the appellant was clearly entitled to an injunction restraining payment of the claim for $200,000. I would not, however, set aside para.3 of the order below, by which the receivers' remuneration and their costs as between solicitor and client were ordered to be paid out of the fund and the appellant as plaintiff was ordered to indemnify the fund in respect thereof, for, as I have indicated already, I am of the opinion that the appointment of receivers clearly should not have been sought or ordered.

163. In the event (which I would propose should occur) that the Court did not set aside para.1 of the order appealed from (by which the order appointing the receivers was discharged), Mr. Berkeley asked that liberty be reserved to the respondent to apply to the judge of the Trial Division in respect of the undertaking as to damages given by the appellant as plaintiff to the Practice Court judge. I do not consider that such an order is necessary in order for the respondent to be able to seek an inquiry as to damages either by summons or pursuant to the liberty to apply reserved by the Practice Court judge.

166. Although we can make no order of our own and (in the unusual circumstances) no substituted order, there is every reason for, and none against, the propositions that both this proceeding and proceeding No. 7535 of 1998 should be tried at the same time and that, whenever an interlocutory application is made in one, the other should also be before the Court.