Eggerth v Piccardi

DERRINGTON J: 1 This application is for a number of orders relating to amendments which are sought to be made to the Claim and Statement of Claim in this matter. The effect of the proposed amendments is twofold. First, to raise various new causes of action. Second, to add additional parties to the proceedings.

History of the proceedings 2 At the outset it ought to be noted that the proceedings have had a somewhat protracted history. It is difficult not to conclude that this has been contributed to by the unfortunate and unavoidable circumstance that the action has been moved between three docket judges at various times. Unfortunately, one of those occasions occurred in the months shortly preceding the date originally set for the trial. 3 In June of this year orders were made vacating the trial. As was noted on that occasion, new counsel had been engaged by the applicants and, no doubt after considering the available evidence, they reached the conclusion that it was prudent for the applicant to recast his claim. Although the granting of an adjournment in those circumstances may appear somewhat unusual, given that there was a period of interruption in the management of the case leading up to the trial, it is likely that the matter was not ready for trial in any event. Although the adjournment was formally opposed by the respondents, that opposition was not forcefully advanced. 4 The action as first constituted was, in general terms, a claim that the applicant had been misled into entering into a transaction in which he contributed funds to a trust which was to undertake the acquisition of a shopping centre development. The money contributed to the trust by the applicant was the only real source of funds other than those which were borrowed on commercial terms. In substance, the applicant asserted that it was always intended that he was the only person who would have any beneficial interest in the assets acquired with the funds. In response, the members of the Piccardi family and EPI International Pty Ltd (EPI) asserted that the funds were to be used for the benefit of both the applicant and the members of the Piccardi family. They pleaded that the agreement was that a trust be established, the beneficial interest in which was to be divided equally as between Mr Eggerth on the one hand, and members of the Piccardi family on the other. The respondents pleaded that such a trust was created and that EPI was appointed as its trustee. Although such an arrangement appears to be an extraordinary act of generosity on the part of the applicant, it was explained that this occurred by reason of Mr Eggerth's long friendship with Mr Kurt Piccardi Snr and in an attempt to assist Mr Piccardi who had fallen on difficult times. They also pleaded that Mr Eggerth had certain personal financial reasons for creating the trust in this manner. 5 One of the startling features of this action as it was first pleaded by both sides was that each intended to rely in evidence upon their assertions as to the contents of certain conversations which occurred in the mid-1990's, being in excess of 20 years ago. Some of those discussions were not held in English. This would have provided the parties with some significant and acute forensic difficulties in convincing a court of the veracity of the agreements which each propounded. It might have been thought that a court would be somewhat reluctant to attempt to realistically decide the accuracy of the recollection of parties as to conversations which occurred over two decades ago. As was said by Keane J in Page v Central Queensland University [2006] QCA 478 at [24] in a slightly different context: The court is not in the business of preserving the opportunity to conduct solemn farces in which parties and witnesses are invited to attempt to reconstruct recollections which have long since disappeared. That case concerned a proposal to amend pleadings to include claims which relied upon oral conversations occurring some 15 years prior to the date of the application to amend. The length of time between the date of the conversations and the proposed amendments was sufficient to deny the plaintiff in that case the ability to amend. 6 When this matter was before the court on a case management hearing on 19 April 2017, I expressed my reservations about how a trial might be conducted in these circumstances. That said, I was advised by both sides that they intended to proceed on that basis. Although it was fairly clear that the matter was not then adequately prepared for a trial commencing in early June, the parties advanced a very tight and congested timetable which, if followed, might have had the matter proceed to trial on the trial dates allocated. On any view, compliance with the timetable as set was optimistic. That optimism was misplaced and the directions were not, or could not, be followed. 7 As mentioned, shortly before the trial the applicant sought an adjournment of the hearing so that he might substantially amend his case. It was indicated that the applicant would no longer assert a case founded upon misrepresentations being made to him about the nature of the arrangements which were to be put in place utilising his money. He indicated that he intended to agitate a case based upon the trust arrangements which were, in fact, put in place and agitate his rights under that trust. The trust upon which the applicant intended to rely was, in substance, that alleged by the respondents in their defence being the one of which EPI was the trustee.

The claims in the Further Amended Statement of Claim 8 The claim now sought to be agitated by the Further Amended Claim and Statement of Claim (FASC) propounds the trust of which EPI is the trustee and asserts that various breaches of trust have occurred. In particular, it is alleged that monies in the nature of income and capital have been dissipated from the trust to members of the Piccardi family in breach of the requirement that all distributions are to be made equally. The essence of the alleged breaches is that equal amounts have not been paid to Mr Eggerth. 9 A feature of the new pleading which presently causes the respondents concern is the alleged "vagueness" of certain allegations. A complaint is made that the identity of the persons who received the distributions from the trust, the date on which the distributions were made, and the amount of the distributions are not specified. In various places in the pleading it is identified that dispositions were made to the group called the "Piccardi Beneficiaries". That nomenclature is defined in the pleading as being Kurt Piccardi Snr, Gerlinde Piccardi, Kurt Piccardi Jnr, Heidi Piccardi, Tony Piccardi and Sonia Piccardi. Whilst Heidi Piccardi, Tony Piccardi and Sonia Piccardi were not previously parties to this action, they were beneficiaries of the trust asserted by the respondents as the action was originally framed. 10 Counsel for the applicant asserts that the applicant is not presently able to provide particulars of the identities of the Piccardi Beneficiaries who received the funds, nor the time and dates of those distributions. It should be mentioned at this point that it does not seem to be in dispute that although, for a period of time, Mr Eggerth was a director of EPI, he was not actually involved in its management or operation. He is also a German national who does not speak English. 11 In two particular respects the alleged inappropriate distributions from the trust are important in the context of this application for leave to agitate the new causes of action. (a) First, it is submitted that the causes of action against the Piccardi Beneficiaries will not be pursued if the applicant is not given leave to pursue his claims. He makes this claim in the following way. He says that the terms of the trust provided that any distribution under the trust was to be equal as between Mr Eggerth on the one hand and the Piccardi Beneficiaries on the other. Mr Eggerth alleges that he has not received any payment of money (either income or capital) from the trust. From the pleadings as they presently exist it seems that this is not disputed. However, it would appear that substantial amounts have been distributed from the trust to the Piccardi Beneficiaries. It is in respect of these distributions that Mr Eggerth now alleges that breaches of trust have occurred. He asserts that he has asked the trustee to confirm the terms of the trust and recover payments wrongly made out of the trust to the Piccardi Beneficiaries. The pleading (and the material before the court) evidences that the trustee is unwilling or unable to comply with the terms of the trust. At the very least that would prima facie appear to be the case. It should be mentioned that this is not a difficult conclusion as the trustee, EPI, is controlled by Kurt Piccardi Snr and Gerlinde Piccardi and, as was submitted by Senior Counsel for the respondents, it is unlikely that one member of the Piccardi family would bring an action against other members of the Piccardi family. It should be noted that that submission was made in relation to a slightly different point, but its pertinence is applicable to this question. (b) Second, the allegations of wrongful distribution are important to some of the relief which is sought in the proceedings. Primarily, relief is sought against EPI as the trustee and it is directed towards EPI restoring the trust so as to rectify the effect of the alleged erroneous administration. Claims are also made against Mr Kurt Piccardi Snr and Ms Gerlinde Piccardi in respect of distributions received by them as well as for damages under the Trade Practices Act 1974 (Cth). No relief is directly sought against the other Piccardi Beneficiaries. However, the relief sought against EPI requiring it to restore the trust fund does have a direct impact upon the Piccardi Beneficiaries' claims to a beneficial interest in the property of the trust or claims to the future performance of the trust. Here the relief sought by Mr Eggerth seeks, in effect, to require EPI to fix upon the Piccardi Beneficiaries a liability for wrongful receipt of trust property. 12 An important issue in this application is the entitlement of Mr Eggerth, as a beneficiary, to pursue relief of the nature agitated. In particular, Mr Eggerth seeks a declaration that the trustees are entitled to have recourse to that part of the capital of the trust held for the Piccardi Beneficiaries to discharge the obligation of the Piccardi Beneficiaries to restore certain amounts to the trust. Further relief is sought in the nature of an order that the trustee administer the trust in a way that has the effect of "equalising" the rights of Mr Eggerth with those of the Piccardi Beneficiaries (on the assumption that the allegations in the new pleading are made out). In effect, the action proposed by Mr Eggerth is in the nature of an "administration action" by which a beneficiary (or an object) seeks to require the trustee to duly perform the trust including, by rectifying past breaches. So much appears from the declarations sought in paragraphs 1 and 2 of the Prayer for Relief in the Amended Statement of Claim. That also appears from the orders sought by Mr Eggerth in paragraph 3 in relation to the sale of a shopping centre which forms part of the corpus of the trust. Mr Eggerth seeks payment to him of one half of the proceeds of the shopping centre and that the trustee have recourse to the remaining half of the proceeds (representing the Piccardi Beneficiaries' interests) to discharge the liabilities of the Piccardi Beneficiaries to restore to the trust the amounts which they have improperly obtained. Various iterations of those same orders in relation to the sale of the centre are sought in the alternative, albeit predicated upon the appointment of a new trustee or the appointment of receivers. Other orders seek the distribution of the remaining assets in accordance with the terms of the trust. 13 There was much discussion in the course of submissions as to the entitlement of the beneficiary to bring an action against a third party to the trust where a trustee was unwilling or unable to do so. The applicant referred to the decision of Powell J in Ramage v Waclaw (1988) 12 NSWLR 84 involving circumstances where a beneficiary under a will sought to bring proceedings on behalf of the estate in relation to certain dispositions of property made by the testator whilst still alive. Such an action would have been pursuable by the executors of the deceased's estate but they were unwilling to pursue it. Powell J allowed a beneficiary to bring the action on the basis that if the action was not brought, it would be lost to the estate. His Honour relied upon a passage stated in Jacob's Law of Trusts in Australia (4th ed) at p 531 in support of his conclusion. The more recent edition of Jacobs restates the principles in the following terms: [23-03] The beneficiaries, or any one of them, may institute proceedings to compel the performance of the trustee's duty or to protect their beneficial interest in the trust property even though that interest is only contingent. A failure by the trustee to carry out any particular duty will, of course, be a breach of trust, giving rise to a right of action by a beneficiary and, if sufficiently serious, will afford grounds for the removal of the trustee and the appointment of a new trustee. Normally this remedy will provide adequate protection to a beneficiary. The general rule is, 'As long as the trustee is ready and willing to take the proper proceedings against the third person, the beneficiaries cannot maintain a suit against him', a rule which applies to constructive as well as express trustees. But where a trustee refuses to institute proceedings against a debtor or to recover trust property, the beneficiary may wish to institute proceedings, either in the beneficiary's own name or in the name of the trustee. The rule here is that where relief is sought in the equitable jurisdiction of the Supreme Court against a third party, a beneficiary may sue in his or her own name, joining as defendants the trustee and any other beneficiaries, but only where there are 'special circumstances'. Finn J has persuasively reasoned that, provided the 'exceptional' or 'special' circumstances requirement is met, the same holds for claims at common law, in a judicature system designed to avoid multiplicity of suits. The right extends to a discretionary object, but again only where there are special or exceptional circumstances. If the circumstances are not exceptional or special, the beneficiary's remedy is to sue the trustee for the execution of the trust and then apply for the appointment of a receiver, and for leave to sue in the name of the trustee or of the receiver. In this connection, James LJ stated in Sharpe v San Paulo Railway Co: I came to the conclusion, very clearly, that a person interested in an estate or a trust fund, could not sue a debtor to that trust fund, or sue for that trust fund merely on the allegation that the trustee would not sue; but that if there was any difficulty of that kind, if the trustee would not take proper steps to enforce the claim, the remedy of the cestui que trust was to file his bill against the trustee for the execution of the trust, or for the realization of the trust fund, and then to obtain the proper order for using the trustee's name, or for obtaining a receiver for using the trustee's name, who would, on behalf of the whole estate, institute the proper action, or the proper suit in this court. Thus, where the trustees of a union refused to take legal proceedings to restrain the union from a proposed misapplication of its funds, a single member of the union was held entitled to sue in his own name, the trustees being added as defendants. Likewise, a beneficiary was permitted to sue personally when the trustees were entitled to possession of trust property, were unwilling, and said they were unable, to sue for mesne profits, and had subsequently been discharged from the trusts. Where the trustee or life tenant, by threats or acts, manifests an intention not to renew an expiring lease, a beneficiary may take proceedings to have the lease renewed. In Ramage v Waclaw, where an aged and infirm testator transferred a joint interest to her children who held power of attorney, the universal legatee under the will was held to have locus standi to bring proceedings on behalf of the estate in order to challenge the validity of the transfer where the executor had failed to do so. (Footnotes omitted). 14 Some of the authorities cited in the course of argument also referred to "special circumstances" as being a necessary pre-condition to a beneficiary under a trust bringing proceedings that might ordinarily be brought by the trustee (See Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd [2017] FCAFC 75 at [102]-[103] and Alexander v Perpetual Trustees WA Ltd (2004) 216 CLR 109 at [55]-[56]). Ultimately there did not appear to be any real dispute as to the test which had to be satisfied before a court would make an order granting a beneficiary leave to pursue an action belonging to the trustee. 15 In Ramage v Waclaw it appears that Powell J adopted the proposition that what was required in order to allow a beneficiary to bring an action which was otherwise vested in the trustee, was the existence of "special circumstances". That, of course, is appropriate given a trustee has both trust and fiduciary obligations to perform and, in the ordinary performance of those duties will act as a prudent person would do if they were acting in their own interests. That has the necessary consequence that if a cause of action is open to the trustee the Court can expect that they will appropriately exercise their judgment as to whether or not it ought to be pursued. Where there are disputes between beneficiaries and their respective rights and entitlements, the Courts can likewise presume that the trustee will act even-handedly between them. These presumptions are not likely to exist where a corporate trustee is controlled by one or more beneficiaries and another beneficiary asserts that the trustee has acted in breach of trust and in a manner which favours those other beneficiaries. In such circumstances the Court would not readily reach the conclusion that the trustee is likely bring an action to remedy a breach to which it was a party or to bring an action against a beneficiary who is in control of the corporate trustee. The guiding mind of the trustee is afflicted by a conflict of interest. 16 Mr O'Sullivan QC, who appeared with Mr Stumer for the applicant, asserted that the circumstances of this case justified the bringing of the action by Mr Eggerth as a beneficiary because it had been established that the trustee was unable, or unwilling, to pursue an action which seemed to be well founded and which had prospects of success. Prima facie, that would appear to be correct although it must be recognised that there is no need to reach any final determinations as to those matters at this stage. 17 Despite the focus on the decision of Ramage v Waclaw and the subsequent authorities which have followed it, on one view they are not necessarily relevant to the disposition of this matter. At present, none of the causes of action proposed in the FASC are actions which vest in the trustee and are pursuable by it against third parties. As the case is formulated, the claims are all expressed to be against EPI and spring from its alleged breaches of trust. It follows that, in the first instance, what the applicant, in effect, seeks to do is to pursue an "administration action" as against the trustee. Within that action he seeks to assert specific breaches of trust by the trustee which resulted in the provision of benefits to the Piccardi Beneficiaries. In this respect the form of the action advanced is one by a beneficiary seeking the due performance of a trust. If that were all that the claim entailed it would not be necessary to give leave to advance such a case. It might not, necessarily, have been appropriate to join all the beneficiaries to the action either. 18 However the relief sought by Mr Eggerth takes this action further than being a mere administration action. He seeks to require EPI to comply with the terms of the trust and to rectify past breaches. Although, he does not specifically seek orders that the trustee pursue the Piccardi Beneficiaries who have, allegedly, wrongly received trust property, the substance of the relief sought has that effect. The Prayer for Relief seeks to require the trustee to act in a way which assumes that there were breaches of trust in paying capital and income to the Piccardi Beneficiaries and that they are liable to repay the same to the trust. It seeks to reverse the benefit provided to those beneficiaries by way of an adjustment to their apparent entitlements under the trust deed by requiring EPI to have recourse to the corpus of the trust, representing the one half interest of the Piccardi Beneficiaries, so as to discharge its liability to Mr Eggerth. 19 It follows that the substance of the action pursued by the applicant is for the return of trust property wrongly paid to the beneficiaries even if it is not specifically pleaded in that manner. In this respect it would appear that the claim in relation to an adjustment of the beneficial interests in the trust, might be regarded as an action which is pursuable against third parties by the trustee. On that basis special circumstances exist in this case which warrant the granting of leave if it is needed. In the events which have happened (which seem to be uncontested), and on the face of the trust deed, it appears that EPI has engaged in breaches of trust by failing to make distributions from the trust equally as between the Piccardi Beneficiaries and Mr Eggerth. I take into account that the Piccardi Beneficiaries assert in their pleading to the original statement of claim that the terms which appear on the face of the trust deed are not the actual terms on which the trust was to operate and that the parties agreed to alter them. It is most unlikely that EPI will bring any action to recover funds from the Piccardi Beneficiaries. It is controlled by Mr Kurt Piccardi Snr and Mrs Gerlinde Piccardi who are unlikely to cause EPI to bring an action against them. As Mr Cooper QC for the respondents identified, it is unlikely that members of the Piccardi family, through EPI, would pursue legal action against other members. The circumstances of the management of the trust are unusual in that Mr Eggerth who contributed the overwhelming amount of capital to the venture has received no return for his investment over many years and those who did not contribute any capital have received substantial amounts. That said, I recognise that the Piccardi Beneficiaries assert that Mr Kurt Piccardi has contributed his business skills to the operation of the trust. The allegations being asserted as against the third parties (the Piccardi Beneficiaries) relate to breaches of trust by EPI and, if the amounts are not recovered from the Piccardi Beneficiaries they can be recovered from EPI. This means that EPI would be conflicted in relation to the action proposed to be pursued by Mr Eggerth. 20 In the result, the circumstances of this matter are sufficiently special to warrant the exercise of the discretion to allow Mr Eggerth to pursue the claims identified in the FASC. 21 The next question is whether all of the Piccardi Beneficiaries ought to be defendants to the proceedings? As is identified above, the form of the action is one which appears to be directed only to EPI as trustee. In its current form it is not one which is directed to the beneficiaries as third parties and, as Mr O'Sullivan QC for the applicant acknowledged, no relief is directly sought against them. However, even if the action being agitated is not strictly the derivative action considered in Ramage v Waclaw, the beneficiaries of the trust ought be joined as parties on the basis that they would be directly affected by the granting of the relief which is sought. 22 The joinder of those parties should occur under r 9.05(1) of the Federal Court Rules. In particular, the Piccardi Beneficiaries are parties who ought to have been joined as a party to the proceeding (r 9.05(1)(a)); or are parties whose joinder is necessary to ensure that each issue in dispute in the proceedings is able to be heard and finally determined (r 9.05(1)(b)(ii)); or who should be joined as a party in order to enable determination of a related dispute and, as a result, avoid multiplicity of proceedings (r 9.05(1)(b)(iii)). 23 The issues which arise in the proceedings include the allegations that payments made by the trustee to the Piccardi Beneficiaries were made in breach of trust and that the benefits provided to the Piccardi Beneficiaries ought to be recovered by the trustee. As mentioned above, Mr Eggerth seeks an order that the interests of the Piccardi Beneficiaries in the remainder of the trust be diminished to the extent that they received benefits to the detriment of Mr Eggerth. In other words, he seeks orders which will have the effect of reducing the interests of the Piccardi Beneficiaries in the trust estate that they would otherwise be entitled to on the face of the trust deed. In actions where a beneficiary seeks to claim an increased interest in assets held on trust, the claim will necessarily have a direct impact on other beneficiaries. The general rule relating to persons interested in such actions was identified in Daniell's Chancery Practice (8th ed) at p 147: It was the aim of the Court of Chancery to do complete justice by deciding upon and settling the rights of all persons interested in the subject of the suit, so as to make the performance of the order of the Court perfectly safe to those who were compelled to obey it, and to prevent future litigation. For this purpose, it was necessary that all persons materially interested in the subject should generally be made parties to the suit, either as plaintiffs or defendants. 24 Here the matter can be tested by asking whether judgment in favour of Mr Eggerth would have any direct effect on the rights of the other beneficiaries. Necessarily the answer to that is in the affirmative. The consequence of Mr Eggerth succeeding will be the diminution of the Piccardi Beneficiaries' rights in respect of the assets held on trust. 25 Further, for the purposes of r 9.05(1)(b)(ii), the proposed causes of action raise issues about the veracity of the performance of the trust and include allegations of breach of the trust by reason of the payments made by the trustee to the Piccardi Beneficiaries. Although it is likely that these allegations will become disputed issues on the pleadings, they are also likely to involve disputed issues of fact which are subjacent to the pleadings. It is necessary that the Piccardi Beneficiaries are joined to ensure that those issues in the proceedings are able to be heard and finally determined and that all related disputes are resolved. It would be an unfortunate situation if the payment of money to the Piccardi Beneficiaries was held to be a breach of trust in these proceedings, yet the Piccardi Beneficiaries are able to assert in a separate proceeding against EPI that there is no breach. 26 It can also be observed that the proceedings rather than being viewed as an administration action against the trustee of a trust estate can properly be seen as being in the nature of an action in rem aimed at establishing an increased interest in the fund by the applicant. That being so, any person with an interest in that property has a direct interest in the outcome of the action and ought to be made a party (See Gosper v Sawer (1985) 160 CLR 548). 27 Given that the Piccardi Beneficiaries will be directly affected by the orders and relief sought by Mr Eggerth, their inclusion in the proceedings at this stage is appropriate. If it be the case that when the beneficiaries are served with the proceedings they consider they have grounds to apply to be removed from the proceedings, r 9.08 will afford them that opportunity.

Sufficiency of the pleading 28 Mr Cooper QC for the existing respondents submitted that the Statement of Claim which has been filed by the applicant is insufficiently particularised and that leave should be refused on that basis. There is force in this submission and it is unfortunate that details of the amounts of money paid from the trust to the beneficiaries, the dates of such payments, the quantities of such payments, and the identities of the persons to whom the monies were paid are not specified. It cannot be doubted that such details are appropriate and should be included at some point in time. 29 Additionally Mr Cooper QC is correct in his submission that pleadings are an assertion by one party to the other as to the issues which they seek to litigate. It is not for the recipient of a pleading to hazard a guess as to what case is alleged against them by reference to their own knowledge. His point is that, although the respondents and, in particular, EPI are much better informed about how the trust was managed, it is not up to them to formulate the case which the applicant might make. Whilst there is force in this submission, the circumstances of this case are somewhat unusual. It would appear that Mr Eggerth has not sought to claim an account of the trustee's stewardship of the trust since its inception to this point in time. That is understandable in circumstances where he had originally denied the validity of the trust. No doubt questions of approbating and reprobating would have arisen were a demand to be made by him for an account. Now that Mr Eggerth is prepared to accept the existence of the trust it is most likely he will pursue the remedy of an account. However, the essential issue for the purposes of the present application is whether the respondents are put sufficiently on notice of the case to be agitated against them. On the face of the pleading as it stands the broad nature of the allegations are clear enough. What is missing is the adequate particularisation of those allegations. However, the respondents are all closely associated and that as EPI is fully apprised of the manner in which the trust was operated, it would be surprising if they were not able to quickly ascertain the substance of the allegations which Mr Eggerth makes. Additionally, Mr Eggerth is entitled to be informed by the trustee of what amounts were paid out of the trust, to whom, and when, such that it would seem to be an inutile process to await the provision of that information and for Mr Eggerth to repeat it in the particulars. 30 It also appears that the applicant may have incomplete financial information in relation to the trust. That is not a criticism of any party but it is probably a reason for the generality of the pleading at this point in time. 31 In the circumstances, despite the generality of some of the pleadings, it is appropriate to allow the allegations to be made at this stage. If, of course, the allegations cannot be further particularised in the future, different questions may arise.

Conclusion 32 In the result, and not without some hesitation, it is appropriate that the applicant has leave to amend the originating application and Statement of Claim in the form of those documents as filed on 12 July 2017. In accordance with what is the usual practice, the amendments to the originating application and Statement of Claim will take effect from the date of filing. 33 It is also appropriate to make the orders that Miss Sonia Marie Piccardi, Tony Kirk Piccardi and Heidi Anne Piccardi be joined as defendants to the proceedings.

Costs 34 The applicant ought pay the costs thrown away by reason of the making of the amendments. There does not seem to be any dispute about that. However, the respondents assert that the costs should be paid on an indemnity basis. In particular, they make reference to the allegations of fraud in the reply filed on 29 September 2015. It is submitted that these allegations were wrongly made by the applicant knowing them to be false and that, eventually, they were not pursued. In this respect the respondents refer to the allegations of "concealed fraud" in paragraphs 1(b), 2(b), 5(b), and 7(b) of the Reply. However, the allegations of "concealed fraud" are made by a reference to s 38(1)(b) of the Limitation of Actions Act 1974 (Qld). They are not necessarily allegations of actual fraud (See Kitchen v Royal Air Force Association [1958] 1 WLR 563, 569 and Levy v Watt (2014) 308 ALR 748, 771-772). In the case of a beneficiary's claim that a trustee has breached a trust duty of which the beneficiary is not aware, it is apparent that an extension of the limitation period can be pleaded by reference to s 38(1)(b) without any allegation of actual fraud. That arises by reason of the existence of the duty of the trustee to act in the interests of the beneficiary. Whether that be a fiduciary duty or a trust duty need not be decided. If there were a breach of trust, the continuation by the trustee to act without obtaining the fully informed consent of the beneficiary would most likely result in a breach of fiduciary duty. To obtain the fully informed consent of the beneficiary, the trustee would need to disclose the breach. By whatever reasoning path, the trustee will usually have had a duty to inform the beneficiary of the existence of the breach and of their entitlements as against the trustees. The failure to make such disclosure is likely to constitute an equitable fraud within the scope of s 38(1)(b). 35 The point to be made here is that the allegations of fraud referred to by the respondents were not clearly of that category of dishonesty which is referred to in those cases justifying the grant of an award of indemnity costs by the wrongful pursuit of allegations of fraud. 36 Further, and more importantly, it is not apparent that the allegations of fraud were made by Mr Eggerth knowing them to be false. Indeed, they are likely to be raised in answer to any limitation defence raised by the respondents against the claims in the FASC. It may be that they will be successful. Again, there is no need to discuss that issue any further. It suffices to conclude that there is nothing yet established to show that the allegations of fraud were wrongly made or that the applicant (or his legal representatives) made the allegations knowing them to be false. 37 The mere fact that the applicant abandoned his initial cause of action by which he alleged that the trust arrangements put in place were not those to which he had agreed, is not to the point. Although it would appear that those now advising Mr Eggerth have realised the difficulties that are consequential upon the passage of time, which include the unravelling of agreements that are some decades old, that, by itself, does not suggest that the claim was not bona fide. All that it shows is that, on reflection and on consideration of the evidence which was available by the time of trial, it was considered that an alternative course should be taken. Indeed, in terms of questions about indemnity costs it can be observed that those advising Mr Eggerth did not seek to proceed with a claim which, evidentially, would have been difficult to sustain. 38 In the result, the circumstances of this case do not fall within those circumstances contemplated by the decision of Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 and the authorities which have followed that decision. 39 Consequently, there be an order that the applicant pay the costs thrown away by reason of the making of the amendments. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Derrington.

SCHEDULE OF PARTIES NSD 437 of 2015 Respondents Fourth Respondent: EPI INTERNATIONAL PTY LTD