Trusts - Administration of three Trusts by trustee companies - Interpretation of subject Trust Deeds in standard form - Provisions concerning trustees' powers and duties - Provisions concerning repurchase procedure as to units in each Trust - Provisions excluding trustees' liability save for fraud - Resolution of various issues concerning compliance with repurchase procedure - Valuations relied on by trustee companies found to be ineffective - Resolution of various related issues concerning breach of fiduciary duties by the subject trustee companies and their directors - Finding of fraud in equity in respect of units and options allotted to certain directors - Protective provisions of subject Trust Deed held not to exclude liability - Plaintiffs entitled to equitable relief in respect of certain claims subject to intervening circumstances and other relevant matters - Exact form of equitable relief to be determined

Corporations Act 1989 (Cth) (Corporations Law), s 232, s 1318(1)

Corporations Act 2001 (Cth), s 181, s 182

Trade Practices Act 1974 (Cth), s 52, s 75B

Trustees Act 1962 (WA), s 75

First Plaintiff by Counterclaim : Mr M J McCusker QC &

Second Plaintiff by Counterclaim : Mr M J McCusker QC &

First Defendant by Counterclaim : Mr D Grace QC & Mr M L Bennett

Second Defendant by Counterclaim : Mr D Grace QC & Mr M L Bennett

Third Defendants by Counterclaim : Mr D Grace QC & Mr M L Bennett

Anderson v Wallace [1835] EngR 272; (1835) 6 ER 1347

Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540

Australian Securities Commission v AS Nominees Ltd & Ample Funds Ltd [1995] FCA 1663; (1995) 62 FCR 504; (1995) 18 ACSR 459

Banque Commerciale SA en Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279

Barnes v Addy (1874) LR 9 Ch App 244

Biala Pty Ltd & Ors v Mallina Holdings Ltd (No 4) (1994) 13 WAR 11

Blakeley v Cook & Ors [2001] WASCA 208

Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53; (1982) 149 CLR 600

Brown v Heffer [1967] HCA 40; (1967) 116 CLR 344

Brunninghausen v Glavanics [1999] NSWCA 199; (1999) 46 NSWLR 538

Caledonian Rail Co v Lockhart [1843-60] All ER Rep 900

Chan v Zacharia [1984] HCA 36; (1984) 154 CLR 178

Coleman v Myers [1976] NZHC 5; [1977] 2 NZLR 225

Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; (1995) 186 CLR 389

Cotton v Dempster (1918) 20 WALR 14

Craven-Sands v Koch [2000] NSWSC 374; (2000) 34 ACSR 341

Dalrymple v Melville (1932) 32 SR (NSW) 596

Darbyshire v Leigh (1896) 1 QB 554

Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500

Dempster & Biala Ltd v Mallina Holdings Ltd (Biala case) (1994) 13 WAR 124

Enzed Holdings Ltd v Wynthea Pty Ltd [1984] FCA 373; (1984) 4 FCR 450; 57 ALR 167

Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 79 ALJR 206

Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95

Fouche v Superannuation Fund Board [1952] HCA 1; (1952) 88 CLR 609

Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101

Godecke v Kirwan [1973] HCA 38; (1973) 129 CLR 629

Goldsmith v Sandilands [2002] HCA 31; (2002) 190 ALR 370

Green & Ors v Wilden Pty Ltd & Ors [2003] WASC 239

Green & Ors v Wilden Pty Ltd & Ors [2004] WASC 105

Green v Magenta Nominees Pty Ltd, unreported; FCt SCt of WA; Library No 950311; 15 June 1995

Hamilton v Whitehead [1988] HCA 65; (1988) 166 CLR 121

Harrison v Randall [1852] EngR 127; (1851) 68 ER 562

Horwitz Grahame Books Pty Ltd v Mid-City Centre Pty Ltd (1990) NSW ConvR 55-514

Hospital Products Ltd v United States Surgical Corporation (Hospital Products/Surgical Staples case) [1984] HCA 64; (1984) 156 CLR 41

Hunter v Hunter [1938] NZLR 520

Kemp v Burn [1831] EngR 10; (1863) 6 ER 740

Legal and General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314

Life Insurance Co of Australia Ltd v Phillips [1925] HCA 18; (1925) 36 CLR 60

Logue v Shoalhaven Shire Council (1979) 1 NSWLR 537

Marsden v Regan [1954] 1 All ER 475

Metcalf & Kerr v Permanent Building Society (In liq) (1993) 10 WAR 145

Mills v Mills [1938] HCA 4; (1938) 60 CLR 150

Molyneux v Fletcher & Clark [1898] 1 QB 648

Monty Financial Services Ltd v Delmo [1996] VicRp 7; [1996] 1 VR 65

National Trustees Executors & Agency Co of Australiasia Ltd v Federal Commissioner for Taxation (Cain's case) [1954] HCA 71; (1954) 91 CLR 540

Nocton v Lord Ashburton (1914) AC 932

Partridge v Equity Trustees Executors & Agency Co Ltd [1947] HCA 42; (1947) 75 CLR 149

Percival v Wright [1902] 2 Ch 421

Permanent Building Society (In liq) v Wheeler (1994) 11 WAR 187

Porteous v Rinehart (1998) 19 WAR 495

Re City Equitable Fire Insurance Co Ltd [1925] Ch 407

Re Morish (1939) SASR 305

Re Whitehouse [1982] QdR 196

Ricciardello v Caltex Oil [1991] ANZ Conv R 445

Speight v Gaunt (1883) 9 App Cas 1

Stuart v Kingston [1924] UKPCHCA 3; (1924) 34 CLR 394

Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444

Summers v Commonwealth [1918] HCA 33; (1918) 25 CLR 144

Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422

Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1; (1972) AC 153

Vrisakis v Australian Securities Commission (1993) 9 WAR 395

Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544

Wickstead v Browne (1992) 30 NSWLR 1

Wilkins v Hogg (1861) 31 LJ Ch 41

Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (The Associated Alloys Case) (2000) 202 CLR 586

Attorney-General (NT) v Maurice [1986] HCA 80; (1986) 161 CLR 475

BHP Steel (RP) Pty Ltd t/as BHP Reinforcing Products v ABB Engineering Construction Pty Ltd [2001] WASCA 294

Butterworth v Purnell [1919] VicLawRp 55; [1919] VLR 375

Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337

Compaq Computer Australia Pty Ltd v Merry & Ors [1998] FCA 968; (1998) 157 ALR 1

Cooper v Morgan [1909] 1 Ch 261

Dixon Stores Group Ltd v Timms Television (1993) 1 All ER 349

Farrow Finance Company (in liq) v Farrow Properties Pty Ltd (in liq) [1999] 1 VR 584

Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) [2001] FCA 1628; (2001) 188 ALR 566

Green & Ors v Wilden Pty Ltd & Ors [2001] WASC 145

Green v Wilden [2002] WASC 234

Hannes v MJH Pty Ltd (1992) 7 ACSR 8

Harrington v Lowe (1996) 190 CLR 311

Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (New York Deli Case) [1988] FCA 40; (1988) 39 FCR 546

Humphries v The Queen (1987) 75 ALR 31

In re Skinner; Cooper v Skinner [1904] 1 Ch 289

In re Vickery v Stephens [1931] 1 Ch 572

J C Williamson v Lukey [1931] HCA 15; (1931) 45 CLR 282

Jalmoon Pty Ltd (in liq) v Bow [1997] 2 Qd R 62

L Schuler AG v Wickman Machine Tool Sales Ltd [1973] UKHL 2; [1974] AC 235

Letterstedt v Broers (1884) 9 App Cas 371

Magenta Nominees Pty Ltd v Webb [2000] WASCA 40

Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705

Mouat v Clark Boyce [1992] 2 NZLR 559

Ngurli v McCann [1953] HCA 39; (1953) 90 CLR 425

Nicholls v Louisville Investments Pty Ltd (1991) 10 ASCR 723

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Ogilvie v Adams [1981] VicRp 92; [1981] VR 1041

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Prentice v Cummins (No 4) [2002] FCA 1215

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Walker v Stones [2001] QB 902

West Country Cleaners (Falmouth) Ltd v Saly [1966] 3 All ER 210

Willison v Van Ryswyk [1961] WAR 87

Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661

Young v Queensland Trustees Ltd [1956] HCA 51; (1956) 99 CLR 560

1 The first three defendants, Wilden Pty Ltd, Tace Pty Ltd and Magenta Nominees Pty Ltd are the trustees of unit trusts known respectively as the Balga Trust, the Summerfield Trust and the Kelmscott Trust. Each trust deed is in the same form. The other defendants are said to be directors of or otherwise linked to the trustee companies. The plaintiffs seek relief in respect of an allegedly improper administration of these trusts.

2 The litigation has been on foot for over 14 years. The book of pleadings contains 338 pages. The pleadings raise many issues and it will therefore be useful to begin by providing an overview of the dispute between the parties.

3 Many years ago William Joseph Green established a firm of electrical contractors known as W J Green & Co in partnership with his wife. At a later stage he set up a company, W J Green & Co (1984) Pty Ltd, which became the trustee for the Green Family Trust. Mr Green's son, Graeme Green, worked in the family business and had an interest in the Green Family Trust.

4 In early 1985, as a result of conferring with his accountant, Mr Green contacted the fourth defendant, Sydney James Chesson, who was a well-known estate agent, with a view to investing in real estate. This led initially to Mr Green by his family company acquiring 400 units in the Fieldgate Square (1985) Unit Trust (of which Zilna Pty Ltd was the trustee). In due course, the relationship with Mr Chesson led to the Green company and members of the Green family becoming unit holders in the three unit trust entities mentioned earlier. The principal trust asset in each case was a suburban shopping centre.

5 The Fieldgate/Zilna Trust is not a party to the present proceedings. The Balga/Wilden, the Summerfield/Tace and the Kelmscott/Magenta trustee companies have been joined as defendants. Mr Chesson played an active role in the management of all these trust entities. For ease of reference, where the context permits, I will refer to the Green company and individual family members as the Green parties.

6 Each of the Trust Deeds regulating the affairs of the various trust entities made provision for repurchase of units by the trustee. In essence, any unit holder could request the trustee to repurchase all or any of the relevant units at a price calculated in accordance with a prescribed formula. This required that consideration be given to the net asset backing of the trust unit.

7 The plaintiffs' case is that they became dissatisfied with the way in which the trust entities were being managed. They were not kept fully informed. Calls for payment pursuant to the loan arrangements underlying the purchase of certain units in the trusts took them by surprise. The Balga/Wilden shopping centre was beset with cash flow problems, and at various meetings in mid-1990 certain steps were taken by the trustees which allegedly worked to the disadvantage of the Green parties.

8 The plaintiffs say that they eventually lodged repurchase requests with a view to being paid out and withdrawing from the trust entities. The plaintiffs refer to a repurchase request lodged with Summerfield/Tace on or about 7 November 1990, a request lodged with Balga/Wilden on or about 7 January 1991 and a request lodged with Kelmscott/Magenta on or about 24 May 1991.

9 The defendants say that valuers were appointed to assess the value of the units the subject of the relevant repurchase requests. They say that the correct procedure was followed but this is disputed by the plaintiffs. On the plaintiffs' case, they have not received any payment in response to the repurchase requests. Further, since 1992 or thereabouts, they have not been provided with information about the affairs of the trust entities or been treated as continuing unit holders of the trusts.

10 In these proceedings, the plaintiffs seek orders for specific performance with a view to compelling performance of the repurchase requests. They also seek relief in equity, including a claim for an account, and removal of the trustees, in respect of various alleged failures by the trustees to perform their obligations under the trusts.

11 I note in passing that the claim for an account was brought forward by way of an amendment to the statement of claim at the trial of the action as a consequence of the late discovery of financial statements bearing upon the affairs of each trust entity with respect to the years after 1992. I will turn to these statements in more detail later. However, for the time being, it is sufficient to note that, broadly described, the statements showed that each trust entity held assets and continued to trade from 1992 to the present day.

12 A central issue concerns the validity of the steps taken in response to the repurchase requests. In essence, the plaintiffs seek rulings that the defendant trustee companies failed to observe the correct valuation procedure. They say further that the trustee companies misconducted themselves in the handling of these requests. They complain of an alleged failure to provide information and to account to the plaintiffs as unit holders. It is said that the plaintiffs are entitled to specific performance of the repurchase procedure and to payment of the amount due to them once the relevant amount is determined.

13 In addition, the plaintiffs say that they must be compensated for being denied access to the funds they would otherwise have received if the proper procedure had been followed. This brings with it a claim for interest on any amount found to be due. Further, and in any event, the plaintiffs say that they have never ceased to be unit holders and are entitled to an account.

14 On the other side, the defendants contend that they acted in accordance with the provisions of the relevant trust deeds throughout. They say that, upon its proper construction, where a price is not agreed, the standard deed did not oblige a trustee company in receipt of a repurchase request to arrange for an independent valuer to determine the current repurchase value of the units. This means that the defendants cannot be held responsible for an alleged failure by the trustees to complete the repurchase procedure. The defendants say further, and in any event, that the steps taken in response to the various repurchase requests represented sufficient compliance with the repurchase procedure. They say that at all material times the trustee companies have been ready, willing and able to pay the amount due in respect of the units in question.

15 The defendants say that the plaintiffs by their own actions are responsible for the fact that no payment has been received by the plaintiffs as a consequence of submitting repurchase requests to the defendants. They say that the amount due to the plaintiffs is limited to the value of the units as at the date of the repurchase requests. They say that loans made to the plaintiffs must be brought to account in determining what amount, if any, is due in respect of the plaintiffs' repurchase requests.

16 For many years, the defendants contended that the Green parties did not have any continuing beneficial interest in the trusts as a withdrawal or severance was effected as a consequence of the various events that occurred prior to 1992. The defendants modified their position in that regard at trial.

17 The defendants have also advanced a counterclaim in respect of various amounts which are said to be due by the plaintiffs in respect of the loan accounts in question. These accounts were created as part of the arrangement whereby members of the Green family acquired units in the trusts.

18 It will be useful at this stage to say a few words about certain procedural issues. These observations will assist an understanding of the principal issues.

19 I begin by noting that various legal proceedings were commenced by the parties on each side of the dispute. The Green parties initiated a claim in the District Court for moneys said to be due to Mr Green's business for electrical services provided to Wilden. Writs of summons were issued by Wilden on 21 December 1990 against the Green company and Graeme Green to recover debts allegedly outstanding pursuant to the Balga/Wilden loan arrangements. The writs issued by the plaintiffs concerning the present dispute were issued on 23 December 1991. Various proceedings were eventually consolidated. There were many amendments to the pleadings on both side, and these adjustments to the pleaded cases became the subject of cross-examination.

20 The plaintiffs entered the matter for trial on 28 August 2002 pursuant to a certificate of readiness which suggested that the matter could be listed for trial. The defendants did not apply to countermand the entry and it can therefore be said that thereafter both parties were of the view that the matter was ready to proceed to trial.

21 As it happened, in following months, there were further amendments to the pleadings. On 3 October 2002 Master Sanderson made a ruling as to certain issues concerning discovery. In due course, pursuant to the usual case management process, orders were made by Steytler J for the exchange of witness statements. It was against that background that at a call over on 29 May 2003 the matter was listed for trial on 4 November 2003, although it appears to have been recognised that witness statements had not yet been exchanged and discovery issues remained outstanding.

22 It seems that the procedural state of affairs I have described remained in that form until early October 2003. Witness statements had still not been exchanged in compliance with the directions previously made. By letter dated 2 October 2003, that is to say, about one month prior to the listed trial date, the solicitors for the defendants pressed the plaintiffs to provide particulars concerning certain aspects of the loss allegedly suffered by the plaintiffs. This led to an application to strike out certain passages in the statement of claim that was dealt with shortly before the trial commenced.

23 My ruling in regard to the application to strike out is the subject of discrete reasons for judgment: See Green & Ors v Wilden Pty Ltd & Ors [2003] WASC 239. Broadly described, the defendants' application to strike out succeeded on the grounds that in the absence of particulars the passages complained of were too general and therefore embarrassing.

24 As I have indicated, it became apparent at the commencement of the trial on 4 November 2003 that witness statements had been delivered by the plaintiffs to the defendants a few days before the trial commenced. There had also been exchanges between the parties concerning the bundles of documents put together by the parties.

25 In the event, both parties handed up to the Court various lever arch files which were said to contain copy documents agreed as to their authenticity and upon the basis that there would be no objection to the admissibility of many of them. However, the stance of counsel for the defendants (as reflected in a letter written by their instructing solicitors) was that as to the plaintiffs' documents the defendants would only consent to the documents being received in evidence subject to the relevance of the document being made known at trial. This led to objections being taken by defence counsel from time to time to the relevance of various documents which were tendered by counsel for the plaintiffs. My rulings in that regard are reflected in the transcript.

26 I note in passing that the plaintiffs' lever arch files grouped the documents by reference to the affairs of each trust and prefaced the page numbers with the initial "P" (to establish that the document is to be found in the plaintiffs' files) and the initial of the relevant trust. The defendants' files were arranged in the same way. Thus, for example, the Balga/Wilden trust deed which was tendered by the plaintiffs as Exhibit 78, can be described as 78 @ PW3.

27 I will follow this pattern throughout my reasons for decision save that if the exhibit had been tendered as part of the defendants' case (in the example I have just given) it would be identified as D78 @ PW3. A document which is not to be found in the lever arch files, being an exhibit handed up at the hearing, will be identified simply as Exhibit 78.

28 At the conclusion of counsel for the plaintiffs' opening at the trial, counsel for the defendants submitted that the claim should be struck out as failing to disclose a reasonable cause of action or, alternatively, on the ground that there was no case to answer. These submissions were based upon an analysis of the pleadings and the provisions of the relevant trust deeds.

29 I heard the application and ruled eventually that there was a case to answer. Before ruling upon the no case submission, I did not require the defendants to make an election not to call evidence, notwithstanding that such an election is usually required in civil cases. I was of the view that because the application raised a succinct point of law and allegations akin to fraud were reflected on the pleadings the case fell within an exception to the general practice.

30 The trial continued over many days and the plaintiffs' witnesses were exposed to lengthy cross-examination.

31 When the plaintiffs closed their case, counsel for the defendants foreshadowed a further application for an order that the case be dismissed upon the basis that the defendants had no case to answer. On this occasion, as on the previous occasion, counsel for the plaintiffs contended that the no case submission should not be dealt with until the defendants, as the moving parties, had made an election not to call evidence.

32 Counsel for the defendants did not fully develop his line of argument in support of the foreshadowed submission of no case to answer. However, in the course of discussion about the procedure to be followed, the nature of his proposed plea became apparent. The line of argument was different to the no case submission made at the commencement of the trial, and I was therefore persuaded that, subject to resolution of the threshold issue concerning the obligation to elect, the defendants were not estopped from making a further application.

33 After hearing from counsel for the respective parties at some length, I ruled in regard to the threshold issue that on this occasion the general practice should be applied with the result that I declined to entertain or rule upon the foreshadowed no case submission until an election was made. Counsel for the defendants intimated that his clients were not willing to elect, and therefore, having regard to the ruling against them on the threshold issue, he said that the defendants would not pursue the foreshadowed no case submission.

34 It followed from this that the defendants did not put their foreshadowed no case submission to the Court and they were therefore not required to elect. The foreshadowed no case submission did not become the subject of any ruling. The trial continued, and the defendants proceeded to call the first of their witnesses.

Further details concerning the no case submissions

35 In order to understand these events fully, and the nature of the threshold issue, it will now be useful to look more closely at some of the matters in issue between the parties.

36 The standard trust deed permits unit holders to require the trustee to repurchase units. Clause 7.4 provides that the price payable on the repurchase of a unit (which is called the "current repurchase value") when there is no agreed value is to be determined by an independent qualified valuer nominated by the President of the Australian Institute of Valuers (Inc) (WA Division).

37 The "current repurchase value" is defined in the deed by reference to a formula. It can best be described as the net asset backing of a unit. In each case the principal asset of the trust was a suburban shopping centre.

38 By cl 7.5 the trustee has the option to arrange for some person to effect a purchase of the subject units or to effect the repurchase by borrowing or releasing sufficient trust funds to provide the price. By cl 7.6, if the trustee has not effected a purchase or repurchase of the units within 90 days after receipt of the repurchase request, the trustee shall offer for sale such part of the trust fund as shall be necessary to provide the price payable on repurchase of the units. The price for the units shall be paid within 7 days after receipt of the proceeds of any such sale. The trustee shall offer the trust assets for sale at a price to be determined by an independent qualified valuer nominated as aforesaid.

39 As I have indicated, the plaintiffs allege that in the early 1990s they lodged repurchase requests with the trustees and that a price was not agreed. The defendants say that valuers were appointed to assess the value in the prescribed manner but this is disputed by the plaintiffs. There is a dispute as to whether the trustees complied with the prescribed repurchase procedure and as to whether the valuers brought an independent discretion to bear on the materials before them, or whether they simply adopted figures in certain audited accounts.

40 The plaintiffs contend that the trustees have failed to complete the repurchase of the plaintiffs' units in terms of the relevant repurchase procedure or at all. They allege also breaches of trust in that the defendants have allegedly failed to make adequate disclosure to the plaintiffs of their conduct of the affairs of the trusts. There are various other matters in issue including also claims of misleading conduct under the Trade Practices Act 1974 (Cth). However, it could be said that the repurchase procedure/compliance issue lies at the heart of the controversy between the parties.

41 The initial application to dismiss the plaintiffs' claim was based upon an interpretation of the relevant trust deeds. The plaintiffs allege in their statement of claim that they submitted repurchase requests to the various trustee companies. The plaintiffs' primary contention on the pleadings is that cl 7.6 of the relevant trust deeds creates an obligation upon the trustee to implement the cl 7.4 and related procedures within 90 days after receipt of a repurchase request. If the units have not been acquired within that period the trustee is obliged to offer trust assets for sale so that a repurchase of units by the trust can be effected.

42 The defendants' case in regard to this issue is that where the price is not agreed cl 7.4 does not expressly oblige the trustee to arrange for an independent valuer to determine the current repurchase value of the units. Clause 7.4 allows for the appointment of an independent qualified valuer if a price for the units cannot be agreed, but it is silent as to whether the appointment should be initiated by the unit holder requesting repurchase or by the trustee in receipt of the request. This means that, on the plaintiffs' pleaded case, it could not be said that the trustee was in breach of any duty in that regard. Moreover, cl 13.4 of the trust deed provides that the trustee shall not be responsible for any breach of duty whatsoever, unless it shall be proved to have been "committed, made or omitted in personal conscious fraudulent bad faith" by the trustee.

43 The defendants argued in their initial application to dismiss the claim that the question of whether the trustees could be held responsible for breaches of duties of the kind contended for by the plaintiffs in regard to the repurchase procedure/compliance issue was essentially a question of construction. This was a matter of law which could be dealt with upon the hearing of a no case submission, without requiring an election by the defendants to call no evidence.

44 As I indicated in earlier discussion, I decided to rule upon the initial no case submission but without requiring the defendants to elect. In the end, I was persuaded that there was a case to answer in that the plaintiffs had an arguable case in regard to the principal issue. I was of the view that under cl 7.4 of the trust deed, in circumstances where a price had not been agreed, the trustee was arguably under a duty to initiate the appointment of an independent qualified valuer. It was therefore open to the plaintiffs to go further and contend also that the trustee had failed to comply with other facets of the repurchase procedure.

45 For present purposes, for ease of reference, I will continue to characterise the allegations made by the plaintiffs concerning a supposed lack of compliance with the steps allowed for by cl 7 of the trust deed as the repurchase procedure/compliance issue. However, I recognise that in due course it will be necessary to define the matters in issue with greater precision.

46 The foreshadowed application to dismiss was made many days later in somewhat different circumstances. It was made against the background of the plaintiffs having presented all the evidence they intended to call, including evidence establishing that repurchase requests were made and that certain valuations were brought into existence which purported to value trust assets and the units the subject of the repurchase requests.

47 It became apparent that if the defendants were permitted to develop their argument in support of the foreshadowed no case submission, they would contend that the steps taken by the trustees in response to the repurchase requests and the resulting valuations represented, quite clearly, having regard to the evidence presented to the Court, a proper compliance with the trustees' obligations. In other words, if the duties contended for by the plaintiffs did exist, they had been performed. The defendants would be seeking to persuade the Court that in regard to the repurchase procedure/compliance issue the plaintiffs could not succeed. There was no case to answer.

48 Counsel for the plaintiffs made it clear that if the no case submission was pursued, this line of argument would be opposed. However, as I have indicated in earlier discussion, counsel for the plaintiffs insisted that there was a threshold issue to be resolved first as to whether the defendants should be required to make an election before being permitted to advance the foreshadowed no case submission.

49 The general rule of practice is that a decision will not be given on a submission of no case to answer unless the moving party elects to call no evidence. However, the trial Judge has a discretion to depart from the general rule where particular circumstances require it. It seems that the primary reason for this practice is to avoid a new trial if an appeal against a decision of no case to answer is successful.

50 On this occasion, the defendants were not able to satisfy me that circumstances existed which justified a departure from the general practice. I was of the view that, in the absence of an election not to call evidence, the foreshadowed submission did not have the potential to produce a decisive result or to avoid a new trial if an appeal against a ruling of no case to answer was successful. The nature of the issue to be argued, and the fact that a large body of evidence bearing upon the issue had been received after many days of trial, served to distinguish the ruling made on this occasion from the ruling made in response to the initial application. Thus, I held that the no case submission should not be entertained unless the defendants elected before making it not to call any evidence, either generally or on the issue on which the ruling was sought.

51 My decision in regard to the threshold issue led to a decision by the defendants not to pursue the foreshadowed no case submission. In a separate judgment, I have provided my reasons for my ruling upon the threshold issue: See Green & Ors v Wilden Pty Ltd & Ors [2004] WASC 105.

52 Let me now turn to some further procedural issues that arose early on concerning various amendments to the pleadings.

Amendments concerning the plaintiffs' claim for an account

53 I was informed that there had been various exchanges between the parties concerning the ongoing obligation of each party to provide continuing discovery. It seems that shortly before the trial commenced this had led to a decision by the defendants to provide further and better discovery concerning the financial situation of the various trust entities and the shopping centres being administered by them. Discovery as to this aspect of the matter was provided in due course and this gave rise on the plaintiffs' side to an application to amend the statement of claim in various respects.

54 In the meantime, on the defendants' side, it emerged that, as counsel for the defendants was now instructed for all of the defendants (notwithstanding that the defendant Sydney Chesson had previously been representing himself), amendments were required to the statement of defence of Chesson so as to bring it into conformity with the defence case generally.

55 It was against this background, on Tuesday, 11 November 2003, that is to say, on the fifth day of the trial, that I was obliged to deal with an application to amend the statement of claim. In particular, the plaintiffs sought to expand their prayer for relief in respect of each trust to include a claim for an account.

56 It might strike an informed observer, having regard to the pleaded issues reflected in the claim and counterclaim, that some form of financial reckoning between the parties would eventually be necessary in order to resolve all aspects of the dispute. However, the fact is that the plaintiffs' claim for relief did not include a claim for an account against the trustee companies of what was said to be due to the plaintiffs in respect of their units, either as an adjunct to their claims concerning the repurchase requests or as a plea in the alternative should it be held that they were not entitled to relief in respect of the principal issue.

57 I pause here to say that the position was complicated to some extent by the fact that the defendant, Mr Chesson, had filed a separate statement of defence that reflected the position he had generally adopted in correspondence, namely, that as a consequence of their attempt to withdraw by way of the repurchase requests the plaintiffs were no longer members of the various trusts. In addition, the plaintiffs appear to have been somewhat ambivalent about whether they continued as members of the trusts after the repurchase requests were made, and thus ambivalent in pressing for an account. However, to my mind, their ambivalence was partly explained by the procedural complexities and by the fact that Graeme Green had been prosecuted for an offence concerning Mr Chesson, which added to the impasse between the parties.

58 In the end, I took account of the fact that, at a formal level, the statement of claim commenced with an assertion in each case that the relevant plaintiff is and was at all material times a member of each trust. The dispute may have been centred upon the repurchase issue, but, as I noted in earlier discussion, an informed observer must surely have concluded that the presence of subsidiary issues would inevitably give rise to a need for an account, and in various passages this was asserted in the claim.

59 Accordingly, after hearing extensive argument, I allowed the plaintiffs' application to amend the statement of claim so as to introduce a claim for an account.

Amendments concerning the plaintiffs' claim for specific performance

60 I should mention also that it was at this stage, in the course of discussion about the claim for an account and other procedural issues, that counsel for the plaintiffs concluded that it would be desirable to formulate with greater particularity the nature of the specific performance orders being sought. He therefore submitted to the Court a minute of proposed specific performance orders dated 14 November 2003 to the effect that the current repurchase value of the subject units be determined in accordance with cl 7 of the trust deed and a portion of the trust fund be offered for sale in order to complete the repurchase. The full details of the minute are set out below in the Balga/Wilden prayer for relief section of this judgment.

61 I pause to observe that a question arose in the course of counsel for the plaintiffs' opening address in regard to the prayer for relief as to what should be treated as the "relevant date" for the purpose of a minute of this kind. Initially, plaintiffs' counsel sought to assert that as there had been late discovery of the accounts portraying the position of the three trusts in recent years, the plaintiffs wished to leave open this issue. Thus, if their review of the accounts suggested that the current value of units in the trusts exceeded the value before the dates of the three repurchase requests prior to 1992 it would be open to them to withdraw the previous requests and, having obtained rulings by way of declaratory relief as to the manner in which cl 7 worked, they would then either obtain orders for specific performance of new repurchase requests or, alternatively, choose between obtaining payments of what was due pursuant to orders for specific performance of the original request or obtaining amounts due to them pursuant to an account taken after trial on present day values.

62 Counsel for the defendants objected strongly to this line of argument on the basis that for more than 10 years the principal issue the subject of the litigation was the question of whether the steps taken by the trustees in response to the original requests were valid and whether the plaintiffs were entitled to the value of the units as at the relevant dates at that time. It had been open to the plaintiffs to press for more detailed discovery but they had failed to do so. Against this background, it would be inequitable (and a basis for denying relief by way of specific performance) if the plaintiffs now sought to obtain relief in respect of events other than those occurring prior to the commencement of legal proceedings.

63 The outcome of this fiercely contested debate prior to the completion of the plaintiffs' opening was an acceptance by counsel for the plaintiffs that the term "relevant date" in the minute dated 14 November 2003 was a reference to the date of the original repurchase request in each case, that is to say, 6 November 1990 (Summerfield/Tace), 7 January 1991 (Balga/Wilden) and 24 May 1991 (Kelmscott/Magenta). Thereafter, to my mind, the trial was fought on that basis and the issues on the pleadings must be viewed accordingly.

64 However, this view of the matter does not necessarily dispose of various incidental issues to be considered if the plaintiffs succeed on the principal issue such as what form of relief (if any) should be allowed to them for being kept out of funds which might otherwise have been paid pursuant to the original repurchase requests and whether they are entitled to an account for breaches of trust as alleged in the statement of claim.

65 In describing the procedural history of the matter, before and at trial, there is a further matter which I must also mention for the sake of completeness.

66 Mr Chesson said in evidence on various occasions, especially in re-examination, that the stance adopted by the trustees as a result of legal advice was as follows. The plaintiffs had commenced legal proceedings with a view to obtaining specific performance of obligations upon the trustees allegedly arising after lodgement of the repurchase requests. If enforced, the obligations would lead to the Green parties withdrawing from the various trusts at a price determined pursuant to the valuation procedure.

67 Thus, in effect, the plaintiffs' stance was that they (the plaintiffs) had withdrawn from the Trust. The trustee companies were therefore no longer obliged to treat the Green parties as continuing unit holders. They were included in various accounting records simply because there was a faint prospect that they might withdraw the repurchase requests they were seeking to enforce. Nonetheless, the trustees could not be criticised for failing to give them notices of meetings and so forth, or for failing to make distributions of income to the Green parties, for the Green parties were seeking to persuade the Court that they were entitled to enforce the contractual obligations which would effect their withdrawal.

68 The defendants' stance is reflected succinctly in the minutes of the AGM of Kelmscott/Magenta of 15 December 1992 (503 @ DM47). The minutes in question record that "Mr Chesson stated that the trustee considered that it had repurchased all the Green parties' units and that a debt was outstanding to the Trust by the Greens". The debt in question related to outstanding loans. The AGM was then postponed "until the Green parties can determine whether or not they are unit holders".

69 Counsel on both sides at the opening of the trial seemed to accept, notwithstanding the pleadings and the history I have just described, that on any view of the matter the Green parties were still members of the various trusts. If, on the plaintiffs' case, the trustees wrongfully failed to complete the repurchase then title to the units remained vested in the Green parties. If, on the defendants' case, the trustees complied with the repurchase procedure, for one reason or another, title to the units does not appear to have been vested in the trustees, with the result that, in strict legal analysis, the Green parties continued as members of the Trusts.

70 Certain exchanges between counsel about this matter occurred on the second day of the trial and are as follows (transcript 549):

"GRACE, MR: Yes, just a matter of clarification. I understood what Mr McCusker said to your Honour was that not only are those formal amendments to be made but also that there is no issue as to the question as to whether the Green parties, if I could use that in a global sense, remain as unit holders of the various trusts.

HASLUCK J: Yes.

McCUSKER, MR: That's so, your Honour, and I think that's consistent with the defence of the other defendants - that is, there is no contention by them that the Green parties are no longer unit holders and certainly that is the defendants' position; that's all the defendants' position that the Green parties remain unit holders.

HASLUCK J: Yes, all right. Thank you, Mr McCusker. Doubtless this will be addressed later in the opening but just in the overall scheme of the case doubtless, Mr Grace, you will be making it clear to me what the implications of that are in terms of the prayer for relief.

GRACE, MR: Yes. I have already touched upon that issue yesterday when I was raising the question of the charging of interest on the unit holders' loans, which various documentation evidences, without the corresponding accounting for income in respect of the units held by the unit holders.

McCUSKER, MR: Could I mention there, your Honour, that the defendants' position is that clearly the unit holders, that's the Green parties who remain unit holders, are entitled to a credit for their share of distributions to be offset against the interest on the loans and the loans themselves."

71 It will be necessary to explore the implications of these exchanges at a later stage in this judgment. I will say no more about this issue for the time being.

72 Mr Green said in evidence that he and his wife, Norma Green, have three children being Graeme Green (the first plaintiff and second named third plaintiff), Michael Green and Sharyn Green (the first named third plaintiff). The third named third plaintiff, Julie Green, is married to Graeme Green.

73 Mr Green said that until about 1980 most of the family income was invested in his electrical contracting business. In 1984 he established the company W J Green & Co (1984) Pty Ltd (the second plaintiff) to act as trustee for the Green Family Trust. At about that time he started to look at investment properties to provide for the future and as a consequence of some investments in real estate as at 1985 he was in a position to invest between $100,000 to $150,000 via the Green Family Trust.

74 At the suggestion of his accountant, Grant Page, Mr Green contacted Mr Chesson by telephone in early 1985. This led to a meeting at the Green family home in Bateman and visits to various commercial properties. Mr Green said in evidence that at that stage he did not have much knowledge of business structures or any knowledge of how a property unit trust worked.

75 Mr Green decided eventually to apply for trust units in the Fieldgate Square (1985) Unit Trust which was being managed by a trustee company known as Zilna Pty Ltd. Mr Green said that he was given a copy of the relevant Trust Deed and was taken by Mr Chesson to see a lawyer, Mr Laurie Shervington. As a consequence, of these exchanges Mr Green understood that the Trust Deed was in a standard form and that the syndicate of investors was set up as a trust because that was a convenient way of keeping track of the money invested. Mr Green understood that Zilna Pty Ltd owned the Fieldgate Shopping Centre in Balga and other investors in the Trust included Mr Chesson, Mr Bert Denboer, Mr John Bonini, Mr John Kelly, who was Mr Chesson's brother-in-law, and two members of the Jurecivich family. Mr Green said that the fact that Mr Chesson was investing his own money in the syndicate gave him significant comfort.

76 Mr Chesson wrote a letter dated 25 June 1985 to Mr Green concerning the process for applying for units in the Fieldgate Square Trust (1 @ PW1). According to the letter, Mr Chesson was instructed at a meeting held on 24 June 1985 of the directors of Zilna Pty Ltd to advise that once a number of units is allocated to an applicant, the trustee has no further power to call funds from any unit holder. The directors of the trustee would not be accepting any applications for units unless the Trust was fully subscribed and obtained sufficient funds to purchase the Fieldgate Square Shopping Centre at $1.9 million. The manager of the Fieldgate Square Shopping Centre was to be Chesson & Co Real Estate Agency.

77 Mr Green said in evidence that he recalled asking Mr Chesson what would happen if the shopping centre lost some of its tenants. Mr Chesson said that if this occurred, the property would be sold. Mr Green was unable to specify the exact date of this conversation or the precise words used. In any event, he caused the Green Family Trust to invest $150,000 in the venture in paid up units. In addition, the family trust acquired $250,000 worth of loan units in Zilna Pty Ltd.

78 I digress briefly to mention that the standard form Trust Deed did not contain any specific reference to the making of loans by the Trust in order to assist a prospective investor to acquire units. However, it was common ground at the trial of the action that in each case this occurred. The effect of the arrangement was that the amount in question was debited to the investor in the books of the relevant Trust upon the basis that income from the Trust that might otherwise be payable to the investor could be set off against accrued interest in respect of the relevant loan account.

79 It was a matter of acute controversy between the parties at trial as to whether an investor such as Mr Green could be called upon for further payments or to discharge the loan while the Trust remained in existence. The evidence of Mr Green was to the effect that as a consequence of representations of the kind reflected in the Zilna letter dated 25 June 1985 he understood that the trustee company had no further power to call up funds from any unit holder in respect of units that had been paid for or for "loan units".

80 After this investment Mr Green received cheques on a monthly basis from Mr Chesson, the latter being the manager of the Fieldgate Square Trust. In August or September 1985, Mr Chesson spoke to Mr Green about the purchase of another shopping centre and asked Mr Green whether he wanted to be involved. According to Mr Green, Mr Chesson said that the investment would be on the same basis as the Fieldgate/Zilna Trust.

81 I pause here to say that on the defendants' case at trial, Mr Chesson, as a director of Zilna, obtained legal advice as to the structure of the loan arrangements which was subsequently reflected in a document headed "General Terms for the Issue of Loans to Unitholders" (455 @ DW851). Loan provisions corresponding to the Loan Terms document are said to have been approved in due course by the directors of each of the trust companies, and to be binding upon all those unit holders who utilised the loan mechanism to purchase certain of their units. The loan provisions allow for a loan to be 66.67 per cent of the value of the units and provide for the payment of interest, which is to be met from the income of the Trust. Importantly, by cl 9, the loan is said to be repayable on demand.

82 Mr Chesson said in evidence that both he and the solicitor, Mr Shervington, went through the loan provisions with Mr Green. On the plaintiffs' case at trial this did not occur; hence, it was not known to the Green parties that pursuant to the loan provisions unit holders could be required to make repayments prior to the Trust being wound up.

83 On the defendants' case, at a meeting held on 11 September 1985, the directors of Wilden - Mr Denboer (Chairman) and Mr Chesson - resolved that a trust be formed by initial subscriptions of one unit each of $1000 each made by Callao Pty Ltd as trustee for the S J Chesson Family Trust and Benrone Pty Ltd for the Denboer Family Trust. Mr Chesson was authorised to negotiate for the purchase of the Balga Bazaar Shopping Centre.

84 Mr Green said in evidence that at about this time he met Mr Chesson at the Balga Bazaar Shopping Centre at 18 Princess Road, Balga and was given an undated document headed "Wilden Pty Ltd Balga Bazaar Shopping Centre". Two documents fitting this description were received as exhibits at the trial, and there was therefore a degree of controversy as to which document, if any, Mr Green received. I will return to this issue later.

85 For the time being, it will be sufficient to say that one of the two undated documents was a report or memorandum signed by the vendor's agent, Graeme Herps (5 @ PW1036). The Herps report described the premises as a well located retail facility with above average income return and good capital growth comprising 17 retail shops divided into 14 tenancies. The vendors were said to be looking for an asking price of $1 million which would show a return on current income of 13 per cent. The bulk of the tenants were said to have been operating from the centre profitably for some years.

86 It is apparent from other documentary evidence that by an offer and acceptance dated 11 September 1985 executed by Mr Chesson on behalf of Wilden the trustee company contracted to purchase the Balga Bazaar Shopping Centre for $1 million subject to obtaining finance of $600,000 (3 @ PW59). Wilden was acting as a trustee on behalf of the Balga Bazaar (1985) Unit Trust pursuant to a deed of trust executed at about this time, albeit stamped 6 February 1986 (18 @ PW03).

87 It was common ground at the trial that because the relevant contract was dated 11 September 1985 the property could be regarded as a property acquired prior to the introduction of capital gains tax. In this respect, the Balga/Wilden shopping centre differed from the shopping centres which were acquired later by the Summerfield/Tace and Kelmscott/Magenta trusts.

88 By an application form dated 18 September 1985 Mr Green applied for 400 units in The Balga Trust (4 @ PW63). The arrangements were that this would be funded by a cash investment of $120,000 and a trustee loan of $280,000. This meant that the nominal value of each unit was $1000. Mr Green understood that of the 400 units applied for 300 were to be taken by the Green Family Trust and 100 by his son Graeme Green. However, in fact, the relevant form purports to allot 400 units to the Green Family Trust.

89 The exhibits at trial included the minutes of directors meeting of Wilden held 2 February 1986 at which Mr Denboer and Mr Chesson noted that arrangements were almost complete for settlement of the Balga purchase on the basis that the vendor of the property would provide a vendor's loan of $660,000 to Wilden (D3 @ DW1620). At that meeting, the two directors purported to resolve that loans be advanced to unit holders in accordance with the loan provisions. Further, it was resolved that units be issued to various parties.

90 I note in passing that although the prospective unit holders, including the Green parties, were required to pay $1000 per unit, either by cash or by loan, 150 units were to be issued to Callao/Chesson for $125,000 (cash $25,000; loan from trust $100,000). It is not clear from the minutes as to why it was decided that Callao/Chesson should acquire the units in question at a reduced price.

91 Events relevant to the purchase of the Balga Bazaar Shopping Centre and the creation of the Balga Unit Trust are reflected in an undated document which appears to be a report on the situation by Wilden. This seems to have been prepared later in 1986 because it speaks in the past tense of the purchase of the shopping centre having been completed on 6 February 1986 (12 @ PW105). However, the plaintiffs' case was opened on the basis that this was the document given to Mr Green when he first met Mr Chesson at the Balga Bazaar Shopping Centre in September 1985. I will call this the "initial Wilden report".

92 According to the initial Wilden report, the purchase of the shopping centre was completed on 6 February 1986 with vendor finance of $660,000 for two years. The unit holders at that time are described as G&A Bonini as to 300 units (paid up 150 trust loan 150), the S J Chesson Family Trust as to 150 units (paid up 38 trust loan 112), the B L & J Denboer Family Trust as to 150 units (paid up 50 trust loan 100), the W J Green Family Trust as to 300 units (paid up 100 trust loan 200), Graeme Green as to 100 units (paid up 20 trust loan 80) and A W & R C Jones as to 25 units (paid up 25). It is therefore apparent from the initial Wilden report that there were in all 1025 units (paid up 383 trust loan 642).

93 The initial Wilden report is consistent with evidence given at the trial by Mr Green that on 3 February 1986 Mr Chesson came to his home to collect two cheques made payable to Wilden. One cheque was for $12,000 for the stamp duty on the purchase and the other cheque was for $100,000 for the purchase of 300 units in the unit trust on the basis that 100 units would be paid up. He received two receipts from Wilden for these amounts (6 and 8 @ PW69/70). He received two unit trust certificates dated 6 February showing The Green Family Trust was entitled to 300 units in all (8 @ PW71 and 11 @ PW78).

94 At about the same time Mr Green's son, Graeme Green, received two certificates from Wilden for 20 units and 80 units respectively (9 and 10 @ PW73/74). In other words, in all, the Green parties had acquired 400 units; that is, Green Family Trust 300, Graeme Green 100.

95 Thereafter, Mr Green and his son received various accounts from Wilden reflecting the arrangements that had been made. For example, the statement of unit income for February 1986 directed to Graeme Green shows the February rentals in respect of 100 units as amounting to $880 from which is set off interest in respect of the 80 trust loan units of $772.80 as a reconciliation with the attached cheque of $107.20. Monthly distributions of this kind received by the Green parties were adduced in evidence within the bundle of documents marked as Exhibit P17.

96 Mr Green said in evidence that in or about June or July 1987, as a director of Wilden, he signed a guarantee as a director of Wilden to the ANZ Bank. This was done in the awareness that funds were required from the ANZ Bank in order to refinance the Balga Shopping Centre. The guarantors are Bert Denboer, William Green, Giancarlo Bonini and Sydney Chesson who are described as company directors. The guarantee document was up-stamped to secure $1.16 million on 2 July 1987 (150 @ PW150).

97 It appears from a Wilden directors' meeting minute dated 16 June 1987 that the borrowed funds were to be used to discharge the vendor's loan of $660,000 with the balance of the funds being used principally to make further loans to the unit holders "on the same terms and conditions as the loans to unit holders made on 2 February 1986". The minutes indicate that Mr Green was one of the four directors present who approved the resolution.

98 According to Mr Chesson, these steps were taken so that the investors, including the Green parties, would have funds in hand to invest in the Summerfield/Tace Trust that Mr Chesson had now established. Certainly, $400,000 of the funds received from the ANZ Bank was transferred to the Summerfield/Tace bank account to be held pending settlement of the purchase of the Summerfield Shopping Centre which occurred on or about 20 July 1987.

99 It seems that during the course of 1987 Mr Chesson had indicated that the Balga Shopping Centre could be revalued and that there was an opportunity for each of the unit holders to withdraw the funds they had placed with Wilden and to invest in another shopping centre. Mr and Mrs Green and all of the other unit holders of The Wilden/Balga Trust, apart from Mrs Jones, decided to take advantage of the opportunity. This led to the formation of The Summerfield Unit Trust in accordance with the standard Trust Deed to be administered by a trustee company known as Tace Pty Ltd. The relevant deed of trust is dated 9 July 1987 (19 @ PT42).

100 I will turn to the affairs of Summerfield/Tace and of Kelmscott/Magenta, which was set up in 1988, in due course. However, for the sake of an orderly narrative, I will continue to focus upon the affairs of the Wilden/Balga Trust for the time being. Nonetheless, it is important to understand that by 1989 and 1990 various events concerning the affairs of the three trusts were occurring in close proximity to each other.

101 It was common ground at the trial that by mid-1987 Mr Green had become a director of Wilden. Mr Green said in evidence that his understanding was that if Wilden was unable to make the required repayments to the ANZ Bank he and the other directors would be liable as guarantors for the debt to the bank. However, he thought that he was only liable for his portion of the debt.

102 Mr Denboer continued as Chairman of Wilden. However, it is apparent from the minutes, and it was common ground at the trial, that the day to day affairs of the Balga/Wilden Trust were controlled by Mr Chesson who acted, in effect, as Managing Director.

103 Mr Green said in evidence that meetings of the investors took place approximately every three to six months. These meetings included the annual general meetings of the Trust. The meetings were extremely informal and were generally held either at Mr Chesson's office or at his home. Mr Green said that there were no formal directors meetings of Wilden and general reports were provided to the gathering by Mr Chesson. Each of the investors attended the meetings whether or not they were also a director of the company.

104 Mr Green said in his signed witness statement that in addition to the monthly statements, after the end of the 1986/87 and 1987/88 financial years he received a statement from Wilden setting out the distributions that had been made that year (Ex 349 @ PW132 and Ex 350 @ PW181). These statements reflected the interest due under the loan arrangements which was to be set off against the income due to the investor.

105 Mr Green said that it was not the practice at directors' meetings to approve formal minutes recording the proceedings at an earlier meeting. The practice was for Mrs Chesson to take notes. At a later stage, as matters became contentious, Graeme Green served as minute-taker for a period, and Mrs Green made her own notes of what took place at meetings. It was a matter in issue between the parties at the trial as to the extent to which minutes purporting to be approved and signed as a true record of what had taken place could be relied upon, and as to whether some meetings mentioned in minutes had taken place at all.

106 I will return to these issues in due course. For ease of reference, where the context permits, I will refer to minutes signed by Mr Denboer (as Chairman) or which were contended for as an accurate record by Mr Denboer or Mr Chesson, as the "Denboer/Chesson minutes". I will refer to notes or minutes prepared by or contended for by the Green parties as the "Green minutes or notes".

107 I note in passing at this stage that the Denboer/Chesson directors' minutes for 2 February 1986 at which the loan provisions were approved by Mr Denboer and Mr Chesson (D3 @ DW1620) do not appear to have been verified as a true record in the minutes of the next directors' meeting on 3 September 1986. It appears from the Denboer/Chesson minutes of the latter meeting, which were signed by Mr Denboer as Chairman, that Mr Green attended the September meeting as a newly appointed director. It follows from this that the 1986 minutes, of themselves, do not establish that Mr Green was or must have been familiar with the loan provisions. However, the defendants' case at trial was that Mr Chesson had run through the loan provisions with him early on in their relationship and, in any event, the uniform loan provisions were reflected in the minutes of each of the trusts.

108 In June 1988 the Balga supermarket was about to become vacant. On or about 9 June 1988 the directors of Wilden met at the Mediterranean Restaurant in Subiaco to discuss this matter. It was proposed that Wilden try to remove the current supermarket operators, Osborne Co-Op, and run the supermarket until a buyer could be found for the property.

109 Mr Green said in his witness statement that Mr Chesson suggested that he manage the supermarket on the basis that he receive 50 per cent of the profits from any sale of the supermarket with the balance being divided between the other unit holders of the Trust. Mr Chesson was to receive $1000 a week for management of the supermarket only if the supermarket made an operating profit of more than $1000 a week. Mr Green recalled that after discussing the matter those present agreed to adopt Mr Chesson's suggestion.

110 Mr Bonini, who was called as a witness by the plaintiffs, and was generally supportive of the plaintiffs' case, gave evidence to much the same effect save that on his account the meeting was held on 13 June 1988. He claims to have made a contemporaneous note of that date immediately after the meeting to the effect that Mr Chesson was to receive 50 per cent of the profits made from any sale of the business with the "remainder 50% to be split amongst other unit holders". I will call this the "June 1988 Bonini note".

111 The Denboer/Chesson minutes of this meeting (494 @ DW1625) purport to have been signed by Mr Denboer a month later on 4 July 1988. These minutes record that the Osborne Co-op was to be issued with a Notice to Quit. Chesson & Co were to manage the supermarket until a suitable operator could be found. It was resolved also that:

"That Chesson & Co receive reimbursement for all out-of-pocket expenses and professional fees in operating the supermarket plus 50% of the Capital Profits on resale and the remaining 50% of profits be equally divided between the unitholders."

112 There is another set of minutes which records the resolution in almost exactly the same terms. It was a matter of controversy at the trial as to whether the version I have quoted correctly reflected the will of the meeting. This resolution is said to differ from Mr Green's account of what was decided in that it opened the way to a claim for professional fees by Mr Chesson that was not limited to $1000 per week in the event of a profit being made. Further, it would allow Mr Chesson to claim more than 50 per cent of the capital profits on resale in that he would be entitled to 50 per cent pursuant to the special allowance and Callao/Chesson would then share in the remaining 50 per cent on a proportionate basis in his capacity as a unit holder. On the other hand, according to the June 1988 Bonini note, the remaining 50 per cent was to be split between the unit holders other than Callao/Chesson. For ease of reference, I will call this the "Balga/Chesson remuneration issue".

113 Mr Green said in evidence that the first time he saw minutes concerning this matter was when the issue concerning payment of fees to Mr Chesson arose over twelve months later. He recalled that those present at the relevant directors meeting acknowledged that there were no minutes of the meeting in June 1988. This is reflected in a document "Discussion of directors" 12 September 1988 (351 @ PW197).

114 I pause here to note that due to a typographical error or otherwise these notes appear to be incorrectly dated and should read 12 September 1989. They refer to events in 1989. This appears to be borne out by the relevant Denboer/Chesson minutes dated 12 September 1989 which purport to have been signed by Mr Denboer on 26 September 1989 (495 @ DW1632).

115 Mr Green recalled that there was discussion about finding a purchaser for the supermarket. Mr Green said that the notes of discussion (Ex 351) generally accorded with his recollection of the discussions that took place at the meeting in question (whenever it was) save that he did not agree there was a resolution to the effect that Chesson & Co obtain all out of pocket expenses or that the balance of the profit was to be 50 per cent to Chesson & Co and 50 per cent to be split amongst "all unit holders including S J Chesson Family Trust in proportion to their units".

116 On the plaintiffs' case, it was not long after the appointment of Mr Chesson to manage the supermarket in mid-1988 that the income from the Balga/Wilden Trust stopped suddenly.

117 According to the plaintiffs, on 2 May 1989 Mr Green met Mr Bonini and Mr Chesson for lunch at the Willagee Hotel. During the course of this encounter Mr Green said that he wanted to receive more regular information and sought an explanation as to why the investors were not receiving any money from the Balga/Wilden Trust and had not done so for several months. According to Mr Green, Mr Chesson said words to the effect that it was because of the costs of redevelopment of the shopping centre. He said there was nothing to worry about.

118 On 16 May 1989 Mr Green wrote to Mr Chesson confirming his request for information (91 @ PW222). However, Mr Green did not receive any further information until the next directors meeting which was held 25 July 1989.

119 It appears from the minutes of a directors' meeting dated 8 August 1989 (185 @ PW226) that Mr Chesson was to arrange through the ANZ Bank a basic overdraft limit of $300,000 and a supermarket operating limit of $150,000 in addition to the $1 million Bill Line.

120 The annual general meeting of Wilden was held on the evening of 31 October 1989 at Mr Chesson's house. Mr Green attended the meeting with his wife. He recalled that Mr Chesson gave a report to the meeting which was relatively positive and that he handed out a document to all unit holders at the meeting described as a report to unit holders AGM held 31 October 1989 (285 to 259 @ PW249).

121 The report refers to a finding in favour of Wilden by the Supreme Court in respect of litigation with Osborne Park Co-Op and an award of damages. The short term strategy was said to be for Wilden to operate the supermarket as a holding pattern. The company expected to sell the supermarket at a considerable profit upon completion of redevelopment. This would bring the property value to approximately $2.2 million. The report included an income and expense report for the period 1 July 1988 to 30 June 1989 (PW253) which disclosed a net profit of $14,487. The Balga Trust balance sheet as at 30 June 1989 indicated that there was a surplus of assets of $1,046,491.88 (PW255).

122 Mr Green said in evidence that the minutes of the AGM of Wilden held 31 October 1989 (Ex 284 @ PW247) accord with his recollection of the discussions that took place at the meeting. He recalled that at about this time he signed loan contracts for the finance of equipment for the supermarket and a fixed and floating charge.

123 The next directors meeting of Wilden was held on 10 February 1990. Mr Chesson said words to the effect that in the first three months of trading there had been a net operating loss of $5574 but it should not be regarded as a bad result.

124 The plaintiffs adduced in evidence an exchange of correspondence between Chesson & Co and the ANZ Bank at Fremantle in regard to an application by Wilden for increased lending. Mr Green said in evidence that he was not aware that an application for increased lending had been made and he did not believe that Mr Chesson raised this with him as a director of Wilden.

125 The correspondence suggested that various problems were beginning to emerge. This is reflected in the ANZ letter dated 3 April 1990 (193 @ PW287). The Retail Banking Manager notes that the chemist and bottle shop had not been able to pay rent for nine months. The ANZ Bank administration believed the proposed sale price for the supermarket of $800,000 (plus stock) was excessive. The Banking Manager said further that the directors' valuation of $3 million on the complex appeared to be excessive considering the present business environment and the fact that certain tenants were not meeting rentals due.

126 The next directors meeting of Wilden was held on 9 June 1990. Mr Green said in evidence that shortly prior to the meeting, Mr Chesson rang and said words to the effect that the supermarket had suffered a huge operating loss. At the meeting on 9 June 1990 Mr Chesson gave those present a number of documents and informed the meeting that the supermarket and shopping centre had an operating loss of $365,574. There was discussion about how to fix the problem.

127 A meeting was held at Mr Chesson's office on the evening of 20 June 1990. There are various records of what supposedly took place being the Denboer/Chesson minutes (508 @ DW1638), the Green minutes of the meeting (207 @ PW253) and Green discussion notes (361 @ PW354). Mr Green said in evidence that the notes of discussion were reasonably accurate.

128 It appears to be common ground that there was discussion at this meeting of obtaining finance from "external sources" bearing in mind that the ANZ Bank was owed $2.2 million (which included Esanda) and creditors amounted to approximately $300,000. Mr Chesson said that approximately $150,000 was needed to keep the supermarket (known at that time as Farmer Jacks) afloat. It is apparent from all versions of the meeting that the required sum of $150,000 was to be financed by the existing unit holders.

129 The Denboer/Chesson minutes for 25 June 1990 record that "the monies received at this meeting were for a reduction of loans to unit holders". The Chairman obtained the following cheques: Bonini $21,951.22, Greenco $29,268.29, Denboer $10,900, Chesson $10,975.

130 Mr Green recalled giving to Mr Chesson a Green Co cheque for $29,268.29 (363A @ PW364) which was the subject of a receipt dated 26 June 1990 (363B @ PW378). The receipt speaks of the Green cheque being for "repayment of part of Farmer Jacks Supermarket loan".

131 It seems that by this time the Green parties harboured grave reservations about the management of Balga/Wilden. It was running at a loss and, on their case, there had been a failure to provide information. They had been called upon to make further cash contributions, although (on the plaintiffs' case at trial) the initial investment agreement arising out of the 1985 Zilna letter and related events prohibited further contributions.

132 On the other hand, under cross-examination, Mr Denboer characterised Mr Green's attitude in a different way. He said that Mr Green was simply "rattled" by the fact that Balga/Wilden was running at a loss and that personal guarantees might be called up.

133 Either way, it is clear that a mood of anxiety and recrimination began to affect the directors' meetings.

134 The next directors meeting of Wilden took place on 12 July 1990. According to Mr Green (par 166) it was at this meeting that discussion turned to something he had said about burning down the shopping centre to make an insurance claim. It was a matter of controversy between the parties at a later stage as to whether the words were spoken in a joking manner. I will take a closer look at this incident later. However, the fact is that the insurer took an interest in the matter and the incident became the source of much debate and further friction between the parties.

135 Mr Chesson acknowledged in his witness statement (at par 54) that by the end of June 1990 the losses and the cash flow position was becoming critical. He said (par 65) that, in all, three calls were made upon unit holders for repayment (or reduction) of loan amounts owing. The Green company paid two amounts of $21,951.22 on 25 June 1990 and 12 July 1990 respectively and a third payment of $22,000 on 25 July 1990. Graeme Green paid two amounts of $7317.07 on 26 June 1990 and 12 July 1990 respectively.

136 Trading was very difficult. Mr Chesson was instructed to find offers to purchase the supermarket at any price he could get for it. It was at about this time, at a meeting on 12 July 1990, that Graeme Green is said by the Green parties to have been appointed minute secretary (211 @ PW398).

137 It seems that a Mr Liggens expressed an interest in acquiring the supermarket. Further, at a meeting on 25 July 1990 Mr Chesson reported that an offer had been received from Mr J W Peterson and Mr K E Geggie to acquire the supermarket (511 @ DW1641 and 215 @ PW417).

138 As to the Peterson/Geggie offer, it emerged that the offerors could only afford to lease the Farmer Jacks Supermarket at Balga if they could dispose of certain office premises at Irwin Chambers in the central business district of Perth. There was talk of Balga/Wilden acquiring the Irwin Chambers property so that Petersen/Geggie could take over Farmer Jacks. This complication delayed the negotiations as it meant that Balga/Wilden had to make further approaches to the ANZ Bank. Eventually, as appears from a minute dated 25 October 1990 the directors of Wilden resolved that Chesson & Co be authorised to prepare all necessary documents to fulfil the purchase of the Irwin Chambers property and the sale of the Farmer Jacks Supermarket.

139 In the meantime, however, the internal wrangling within Balga/Wilden had given rise to controversies between the parties and a degree of uncertainty as to the status of Mr Green. The period of upheaval between June and December 1990 set the scene for the lodgement of the various Green repurchase requests including the Balga/Wilden repurchase requests which were lodged on or about 7 January 1991. Accordingly, it will be useful to back-track to some degree and look at the relevant events in detail.

140 Mr Green said in evidence that Mr Chesson was painting a very bleak picture about the future of the trust/supermarket and that the investors were desperate to receive an offer on the supermarket. At page 4 of the Green minutes dated 12 July 1990 (12 @ PW399) in par 6 it is said that "W Green stated that week to week he did not know the true position of Wilden Pty Ltd." On that day Mr Green gave Mr Chesson another cheque for $29,268.29 being the second payment on the loan accounts that was due (365 @ PW397). On the plaintiffs' case, the Green parties had not previously been aware that calls for repayment could be made.

141 Three days after the meeting just mentioned, on 15 July 1990, Mr Green said in evidence that he observed an incident at Mr Chesson's office in which Mr Denboer appeared to be abusing the prospective purchaser Mr Liggens in an aggressive manner. It seems that the Liggens' interest in the premises evaporated thereafter. According to Mr Green, later that evening there was a directors meeting. Mr Green was so annoyed at what had happened earlier in the day concerning Liggens that he said words to the effect that "If I was given $1000 and exonerated from any liabilities, I would walk away from my investment in Wilden".

142 Mr Chesson purported to accept this offer on the spot. He gave Mr Green a cheque for the amount in question, although in fact the cheque was never cashed by Mr Green.

143 I pause here to say that this "transaction" is evidenced by a handwritten document dated 15 July 1990 which was drawn up then and there (212 @ DW1152). It purports to be an agreement between Callao (Chesson) for the sale of all 300 units held by W.J. Green Pty Ltd for $1000 (that is, effectively, $3.33 per unit) "on the undertaking that the bank, Esanda and all creditors release Bill Green and W J Green Family Trust and W J Green Co Pty Ltd from all personal guarantees in relation to Wilden Pty Ltd and the Balga Bazaar (1985) Unit Trust as from 16 July 1990". I will call this the "Green/Chesson July 1990 document".

144 The Green/Chesson July 1990 document was signed by the parties and witnessed by Mr Bonini. In following days Mr Chesson took steps to have Mr Green released from liability on the guarantees. On behalf of Wilden he sent a pro forma letter dated 16 July 1990 to the ANZ Bank, Esanda Finance and all trade creditors advising that Mr Green had no further interest in the supermarket, was no longer a director of Wilden and was withdrawing his guarantee. On the same day he faxed a letter to Mr Green advising him that these steps had been taken.

145 At the next directors meeting of Wilden on 25 July 1990 Mr Denboer called on Mr Green to resign as a director because of the uncertainty as to whether the Green Family Trust was still a unit holder. Mr Green said that the Green minutes of this meeting accord with his recollection of what took place (215 @ PW417). I note in passing, that apparently as a consequence of ongoing ill-feeling and distrust arising out of the arson incident, the proceedings of this meeting were taped by Mr Chesson. The tape-recording became an exhibit at the trial with a transcript (annotated to reflect the defendants' contentions as to what was on the tape) serving as an aide memoire.

146 The Green minutes dated 25 July 1990 record a resolution whereby the directors were to execute the offer to lease with amendments as a counter offer to Peterson and Geggie and that Mr Chesson was to negotiate on the unit holders' behalf. The minutes were to record that Mr Green, as a representative of the Green Family Trust, stated that he was in favour of the motion.

147 Mr Chesson reported that there were not enough funds to meet creditors and that unless funds were injected into the supermarket the Trust would face legal action with liquidation being the end result. It was resolved that a decision on the further repayment of loans as required to inject funds would be influenced by the outcome of the counter offer to Peterson and Geggie.

148 On 26 July 1990 Mr Chesson contacted Mr Green by telephone to request a further repayment towards the loan units. Mr Green provided a cheque for $22,000 in favour of Wilden on 27 July 1990 (370 @ PW426). The position at law was unclear, but the parties seem to have tacitly assumed that the Green/Chesson July 1990 document was questionable and in practical terms could not be taken to effect Mr Green's rights and obligations or to stand in the way of his wish to keep on attending meetings. (The parties may have assumed that in reality there was no way in which Mr Green could be released from his liabilities to the lending institutions with the result that the sale agreement supposedly reflected in the Green/Chesson July 1990 document was inoperative because the condition upon which the agreement depended had not been and could not be fulfilled).

149 At a directors meeting of Wilden on 29 July 1990 Mr Chesson informed the directors that he had advised the insurance company of the supposed arson threat allegedly made by Mr Green. Again, as I have indicated, I will explore the details of this incident later. However, there can be little doubt that the arson incident and the determination of Mr Chesson and Mr Denboer to treat it as a very serious error of judgment on Mr Green's part added to the mood of tension and mutual distrust.

150 On 30 July 1990, Mr Green wrote to Chesson & Co requesting quarterly accounts for each of the trusts in which The Green Family Trust had units. On 31 July 1990 Mr Green attended a further directors meeting of Wilden at Mr Chesson's office with two legal advisers from Bennett & Co, although the legal practitioners in question had to remain outside.

151 A further directors meeting of Wilden was held on 2 August 1990. The minutes show that the Peterson/Geggie offer was accepted by all directors and signed by Mr Denboer and Mr Bonini. That offer provided for Peterson and Geggie to take a lease of Shop 1 as from 1 September 1990. Sub-paragraph (e) provided that the lessor (Wilden) or nominee was to purchase the strata title units known as Units 8 and 9 Irwin Chambers for $1 million subject to arrangement of satisfactory finance (Ex 219 @ PW450). Mr Green is recorded as being present at this meeting.

152 Shortly after the meeting Mr Green received information which suggested that Mr Chesson may have acted improperly in regard to an award made by Gillette Australia for a display of products at the Farmer Jacks supermarket. This was a gratuity or form of benefit which could possibly be regarded as an asset of Wilden. Mr Green instructed his solicitors, Bennett & Co, to enquire into the matter.

153 On 6 August 1990 Bennett & Co received a letter from Gillette Australia about the matter (Ex 374 @ PW462). The letter from Gillette said that the return trip for two people to the World Cup Soccer in Italy for best display in a supermarket was awarded to Farmer Jacks, Balga. The company understood the proprietors of the supermarket to be Wilden Pty Ltd as trustee for The Balga Bazaar (1985) Unit Trust, trading as Farmer Jacks Supermarkets, Balga. Wilden directed Gillette to ticket Mr Andrew Prigmore and Mr Simon Chesson for the award. This incident gave rise to controversy between the parties. I will deal with this matter separately at a later stage.

154 The next directors meeting of Wilden took place on 8 August 1990. Mr Green said that the Green minutes accord with his recollection. It was foreshadowed at that meeting that Wilden would be calling up loans to unit holders within 28 days. Mr Green requested Mr Chesson to provide the most recent trading and balance sheets available as he did not know the true and accurate figures for the supermarket. It seems that the notion of calling up loans was of grave concern to Mr Green because, on his case, his understanding had always been from the outset that he would not be called upon to make further payments. By letter dated 16 August 1990 (231 @ PW481) Mr Bonini resigned as a director of Wilden.

155 A directors meeting of Wilden was held at Mr Chesson's office on 17 August 1990. Mr Chesson reported that no answer had been received from the bank on the Peterson/Geggie deal. The bank had indicated that more capital would be required. Mr Green presented a letter to the company secretary advising that he wished to inspect all company books and records on Wednesday, 22 August at 9.30 am with an accountant (96 @ PW475). He wrote some letters in that regard (PW476 and PW486).

156 Matters came to a head at about this time in that (arguably) the financial problems of Wilden/Balga Trust were now acute. The Green parties understood that it was necessary to raise further capital but Mr Green and his son clearly felt that insufficient information was being provided to them.

157 At a directors meeting of Wilden on 23 August 1990 Graeme Green was relieved of his duties as minute secretary pursuant to a motion passed by Mr Denboer and Mr Chesson. The Green minutes note that the Green electrical firm had issued a Notice under s 364(b) of the Corporations Law against Balga/Wilden in respect of an unpaid account for services rendered.

158 The Green minutes also record the following events:

"Finance of Geggie/Peterson offer:

We require $400,000. The Bank haven't indicated at this stage what monies they will lend. They have indicated that they will lend $600,000 on Irwin and leave the overdrafts in place at the Supermarket and Wilden Pty Ltd property account.

Issue of More Units:

It was suggested by Mr Chesson that he may be able to obtain funds from "outside people" if we issue more units. For example, sell $1,000 units at $750 or $650 per unit. This would devalue our units.

Mr Chesson produced a Balance Sheet as at 31 July 1990. If we issued 500 units for $400,000 - value then at $1,138 each.

MOTION: Moved By Mr B Denboer. Seconded by Mr W Green.

"That Mr S Chesson be empowered to negotiate to sell a number of units in Wilden Pty Ltd to raise $400,000 of Capital at the best possible rate.

These $1000 units to be negotiated at a discount but not less than $500 each, but that any transaction be ratified by the Directors.

If this Capital can negotiated then we are to use this money to fulfil the transaction with Geggie and Peterson to complete the sale of the supermarket."

RESOLVED: Unanimously."

159 The Denboer/Chesson minutes dated 23 August 1990 set out a resolution to that effect (D15 @ DW1652).

160 This resolution was subsequently confirmed by a document dated 28 August 1990 (Ex 237 @ PW530) whereby "We the undersigned unit holders resolve to accept and hereby ratify the resolution of directors of Wilden Pty Ltd at their meeting of 23 August 1990 as follows...". The resolution I have just referred to followed.

161 The document was signed by various unit holders including Mr Green on behalf of the Green Family Trust, but not by Graeme Green. A confirmation of this kind was arguably required in order to comply with provisions of the Trust Deed concerning the issue of shares at a discount.

162 At a Wilden directors meeting held on 28 August 1990 the Denboer/Chesson minutes indicate that it was then moved by Mr Green and seconded by Mr Denboer, and so resolved that:

"That Mr Chesson be and is hereby empowered and authorised to issue and sell up to 400 new $1,000 fully paid units at $500 per unit in the Trust and that this authority be open for a period of fourteen (14) days.

Mr Denboer stated that Benrone Pty Ltd would purchase $200,000 worth of units at the abovestated price of $500 per unit but would require at least one (1) month to arrange his finances.

Mr Chesson also stated that Callao Pty Ltd would purchase additional units.

Mr WJ Green stated that he was not interested in purchasing any additional units at the moment."

163 It was then moved by Mr Chesson and seconded by Mr Green, and so resolved that Mr Chesson's offer on behalf of Callao to purchase new units, up to $200,000 for up to 400 fully paid $1000 units at a purchase price of $500 per unit in the name of a company to be advised, be and is hereby accepted. Likewise, Mr Denboer's offer to purchase new units up to $200,000 for up to 400 fully paid $1000 units at $500 each in the name of a company to be advised was accepted.

164 The minutes indicate that in each case Mr Chesson and Mr Denboer abstained from voting on the motion affecting them. They say also that Mr Chesson tabled a letter signed by Green, Chesson and Denboer on behalf of their respective companies empowering Mr Chesson to sell a number of units to raise $400,000 of capital.

165 I pause to say that Mr Green's wife attended the relevant meeting and her evidence is to the effect that it took place on 28 August 1990 not on 27 August 1990 as suggested by one set of minutes.

166 I note in passing also, as will become more fully apparent later, that Mr Chesson and Mr Denboer had decided to finance their purchase of additional units in Balga/Wilden by lodging repurchase requests in respect of certain of their units in Summerfield/Tace. Steps were being taken to ensure that, by way of advances from the ANZ Bank, Summerfield/Tace had sufficient funds in hand to meet the prospective repurchase requests. In addition to acquiring additional units in Balga/Wilden, Callao/Chesson and Benrone/Denboer would also have sufficient funds in hand to discharge or reduce their loan accounts in Balga/Wilden.

167 Mr Green said that in October 1990, when neither he nor his accountant had received the information requested at the meeting of 23 August 1990, he instructed his solicitors to follow up the request for information. They did so by letter dated 4 October 1990. This led to further exchanges in writing as to the adequacy of the information being made available by Wilden.

168 The next directors meeting of Wilden took place on 25 October 1990. Mr Green and his wife attended the meeting and the latter took notes. The Green notes accord with Mr Green's recollection of the discussion. He recalled also that this was the first time that he became aware that each of Mr Chesson and Mr Denboer had repaid their loans to the company. He was not aware they had got the funds to repay those loans. The meeting resolved to accept the application for 200 units each by Benrone/Denboer and Callao/Chesson and to allow for the balance of 200 units to each at $500 to be paid for within two years (that is, they were arguably being allowed an option to take up the units within two years).

169 Mr Green stated that his family was not interested in purchasing further units at that stage. The meeting went on to resolve that Wilden would immediately call for repayment of its loans to the unit holders to be received by 1 December 1990.

170 Wilden promptly sent letters to the Green parties calling up all loans made to unit holders of the Balga/Wilden Trust. For example, Graeme Green received a letter dated 29 October 1990 referring to this matter. The letter concluded by asking him "whether or not you will be making repayment of the loan in full on or before 1st December 1990" (117 @ PW594).

171 It seems that on or about 30 October 1990 Wilden had received a valuation of the Balga Bazaar Shopping Centre from Baillieu Frank Knight which suggested that the value of the property in its existing state was $2,960,000; it would be worth $3,420,000 when certain extensions were completed.

172 Mr Green's evidence at trial was to the effect that he did not receive a copy of the valuation report in 1990 and was not aware that the centre had been valued at approximately $3 million. He recalled that during this period Mr Chesson informed him on a number of occasions that the centre was worth somewhere between $1.3 million and $1.9 million. However, he was unable to recall the exact dates of these conversations or the precise words used. He continued to press for information concerning the affairs of the Balga/Wilden Trust.

173 A directors meeting of Wilden was held on 6 December 1990, being a meeting attended by Mr Chesson and Mr Denboer but not by Mr Green. The minutes of the directors meeting were adduced in evidence at the trial (133 @ PW710). At the directors meeting in question it was resolved that writs be issued against the Green parties for the outstanding loans.

174 The annual general meeting of Wilden was held that night, that is, on 6 December 1990 at Mr Chesson's office. This was attended by Mr Green, his wife and his son, Graeme Green. Mr Green said that the Green minutes of this meeting (132 @ PW708) accurately reflected what took place at the meeting. However, although it is not reflected in the minutes, he believed that he raised with Mr Chesson the fact that he had not been informed of the directors meeting held earlier that day.

175 A report was submitted to the meeting which described the unit holding in the Balga/Wilden Trust as follows: Deltabrook Pty Ltd fully paid 200; Benrone Pty Ltd fully paid 350 with 200 option; Callao Pty Ltd fully paid 300 with 200 option; the Green Family Trust fully paid 300 and G W Green fully paid 100. This gave rise to a total of 1425 fully paid units. Deltabrook, Benrone and Callao were companies associated with Mr Kelly, Mr Denboer and Mr Chesson respectively. Deltabrook/Kelly had acquired the Bonini units.

176 By letter dated 9 December 1990 (Ex 136 @ PW730) Mr Green wrote to Wilden noting that at the AGM held on 6 December 1990 he was voted out as a director by the two other directors, Mr S Chesson and Mr B Denboer. He referred to a statement that this vote was effected for personal reasons. He sought a copy of the minutes of the directors meeting held in his absence on Friday, 6 December 1990. He continued as follows:

"I have been repeatedly requesting information, all of which has been ignored. I reserve the right to have this information previously requested and all financial statements up till 1 December 1990.

I also reserve the right to carry out an inspection of company records for the period when I was a director.

I am considering offering the 300 units held by W.J. Green & Co (1984) Pty Ltd in the Balga Bazaar (1985) Unit Trust, for repurchase by the Trust.

I state for the record that I, as a Director have never been fully advised and informed regarding the affairs of Wilden Pty Ltd and have been unaware of many decisions made by other directors concerning this company."

177 The reply he received from Wilden dated 13 December 1990 (Ex 137 @ PW 731) was in these terms:

"We are in receipt of your letter dated 9th December 1990.

At the Annual General Meeting of Wilden Pty Ltd on 6th December 1990 the Shareholders voted to remove you as a Director. It was not stated that the vote was carried out for personal reasons. In fact when Mr Denboer moved the motion on behalf of Benrone Pty Ltd he stated that he would not give reasons. It is obvious however, that the other directors found it difficult to work with your vexatious and unco-operative behaviour.

It is stated here for the record that you were fully advised and informed regarding the affairs of Wilden Pty Ltd and the Balga Bazaar (1985) Unit Trust.

The balance of your comments do not warrant reply."

178 On 21 December 1990 Wilden issued writs of summons against the Green company and Graeme Green claiming $234,097.56 and $85,365.86 respectively in respect of the debts allegedly outstanding pursuant to the loan arrangements.

179 It will be useful at this point to make some general observations in passing, with a view to understanding the respective cases at trial. These observations are prompted by the pleadings, the submissions made by the parties and the manner in which cross-examination was conducted at trial.

180 The defendants' case was that Mr Chesson managed the affairs of Balga/Wilden with complete propriety. The Denboer/Chesson minutes should be regarded as the official minutes of the company and those minutes reflect valid resolutions (usually supported by the Green parties) and related documentation approving what was done at every stage.

181 It was always on the cards that if an economic downturn occurred it might be necessary to raise funds by recalling all or part of the loans, and the loan provisions to the knowledge of all concerned were structured accordingly. Without any fault on Mr Chesson's part losses were experienced in mid-1990 with the result that repayment calls had to be made. In the meantime, the Green parties had become unduly "rattled" by these events and the prospect that they might be liable on personal guarantees. They began behaving erratically as exemplified by the arson incident, the Green/Chesson July 1990 document and their obsessive concern with the comparatively unimportant Gillette issue.

182 All of this led to a breakdown in personal relationships and it became almost inevitable that Balga/Wilden would have to look exclusively to Mr Denboer, Mr Chesson and their friend Mr Kelly in order to raise sufficient funds to save the Balga/Wilden shopping centre and avert the prospect of it finishing up in receivership (in which event the loans to investors and personal guarantees would be called up). It is therefore not surprising that control gradually passed to the Denboer/Chesson group and that the Green parties decided to withdraw by lodging repurchase requests. As to the Balga/Chesson remuneration issue, it was a reasonable arrangement in the circumstances, given that Mr Chesson was doing most of the work.

183 On the other hand, the plaintiffs presented an entirely different picture. They contended that it was put to them at the outset that they would not be obliged to make further contributions of cash, by way of loan repayments or otherwise. The Balga/Chesson remuneration package was effected by a sleight of hand and led eventually to calls for repayment which were inconsistent with the original arrangements. A series of incidents in mid-1990 plus a general unwillingness on the part of Mr Chesson to provide information or explain his action created an atmosphere of distrust.

184 It was in this context that Chesson and Denboer exaggerated the difficulties confronting Balga/Wilden in the expectation that they could increase their unit holding and bring about a situation in which Bonini was forced out and the Green parties felt obliged to withdraw. This opened the way to Deltabrook/Kelly acquiring the Bonini units and to Callao/Chesson and Benrone/Denboer acquiring more units at a reduced or discounted price of $500 per unit in a Trust with underlying assets which were not affected by capital gains tax. This was done (unbeknownst to the Green parties) by liaising with the ANZ Bank to refinance Summerfield/Tace.

185 On the plaintiffs' case, when the various events are viewed in this light it can be seen that both before and after submission of the repurchase requests there was a breach of fiduciary obligations.

186 Cross-examination directed to the Chairman of Wilden, Mr Denboer, and to the de facto Managing Director, Mr Chesson reflected the plaintiffs' case. It ran along these lines. In mid-1990 Balga/Wilden was going through a difficult period. Nonetheless, if the problems with the supermarket could be overcome, the value of the underlying assets remained attractive. Further, Fieldgate/Zilna and Summerfield/Tace were doing well. Accordingly, arrangements could be made for the ANZ Bank to advance funds to these Trusts so that repurchase requests lodged by Benrone/Denboer and Callao/Chesson could be paid out. The funds in hand thus obtained would permit Benrone/Denboer and Callao/Chesson to acquire further units in Balga/Wilden and discharge their loan accounts.

187 Further, the indications were that Bonini and the unsophisticated Green parties were demoralised or rattled by the current Balga/Wilden losses. The Green parties would not only be disinclined to take up more units in Balga/Wilden but also could probably be persuaded to let the new units be issued at a reduced or discounted price, with some units being issued pursuant to a deferred price or "option" arrangement. These events would be followed in due course by a demand for repayment of outstanding loans which would not be embarrassing for Benrone/Denboer and Callao/Chesson but would probably be enough to persuade the Green parties to lodge repurchase requests and withdraw. This would leave the Denboer/Chesson faction in command of the field.

188 This line of attack can be illustrated by a few examples from the cross-examination of Mr Denboer. I will commence with this exchange (transcript 2373):

"Can I put it to you again, Mr Denboer, that you had agreed with Mr Chesson and in fact discussed with Mr Chesson prior to the meeting of 28 August that Benrone and Callao would finance the take-up of new discounted units in Wilden by seeking the repurchase of units in the Summerfield Unit Trust and the Fieldgate Unit Trust?---Well, it obviously was an option; nothing confirmed."

189 The cross-examination continued in this way (transcript 2386):

"Didn't you understand that the effect of Benrone and Callao having units repurchased by Tace by a financing from the ANZ Bank was to effectively preclude that option for other unit holders?---No, not at all. They could have done what they wanted at any time. I opted to put in a repurchase request. Anybody else could do that as well at whatever timing. If the timing of other repurchases were to be later than mine and the ratio wasn't in agreeance in accordance with our discussions or our agreement, then it may be that their units might not be repurchased. I was certainly aware of that, but there was no other repurchase request in.

Why didn't you as a director of Tace suggest that Benrone's units and Callao's units be offered to other unit holders for purchase?---It didn't come up but they could have been. Anybody was welcome to buy them. I was happy to receive a cheque from whoever wanted them. It made no difference.

How would they have been able to do so if they weren't told about it prior to settlement?---Weren't they told?

You tell me?---Well, I'm not aware that they weren't specifically precluded from the knowledge that I was asking for a repurchase, no."

190 Having set the scene, the cross-examination moved to the affairs of Balga/Wilden as at August 1990 (transcript 2389):

"...you've told his Honour that the only reason you were injecting the money, taking up these units in Wilden, was because it was in a dire circumstance?---That's correct, yes.

How did Wilden survive from 28 August until 12 October when you were able to put funds in?---How did they survive?

If the circumstances were dire on 28 August and you didn't complete your subscription for new units for some six-and-a-bit weeks?---Yes.

Is that consistent with your understanding of the dire circumstances of Wilden?---There was no question, they were absolutely dire. We were facing - I mean, Mr Green had already suggested that we go into bankruptcy, that we get an administrator in. We were in dire straits. We fended off - if there's a difference in part between the time when I said we were in dire straits and the time we received money to put in, we continued to fend off, fend off creditors.

So the position is that Peterson and Geggie took up the supermarket on 1 September, didn't they?---If that's the date they - whatever the date was, if that's the correct date.

So as at 28 August you effectively stopped the haemorrhaging, didn't you?---If we received an injection of capital. The haemorrhaging didn't stop for some time after Geggie and Peterson were involved."

191 The cross-examiner explored this issue as follows (transcript 2439):

"How was the subscription of a further 200 units each at a price of $500 per unit - that's each to Callao and Benrone - going to assist the financial circumstances of the trust that pertained at that time?---Well, I guess by a further input of finances, of money, an injection of capital.

It was an option?---It was an option we exercised in order to keep it afloat. We had the option to buy further units.

Okay. Let me deal with that. You understood that the option did not oblige Benrone to subscribe for further units?---No.

You didn't understand that?---True. It was an option, yes.

And your understanding was that you wanted the option to take up units for up to two years?---Yes.

How would giving Benrone an option for two years assist the present financial circumstances of the trust?---Perhaps it was an inducement, but I had the option there to do that. How would it affect the financial situation of the unit at that time? It probably may not but the option was there to do that and the option was given to all existing unit holders.

It was an inducement to do what?---It may have been. It was something that I asked for, I believe, at the time and it was granted and ratified by all the directors and existing unit holders. That was agreed to."

You say the reason why liquidation was a serious threat at the time was Greenco's 364 notice. Is that what you say?---No, not only them. They were a further problem. We simply had no money. We simply couldn't pay our creditors, and the 364 from Green was only a further nail in the coffin. We were desperate. We needed to raise funds.

You say that the issue of units at a discount is authorised by the trust deed which gives you power to act as you think fit for the adequate protection of any part of the trust fund?---Well, we needed to inject capital, we needed to raise funds, and if we are to do that by issuing extra units, so be it. It was a way of getting some funds into the trust.

Did you not think that if you were to justify, seeking to justify your conduct in the administration of this trust by reference to extraordinary powers, you should act impartially and offer the same opportunities to the other unit holders?---Yes, they were. Mr Green has expressed in his own statement and his minutes continually that he did not want to take up further units. I think it was he who said, 'Good money after bad,' and that really is almost how I felt. I would not have paid any more money for those units. They were not worth any more. I was reluctant to even buy them at that figure because we were in the poor financial position that we were, and I sold units to raise money out of a trust which was giving me a return to put into this trust.

You profited handsomely from that, didn't you?---No."

193 The cross-examiner pressed the attack (transcript 2442):

"Your benefit was that you bought in at a discount and increased your holding. That's what I'm putting to you?---Well, my scenario was that I purchased at a critical time. I took on the responsibility for the shopping centre and for the creditors and, luckily, with some good management and some perseverance, we didn't let it sink. We waited and waited and we were lucky to get our money back."

194 Against this background, it now becomes necessary to look at the repurchase requests that the Green parties submitted to Wilden in early January 1991. However, before doing so, it will be useful, within the context of these general observations, to recall that the valuation procedure in cl 7.4 of the standard Trust Deed arguably assumes that the appointment of an independent qualified valuer by the President of the Institute of Valuers will only occur if the parties have been unable to agree upon a repurchase value for the units.

195 On the defendants' case any apparent or alleged prevarication on Wilden's part in dealing with the Green repurchase requests lodged with Wilden in early January 1991 was largely due to a degree of uncertainty as to whether a value could be agreed and as to whether the Green parties, at that time, wished to pursue the valuation procedure. Correspondence concerning the Green parties repurchase requests as to Summerfield/Tace, which were the first in time to be lodged (on 7 November 1990), could arguably be said to have contributed to the mood of uncertainty. I will address this point later under the heading "General observations on repurchase requests".

196 On 2 January 1991, Mr Green signed a repurchase request on behalf of the Green company in respect of the company's units in Balga/Wilden (22 @ PW739). The request was under the seal of Mr Green's company and related to 300 units held by the Green company for the Green Family Trust. Wilden was requested to repurchase the units in question "in the manner and upon the terms and conditions of the Trust Deed of the Trust at a price per unit to be calculated in accordance with the provisions thereof."

197 Mr Green received in response a letter dated 9 January 1991 from Wilden in these terms (25 @ PW148):

"We acknowledge receipt on 7th January 1991 of your repurchase request and the advice that the unit certificates are held by Bennett & Co.

We are taking legal advice on the Trust position with the units as we have been advised by Callao Pty Ltd that they have purchased your units. Until the matter is clarified we are unable to proceed with your repurchase request.

In the meantime we require the repayment of your debt to the Trust forthwith."

198 I note in passing that the reference in this letter to Callao having purchased the Green Family Trust units is presumably a reference to the Green/Chesson July 1990 document whereby Callao purported to purchase the units for $1000.

199 As I have indicated, the status of that document and the attitude of the parties towards it remained a matter of uncertainty, but, on the whole, for one reason or another the parties seemed to have assumed that the agreement (if any) reflected in the document was inoperative due to non-fulfilment of the condition that Mr Green be released from liability to lending institutions. Hence, at a first glance, the Wilden letter of 9 January 1991 appears to be laced with a degree of sophistry.

200 Graeme Green signed a repurchase request dated 3 January 1991 in respect of his 100 units and delivered the same to Wilden (24 @ PW745). He received a letter dated 9 January 1991 from Wilden which acknowledged receipt of his request certificate and the relevant unit certificate and continued as follows:

"We will proceed to complete a valuation of the assets of the trust (at your cost) and follow the procedure set down in the trust to try to find a purchaser for your units within ninety (90) days from 7th January 1991. If no purchaser is found within ninety days then it is not expected that the Trust will be in a financial position to repurchase your units itself. It may be necessary for the Trust to place its real estate assets for sale immediately after 8th April 1991."

201 It is significant, in the light of later events, that in this letter Mr Chesson, on behalf of Wilden, seemed to accept that Wilden had an obligation to initiate the valuation procedure and recognised that assets might have to be offered for sale in order to complete the repurchase procedure.

202 For ease of reference, where the context permits, I will henceforth refer to the Green repurchase requests collectively as being effectively dated 7 January 1991. The trial was fought on the basis that they were received on that date and that 7 January 1991 should be regarded as the relevant valuation date.

203 At about this time also, Mr Graeme Green, who had been pressing Wilden for information, received a letter dated 9 January 1991 from Wilden in these terms (660 @ PW 751):

"We refer to your letter dated 15th December 1990 and faxed to this office on 22nd December 1990.

No option to purchase units in the Trust has been granted to Directors of Wilden Pty Ltd. Options have been granted to existing unitholders on the basis that:

(a) All loans made by the Trust to such unitholders have been repaid in full,

(b) An amount of cash is (was) paid, for a number of units issued (to be issued), equal to the cash required to exercise the option granted for further units,

(c) The option to purchase further units is exercised within twenty four (24) months,

(d) The unitholder has a current unitholding at the date of the exercise of the option, and

(e) The option is not transferable.

You were advised at the Annual General Meeting of the Trust that an application would be considered from you if and when your loan was repaid. We further advise that if your loan is repaid and you desire to pay a further sum being pro-rata to that paid by the other unitholders (to which further units and an option have been granted) then you would be granted an option to purchase further units within a period not exceeding twenty four (24) months.

We have no record of a request alleged to have been made at the Annual General Meeting by you for figures up to 30th November 1990. All of the matters raised in your six letters have been responded to.

The Directors have no intention of resigning or removing Chesson & Co as managing agents of the Trust's real estate assets.

Your fifth paragraph has been replied to on several occasions.

This reply is as a matter of record as we assume (from the receipt of your repurchase request for all of your unitholding in the Trust) that you will not be meeting the requirements for the issue of further units and options."

204 I pause to observe that it is apparent from this letter that an issue had arisen as to whether the entitlement to options was confined to those unit holders who had discharged their loan situation. I will return to this issue in due course.

205 It was at this point that Bennett & Co wrote two letters to Wilden on behalf of the Green parties which, on the defendants' case, gave rise to the degree of ambiguity I mentioned in earlier discussion as to whether the cl 7.4 valuation procedure should remain in abeyance until it was clear that no price could be agreed.

206 First, by a letter dated 14 January 1991, Bennett & Co said that the reference in cl 7.4 to an "agreed value" contemplates "discussion between the trustee and the unit holder as to an appropriate value". The plaintiffs' solicitors went on to request copies of documents bearing upon the matter in hand and added "the initial task is for the parties to try to determine an agreed value" (D21 @ DW1403). Simultaneously, by letter dated 14 January 1991 Bennett & Co said that their clients were "desirous of settling this matter" (383 @ PW754). The letter was marked "without prejudice" but the privilege has been waived. Mr Chesson said in evidence (par 114) that he met with Mr Burton of Bennett & Co on 13 February 1991 in an attempt to settle the matter.

207 On the defendants' case, this correspondence explains why the question of what was to be done about the Green repurchase requests remained in abeyance for a considerable period of time. The parties were ostensibly seeking to agree a price as a step that had to be taken before the appointment of a valuer could be progressed. The Green parties were not pressing Wilden as trustee to proceed with the appointment of a valuer.

208 Notwithstanding the correspondence I have just mentioned, on 23 December 1991, close to twelve months after lodgement of the repurchase requests, the Green parties issued a writ of summons against Wilden seeking equitable and other forms of relief.

209 Mr Green said in evidence that he received a notice of acceptance of the Green Family Trust repurchase request on 30 June 1992 (close to eighteen months after lodgement of the request).

210 The relevant document (41 @ PW851) is a letter from Wilden to the Green company dated 29 June 1992 which commences with a heading "Notice of Acceptance of Request for Repurchase of Units" and continues as follows:

"The directors of Wilden Pty Ltd hereby give notice and advise as follows:

A. Wilden Pty Ltd is the trustee of the Balga Bazaar (1985) Unit Trust in accordance with a deed of trust undated but stamped 6th February 1986.

B. W.J. Green & Co (1984) Pty Ltd is the registered unitholder of Three Hundred (300) Units in the Trust.

C. W.J. Green & Co (1984) Pty Ltd has on 3rd January 1991 in the form prescribed in the trust deed requested Wilden Pty Ltd to repurchase all of the units in the trust held by W.J. Green & Co (1984) Pty Ltd.

D. The directors of Wilden Pty Ltd have resolved to accept the repurchase request of W.J. Green & Co (1984) Pty Ltd."

211 A notice of acceptance dated 29 June 1992 in the same terms was delivered to Graeme Green (42 @ PW852).

212 These so-called Notices of Acceptance (cl 7 does not require that such a notice be sent) were followed by letters to the Green parties dated 27 July 1992 enclosing statements setting out a calculation of the repurchase at a price of $1000 per unit and a calculation of outstanding interest on the respective loan accounts (295 and 296 @ PW864 to PW869). An allowance for stamp duty and 20 per cent fee on repurchase of units was brought to account also. The repurchase price payable to the Green parties in each case was exceeded by the total of the amounts said to be due to Wilden in respect of outstanding loans. Thus, the net balance payable by the Green company was said to be $86,810.39; by Graeme Green $38,029.04.

213 By letter dated 27 July 1992 Bennett & Co, on behalf of the Green parties, asserted that repurchase requests were delivered to Wilden in January 1991 but "no value per unit has been agreed between our clients and Wilden" (46 @ PW862). The plaintiffs' solicitors went on to say that contrary to the terms of the Trust Deed no valuation had been obtained by Wilden with the result that "Wilden remains in breach of trust in failing to complete our clients' repurchase requests in terms of the Trust Deed".

214 It is true that by this time the Green parties had commenced legal proceedings for specific performance in respect of Green repurchase requests. However, according to the defendants, the letter dated 27 July 1992 represented the first occasion on which the plaintiffs asserted that a value per unit could not be agreed and that Wilden was subject to a duty under cl 7.4 to initiate the valuation process, being a duty which it had allegedly failed to perform.

215 It is apparent from the documentary evidence that shortly afterwards by letter dated 12 August 1992 (43 @ PW870) Wilden proceeded to instruct the President of the Australian Institute of Valuers to appoint a valuer in purported performance of the arrangements in that regard reflected in cl 7 of the standard form Trust Deed. The relevant letter reads as follows:

"We hereby request that you appoint a valuer to value the Balga Bazaar Shopping Centre as at 3rd January 1991.

All necessary information and leases can be examined at the offices of the managing agents of the shopping centre, Chesson & Co.

We enclose our cheque for $75-00 being your administration fee for the appointment."

216 I note in passing that this letter requests the appointment of a valuer to value the shopping centre rather than a valuer to value the current value of a unit in the Trust, being the valuation exercise envisaged by cl 7 of The Wilden/Balga Trust Deed.

217 At a later stage I will look in more detail at the effect of the steps taken in purported performance of the obligations under the Trust Deed. However, as to the sequence of events, it is apparent from the contemporary correspondence that the President appointed Mr I Sanderson of Chesterton International to proceed with the valuation. By letter dated 21 August 1992 he arranged with Wilden to inspect the relevant leases and there were further exchanges between the parties in regard to relevant information. The tenor of Mr Sanderson's evidence at the trial was that he and Mr Chesson talked about the need for a valuation of the units at about the time of the appointment. However, the first step was to value the shopping centre, this being the principal asset of the Balga/Wilden Trust.

218 By letter dated 23 September 1992 (452 @ PW 879) Mr Sanderson provided a valuation report concerning the Balga Bazaar Shopping Centre to Wilden in which respect a value of $2.9 million was attributed to the shopping centre at 3 January 1991. Further exchanges then occurred concerning the value to be attributed to the Balga/Wilden holding in Irwin Chambers. By letter dated 8 October 1992 Mr Sanderson provided a valuation report attributing a value of $619,000 to Lots 8 and 9 Irwin Chambers (454 @ PW927).

219 By letter dated 20 October 1992 (49 @ PW948) N F V Curtis & Associates sent an auditor's report to Wilden concerning Balga/Wilden. The Curtis/auditor's report commences with the heading "Auditor's Report" and reads as follows:

"I am a Registered Auditor under the Corporations Act 1989.

I have been given a Statement of Assets and Liabilities of the Trust as at the 3rd January 1991 and have extracted the accuracy of the Statement from the computer recording kept for the Trust and Shopping Centre as at the 3rd January 1991 and have agreed with the accuracy of the amounts contained in the Statement.

I have to some degree attempted to establish the validity of the amounts in relation to the assets and have satisfied myself that the Assets and Liabilities contained in the attached Statement are a true reflection of the Assets and Liabilities of the Trust as at 3rd January 1991 and reflect a fair view of the surplus of the Unit Trust as at that date."

220 The related statement of assets and liabilities purports to determine the surplus of assets over liabilities. It then brings to account certain disposal costs (being a matter allowed for by cl 7) in the form of estimated selling expenses and bank penalty interest. It describes the total number of issued units. It is signed by Mr Curtis and bears an endorsement to the effect that this is the statement referred to in his report.

221 By letter dated 20 October 1992 Chesson & Co requested Mr Sanderson to proceed with a valuation of units in the Trust in accordance with the Trust Deed. This instruction was accompanied by the Curtis/auditor's report and related financial statements and a recent valuation of units in another trust by Hunt Associates.

222 Mr Sanderson said in the affidavit presented as his witness statement (D24) at par 35.2(a) that he concluded that the auditor's figures (save for a cost error) were reliable. Accordingly, he proceeded to determine the current repurchase value of the subject units as at the relevant date. As I have indicated, he said that this was a matter that had been raised with him by Mr Chesson soon after his appointment.

223 By letter dated 21 October 1992 from Mr Sanderson to Chesson & Co an assessment of Balga Bazaar Unit Trust was enclosed indicating that the units should be valued at $886.82 as at 3 January 1991. The defendants' case at trial was that, notwithstanding a lack of clarity in the written instructions provided to the President of the Institute initially, the Sanderson valuation should be treated as effective. In other words, $886.82 per unit represents the current repurchase value of the Green units at the relevant date and the Court should make a declaration to that effect on the defendants' case any ambiguity in the written instructions to Sanderson was clarified by subsequent discussions and related events. It was entirely logical that the real estate belonging to the Trust should be valued first, financial statements should then be prepared by the auditor, and, finally, that Sanderson should then arrive at a repurchase value per unit.

224 On the other hand, the plaintiffs contended at trial that there was a fundamental lack of compliance with the cl 7 valuation procedure which invalidated the result. More particularly, the sequence of events and other evidence showed that Mr Sanderson had simply adopted the Curtis/auditor's report uncritically, and therefore could not be said to have exercised a proper independent discretionary judgment in arriving at the figure of $886.82 per unit. I will return to these issues when the time comes to review the pleadings.

225 There were various exchanges between Mr Green or his representatives and Wilden but without Mr Green obtaining satisfaction. On 16 December 1992, Mr Green attended the annual general meeting of Wilden with his wife and son, Graeme Green. Mrs Green took notes of the meeting (302 @ PW984 to PW987). Mr Green said these notes accurately reflect the discussions that took place at the meeting.

226 By now it was clear that there was a complete breakdown in the relationship between the parties. The Wilden proposal to repurchase at a price of $1000 per unit had been overtaken by the Sanderson figure of $886.82 per unit. Wilden claimed that outstanding balances were due from the Green parties in respect of the Green loan accounts. The Green parties allege that they did not receive any further information. The Greens said in evidence that they never received any payment from Wilden in respect of the repurchase requests.

227 Mr Green said in evidence at the trial that if he had received payment from Wilden he would have invested the money in real estate. He said in evidence that it was not until the trial of the action, when further discovery was provided, that he and his advisers were provided with copies of financial statements in respect of the Balga/Wilden Trust for the period 30 June 1999 to the present date. The relevant accounts are Exhibit 343.

228 In order to complete the narrative, let me now turn to the affairs of the other Trusts, namely, Summerfield/Tace and Kelmscott/Magenta.

229 It appears from a set of Denboer/Chesson minutes that at a meeting on 27 November 1986 the directors of Tace resolved to form a trust and to negotiate for the purchase of a suitable shopping centre (153 @ PT651); that is, about twelve months after Wilden had contracted to acquire the Balga Shopping Centre. At a meeting of the directors on 30 June 1987 Mr Chesson advised that the purchase of the Summerfield Shopping Centre would soon be completed. Initial subscriptions would be for ten units of $1000 each (154 @ PT652).

230 Mr Green said in evidence that in early 1987, at a meeting of the unit holders of Wilden, Mr Chesson first raised with those present at the meeting a further investment proposal which he referred to as Summerfield. Mr Chesson said words to the effect that he was looking at buying another shopping centre and that it was possible to refinance Balga/Wilden. There was an opportunity for unit holders to take their original investment out of Balga/Wilden and put it into Summerfield.

231 According to Mr Green, he did not discuss the terms of the proposed investment in this new Trust in any detail with Mr Chesson. Mr Green assumed that the investment was on the same basis as that which applied to the previous investments in both the Fieldgate Unit Trust and the Balga Bazaar Unit Trust. The primary difference between the Green Family Trust's investment in the Summerfield/Tace Trust was that Mr Green was not a director of Tace.

232 Graeme Green applied to take up 250 units at $1000 each on 4 July 1987 on the basis of a cash contribution of $70,000 and loan arrangements for $180,000 (151 @ PT40). He agreed to be bound by the Trust Deed dated 1 July 1987.

233 On 7 July 1987, Mr Green completed an application form for units in Summerfield/Tace on behalf of the Green Family Trust in regard to 300 units in the Trust. The application form states that he paid $100,000 in cash with the remaining units being financed by a loan from the trustee. However, he said in evidence that he did not pay any cash to Tace for these units. The $100,000 referred to in the application was obtained from the refinancing of Balga/Wilden. Mr Green ultimately received a unit trust certificate for 350 units in Summerfield/Tace dated 25 July 1987.

234 In the meantime, on 17 July 1987, the Tace directors (Kelly (Chairman) and Chesson) had resolved to adopt the standard loan provisions (including a term that the loan is repayable on demand). Mr Green was not a director of Tace and was therefore not present when the loan provisions were adopted.

235 I note in passing that at the same meeting Mr Chesson was allocated 600 units for a total price of $500,000 (loan $398,000). It is not clear why he was allowed a discounted price.

236 Documentary and other evidence established that Summerfield/Tace purchased the shopping centre in question for $4.5 million in July 1987. The trustee company mortgaged the property to raise $3.3 million in funds to be lent to unit holders against the security of their units in the Trust.

237 Each month from August 1987 until June 1992, Mr Green received monthly statements and a cheque from Tace. In addition to these statements, at the end of each of the financial years of 1987/88, 88/89, 89/90**,** 90/91 and 91/92 he received a statement from Tace setting out the distributions that had been made that year. For example, the statement for the Green Family Trust for the period 1 July 1987 to 30 June 1988 shows an income of $37,653 (in respect of 350 units) less interest of $33,495 (in respect of 250 units) giving rise to a dividend of $4158 (162 @ PT105).

238 It emerges from a letter dated 17 November 1988 from Tace to the unit holders generally, and from related evidence, that towards the end of 1988 a unit holder lodged a request for repurchase of his 50 units in the Trust (164 @ PT129). Based on an estimated value of the Trust property of $5.35 million the units were thought to be worth $1,163 each. The units were offered for purchase by current unit holders for a period of 30 days. Tace acknowledged that upon receipt of such a request it was obliged to act within 90 days and had the option of offering the units for sale in that way, finding an outside buyer, or having the units valued and then purchasing the same from the unit holder.

239 As I have indicated in earlier discussion, in September 1990 Benrone/Denboer and Callao/Chesson lodged repurchase requests for units in Summerfield/Tace, ostensibly to raise funds for propping up Balga/Wilden.

240 According to Mr Chesson, Callao lodged a repurchase request for 300 units, being half its units in the Trust, and Benrone lodged a request for 175 units, being all of its units in the Trust. These were considered at a meeting of Tace directors on 14 September 1990 (240 @ PT668). Tace resolved to purchase the units at a price of $1350 per unit.

241 These repurchase requests were funded from cash reserves and with funds made available by the ANZ Bank ($300,000) pursuant to an extension of the mortgage against the Summerfield Shopping Centre. On 20 September 1990 settlement statements were issued for redemption of the Callao and Benrone units at $1350 per unit (D16 @ DT394). The statements included a charge for cost of valuation and an administration fee.

242 On 12 October 1990 Callao and Benrone provided to Tace an irrevocable authority to pay proceeds from the purchase of units in Tace to Wilden. It was common ground that funds were moved to the Wilden bank account. I note in passing that on 19 October 1990 the directors of Tace resolved that a repurchase request submitted by Mr Bonini be declined at $1550 per unit.

243 Mr Green and his solicitors pressed for information as to the affairs of Summerfield/Tace. It emerges from correspondence between the parties that as to this Trust also there was eventually a breakdown in the relationship between the parties.

244 On or about 6 November 1990, Mr Green submitted a repurchase request to Summerfield/Tace to repurchase all the units held by the Green Family Trust, that is, 350 units. Mr Green received an acknowledgement of the repurchase request from Mr Chesson (28 @ PT211).

245 Mr Green also received in the mail a letter from Mr Chesson on 8 November 1990 (30 @ PW209). This referred to the absence of any information as to the price required for the units and inquired whether the directors should adopt a price derived from an independent valuation of the shopping centre.

246 Graeme Green lodged a request for the repurchase all of his units at this time also. The request was accompanied by a letter from him dated 9 November 1990 stating that a net repurchase value of $1350 per unit (after all disposal costs) was acceptable to him for repurchase of his 300 units (32 @ PT213). By letter dated 19 November 1990 to Tace, Mr Green advised also that $1350 per unit would be acceptable for repurchase of the 350 Green Family Trust units.

247 I note in passing that the trial was fought on the basis the Green repurchase requests were received on 7 November 1990, and that this should be regarded as the operative valuation date. I will proceed accordingly.

248 The various repurchase requests were discussed at an AGM of the Trust on 22 November 1990 (255 @ PT218). Mr Green attended the meeting with his son and their solicitors. The minutes include this passage:

"REPURCHASE OF UNITS

A repurchase request from Benrone Pty Ltd and Callao Pty Ltd was presented to the Directors in accordance with the Trust Deed. The repurchase would take the property to nearly two thirds borrowing. Two thirds borrowings is acceptable to the Trust therefore these units were repurchased by the Trust.

Mr Steinepreis queried the ANZ Bank's involvement with the valuation of the property.

Mr Chesson explained the ANZ Bank's involvement with the valuation of the property. The ANZ have a panel of three valuers - Richard Ellis, Stanton & Co, Ballieu Knight Frank. Rather than charge the Trust with a valuation, Benrone Pty Ltd and Callao Pty Ltd adopted the value used by the Bank's valuer. Benrone Pty Ltd and Callao Pty Ltd paid for the valuation and not the Trust.

The Bonini Family, Green Family and Mrs and Mrs Marshall have also lodged repurchase requests. If all repurchase units presented were paid for by the Trust, the property would exceed the two third borrowing.

In accordance with the Trust Deed, if the repurchase units have not been purchased within ninety (90) days after they have been received by Tace Pty Ltd as trustee for the Summerfield (1987) Unit Trust, Clause 7.5 and 7.6 of the Trust Deed has to be applied. This may necessitate the sale of the shopping centre. The Reserve Price is set under the terms of the Trust Deed. The Trust must adopt a Reserve Price set by an independent qualified valuer nominated by the Australian Institute of Valuers (WA division). The Trust can use the valuation paid for by Benrone Pty Ltd.

MOTION: Moved Mr B Denboer. Seconded Mrs M Kelly.

RESOLVED: 'That Chesson & Co be empowered to sell the property by Auction if the units are not taken up within the ninety days as stipulated in the Trust Deed. The minimum value is to be $6.3million or a higher value. The valuation is to be updated at a date closer to the auction date.'

A Poll was called, 2455 units for, 950 units against. The Bonini Family and Mr Baker representing Mrs Baker abstained from voting."

249 According to Mr Chesson, he was instructed to write to the unit holders and to offer partial repurchase of their units on a pro rata basis so as to purchase progressively until full repurchase was achieved. The purpose of this was an attempt to treat all of the unit holders who had lodged repurchase requests equally.

250 The Green parties continued to press for total repurchase of their units. A letter dated 18 July 1991 (543 @ PT292) from their solicitors, Bennett & Co, reads in part as follows:

"Our clients do not, at this stage, agree to a partial repurchase.

Our clients seek full repurchase in terms of their repurchase request subject to agreement as to a value per unit as discussed below.

If you are able to present a firm proposal for a partial repurchase then our clients will give consideration to that proposal.

With respect to the proposed price of $1,350 per unit we advise that, in due (sic) of the repurchase by the trust of units since that price was proposed, that price no longer accurately reflects the true value of our clients' units. Please advise a value which the trustee will be prepared to agree a price pursuant to Clause 7.5 of the Trust Deed."

251 I interpose to say that, again, in regard to this Trust also, the solicitors for the Green parties seemed to accept that inherent in the repurchase procedure was that an attempt be made to agree a repurchase price. If a price could be agreed it would not be necessary for the valuation procedure to be activated.

252 At a meeting on 25 June 1991 the directors resolved to do no more in respect of the Green repurchase requests until the property was put to auction (544 @ DT701).

253 In due course the Summerfield Shopping Centre was put to auction. This occurred on 11 December 1991 at the Chamber of Commerce, Parliament Place, Perth. The reserve price of $6.3million was not achieved. These events were the subject of a report to unit holders dated 18 December 1991 (273 @ PT420).

254 According to Mr Chesson, on the day of the auction Mr Green handed him a note to the effect that the price received at auction would not be accepted as setting the repurchase price for the Green units. As it happened, an issue of that kind did not eventuate because the reserve price was not achieved.

255 By letter dated 11 December 1991 Bennett & Co, on behalf of the Green parties, wrote to Tace (271 @ PT410). They queried the levying of fees by Chesson & Co in respect of the repurchase requests and complained of misconduct by the trustee company. The letter included this passage:

"Our clients do not propose to withdraw their repurchase request however they advise that they now do not agree a price of $1,350 per unit. That price was agreed prior to the recent reduction in the number of units. Consequent upon that reduction the value of our clients' units has increased. Our clients will accept a proper value determined in accordance with Clause 7.6 of the trust deed."

256 I pause to observe that this letter appears to be the first occasion on which it had been said firmly on behalf of the Green parties that a price could not be agreed and that the units would have to be valued. The letter did not expressly require the trustee to activate the valuation procedure. It did not lead to a settlement of the differences between the parties.

257 Mr Chesson said in his witness statement (par 137) that the shopping centre remained on the market from December 1991 to 30 June 1992 without any offers at or about the reserve price being received. By mid-1992 Tace was in a position to repurchase fully the Green units, because arrangements had been made for funds obtained from Fieldgate/Zilna to be reinvested in Summerfield/Tace. Mr Chesson said in evidence (par 145) that as soon as funds became available in Zilna, after 23 June 1992, he caused to be sent to the Green parties acceptances in relation to all the Green repurchase requests.

258 The Green company and Graeme Green received notices of acceptance of their repurchase requests from Tace dated 30 June 1992 (53 @ PT438). Settlement statements prepared by Tace reflected an offer to repurchase at $1350 per unit.

259 Letters dated 24 July 1992 from Tace to Mr Green and Graeme Green show that the trustee company proposed that $193,370.35 and $141,975.12 respectively be paid to the Green parties, although the company said it was reluctant to send cheques of this size through the post. Mr Chesson said in evidence (par 149) that the Green parties' lawyer, Mr Dean of Bennett & Co told him there was no point in forwarding the cheques because they would be sent back. According to Mr Chesson, he did not send the cheques and the Green parties did not press for payment.

260 Mr Green said in evidence at the trial that he never received payment from Tace in respect of the repurchase requests. According to him, if he had received this money he would have invested in real estate or utilised the funds to enable Green & Co to repay the loans demanded by Wilden.

261 By letter dated 27 July 1992 Bennett & Co, on behalf of the Green parties, wrote to the solicitors for Tace refusing to accept that a repurchase of the subject units had taken place (466 @ DT527). They acknowledged that the Green parties had previously been prepared to agree a value of $1350 per unit as at 7 November 1990 but the proposed value was not accepted by Tace within a reasonable time. Hence, in the absence of an agreed value the current repurchase value was to be determined in accordance with the valuation procedure allowed for by cl 7 of the Trust Deed.

262 The Bennett & Co letter alleged that Tace was in breach of trust in failing to complete the Green repurchase requests but did not specifically call upon the trustee to ensure that a valuer was appointed to value the units as at the date the repurchase request was lodged. (I note in passing that on the same day Bennett & Co wrote in much the same terms to Magenta in respect of the repurchase requests concerning Kelmscott/Magenta).

263 The Tace solicitors, Marks Healy & Sands, replied by letter dated 14 August 1992 (467 @ DT529). They said their client would arrange for the appointment of an independent qualified valuer.

264 Tace then proceeded to activate the valuation procedure. By a letter dated 12 June (sic) 1992 Tace wrote to the President of the Institute requesting "that you appoint a valuer to value the Summerfield Shopping Centre as at 7th November 1990" (51 @ PT435). A letter dated 14 August 1992 from the Institute to Tace confirmed that Mr R Richmond had been appointed (58 @ PT449).

265 An affidavit sworn by Mr Richmond was received as an exhibit at the trial (D26). He said that he spoke to Mr Chesson soon after his appointment and understood that he was required to value first the shopping centre and then the units.

266 Mr Richmond's report dated 4 September 1992 valued the subject shopping centre at $6.3million (488 @ PT453). It seems that on Mr Chesson's instructions, Denise Kelly arranged with the auditor of Summerfield/Tace, Mr Norman Curtis, to prepare a statement of assets and liabilities as at 7 November 1990 and as at 29 November 1990. By letters dated 22 September 1992 Curtis wrote to Tace to say that he had "to some degree" attempted to establish the validity of the amounts in the statements and had satisfied himself that the statements were a true reflection of the position it portrayed as at the relevant date (490 @ PT551). These materials were delivered to Mr Richmond.

267 I digress briefly to note that, according to evidence given by Mr Chesson at trial (par 190), Mr Richmond was asked to produce valuations of the units at 7 November 1990 and at 29 November 1990 because a repurchase request had been received from another unit holder (Givenleigh) on the latter date. It was common ground at the trial that the Green requests were lodged on 7 November 1990, and thus I will henceforth focus upon the events and valuations concerning that date.

268 By letter dated 1 October 1992 to Tace Mr Richmond purported to determine the current repurchase value of the Trust as at 7 November 1990 (the date of the request) as $1292.95 per unit (59 @ PT555). It is apparent from his report that he drew upon and adopted the figures in the Curtis statements of assets and liabilities.

269 In the course of his evidence at trial Mr Richmond said that he spoke briefly to Mr Curtis and satisfied himself that Mr Curtis was presenting the figures as figures approved by an auditor. Mr Richmond gave weight to the assurance that he could rely upon the figures. Under cross-examination, he agreed that he did not himself personally check the various items although he did verify the selling expenses by inquiries at his own office. He also conferred with Mr Chesson about the current repurchase value formula in the Trust Deed before making his final determination as to the appropriate value per unit.

270 The first of Mr Richmond's two reports dated 1 October 1992 concludes in this way:

"Value of Trust Fund as at 7th November 1990 - $5,559,779.13. Number of units in the Trust as at the 7th November, 1990 - 4075.

I have estimated the disposal cost of the Trust Fund to be $291,023, including Bank penalty interest as advised by the ANZ Bank by letter of the 16th September, 1992.

After taking into consideration the above factors including my valuation of the Summerfield Shopping Centre and the figures provided in the statement of assets and liabilities, as confirmed by the Auditor Mr Norman F.V Curtis, I am of the opinion that the current Repurchase Value of the Trust as at the 7th November 1990, is $1,292.95 per unit."

271 According to Mr Chesson (par 149), statements of repurchase of units dated 1 October 1992 based on the Richmond report were sent to the Green parties (D69 @ DT647/648). The statement for the Green company shows that the repurchase of 350 units was to be completed at $1292.95 per unit. After bringing to account the outstanding loan account of $250,000, a 2 per cent fee on repurchase and other outgoings the net balance payable to the company was said to be $172,802.20. Pursuant to the same formula, the net balance payable to Graeme Green was $124,202.42. However, these events did not lead to a resolution of the differences between the parties.

272 Mr Green said in evidence that he attended the annual general meeting of Tace on 14 December 1992 with his wife and his son, Graeme Green. Since the 1992 annual general meeting he has not received any further information from Tace with respect to Summerfield/Tace and no notice of any meetings. He first saw financial statements relating to Summerfield/Tace in the period subsequent to 1992 up to the present date at the trial of the action being Exhibit 345.

273 I note in passing that in the pre-consolidation proceedings against Tace (CIV 3049 of 1991) the Green parties alleged in 1994 that the Richmond valuation was of no force and effect because he had been wrongly instructed and he did not make a proper independent discretionary judgment. A true and fair current repurchase value of the Green units was said to be $1355, that is, $5 per unit more than the figure proposed by Graeme Green in November 1990 and by Tace in mid-1992.

274 On 28 October 1988 the Kelmscott Trust was established by a Deed made between Benrone, Milone and Callao. At a meeting of the directors of Magenta Pty Ltd (Kelly (Chairman), Denboer and Chesson) one month later on 28 November 1988 the standard loan provisions were approved and units were issued to various applicants at $1000 per unit paid for in the usual way by a combination of cash and loans (501 @ DM12). Units were issued to the Green parties and 720 units were issued to Callao for the Chesson Family Trust at what appears to be a discounted price of $590,000. The Green parties were not represented at this meeting.

275 I note in passing that on 28 October 1988 Mr Denboer, Mr Kelly and Mr Chesson had signed a form allowing for the issue of 600 "additional units" at a total consideration of $470,000. Other documents suggest that these formed part of the 720 units formally allocated to Callao/Chesson one month later.

276 Mr Green said in evidence that an investment in the Kelmscott Unit Trust was first mentioned to him at one of the Trust meetings by Mr Chesson. He could not recall what date the meeting in question was held. He did not discuss the details of the investment in the new Trust in any detail with Mr Chesson. He assumed that the investment would be on the same basis as that which applied to the previous investments in Fieldgate/Zilna and Balga/Wilden. He said that the primary difference between his investment in this unit trust and that in Balga/Wilden was that he was not a director of Magenta Nominees Pty Ltd.

277 On 14 November 1988 Mr Green completed an application form for units in The Kelmscott Village Unit Trust on behalf of his wife and himself. The application form on its face states that he paid $250,000 in cash to the trustee and applied for a trustee's loan of $500,000. The family trust utilised the proceeds it received from the refinancing by Zilna of the Fieldgate Shopping Centre and paid $100,000 in cash from family trust funds.

278 Mr Green recalled that the purpose of the refinancing of the Fieldgate Shopping Centre was to partially finance the purchase of the Kelmscott Village Shopping Centre. He recalled that a resolution to this effect was passed by the unit holders of The Fieldgate Trust at its 1988 annual general meeting. On the advice of his accountant he took the units in the name of himself and his wife. Further, he invested also $10,000 on behalf of his daughter Sharyn by way of a gift as he thought it would benefit her in the future.

279 I pause to note that Sharyn Green (now Sharyn Arndt) gave evidence at the trial. Her understanding was that an application had been made to vest 30 units in the Kelmscott/Magenta Trust in her but it became apparent to her at the trial from the relevant documents that she was the holder of 40 units pursuant to a certificate dated 31 January 1989 (173 @ PM79).

280 It is against this background that the Denboer/Chesson minutes of the Magenta directors' meeting held on 28 November 1988 recorded the allocation of units to the Green parties at a price of $1000 per unit and to other significant unit holders as follows (501 @ DM12):

"Benrone Pty Ltd as trustee for the BL & J Denboer Family Trust - 150 Units; Cash Payment $100,000 (Loan from the Trust $50,000);

...

Giancarlo Bonini & Angelina Bonini - 500 Units; Cash Payment $200,000 (Loan from the Trust $300,000);

...

Callao Pty Ltd as trustee for the SJ Chesson Family Trust - 720 Units; Cash Payment $70,000 (Loan from the Trust $520,000-00);

...

William Joseph Green & Norma Glenyse Green - 750 Units; Cash Payment $250,000 (Loan from the Trust $500,00-00);

Graeme William Green & Julie Anne Green - 30 Units, Cash Payment Nil (Loan from the Trust, secured against the Units of William Joseph Green & Norma Glenyse Green and against the Units held by Graeme William Green in the Summerfield (1987) Unit Trust, $30,000);

Sharyn Green - 40 Units, Cash Payment $10,000 (Loan from the Trust, secured against the Units of William Joseph Green & Norma Glenyse Green, $30,000);

...

Milone Pty Ltd as trustee for the JM Kelly Family Trust - 300 Units; Cash Payment $100,000 (Loan from the Trust $200,000-00);"

281 The allocation of units as above suggests that Callao/Chesson received units at a discounted price, although no reason is given as to why this should be so.

282 From January 1989 until May 1990 Mr Green received monthly statements and a cheque from Kelmscott/Magenta. He did not receive any or any sufficient communications from Mr Chesson or anyone else on behalf of Magenta about the progress of the Trust.

283 According to Mr Green, he received a notice on or about 25 July 1989 that the annual general meeting of the shareholders of Magenta would be held on 16 August 1989 at the Park Royal Hotel. He attended the AGM with his wife, his son Graeme Green, his daughter Sharyn Green and his daughter-in-law Julie Green. He said that he had not received any information about Kelmscott/Magenta prior to attending the meeting. At the meeting he received a document headed Kelmscott Village (1985) Unit Trust - Circular to Unit Holders (Ex 397).

284 The Ex 397 Kelmscott circular referred to cash flow difficulties at Kelmscott as a result of a number of circumstances arising from the uncertain state of various tenancies. The circular went on to say that the non-collection of rents from several tenants and most particularly the Growers Market had increased the overdraft of the Trust to a level which the bank found unacceptable. The bankers had asked the Trust to reduce the overdraft. The circular suggested that the ways in which the overdraft could be reduced were to stop the payment of distributions, continue pursuing Richard Ellis and the former owner of the shopping centre to recover outstanding amounts, continue pursuing the former tenants for the amounts outstanding under their leases, lease out the vacant shops, request unit holders to repay 10 per cent of the loans that they had been advanced by the Trust.

285 In January 1990 Mr Green instructed his accountant, Grant Page, to request information relevant to the completion of tax returns for the 1989/90 financial year. He did not receive any further information about Kelmscott/Magenta until he received in the mail a notice of an extra-ordinary general meeting which would be held on 29 June 1990. He attended the meeting in question and agrees that the minutes accurately summarise the discussions that took place.

286 There was a further meeting of unit holders on 21 July 1990 and an AGM of Magenta on 14 August 1990. Mr Chesson gave an oral report to the latter meeting. According to Mr Green, the minutes accurately summarise the motions that were passed at the meeting (228 @ PM227). On or about 23 August 1990 Mr Green received an invoice from Magenta for repayment of 1 per cent of the loan units. He did not make the payment as requested as he believed that the Green parties were not receiving proper information concerning the Trust and by now he had no confidence in the Chesson management.

287 I pause to observe that it was at this time, in August 1990, that various contentious issues were coming to a head in the Balga/Wilden Trust, and thus there was a prevailing mood of distrust and disagreement as between the Green parties on the one side and those who controlled Magenta (Kelly, Denboer and Chesson) on the other side. This mood had been exacerbated by the so-called arson incident and the dispute concerning the Gillette award.

288 There were further meetings and exchanges of correspondence in the months that followed concerning the affairs of Kelmscott/Magenta but these did not produce a satisfactory outcome as far as Mr Green was concerned. By letter dated 28 May 1991 Bennett & Co submitted to Magenta repurchase requests for the units of the Green parties in the Kelmscott/Magenta Trust. The repurchase requests were all dated 24 May 1991 and were accompanied by unit certificates save in the case of Mr and Mrs Green's request (32-37 @ PM378-382). The Bennett & Co letter sought confirmation that the "proper course of action" will be instituted under the Trust Deed as soon as possible. However, the letter concluded with the assertion "we hereby reserve our clients' rights to withdraw any or all of the repurchase requests at any time."

289 By letter dated 29 May 1991 Magenta confirmed that "the terms of the Trust Deed will be followed" (37 @ PM383). However, the trustee company referred to matters requiring clarification and, noting that no proposed repurchase price had been stated, asked whether the Greens had a particular price in mind. Further, taking account of the possibility that the repurchase requests might be withdrawn, Magenta asked for a bank cheque in the sum of $6000 to secure any valuation fees that might be incurred in valuing the real estate.

290 Bennett & Co responded on behalf of the Green parties by letter dated 12 June 1991. They purported to clarify the matters in question (39 @ PM387). Significantly, the solicitors for the Green parties said:

"If the trustee intends to proceed pursuant to clause 7.5 then our clients are prepared to negotiate an agreed value."

291 Further, the letter suggested that there was no need for a fresh valuation of the realty as an earlier valuation could be updated. "That would be sufficient compliance with clause 7.4".

292 By letter dated 14 June 1991 Magenta said that the Bennett & Co reply had raised further questions (40 @ PM389). It said that:

"The Trustee is not in a position to decide what action is appropriate (if any) under section 7.5 of the Trust Deed until your client states an asking price or states that a valuation is to be arranged to determine the asking price."

293 The Bennett & Co response (310 @ PM391) reads in part as follows:

"The Trustee is in a position to decide whether there is any possibility of arranging for payment to our client of the current repurchase value. We understand that the Trustee will not be in a position to arrange for payment of such amount other than by way of sale of the Shopping Centre. If this is so then the only appropriate action is for the Shopping Centre to be forthwith put on the market and sold. Accordingly, there is no point in negotiating an 'Agreed Value' or wasting money obtaining a valuation only for the purpose of determining the 'Current Repurchase Value'. The Trustee should in these circumstances obtain a valuation to determine both the 'Current Repurchase Value' and the value for which the Shopping Centre is to be sold.

In this respect, we insist that the valuation be carried out by an independent valuer agreed to by our clients.

..."

294 The letter included a further passage to this effect:

"With respect to the question of valuation please provide the following details:

(i) the date of the latest valuation of the shopping centre, the name of the valuer and a copy of the valuation;

(ii) whether it is in fact the trustee's position that, in the event that a valuation of the shopping centre is required (which we do not accept) the trustee is not prepared to agree to a simple updating of the most recent valuation?

(iii) the trustee's attitude to our clients' position that in the event that repurchase is not to take place pursuant to clause 7.5 of the Trust Deed that the shopping centre should be put on the market at the last valuation obtained and whatever the property is actually sold for will accurately determine the current repurchase value? As pointed out in our letter of 12 June 1991 (and ignored in your response) our clients will accept such a sale price as determinative of the current repurchase value."

295 I pause here to note that on the plaintiffs' case these exchanges were said to show prevarication on Magenta's part. On the defendants' case they showed that the Green parties were not prepared to deal with reasonable requests for information, for, on any view of the matter, the cl 7.4 valuation process to fix a unit value could not be initiated by any party until it was clear that a repurchase price could not be agreed. It was therefore reasonable to find out what price the selling party wanted.

296 Moreover, and perhaps more importantly, the exchanges arguably show that the plaintiffs were not insisting upon compliance with the cl 7.4 procedure within a 90 day period upon the basis that the trustee was subject to strict duties in that regard. Indeed, the Green parties contemplated some departures from the strict procedure in suggesting that the valuer would not simply be one nominated by the President of the Institute but would be "an independent valuer agreed to by our clients".

297 It was against this background that Magenta wrote to the President of the Institute by letter dated 13 January 1992 asking for a valuer to be appointed to value the Kelmscott Shopping Centre (61 @ PM531). The letter commences:

"Please appoint a valuer for the purposes of concurrence or otherwise with a valuation of the shopping centre prepared by G.R. Wilkinson of Baillieu Knight Frank."

298 I note in passing that Wilkinson was a valuer appointed by the ANZ Bank in its capacity as mortgagee. He had previously prepared a valuation. I note also that, as in the case of the other trusts, the initial letter of instruction referred to a valuation of the shopping centre rather than to a valuation of units. Again, an issue arises as to whether the written instructions were clarified by subsequent and related events and as to whether, in any event, the valuer can be said to have been properly instructed. There is then a further issue as to whether the valuer can be said to have exercised an independent discretionary judgment in arriving at his conclusion.

299 By letter dated 20 February 1992 the President confirmed that Mr D Hunt had been appointed to value the shopping centre (63 @ PM535). Mr Chesson said in evidence (par 165) that shortly after the appointment was effected he met with Mr Hunt at the Chesson office at 51 Manning Road, Como. He introduced Hunt to Denise Kelly and told him to liaise with her in obtaining whatever information he needed.

300 Mr Chesson said that he asked Mr Hunt to carry out a valuation of the units in accordance with the Trust Deed and to value the shopping centre. He recalled that Hunt read the Trust Deed and said that in order to carry out his instructions he would need to refer to an accountant external to the Trust operations. It was resolved that Hunt would refer to the company auditor, in which respect the value he attributed to the realty would be reflected in the relevant financial statements. On 17 March 1992 Mr Hunt wrote by fax requesting information (D72 @ DM870). There was further correspondence in that regard.

301 Mr Chesson said (at par 193) that when he met Hunt after his appointment he asked him to value the units in the Kelmscott Trust after he had valued the shopping centre. (I note in passing that the Hunt/Kelmscott appointment was the first of the three appointments to be effected and, on the defendants' case, this conversation with Hunt may have had the effect of establishing a pattern whereby the appropriate order of events was thought to be - value the real estate, incorporate the figure for realty in financial statements, refer the statements to the auditor (Curtis) for his appraisal, the valuer would then determine the value of the units by reference to the approved financial statements).

302 It seems that on 25 February 1992 the Green repurchase requests were discussed at a directors' meeting of Magenta (535 @ DM28). It was noted that the Greens would not agree to a repurchase price. The Magenta directors resolved that the Baillieu Knight Frank valuation of Kelmscott Village for the ANZ Bank at $5,370,000 be adopted and Mr Chesson write to the President of the Institute of Valuers to appoint an independent valuer to determine current repurchase value of the units. In other words, as I indicated earlier, an appointment was now sought for a valuer to value not the shopping centre but the units.

303 On 20 March 1992 market valuations were received from Hunt Associates concerning the Kelmscott Shopping Centre which assessed the current market value of the property in the sum of $5,437,000 as at 20 March 1992 (327 @ PM539).

304 By letter dated 8 April 1992 Mr Curtis delivered an auditor's report (in the form described in earlier discussion concerning Balga/Wilden) which said that the relevant statement of assets and liabilities presented a fair view of the Trust as at 20 March 1992. Mr Hunt then presented a letter dated 9 April 1992 attributing a value to the units of $736.17 per unit as at 20 March 1992 (65 @ PM599).

305 I pause at this point to note that as to both valuations, the value date did not refer to the date of lodgement of the Greens' repurchase request in Magenta, namely, 24 May 1991. This was the first of the various requests to appoint a valuer and it may be that at this stage there was a degree of uncertainty as to what should be treated as the relevant valuation date.

306 At a meeting of directors of Magenta on 30 April 1992 it was resolved that if a purchaser could be located to purchase the Green units at $736.17 per unit that should be proceeded with (536 @ DM29).

307 By letters dated 30 June 1992, Mr Chesson communicated with the Green parties to advise that Magenta accepted the request for repurchase of units in question, that is to say, WJ & NG Green 750 units, GW & JA Green 30 units and S Green 40 units (70-72 @ PM610-612). The statements accompanying the letters calculated the repurchase price by adopting a figure of $736.17 per unit. In each case, after outstanding loans were brought to account, various net deficits were said to be owing by the Green parties, namely, $26,220.25 in respect of Mr and Mrs Green, $4870.35 in respect of Sharon Green, and $8056.61 in respect of Graeme and Julie Green.

308 The acceptance of request letters dated 30 June 1992 enclosed valuations of the real property and units by Mr Hunt. They said that the shortfall on the settlement of the repurchase requests by the Green parties was due and payable.

309 An interim report to unit holders of Kelmscott/Magenta dated 15 July 1992 revealed that trading for the financial year to 30 June 1992 produced a loss of $79,698.58 (329 @ PM624). On 24 July 1992 Mr Green received a letter from Mr Chesson on behalf of Magenta requesting payment of an outstanding sum of $26,220.25 following repurchase of the units in question (331 @ PM628).

310 By letter dated 27 July 1992 Bennett & Co, on behalf of Mr Green wrote to the trustee company's solicitors, Marks Healy Sands (77 @ PM633). They said that valuations of Hunt Associates and Baillieu Knight Frank purported to value current market value of the shopping centre, but did not value current repurchase value of each unit in the Trust. They did not comply with cl 7.4 of the Trust Deed, with the result that Magenta was in breach of trust in failing to complete the Green repurchase requests in accordance with the Trust Deed.

311 Bennett & Co said further that Magenta was not entitled to deduct "unpaid interest". The amounts could only be outstanding by reason of the trustee's failure to complete the repurchase requests. It was said the true value of the subject units was at least $900 per unit "being the value per unit at which 450 units were issued to the S.J. Family Trust in 1991."

312 The response to this was contained in a letter dated 14 August 1992 from Marks Healy Sands to Bennett & Co advising that Magenta would have the value of a share in the unit trust determined by an independent qualified valuer nominated by the President of the Australian Institute of Valuers (78 @ PM635). The valuer would attend to valuation as at 24 May 1991, that is, the date of the repurchase request. To minimise expense the President would be asked to appoint the same valuer.

313 By letter dated 13 August 1992 Magenta wrote to Hunt requesting (apparently with the approval of the President) that a valuation of the property and the units be carried out as at 24 May 1991 (539 @ DM943). By letter dated 21 October 1992 Curtis was asked to provide an auditor's report at the same date (D23 @ DM966) and did so by letter dated 12 November 1992 (86 @ DM75).

314 It appears from a letter dated 16 October 1992 that Hunt Associates valued Kelmscott Village Shopping Centre at 24 May 1991 at $5,191,000. By letter dated 19 November 1992 Hunt said that in his view the current repurchase value per unit as at 24 May 1991 was $679.48 per unit (85 @ PM662). It is apparent that he relied upon the figures that had been provided by Curtis a few days earlier.

315 On 30 November 1992 Magenta sent a statement of repurchase of 750 units of WJ & NJ Green in Kelmscott Unit Trust at $679.48 per unit. After a "2% fee on repurchase of units" and outstanding loans were brought to account, this resulted in an amount allegedly payable by the Green parties to the trustee in the sum of $72,502.98 (90 @ 705). On 30 November 1992 Magenta sent to Sharyn Green a statement of repurchase request of 40 units at $679.48 per unit (90 @ 703). Similar statements were sent to other members of the Green family.

316 On 15 December 1992 Mr Green attended the annual general meeting of Kelmscott/Magenta with his wife who took notes of the meeting. It was reported at the meeting (334 @ PM714) that a valuation of the property had been undertaken as a result of repurchase requests lodged by the Green family. It was noted that day to day operation and administration of the Trust was left in the hands of Mr Chesson as managing director of the company.

317 Mr and Mrs Green were asked if they were still unit holders. The stance they adopted was that while their names were still on the unit certificates they were still unit holders and entitled to vote. It was resolved that the AGM should be postponed until the Green parties could determine whether nor not they were unit holders.

318 Mr Chesson said in evidence (par 170) that Magenta's solicitors wrote to Bennett & Co on 21 December 1992 and again on 14 January 1993 (473 @ DM1007; D8 @ DM1008). It was apparent that the proposal to complete the repurchase requests pursuant to the Hunt valuation was not acceptable to the Green parties, and the dispute ran on.

319 On 28 January 1994 Magenta sent to WJ & N G Green a statement of income and expense for the period ended 30 June 1994. The amount due and payable by the Green parties to Magenta as trustee was said to be the sum of $92,163 (337 @ PM740). It will be apparent from earlier discussion that by this time the parties were involved in litigation.

320 The evidence of Mr Green at trial was that apart from the matters he referred to in the course of his evidence, since the 1992 annual general meeting he had not received any further information from Magenta in respect of the Trust. He saw only financial statements concerning the affairs of the Trust in respect of the period 1992 to the present date when the relevant bundle of documents (Ex 344) was produced at the trial of the action.

321 Mrs Green confirmed in her evidence at trial that she and her husband had never received a cheque from Magenta in respect of the repurchase requests. She said that if money in respect of these requests had been received she and her husband would have invested the money in real estate. I note in passing that in a minute of proposed amended statement of claim dated 14 February 1994 the Green parties sought specific performance of the Magenta repurchase requests dated 24 May 1991 and equitable damages (D6).

322 On the defendants' case, Mr Hunt's further valuation by letter dated 19 November 1992, which fixed the value at $679.48 per unit at the correct date of 24 May 1991, was ultimately valid and effective.

323 Having set out the narrative concerning the making of the various repurchase requests by the Green parties, it will now be useful to stand back and make some general observations about this aspect of the matter, bearing in mind that in regard to each trust the plaintiffs allege that there was a lack of compliance with the repurchase procedure and that the current repurchase value per unit determined by the valuer in each case was of no force and effect. It is said also that the trustee companies failed to perform their duties and should be removed.

324 It will be apparent from the narrative that the first of the repurchase requests was lodged by the Green parties on 7 November 1990 in respect of the Summerfield/Tace Trust. That lodgement occurred in close proximity to meetings at which units held by Callao and Benrone had been repurchased at an agreed figure of $1350. It is apparent from the narrative, and from correspondence concerning the Green repurchase requests, that the Green parties were prepared at that stage to have their units repurchased at the same figure, namely, $1350. This was acknowledged by Bennett & Co in their letter dated 27 July 1992 concerning the Tace repurchase request (466 @ DT527).

325 The interpretation of cl 7.4 arguably proceeds from the premise that the valuation of units by an independent valuer is only required in circumstances in which a "price payable" cannot be agreed. Accordingly, at first sight, a trustee in receipt of a repurchase request would appear to be acting reasonably in seeking to ascertain whether a price could or could not be agreed. If there were indications that a certain figure (in this case $1350) had prospects of being agreed, it would seem to be sensible for the trustee to enquire into the acceptability of such a figure.

326 When the matter is viewed in this light, it might seem difficult to accuse a trustee of a dereliction of duty simply because he did not immediately activate the valuation procedure, or take steps to offer assets of the trust fund for sale within the 90 day period referred to in cl 7.6 of the Trust Deed.

327 In the present case, the position was complicated additionally, as I have indicated in the narrative, by the notion that it might not be necessary to dispose of Trust assets in circumstances where it was (arguably) open to the trustee to set off against whatever current repurchase value was agreed by the parties or determined by a valuer outstanding loan debts in respect of the units in question. Further, in regard to Summerfield/Tace, the trustee wished to ascertain whether a partial repayment of the amount due could be made, having regard to the ratio of Trust assets to borrowings. This matter is referred to in the minutes of 22 November 1990 and was said by the solicitors for the Green parties on 18 July 1991 to be "not agreed to, at this stage". The possibility of a partial repurchase was not rejected out of hand.

328 The defendants' case was that the view I have just outlined represented a commonsense approach, that is, the notion that the trustee should first ascertain whether an agreed value could be arrived at as a means of fixing the "price payable" (being the operative expression used in cl 7.4). It was not only consistent with cl 7 of the Trust Deed but consistent with the realities of the situation in which, notwithstanding a degree of acrimony between the parties, the parties in dispute, quite sensibly, all seemed to be of the view that the first step was to ascertain whether a price could be agreed or not.

329 This is evident in the correspondence that followed lodgement of the repurchase requests in respect of Balga/Wilden on 7 January 1991 and in respect of the repurchase requests lodged in respect of Kelmscott/Magenta dated 24 May 1991. In each case one finds in the relevant correspondence indications that the Green parties were prepared to give consideration to a negotiated price and were not necessarily insisting upon an immediate activation of the cl 7.4 valuation procedure upon the basis they now contend for.

330 I remind myself that by letter dated 13 February 1991 from Chesson & Co to Bennett & Co (418 @ PW775) Mr Chesson confirmed an arrangement made with Mr Burton of Bennett & Co whereby a meeting would be held with a view to resolving all matters in issue. The letter reads in part as follows:

"At your request I have agreed to meet with you in your office at 3.00 am (sic) Wednesday 13th February 1991 to further discuss your propositions for a solution to the problems associated with Mr W J Green and Chesson & Co and the following companies and unit trusts:

a) Zilna Pty Ltd as trustee for the Fieldgate Square (1985) Unit Trust

b) Tace Pty Ltd as trustee for the Summerfield (1987) Unit Trust

c) Magenta Nominees Pty Ltd as trustee for the Kelmscott Village (1988) Unit Trust

d) Wilden Pty Ltd as trustee for the Balga Bazaar (1985) Unit Trust

e) Callao Pty Ltd as trustee for the S.J.Chesson Family Trust"

331 I understand that the meeting was held but a solution did not emerge. Nonetheless, this letter and related events reinforce an impression derived from other evidence that as at the end of February 1991 both parties seemed to accept that the valuation procedure should not be activated until it was clear that a price for the units the subject of the repurchase requests could not be agreed, and that there was still some prospect of agreement. I remind myself that by that time repurchase requests had been lodged for Summerfield/Tace (7 November 1990) and for Balga/Wilden (7 January 1991) and a short time later repurchase requests were lodged for Kelmscott/Magenta (24 May 1991).

332 I noted in earlier discussion that as to Kelmscott/Magenta, Bennett & Co for the Green parties, said on 12 June 1991 that their clients were "prepared to negotiate an agreed value". When negotiations petered out Magenta requested the appointment of a valuer on 13 January 1992.

333 I noted in earlier discussion also that as to the Summerfield/Tace repurchase requests it might be said that a clear absence of agreement concerning price did not become apparent until Bennett & Co wrote to Tace in those terms by letter dated 11 December 1991 (271 @ PT410). In that letter, Bennett & Co said that the Green parties would accept "a proper value determined in accordance with cl 7.6 of the trust deed" but they did not press for the appointment of a valuer pursuant to cl 7.4.

334 It was not until the solicitors for Green wrote to the Tace solicitors by letter dated 27 July 1992 (466 @ D527) that there was any suggestion that cl 7.4 valuation procedure should be activated or that Tace was in breach of trust in that regard. Bennett & Co wrote a letter dated 27 July 1992 in much the same terms concerning the Magenta repurchase requests (77 @ PM633).

335 As to Balga/Wilden an absence of agreement did not become clearly apparent until Bennett & Co wrote to the trustee company on 27 July 1992 (46 @ PW862). In respect of Balga/Wilden and Summerfield/Tace, valuers were appointed by the trustee company in mid-1992, shortly after receipt of the Bennett & Co letters dated 27 July 1992, being the first occasion on which the valuation procedure was referred to explicitly by or on behalf of the Green parties.

336 I pause here to note that on 23 June 1992 a deed was executed settling litigation with the Green parties concerning the Zilna Trust. As I have indicated, there had also been an attempt to settle differences generally with respect to the other trusts.

337 I note in passing that the defendants were challenged about a letter dated 13 August 1992 which Mr Chesson wrote to the valuer, Mr Hunt, concerning Magenta (88 @ P1011). Mr Chesson said that "due to a change in the approach of the solicitors for the unit holder we now require that a valuation of the property and units in the trust be carried out as at 24 May 1991."

338 The plaintiffs' case at trial was that this letter displayed a degree of duplicity on Mr Chesson's part in seeking to disguise an error on his part in the instructions he had given to the valuer. However, Mr Chesson answered this at trial (par 175 transcript 3516) by saying that in fact he genuinely believed that in mid-1992, as evidenced by the Bennett & Co letters dated 27 July 1992, the plaintiffs and their solicitors had suddenly changed their stance. Prior to mid-1992 he had reason to believe that the Green parties would accept an agreed value of $1000 per unit in respect of Balga/Wilden and $1350 in respect of Summerfield/Tace. A price per unit for Kelmscott/Magenta was to be negotiated. It was not until he received the letters dated 27 July 1992 that it became apparent to him that the prospect of arriving at agreed values had evaporated and the current repurchase values would have to be determined strictly in accordance with the cl 7.4 valuation procedure. Thus, he proceeded promptly to take the appropriate steps, that is, to arrange for the appointment of valuers in respect of Balga/Wilden and Summerfield/Tace and to ensure that the previously appointed valuer in Kelmscott/Magenta determined the value per unit at the proper date.

339 When all these considerations are drawn together, and are looked at in overview, there appears to be some force in the defendants' submission that they should not be criticised for any alleged prevarication in dealing with the various repurchase requests. However, I do not intend to arrive at any conclusion in that regard, until I have reviewed the pleadings and have had a closer look at the provisions of the Trust Deed. I must also give further consideration to the evidence as a whole and the respective submissions of the parties.

340 As to the appointments of valuers, I remind myself for ease of reference that the valuers were not appointed in the order in which the repurchase requests were received. Curiously, as a consequence of the way in which the various disputes evolved, the appointments were effected in reverse order.

341 Mr Hunt was appointed pursuant to a letter dated 13 January 1992 to the President of the Institute requesting a valuation of the Kelmscott/Magenta real estate (rather than a valuation of the subject units). On the defendants' case at trial, a pattern was then established which conformed to the logic of the situation that the activating letter to the President concerning Balga/Wilden (being a letter dated 12 August 1992 which led to the appointment of Mr Sanderson) and Summerfield/Tace (being a letter dated 12 August 1992 which led to the appointment of Mr Richmond) requested the appointment of a valuer to value the real estate to the intent that in due course he would proceed to a valuation of the subject units, being the task envisaged by the relevant clauses of the Trust Deed.

342 Further, by letter dated 13 August 1992, as a consequence of exchanges between the parties, Magenta was obliged to amend its instructions to Hunt in order to ensure that he provided a valuation of the property in question and the subject units as at the date the Kelmscott/Magenta repurchase requests were lodged, namely, 24 May 1991.

343 On the defendants' case the letter to the President requesting an appointment in each case should not be characterised as a letter whereby the valuation task was fully defined. It was enough to request an appointment and to provide sufficient information for a suitable appointment to be made. The valuer's task was to be defined more exactly once he was provided with the relevant documents including the Trust Deed. It was therefore immaterial in the circumstances of the present case that the activating letter to the President in each case referred to a valuation of the real estate rather than to a valuation of the subject units. I will return to the issues surrounding the defendants' contention in due course. In the meantime, it will be useful to turn to the pleadings.

344 The pleadings at trial were contained within a spiral bound document "Papers for the Judge" dated 2 August 2002 containing 338 pages. As I have indicated, various amendments were made as the trial proceeded. However, essentially, the details of the amendments were transferred directly to the volume I have just described. Accordingly, if I refer to any particular pleading I will be referring to a pleading (as amended) within that volume.

345 I pause here to say that it is important, especially in regard to a lengthy trial, that the case be decided by reference to the issues arising on the pleadings, and only by reference to those issues.

346 I find support for this view in what Mason CJ and Gaudron J said in Banque Commerciale SA en Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 286 - 287:

"The function of pleadings is to state with sufficient clarity the case that must be met: Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (In liq) [1916] HCA 81; (1916) 22 CLR 490 at 517, per Isaacs and Rich JJ. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party's right to this basic requirement of procedural fairness. Accordingly, the circumstances in which a case may be decided on a basis different from that disclosed by the pleadings are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities. See, eg, Browne v Dunn at 36_; Mount Oxide Mines_."

347 The defendants submitted that they have not acquiesced in the case being decided on a basis other than the pleaded issues, and do not consent to any broadening of the issues beyond those pleaded. See also Goldsmith v Sandilands [2002] HCA 31; (2002) 190 ALR 370 at 371, per Gleeson CJ.

348 I note in passing also that various rules concerning pleadings are set out in O 20 of the Rules of the Supreme Court 1971. By O 20 r 8(1) every pleading must contain a statement in a summary form of the material facts on which the party relies but not the evidence by which those facts are to be proved. Further, by O 20 r 8(2) the effect of any document or the purport of any conversation referred to in the pleading must, if material, be briefly stated.

349 Thus, prima facie, if a party in the course of a pleading sets out what is said to be the effect of a contractual provision, making it clear, by implication, that the party contends for an interpretation to that effect of the relevant document, it will be bound by the stance reflected in its pleading. The general rule is that a party must plead as the fact the meaning of a document for which he or she contends: Darbyshire v Leigh (1896) 1 QB 554 at 559.

350 The conventional view was that the meaning of words used in a document can be regarded as a question of fact, whether one is dealing with a poem or a legal document. The effect of the words is a question of law: Life Insurance Co of Australia Ltd v Phillips [1925] HCA 18; (1925) 36 CLR 60 per Isaacs J at 78. However, more recently, a neat distinction of this kind has been described as illusory: Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; (1995) 186 CLR 389 at 396. However, it seems that if the meaning of a document which is set forth in a pleading is admitted the case will be decided upon the admitted meaning without the opportunity to tender the document itself or to make submissions about its interpretation or construction: Seaman's Civil Procedure at par 20.8.10.

351 It will become apparent in due course that these remarks (which I will call my "preliminary observations on the pleadings") have a particular relevance to the Balga/Wilden cl 7.4 repurchase request issue. However, in the meantime, it will be useful to begin by describing the structure of the statement of claim.

352 The plaintiffs' introductory pleas are set out in pars 1 - 12 of the statement of claim. The plaintiffs described the Trust entities and asserted that each of the Trust companies were in the effective control of Mr Chesson and Mr Denboer. The position of Mr Chesson as a director of Callao Pty Ltd and as a beneficiary of the S J Chesson Family Trust was described. The position of Mr Denboer as a director of Benrone Pty Ltd and Deltabrook Pty Ltd was described. The statement of claim sets out the various unit holdings of the Green parties.

353 The plaintiffs pleaded that Mr Chesson was at all material times, pursuant to a duty owed to the Green parties, required to act honestly in the exercise of his powers and in the discharge of his duties as a director of Wilden (par 7.6), required to exercise a reasonable degree of care and diligence (par 7.7), required not to make improper use of his position as a director of Wilden to gain, directly or indirectly, an advantage for himself or for any other person or to cause detriment to Wilden (par 7.8). Allegations of the same kind are said to arise out of his association with Tace and Magenta. Allegations of the same kind are advanced against Denboer.

354 The plaintiffs pleaded in par 12 that Mr Kelly was at all material times a beneficiary of the J M Kelly Family Trust, which was registered as the holder of 1,400 units in Summerfield/Tace, and was a director of Tace. He was said to be under duties of the kind just mentioned in respect of Tace.

355 The plaintiffs pleaded in par 13 that by an agreement partly oral and partly in writing made on or about 18 September 1985 between the Green company and Graeme Green, the Green company applied for the allotment to it of 400 units in the Balga/Wilden Trust at a price of $1000 per unit to be financed by a cash payment as to 120 units and by the provision of a trustee's loan as to the remaining 280 units. It is said that 100 units were applied for and on behalf of Graeme Green.

356 It is alleged in the particulars that the investment agreement was constituted by representations made by Mr Chesson to Mr Green for and on behalf of the Green company and Green during conversations in about September 1985. In so far as the agreement was in writing it is constituted by a document titled "Balga Bazaar (1985) Unit Trust Application for Units" dated 18 September 1985 and a document titled "Wilden Pty Ltd Balga Bazaar Shopping Centre" which, inter alia, confirmed the oral representations made by Mr Chesson.

357 It is alleged in par 14.4 that the purchase moneys would not be due for repayment until either the subject centre was sold by Wilden and the Balga Unit Trust was wound up or Wilden effected a repurchase of the Green units pursuant to provisions of the Balga Trust Deed. Interest would accumulate in respect of the loan at the rate of 14.75 per cent per annum. The agreement was subject to the terms of the Balga Trust Deed. No demand would be made by Wilden for repayment of the loan.

358 For ease of reference, I will call the agreement described in par 13 and par 14 of the claim the alleged Balga/Wilden investment agreement.

359 The plaintiffs went on to plead in pars 15 - 18 that fully paid and unpaid units were issued to the Green parties in accordance with the terms of the alleged Balga/Wilden investment agreement. It is said that the purchase of the subject shopping centre was completed on 6 February 1986.

360 The plaintiffs pleaded in par 19 that by letters dated 29 October 1990 and in breach of the alleged Balga/Wilden investment agreement, Wilden purported to demand repayment of loans made to the Green parties.

361 It is said in par 20 that on 7 January 1991 the Green parties lodged repurchase requests with Wilden.

362 The plaintiffs set out in summary form at par 21 of the claim what is said to be the scheme for the repurchase of units with reference being made to cl 7.1 to cl 7.11 of the standard form of trust deed. A plea in this form appears to be put up pursuant to O 20 r 8(2) of the Rules of the Supreme Court, mentioned earlier, which requires that the effect of any document must be stated.

363 It is in that context that the plaintiffs pleaded that a unit holder may request the trustee to repurchase all or any of its units in the Unit Trust. The plaintiffs then put up a plea which had an important effect upon the conduct of the trial and the matters thought to be in issue between the parties. I will set out the relevant plea in its entirety. The plaintiffs pleaded at par 21.2 of the claim that:

"21.2 The price payable by the trustee is to be an agreed value or if no such value can be agreed the current repurchase value as determined by an independent expert valuer."

364 I note in passing that the words "agreed value" are in a lower case form rather than in the upper case form of "Agreed Value" which appears in cl 7.4 of the standard form of Trust Deed. The pleading certainly contemplates that it was open to the parties to attempt to agree a value prior to the matter being referred to an independent expert valuer if agreement could not be reached. Indeed, as appears from the narrative sections of this judgment, there is a good deal of evidence suggesting that this is how the parties viewed the operation of cl 7.4 as the dispute between the parties gradually developed. This view of the meaning and effect of cl 7.4 was admitted by the defendants in par 11 of the statement of defence.

365 I have felt obliged to dwell upon this point because, as will become apparent later, the plaintiffs delivered some closing submissions at the end of the trial which did not appear to be entirely consistent with their pleading in regard to this matter. Put shortly, an assertion was made that cl 7.4 established an inflexible mechanism whereby the price payable for units the subject of a repurchase request could only be determined by a valuer and it was simply not open to the parties to arrive at an agreed value by negotiation. I will return to this point in due course. For ease of reference, if necessary, I will refer to this as the "par 21.2 statement of claim issue".

366 It is said in par 22 of the claim that no value was agreed between the Green parties and Wilden with the result that the price payable by Wilden was therefore to be calculated on the basis of the current repurchase value as determined by an independent qualified valuer. However, (par 23) in breach of the provisions of the Trust Deed Wilden failed or refused and continues to fail or refuse to do any of the things required of it by cl 7, that is, it did not purport to have the current repurchase value determined by an independent expert valuer until 21 October 1992. Further, it failed or refused to offer for sale and to sell such part of the Trust fund as was necessary to repurchase the units or to complete the purchase of the units.

367 The plaintiffs pleaded in par 25 that on a proper construction of the Trust Deed the independent qualified valuer was required to make at the date the repurchase request is received an independent discretionary judgment of the current value of the Trust fund, the disposal costs and an independent determination of the number of units in the Trust.

368 It is said (par 26) that on or about 21 October 1992 Mr Sanderson made a purported written determination as to the current repurchase value of a unit in the Balga Unit Trust as at 3 January 1991. However, (par 27) the determination was of no force and effect as Mr Sanderson was only appointed by the President of the Australian Institute of Valuers to value the Balga Plaza Shopping Centre, Princess Road (Balga), and Lots 8 and 9 Irwin Chambers ("the Trust real estate") and was not appointed to make a determination as to the current repurchase value of a unit.

369 The plaintiffs said (par 29) that Mr Sanderson did not make an independent discretionary judgment of the current value of the Trust fund as at 3 January 1991 (because he only valued the Trust real estate) and did not make any independent discretionary judgment of the quantum of liabilities. He simply adopted the value attributed to the assets of the Trust (other than the Trust real estate) in an auditor's report prepared by N V F Curtis & Associates and the amount attributed to liabilities in the auditor's report.

370 It is said further (par 30) that he did not make any independent discretionary judgment of the quantum of disposal costs or a determination as to the number of units in the Balga Unit Trust. The "relevant date" is said to be 2 January 1991 in respect of the Green company repurchase request and 7 January 1991 in respect of the Graeme Green request (par 32). It is said that on or about 30 June 1992 Wilden purported to accept these repurchase requests but such purported acceptances were disputed by the Green parties.

371 The plaintiffs alleged (par 33A) that by reason of the matters pleaded Wilden knew or ought reasonably to have known that the determination by Mr Sanderson was not made in accordance with the terms of the Balga Trust Deed. Various particulars of the Wilden knowledge are provided, including an assertion (par 33(g)), that the expressed terms of Mr Sanderson's report made it manifest to Wilden and Chesson that the report and the valuation process was affected by the matters complained of.

372 The plaintiffs pleaded (par 33B) that by reason of these matters Wilden was required to inform Mr Sanderson that his determination had not been made in accordance with the terms of the Balga Trust Deed and to take all steps necessary to ensure that he made a correct determination. Wilden's reliance on the determination for its purported acceptance of the repurchase requests was, and continues to be, a breach of the provisions of the Balga Trust Deed and a breach of Wilden's duty as trustee (par 33).

373 It is said (par 34) that since 30 June 1992 the Green parties and Wilden have been in dispute as to the proper price payable in settlement of the repurchase requests. The Green parties have at all material times been and are now ready, willing and able to perform their obligations and to transfer their units upon payment by Wilden in terms of the repurchase request (par 35); each of the Green parties have no liability to repay the loan until completion by Wilden of their repurchase requests (par 36).

374 It is then pleaded (par 37) that by reason of Wilden's breach of the Balga Trust Deed, the Green parties have suffered loss and damage, being the loss of the use of the balance payable by Wilden upon a repurchase of the subject units less the amount of any loan and interest thereon since the relevant dates, namely, 2 and 7 January 1991.

375 The plaintiffs went on in their statement of claim to refer to various alleged breaches of trust by Wilden. It is said that Wilden has failed to make any or any adequate disclosure to the Green parties of its conduct of the Balga Unit Trust and has failed to account generally or at all. The particulars in support of this plea include reference to a number of the matters I touched on in the earlier narrative. It is said (par 43) that without the consent of the Green parties Wilden disposed of the Gillette trip by way of gift. It is said (par 47) that Wilden failed to keep proper accounts and provide financial statements.

376 It is alleged in pars 48 - 61 inclusive that the purported allocation of additional units to Callao, Benrone and Deltabrook initiated at the directors' meeting held on 23 August 1990 and related steps were invalid. The resolutions and related steps purporting to carry the resolutions into effect represented a breach of Wilden's duty to act impartially between unit holders and to treat the Green parties equally with other holders of units in the Balga Unit Trust (par 58).

377 Further, in purporting to make the issue of options to Callao, Benrone and Deltabrook on or about 6 December 1990, and in refusing an issue of options to the Green parties, Wilden purported to exercise its power so as to confer an advantage on each of Chesson, Denboer, Callao, Benrone and Deltabrook to the detriment of each of the Green parties (par 61). It is said that the Green parties have suffered detriment in not being able to acquire options and convert them into units and the holding of options by the other parties gave them the right to dilute the interests of the Green parties in the Trust.

378 For ease of reference, I will call issues raised in pars 48 - 61 the "Balga/Wilden additional units and options issue". I note in passing that the resolution concerning the options was passed at a Wilden directors meeting on 25 October 1990 but the options are said to have taken effect on 6 December 1990.

379 The plaintiffs advanced a claim against Mr Chesson in pars 62 - 70 of the statement of claim. They alleged that he failed to act honestly in the performance of his powers and duties by conferring a benefit on Simon Chesson in respect of the Gillette trip (par 64), he failed to act honestly in purporting to allocate additional units and options to purchase additional units at a time when he did not, and could not, have honestly believed that this was in the best interests of the Balga Trust. What he did was to the particular advantage of Chesson, Callao, Benrone and Deltabrook (par 66).

380 The Chesson remuneration issue arising out of the June 1988 meeting at the Mediterranean Restaurant is referred to in par 67 of the statement of claim. It is said Mr Chesson failed to act honestly in the exercise of his duties as a director by causing Wilden to pay, or to incur a liability to pay, moneys to Mr Chesson to which he had no entitlement, namely, management fees of $1000 per week in respect of the Farmer Jacks Supermarket and an alleged but unspecified Co-op fee. The plaintiffs pleaded in par 68 that on or about 13 June 1988 Wilden agreed to retain Mr Chesson upon the terms therein described, that is, upon terms that conform to the evidence given by Mr Green at trial and to the terms of the June 1988 Bonini note.

381 Various claims are made against Mr Denboer in pars 71 - 75 of the statement of claim. It is said that he failed to exercise a reasonable degree of care and diligence in the performance of his powers and duties (par 71), breached his duty not to make improper use of his position as a director (par 73) and failed to act honestly by causing Wilden, in breach of its duties as trustee, to purport to allocate additional units and options to purchase additional units in the Balga Unit Trust (par 74).

382 The plaintiffs pleaded in par 76 that in the circumstances of the demand by Wilden for repayment of loans by the Green parties, its failure to complete the repurchase requests, its breaches of trust and the conduct of Chesson and Denboer, Wilden conducted the Balga Unit Trust with the fraudulent purpose of causing financial disadvantage to the Green parties and advancing the financial interests of each of itself, Chesson, Denboer, Callao, Benrone and Deltabrook.

383 The particulars of purpose provided in support of this plea include reference to matters mentioned earlier in the pleading such as the issue of additional units and options, the withholding of information, the failure to account, the lack of any honest belief that its conduct in failing or refusing to complete the repurchase requests was in the best interests of the Trust. Reference is made also to the Chesson remuneration issue. It is said that Wilden is not a fit and proper person to remain as trustee (par 76.8) and is not an impartial trustee but acts at the direction of Chesson and Denboer without regard to the beneficial interests of the Green parties (par 76.9).

384 Claims for damages are then advanced on the basis that there has been a loss of the use of moneys that ought to have been paid by Wilden in response to the repurchase requests. In addition, the plaintiffs pleaded (par 80) that the Green parties were entitled, by way of damages, to compound interest on the respective sums due by Wilden to them at the rate of 20 per cent per annum from the date of the receipt of the repurchase requests until payment (par 80). In the alternative, the Green parties claim by way of damages an amount equivalent to the sums claimed by way of interest by Wilden on the loan accounts carried in the books of Wilden in respect of the Green parties.

385 In their prayer for relief (at page 83) the Green parties sought as against Wilden an order that Wilden be removed as trustee and some other fit and proper person be appointed, an injunction restraining Wilden from dealing with the assets of the Trust, an order for specific performance of the repurchase requests, a declaration that the purported issue of additional units and issue of options to purchase additional units is void and of no effect, a declaration that Mr Sanderson's determination by letter dated 1 October 1992 is of no force and effect, an order that the trustee perform its obligations in respect of the repurchase requests pursuant to cl 7.4 of the Balga Trust Deed, damages, and equitable damages. The plaintiffs sought also, as a consequence of events at the commencement of the trial (via the amended par 10), that an account be taken before a Master of the Court as to the income and expenditure of the Balga Unit Trust as and from 30 June 1991 and the plaintiffs' entitlement in respect thereof.

386 I referred earlier in this judgment, in summary form, to the orders for specific performance contended for by the plaintiffs in a minute dated 14 November 2003.

387 The minute of proposed specific performance orders dated 14 November 2003 reads as follows:

1. shall forthwith request the President of the Institute of Valuers to nominate a Valuer to value the units as at the relevant date for the purpose of ascertaining their Current Repurchase Value in accordance with the terms of the Trust Deed;

2. thereafter promptly make available to such Valuer as is appointed by the President the accounts, books and records of the Trust and full details of all assets and liabilities of the Trust as at the relevant date;

3. at the same time in accordance with the Trust Deed make such estimations as may be required and provide them in writing to the said Valuer to enable him to determine the Disposal Costs (within the meaning of that phrase in the Trust Deed) as at the relevant date;

4. upon determination by the said Valuer of the unit value of the Plaintiffs' units:

4.1 forthwith provide the Plaintiffs with a true copy of all the said Valuer's determinations;

4.2 forthwith provide the Plaintiffs with a statement showing:

4.2.1 the value of the Plaintiffs' units determined by the valuer as the Current Repurchase Value;

4.2.2 the amount (if any) owing by each unit holder to the Trustee as at the relevant date;

4.2.3 the amount (if any) owing to each unit holder by the Trustee as at the relevant date;

4.3 the Trustee shall appoint an independent Valuer (who may be the said Valuer) to fix the Value of all or part of the assets of the Trust and to be sold to provide funds to meet the cost of the Current Repurchase Value;

4.4 upon receipt of such valuation forthwith offer for sale the whole or part of the Trust Fund so valued at a price not less than the value so determined;

4.5 upon receipt of an offer to purchase the whole or part of the Trust Fund so offered for sale provided such offer is not less than the value so determined, accept such offer and promptly complete the sale of the Trust Fund or part thereof;

4.6 within 7 days of the receipt by the Trustee of the proceeds of sale pay to the Plaintiffs the Current Repurchase Value without deduction."

388 As indicated earlier in this judgment there was a fiercely contested debate at trial as to what should be regarded as the "relevant date" mentioned in par 1 for the purpose of ascertaining the current repurchase value. In the end, the trial was fought on the basis that in each case this should be viewed as a reference to the date of the repurchase requests actually lodged by the Green parties; that is, in the case of the Balga/Wilden repurchase request, 7 January 1991.

389 Finally, as against Mr Chesson and Mr Denboer, the plaintiffs sought an injunction to restrain them from causing Wilden to deal with assets of the Trust in a manner detrimental or inconsistent with the rights and interests of the Green parties, an account for all moneys received from Wilden, an order for the payment to the new trustee of all moneys found to have been improperly received and damages.

390 The statement of claim went on to set out various pleas concerning the Summerfield/Tace and the Kelmscott/Magenta Trust entities. It will be apparent from earlier discussion concerning the no case submissions, and from the narrative section of this judgment, that many of the issues raised against Tace and Magenta, and against the individual defendants (Chesson, Denboer and Kelly) give rise to issues matching the issues raised against Wilden save that the additional units and options issue and certain specific issues, such as the Gillette trip, are clearly confined to the Balga Unit Trust.

391 In essence, the plaintiffs alleged that their entry into the Trusts were governed by an investment agreement whereby they would not be required to discharge outstanding loans before satisfaction of their repurchase requests. They alleged a lack of compliance with the repurchase procedure in that the trustees failed to effect the appointment of valuers.

392 Further, and in any event, the determinations purportedly made by the valuers were not in accordance with the Trust Deeds because the valuers made no independent discretionary judgment as to the value of the relevant Trust fund. They merely (and incorrectly) adopted the values attributed to the assets and liabilities and disposal costs of the Trust funds in auditors' reports prepared by Mr Curtis.

393 In essence, as to Tace, the plaintiffs raised the repurchase procedure/compliance issue and alleged that the trustee had failed to perform the duties prescribed by cl 7, that is, it was said that the purported determination of the current repurchase value of a unit by Mr Richmond dated 21 October 1992 was of no force and effect in that he failed to make the required independent discretionary judgment as at the relevant date, being 7 November 1990.

394 The plaintiffs pleaded (par 116) that on or about 30 June 1992 Tace purported to accept the Green repurchase requests with the net balances offered being $193,370.35 to Green & Co and $141,975.12 to Graeme Green. Since that time the parties have been in dispute as to the proper prices payable, but the Green parties (par 120) have at all material times been ready, willing and able to perform their obligations.

395 It is said further, in regard to Tace (par 123) that the various steps whereby on or about 14 September 1990 Tace purported to repurchase 300 units held by Callao and 175 units held by Benrone in the Summerfield Unit Trust at a price of $1350 per unit (giving rise to payments of $405,000 or thereabouts to Callao and $236,250 or thereabouts to Benrone) was in breach of Tace's duty to act impartially, and thus a breach of trust, in that the purported repurchase was funded by unspecified cash reserves held by Tace, borrowings of $300,000 from the ANZ Bank, and resulted in financial benefits to Callao and Benrone. Further, it was calculated to cause financial disadvantage to the Green parties in that it depleted the cash reserves of Tace and devalued their units in the Trust and shares in the company. It was said that the steps taken amounted to a fraud in equity by each of Chesson, Denboer and Kelly (pars 132 - 140). For ease of reference, I will call this the "Tace repurchase of Callao/Benrone units" issue.

396 The plaintiffs pleaded also (pars 142 to 150) that the events underlying the Tace repurchase of Callao/Benrone units issue amounted to misleading or deceptive conduct by Tace conduct contrary to s 52 of the Trade Practices Act 1974 (Cth).

397 It was said further in support of the Tace misleading and deceptive conduct claim that pursuant to s 75B of the Trade Practices Act Chesson, Denboer and Kelly were liable to the Green parties jointly and severally with Tace for the loss and damage contended for.

398 The plaintiffs alleged in the particulars accompanying this claim that the value of the units held by the Green parties was reduced by reason of the Summerfield Trust undertaking a borrowing of $300,000 from the ANZ Bank at an annual interest cost of $25,567.32 for the year ended 30 June 1991 together with fees and expenses of $5048.08. These figures were translated into a cost per unit of the borrowing for the periods mentioned in the pleading.

399 As to Magenta, the plaintiffs contended again that there was a failure on the part of the trustee to perform the duties prescribed by cl 7 of the Trust Deed. Further, the purported written determination as to the current repurchase value of a unit in the Kelmscott Trust as at 24 May 1991 contained in a letter signed by Mr Hunt dated 19 November 1992 was of no force and effect (par 87).

400 It is said he was only appointed to value the real estate, and, in any event, he did not make an independent discretionary judgment of the current value of the Trust fund.

401 Breaches of trust are alleged against Magenta in failing to apply the provisions of the Trust Deed and in failing to make adequate disclosure and to account. These allegations are accompanied by claims for breach of duty against Chesson, Denboer and Kelly which are said to amount to fraud in equity.

402 I note in passing, as was conveyed to me by counsel in opening the defendants' case (transcript page 2793) that the plaintiffs' claim against Magenta, unlike the claim against the other two trustees, is not a claim for an order that Magenta be removed as trustee of the Unit Trust. There is no claim against Magenta alleging a fraudulent purpose of causing financial disadvantage to the plaintiffs.

403 For the sake of an orderly exposition, it will be useful at this stage to focus principally upon the disputed issues concerning Balga/Wilden in the expectation that rulings upon the Trust provisions and loan arrangements concerning that trust will be of assistance later in resolving matters in dispute concerning Summerfield/Tace and Kelmscott/Magenta.

404 Accordingly, rather than traversing the pleadings at length concerning the two latter Trusts, let me now turn to the statements of defence with a view to identifying with greater particularity the matters in issue concerning the Balga/Wilden Trust and related activities.

405 By their statements of defence the defendants set out various specific admissions and denials of assertions reflected in the statement of claim. The size of the pleadings makes it unrealistic to deal with each of these responses. Accordingly, I will limit my summary of the defence case to the principal areas of disagreement and to the countervailing assertions relied upon by the defendants. In essence, each of the defendants denied that they were liable to the plaintiffs as alleged.

406 The defendants denied that Chesson and Denboer exercised effective and ultimate control over Wilden, and over Callao and Benrone respectively and denied that duties of the kind alleged in pars 7.6 - 7.8 of the statement of claim were owed to the Green parties as alleged. The defence case was that any such duties were owed to Wilden and not to the individual unit holders.

407 The defendants admitted that on or about 18 September 1985 the Green parties applied to Wilden for the issue of 400 units in the Balga Trust at a purchase price of $1000 per unit and received allotments as alleged but denied that these events were carried into effect pursuant to the alleged Balga/Wilden investment agreement whereby no calls were to be made in respect of loan arrangements or otherwise.

408 It is said that the Green parties were obliged to repay loans as all the other unit holders did in respect of their loans prior to the commencement of proceedings. Reference is made (par 5(b)) to repayment of part of a Green loan in July 1990 when so required by Wilden. It is said (par 9) that on 25 October 1990 the directors of Wilden resolved that loans be repaid with the result that demands for repayment were made of the Green parties by letters dated 29 October 1990.

409 Wilden admitted (pars 10 and 11) that repurchase requests were received from the Green parties on or about 2 and 7 January 1991 as alleged. Wilden admitted (par 11) that no value was agreed with the Green parties.

410 I digress at this point to remind myself that it was in par 11 of the statement of defence that the defendants responded to the matter I described earlier as the par 21.2 of the statement of claim issue. By their pleading at par 11 of the statement of defence the defendants admitted that by cl 7.4 of the Trust Deed the price payable by the trustee is to be an agreed value or if no such value can be agreed the current repurchase value as determined by an independent expert valuer. As I have indicated, the matters in issue at trial were fought essentially upon the basis that cl 7.4 allowed for the parties to try and arrive at an agreed value by negotiation.

411 It is said further in par 11 of the statement of defence that as at 7 January 1991 Graeme Green was indebted to Wilden in the sum of $85,365.86 (being the balance of the loans to it) plus interest thereon as from 1 July 1989, the total being greater than the value of his 100 units. Wilden was at all material times entitled, in equity, to deduct from the repurchase value of Graeme Green's 100 units the balance of the said loans and interest plus other entitlements including remuneration payable to Chesson & Co by Wilden for its services relating to the repurchase of 2 per cent of the repurchase value of the units (or alternatively other reasonable remuneration). There was thus no need for any part of the Trust assets to be converted into cash to enable the repurchase to be completed.

412 Wilden acknowledged (par 12) that on or about 21 October 1992, Mr Sanderson, an independent qualified valuer, duly valued each of the Green units at $886.82.

413 As to the allegation in par 23 of the claim that in breach of the provisions of the Trust Deed, Wilden failed to comply with the repurchase procedure and complete the repurchase of the Green units, Wilden asserted that it was able to complete the repurchase of the Green units without selling Trust assets. Further, and in any event, the solicitors for Green, by letter dated 14 January 1991 discouraged Wilden from obtaining a valuation of Green's units as at 7 January 1991 and until June 1992, negotiated with Wilden with a view to agreeing a price for the units of the Green parties in the context of negotiations towards agreeing the repurchase values of units held by the Green parties in four trading Trusts. It is said that in November 1991 the Green parties pleaded herein complex and unfounded and/or unnecessary allegations and contradictory claims thereby delaying completion of the repurchase.

414 The defendants said further (par 13(c) - (g)) that in June 1992 Wilden made offers to purchase the Green units at a price of $1000 each, which offers were unreasonably rejected in July 1992. Wilden then proceeded to obtain a valuation of the Green units as required by the deed of Trust which was made on 21 October 1992. Wilden denied that the non-completion of the repurchase has been due to any breach of trust as alleged or at all and contended that the Green parties refused and neglected to settle the repurchase. It is said that the delay in settlement of the repurchase has been caused by or contributed to by conduct on the part of the Green parties. It is said (par 17) that Mr Sanderson made a valid and binding determination.

415 It was pleaded (par 21) that after Mr Sanderson had valued the shopping centre and Lots 8 and 9 Irwin Chambers, he reviewed the Trust Deed and the statement of assets and liabilities of the Trust and concluded that the auditor's figures for assets (save for a cost error) and liabilities were essentially reliable. It was against this background, and after taking account of the other matters mentioned in the pleading, that he adopted the auditor's figures and valued the units at $886.82 at the relevant time.

416 The defendants contended (par 22A(vii)) that in the premises the determination by the value was made in accordance with the terms of the Trust Deed contract which, in any event, imposed no obligations on the trustee to implement the repurchase of the Green units or to determine the repurchase value of those units, for the plaintiffs at all material times were at liberty to ascertain the true current repurchase value of their units and to communicate that information to the trustee. I note in passing that this plea, in effect, raises the cl 7.4 trustee's duty issue which gave rise to the defendants' initial no case submission.

417 In summary, then, to this point, the defendants acknowledged receipt of repurchase requests from Graeme Green and Green & Co. However, they contended further (per the cl 7.4 trustee's duty issue) that Wilden was not obliged to activate the repurchase procedure as alleged. Further, and in any event, Wilden did not fail to comply with the repurchase procedure, or, alternatively, any putative lack of compliance can be excused, in that in due course Mr Sanderson was instructed and produced a valid determination as to the value of the subject units. The delay in reaching that point was due to equivocal conduct on the part of the plaintiffs. Further, and in any event, the presence of outstanding loans excused any lack of compliance, bearing in mind that on the defendants' case current repurchase value of the units was exceeded by the outstanding loan debts.

419 As to the alleged breaches of trust by Wilden, the defendants admitted (par 26) that Wilden owed duties of disclosure as alleged, but denied that there was any breach of the same. In particular, the requests for information were made by Mr W.J. Green and he accepted the information and explanations given to him in response to his queries at meetings of Wilden's directors.

420 As to the alleged breach of duty concerning the Gillette trip issue, the defendants pleaded (par 29) that the benefit of competing for the prize as offered to the manager of the supermarket as an incentive and denied that the prize was ever an asset of the Trust. Further, and in any event, the travel arrangements were tacitly approved at a meeting of Wilden's directors on or about 9 June 1990.

421 As to the Balga/Wilden additional units and options issue, the defendants pleaded that on 28 August 1990 the following connected instruments were signed, namely, first, an offer signed by W J Green and Chesson as directors of Wilden to sell to Denboer or his nominee up to 400 units in the Trust at a price of $500.00 each to raise $200,000 for the Trust; second, an offer of the same kind signed by W J Green and Denboer to sell to Chesson or his nominee up to 400 units on the same terms; third, a resolution signed by W J Green on behalf of Green, by Denboer on behalf of Benrone and by Chesson on behalf of Callao and Deltabrook ratifying the resolution bearing upon the proposed allocation and authorising the issue of units at a discount.

422 It is said that the operative resolutions were either moved or seconded by W J Green and that Denboer and Chesson abstained from voting in respect of the resolutions affecting them. It is said that the issue of new units to Callao and Benrone are not liable to be set aside.

423 As to the allegation of invalidity, the defendants pleaded (par 39) that the existing units were not worth $1000 each. The circumstances (that is, the need to raise funds to pay creditors and concern on the part of unit holders about Wilden's financial stability) did exist to justify the issue of units at a price below $1000 each, and in particular, at a price of $500 each.

424 It is said in the particulars supporting the plea that Wilden had been trading in its supermarket at a loss and was in financial difficulties. In or about June 1990 Mr Green had offered to give away his company's units in the unit Trust. In July 1990 Mr Green said at a directors' meeting, and on the telephone, that the supermarket should be burnt down. On 15 July 1990 Mr Green sought to cause Wilden to give away the supermarket business plus some of its equipment and then agreed in writing to sell 300 units to Callao for $1000 each. Further, at a meeting of Wilden's directors on 17 August 1990 the Green parties approved the cancellation of 300 units held by G & A Bonini in consideration of the forgiveness of their indebtedness in the sum of $256,096.78 (their loan from Wilden) and approved the issue of 300 units to Deltabrook Pty Ltd at a price of $256,096.78. The losses sustained by Wilden and its financial difficulties had been discussed at length at directors' meetings of Wilden attended by the Green parties.

425 The defendants pleaded further (par 40) in regard to the allegations of invalidity, that the purpose of the resolution of 23 August 1990 was to raise capital promptly. On 25 October 1990 the directors of Wilden (Denboer, Chesson and Green) resolved to accept Benrone's and Callao's applications for 200 units each at a price of $500 per unit on the basis of prompt payment therefore and that Callao and Benrone could pay for and acquire a further 200 units each at a price of $500 per unit at any time within the next two years. In effect, Deltabrook repaid the balance of Wilden's loan to Bonini of $256,096.78. Mr Green said that he was not interested in purchasing further units.

426 It is said (par 41) that on 23 and 28 August 1990 Chesson pointed out that the financial position of Wilden was such that investors generally would be most unlikely to invest in the Trust. He disclosed that Milone Pty Ltd was interested in acquiring units in the Trust. On or about 23 August 1990 Mr Green brought a chartered accountant, David Coates, to inspect the Balga/Wilden books of account with a view to Wilden being placed in receivership. Mr Coates said to Chesson in Mr Green's presence (and without contradiction) that the contemplated discounted price of $500 per unit was fair. It is said further that Chesson and Denboer reduced their holdings of units in other more prosperous unit trusts to raise funds to be invested in the Balga/Wilden Trust to save Wilden from being wound up. It was fair and reasonable for Denboer and Chesson to offer to save Wilden on terms that Benrone and Callao were granted the said options and since Mr Green's guarantees had been released.

427 The defendants pleaded in the alternative (par 42) that cl 13.7 of the Trust Deed authorised a director of Wilden to acquire units in the Trust and to be interested in transactions with Wilden. Further, at an extra-ordinary general meeting at which the Green parties and all other unit holders were represented it was resolved to alter Wilden's articles to the effect that no arrangement entered into by Wilden with a company in which a director was interested should be rendered voidable by reason of the director's interest therein.

428 It is said that at meetings of Wilden's directors Denboer and Chesson disclosed their interests in Benrone and Callao respectively and in proposed transactions with Wilden and generally. On 28 August 1990 they respectively declared their interests at a meeting of Wilden's directors and it was recorded in the minutes that offers had been made on behalf of their companies to purchase the new units. It is said further that as to the additional units and options issue, resolutions of the directors authorised the conduct complained of. The units in question were issued for the protection of the whole of the trust fund by raising money to pay Wilden's creditors and thereby avoid litigation. It is said further (par 47(f)) that in any event the grant of options did not prejudice in any way the calculation of the repurchase value of the Green units as at 7 January 1991.

429 There is a general averment in par 61 of the statement of defence that, if Wilden acted in breach of trust as alleged or at all, cl 13.4 of the Deed of Trust conferred protection. By that clause Wilden would not be responsible for any breach of trust on the part of Wilden or its legal or other advisers or generally unless it shall be proved to have been committed, made or omitted in person, conscious, fraudulent bad faith by Wilden. Further, and in any event, Wilden acted honestly and reasonably and ought fairly to be excused under s 75 of the Trustees Act 1962. If Denboer and Chesson would otherwise be liable on grounds referred to in s 1318(1) of the Corporations Law, each acted honestly at all material times and ought fairly to be excused under s 1318.

430 For the reasons given earlier, it will be convenient to deal with the statements of defence concerning the Summerfield/Tace and Kelmscott/Magenta Trust entities at a later stage.

431 In essence, these defendants said also that cl 7.4 does not impose any obligation upon a trustee in receipt of a repurchase request to effect the appointment of an independent valuer if a value cannot be agreed. It follows that the defendants were not in breach of any duty in that regard. Further these defendants say that, in any event, the repurchase values of the various units have been properly determined by the respective valuers in accordance with the provisions of each Trust Deed, that the plaintiffs are at fault in failing to complete the repurchase and that none of the defendants has been guilty of any breach of the respective Trust Deeds or of any breach of duty as a director or otherwise or of misconduct of any kind.

432 These defendants plead also that, if (which they deny) Tace or Magenta acted in breach of trust, cl 13.4 of each Trust Deed provides that the trustee is not to be responsible for any breach of trust on its part "unless it shall be proved to have been committed, made or omitted in personal, conscious, fraudulent bad faith" by the trustee.

433 I will deal at a later stage also with various counterclaims against the Green parties. However, in essence, those counterclaims relate to liabilities allegedly arising under the loan arrangements contended for by the defendants including accrued interest.

434 Put shortly, Wilden counterclaims against Graeme Green the sum of $85,365.86 plus interest from 2 December 1990 to the date of judgment. It claims against Greenco the sum of $234,097.56 plus interest from the same date until the date of judgment. Magenta counterclaims against Sharyn Green $37,573.19 plus interest, against Graeme and Julie Green $30,000 plus interest and against William and Norma Green $602,520.61 plus interest. In each case interest is said to accrue at the rates and in the manner described in the pleading as from 9 December 1994 to the date of judgment.

435 It will now be convenient to look at the plaintiffs' reply in regard to the issues concerning the Balga/Wilden Trust entity.

436 As to the defence plea in par 13 of the statement of defence that Wilden was unable to repurchase the Green units without selling Trust assets and was discouraged from proceeding further until June 1992 by negotiations between the parties, the plaintiffs said in their reply (par 2) that if the repurchase had not been effected within 90 days it was Wilden's duty to offer for sale (at a price to be determined by an independent qualified valuer) such part of the trust fund as was necessary to effect the repurchase. The plaintiffs denied that any correspondence from its solicitors could properly have discouraged Wilden as alleged and said that in breach of trust Wilden failed to take any, or any reasonable steps, to comply with its duties. Further, as at 14 January 1991, Wilden had commenced legal proceedings and any "without prejudice" negotiations to resolve matters in dispute were conducted on the basis that Wilden was required to proceed in accordance with the prescribed repurchase procedure.

437 As to the defence plea that if Wilden acted in breach of trust it was excluded from liability by cl 13.4 of the Trust Deed, the plaintiffs pleaded (par 6) that cl 13.4 should be construed strictly against Wilden and did not operate to exclude the trustee company from liability for the breaches complained of. Further, and in any event (par 6.3), Wilden's breaches of trust as alleged were not honest and were committed in circumstances of personal, conscious and fraudulent bad faith by Wilden, and in circumstances where Wilden did not honestly believe its conduct was in the best interests of the beneficiaries.

438 The supporting particulars alleged that Wilden deliberately refrained from requiring performance of the duties imposed upon it by the Trust Deed as part of a course of conduct calculated to deprive the plaintiffs of their just entitlements pursuant to the Trust Deed. These were said to be the entitlement to have their units repurchased as a value properly calculated in accordance with the terms of the Trust Deed, the entitlement to have their units properly repurchased prior to any demand being made for repayment of the loans by Wilden, the entitlement not to have their unit holding unfairly diluted, the entitlement to be offered units or options at the same rate as other persons or unit holders so as not to allow the plaintiffs' unit holding to be unfairly diluted, the entitlement to have the value of the plaintiffs' units preserved, the entitlement to the prompt production of financial and other documents recording the stewardship of the Trust.

439 It is said (par 6.3(e)) that Wilden's actions were calculated to enrich parties other than the plaintiffs being Chesson, Denboer, Callao and Benrone by way of the allocation of additional units in the Balga/Wilden Trust at a rate which was an undervalue, and which was thereby, by way of the increase in units in the Trust, to the plaintiffs' detriment and to the benefit of the parties just mentioned.

440 In par 6.4 of the reply the plaintiffs pleaded further, and in the alternative, to the extent that cl 13.4 purports to exclude Wilden from liability from the consequences of negligence, a breach of trust in bad faith consciously and/or with reckless indifference to the interests of the plaintiffs' beneficiaries, and by not honestly believing its conduct to be in the best interest of the beneficiaries, it is void and unenforceable as against the plaintiffs and is contrary to public policy. It purports to exclude Wilden from liability in respect of an irreducible core of obligations owed by trustees to beneficiaries which are fundamental to the concept of a trust.

441 It is said further, and in the alternative (par 6.5), that the actions of Wilden have vitiated the Trust as it has thereby failed to exercise the core of obligations fundamental to the concept of a trust and owed by a trustee to beneficiaries.

442 The plaintiffs denied (par 8) that Wilden acted honestly and reasonably as alleged in the statement of defence and denied that the defendants were entitled to relief pursuant to s 75 of the Trustees Act 1962 (WA) or otherwise. Chesson and Denboer are said to be barred from any relief pursuant to s 1318(1) of the Corporations Law in that they did not act honestly at all material times and obtained improper personal benefits.

443 Against this background, it will now be convenient to identify the matters principally in issue between the parties.

444 The parties were required by the practice of the Court to file statements of issues. The plaintiffs filed an amended statement of issues dated 7 October 2002 and subsequently filed a statement of issues (second generation) dated 2 April 2003. The defendants filed statements of issue dated 13 and 15 January 2003. I have been assisted by, and have drawn upon, these statements of issues to some extent. However, my formulation of the issues has been determined essentially by my own review of the pleadings. I have been influenced also by a need to keep the principal issues in view before descending to subsidiary issues.

445 Further, as I have indicated, I am of the view that it will be of assistance to me in resolving the myriad of issues to focus initially upon the Balga/Wilden issues. Findings in regard to those issues will facilitate the resolution of similar issues concerning the Summerfield/Tace and the Kelmscott/Magenta entities. Accordingly, for the time being, unless otherwise indicated, my observations will be confined to the Balga/Wilden dispute.

446 It emerges from the narrative that at all material times, on the plaintiffs' case, the Green parties were influenced by the notion that their investment in the Balga/Wilden Trust was conditioned by arrangements which were made on or about September 1985 between Wilden and Green & Co and Graeme Green, being partly oral and partly in writing. These arrangements are pleaded as a specific agreement between the parties in pars 13 and 14 of the statement of claim, being the agreement I have called, for ease of reference, the "alleged Balga/Wilden investment agreement".

447 A key feature of the alleged agreement is the supposed term (par 14.4) that loan funds (that is, moneys due in respect of units which were not fully paid) would not be due for repayment until either the Balga Centre was sold and the trust wound up or Wilden effected a repurchase of the Green units pursuant to provisions of the Balga Trust Deed. Further, no demand would be made by Wilden for repayment of loan funds (par 14.8).

448 On the plaintiffs' side, it seems that a belief in the alleged Balga/Wilden investment agreement gave rise to a sense of grievance in mid-1990 when unit holders were called upon to make repayments in reduction of the loans in order to avert the possibility of receivers being appointed due to a down turn in the trading figures. These circumstances in turn reinforced a suspicion that Mr Chesson and Mr Denboer were not administering the affairs of Balga/Wilden with propriety and impartiality. Further, the plaintiffs say that Wilden breached the investment agreement in seeking to call up the loans by letter dated 29 October 1990. This set the scene for lodgement of the Green repurchase requests in early January 1991.

449 I note in passing that at par 19 of the statement of claim the plaintiffs pleaded specifically that by letters dated 29 October 1990 and in breach of the investment agreement Wilden purported to demand repayment of the subject loan.

450 On the defendants' side, a belief that no such agreement existed seems to have encouraged Mr Chesson and Mr Denboer to conclude that the Green parties were behaving unreasonably with the result that demands for repayment of the loans were directed to the Green parties by letters dated 29 October 1990. Moreover, in early January 1991 Wilden's response to the Green repurchase requests was arguably affected by the supposed entitlement to call for repayment of the loans. On the defence case, if the loans were repayable, it might not be necessary to offer assets of the trust for sale in order to meet the repurchase price because the Green loan debts could be set off against the price. In any event, on this view of the matter, it would be reasonable for a trustee company to explore and negotiate about such matters even if this gave rise to a degree of delay.

451 With the benefit of hindsight, it would probably strike an observer that this aspect of the dispute should be examined first. There is a pleaded issue at par 19 of the claim as to whether Wilden breached the investment agreement. Further, if, in law, or in equity, the Green parties were not truly in a position to insist upon compliance with the alleged Balga/Wilden investment agreement then such a finding will tend to weaken their criticisms of Wilden and of Mr Chesson. Such a finding is not necessarily fatal to the plaintiffs' claim concerning an alleged lack of compliance with the repurchase procedure, because, irrespective of any agreement, it was arguably still open to them to contend that the current repurchase value had to be determined in accordance with the provisions of the trust deed and the amount in question be paid, notwithstanding that the Green parties remained liable to meet outstanding calls for repayment of the loan. However, in the absence of any finding to the effect that Wilden or some of its directors were acting in breach of or without regard to the provisions of a binding Balga/Wilden investment agreement, the allegations of impropriety are diminished.

452 All of this suggests that the first principal issue to be resolved concerns the status and effect (if any) of the alleged Balga/Wilden investment agreement. Having regard to the purpose for which the Balga/Wilden Trust was formed and the manner of formation, was there any relationship between the subscription for units and the loan arrangements? Further, upon what terms were the loans made? Were the trustees able to call for repayment of the loans on demand? If not, in what circumstances could they call for repayment?

453 For ease of reference, I will call these issues collectively the "alleged Balga/Wilden investment agreement issue".

454 It will then be convenient to deal with the Balga/Wilden additional units and options issue. I say "convenient" first, because the resolutions in question were initiated in August 1990 (prior to submission of the Balga/Wilden repurchase requests in January 1991); second, because the conduct of the respective parties might be thought to provide a context within which to assess the calling up of the Green loans and the subsequent handling of the Green repurchase requests by the trustees. Findings will be required as to whether the resolutions and other steps bearing upon the additional units and options issue are invalid as alleged in pars 48 to 61 of the statement of claim, and whether this gave rise to breaches of duty. If the issue of the additional units and options was not in accordance with the trust deed, is the trustee entitled to rely upon cl 13.4 or s 75 of the Trustees Act 1962? What relief should be granted? Should the allottees be required to pay an additional sum?

455 I must then determine the status and effect of the two Balga/Wilden repurchase requests lodged by the Green parties in early January 1991. Put shortly, what was required to be done by any unit holder in order to require repurchase of his units in the manner envisaged by the trust deed? Were valid repurchase requests made by the Green parties? What were the obligations of the trustee company upon receipt of a repurchase request? In circumstances where no price had been agreed, was the trustee company obliged to activate the valuation procedure described in cl 7, notwithstanding that cl 7.4 appears to be silent as to which of the two interested parties is to take the required step? Was it open to the trustee to defer taking any steps to effect the appointment of a valuer until it was quite clear that a repurchase price could not be agreed?

456 This aspect of the dispute encompasses what I have called previously the cl 7.4 trustee's duties issue (being the matter the subject of the initial no case submission) It embraces also the par 21.2 statement of claim issue (that is, whether the plaintiffs are bound by a plea which assumes that the price payable after receipt of a repurchase request did not have to be determined by a valuer but could be determined by agreement between the parties). For ease of reference, I will henceforth call these various issues the "Balga/Wilden cl 7.4 repurchase request issue".

457 On the assumption that I will be required to proceed further, and, in any event, for the sake of completeness, I will then be required to determine whether Wilden, in its role as trustee, complied with the repurchase procedure. It will be necessary to examine the instructions given to the valuer, Mr Sanderson, and to make findings as to the adequacy of the steps taken by him and of his determination, having regard to the provisions of cl 7 of the trust deed. This will bring into play the question of whether he exercised an independent discretionary judgment as to certain facets of his inquiry. Findings will also be required as to whether Wilden was obliged to observe the time limits prescribed by cl 7 and to offer a portion of the trust fund for sale in order to meet the repurchase requests. This in turn will require that further consideration be given to the status of the Green loans.

458 I will refer to this cluster of issues as the "Balga/Wilden repurchase procedure/compliance issue".

459 If the repurchase request is found to have been validly dealt with by Wilden, I must proceed to some further issues. Were the Green parties ready, willing and able to settle on the sale of the units? Was Wilden ready, willing and able to settle on the purchase of the units? Which party, if any, was responsible for the repurchase not being completed? What steps must be taken by the parties to complete the repurchase after trial? I will call this the "Balga/Wilden form of relief in the event of compliance issue".

460 On the other hand, if it is found that Wilden did not validly deal with the repurchase requests, it will then be convenient to deal with the further questions of whether Wilden acted in breach of trust by insisting that the repurchase procedure had been complied with and by allegedly failing to attend promptly to the repurchase requests. It will be convenient in this context to examine various allegations of breach of trust. I will call this the "Balga/Wilden breach of trust issues".

461 It will be convenient to determine also whether cl 13.4 of the trust deed, which purports to excuse derelictions of duty other than fraudulent conduct, can be regarded as a valid and effective provision, bearing in mind that, by their reply, the plaintiffs challenge its validity. If the provision is valid and effective, can Wilden rely upon it in the circumstances of the present case in order to avoid liability for breach of trust? Further, can Wilden rely on s 75 of the Trustees Act? I will describe these and related issues as the "protective provisions issue".

462 Against this background, if it be held that the repurchase requests were not validly dealt with, and that this and other matters gave rise to breaches of trust, I must give consideration to the appropriate form of relief.

463 I will have to determine whether the plaintiffs are entitled to orders removing Wilden as trustee. Findings will be required as to whether Wilden was entitled to demand repayment of the Green loans and, if so, the manner in which the plaintiffs' obligation in that regard is to be related to any relief available to them by way of specific performance or otherwise in respect of the repurchase requests. Findings will be required as to whether the Green parties are still unit holders and shareholders of the Balga/Wilden entities. Are the plaintiffs entitled to specific performance? Are the plaintiffs entitled to compound interest or equitable damages for delay or damages for loss of use of the funds and how are these to be calculated or assessed? I will call this the "Balga/Wilden forms of relief issue".

464 Finally, it will be necessary to determine to what extent, if any, the plaintiffs are entitled to relief against the individual defendants, namely, Chesson, Denboer and Kelly, in respect of the affairs of the Balga/Wilden Trust.

465 However, before proceeding to a resolution of the various issues, it will be convenient to look at some legal principles bearing upon the administration of trusts including the effect of protective provisions such as cl 13.4 of the Trust Deed and s 75 of the Trustees Act 1962.

Legal principles re breach of trust and equitable fraud issues

Legal principles re administration of trusts

466 It is the duty of a trustee to adhere to the terms of the relevant trust deed. Other equitable rules are to be applied subject to any provisions contained in the trust instrument itself. In addition, it is the duty of trustees to act fairly by all the beneficiaries and to keep proper accounts. A trustee should exercise the same diligence and prudence as an ordinary prudent man of business would exercise in conducting that business if it were his own subject to the circumstances of the case: Speight v Gaunt (1883) 9 App Cas 1 at 19.

467 Where the trustee deviates from the terms of the Trust Deed, he acts at the peril of failing to satisfy the Court that the deviation was necessary or beneficial. Harrison v Randall [1852] EngR 127; (1851) 68 ER 562 at 567. A trustee who acts as a protagonist for some beneficiaries and in antagonism to others commits a breach of trust and may be discharged. Hunter v Hunter [1938] NZLR 520.

468 A trustee must not abuse his position by making it a means of profit or benefit to himself or any third party. This means that the trustee must account for benefits or gains obtained in circumstances where there was an actual or significant possibility of a conflict between personal interest and fiduciary duty. Further, he must account for any benefit or gain obtained by reason of or by use of his fiduciary position or of opportunity or knowledge resulting from it.

469 Trustees may receive remuneration where this is expressly or impliedly provided for in the instrument of trust or where there is a special agreement between the trustees and the beneficiaries that the trustees shall be paid for their services. The courts are wary about upholding such agreements and will refuse to enforce them where there appears to be the slightest sign of unfairness or undue pressure.

470 A trustee has a positive duty of disclosure to a beneficiary. This duty involves an obligation to keep proper accounts and to have them always ready when called upon to render them. Kemp v Burn [1831] EngR 10; (1863) 6 ER 740. The duty is to provide a full rather than a reluctant response to a request for information by the beneficiaries. Re Whitehouse [1982] QdR 196.

471 The powers and duties of trustees are described in the Trustees Act and are discussed in various texts including Jacobs, "Law of Trusts in Australia" (6th ed) at 406 to 554. I note in passing that by cl 12 of the Balga/Wilden Trust Deed the trustee is empowered to carry on any trade or business and to employ any person accordingly and to decide the remuneration to be allowed and paid and the amount of all charges and expenses. By cl (15) the trustee is empowered to determine generally all matters as to which any doubt, difficulty or question may arise under or in relation to the execution of the Trusts and the powers under the Deed. By cl 12(25) he may do all such other things as may be incidental to the exercise of the powers conferred on the trustee.

472 At a later stage I will have occasion to look in more detail at cl 13.4 whereby the trustee covenants to exercise all due diligence in protecting the rights of unit holders provided that the trustee shall not be responsible for any loss occasioned by the exercise of any power or any breach of duty or trust whatsoever unless it be proved to have been committed in person or conscious fraudulent bad faith by the trustee.

473 It is a well-known rule that a trustee must not abuse his position by making it a means of profit or benefit to himself or any third party: Stuart v Kingston [1924] UKPCHCA 3; (1924) 34 CLR 394 at 401 and Molyneux v Fletcher & Clark [1898] 1 QB 648. The pursuit of interests in conflict with duty arising from fiduciary relation gives rise to equitable fraud.

474 In Chan v Zacharia [1984] HCA 36; (1984) 154 CLR 178 Deane J made various observations at 198 which bear upon the general principle of equity requiring a person in a fiduciary relationship to account for personal benefit or gain. The doctrine is often expressed in the form that a person is not allowed to put himself in a position where his interest and duty conflict. However, the equitable principle governing the liability to account is concerned not so much with the mere existence of a conflict between personal interest and fiduciary duty as with the pursuit of personal interest by, for example, actually entering into a transaction or engagement in which the trustee has, or can have, a personal interest conflicting with the interests of those whom he is bound to protect or the actual receipt of personal benefit or gain in circumstances where such conflict exists or has existed.

475 Deane J went on to say that what is conveniently regarded as the one fundamental rule in fact embodies two themes which, while overlapping, are distinct. He then said at 199:

"Stated comprehensively in terms of the liability to account, the principle of equity is that a person who is under a fiduciary obligation must account to the person to whom the obligation is owed for any benefit or gain (i) which has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between his fiduciary duty and his personal interest in the pursuit or possible receipt of such a benefit or gain; or (ii) which was obtained or received by use or by reason of his fiduciary position or of opportunity or knowledge resulting from it. Any such benefit or gain is held by the fiduciary as constructive trustee (see Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd [1958] HCA 33; (1958) 100 CLR 342 at 350). That constructive trust arises from the fact that a personal benefit or gain has been so obtained or received and it is immaterial that there was no absence of good faith or damage to the person to whom the fiduciary obligation was owed."

476 According to Ford and Lee, "Principles of the Law of Trusts" (loose leaf edition) par 4003,4085 any item that can be treated in law as property can be the subject matter of a trust if the title to the item can be transferred or, at least, its owner is not restrained from declaring that the owner holds it on trust. The subject matter of a trust must be a thing which exists in the physical world (provided it is capable of being owned) or a legal right.

477 The condition that a right must in its nature be capable of assumption by third parties excludes personal rights such as those associated with an individual's personality (for example, reputation) but the condition does not mean that in every case an item must be transferable in order to be classified as property: National Trustees Executors & Agency Co of Australiasia Ltd v Federal Commissioner for Taxation (Cain's case) [1954] HCA 71; (1954) 91 CLR 540 at 558.

478 In equity, the term "fraud" is used to describe that which although falling short of deceit imports the breach of a duty to which the sanction of equity is attracted. Viscount Haldane said this in Nocton v Lord Ashburton (1914) AC 932 at 954:

"It is a mistake to suppose that an actual intention to cheat must always be proved. A man may misconceive the extent of an obligation which a Court of equity imposes upon him. This fault is that he has violated, however innocently because of his ignorance, an obligation which he must be taken by the Court to have known, and his conduct has in that sense always been called fraudulent, even in such a case as a technical fraud on a power. It was thus that the expression 'constructive fraud' came into existence. The trustee who purchases the trust estate, the solicitor who makes a bargain with his client that cannot stand, have all for several centuries run the risk of the word 'fraudulent' being applied to them. What it really means in this connection is not moral fraud in the ordinary sense, but breach of the sort of obligation which is enforced by a Court that from the beginning regarded itself as a Court of conscience."

479 An equitable fraud is not limited to conscious wrongdoing or overreaching, it does not depend upon proof of subjective knowledge in a defendant of the relevant facts. It depends rather upon whether what has happened in the context in which it has happened, appears to a judicial conscience as being so unconscientious that it should not be allowed to stand. Logue v Shoalhaven Shire Council (1979) 1 NSWLR 537 at 555.

480 Actual fraud equates with dishonesty, which is determined objectively viewed in the light of the role and calling of the trustee in question. It connotes, at the minimum, an intention on the part of the trustee to pursue a particular course of action, either knowing that it is contrary to the interests of the beneficiaries or being recklessly indifferent whether it is contrary to their interests or not. If the trustee acts in a way which he does not honestly believe is in their interests, then he is acting dishonestly. It does not matter whether he stands or thinks he stands to gain personally from his actions. A trustee who acts with the intention of benefiting persons who are not the objects of the Trust is nonetheless dishonest because he does not intend to benefit himself. Armitage v Nurse (1998) Ch 241 at 251.

481 Let me now turn to the cl 13.4 protective provision.

The legal principles - The cl 13.4 protective provision

"13.4 The Trustee hereby covenants to exercise all due diligence and vigilance in protecting the rights of Unit Holders provided that the Trustee shall not be responsible for -

(1) any loss or damage occasioned by the exercise of any discretion or power hereby or by law conferred on the Trustee or by failure to exercise any such discretion or power or by any error or forgetfulness whether of law or of fact;

(2) any breach of duty or trust whatsoever -

on the part of the Trustee or its legal or other advisors or generally unless it shall be proved to have been committed made or omitted in personal conscious fraudulent bad faith by the Trustee charged to be so liable. All persons claiming any beneficial interest in over or upon the property subject to this Trust shall be deemed to take the same with notice of and subject to the protection hereby conferred on the Trustee."

483 In essence, then, clause 13.4 provides that the trustee shall not be responsible for any breach of duty whatsoever, unless the breach shall be proven to have been committed, made or omitted in personal conscious fraudulent bad faith by the trustee. I remind myself that the defendant trustee companies sought to rely upon this clause as a plea in the alternative, that is, if there were breaches of trust (which was denied) they were excused by the cl 13.4 protective provision.

484 The plaintiffs plead at par 6 of their reply that cl 13.4 was void and unenforceable as being contrary to public policy in that it purported to exclude Wilden from liability in respect of an irreducible core of obligations owed by trustees to beneficiaries which are fundamental to the concept of a trust. Further, such a clause should be construed strictly against Wilden and, in any event, did not exclude liability in the present case because the breaches of trust complained of were committed in circumstances of dishonesty and bad faith.

485 A provision of this kind was considered at some length by the Court of Appeal in Armitage (supra). In that case a beneficiary had alleged that the trustees had acted improperly in the management of trust property and had subordinated her best interests to the interests of her mother. Clause 15 of the settlement protected the trustee from liability unless such loss or damage was caused by his own actual fraud. A preliminary question arose as to whether cl 15 operated to absolve the trustee from liability for all or any of the breaches alleged in the claim.

486 The Court of Appeal held that the words "actual fraud" in cl 15 excluded constructive fraud and equitable fraud and simply connoted dishonesty. Accordingly, the clause exempted a trustee from liability for loss or damage unless caused by his own dishonesty, no matter how indolent, imprudent, lacking in diligence, negligent or wilful he might have been, and was not void for repugnancy or on the grounds of public policy.

487 A trustee could be said to act dishonestly if he acted in a way which he did not honestly believe was in the interests of the beneficiaries, whether or not he stood or thought he stood to gain personally from his actions. However, in the instant case, the statement of claim did not allege dishonesty on the part of the trustees and therefore they were absolved from liability.

488 Millett LJ observed that it is a duty of a trustee to manage the trust property and deal with it in the interests of the beneficiaries. If he acts in a way which he does not honestly believe is in their interests then he is acting dishonestly. It does not matter whether he stands or thinks he stands to gain personally from his actions. A trustee who acts with the intention of benefiting persons who are not the objects of the Trust is not the less dishonest because he does not intend to benefit himself. Nonetheless, the subject clause exempted the trustee from liability or loss or damage to the Trust property no matter how indolent, imprudent, lacking in diligence, negligent or wilful he may have been, so long as he has not acted dishonestly.

489 His Lordship went on to say that if a trustee consciously takes a risk in good faith and with the best intentions, honestly believing that the risk is one which ought to be taken in the interests of the beneficiaries, there is no reason why he should not be protected by an exemption clause which excludes liability for wilful default. He rejected an argument that a clause which purports to exclude all liability except for actual fraud is void, either for repugnancy or as contrary to public policy because it followed from his earlier reasoning that, in its practical application, such a clause applied to acts of negligence but did not exclude liability for fraud, or acts of dishonesty, being matters lying at the heart of a trustee's responsibilities.

490 He said further that in Wilkins v Hogg (1861) 31 LJ Ch 41 Lord Westbury LC accepted that no exemption clause could absolve a trustee from liability for knowingly participating in a fraudulent breach of trust by his co-trustee. But subject thereto, he was clearly of opinion that a settler could, by appropriate words, limit the scope of the trustee's liability in any way he chose.

"I accept the submission made on behalf of Paula that there is an irreducible core of obligations owed by the trustees to the beneficiaries and enforceable by them which is fundamental to the concept of a trust. If the beneficiaries have no rights enforceable against the trustees there are no trusts. But I do not accept the further submission that these core obligations include the duties of skill and care, prudence and diligence. The duty of the trustees to perform the trusts honestly and in good faith for the benefit of the beneficiaries is the minimum necessary to give substance to the trust, but in my opinion it is sufficient. As Mr Hill pertinently pointed out in his able argument, a trustee who relied on the presence of a trustee exemption clause to justify what he proposed to do would thereby lose its protection: he would be acting recklessly in the proper sense of the term.

It is, of course, far too late to suggest that the exclusion in a contract of liability for ordinary negligence or want of care is contrary to public policy. What is true of a contract must be equally true of a settlement...

The submission that it is contrary to public policy to exclude the liability of a trustee for gross negligence is not supported by any English or Scottish authority."

492 Having reached the position that the respondents were absolved by cl 15 from liability save for loss caused by their own dishonesty, Millett LJ then looked at the question as to whether the statement of claim alleged dishonesty. He noted that allegations of fraud and dishonesty must be pleaded clearly and with particularity. It is not necessary to use the word "fraud" or "dishonesty" if the facts which make the conduct complained of fraudulent are pleaded; but if the facts pleaded are consistent with innocence, then it is not open to the Court to find fraud. He was of the view that certain of the allegations were consistent with honest incompetence. If proved, they would support a finding of negligence, even of gross negligence, but not of fraud. As to instances of that kind, cl 15 operated to absolve the trustees from liability.

493 In my view, it emerges from a consideration of the Armitage case (supra) that cl 13.4 should not be characterised as void and unenforceable on the grounds that it is contrary to public policy. The reasoning of the Court of Appeal discloses that it is permissible to include a clause excluding liability for errors and acts of negligence in a trust document so long as the exclusion does not extend to the irreducible core of obligations which are fundamental to the concept of a trust; that is, the obligation to perform the trusts honestly and in good faith. In the present case, I am not persuaded that the exclusion of liability reflected in cl 13.4 goes too far. It expressly allows for relief in respect of acts of fraud or dishonesty. Accordingly, I rule against the plaintiffs as to their plea concerning public policy.

494 However, this ruling leaves open the question of whether the conduct of the trustee companies and those associated with the management of the companies was not covered by the cl 13.4 protective provision because the conduct was fraudulent or dishonest. As to the various allegations of breach of trust under notice, this will require findings to be made as to whether the conduct complained of was of that order or whether the conduct complained of was of a lesser order (albeit misguided or negligent) or consistent with innocence.

495 As I begin to think about these issues and the application of the reasoning in Armitage (supra) to the present case, I must keep a number of points steadily in mind.

496 First, the clause in Armitage (supra) exempted the trustee in respect of all breaches save for "actual" fraud. In the present case the exemption is couched in different terms and does not apply to "breaches made or omitted in personal conscious fraudulent bad faith" by the trustee. In other words, the trustee can arguably be held liable not only for actual fraud (that is, for acts of dishonesty) but also for unconscientious conduct amounting to equitable fraud because it would be an act of bad faith to fail to comply with an obligation which is enforced by a court of equity. A trustee is not like a contracting party, but is rather the grantee of property that is burdened in a particular way. It would be an act of bad faith to take steps inconsistent with the trust, notwithstanding the presence of a clause purporting to exclude liability.

497 I find support for this view in an illuminating analysis on Armitage (supra) by Dr James Penner in "Breach of Trust" edited by Peter Birks and Arianno Pretto (Hart Publishing) at 241. The learned author submits that the essence of a trust is that the trust property does not form part of the trustee's personal estate. Having accepted that there is an irreducible core of obligations owed to a beneficiary, it must follow from Millett CJ's reasoning in Armitage (supra), that, because the essence of the trust is not a matter of agreement (in that the principal obligations are imposed by rules of equity), an exclusion of liability clause cannot be construed to assist the trustee in cases where he has committed equitable fraud. Further, the author is of the view that an exemption clause of this kind does not extend to breaches of fiduciary obligation whether advertent or not.

498 This approach is consistent with the view that an exclusion clause is to be construed in its context and contra proferentem in a case of ambiguity: Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500.

499 I feel obliged to note in passing that the decision of the Full Court in this State in Permanent Building Society (In liq) v Wheeler (1994) 11 WAR 187 compels me to accept that some duties imposed upon trustees such as the duty to exercise reasonable care are not fiduciary duties. cf Goldfinch: "Trustee's Duty to Exercise Reasonable Care (2004)" 78 ALJ 678. It follows that the cl 13.4 exclusion clause may be sufficient to excuse the trustee from breaches of certain non-fiduciary duties. In that regard, it is significant that Millett CJ in Armitage (supra) concluded that the duties of skill, care, prudence and diligence did not fall with the "irreducible care of obligations" owed by the trustees.

500 Second, I must keep steadily in mind that in the present case, unlike Armitage (supra), the statement of claim contains allegations of fraudulent conduct and dishonesty as against the trustee companies and certain of their directors, namely, Chesson, Denboer and Kelly. There is therefore a basis for findings to be made which may establish that the exemption clause is not available to exclude liability.

501 I will defer my findings in regard to matters of this kind until the time comes to review the facts and circumstances bearing upon particular issues. However, finally, I remind myself that in civil litigation of this kind the plaintiffs bear the burden of proof in respect of the allegations made by them and are required to establish the allegations upon the balance of probabilities. As to allegations of fraudulent conduct, the Judge must be conscious of the gravity of the allegations.

502 I note also that where satisfaction of the civil standard of proof depends on inference, there must be something more than mere conjecture, guesswork or surmise. That is, there must be more than conflicting inferences of equal degrees of probability so that the choice between them is a mere matter of conjecture. If there is, the test is to this effect. The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence, while in the latter you need only circumstances raising a more probable inference in favour of what is alleged. Cross on Evidence (6th Aust ed) par 9055.

503 I must now turn to s 75 of the Trustees Act.

Section 75 of the Trustees Act

504 Section 75 of the Trustees Act is to this effect. If it appears to the Court that a trustee may be personally liable for any breach of trust, but acted honestly and reasonably, and ought fairly to be excused for the breach of trust and for omitting to obtain the directions of the Court in the matter in which he committed the breach, then the Court may relieve him wholly or partly from personal liability for that breach.

505 The High Court had occasion to consider a provision in essentially those terms in Partridge v Equity Trustees Executors & Agency Co Ltd [1947] HCA 42; (1947) 75 CLR 149. In that case an executor was subject to an imperative trust to sell, call in and convert the estate into money. The High Court concluded that, as the trustee company had failed to insist upon payment of a large outstanding debt the loss in question was due to a wilful default or breach of trust on the part of the trustee and it was not able to rely on the protective provisions.

506 Starke, Dixon and Williams JJ observed at 165 that a professional trustee should be particularly careful to act strictly within the line of its duty and would have to establish a strong case before the Court would apply the statutory provision in its favour. In the instant case, the defendant company had acted honestly but it was disputed that it had acted reasonably. The decided cases showed that in considering whether a trustee has acted reasonably the terms of the instrument creating the trust ought to be taken into consideration. If an ordinary businessman might reasonably entertain a particular view of the construction of the instrument, and the action of a trustee would have been justified if that view had been the true one, the trustee cannot be said to have acted unreasonably merely because this view of the construction of the instrument was wrong.

507 Their Honours went on to observe that each case must be decided on its own facts. However, in the instant case, any businessman reading the Will would have concluded that his dominant duty was to get in the debt. The defendant did not do so and did not appear even to have sought advice from counsel or its solicitors. It placed its own construction on the clause and acted accordingly. In all the circumstances, their Honours were unable to hold that the defendant acted reasonably.

508 It seems that the trustee allegedly in default bears the onus of proving that his or her conduct was honest and reasonable and that in all the circumstances of the case, he or she ought fairly to be excused. Craven-Sands v Koch [2000] NSWSC 374; (2000) 34 ACSR 341. The criterion of "honestly" means the trustees must have acted in good faith and for the welfare of the Trust. Cotton v Dempster (1918) 20 WALR 14. "Reasonably" means reasonably in the interests of the estate, not in the interest of the trustees themselves. Re Morish (1939) SASR 305 at 309. It also means acting with a degree of prudence that a person of ordinary intelligence and diligence can be expected to exhibit in the conduct of one's own affairs. Fouche v Superannuation Fund Board [1952] HCA 1; (1952) 88 CLR 609 at 641.

509 Conduct that has been held as unreasonable includes conduct that is negligent or careless, acting in an unauthorised manner without taking steps to ascertain whether the conduct was or was not authorised, doing nothing and simply accepting without enquiry what co-trustees have done and placing a co-trustee in a position to handle the Trust fund when he or she suspect that the co-trustee may misappropriate the Trust funds. Dalrymple v Melville (1932) 32 SR (NSW) 596.

510 Relief from breach of trust does not follow as a matter of course simply because the trustee proves that he or she has acted honestly and reasonably. The Court must look at all the circumstances to ascertain whether the trustee ought fairly to be excused for the breach. The term "ought fairly be excused" means in fairness to the trustee and to the other persons who may be affected. Marsden v Regan [1954] 1 All ER 475 at 481.

511 It emerges, then, from a consideration of these decided cases, and especially Partridge's case (supra) that a trustee may possibly be excused if he can satisfy the Court that he acted honestly and, further, can be said to have acted reasonably because an ordinary businessman might reasonably entertain a particular view of the construction of the instrument, and the action of the trustee would have been justified if that view had been the true one.

512 Having regard to these various principles it will be convenient now to look at the principles concerning directors' duties and liabilities in more detail.

Legal principles re directors' duties and liabilities

513 The power to control the management of a company, its property and affairs is vested in the board of directors. With this power comes the opportunity for mismanagement and fraud. Thus, the law subjects the directors to strict statutory and fiduciary duties: Ford's, "Principles of Corporations Law" (11th ed) at par 8.010. The broad duty to act in good faith overlaps with the statutory requirement that a company officer shall at all times act honestly.

514 The classic exposition of the standard of diligence, skill and care required by the general law is that contained in the judgment of Romer J in Re City Equitable Fire Insurance Co Ltd [1925] Ch 407 at 428. First, a director need not exhibit a greater degree of skill than may reasonably be expected of a person of his knowledge and experience. Second, a director is not bound to give continuous attention to the affairs of his company. Third, a director is, in the absence of grounds for suspicion, justified in trusting other officials or employees of the company to perform their duties honestly.

515 Ipp J referred to these propositions in Vrisakis v Australian Securities Commission (1993) 9 WAR 395. In the course of a lengthy discussion, he noted that precepts of this kind are reflected in the relevant legislation, although the omission of the term "skill" suggests that what the legislature is demanding of honest directors is diligence only. Thus, as to the statute before him, he noted that s 229(2) of the Companies Code was derived from s 124(1) of the Companies Act 1961 which required a director at all times to act honestly and use reasonable diligence in the discharge of the duties of his office.

516 I note in passing that these provisions were in force at the time the subject trusts in the present case were being set up and administered. Under the new regime known as the Corporations Law which operated from 1 January 1991 the duty to act honestly and with care and diligence was repeated in s 232. The general duties of good faith, care and diligence are now reflected in s 180 and s 181 of the Corporations Act which commenced operation on 15 July 2001.

517 For example, s 180 of the Corporations Act 2001 now provides that directors must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they were a director of a corporation in the corporation's circumstances and occupied the office held by and had the same responsibilities within the corporation as the director.

518 I pause to observe that Ch 10 of the Corporations Act contains lengthy provisions dealing with the transition from the old to the new provisions. By s 1370 the object is for companies and individuals to be put in the same position as if the old corporations legislation had been valid Commonwealth legislation and the new legislation to the extent that it contains corresponding provisions were a continuation of the old legislation. In the present case, the pleadings referred mostly to the Corporations Law and I will continue to use that term unless the context requires otherwise.

519 The decided cases establish that at common law in order to fix primary liability on a company it is necessary to consider the mental state of the person or persons who constituted the company's directing mind and will. The search is for those people who are charged with such a high degree of responsibility for the management of the company and they can be said to be acting as the corporation rather than for the corporation. Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1; (1972) AC 153 at 170; Hamilton v Whitehead [1988] HCA 65; (1988) 166 CLR 121.

520 Directors of trust companies owe duties which are imposed by common law and by statute. In addition, the directors are in a fiduciary relationship to the company and cannot use the power conferred on them to obtain a private advantage. Mills v Mills [1938] HCA 4; (1938) 60 CLR 150. The duties of the directors include duties to act in good faith, to exercise powers for a proper purpose and to avoid conflicts of interest. Hospital Products Ltd v United States Surgical Corporation (infra); see also s 181 and s 182 of the Corporations Act (formerly s 229 Companies (Western Australia) Code and s 232 of Corporations Law).

521 The general view is that directors owe duties to the corporate entity rather than to members. Percival v Wright [1902] 2 Ch 421. This view has been recently endorsed as the more appropriate approach by the Full Court in this State in Blakeley v Cook & Ors [2001] WASCA 208.

522 However, the Full Court recognised in the latter case at par 21, that particular circumstances may result in duties of a fiduciary nature being owed by a director to the shareholders. This view is supported by Coleman v Myers [1976] NZHC 5; [1977] 2 NZLR 225 and certain other cases cited by the plaintiffs in their "propositions of law" document dated July 2004 at par 111 to par 117 including Brunninghausen v Glavanics [1999] NSWCA 199; (1999) 46 NSWLR 538.

523 The author of "Ford's Principles of Corporations Law" (supra) observes, at par 8.110, that directors of a trustee company may be liable for loss caused to it by their acts or omissions in maladministration of the company's affairs when the company acted as a trustee. Their general law liability is supplemented by s 197 of the Corporations Act.

524 The learned author goes on to address the question of whether directors of a company which is a trustee are under a duty to consider the interests of beneficiaries under trusts administered by the company. He acknowledges that if directors pay insufficient attention to the interests of beneficiaries, the result may be a claim against the company for breach of trust which could adversely affect the interests of the members and creditors. However, having regard to the orthodox view that directors owe their duties to the corporate entity rather than to members, he tends to doubt that there would be a duty to consider the interests of beneficiaries.

525 The author's view must be considered in conjunction with later discussion at par 9.050, in which, having regard to cases such as Coleman v Myers (supra) and Brunninghausen v Glavanics (supra), the learned author appears to recognise that in certain circumstances a fiduciary duty may be owed by directors to shareholders. Pointers towards the existence of a fiduciary obligation include shareholders' dependence upon information and advice, the existence of a relationship of confidence, the significance of some particular transaction of the parties, and the extent of any positive action taken by, or on behalf of, the directors to promote a particular transaction, and the structure of shareholdings in the company.

526 The learned author observes further that a fiduciary relationship can exist between a director and shareholder where the director occupies a position of particular advantage in relation to the shareholder and special circumstances, such as confidential negotiations to sell the company's business, allow the director to use that advantage to the detriment of the shareholders.

527 Brunninghausen v Glavanics (supra) is a case in point. The Court of Appeal held that a fiduciary duty to shareholders arose where the sole effective director and majority shareholder is a proprietary company took advantage of his special knowledge of a proposed sale of the company business to acquire the only other shares of the shareholder at a gross undervalue without disclosure of the negotiations for sale.

528 I pause to say that, in my view, these decided cases lend support to the notion that in special circumstances of the kind just described, in which the director of a trustee company is in a position of knowledge and influence, that the director of a trustee company may owe fiduciary duties to beneficiaries or unit holders in the subject trust, bearing in mind that the categories of fiduciary relationship are not closed: Hospital Products Ltd v United States Surgical Corporation (Hospital Products/Surgical Staples case) [1984] HCA 64; (1984) 156 CLR 41.

529 Persuasive dicta to this effect by Finn J is to be found in Australian Securities Commission v AS Nominees Ltd & Ample Funds Ltd [1995] FCA 1663; (1995) 62 FCR 504; (1995) 18 ACSR 459 at 474. His Honour said that it is not open to doubt that the particular factual relationship existing between the director of a trustee company and the beneficiaries of a trust may properly warrant the finding of a fiduciary relationship between them.

530 His Honour went on to note that protection can also be afforded in other more orthodox ways. The position now reached in the accessorial liability rule of Barnes v Addy (1874) LR 9 Ch App 244 is such as to render the directors of trust companies particularly and peculiarly vulnerable to suit by the trust beneficiaries for acts which constitute breaches of trust or of fiduciary duty on their company's part.

531 The relevant liability rule can be formulated (conservatively) as one which exposes a third party to the full range of equitable remedy available against a trustee if that person knowingly or recklessly assists in or procures a breach of trust or of a fiduciary duty by a trustee. According to Finn J recent Australian case law is demonstrating that directors of a trust company are vulnerable to this rule because it will often be their own conduct which is causing a company to commit a breach of trust: Biala Pty Ltd & Ors v Mallina Holdings Ltd (No 4) (1994) 13 WAR 11.

532 His Honour said further that, absent an effective exemption clause, if a fiduciary is to be excused from liability that person requires at least the informed consent of the beneficiaries to his or her conduct.

533 I note that in Biala (supra) (which was upheld by the Full Court in Dempster & Biala Ltd v Mallina Holdings Ltd (Biala case) (1994) 13 WAR 124) because Mallina and Dempster Nominees were participants in a continuing venture the latter owed duties to Mallina of the utmost good faith, full disclosure of any fact which might in any degree affect a decision to be taken by Mallina and to refrain from pursuing any collateral advantage without informed consent. Whatever liability attached to Dempster Nominees for breach of these obligations attached to Dempster himself as he had knowingly assisted in that breach. The true question was not whether further information would have caused Mallina to act differently but whether it had received all the relevant information consonant with the fiduciary's obligations so as to enable it to make a properly informed decision.

534 The general rule is that once the breach of fiduciary duty is established the claimant is entitled to relief by way of an account fashioned to suit the circumstances of the case and with a view to putting him in a position in which he would have stood had there been no breach. However, the rule requiring a fiduciary to account for profits must not become a vehicle for the unjust enrichment of the plaintiff: Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544.

535 It has been said that the debate about the identification of a fiduciary relationship is usually between the "entrustment" theory, which has it that a fiduciary relationship will arise whenever one party reposes particular trust and confidence in another - viewing the matter from the perspective of the supposed principal in the relationship - and the "undertaking" theory, which concentrates on the undertaking given by the alleged fiduciary to act on behalf of the supposed principal. Evans, "Equity and Trusts", at par 5.3.

536 The plaintiffs in the present case have set out in the statement of claim various facts and matters which, if substantiated, would establish that the Green parties had a close connection with and reposed a considerable degree of trust in Mr Chesson as the person, for the most part, constituting the directing mind and will of the trustee company. The case was fought at trial on both sides upon the basis that there was an arguable issue as to whether a fiduciary relationship and breaches of consequential fiduciary duties of the kind contended for by the plaintiffs could be made out. The appropriate ruling would depend upon the evidence.

537 Notwithstanding a lack of decisive authority bearing upon this point, I am of the view, consistently with the cases I have just mentioned, that in certain special circumstances directors of a trustee company can be held to owe fiduciary duties to beneficiaries of or unit holders in the subject trust.

538 It is with this view in mind that I will proceed to make my findings at a later stage. In doing so, I will take account of the observations of Rowland J at 172 to 182 in Dempster v Mallina Holdings Ltd (supra) that the remedies for breach of fiduciary duty will usually involve an account, equitable compensation or the implication of a constructive trust attaching to the subject property. His Honour was of the view that it would have been possible to impress a constructive trust on the share held by Dempster Nominees in favour of Mallina. The appropriate form of remedy will depend upon the circumstances including events subsequent to breach.

539 Finally, I am compelled by the pleadings to keep in mind also s 1318 of the Corporations Act. The General Averments part of the statement of defence contained a plea in par 64 that if (which is denied) Denboer and Chesson would otherwise be liable on grounds referred to in s 1318(1) of the Corporations Law, each acted honestly at all times and ought fairly to be excused under s 1318.

540 I note in passing that s 1318 of the Corporations Law concerning exculpation of company officers by the Court is derived from s 535 of the Companies Code which in turn is based on United Kingdom legislation stemming from the report of the Reid Committee 1906. Under the influence of decided cases s 535 of the Companies Code was expressly limited to civil liability: Ford: "Principles of Company Law" (5th ed) at 495. It follows from all of this that for present purposes s 1318 can be regarded as a corresponding provision.

541 Under s 1318 if any civil proceedings against an officer of a corporation for negligence, default, breach of trust or breach of duty, it appears to the Court that the person is or may be liable in respect of the negligence, default or breach, that the person has acted honestly and that, having regard to all of the circumstances of the case, including those connected with the person's appointment, the person ought fairly to be excused for the negligence, default or breach, the Court may relieve the person either wholly or partially from liability on such terms as the Court thinks fit.

542 According to the author of Ford's, "Principles of Corporations Law" (11th ed) at par 8.420, this provision allows relief in proceedings brought by a party other than the company. When s 1318 speaks of a person having acted "honestly" that word appears to be used in the narrow sense as involving absence of moral turpitude. The discretion to relieve is unlikely to be used in favour of a director who benefits from the breach of duty or one who remains in wrongful possession of company property even pending determination of his or her claim for remuneration.

543 Having regard to these various principles it will be convenient now to dispose of certain subsidiary issues.

544 In the course of the narrative, I touched upon certain subsidiary issues which had a striking effect upon the relationship between the parties and which were eventually mentioned in the statement of claim.

545 There were three issues in particular which seemed to give rise to an inordinate degree of controversy, at the time of the disagreement between the parties and at trial. I am referring now to the Balga/Chesson remuneration issue, the so-called arson incident and the Gillette Award issue.

546 On the plaintiffs' side, these incidents were said to demonstrate a lack of honesty on the part of the Chesson group and to underpin the plaintiffs' allegations of breach of trust by Wilden and breach of duty by its directors. On the defendants' side these incidents were said to show that Mr Green and his son Graeme Green began behaving erratically and obstructed the proper administration of the Trusts.

547 I am inclined to deal with these incidents now because they cast light on the nature of the deteriorating relationship between the parties in mid-1990. Indeed, in re-examination, Mr Chesson described the arson incident as "the start of things escalating". Further, in regard to more important matters, these subsidiary issues bear upon the credibility of the principal witnesses on each side and the way in which cross-examination was conducted.

548 The events giving rise to the Balga/Chesson remuneration issue occurred in mid-1988, and were therefore first in time. However, it will be convenient to look initially at the so-called arson incident.

549 It emerges from the narrative that by June 1990 the Green parties harboured grave reservations about the management of Balga/Wilden. The Trust was thought to be incurring losses and the plaintiffs were concerned about an alleged failure to provide information. Further, the plaintiffs had been called upon to make further cash contributions in order to prop up Balga/Wilden.

550 On the other hand, under cross-examination, Mr Denboer characterised Mr Green's attitude in a different way. He said that Mr Green was simply "rattled" by the fact that Balga/Wilden was running at a loss and that personal guarantees might be called up.

551 At a directors' meeting of Wilden on 12 July 1990, it seems that discussion turned to something Mr Green had allegedly said about burning down the shopping centre to make an insurance claim. It was a matter of controversy between the parties at a later stage as to whether the words were spoken in a joking manner. However, the fact is that the insurer took an interest in the matter and the incident became a source of much debate and further friction between the parties.

552 As a consequence of this mood of mutual distrust, the proceedings of the Wilden directors' meeting held on 25 July 1990 were taped by Mr Chesson. There was some controversy as to whether this was done openly or surreptitiously. Certainly, the tape recording became an exhibit at the trial with a transcript (annotated to reflect the defendants' contentions as to what was on the tape) serving as an aide memoire.

553 Mr Chesson said in his witness statement (at par 83) that prior to the 25 July meeting Mr Green had said words to the effect that it was a good idea to burn down the shopping centre and that "we know who burnt down the Bassendean Shopping Centre and that it is easy for an electrician to start a fire". Graeme Green is alleged to have said words to the effect that he agreed with his father's views. Graeme Green allegedly said also that he had connections to people that could break legs, get people bashed and steal cars.

554 According to Mr Chesson, at some time in or about July 1990, he was at the supermarket just before opening time. Mr Green rang through to him, referred to previous talk about burning the place down, and said that he was deadly serious. Mr Chesson said that he told Mr Green to put the thought right out of his mind and hung up. Further phone calls ensued which suggested that Mr Green wished to press the issue. This caused Mr Chesson to drive to the office of his lawyer, Garry Martyn, to discuss the matter. In due course Mr Chesson told Wilden's insurance broker, Mr Lyn Campbell, about Green's assertion.

555 This led to Mr Chesson taking a decision to tape the proceedings at the next meeting on 25 July with a view to getting an acknowledgement on tape that the words had been spoken simply as a joke. A copy of the tape was provided to Lyn Campbell in due course. According to Mr Chesson, Wilden's insurer, Mercantile Mutual, required that a security company be engaged to watch the premises. Mr Chesson referred in evidence to a cheque butt which was said to evidence a payment to a security firm for that purpose.

556 In due course letters were signed by Mr Green stating that he had always intended the suggestion of burning the shopping centre down to be a joke (220 @ DW1237 to DW1241). All of the other three directors signed a letter stating that they accepted Mr Green's assurance that it was a joke (221 @ DW1243 to DW1250). The issue with the insurance company was resolved by these letters.

557 Mr Green provided a different version of the relevant events. He said in his witness statement (at par 166) that prior to a Wilden directors' meeting on 12 July 1990 he overheard Mr Chesson and Mr Denboer engaged in banter with Mr Bonini about burning down the shopping centre to which Bonini answered "We may be Italian but we are not the Mafia".

558 Mr Green said further that on or about 19 July 1990 he spoke with Mr Chesson by telephone on which occasion there was some joking reference to a local supermarket burning down the previous weekend and a further reference to the probability that a fire would solve all Wilden's problems.

559 Mr Green went on to say that prior to attending a Wilden directors' meeting on 25 July 1990 he was feeling exceptionally stressed and had consumed two cans of beer to try and settle himself down. His wife had given him a valium tablet and as he had not had one before he felt that he was somewhat affected by it. He had no recollection of Mr Chesson announcing at this meeting that the meeting was to be taped. Thus, when Mr Chesson asked him "Were you serious when you said you could organise burning down the shopping centre?", Mr Green answered in a flippant manner to the effect that maybe he could and maybe he could not. He was not paying too much attention to what Mr Chesson was saying as his main concern was how the problems of Balga/Wilden were to be solved. He was unaware that Mr Chesson was taping the conversation.

560 Mr Green said further that at the next meeting on 29 July 1990 he was amazed when Mr Denboer announced that they had a tape recording of the earlier conversation and went on to call for Mr Green's resignation due to the insurance company making a request in that regard. There was reference to posting a 24 hour security watch at the premises. Mr Green's immediate reaction was to feel terribly hurt that people he thought were close to him would do such a thing. Mr Chesson and Mr Denboer walked away side by side and were smirking at each other. Mr Green immediately sought legal assistance.

561 Mr Bonini said in his witness statement (par 62) that he recalled some discussion at the meeting on 12 July 1990 about burning down the shopping centre initiated by Chesson and Denboer. He never heard Mr Green or Graeme Green say that it was a good idea to burn down the shopping centre or make statements foreshadowing violent acts. He denied that Chesson discussed the subject of insurance with him. He did recall discussing the issue with Mr Campbell at the supermarket. He attempted to explain to Mr Campbell that whatever was said had been said in jest. As to the meeting of 25 July 1990, he could not recall the tape recorder being placed in the middle of the table where everyone could see it, and he did not know the meeting was being taped.

562 In addition to the testimony given by the parties the 25 July tape was played in Court as an adjunct to the cross-examination of Mr Green. The nature of the exchanges on the tape were of use in evaluating the testimony of the witnesses.

563 There is a degree of ambiguity as to who exactly made the first reference to the possibility of a fire at the Balga/Wilden premises, but I am left with little doubt that in the course of a telephone conversation at some stage prior to the meeting of 25 July 1990 Mr Green floated an idea that the premises could be burnt down with a view to collecting insurance proceeds. I doubt that he seriously proposed that this be done or urged others to take steps in that direction. He simply voiced a thought that had floated into his mind. Unfortunately, given a degree of strain between the parties, that was enough to give rise to an issue that had to be dealt with.

564 I arrive at this conclusion because the tenor of all subsequent discussion was to the effect that it was Mr Green who had voiced the thought, and thus had to withdraw it, or negate it, so as to avoid trouble with the insurer. The exchanges on the tape are consistent with such a view. Further, Mr Green seemed to accept that he had voiced such a thought, albeit at a time when he was under stress, or possibly affected by the tablet he had taken. He sought to explain his actions by saying that it was simply a joke.

565 Put shortly, then, I find that at some stage prior to the meeting of 25 July (the taped meeting) Mr Green said something to Mr Chesson about starting a fire at the premises. I am of the view that this was a random thought without any clear or specific purpose behind it. When Mr Green saw that the idea he had floated struck everyone else as absurd and dangerous, he quickly abandoned the notion. He adopted the stance that his utterance should be written off as a joke. However, by then, the genie was out of the bottle, and it was hard to put it back.

566 I doubt that at any stage Mr Chesson and Mr Denboer were truly alarmed by what had been said. However, Mr Chesson was a sufficiently experienced businessman to see possible repercussions if any damage was subsequently done to the premises and it was found that such an idea had been floated, and discussed to some extent. Thus, I accept that he was bona fide in contacting his insurance broker in order to take advice about the incident, and in taping the meeting of 25 July 1990 in order to obtain evidence that he was not responsible for what had occurred. I do not accept that he was taping this evidence simply to embarrass the Green parties, or to obtain leverage against them.

567 Mr Chesson accepted under cross-examination that he subsequently deceived Mr Green in going through the charade of destroying the tape in the presence of the other interested parties, when in fact he was well aware that there was an extra copy in existence. In his view, a charade of this kind was necessary in the circumstances.

568 It is apparent from this incident, and from other facets of the narrative, that in the period July to October 1990 there was a kind of cat and mouse game going on between the parties, especially in regard to the affairs of Balga/Wilden. In my view, both then, and at trial, both Mr Green and Mr Chesson were conscious of a need to keep adjusting their positions and put the best possible gloss on their actions as various moves and counter-moves were made. The Chesson group and the Green parties had become so deeply suspicious of each other that, to my mind, there was a real likelihood that the prevailing mood distorted their respective perceptions of what occurred. It follows that as to this, and other matters, I did not regard any of the principal witnesses - Mr Green, Graeme Green, Mr Chesson, Mr Denboer and Mr Kelly - as entirely reliable. I have approached the matters in issue at trial, including the arson incident, upon the basis that, wherever possible, I should give weight to and prefer the contemporary record and related documentation to the testimony of the principal witnesses. It is for that reason that I have given particular weight to the exchanges on tape concerning the arson incident.

569 In looking at the contemporary record, I am conscious, from all the evidence I have heard, that the various Trusts were set up in a comparatively informal manner, notwithstanding the execution of formal Trust Deeds. Initially, with the approval of the interested parties, the affairs of the Trusts were conducted in an informal and friendly way. It appears to me that the various investors, including the Green parties, were content to leave managerial matters to Mr Chesson and this probably encouraged him to believe that the unit holders were content for him to act as he thought fit.

570 This view of the matter is reflected in a letter written by an investor who did not become a party to the present dispute, namely, Mr John Baker. His letter to Mr Chesson dated 5 December 1991 appears to me to be an accurate summary of the situation (P465 @ PT402). In that letter he said that the Trusts were set up in an atmosphere of family and friends and therefore the need to provide detailed information and to formalise all procedures was not previously requested. However, he goes on to say that "with the breakdown in some relationships over the past twelve months, the need to tighten up and formalise advice eg the minutes of meetings, has become increasingly necessary".

571 When I speak of placing reliance upon the contemporary documentation, I include not only the letters and formal documents brought into existence at the time the Trusts were set up and when disagreements began to occur but also, for the most part, the minutes and notes of various meetings.

572 I am aware, of course, that a good deal of controversy surrounded the minutes and notes, and as to certain matters there are significant differences between the various records. However, on the whole, the various versions revealed a significant degree of uniformity. Thus, as to many aspects of the dispute I am inclined to give weight to the minutes and notes in piecing together the narrative and testing the credibility of the parties. On those occasions in which a difference in wording had important implications, or where matters have been allegedly omitted, I will resolve the evidentiary issue concerning the matter in question on a case by case basis.

573 I consider that the arson incident was in the nature of a sideshow which had the unfortunate effect of adding to the fractious mood. It was a comparatively minor incident which was blown out of proportion on both sides, and was used thereafter as a means of attempting to demonstrate the duplicity and supposed aggression of the opposing sides. However, for the reasons I have given, I am not satisfied that there is any facet of the controversy which amounted to a breach of trust by Wilden or to a breach of duty by the directors of Wilden. I consider that the controversy originated with an idea floated rather foolishly by Mr Green and that, on the whole, the conduct of Mr Chesson, including the taping of the 25 July meeting, was reasonable in the circumstances. I find against the plaintiffs in regard to this issue.

574 Let me pause to make the nature and implications of my findings clear.

575 The arson incident did not give rise to pleaded issues of any real significance, or bring with it any specific claim for relief. The trial was fought upon the basis that the incident had a bearing upon the breakdown in the relationship between the parties, and was of significance in explaining some of the actions of the parties at about that time and subsequently. It will be apparent from my findings that I myself have viewed the matter in that light.

576 It is in this context that I have made findings against the plaintiffs in respect of what is essentially an evidentiary issue. It follows from what I have said also that the findings in question do not shut out the plaintiffs with respect to other issues.

577 It emerges from the narrative that in early August 1990 Mr Green received information which suggested that Mr Chesson may have acted improperly in regard to an award made by Gillette Australia for a display of products at the Farmer Jacks Supermarket owned and operated by the Balga/Wilden Trust. To Mr Green's mind, this was a gratuity or form of benefit to which could possibly be regarded as an asset of Wilden. Mr Green was disturbed to learn that the tickets to Italy comprising the award had been utilised by the former manager of the supermarket, Mr Andrew Prigmore, and by Simon Chesson.

578 On 6 August 1990 Mr Green's solicitors, Bennett & Co, received a letter from Gillette Australia about the matter (374 @ PW462). The letter said that the return trip for two people to the World Cup Soccer in Italy for best display in a supermarket was awarded to Farmer Jacks, Balga. Gillette understood the proprietors of the supermarket to be Wilden Pty Ltd as trustee for the Balga Bazaar Unit Trust, trading as Farmer Jacks Supermarket, Balga. Wilden had directed Gillette to ticket Mr Andrew Prigmore and Mr Simon Chesson for the award.

579 This incident was said to demonstrate that Wilden had acted in breach of trust and that Mr Chesson and Mr Denboer were in breach of their duties as directors of Wilden.

580 According to the plaintiffs' responsive submissions (at par 518) the controversy concerning the Gillette incident was one of the "minor matters" raised by the pleadings arising out of the awarding of the Gillette trip to Andrew Prigmore and Simon Chesson. The plaintiffs alleged that the trip was an asset of the Trust that was disposed of for no value and so as to confer a benefit upon a third party. The defendants denied that there was any impropriety in the awarding of the trip to Balga/Wilden's employee Andrew Prigmore. The relevant claims were set out in various passages of the statement of claim (as to Wilden at pars 40 - 45, as to Chesson at pars 62 and 63, as to Denboer at pars 71 and 72).

581 It was alleged on the pleadings that Wilden owed a duty to the Green parties to maintain property held by it as a trustee. The Gillette Award provided to Wilden a return trip for two people to Italy valued at approximately $14,332 which became an asset of the Balga Unit Trust. In breach of its duty Wilden, without the consent of the beneficiaries, disposed of the trip by way of gift to Prigmore and Simon Chesson. Further, Wilden was in breach of a duty of loyalty which required it to act solely for the economic wellbeing of the Balga Unit Trust.

582 Chesson was said to have failed to act honestly in the discharge of his duties as a director of Wilden by causing Wilden, in breach of its duties, to confer a benefit on Simon Chesson because he knew that the trip had been awarded to Wilden. Further, he breached his duty not to make improper use of his position as a director of Wilden. Denboer was said to have been in breach of duty in failing to exercise a reasonable degree of care and diligence in the exercise of his powers and the discharge of his duties as an officer of Wilden by causing Wilden, in breach of its duties as trustee, to confer a benefit on Simon Chesson, the son of his co-director.

583 The defendants said in answer, at par 29 of the statement of defence, that the prize was not an asset of Wilden and said further that it was not transferable and could not have been sold for the benefit of unit holders. It was the offer of a chance to win such a trip. In support of this plea the defendants led evidence from an expert witness, Mr Robin Tunnicliffe, a witness with managerial and accounting qualifications.

584 I will look at the Tunnicliffe evidence in more detail later in the context of another issue. However, as to this matter, he was of the view that the Gillette Award was a once off occurrence which did not have future economic benefits and therefore, in strict analysis, could not be characterised as an asset of the company.

585 The defendants pleaded also, in the alternative, that at a meeting of Wilden's directors on or about 9 June 1990 Chesson informed W J Green, Denboer and Bonini that Prigmore had won the two tickets and had asked Simon Chesson to accompany him, and no director objected to those matters and Prigmore was granted leave for the purposes of travelling to Italy pursuant to the prize.

586 It will now be useful to look at the evidence bearing upon the matters in contention in more detail.

587 Mr Chesson said at trial in his witness statement (par 56) that in or about February 1990 Andrew Prigmore told him that he wanted to enter the store in the Gillette competition for the best display of Gillette goods. The prize for the best display was a trip for two to Italy. He said that he had a friend at a sports store and could borrow the goods he needed to set up a good display. According to Mr Chesson, he (Chesson) said words to the effect that if Prigmore could win the trip for two he could have it as long as it did not cost the company any money.

588 Mr Chesson went on to say that he saw the display which had been created by Prigmore in his own time. It included sports bags, balls, shirts and shorts relating to soccer, none of which items were supplied by Wilden. To the best of his knowledge Wilden did not produce any items used in the display and creation of the display did not cost Wilden any money other than the purchase of the Gillette stock which was sold from the display.

589 In or about May 1990, when Prigmore told Mr Chesson that he had won the trip to Italy, Chesson said words to the effect that it was his trip as he had won it. Prigmore was minded initially to take either his brother or his girlfriend. However, as they were unable to go, he was eventually accompanied by Simon Chesson who had worked part-time at the supermarket. Mr Chesson and his wife drew up a roster for each of the Boninis, Greens and Denboers to assist with the supermarket while Andrew Prigmore and Simon Chesson were away.

590 I accept Mr Chesson's evidence as to what occurred. As to this issue I am not prepared to hold that Mr Chesson acted improperly in directing that the employee Prigmore could have the trip if he won it. To my mind, Mr Chesson's decision concerning the trip can be characterised as part of his managerial prerogative. I am not persuaded by the plaintiffs' contention that Wilden acted in breach of trust in regard to this matter, or that Mr Chesson was in breach of his alleged fiduciary duties or his duties as a director.

591 I am satisfied that Andrew Prigmore was authorised by Mr Chesson to enter the competition for his own benefit and that the display was created by Prigmore outside business hours for the most part from borrowed items. The witnesses for the Green parties did not appear to dispute that Andrew Prigmore created the display in question or that Prigmore had been given permission to enter the competition. The essence of the complaint was that the Green parties had not been consulted.

592 For the reasons I have given, I find that it was permissible for Mr Chesson to have authorised an employee to enter the competition and this was a legitimate exercise of the broad managerial powers allowed to the trustee company by the Balga/Wilden Trust Deed, and thus by Mr Chesson as managing director of Wilden. Further, I consider that the prize was not transferable and, for the reasons given by Mr Tunnicliffe, cannot be regarded as an asset of the Trust. It follows from this that Wilden and the directors of that company cannot be regarded as in breach of duty in regard to the handling of the supposed asset.

593 Even if I be wrong in the findings I have just set out, I would not, in any event, be prepared to hold that Mr Chesson acted dishonestly in regard to this matter or that Mr Chesson and Mr Denboer can be said to have breached a fiduciary duty or to have acted in a manner that amounted to fraud in equity. It follows from everything I have said to this point that the Gillette Award was a comparatively minor managerial matter and, to my mind, any fair-minded observer would simply conclude that it was appropriate for Prigmore to be rewarded for his initiative and, in the end, it was merely fortuitous that he was accompanied by his friend Simon Chesson.

594 In addition, as a further finding in the alternative, I am of the view that cl 13.4 of the Trust Deed protects Wilden against liability in respect of this matter. In the course of earlier discussion I concluded that the trustee company's duties of skill, care and prudence did not fall within the irreducible core of obligations and should not be characterised as fiduciary duties. Thus, in the absence of any finding of fraud or dishonesty, cl 13.4 would usually be sufficient to excuse the trustee from liability for breach, notwithstanding some errors of judgment or lack of skill on the part of the trustee company. I will apply this approach here. The consequence is that Mr Chesson and Mr Denboer are protected also.

595 Again, one is left with the impression that a comparatively minor incident was blown out of proportion, both at the time of the relevant events, and at trial. Certainly, evidence concerning this issue occupied an inordinate amount of time at the trial.

596 More importantly, the strident tone adopted by the cross-examiner for the plaintiffs in respect of this and the arson incident tended to complicate my assessment of the evidence given by Mr Chesson and Mr Denboer with respect to more important issues. When a tone of outrage is adopted in regard to comparatively minor issues, which prove to be not quite worthy of the outrage, it becomes difficult to know what to make of cross-examination conducted at a similar pitch concerning more important matters. In circumstances of this kind, a degree of defensiveness on the part of the witness under attack seems justifiable. All of this, simply reinforced my perception that wherever possible I should turn firstly to the contemporary record and relevant documents.

597 Let me now turn to the Balga/Chesson remuneration issue.

598 It appears from the narrative section of this judgment that in June 1988 the Balga Supermarket was about to become vacant. The directors of Wilden met at the Mediterranean Restaurant in Subiaco to discuss this matter, although there is some controversy as to whether the meeting took place on 9 June or 13 June 1988. Nonetheless, it seems to have been common ground between the parties on the pleadings and having regard to the evidence of their witnesses at trial, that arrangements were made at the Mediterranean Restaurant meeting for Mr Chesson to manage the supermarket. There is a difference of opinion as to the terms of his engagement as indicated by the presence of the June 1988 Bonini note and the contents of various minutes.

599 The complaint by the plaintiffs pursuant to pars 7.6, 67 and 76 of the statement of claim is that on or about 30 June 1988 Wilden agreed to retain Chesson to manage the Farmer Jacks Supermarket and pay him the sum of $1000 per week in a management fee and an alleged but unspecified co-op fee.

600 The plaintiffs allege that the retainer to manage the supermarket was made on terms that $1000 per week would be paid if, and only if, the supermarket made a profit in excess of $1000 per week. Upon the sale of the supermarket Chesson would receive 50 per cent of the profit on sale. The balance of profit on any such sale would be distributed amongst the other unit holders in proportion to their holding. It is said that the supermarket failed to make any profit in excess of $1000 per week and therefore Wilden was not liable to pay or carry in its books as a liability the fees as claimed by Chesson.

601 The plaintiffs allege that as to this matter Chesson was in breach of a duty owed to the Green parties to act honestly in the exercise of his powers and the discharge of his duties as a director of Wilden (par 7.6 of the claim). The duty was said to arise from the circumstances that Chesson was a director of the relevant trustee corporation and was the person in effect in control of the same at the time when the Green parties were unit holders in a Trust conducted by the company and share holders of the same.

602 The plaintiffs allege in par 67 that Chesson failed to act honestly in the exercise of his duties as a director of Wilden by causing Wilden to pay, alternatively to incur a liability to pay to Chesson, management fees of $1000 per week and an alleged but unspecified co-op fee. According to the particulars, he could not have honestly believed that the payment of these fees to himself was in the best interests of the Trust in that he knew he did not have any entitlement to those fees, the payment of those fees would result in a diminution of the Trust assets, and the fees represented an instance of Wilden as trustee breaching its fiduciary duty to the unit holders of the Trust.

603 The defendants deny that Chesson breached his duty by creating a liability for the disputed fees (pars 51, 52 and 59 of the statement of defence). They plead that the relevant agreement allowed Chesson to receive $1000 per week for services provided by his firm irrespective of whether Wilden derived a profit. It was pleaded that in or about July 1989 Chesson agreed with Wilden's other directors that he would not be paid the weekly fee until Wilden had the funds to pay on the sale of the supermarket business or of the shopping centre and that the relevant services were duly rendered. It is pleaded further that to date Wilden has not paid the fee in question.

604 I pause at this point to mention that the disputed management fees are reflected in an invoice from Chesson & Co to Wilden dated 20 September 1991 which reflects a claim for $74,000 in respect of "running, control of supermarket operation as agreed at $1000 per week for 74 weeks" (505 @ PW800 to PW805). The relevant exhibit includes a detailed statement of account (over several pages) describing a wide range of professional, administrative and secretarial services.

605 It appeared to be common ground at the hearing that the claim reflected in the invoice had not in fact been paid. However, the presence of the claim impacted upon another contentious issue in that the statement of assets and liabilities of the Balga/Wilden Trust as at 3 January 1991, being the statement which was later prepared and supplied to the valuer Mr Sanderson (purportedly as approved by the auditor Mr Curtis) included within the current liabilities an amount of $140,210. There was evidence that this figure encompassed the Chesson claim for $74,000 just mentioned.

606 In other words, the presence of the Chesson claim had the effect of swelling the supposed liabilities of the Balga/Wilden Trust. This was bound to have the corresponding effect of diminishing the value attributed to each unit in that Trust when Mr Sanderson proceeded to determine the current repurchase value of each unit. Thus, on the plaintiffs' case, the Balga/Chesson remuneration issue gives rise to various live issues as to whether Chesson stood to benefit by pressing what is said to be a spurious claim for management fees pursuant to the so-called Mediterranean Restaurant agreement. The plaintiffs contend that his creation of an invoice referable to the Mediterranean Restaurant management agreement (when he was not in fact entitled to claim any management fees because the supermarket did not make a profit under his management) as a means of inflating the liabilities of the Balga/Wilden Trust demonstrates his dishonesty. It demonstrates also a lack of care (amounting to a breach of duty) on the part of Wilden and Denboer.

607 Mr Green said in evidence at the trial that on 13 June 1988 he met at the Mediterranean Restaurant in Subiaco for lunch with Mr Chesson, Mr Denboer and Mr Bonini. He did not believe that it was a directors' meeting. In the course of the discussion Mr Chesson said that he wanted to remove the operators of the supermarket and that Wilden ought to run the supermarket. The directors then agreed to Mr Chesson's suggestion that he would manage the supermarket but upon the basis he would receive 50 per cent of the profits from any sale of the supermarket with the balance being divided between the other unit holders of the Trust (that is, Chesson would not share in the division of profits). Chesson would receive $1000 per week for management of the supermarket only if the supermarket made an operating profit of more than $1000 per week. Mr Green disagreed that Chesson & Co would be reimbursed for all professional fees and out of pocket expenses in running the supermarket.

608 Mr Bonini gave evidence at the trial that he met with the group just mentioned on 13 June 1988 at the Mediterranean Restaurant. The lunch was not conducted as a directors' meeting. In essence, Mr Chesson stated that he would evict the supermarket operator, take over the management himself, and charge $1000 per week or less if profits were not high enough. He would take 50 per cent of profit upon sale of the supermarket and the remaining 50 per cent would be distributed amongst the other unit holders.

609 Mr Bonini said that he felt uneasy about the situation and thus, immediately after the lunch, wrote his own note of what was discussed (being the document I have called the Bonini note).

610 Mr Denboer said that his understanding of the agreement was that when the business was sold Mr Chesson would get 50 per cent on the sale of the business. He said that Mr Chesson was to get a set figure to run the supermarket of $1000 per week. It was to be less if not enough profits were made.

611 A slightly different version of the relevant events was provided by Mr Chesson. He said in evidence at the trial that his firm was to receive reimbursement for all professional fees and out of pocket expenses in running the supermarket together with 50 per cent of the capital profits on resale. The balance of the profits on resale was to be divided equally between all the unit holders. It was his understanding that he was to be paid for his professional fees and out of pocket expenses (which would go towards meeting the salaries of those in his office) with this being fixed in the sum of $1000 per week.

612 Mr Chesson gave evidence that he gave instructions for Exhibit 505 invoice for $74,000 to be prepared and given to Wilden on or about 20 September 1991. He relied on this chronology to explain why the balance sheet as at 30 June 1991 and the notice to unit holders of income and expense report for the year ended 30 June 1991 did not record a liability to Chesson & Co for management services in respect of the amount of $74,000. He was pressed as to why it was not recorded as a liability in the accounts for the following year but could give no clear answer in that regard. He was not able to say whether or not the account had actually been paid. Mr Chesson was pressed also as to when exactly the Chesson/Denboer minutes were brought into existence concerning the initial resolution and a meeting held later which purported to record a resolution allowing for the liability to Mr Chesson to be deferred.

613 The plaintiffs submitted that the Court should find that the agreement in respect of the Balga/Chesson claimed remuneration was as pleaded by the plaintiffs having regard to the evidence of Mr Green (supported to some extent by Mr Bonini) that the fee of $1000 per week was only to be paid if a profit was made. The plaintiffs' position was said to be supported by the fact that Chesson & Co failed to render an invoice for the fees or raise a claim for $74,000 in the relevant books of account until 20 September 1991. The delay in submitting an account could be regarded as an acknowledgement by Mr Chesson that he was not entitled to management fees. Further, Mr Chesson's uncertainty as to whether his firm had been paid or not was said to show that the claim for the amount in question was not substantiated by the evidence.

Findings as to the Balga/Chesson remuneration issue

614 When I review the evidence in regard to this matter there appears to be little dispute that a meeting was held at the Mediterranean Restaurant in Subiaco in June 1988 which was attended by four individuals who were in fact directors of a company administering the Balga/Wilden Trust. It appears to be common ground on the evidence that this was not just a social occasion but an occasion when those present addressed a serious matter of concern, namely, what was to be done about the management of the supermarket.

615 It appears to be common ground that a decision was taken in regard to that matter which allowed for Mr Chesson, through his firm, to take over the running of the supermarket, and this he proceeded to do. I have little hesitation in concluding that this get-together, albeit in a restaurant, should be regarded as a meeting of directors of Wilden which was capable of giving rise to an enforceable decision.

616 Again, it appears to be common ground that the question of remuneration was discussed and that a fee of $1000 per week was under notice. There is a dispute between the parties as to whether this fee was subject to a condition that it would only be payable if the supermarket operated at a profit.

617 The plaintiffs allege that Mr Chesson and Mr Denboer acted improperly in regard to this matter. In my view, the burden of proof lies upon them of establishing, on the balance of probabilities, that an agreement of the kind contended for by the plaintiffs, including the condition concerning profits, was actually made. At the end of the day, I am not satisfied that the condition contended for formed part of the agreement. The evidence of Mr Green and Mr Bonini was rather vague as to this aspect of the matter and not entirely consistent. As appears from the reasons given earlier in this judgment, I am inclined to view the evidence of Mr Green with some caution in regard to a matter of this kind. He was not inclined by habit to fix in his mind exactly what had been agreed, and, to my mind, the reliability of his evidence is affected by the passage of time and the bitterness of the dispute between the parties. Further, and in any event, I am troubled by a divergence between his evidence and that of Mr Bonini in regard to the crucial condition.

618 It is indeed somewhat surprising that Mr Chesson deferred submitting his account for a considerable period of time. However, I am not persuaded that this, of itself, is sufficient to substantiate the plaintiffs' view of the matter, and to overcome the difficulties in the plaintiffs' position that I have just identified. The absence of an account is a somewhat ambivalent factor in the situation. One has to keep in mind that not so long after the agreement concerning the Balga/Chesson remuneration issue was arrived at the Balga/Wilden Trust began to run into financial and cashflow difficulties. To insist that the management fee be paid would have not only exacerbated those difficulties but also have prejudiced Mr Chesson's self-interest as a unit holder.

619 Put shortly, then, I am not persuaded that there was a breach of duty on the part of the trustee company, or a dereliction of duty on the part of Mr Chesson and Mr Denboer in circumstances where, first, the plaintiffs cannot define with exactitude what was agreed and, second, where the plaintiffs appear to have gone along with and consented to the notion that the supermarket should be managed by Chesson & Co for a fee in respect of his services. To my mind, it seems unconvincing that a real estate agent such as Mr Chesson would agree to perform the work in question while subject to a significant restriction upon his right to be remunerated. There is a lack of convincing evidence to the contrary.

620 Accordingly, I find against the plaintiffs in regard to the Balga/Chesson remuneration issue. I am not persuaded that the plaintiffs are entitled to relief of the kind sought in the statement of claim in respect of this matter.

621 Further (again as a finding in the alternative) I am of the view that, in any event, cl 13.4 can be relied upon to excuse the trustee company, and thus the directors in default, from liability in respect of a breach related to a non-fiduciary duty of skill and care in circumstances where no finding has been made of fraud or dishonesty.

622 It follows from everything I have just said that this issue can be resolved by reference to what are essentially findings of fact. Thus, there is no need for me to review at any length the application of the legal principles mentioned earlier bearing upon the administration of the subject Trust. However, I feel obliged to point out that the inability of the plaintiffs to discharge their burden of proof in regard to this matter does not necessarily bring with it the further conclusion that the claim for $74,000 was properly included in a statement of assets and liabilities purporting to describe the situation of the Balga/Wilden Trust as at 3 January 1991. The relevant invoice (Exhibit 505) was not presented, and the debt was therefore not crystallised, until 20 September 1991; that is, after the subject period. I will come back to this aspect of the matter in due course.

623 Having disposed of the three subsidiary issues mentioned earlier, namely, the so-called arson incident, the Gillette Award and the Balga/Chesson remuneration issue, let me now turn to the first of the principal issues, namely, the alleged Balga/Wilden investment agreement issue.

The Balga/Wilden investment agreement issue

624 As to the Balga/Wilden investment agreement issue the plaintiffs' case proceeds from the premise outlined in par 13 of the statement of claim, namely, that an agreement of the kind contended for was made on or about 18 September 1985 between Wilden and Green & Co and Graeme Green. The plaintiffs alleged in par 19 of the claim that by letters dated 29 October 1990 and in breach of the agreement Wilden purported to demand repayment of the loan. The plaintiffs pleaded at par 2 of the reply (page 324 of the pleadings), by way of defence to Wilden's counterclaim in respect of the Green loans, that the Green parties denied liability to repay the loans, essentially upon the basis that the conditions restricting Wilden's ability to call up the loans had not been complied with.

625 The alleged investment agreement is said to have been constituted by representations made by Mr Chesson to Mr Green during conversations in or about September 1985. In so far as the agreement was in writing, the plaintiffs alleged that it was constituted by a document headed "Balga Bazaar (1985) Unit Trust Application for Units" dated 18 September 1985 and a document headed "Wilden Pty Ltd Balga Bazaar Shopping Centre" which confirms the oral representations. The central features of the agreement are said to be that the purchase of units could be financed by a trustee's loan. However, as pleaded in par 14 of the claim, loan funds would not be due for repayment until either the shopping centre was sold and the Balga Unit Trust wound up, or Wilden effected a repurchase of the Green units.

626 Put shortly, the plaintiffs' position was that the Balga/Wilden investment agreement precluded the trustee from calling upon the Green parties for any further payments until the shopping centre was sold or the Green units were repurchased. I note in passing that the plaintiffs pleaded in response to a request for further particulars (at page 91 of the pleadings) that the representations relied on were allegedly made by Mr Chesson at various times prior to the Green parties taking up units in the Trust at Mr Chesson's home and at Bill Green's home during visits by Mr Chesson.

627 The trustee company's powers are broad and it was therefore arguably open to Wilden to make loan arrangements with prospective investors. The thrust of the plaintiffs' case was that the agreement relied upon was a loan contract containing limitations upon the power of Wilden as lender to require repayment. Nonetheless, in evaluating the question of whether an agreement of the kind contended for was made, I am conscious that loan arrangements of this kind with particular investors do not appear to sit comfortably with the obligation of the trustee to administer the trust fund carefully and impartially. I note also that the deed of trust made no provision for loan funds with the result that the cl 7 repurchase procedure is silent as to what should be done about outstanding loans in the event of repurchase.

628 I pause to observe that an agreement of this kind cannot be regarded as effecting a variation to the terms of the Trust Deed, and I did not understand the plaintiffs' plea to be presented on that basis. In effect, the plaintiffs sought to set up a collateral contract, being an arrangement standing to one side of the Trust provisions, part of the consideration for which was an undertaking by the prospective investor to take up units in the Trust. However, on any view of the matter, the first question to be resolved is whether a specific agreement of the kind contended for was actually made.

629 Before turning to the factual background and evidence concerning the relevant negotiations, it will be useful to look briefly at certain legal principles bearing upon an issue of this kind.

Legal principles re investment agreement issue

630 It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty. An intention to contract is essential. In Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422 at 428 a majority of the High Court indicated, consistently with what has been described as the "objective theory" of contractual assent, that the law is concerned, not with the real or subjective intentions of the parties, but with the outward manifestations of those intentions.

631 Cheshire & Fifoot, "Law of Contract" (8th Aust ed) indicates at par 5.1 that an objective test must be applied in determining whether the parties have manifested an intention to create legal relations. The same text recognises at par 28.6 and in following passages that the objective theory has been subjected to criticism. However, essentially, the function of a judge is not to seek and satisfy some elusive mental element but to ensure, as far as practical experience permits, that the reasonable expectations of honest parties are not disappointed. This is the objective test of agreement. Intention is to be determined as a matter of inference from conduct. The parties are to be judged not by what was in their minds but by what they had said or written or done.

632 There are various recent decided cases which support this approach.

633 For example, in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549 Gleeson CJ approved the view that the relevant intention of each party is the intention which is reasonably understood by the other party to be manifested by that party's words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other parties. He observed also that, in the search for an objective determination of the intention of the parties, it may be both appropriate and necessary to have regard to the commercial circumstances surrounding an exchange of communications and, in particular, to the subject matter of those communications.

634 More recently, in Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 the High Court had occasion to consider whether the parties to informal negotiations providing for a clergyman to assume the position of Archbishop of the Greek Orthodox Church in Australia intended to enter into contractual relations. The High Court held that in circumstances of the case there was no ground for inferring an absence of intention to create legal relations on the facts found.

635 Gaudron, McHugh, Hayne and Callinan JJ made certain observations about the intention to create contractual relations at [24] and [25]. They said that it was of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty. To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet the circumstances may show that the parties did not intend to subject their agreement to the adjudication of the court.

636 It was said further that because the search for the intention to create contractual relations requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word "intention" is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties.

637 See also Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 79 ALJR 206 in which the High Court said at par 34 that the legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual belief and intentions. This accords with the general test of objectivity.

638 Let me now return to the circumstances of the present case.

639 The verbal representations relied upon by the plaintiffs depend essentially upon the evidence of Mr Green, for the tenor of Graeme Green's evidence was that in regard to Balga/Wilden he relied essentially upon what his father told him about the investment arrangements. A crucial reference point in regard to Mr Green's understanding of the matter is a letter dated 25 June 1985 written to him by Mr Chesson in his capacity as secretary of Zilna Pty Ltd concerning a proposed application for units in the Fieldgate Trust.

640 Mr Chesson says in the 25 June Zilna letter that he was instructed by the directors to advise that "once a number of units is allocated to an applicant, the trustee has no further power to call funds from any unit holder."

641 The plaintiffs' case was essentially that a proposition of this kind formed part of the discussions at an early stage in the relationship between Mr Green and Mr Chesson as the former weighed up the merits of investing in the Zilna project. It is said that representations made at the time of Mr Green's entry into the Fieldgate Trust were reiterated by Mr Chesson when the time came for the Green parties to apply for units in the Balga/Wilden Trust, and at a later stage in regard to the other two trust entities. Graeme Green said in evidence that his father showed him the 25 June Zilna letter but he personally did not discuss the matter with Mr Chesson.

642 A close look at the 25 June Zilna letter reveals that the document is rather equivocal. It appears to be dealing principally with the trust and company structure and does not expressly purport to be defining conditions bearing upon loan arrangements, save that in par 8 of the letter there is an assertion that where a unit holder has borrowed funds arranged through the trust sufficient funds will be retained to cover the interest on those funds. It might be said that the passage I have just mentioned is limited simply to arrangements concerning the distribution of the rental income of the trust.

643 This brings me to the evidence of Mr Green himself. He acknowledged that as at 1985 he had a very limited knowledge of trust and company structures. I am obliged to keep this factor in mind as I evaluate his evidence, for it is possible that he was simply not in the habit of distinguishing one kind of arrangement from another with the result that there may have been a degree of misunderstanding on his part as to what exactly was being put to him. I note in passing that it was open to investors to take up units entirely on a fully paid basis, this being the course pursued by Mr and Mrs Jones in respect of the Balga/Wilden Trust.

644 Mr Green said in his witness statement (at par 39) that Mr Chesson told him that the Fieldgate/Zilna Trust had been set up to purchase the shopping centre. He recalled that the structure of the trust was that there was some income units and some loan units. He recalled that Mr Chesson told him that the trust was set up in this way to keep track of investors' money. He went on to say (at par 45) that at the time he caused the family trust to invest in the Fieldgate Trust, he did not have any discussion with Mr Chesson about the terms of the loan units or the circumstances in which the amounts would become repayable.

645 Mr Green recalled also that there was no discussion as to what would happen if any other unit holder needed to get his or her money out of the trust. However, prior to applying for the units, he asked Mr Chesson to confirm in writing that he would not ask for more money from Mr Green or the family trust (par 47). Mr Green did not now recall the exact date of the conversation or the precise words used. However, after this conversation he received the 25 June Zilna letter I mentioned a moment ago (1 @ PW1). Later, Mr Chesson spoke to him about another venture.

646 Let me now turn to the documents relied on by the plaintiffs, being the two documents described in par 13.4 of the statement of claim.

647 Mr Green recalled (par 54) meeting Mr Chesson at the Balga Bazaar Shopping Centre and being given a document headed "Wilden Pty Ltd Balga Bazaar Shopping Centre". In earlier discussion, I noted that there were two documents fitting this description which were received as exhibits at the trial. There was therefore a degree of controversy as to which document, if any, Mr Green received.

648 One of the two undated documents fitting the description was a report or memorandum signed by the vendor's agent, Graeme Herps (5 @ PW1036). The Herps report described the premises as a well located retail facility with above average income return and good capital growth comprising 17 retail shops divided into 14 tenancies. The vendors were said to be looking for an asking price of $1 million which would show a return on current income of 13 per cent. The bulk of the tenants were said to have been operating from the centre profitably for some years.

649 Mr Herps, in his role as agent of the vendor, went on to say that his firm managed in excess of 40 shopping centres and is confident that rental increases can be achieved. The Herps document might well leave an impression with a prospective investor that his investment was not likely to give rise to any demands upon him beyond his initial investment but it is silent about the manner in which any investment is to be arranged. It is difficult to accept that this document supports the plaintiffs' case concerning the investment agreement issue.

650 This brings me to the second undated document. At transcript page 885 Mr Grace asserted in the course of opening the plaintiffs' case that the two documents being referred to in par 13.4 of the statement of claim were the application form (4 @ PW63) and the undated initial Wilden document (12 @ PW105); that is, not the Herps document, but rather an undated document referring to the acquisition of the Balga Shopping Centre.

651 However, the latter document (which I previously called the "initial Wilden document") was clearly brought into existence after 18 September 1985 because it refers to the purchase of the shopping centre being completed on 6 February 1986. Accordingly, it is difficult to see how the initial Wilden document could be used to support representations allegedly made prior to 18 September 1985 comprising the Balga/Wilden investment agreement.

652 If indeed Exhibit 12 is being relied upon, it supports the plaintiffs to the extent of evidencing that loan arrangements of the kind reflected in the application form were in place but it weighs against the plaintiffs' case in appearing to be a document prepared after the application for units was made by the Green parties and it contains no explicit reference to any conditions governing the loan arrangements in regard to repayment of loans.

653 As to the ambiguity just mentioned, I note that Mr Green's evidence at transcript 1085 strongly suggests (contrary to Mr Grace's stance at transcript page 885) that the document handed to Mr Green by Mr Chesson per par 54 of the Green witness statement, on Green's first inspection of the Balga Shopping Centre, was the Herps document (5 @ PW1036). Mr Green's evidence at that point went on to suggest that on 3 February 1986 Mr Chesson collected his cheque for $12,000 stamp duty and $100,000 for the purchase and it was on that date he signed the trust deed. On or around 6 February 1986 Mr Green received two trust certificates.

654 This evidence suggests that the only material documents before Mr Green prior to 18 September 1985 or prior to trust units being vested in him on or about 6 February 1986 was the application form and possibly the Herps document (5 @ PW1036). Indeed, Mr Green identified the Herps P5 document in his evidence as the relevant document and referred to no other.

655 Counsel for the defendants explored this issue in cross-examination at transcript 1214. He put to Mr Green that the Court had been told in opening that the document referred to in par 13.4(2)(b) was the initial Wilden document and got him to admit obliquely that the P12 document described a deal which Wilden had entered into "rather than explaining the position as between the unit holders and Wilden". However, the cross-examiner did not pursue or address the Green evidence at transcript 1085 to the effect that the relevant document was the Herps document.

656 According to Mr Green, Mr Chesson told him that the investment was going to be set up on the same basis as Zilna. From this, he believed that he meant that the property would have an identical trust deed and that he would be a shareholder in the company as well as a unit holder. He did not recall speaking to Mr Chesson about his son Graeme Green being involved in the new trust but he believed he must have done. In September 1985 he filled out an application for units in the Balga/Wilden Trust.

657 I pause to say that at the closure of the plaintiffs' case, and shortly before defence counsel commenced his opening address, I sought clarification concerning par 13.4 of the statement of claim. I reminded counsel that in the pleading reliance was placed upon two documents in support of a plea that the parties entered into an investment agreement of the kind alleged, namely, the application for units signed by Mr Green (4 @ PW63) and an undated document titled "Wilden Pty Ltd/Balga Bazaar Shopping Centre". I pointed out that there were two documents which fitted that description being the Herps document (5 @ PW 1036) and the initial Wilden document (12 @ PW105).

658 I noted that Mr Grace for the plaintiffs had opened the case for the plaintiffs on the basis that the document being referred to in the pleading was the exhibit 12 initial Wilden document. However, I went on to mention that the evidence-in-chief given by Mr Green appeared to relate to the exhibit 5 Herps document. However, Mr Pringle for the defendants had cross-examined on the basis (apparently in response to the plaintiffs' opening) that the document in question was the exhibit 12 initial Wilden document.

659 In response to my enquiry as to the identity of the document being relied upon, junior counsel for the plaintiffs, Mr Bennett, confirmed that the document being relied upon was the exhibit 12 initial Wilden document. Leading counsel for the defence, Mr McCusker, confirmed that he understood also that the plaintiffs' case was being presented upon this basis. I indicated that I would hear from counsel for the plaintiffs if they wished to return to this aspect of the matter but nothing further eventuated. The relevant exchanges are reflected in the transcript at pages 885, 1085 and 1214, followed by the exchanges with counsel arising out of my enquiry at page 2679.

660 It follows from all of this that I am obliged to proceed upon the basis that the two documents relied upon by the plaintiffs in support of the alleged Balga/Wilden investment agreement are the application for units form signed by Mr Green (4 @ PW63) and the exhibit 12 initial Wilden document (12 @ PW105). I will look at the evidence in that light and make my findings accordingly.

661 This brings me to the second of the documents specified in par 13.4 of the statement of claim, namely, the application form.

662 This document also is somewhat equivocal. The Application for Units form dated 18 September 1985 (4 @ PW63) points to the existence of arrangements whereby the purchase of units by Green & Co would be financed partly by a cash investment and partly by a "trustee's loan" in the sum of $280,000. However, the Application for Units form is silent as to the circumstances in which the applicant can be called upon to repay or reduce the loan. The form is not executed by Wilden and, in any event, prima facie, its terms cannot be regarded as a variation to the provisions of the trust deed.

663 This document, at best, simply indicates that units could be acquired pursuant to loan arrangements. However, many prospective investors, who were conversant with commercial practices, would be inclined to think that in the absence of specially negotiated conditions as to the term of the loan, prima facie, it would be repayable on demand.

664 It emerges, then, from this review of the evidence that Mr Green does not point to any discussion in particular in which Mr Chesson, on behalf of Wilden, specifically represented that if units were purchased pursuant to loan arrangements no demand would be made for repayment of the loan prior to the sale of the shopping centre or winding up of the trust or a repurchase of the Green units being effected pursuant to provisions of the trust deed. The plaintiffs' case rests essentially upon assertions reflected in the 25 June Zilna letter and Mr Green's evidence in general terms that he was led to believe that he would not be obliged to make further contributions of any kind.

665 The documents relied upon by the Green parties provide scant support for the plaintiffs' case, first, because, as to one of them, there is ambiguity as to what exactly was received and, second, because, in any event, even if it be accepted that the relevant documents are the application form and the initial Wilden document (on the plaintiffs' case as opened by Mr Grace) the documents are silent as to the terms contended for. They do no more than evidence that units could be paid for pursuant to loan arrangements. They say nothing about any restrictions upon repayment of the loans.

666 Graeme Green said in his evidence-in-chief (par 17) that prior to his becoming a unit holder in Balga/Wilden he was shown the Zilna letter by his father. All of his knowledge about the Trust at this time was conveyed to him by his father. It was common ground at the trial, having regard to the pleadings and the witness statement of Mr Chesson, that Mr Chesson did not discuss the Balga/Wilden loan provisions directly with Graeme Green. (However, Mr Chesson said (par 35) that he did take Graeme Green through the terms of the loans at his home before the latter invested in Summerfield/Tace).

667 As a witness for the plaintiff, Mr Bonini agreed that he talked about his proposed investment in Zilna at some length with Mr Chesson including reference to what might happen if things went wrong. According to Mr Bonini (at par 27) there was never any discussion that the loan represented by the loan units would be repayable before the sale of the centre.

668 On the other side, Mr Chesson asserted that in conjunction with Zilna's solicitor, Mr Spencer Laitt, the loan provisions were formulated with care and were given precise expression in a written form. The loan provisions are reflected in a document headed "General Terms for the Issue of Loans to Unit Holders" (445 at DW851). A document similar to the Exhibit 445 document was given to Mr Green before he applied for units in the Balga/Wilden Trust.

669 It emerges from the narrative I have provided that, on the defendants' case, the standard loan provisions were subsequently approved by the directors of each of the three subject trustee companies. Clause 9 of the loan provisions is to the effect that the loan is repayable on demand. However, the expected duration of the loan is said to be for the length of the bill line facility of the ANZ Bank (5 years) or earlier repayment by sale of units, sale of the property or partial or full repayment of the loan.

670 Mr Chesson's evidence was to the effect that at all material times, in talking to Mr Green or the Green parties, his comments on the loan arrangements were consistent with the general terms he had prepared in conjunction with his solicitor.

671 Mr Chesson said in his witness statement that Mr Bonini and he became the initial directors of Zilna. From June 1985 he and Bonini had meetings as the two directors of Zilna. He accompanied Bonini to two meetings with the latter's solicitor, Laurie Shervington. Chesson's recollection is that draft terms for loans from Zilna to unit holders, which he (Chesson) had prepared, were provided by him in writing at the second of those meetings and that those terms were discussed. The draft terms were like those included in the minutes of the meeting of Zilna's directors which he had attended on 8 July 1985.

672 The minutes of the Zilna meeting of 8 July 1985 purport to show that the two directors (Chesson and Bonini) approved the loan provisions, and thus approved the provision (cl 9) whereby the loans were repayable upon demand.

673 Mr Chesson said further that he visited Mr Green at his home and recalled discussing the terms for a loan from Zilna. He did not say to Mr Green at any time that a loan from Zilna would not be repayable before the Fieldgate Shopping Centre was sold or his units were repurchased. Mr Chesson said also that before Mr Green applied for units in the Zilna Trust he accompanied Mr Green to the law firm Northmore Hale Davy & Leake. There, the solicitor, Shervington, went through the loan terms with Mr Green. The loan provisions under discussion corresponded with the provisions adopted by Zilna on 8 July 1985, being the provisions adopted later by the other companies.

674 Under cross-examination Mr Chesson could not recall whether Mr Green saw his solicitor, Shervington, before or after Mr Chesson wrote the 25 June Zilna letter. His recollection was that Mr Green had with him the documents Chesson had provided, namely, the Trust Deed, the Herps document and a document containing the standard loan provisions.

675 It was common ground that Mr Green became a director of Zilna as noted in minutes dated 21 August 1985, along with Mr Denboer and Mr Kelly. According to Mr Chesson the minute book of the company containing all the minutes was brought to every directors' meeting, and was therefore accessible.

676 In September 1985 Wilden was acquired as a shelf company to facilitate the proposed Balga/Wilden project. Mr Chesson and Mr Denboer became directors. In the course of his evidence, Mr Chesson identified minutes of a meeting of the directors of Wilden which he attended on 11 September 1985. These minutes record that a trust was to be formed and reflect the proceedings at that meeting (492 @ DW1617). Mr Chesson was authorised on behalf of Balga/Wilden to purchase the Balga Bazaar Shopping Centre.

677 Mr Chesson said in his witness statement (at par 26) that he recalled discussing with Mr Green, Mr Denboer and Mr Bonini that the terms for the unit holders loans from Wilden would be the same as for the loans made by Zilna to its unit holders. He had several meetings with Mr Green, including one at the shopping centre, over a period of some months before the settlement of the purchase of that shopping centre. His recollection was that on at least one of those occasions he said to Mr Green that the syndicate was being set up in the same way as for Zilna, and that the terms for loans would be the same as Balga/Wilden. On one of those occasions he gave to Mr Green a copy of the Trust Deed for Wilden, a copy of a document setting out the loan provisions and the Herps document (5 @ PW1036).

678 Mr Chesson identified the Denboer/Chesson minutes of a meeting of directors of Wilden (Denboer and Chesson) which he attended on 2 February 1986 (D3 @ DW1620). Those minutes are said to establish that the standard loan provisions were approved by the directors at the meeting in question. They refer to loans being repayable on demand with interest to be at the cost of borrowings from the ANZ Bank.

679 Mr Chesson said that he first became aware of what the Green parties alleged about the terms of the loans by Wilden when he received the pleadings in the present litigation. According to him, Mr Green had not previously alleged that the minutes of the meeting of the directors of Zilna on 8 July 1985 incorrectly reflected the agreed terms. He had not alleged that the minutes of the meeting of directors of Wilden on 2 February 1986 incorrectly reflected the terms of loans to unit holders.

680 Mr Chesson said specifically (at par 30) that he never stated to Mr Green that the loans to be made by Wilden to his company or to Graeme Green would not be repayable before the shopping centre was sold or upon repurchase of their units.

681 Mr Chesson said further in his witness statement (at par 32) that to the best of his recollection the document containing proposed terms for loans discussed with Mr Shervington in 1985 was the same as the document headed "General terms for the issue of loans to unit holders" in the documentation provided to unit holders at the AGM of shareholders and unit holders of Wilden on 27 November 1991 (455 @ DW851). He said that he kept the standard form loan provisions on his computer from 1985 onwards and the wording was included in the minutes of directors of the various companies as and when the loan provisions were approved. Hard copies were printed out from time to time for the benefit of prospective investors.

682 Under cross-examination, Mr Chesson said that he gave to Mr Green a document corresponding in its terms to the document received in evidence "General terms for the issue of loans to unit holders" (455 @ DW851). For ease of reference I will call the document received as an exhibit the "P455 general loan terms document". He could not say where the document actually given to investors was now but the terms in question were stored on his computer. He could not explain why there was no discovery of any such document by Mr Denboer or Mr Kelly, although they too were investors. He had tried to locate the document in question for the purposes of discovery.

683 Mr Chesson was cross-examined vigorously, but he continued to assert that he gave a document like the P455 general loan terms document to Mr Green when he met him at the Balga Supermart premises as a preliminary to Green's investment in the Balga/Wilden project. He told him that the new project would proceed on the same basis as Zilna. He gave Mr Green the Herps document but did not hand him the P12 initial Wilden document as alleged by the Green parties at trial. He said that the latter document was brought into existence in May 1986 after settlement of the Balga/Wilden purchase of the supermarket premises.

684 Mr Chesson was then cross-examined at some length about certain aspects of the P455 loan terms document and his related testimony which did not seem to fit the situation. Clause 2 of the document speaks of interest on loans being at the cost from time to time of the borrowings of the Trust for a bill line facility with the ANZ Bank including all recurring charges. However, it was common ground at the trial that, as it happened, the Balga/Wilden purchase of the supermarket was facilitated by a vendor's loan. A loan from the ANZ Bank was not obtained until a later stage. Further, the Balga/Wilden minutes of 2 February 1986, referring to adoption of the loan provisions, includes reference to the interest and recurring charges being "estimated to be a total of 15%". This not only did not fit the Balga/Wilden situation but also did not correspond to other versions of the loan provisions.

685 This set the scene for further cross-examination in which Mr Chesson was challenged to admit that the P455 general loan terms document was not actually brought into existence until a much later stage, namely, in time for the annual general meeting of Summerfield/Tace held on 14 November 1991 because it was only then, shortly before that meeting, that it became apparent that the loan terms issue might be a significant matter in the dispute between the parties. Graeme Green had commenced legal proceedings and shortly before the Summerfield/Tace AGM had filed a pleading which indicated that the Green parties would contend that the trustee companies were not at liberty to recall outstanding loans unless the restrictions contained in the alleged investment agreement were complied with.

686 Mr Chesson denied these allegations and resisted the challenge to his credibility. In essence, he contended that the standard loan provisions were formulated in conjunction with his solicitor and used first at the time of the Zilna project at which time cl 2 did fit the situation. The loan provisions remained on his computer to be used again and were played out as required. He could not account for every version of the document printed out in hardcopy, and therefore could not be certain as to whether the reference to an estimation of 15 per cent appeared on each occasion. However, he continued to assert that Mr Green had been provided with the loan provisions before entering the Balga/Wilden Trust and had been through the document with his solicitor, Mr Shervington.

687 Mr Chesson denied emphatically that the alleged Balga/Wilden investment agreement was made containing restrictions upon repayment. He acknowledged that he did not give a copy of the loan terms document to Graeme Green prior to the latter's entry into the Balga/Wilden Trust, as he assumed that Mr Green had made clear to his son the nature of the investment arrangements. However, at a later stage, prior to Graeme Green's entry into the Summerfield/Tace project, he (Chesson) went through the loan terms document with Graeme Green.

688 I pause here to say that Exhibit D104, being a letter dated 13 December 1990 from Mr Chesson on behalf of Wilden to Mr Martyn (Wilden's solicitor at that time) is a succinct summary of the defendants' position concerning the loan arrangements. This letter was put in by Mr Chesson in re-examination with a view to rebutting any suggestion that documentation evidencing the loan arrangements was only brought into existence towards the end of 1991, shortly before the Summerfield/Tace AGM, in response to a pleading recently filed by Graeme Green.

689 The 13 December 1990 Wilden/Martyn letter purports to set out the history of the Green loan arrangements in respect of the Balga/Wilden Trust as a preliminary to Wilden's solicitor being instructed to commence recovery for the balance of the loan that was said to be owing. The history reflected in the letter includes reference to an important matter I mentioned earlier in this judgment, namely, that in mid-1990 the Green parties and other investors were called upon to make certain payments to alleviate the financial difficulties of the Balga/Wilden Trust, and apparently did so without objection or any reliance upon conditions precluding further payments of the kind which are now said to form part of the Balga/Wilden investment agreement.

690 The 13 December 1990 Wilden/Martyn letter reads as follows:

1 The initial loan of $200,000.00 was made to WJ Green & Co (1984) Pty Ltd as trustee for the WJ Green Family Trust on 6/2/1986.

2 The conditions for the initial loan is set out in the General Terms for the Issue of Loans to Unitholders attached hereto.

3 The additional loan of $100,000.00 was made to WJ Green & Co (1984) Pty Ltd as trustee for the WJ Green Family Trust on 6/7/1987.

4 The conditions for the additional loan are identical to the conditions for the initial loan set out in the General Terms for the issue of Loans to Unitholders attached.

5. The first and second calls were made on 20/6/90, payable on 26/6/90 and 13/7/90 respectively; as evidenced by Directors' minutes of 20/6/90.

6 The third call was made on or about 12/7/90, payable on 25/7/90; these Directors' minutes are in the possession of Mr GW Green who has refused to deliver up the minutes belonging to Wilden Pty Ltd.

7 The fourth and final call was made on 25/10/90, payable no later than 1/12/90; as evidenced by correspondence addressed to WJ Green & Co (1984) Pty Ltd attached hereto.

WJ Green & Co (1984) Pty Ltd as trustee for the WJ Green Family Trust has not yet paid the outstanding balance and has made no arrangements to pay.

Please initiate legal proceedings against WJ Green & Co (1984) Pty Ltd as trustee for the WJ Green Family Trust of 22 Nolan Way, Bateman, for $234,097.56 being the balance owing.

Yours faithfully

SJ Chesson

Director-Wilden Pty Ltd"

691 It will be useful now to look at the conduct of the parties in mid-1990 when Balga/Wilden was in financial difficulty and the investors turned their minds to an injection of capital in order to save the project.

692 The minutes of a Wilden directors' meeting held 20 June 1990 (207 @ PW353) refer to a motion by Mr Green "that the unit holders immediately finance from external sources a sum of $150,000 and that the $150,000 be shared on the basis of the units held". This is said to have been seconded by Mr Bonini. The same minutes speak of Mr Green moving also that Wilden sell off Farmer Jacks at Balga. Both motions were carried.

693 The first motion clearly contemplated that the unit holders would share responsibility for the amount to be raised in proportion to units held and produce bank cheques within five days. All of this suggests that the reference to finance from external sources meant funds additional to the existing resources. It was certainly the case that five days later the unit holders made various payments.

694 The reality was that payments of this kind had to be regarded as loans to the Trust because there was no talk at this stage of additional units being issued. Equally, such payments had the potential to be regarded as ingoing payments which would serve to reduce the existing loans owed to Balga/Wilden by the various unit holders.

695 The Denboer/Chesson minutes of 25 June 1990 (signed by Denboer as Chairman on 4 July 1990) record that the Chairman obtained various cheques from those present (Bonini $21,951.22; Greenco $29,268.29; Denboer $10,900; Chesson $10,975). It is said that "the moneys received at this meeting were for a reduction of loans to unit holders". The moneys were to be deposited in the R&I Bank account and payments to creditors made from that account.

696 According to Mr Chesson, it was explained to the meeting and clearly understood that the moneys in question were for repayment of loans. This money could not be put into the Trust as additional capital without issuing more units. Hence the moneys had to be applied as a repayment of loans.

697 I pause here to say that according to the alternative form of minutes applicable to the meeting of 25 June 1990 (208 @ PW371) it was said that Mr Chesson reported that the moneys received at the meeting were for repayment of loans, although it represented an injection of money concerning Farmer Jacks Supermarket at Balga. A further note is to the effect that when Wilden was refinanced this gave the unit holders cash back. Now the moneys had to be applied as repayment of a loan.

698 Mr Chesson said in his witness statement, at par 64, that it was decided in June that loans by Wilden to unit holders would be partially repaid to provide funds for the continued operations of the Farmer Jacks shop. He said further, at par 65, that three calls were made for repayment with proportionality to the amounts owing. Greenco paid two amounts, being $21,951.22 and a third payment of $22,000 on 25 June 1990.

699 Graeme Green said in his witness statement, at par 43, that his father told him it was decided that unit holders would be required to finance a further $150,000. His father said that a payment would be made on his (Graeme's) behalf. He said further, at par 45, that on 25 June 1990 his father handed Chesson a cheque for $29,268. This represented a partial repayment of loan funds.

700 The exhibits at trial included also a receipt dated 26 June 1990 (363B @ PW378) signed on behalf of Wilden which records, in respect of the cheques mentioned in the minutes "received from Greenco $29,268 being for repayment of part of Farmer Jacks Supermarket loan". This was signed by Mr Chesson on behalf of Wilden. The figure in question was apparently made up of $21,951.22 in respect of the Greenco contribution and $7317 in respect of the Graeme Green contribution.

701 Mr Green said in his witness statement, at par 156, that he recalled that the unit holders discussed and agreed at the meeting in question to seek repayment from unit holders (on the basis of units held) of a total of $150,000 with 50 per cent to be paid within five days. He said further, at par 157, that at the next meeting on 25 June 1990 cheques were paid in that regard.

702 It will be recalled that by this time Graeme Green was making notes of what took place at meetings. His handwritten notes (Exhibit P447) in respect of the Wilden directors' meeting of 12 July 1990 refer simply to payments including a Green payment of $29,268.29. The basis of that payment is not precisely defined.

703 The Graeme Green notes of 8 August 1990 refer at page 3 to a motion by Mr Chesson (seconded by Mr Denboer) that Wilden call up all unit holders within 28 days. I note in passing that the Graeme Green notes do not reflect any protest or objection to the proposal on the grounds that calls for payment were in breach of the alleged Balga/Wilden Investment Agreement.

704 The Graeme Green notes of 17 August 1990 refer to a motion moved by Mr Chesson (seconded by Mr Denboer) whereby there would be a call up on the same proportion of three previous calls and this would be made on unit holders to raise approximately $75,000. Again there is no note of any protest that such contributions were being required in breach of an undertaking allegedly given by Mr Chesson at the outset that no further payments would be required.

705 The Denboer/Chesson minutes of the meeting of 9 August 1990 refer to this matter and indicate that the loans to unit holders were thought to be repayable on demand. In the current financial circumstances it was thought to be prudent that directors should now demand that all unit holders make repayments.

706 I note also that by letter dated 26 July 1990 from Green to Chesson (366 @ DW1209) Mr Green took steps to try and effect a rescission of the so-called Green/Chesson July agreement on the basis that Mr Chesson's so-called offer to withdraw would be accepted subject to an acknowledgement that the moneys paid to date ($29,268.29 on 12 July 1990; $29,268.29 on 25 June 1990) "are for repayment of loan account held by Wilden as trustee". In other words, in that document Mr Green seemed to accept that his recent payments had been made in reduction of existing loans.

707 These various contemporary pieces of evidence all seem to suggest that in June 1990 the directors of Wilden agreed that funds had to be injected into Balga/Wilden and that this should be done by way of a partial repayment of loans. Various payments were made by Mr Green. There is a significant body of evidence that in making such payments he was aware that they would go in reduction of the loan obligations. This is in fact how they were treated in the minutes and in the books of the company. It is significant that all of this appears to have occurred without the Green parties protesting that calls for repayment of that kind represented a breach of an agreement such as the alleged Balga/Wilden Investment Agreement.

708 It is true that according to minutes dated 29 July 1990 (217 @ PW427/428) there is reference to Mr Green contending the $22,000 obtained from him had been obtained fraudulently. However, that protest, denoting a mood of exasperation, does not seem to be specifically linked to an investment agreement of the kind alleged.

709 I note also that by this time, the Green parties were represented by solicitors. If there was a Balga/Wilden Investment Agreement of the kind alleged, it seems very surprising that the Green parties, by their solicitors or otherwise, did not allege that the payments the Green parties had been required or encouraged to make represented a breach of the alleged agreement, or at least a breach of fiduciary obligations. In fact, allegations of this kind were not made until much later.

710 Let me round off this aspect of the matter by noting that Graeme Green said in his witness statement that his father handed Chesson a cheque for $29,268.29 as a partial repayment of the loan (par 45). He agreed under cross-examination that he was present when there was discussion about repayments with no objection or protest being recorded, although it is now the plaintiffs' case that it was a condition of the investment agreement that no additional payments were to be made.

711 In the course of Graeme Green's cross-examination, reference was made to a letter dated 27 November 1990 from Bennett & Co to Magenta concerning the Kelmscott Village Shopping Centre (282 @ PM330) which was written soon after calls for repayment were made.

712 The exhibit 282 letter from the plaintiffs' solicitors complains of breaches of fiduciary duties by the trustee company and includes the following passage:

"As regards the alleged call for repayment of certain moneys by our clients, our clients deny any liability whatsoever to make the alleged repayments. If, however, you provide us with written confirmation that all unit holders in the Kelmscott Village (1988) Unit Trust have made a further pro rata contribution to the Trust fund then our clients will consider making an equivalent pro rata contribution."

713 I pause to observe that although this letter makes a protest of sorts about a call for repayment, curiously, it does not purport to base that protest upon an express term of the kind contended for by the plaintiffs in par 14 of the statement of claim. Indeed, it is a protest of a rather weak kind because the letter appears to contemplate that in certain circumstances the Green parties might be prepared to make a further contribution.

714 The exhibit 282 letter appears to be the only written protest made not long after the mid-1990 Balga/Wilden calls for repayment. The absence of any specific objection or protest based upon an express term of a kind now contended for by the plaintiffs weighs against any finding being made that the term contended for formed part of the investment agreement.

715 There are some additional matters which need to be considered in regard to this issue.

716 During the cross-examination of Mr Green it was established that for many years the statement of claim contained at par 14 an assertion that the investment agreement was subject to an express term whereby the purchase of units in Balga/Wilden was to be financed partly by loan arrangements and, as pleaded in par 14.4, the loan moneys would not be due for repayment until either the centre was sold by Wilden and the Balga Unit Trust was wound up (par 14.4.1) or Wilden effected a repurchase of the units of the Green parties in the Balga Unit Trust pursuant to the provisions of the Balga Trust Deed (par 14.4.2).

717 It was pleaded in addition that interest would accumulate in respect of the loan principal outstanding at the rate of 14.75 per cent per annum (par 14.5), that no demand would be made by Wilden for repayment of the loan (par 14.8) and that upon occurrence of either of the events referred to in par 14.4 the balance of the loan and any interest thereon would be repaid respectively by the Green parties to Wilden (par 14.9).

718 However, Mr Green did not provide convincing evidence at trial that the pleading truly reflected his recollection and understanding of the relevant events. Indeed, he conceded under cross-examination that these passages of the claim did not accord with his recollection or understanding of the matter. I will come to the relevant passages in the transcript shortly.

719 In essence, under cross-examination, Mr Green acknowledged that he did not become aware that units could be repurchased until 1990 when Mr Chesson and Mr Denboer repurchased units out of Tace. He appeared to accept that the statement of claim was in error in suggesting that in September 1985 he and Mr Chesson had discussed a term bearing upon the loan arrangements of the kind described in par 14.4.2 of the statement of claim, that is, that the loan would only be repayable if the Green units were repurchased.

720 Mr Green said in the course of cross-examination (transcript 1216):

"The only discussions we ever had about a loan was in regard to the loan that Wilden, or whatever trust took out the loan - and it would be paid upon the shopping centre being sold. Now, if this pleading refers back to 85, which I can't make out myself, or 86, when it was, then I'd have to say it's wrong."

721 The evidence given under cross-examination in regard to this point is consistent with the assertion at par 61 of Mr Green's witness statement that he did not have any discussions with Mr Chesson about how the trust would come to an end. He assumed that the shopping centre would be sold and the profit or loss would be split pro rata amongst the unit holders. He was not aware that units could be repurchased by the trust until Mr Chesson and Mr Denboer had their units in Tace Pty Ltd repurchased.

722 It was in this context that the cross-examination of Mr Green turned to par 14.4.2 which appears at page 15 of the pleadings (transcript 1220):

"Would you look again, please, at page 15 of the papers for the judge right at the foot of the page?---15 of? Page 15 of the papers for the judge, that very thick volume that you were looking at earlier, foot of page 15?---Yes.

You see it refers to the centre being sold by Wilden and the trust being wound up?---Yes.

Are you saying that that proposition was ever discussed between you and Mr Chesson back in 1985?---I would say that that was the understanding taken - we started off the first trust called Zilna and from that point on we never discussed any further arrangements for loans other than the trust would be borrowing a loan at maybe 13 and a half per cent or 14 per cent and our repayments, etcetera, or our entitlements were worked out on a pro rata ratio.

Are you saying that what you discussed with Mr Chesson was that the borrowings from Wilden would be on the same terms as occurred in the case of Zilna?---Yes.

Did that happen?---Yes.

Do you remember when or where?---When they first set the Wilden trust up, when it was first mentioned to me.

And that's all that was said about the terms for the borrowings?---It would be on the same basis as Zilna."

723 These points must be considered in conjunction with the matter mentioned a moment ago that, in 1990, when Mr Green was called upon to make payments in reduction of the Green loans he does not appear to have objected on the grounds that there was a binding agreement between the parties (of the kind pleaded in par 14 of the claim as the Balga/Wilden investment agreement) which precluded Wilden from making demands for repayment. In fact, as I have indicated, the Green parties proceeded to make a number of repayments. It might be said that, in doing so, he was simply waiving his rights under the agreement in order to join with his fellow unit holders in alleviating the Balga/Wilden Shopping Centre losses. However, at the time, his actions were not characterised in that way. The Green parties simply made the repayments, albeit reluctantly.

724 All of this suggests that Mr Green was rather vague as to what, if anything, had been agreed in regard to the loans, and did not have it firmly fixed in mind that he could only be called upon to make repayments on the terms pleaded in par 14.4.2 of the claim.

Findings as to Balga/Wilden investment agreement issue

725 It will probably be apparent by now that the present proceedings, and the trial of the action, were bedevilled by a deep-rooted antipathy between the parties. Claims and counter-claims of various kinds have been on foot for over 13 years. Interlocutory matters have been vigorously contested and rulings in that regard taken on appeal. It seems that the parties came very close to settling the matter some years ago. However, the negotiations which were said to have produced a result in due course became the subject of separate proceedings and eventually an appeal concerning that matter.

726 There have been criminal proceedings involving the parties and it seems likely that those proceedings and the outcome have added to the mood of suspicion and distrust.

727 It is not part of my function to enquire into these matters or to arrive at any conclusion concerning the rights and wrongs of the general situation or the reasonableness of the conduct of each party from time to time. My function is limited to resolving the issues brought before me on the pleadings in accordance with the rules and conventions of civil litigation. I have proceeded, and will continue to proceed accordingly. Nonetheless, in my view, it would be naive and unrealistic simply to ignore the broader picture I have described. It has a bearing on the conduct of the cross-examination of witnesses on both sides. It also has a bearing upon my evaluation of the credibility of the witnesses.

728 I touched upon this under the heading "Observations in passing as to Balga/Wilden". I touched upon it also in dealing with the subsidiary issues, that is, the arson incident, the Gillette Award issue and the Balga/Chesson remuneration issue. I endeavoured to provide illustrations as to this aspect of the matter. I mentioned that cross-examination of the principal witnesses for the plaintiffs proceeded in part from the premise that as from mid-1990 Mr Green became rattled and became overly suspicious about the management of the Trust. On the other side, it was put to Mr Chesson, Mr Denboer and Mr Kelly as a constant refrain, and especially in regard to Balga/Wilden, that as from mid-1990 the Chesson groups were parties to a cunning plan to exclude the Green parties and reap a windfall for the Chesson group. Many questions imputed the worst possible motives to each member of the Chesson group and the strident tone of such questions at times made it very difficult to evaluate the weight to be given to the answers.

729 Let me give an example. In my estimation, Mr Kelly, who was the brother-in-law of Mr Chesson, was a man who was brought in as an investor essentially because he was close to Mr Chesson, but in fact played no real part in managerial matters, albeit being named as Chairman of one of the Trusts. To my mind, it emerged clearly from his evidence that, although, admittedly, he had money at stake, in fact, he had little interest in the detail of what was going on. He can be criticised for this, and it might even be that his inertia gives rise to civil liability in failing to discharge his duties as the director of a trust company with proper diligence.

730 Nonetheless, if the reality is, as I perceive it to be, that Kelly took little interest in the detail of what was going on, then, to a detached observer, it might not seem surprising that he simply could not remember, or had no views about, what was said or allegedly said in his presence at some of the many meetings held many years ago.

731 At times, in the witness box, Mr Kelly looked totally bemused as the cross-examiner scornfully attributed his inability to offer evidence on a point as yet another indication of his perfidy. In strict analysis, the questions were relevant to issues on the pleadings, but the fact is that exchanges of that kind did not give rise to evidence that was of much use to me.

732 There were similar instances in regard to some of the other principal witnesses on the defendants' side. For example, Mr Chesson was cross-examined forcefully about his scant regard for the truth in writing a letter dated 13 August 1992 to the valuer Hunt, in which he suggested that further action was required due to "a change in the approach of the solicitors for the unit holder" (88 @ P1011). However, it will be apparent from my "general observations on the repurchase requests" that, on one view of the matter, a comment of that kind by Mr Chesson was justified, for the plaintiffs solicitors, who had been seeking to agree a repurchase price or otherwise compromise all matters in dispute were now (as at 13 August 1992) insisting that the formal valuation process be proceeded with.

733 Thus, again, as I indicated in dealing with the arson incident and the Gillette Award incident, I was left with an impression that a deep-rooted animosity between the parties and the passage of many years, had the effect of distorting perceptions and recollections, and made it necessary for me to, wherever possible, to give primary weight to the contemporary documentation.

734 This brings me to the documentation bearing upon the alleged Balga/Wilden Investment Agreement. There is evidence before me from Mr Chesson that the loan provisions were formulated in conjunction with his solicitors. The minutes of Fieldgate/Zilna as at 25 June 1985 set out the loan provisions in what came to be the standard form. This seems to corroborate the Chesson evidence that the loan provisions had been drafted as early as 1985, because the authenticity of the Zilna minutes has not seriously been doubted. The 13 December 1990 Wilden/Martyn letter permits me to conclude that the loan terms documents were not simply created in November 1991 in response to legal action taken by Graeme Green.

735 There was, as I have indicated, a good deal of controversy at trial concerning the evidence given by Mr Chesson that he presented a document reflecting the loan provisions to Mr Green prior to Mr Green entering the Balga/Wilden Trust. There was controversy as to whether Mr Chesson was present when Mr Green was taken through all the relevant documents by his solicitor, Mr Shervington. This was denied by Mr Green. However, when one reviews the evidence bearing upon the loan arrangements it is more important, to my mind, to look closely at the documents relied upon by the Green parties to support their contention that an investment agreement was made as alleged.

736 The application for units and the Exhibit 12 initial Wilden document provide very little support for the plaintiffs' case. I find that the latter document was not provided to Mr Green as alleged because it is clear from the terms of the document that it was brought into existence after Mr Green had applied for units in the Balga/Wilden Trust. The document reports on the settlement of the Balga/Wilden supermarket in February 1986 as an accomplished fact. It was clearly written after that date. I am compelled to accept Mr Chesson's evidence that it was prepared in May 1986 and therefore could not have been provided to Mr Green, as alleged on the plaintiffs' case, prior to Mr Green's application for units in Balga/Wilden in September 1985.

737 For the reasons I have previously given, I consider that the 25 June Zilna letter provides little support for the plaintiffs' case. It certainly does not reflect an agreement of the kind contended for and is consistent simply with instructions directed to the operations of the Trust generally. I noted previously that the evidence given by Mr Green as to when representations consistent with the restricted terms contended for were made was put in general terms and rather vague. His admissions under cross-examination suggested that par 14.4.2 of the statement of claim did not truly reflect actual discussions and events but was designed to gloss over deficiencies in his recollection of what occurred. For these reasons, and for the reasons I have given previously, I do not regard him as an entirely reliable witness on this point. I have difficulty in accepting his version of the relevant events.

738 I note also that it appears from the Wilden directors' meeting dated 16 June 1987 that Mr Green was present when funds from the ANZ Bank were to be used to make further loans to the unit holders "on the same terms and conditions as the loans to the unit holders made on 2 February 1986". This suggests that Mr Green was familiar with, or, at least, not inclined to dispute, that there were standard loan provisions of the kind described by Mr Chesson.

739 Finally, I must give weight to the fact that at a latter stage, in mid-1990, when calls for partial repayment of the loans were made there does not appear to have been any effective protest by the Green parties to the effect that Wilden was restricted by the terms of an investment agreement from making such calls for repayment. This all suggests that no such terms were negotiated, or binding upon Wilden in the way suggested by the Green parties.

740 The burden of proof lies upon the plaintiffs to establish that such terms formed part of the loan terms. In the end, I am not satisfied that the loan terms were as alleged by the plaintiffs. I consider that the loans were essentially repayable upon demand in the manner reflected in the loan provisions and that interest was to be calculated in the manner allowed for by those provisions. I prefer the evidence of Mr Chesson in regard to this matter because it appears to be more consistent with the contemporary documentation.

741 I accept that because the standard loan provisions were stored in his computer they did not entirely "fit the situation" concerning Balga/Wilden initially because finance was provided by the vendor, not the ANZ Bank. I consider that this came about due to inadvertence. However, as a consequence of the resolution on 16 June 1987 they did come to fit the situation. Further, and in any event, this aspect of the matter does not appear to alter the capacity of Wilden to treat the loans as being essentially repayable on demand (which is how they were regarded by the unit holders themselves, as emerges from the events in mid-1990).

742 Let me now draw my reasoning together in summary form.

743 It emerges from my review of the legal principles bearing upon an issue of this kind that in seeking to ascertain the contractual obligations voluntarily assumed by the parties to the alleged Balga/Wilden investment agreement, and in seeking to ascertain the intentions of the parties to the contract in question, it is necessary to look at what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which the material statements and actions happened. The inquiry should not be treated as a search for the uncommunicated subjective motives or intentions of the parties.

744 In other words, in the context of this case, it is not sufficient for the Green parties, and Mr Green especially, to speak simply of what he understood to be the case or what was subjectively intended. In order to resolve the crucial issue of what agreement, if any, was made, I need to look at the relevant facts and matters objectively in order to arrive at a conclusion about whether the loans were subject to restrictions upon repayment of the kind contended for by the plaintiffs. The burden of proof lies upon the plaintiffs to establish that restrictions of the kind contended for formed part of the loan arrangements.

745 As to the alleged Balga/Wilden investment agreement, the Green parties have established that the parties entered into a collateral agreement (not provided for by the Trust Deed) that prospective unit holders could obtain loan funds from the Trust to facilitate their purchase of units. However, to my mind, the Green parties have not established, on the balance of probabilities, that a collateral agreement of the kind contended for in par 13 and par 14 of the statement of claim was made as alleged; that is, that the Green parties could not be called upon to repay or reduce the loans unless the subject shopping centre was sold or repurchase requests discharged.

746 There are no documents in existence which directly support the plaintiffs' contention. The documents relied upon by the plaintiffs as providing indirect support for the plaintiffs' position are, at best, equivocal and cannot be said to underpin the plaintiffs' case. The evidence given by Mr Green at trial was not convincing and, under cross-examination, he conceded that the case pleaded at par 14.4 of the claim did not truly reflect his recollection or understanding of the situation. The opposing evidence given by Mr Chesson was by and large consistent with such contemporary documentation as did exist. It is significant that when the Green parties were called upon to make repayments in mid-1990 they did so without objection and without reliance upon restrictive conditions of the kind they subsequently contended for.

747 Accordingly, for all these reasons, I find that Wilden was not bound by restrictive conditions concerning repayment of the loans as pleaded in par 14 of the claim and was not in breach of the alleged Balga/Wilden Investment Agreement as contended by the plaintiffs. It follows that the plaintiffs are not entitled to obtain relief in respect of this aspect of the claim.

748 Before leaving this issue, it will be useful to look briefly at some further implications of the findings I have just made.

749 It was a matter of controversy between the parties at trial, and at the time the various repurchase requests were lodged, as to whether the trustee companies were at liberty to defer dealing with the various repurchase requests on the grounds that loans had not been repaid.

750 It follows from the findings I have just made that, contrary to the plaintiffs' case, the trustee companies were at liberty to call up the loans. However, as the loan arrangements were in the nature of collateral contracts, I proceed from the premise that the contractual obligation to repay could not in any sense be said to override the rights and duties of the parties prescribed by the Trust Deeds. Thus, if one of the trustee companies received a repurchase request, it was obliged to deal with the request in the manner prescribed by the relevant Trust Deed, notwithstanding that certain moneys might be due pursuant to the loan arrangements.

751 However, the presence of outstanding loan moneys might arguably be said to have a bearing upon the separate question of whether the trustee was acting properly and reasonably in seeking to utilize any outstanding loan as an asset of the Trust that could be used to meet a cash flow crisis or to discharge or reduce whatever price was due in respect of the repurchase request before proceeding to a sale of other assets. I will return to issues of this kind in due course.

752 It will now be convenient to take a closer look at the Balga/Wilden additional units and options issue which followed on from and is arguably related to the loan calls made upon the Green parties in mid-1990.

The Balga/Wilden additional units and options issue

753 The plaintiffs alleged at pars 48 to 61 of the statement of claim that the purported allocation of additional units and options to Callao and Benrone initiated at the Wilden directors' meeting of 23 August 1990 and related steps were invalid. It is said that the resolutions and related steps including the allocation of units to Deltabrook (Kelly) represented a breach of Wilden's duty to act impartially between unit holders and to treat the Green parties equally with other holders of units in the Balga Unit Trust. It is said that Chesson and Denboer failed to disclose circumstances bearing upon the current value of units in the Balga/Wilden Trust.

754 Further, in purporting to make the issue of options to Callao, Benrone and Deltabrook, and in refusing an issue of options to the Green parties, Wilden purported to exercise its power so as to confer an advantage on each of Chesson, Denboer, Callao, Benrone and Deltabrook to the detriment of each of the Green parties. It is said that the Green parties have suffered detriment in not being able to acquire options and convert them into units and the holding of options by the other parties gave them the right to dilute the interests of the Green parties in the Trust.

755 The plaintiffs said also in the following paragraphs that Mr Chesson failed to exercise reasonable care and diligence in exercising his powers. It is said he failed to act honestly in purporting to allocate additional units and options at a time when he did not, and could not, have honestly believed that this was in the best interests of the Balga Trust. What he did was to the particular advantage of Chesson, Callao, Benrone and Deltabrook. Allegations are made against Mr Denboer in essentially the same terms.

756 The plaintiffs alleged at par 76 that the combined effect of various breaches (amounting to a concerted plan to exclude the Green parties) meant that Wilden had conducted the Balga/Wilden Trust with a fraudulent purpose of causing financial disadvantage to the Green parties in order to benefit the Chesson group. I will call this the "par 76 fraudulent purpose plea".

757 I touched on this aspect of the matter earlier in my "observations in passing on the Balga/Wilden dispute". Before proceeding to make findings bearing upon this issue, it will be useful to recapitulate with a view to understanding the nature of the disputed issue.

758 I must begin by reminding myself that by cl 4.8 of the Trust Deed the trustee may with the prior written approval of at least 75 per cent of the unit holders issue additional units of any class in such manner as the trustee shall think fit, but having regard to the then value of the units unless the circumstances justify a departure from that value.

759 The defendants' case was that Mr Chesson managed the affairs of Balga/Wilden with complete propriety. Without any fault on Mr Chesson's part losses were experienced in mid-1990 with the result that an injection of funds was required in order to satisfy the demands of creditors. On the defendants' case, funds were put in initially in mid-1990 by way of partial repayment of outstanding loans.

760 It was a matter in controversy at the trial as to the basis on which these payments were made. I addressed that issue and made certain findings in earlier discussion. However, on the defendants' case it remained the position as at August 1990 that Balga/Wilden was in dire straights and further steps had to be taken. This involved putting the supermarket up for sale, and this in turn led to the receipt of certain offers for the same from Splendid Enterprises and Petersen & Geggie. The latter offer was complicated by the need for Wilden to acquire premises at Irwin Chambers before the Petersen & Geggie offer could proceed.

761 The tenor of the evidence given by Mr Chesson and Mr Denboer at trial was that in this July/August period they were simply concerned to find ways and means of rescuing Balga/Wilden so that it would not be put into receivership or wound up. According to Mr Chesson, he had lived through the experience of receivership in a sports goods enterprise some years earlier and was determined not to relive the experience. According to him, he foresaw that if the Balga/Wilden Trust was wound up the receiver would immediately, as a first step, insist that all outstanding loans be paid, because the loans represented a significant asset of the Balga/Wilden Trust. This would probably lead on to liability in respect of personal guarantees.

762 The defendants case was that all the relevant facts and circumstances were disclosed to the unit holders, including the Green parties. Everyone was aware (as appears to be reflected in the various minutes) that a moment had arrived in which there was a real risk of the individual unit holders being bankrupted. However, according to Mr Chesson (and to some extent to Mr Denboer) the conduct and utterances of the Green parties at this time were disturbing and became a source of increased apprehension to Mr Chesson. I have touched upon this part of the evidence before. In essence, it seemed to Mr Chesson that Mr Green was behaving erratically. Further, Mr Green seemed to be in receipt of professional advice from his solicitors and from his accountant, Mr Coates, that it might be better if the Balga/Wilden Trust was wound up, notwithstanding the risk (as Mr Chesson perceived it) that loans would then be called up. In addition, Greenco was pressing for payment of a debt for electrical services and arguably had the capacity to initiate a winding up by the issue of a Section 364 Notice.

763 The defendants' case was that in these circumstances, Mr Chesson and Mr Denboer had a limited capacity to inject further funds into Balga/Wilden, and were reluctant to do so given the instability created by the attitude of the Green parties. However, various steps were taken which eventually managed to stabilise the situation. More particularly, as a consequence of discussions between Mr Chapman of the ANZ Bank and Chesson, the prospect was explored of Fieldgate/Zilna and Summerfield/Tace being refinanced. Funds from that quarter could then be used to meet repurchase requests lodged by Chesson/Callao and Denboer/Benrone so that those parties would be in a position to invest further funds in Balga/Wilden.

764 It seemed that Mr Bonini wished to withdraw from Balga/Wilden. Thus, steps were taken for his units to be acquired by another investor. Mr Chesson's brother-in-law, Mr Kelly, was willing to assist. Accordingly, a company known as Deltabrook was acquired as a vehicle to take advantage of Mr Kelly's presence. Further, in August 1990 resolutions were passed providing for units in the Balga/Wilden Trust to be offered for sale at a discount, albeit not below the price of $500 per unit. Mr Chesson was empowered to look around for investors who would take up these further units.

765 On the defendants' case, in the course of discussion, all of the alternatives having been fully explored, Mr Green made it clear on behalf of the Green parties that he did not wish to acquire further units because he did not want to send good money after bad. I pause here to observe that notes made by Mrs Green at a Wilden directors' meeting of 28 August 1990 (PW531) record Mr Green as saying, in the context of discussion about these matters: "Good money for bad is not my policy". The notes reflect an exchange (PW535) when he was asked whether he wanted more units, he replied "Not at this stage". The notes refer also to an offer from John Kelly to purchase units for $200,000 subject to a cash flow report.

766 Put shortly, then, on the defendants' case the Green parties did not participate in the issue of further units, because, as a consequence of a fully informed decision, they did not wish to participate. They consented to the proposal. The further issue may have had the consequence of "diluting" the value of the Green units below the original issue price of $1000 per unit but that was an inevitable consequence of the financial difficulties confronting Balga/Wilden and the need to attract more funds.

767 I note in passing that an important exhibit in that regard is a balance sheet document made up to 31 July 1990 portraying the value of the proprietorship at that date as being $1,336,148 (D7 @ PW434).

768 This document bears various handwritten calculations made by Mr Chesson in which he calculated that on a proprietorship of that value in a trust with the existing 1025 units the value of a unit would be $1300. However, if the units were increased by 400 to 1525 then the value per unit would be $1138. Other calculations, and alternatives appear, which show the effect of alternative scenarios. I will call this the "August 1990 Chesson unit value calculation document".

769 I note that the figures in question are repeated in the minutes made by Mrs Chesson of the meeting dated 23 August 1990 at which the resolution empowering Mr Chesson to negotiate to sell further units was passed. This suggests that the implications of a move to issue further units were under discussion at that meeting.

770 On the defendants' case, it was against the background of all these events, and being cognizant of cl 4.8 which allowed for extra units to be issued at a discount in special circumstances (subject to the prior written approval of 75 per cent of the unit holders), that the directors of Wilden empowered Mr Chesson to raise $400,000 of capital by selling units at a discount but not less than $500 each.

771 The Denboer/Chesson minutes dated 23 August 1990 set out a resolution to that effect (D15 @ DW1652).

772 This resolution was subsequently confirmed by a document dated 28 August 1990 (Ex 237 @ PW530) whereby "We the undersigned unit holders resolve to accept and hereby ratify the resolution of directors of Wilden Pty Ltd at their meeting of 23 August 1990 as follows...". The resolution I have just referred to followed.

773 The document was signed by various unit holders including Mr Green on behalf of the Green Family Trust, but not by Graeme Green. A confirmation of this kind was arguably required in order to comply with provisions of the Trust Deed concerning the issue of shares at a discount.

774 At a Wilden directors meeting held on 28 August 1990 the Denboer/Chesson minutes indicate that it was then moved by Mr Green and seconded by Mr Denboer, and so resolved that (234 @ DW1655):

"That Mr Chesson be and is hereby empowered and authorised to issue and sell up to 400 new $1,000 fully paid units at $500 per unit in the Trust and that this authority be open for a period of fourteen (14) days.

Mr Denboer stated that Benrone Pty Ltd would purchase $200,000 worth of units at the abovestated price of $500 per unit but would require at least one (1) month to arrange his finances.

Mr Chesson also stated that Callao Pty Ltd would purchase additional units.

Mr WJ Green stated that he was not interested in purchasing any additional units at the moment."

775 It was then moved by Mr Chesson and seconded by Mr Green, and so resolved that Mr Chesson's offer on behalf of Callao to purchase new units, up to $200,000 for up to 400 fully paid $1000 units at a purchase price of $500 per unit in the name of a company to be advised, be and is hereby accepted. Likewise, Mr Denboer's offer to purchase new units up to $200,000 for up to 400 fully paid $1000 units at $500 each in the name of a company to be advised was accepted.

776 The minutes indicate that in each case Mr Chesson and Mr Denboer abstained from voting on the motion affecting them. They say also that Mr Chesson tabled a letter signed by Green, Chesson and Denboer on behalf of their respective companies empowering Mr Chesson to sell a number of units to raise $400,000 of capital.

777 The plaintiffs' case at trial was that in mid-1990 the Green parties raised legitimate concerns about the management of Balga/Wilden and the losses that were being incurred. This gave rise to acrimony between the parties which had the effect of unsettling Mr Bonini. It was at about this time that Mr Chesson and Mr Denboer recognised that it would be convenient to marginalise the Green parties with a view to silencing their criticisms and increasing the Chesson/Denboer control of the Balga/Wilden Trust.

778 Chesson and Denboer allegedly recognised also that, unlike the other Trusts, Balga/Wilden had an attractive feature in that the property had been acquired prior to the introduction of capital gains tax on 19 September 1985.

779 Accordingly, on the plaintiffs' case, as from about July 1990 Chesson, Denboer and Kelly were parties to a concerted plan of action whereby the Green parties would be marginalised or excluded and the Chesson group would acquire a larger share of the Balga/Wilden Trust. Mr Chesson and Mr Denboer were cross-examined at length as the cross-examiner sought to substantiate this thesis and to establish that the Green parties had not been dealt with honestly and impartially. I referred to this thesis in earlier discussion under the heading "Observations in passing as to Balga/Wilden".

780 It was put to Mr Chesson and Mr Denboer that from July to October 1990 they exaggerated the financial difficulties of Balga/Wilden with a view to unsettling Bonini and the Green parties and to ensure that the Green parties would not be minded to take up any further units.

781 It was put to Mr Chesson that it was misleading of him to suggest that his brother-in-law Kelly was recruited as an investor simply to help Balga/Wilden through its financial difficulties. Reference was made to an opening of a bank account for Deltabrook in late July 1990 with funds deposited by Chesson, not by Kelly, because Kelly's funds would not be available until October. Mr Bonini was persuaded to dispose of his units and submit a written resignation to Wilden dated 16 August 1990 (231 @ PW481) prior to a Wilden directors' meeting held 17 August 1990 attended by Mr Denboer, Mr Chesson and Mr Green, with Mrs Chesson and Graeme Green in attendance. At that meeting Mr Chesson tabled a request from Bonini for the repurchase of his 300 units in Balga/Wilden and a copy of Bonini's resignation. It was resolved that the issue of 300 fully paid units for a price of $256,096.78 to Deltabrook (Kelly) be approved.

782 In the meantime (on the plaintiff's case) Mr Chesson had been exploring with Mr Chapman of the ANZ Bank the prospect of Zilna/Fieldgate and Summerfield/Tace being refinanced so that, by related repurchase arrangements, which were not brought to the attention of the Green parties, Denboer and Chesson would be in a position to acquire further units and to repay their loans.

783 It was against this background (again with Mr Green and Graeme Green being present) that the 23 August 1990 resolution was passed whereby further capital was to be raised. If the capital could be raised by the issue of additional units then the money was to be used to fulfil the transaction with Petersen & Geggie in order to complete the sale of the supermarket.

784 According to the plaintiffs, the Greens were led to believe that Mr Chesson would be looking around for investors generally. However, he had failed to disclose that a plan was already in motion whereby the further units to be issued would in fact be vested in members of the Chesson group.

785 On 28 August 1990 Mr Kelly wrote to Wilden to say that subject to complete satisfaction with the accounts of Balga/Wilden his company Milone was prepared to complete an application for 400 units in the Trust at $500 each. Payment would be made for the same within seven days of that date by bank cheque. It was put to Mr Chesson in cross-examination that this letter was less than straightforward in that Mr Chesson knew that Mr Kelly was not then in a position (or not minded to) complete the proposed purchase within the nominated time. Further, the presence of the letter at a meeting scheduled for 28 August 1990 had the effect of fixing a price for the units at $500.

786 On the plaintiffs' case, it was pursuant to the Chesson/Denboer/Kelly plan, and without full disclosure to the Green parties, that the directors of Wilden resolved on 28 August 1990 that Mr Chesson was empowered and authorised to issue and sell up to 400 new $1000 fully paid units at $500 per unit within a period of 14 days. Mr Denboer stated that Benrone would purchase $200,000 worth of units at the nominated price; Mr Chesson offered to purchase 400 units up to $200,000 at the nominated price. The plaintiffs say that their acquiescence to these events was due to a lack of full disclosure and their supposed consent to the additional units at a discounted price was illusory.

787 I pause here to note that it was put to Mr Chesson and Mr Denboer that by this time, had there been a full disclosure to the Green parties of Mr Chesson's discussions with the ANZ Bank and various other matters, it would have become apparent to the Green parties that the situation of Balga/Wilden was not as bad as had previously been portrayed by Mr Chesson. Notes of discussion at the meeting of 23 August 1990 reflect an assertion by Mr Denboer that "we have arrested the rot" (523 @ DW205/207).

788 It was put to Mr Denboer in cross-examination that by this time the haemorrhaging had stopped. Mr Chesson was asked how it came about that Balga/Wilden was able to continue during the period late August to late October without funds actually being lodged with Balga/Wilden. He said in answer that the bank and the Balga/Wilden creditors at that time were probably prepared to be sympathetic and hold off as there were prospects of recovery. However, to his mind, the situation never ceased to be acute because the future of the supermarket remained uncertain until the Petersen & Geggie transaction was put in place. Further, throughout this period Mr Green continued to indicate that he and his advisers were of the view that Balga/Wilden should be wound up and continued to threaten action in that regard by reliance upon a Section 364 Notice concerning a debt owed to the Green parties in respect of electrical services supplied to the Trust.

789 The plaintiffs' case that the Chesson group was intent upon carrying into effect a previously devised stratagem in a surreptitious manner placed a particular emphasis upon the events of Tuesday, 28 August 1990.

790 There are various documents bearing upon the events of that day. A set of Denboer/Chesson minutes signed by Mr Denboer some days later purport to reflect the proceedings of a Wilden directors' meeting held on 28 August 1990 (234 @ DW1655). A set of minutes attributed to Mrs Chesson purports to reflect the proceedings of directors also (234A @ PW52). In both cases those in attendance are described as Mr Denboer, Mr Chesson, Mr Green, with Mrs Chesson and Mrs Green being in attendance.

791 Mrs Green also made notes at the meeting (PW531). These are the notes I mentioned a moment ago which record that the Green parties did not want to buy more units "at this moment". Mr Green also confirmed that he was pressing his claim against Wilden via the Greenco s 364 notice. When asked whether he intended to "see this 364 thing through" he replied: "I see no reason why not".

792 It emerges from this documentation that Mr Chesson tabled the letter from Milone signed by Mr Kelly dated 28 August 1990 indicating a willingness "to complete an application for 400 units in the Trust at $500 each" with payment to be made within seven days. The resolution of 23 August 1990 was carried forward in that at this meeting a few days later it was resolved that Mr Chesson be empowered to issue and sell up to 400 new $1000 fully paid units at $500 per unit. It was resolved that the Chesson offer on behalf of Callao, and the Denboer offer on behalf of Benrone, to purchase 400 units upon that basis be accepted. Mr Chesson and Mr Denboer abstained from voting in respect of the resolutions affecting their interests.

793 On that day the Wilden directors purported to provide written confirmation accepting and ratifying the resolution of 23 August 1990 concerning the sale of new units. The ratification document was signed on behalf of Callao, Benrone and Deltabrook. Mr Green signed also on behalf of Greenco (237 @ PW530). Simultaneously, a document was signed whereby Mr Chesson and Mr Green as directors of Wilden offered to sell the subject parcels of 400 units at $500 each (236 and 237 @ PW529/530).

794 It was put to Mr Chesson that he had prepared the relevant documentation in advance of the meeting so that he could rush through the issue of the new units to the advantage of the Chesson group while the Green parties remained in a demoralised state of mind concerning the future of Balga/Wilden, and while (notwithstanding various requests for information) they were not fully informed as to the affairs of Balga/Wilden.

795 Mr Chesson and Mr Denboer disputed these propositions. They continued to assert that Balga/Wilden was in dire straights. Mr Green was clearly rattled and behaving obstructively, as indicated by his intention to press ahead with his s 364 claim which might lead to the winding up of Wilden. Hence, according to the defendants, they were left with no alternative but to press ahead with steps to inject further capital into Balga/Wilden.

796 On the plaintiffs' case, events at the next meeting of Wilden directors held on 25 October 1990 represented a further step in the Chesson group's stratagem to exclude the Green parties and obtain control of Balga/Wilden to their own financial advantage. The directors resolved, on that occasion, that Wilden would accept the application for 200 units signed by Benrone and Callao and that the balance of the subscription of units by Benrone (200) and Callao (200) being for $1000 fully paid units for the payment of $500 per unit could take effect at any time within the next two years. In effect, Callao and Benrone had a two year "option" to take up these units. (The rights purportedly arising from this resolution were generally referred to in the litigation as option rights (in that payment did not fall due for two years) and I will continue to use that description even though it may not be strictly accurate).

797 It was resolved also that Wilden should call up all loans made to unit holders of the Trust to be repaid by 1 December 1990 and an indication be required from all unit holders within seven days as to whether or not they would be making the repayment on the due date. By this time Callao and Benrone had discharged their loans, and they were therefore not affected or discomforted by the proposed call. Thus, on the plaintiffs' case, this resolution was simply part of the plan to apply pressure to the Greens and force them out of the Trust, for the Chesson group was of the view that the Green parties were not in a position to meet the demands for repayment.

798 I pause to note that at par 226 of his witness statement Mr Green said that 25 October 1990 was the first occasion that he became aware that each of Mr Chesson and Mr Denboer had repaid their loans to the company. He was not aware where they had got the funds to replay those loans. He had been informed by Mr Chesson that the centre was worth between $1.3 million and $1.9 million. He was not informed that a report was received by Wilden from Baillieu Knight Frank on 30 October 1990 valuing the centre at $2,960,000 (or $3,420,000 on completion of extension) (120 @ PW603). The opening paragraph of the report indicates that Mr Chesson and the valuer were in contact about this matter in late August.

799 An annual general meeting of the Balga/Wilden Trust was held on 6 December 1990. On the plaintiffs' case, the Green parties were not given any or any proper notice of this meeting and thus were unable to resist a resolution whereby Mr Green was required to resign as a director. This was said to represent a further step in the plan to exclude the Green parties.

800 Having set out the respective positions in overview, it will now be useful to look at some other facets of this issue. For the moment, I will put to one side the effect, if any, of the protective provisions.

General observations re the Balga/Wilden additional units and options issue

801 It emerges from my review of the evidence to this point that most of the specific allegations made by the plaintiffs in regard to this issue (as reflected in par 48 to par 61 of the statement of claim) are linked to a fundamental allegation of impropriety on the part of the defendants; that is, a concerted plan by the Chesson group to exclude the plaintiffs.

802 This was put succinctly in the plaintiffs' closing submissions dated 24 November 2004 (at par 502 to par 504) along these lines. In or around the middle of July 1990 Mr Chesson recognised that the financial crisis for Wilden was virtually solved (by the sale of the supermarket) and Chesson set about a process to try to secure a greater interest in the Balga/Wilden Trust for himself and his related entities and supporters. The conduct of Chesson and Denboer involved orchestrating a plan to realise upon the capital gains tax free status of the Balga Bazaar Shopping Centre (notwithstanding Mr Chesson's denial of such a proposition at TS 3906).

803 It is the plaintiffs' pleaded case that such conduct of Chesson and Denboer was a concerted course of conduct calculated to enrich themselves and cause financial disadvantage to the Green parties. The expression of the concerted conduct was the issue of additional units and options at a discount.

804 The plaintiffs submitted further that in the course of such conduct Chesson failed to act honestly in the exercise of the relevant transaction. The effect of the transaction was to provide a benefit to himself as he preferred his own interests and the interests of certain unit holders and directors over the interests of the Trust and the other unit holders of the Trust including the plaintiffs.

805 Furthermore, he made or caused to be made no disclosure of his or Denboer's investments or the benefits obtained by them by reason of the issue of the options and units described. The issue of options was unsupported by the Trust Deed and therefore improper. Denboer is said to have colluded with Chesson in regard to those matters.

806 There are various assumptions built into the fundamental allegation of impropriety comprising the plaintiffs' par 76 fraudulent purpose plea. Accordingly, before addressing the specific issues raised by the pleadings, it will be useful to make some general observations and arrive at some broad conclusions bearing upon the plaintiffs' basic proposition.

807 The plaintiffs proceed from the premise that in mid-1990 Chesson and Denboer exaggerated the financial difficulties which were said to be confronting Balga/Wilden. The plaintiffs did not produce expert evidence in order to substantiate this view. To my mind, there is a lack of compelling evidence in support of the plaintiffs' contention. It is clear from the various minutes that all those associated with Balga/Wilden, including the Green parties, accepted that Balga/Wilden was facing financial difficulties and the actions of the parties are generally consistent with this being the accepted view. The Green parties had business experience and this means that their own appreciation of the situation cannot be entirely disregarded, notwithstanding Mr Green's stance that he was not being provided with sufficient information.

808 The plaintiffs sought to underpin the fundamental allegation of impropriety by reliance upon the allegation that the Chesson group acted improperly by calling for payments from the Green parties in reduction of the loans in mid-1990 and in calling up the outstanding balance of the loans towards the end of 1990. However, it follows from my earlier findings concerning the Balga/Wilden investment agreement issue that, in strict analysis, it was open to Wilden by its directors to make these calls. Further, if the financial difficulties were real, as they appear to have been, then it was not unreasonable for Wilden to have proceeded in that manner, albeit that this became a source of annoyance to the Green parties. I have found that as to certain subsidiary issues such as the so-called arson incident and the Gillette Award issue the stance adopted by the Green parties was not justified and could legitimately be viewed by Chesson and Denboer as unco-operative.

809 If the financial difficulties were real, then it was open to Wilden by its directors to seek to raise further capital by issuing additional units at a discounted price provided requirements of cl 4.8 of the Trust Deed were observed. That clause obliged the trustee to have regard to the "then value" of the existing units unless in the particular circumstances the trustee determined that it should depart from such value. Thus, if the difficulties were real, and the Green parties seem to accept that they were, it was not necessarily improper for the trustee to countenance the issue of additional units at a price below $1000 per unit in an endeavour to resolve the difficulties.

810 Put shortly, then, the plaintiffs' fundamental allegation of impropriety depends largely upon the notion that the Chesson group not only fabricated a financial crisis but also sought to attend to it by acting unlawfully. However, for the reasons I have given, I do not consider that the plaintiffs have been able to substantiate either of those two propositions. To my mind, in strict analysis, it was open to Wilden by its directors to meet the company's difficulties by calling up all or part of the outstanding loans and by raising further capital by the issue of additional units at a discounted price provided the necessary steps were taken in accordance with the provisions of the Trust Deed and the trustees' general obligations.

811 It follows from my review of the legal principles bearing upon the administration of trusts that the duties imposed upon Wilden, and by extension upon its directors, included the duty of disclosure, the duty to act impartially, and the duty to account to the person to whom a fiduciary obligation is owed for any benefit or gain which has been obtained in circumstances where a significant possibility of conflict existed between a fiduciary duty and the receipt of a personal benefit.

812 When I begin to dwell upon these requirements (while still speaking in general terms) it strikes me that it is in this area that the plaintiffs' case gathers in strength. I will accept that Mr Chesson, Mr Denboer and Mr Kelly believed that funds had to be raised in order to keep Balga/Wilden afloat. But this finding leaves open the further questions of whether the Chesson group acted honestly and reasonably in regard to the issue of additional units and options. In other words, to my mind, although the plaintiffs have not made out their fundamental allegation of impropriety or proved the existence of a concerted plan to exclude, there are nonetheless various features of the evidence which indicate that Chesson and Denboer acted improperly and caused the trustee company to act in breach of its fiduciary duties as trustee.

813 Let me now proceed to my findings as to that aspect of the dispute.

814 I am of the view (and so find) that the Chesson group of Chesson and Denboer and their respective companies were acting in unison. I find that the actions of Chesson and Denboer can be attributed to Wilden and their respective companies on the basis that this constituted the directing mind and will of these companies. Having regard to the reasoning in the decided cases mentioned earlier such as Coleman v Myer (supra) both Wilden and its directors Chesson and Denboer were subject to fiduciary duties owed to the Green parties as shareholders and as unit holders which obliged them to make full disclosure of and not to profit by knowledge of any matter or transaction which had a bearing upon the value of the trust fund or units relating to the fund. The fiduciary obligations arose from the various special circumstances described by the plaintiffs in par 76 of the statement of claim, being, essentially, the long-standing dependence of the Green parties upon information and advice provided by Mr Chesson as to the affairs of the Balga/Wilden Trust, and as to the affairs of the other two Trusts, being a managerial role for which he had assumed responsibility.

815 For the reasons I have given I am not persuaded that there was a concerted and dishonest plan to exclude the Green parties by manufacturing a financial crisis and unlawfully calling up their loans. However, I am of the view that in breach of their fiduciary obligations Wilden, Chesson and Denboer acted in bad faith in failing to disclose to the Green parties all the matters relevant to their proposed acquisition of further shares and options including the source of the funds to be used by the Chesson group in acquiring further shares and options and, as alleged in par 55, what attempts, if any, had been made to sell the units to parties other than existing unit holders. Further, they failed to disclose circumstances such as the provision of funds to Chesson and Denboer via the Tace/Summerfield refinancing arrangements which might have had a bearing on whether $500 per unit was the best possible rate that could be obtained for the additional units in Balga/Wilden.

816 Having regard to the reasoning in Nocton v Ashburton (supra) and the related cases, it is not fatal to the plaintiffs' claim that an actual intent to cheat has not been substantiated. It is enough for me to find, as I do, that, in a situation in which a conflict of interest arose, those subject to fiduciary duties acted unconscionably by not making a full and sufficient disclosure in order to advance their own self interest. This amounted to a fraud in equity by Wilden and certain of its directors, namely, Chesson and Denboer. Moreover, I am of the view that in the absence of a full and proper disclosure the Green parties did not give an informed consent to the proposal and are not bound by the same.

817 For these reasons (which I have set out initially in a summary form) I find that the plaintiffs have substantiated their par 76 fraudulent purpose plea; that is (to use the language of the statement of claim) Wilden conducted the Balga/Wilden Unit Trust with the fraudulent purpose of causing financial disadvantage to the Green parties and advancing the interests of itself, Chesson, Denboer, Callao, Benrone and Deltabrook. Wilden, by those constituting its directing mind and will (Chesson and Denboer) preferred the interests of certain unit holders and directors of Wilden over the interests of the Trust and the unit holders in the Trust (including the plaintiffs) as a whole.

818 I pause here to observe that although the par 76 fraudulent purpose plea is directed to Wilden, in doing so, it draws together various proceeding allegations of default including reference to the conduct of Chesson referred to at pars 62 to 70 and the conduct of Denboer mentioned at pars 71 to 75. Certain of those allegations concern the Gillette Award issue and the Balga/Wilden remuneration issue. As I have found in favour of the defendants in regard to those matters I will put them to one side. However, more importantly for present purposes, par 65 and par 74 contain allegations that Chesson and Denboer failed to act honestly in discharge of their duties as directors by causing Wilden to act in breach of its duties as trustee in regard to the Balga/Wilden additional shares and options issue.